Volume XXII, No. 26 (No. 592)
Friday, June 11, 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.
Welcome to the 26th and final issue of Volume XXII of Coverage Pointers. Next issue begins our 23rd year of publication and we’re just as happy and committed to producing this newsletter now as we were in 1999, when we first began sharing our analysis and humor. Thank you to our staff and to our loyal and interactive subscribers for your interest in our offerings.
Happy June. We are excited about the possibility of the US – Canadian border reopening after 15 months (maybe it will be 16) to allow us to cross over to our second home in Southern Ontario. David Adams, whose place is just a few kilometers west of mine, in equally anxious. Each day, new rumors flood the newswires, so keep your fingers crossed. The Land of the Blue Martinis awaits.
Special guests:
North of the Border:
Speaking of Canada, we are pleased to welcome back, our good Canadian friend, and lawyer extraordinaire, Heather Sanderson who, in the past, has offered some insight on Canadian insurance law. Heather Sanderson, the principal at Sanderson Law, has over 30 years of experience providing legal advice and direction on the investigation, defence and prosecution of commercial and personal lines claims and litigation. Her column has been entitled: North of the Border. She can be reached in Calgary, Alberta, Canada at [email protected], tel. 403-837-2508
Diversity in Law Firm Retention:
Guest writing for Mirna Santiago is Sean Griffin, an extremely talented lawyer in Washington DC, with the Dykema firm. Sean litigates complicated contract disputes, many of which involve allegations of fraud. He represents various organizations—including government contractors, transportation companies, and law firms—in the District of Columbia, Maryland, Virginia, and around the country. He can be reached at 202-906-8703 or at [email protected]. His article originally appeared in Law360 and is reprinted with permission.
NY and ROR’s:
There’s a real interesting case in my column that supports my position on the ill-advisability of New York reservation of rights letters.
This was a case involving lack of cooperation, with the insured’s participation sought in 2015 and 2017. In May 2018, the insurer sent out an ROR letter and disclaimed in September 2019. The court held that the Reservation of Rights letter was of no value in giving the insurer time to issue a disclaimer. Heed our instruction on this!
[H]ere, counsel retained by Burlington sent Sublink's principal written letters on May 8, 2015, and May 19, 2017, and retained counsel's calendar clerk made numerous calls starting in August 2017. Thus, by the time Burlington issued its May 23, 2018, reservation of rights letter, Burlington already possessed all of the necessary information regarding Sublink's failure to cooperate, and Burlington's September 5, 2019, disclaimer was untimely.
Not following? Perhaps you need to schedule:
New York Coverage Protocol Training:
A 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:
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Are you sending out reservation of rights letter in NY claims?
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Do you know the “30-day” rule?
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Are you certain you know who gets copies of coverage position letters in New York?
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If the insured fails to respond to 10 letters seeking cooperation, can you successfully deny coverage for lack of cooperation?
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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?
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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.
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. If your shop can benefit from that training, let me know and we can arrange a date and time to help train your staff.
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:
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Employment & Business Pointers aims to provide our clients and subscribers with timely information and practical, business-oriented solutions to the latest employment and general business law developments. Contact Joseph S. Brown [email protected] to subscribe.
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Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!). Please drop a note to Jody Briandi at [email protected] to be added to the mailing list.
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Labor Law Pointers: Hurwitz & Fine, P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at [email protected] to subscribe.
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Products Liability Pointers: Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies. Contact Brian F. Mark at [email protected] to subscribe.
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Medical & Nursing Home Liability Pointers. Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Chris Potenza at [email protected] to subscribe.
ruMIRNAtions:
Due to the early-season heatwave in New York this week, I am taking it easy and letting attorney Sean Griffin do the heavy lifting in this edition of Coverage Pointers. In his article for PropertyCasualty360.com (reprinted with permission, of course), he explains why selecting diverse law firms actually makes sense for insurers. Having diversity in panel counsel is not just the right thing to do, it also makes great business sense.
Enjoy the article—and the heat—and I will see you on the next edition of Coverage Pointers.
Mirna
Mirna M. Santiago
[email protected]
Think Gun Control is a New Issue? Look at this Story from 100 Years Ago:
Buffalo Courier
Buffalo, New York
22 Jun 1921
To Confer with Judges
On Disarming of Buffalo
Gun-Toters Next Week
District Attorney Moore Says with 12,000 Licensed to
Carry Loaded Revolvers Buffalo Literally Is an Armed City—
Crime Results from Gun Permits, Records Show—Justice Dudley
and Mayor Buck Agree with County Prosecutor.
District Attorney Guy B. Moore announced yesterday afternoon that he will confer with supreme court justices and County Judge Noonan the first part of next week on the question of withdrawing all revolver, permits issued in the county.
Mr. Moore had intended to hold a conference with the justices this week but owing to the stress of business in the courts, the conference was postponed.
Buffalo An Armed City.
The district attorney claims that many crimes in Buffalo could have been averted if so, many revolver permits had not been issued. According to his statements there are approximately 12,000 persons in Buffalo possessing licenses or permits to carry loaded revolvers.
A careful, checking up of the permits issued shows that only about 600 are really necessary, he said. Permits are still being issued and at the present rate there will be several hundred more in the city before the summer is over.
Mr. Moore declared yesterday that if the permits are revoked crimes in Buffalo will necessarily lessen. His assertions are backed up by others in the district attorney's office who are familiar with the situation in Buffalo.
"This city literally is an armed municipality," declared Mr. Moore yesterday. “It is time to disarm. Records show that one person out of every fifty carries a gun or has a permit to do so and these permits are held in nearly all cases by people who do not require to be armed."
Mr. Moore said he was opposed to permitting private detectives among others to go about with loaded guns.
At the conference with the justices next week, Mr. Moore intends to bring all records of gun permits to their attention and show the great number of shootings that have resulted. He hopes that the permits will be revoked and that a more stringent control over the issuing of them in the future will be exercised by the courts.
Support Moore's Plan.
Mayor George S. Buck, asked yesterday if he approved of the suggestion of the district attorney, replied:
"I attempted to get a strict police control over the issuing of permits last year, but the courts held that permits can be given out to persons, who in the court's opinion, are reliable and need to carry a revolver. I am for anything that will get gun toting under control."
Justice Welsey C. Dudley was also questioned as to the recommendations of District Attorney Moore for revocation of the gun permits, and said:
"I do not know how many permits have been issued, but if it is true that there are 12,000 permits in the city, most of them ought to be revoked at once.
Judge Noonan of county court would not comment on the suggestion of the district attorney.
"I am through talking to the newspapers," was the only statement he would make.
Detective Captain Edward Newton said last night:
"I think It would be an excellent plan to revoke all pistol permits. Many people are holding permits now who shouldn't have them. At the time of the Chauffeur club holdup, we found a number of men with revolvers, and permits to have them, who could hardly speak English. It would aid the police if new permits were issued only to responsible people."
Peiper on Property and Potpourri:
A relatively quiet week from the courts marks the end of Spring 2021. Given from where we came, though, it is nice to have any decisions. The First Department reminds us in the issue that the suit limitation clause in a first party policy is enforceable, but with one important caveat. Not all clauses are created equal. For it to apply, the clause must indicate that it runs from the date of the damage causing event. Date of loss, without more, is considered ambiguous and likely will not apply.
We move toward Summer enjoying our one shot at the big time. The Blue Jays will stay here for another month or so before departing for the bigger skies of our neighbor to the North. It has been a fun little diversion, and I doubt many cities can provide a MLB experience and then have 80% of their fans home within 30 minutes of the last pitch. Such is life in sleepy Buffalo.
The loss of the Blue Jays, if it can be considered a loss, is offset by the return (eventually) of Canadian travel. My Nexus card is still good, and my son has not had new skates in 18 months. Thorold, Ontario we will be there soon! For those wondering, skate fitting in Ontario is a unique experience. Picture multiple staff engaged in fitting and molding boots, adjusting blade angles, and profiling the skate edges for gameday excellence. Does it matter, nah. But it is fun and gives us a reason to hit up Swiss Chalet for dinner before the ride back across the bridge.
Steve
Steven E. Peiper
Loss of Baby’s Eye? Value 100 Years Ago?
The New York Times
New York, New York
11 Jun 1921
Award for Baby’s Eye Cut to $12,000
The Appellate Division of the Supreme court decided yesterday that $12,000 is sufficient compensation for the loss of a baby’s eye, and that $20,000 awarded by a jury in the Supreme court is too much. Hence a new trial will be ordered in the suit of Henry Yoost Jr. against the Third Avenue Railway, unless $12,000 is accepted. The infant is Henry Yoost Jr., who was being carried across the street in the arms of his mother, Mrs. Henry Yoost, of 159 East 103d Street, when a
steel splinter from a drill entered his left eye and destroyed its vision.
Editor’s Note: $12,000 in 1921 is equivalent in purchasing power to about $179,030.61 today, an increase of $167,030.61 over 100 years. The dollar had an average inflation rate of 2.74% per year between 1921 and today, producing a cumulative price increase of 1,391.92%.
Wilewicz’ Wide-World of Coverage:
Just a quick update here, as this week has brought a bit more adventure than planned. Beyond a number of new files (and a few old ones) to handle, associate interviews (p.s. – we’re hiring!), and a bat being trapped in our house on Tuesday at midnight, my car almost completely broke down this morning. It turns out that since we all did a little less driving than usual during the pandemic, our cars are starting to fall apart from disuse. If it’s not one thing, it’s another.
But now, with the start of a warm summer in full swing, I am supremely proud to update you all on my progeny’s Mock Trial team. As I reported a few weeks ago, my daughter’s high school team made it to Regional Finals and became Western New York champs! That allowed them to move on to the State level, competing against teams from around the entire State of New York.
First, let me reiterate that I could not be more proud that she got further than even I did when I undertook my own four year run in High School Mock Trial (go F-M!). While we once got to the Regional Final, we did not win there in good old Onondaga Supreme, and thereafter we lost some momentum. However, this year my daughter’s team performed excellently, fought superbly, and ended up placing fifth out of 242 in The State! During their season, they were undefeated until their tenth and final match. They were of course disappointed but given that this is the furthest their school team had ever gotten in history, that’s quite an accomplishment and they were thrilled in the end. That, and the fact that my daughter is only a freshman and has three more years, and I’m just bursting.
I’ll be back next time with all your Circuit Court coverage case needs.
Until next time,
Agnes
Agnes A. Wilewicz
Chancellor of Syracuse University Retires with Lifetime Annual Salary of $7,500:
The New York Times
New York, New York
11 Jun 1921
DAY CHANCELLOR EMERITUS
Trustees Accept Resignation and
Vote $7,500 Life Salary.
SYRACUSE, N. Y., June 10. —The resignation of Dr. James R. Day as Chancellor of Syracuse University was submitted to the Board of Trustees and accepted today.
Dr. Day was appointed Chancellor Emeritus with an annual salary of $7,500 for life. A committee of seven members of the board was named to select a new chancellor.
Barnas on Bad Faith:
I spent most of my free time the past week at the ballpark downtown watching the Blue Jays in person. It still is a surreal feeling even after a few games. The ballpark looks great and the fans have been really into it. As a lifelong Jays fan in Buffalo, it is nice to see plenty of Blue Jays apparel in the stands even though no Canadians can cross the border to attend the games. I am enjoying the varying “Buffalo Blue Jays” shirts in the stands each night. Unfortunately, I have a feeling it will be a much different atmosphere in the ballpark when the Yankees come to town next week.
I have a nice bad faith decision from the Eleventh Circuit applying Florida law in my column this week. The court concluded that Progressive did not act in bad faith by including waiver-of-subrogation language in a release for a policy limits settlement, despite the settlement offer being conditioned upon there being no hold harmless or indemnity provisions in the release.
That’s all for now.
Brian
Brian D. Barnas
Prohibition Still in Full Swing:
Dunkirk Evening Observer
Dunkirk, New York
11 Jun 1921
STATE GIVES BACK BOOZE
Court Rules That Man’s Hoard Was
Personal Property and Wrongfully
Seized by Peace Officers.
Laramie, Wyo.—George Longpre is being overwhelmed by the ardent manifestations of a wide circle of “friends.”
Reason:
He has just received thousands of dollars’ worth of liquors and beer, handed over to him by order of the state courts.
Sheriff Trabing hauled the truckload of “items” to the home of Longpre under an order of Judge M. C. Brown, who held that this “personal property” was unlawfully seized by Wyoming peace officers.
Amid the huzzahs of hundreds of onlookers, Sheriff Trabing transferred the following “items” to Longpre’s cellar:
Fifty-three cases of bonded whiskey.
One ten-gallon jug of gin.
Four three-gallon kegs of “liquor.”
One gallon keg of “liquor.”
Four one-half-gallon kegs of “liquor.”
Twenty bottled of beer.
Forty bottled of “mixed liquors.”
The consignment, estimated at local “bootleg” prices to be worth nearly $20,000, was seized at Longpre’s home in August 1919, by a squad of state prohibition officers. Longpre immediately brought action for the return of his “property,” and the decision was rendered in his favor.
Off the Mark:
This edition of “Off the Mark” brings you a recent construction defect decision from the United States Court of Appeals for the Tenth Circuit. In HT Servs., LLC v. Western Heritage Ins. Co., the Court examined whether the faulty construction of a retaining wall, which was related to the construction of a residential community, arose out of the construction of a residential structure, thus triggering the “Habitational New Construction” exclusion. The Court, relying on the broadness of the term “arising out of”, found that it did. As such, the defendant insurance carrier was entitled to summary judgment.
Until next time …
Brian
Brian F. Mark
[email protected]
Short Skirts to be Measured in Albany – 100 Years Ago:
New York Herald
New York, New York
11 Jun 1921
Albany to Decide Limit
for Schoolgirl’s Skirt
Special Dispatch to The New York Herald
New York Herald Bureau,
Albany, June 10.
When is a schoolgirl’s skirt too short for scholastic propriety? That question, which already is puzzling the mangers of the Oswego State normal School, is to be passed to the State educational Authorities at Albany. The controversy began when Dr. James G. Riggs sent a girl home because he thought her skirt was too short and ordered four others to let theirs out a tuck or two.
Friends of the girls declare the women teachers are jealous, and one member of the board of the managers has said that the board, rather than Dr. Riggs, is the proper authority to sensor such matters.
Meanwhile the ninety clear visioned young men students are enjoying the situation and hoping that the fewest possible inches below the knee will be designed as the skirt limit.
Boron’s Benchmarks:
Check back next time for the very latest in high court decisions from around the country. Take care, until then.
Eric
Eric T. Boron
[email protected]
Liquor Jury Ices Café Owner:
New York Herald
New York, New York
11 Jun 1921
LIQUOR JURY TURNS
IN FIRST CONVICTION
Café Keeper Found Guilty of Selling
Whiskey in Violation of New State Law.
MERCY IS RECOMMENDED
Pecora Now Satisfied That
Mullan-Gage Prohibition
Act Will Be Enforced.
The first conviction after a jury trial of a violator of the Mullan-Gage prohibition laws in New York County was obtained yesterday in the Extraordinary Term of the Supreme Vourt before Justice Borst, when Michael Ravensky, a cafe proprietor and former licensed saloonkeeper, was found guilty of possessing liquor in his establishment, at 1274 Avenue A. The jury returned a verdict after two hours’ deliberation.
The first three trials of alleged violators of the dry laws resulted in defeats for the prosecution. Two defendants were acquitted. The third jury could not agree on a verdict.
Ryan’s Capital Roundup:
Hello Loyal Coverage Pointers Subscribers:
This past weekend, I was able to catch a couple Buffalo Blue Jays games live, and I have to say that there is something to be said about being at the ballpark again. We missed a whole year of in-person baseball and, no offense to the AAA Buffalo Bisons I’m used to, but the crack of the bat is a bit different in the Majors. Being a Blue Jays fan myself, having the team in my own backyard is something special. And watching Vlad smash a home run while my video machine was running is something that I will keep with me forever. More than that, I was able to catch a game on Sunday with my four-year-old and although the game was a mystery to him, he will be mystified years from now when I tell him about the year we watched Major League baseball in our own backyard, in person.
This edition of Ryan’s Capital Roundup outlines several consensus amendments to the insurance regulations by DFS. I have itemized the changes by Title 11 section for easy review and linked to the entirety of the changes for those that want more information.
However, and most importantly, you will not want to miss our write-up in the Legislative List regarding the newly introduced, zero-hour bill outlining the proposed “Comprehensive Insurance Disclosure Act”. Insurers and the defense bar will want to read this one, which the Sponsor Memorandum purports will solve the following problem: “This amendment will reduce the use of delaying tactics” by defendants in “disclosure of complete and accurate information about the nature and extent of insurance coverage”. Be heard today, the session ends tomorrow…
Until next time,
Ryan
Ryan P. Maxwell
Try this Now and Your Marriage Will be Over:
Star-Gazette
Elmire, New York
11 Jun 1921
[Advertisement]
A Suitable Gift
--for a groom to his bride would be an Electric Range.
She will appreciate it more than anything else he could give her because it will enable her to prepare better meals for him and do it more quickly, easily and cheaply.
Men are not supported to be adepts in cooking or experts in choosing ranges, so bring your mother or sister along and let us demonstrate a Westinghouse Electric to you and substantiate our general statements with facts or figures.
Or your electrical dealer will be pleased to do the same.
“Do It Electrically”
Elmira Water, Light & Railroad Co.
Sales Dep’t. Phone 2400.
It is hard to believe that we are nearly halfway through June. As life returns to what seems to be more “normal,” it is as if the pace of things is picking up. The plan for this summer is to soak up all the sun we can and introduce Charlie to the pool and the boats. I would like to get him waterskiing, but I think my wife would prefer if we waited another year or so.
It appears that the courts have taken an early summer break as there are no new insurance cases to report out of the U.S. District Courts of New York. A quick review of the docket shows that quite a few cases have been filed in the past couple weeks, which, hopefully, means a plethora of decisions to report down the line.
Likewise, there has not been much to report on the CVA front. However, as we are just over two months away from the current “look-back” period closing, we will be keeping an eye on any movement to expand or reopen the “look-back” period further.
CJ
Charles J. Englert, III
Babe Ruth Sets Home Run Record with his 120th:
The Standard Union
Brooklyn, New York
11 Jun 1921
WATCHING THE SCOREBOARD
Yesterdays' hero – Babe Ruth, who made the 120th homer of his career, setting a new world's record, formerly held by "Cactus" Cravath. It didn't help the Yankees though. The Indians took eleven innings to wallop them 8 to 6.
Editor’s Note: Any baseball fan knows that the Babe ended up with 714 home runs in his career, or was it 715?
Dishing Out Serious Injury Threshold:
Dear Readers,
Hope everyone had a great and appreciative Memorial Day weekend. Unfortunately, we had rain here for most of the weekend but were still able to enjoy ourselves. Thankfully, we had gorgeous weather this past weekend to make up for it. I took a trip out to Greenport on the Eastern end of Long Island and was able to enjoy the harbors and vineyards. Hope everyone gets to take some getaways and enjoy themselves this summer.
In the Serious Injury Threshold world, we don’t have any cases of pertinence to report.
Be well,
Michael
Michael J. Dischley
Doctor Rendered Crazy Because of Bad Tooth:
The Buffalo Enquirer
Buffalo, New York
11 Jun 1921
Defective Teeth
Craze Physician
Duquoin, Ill., June 11. —Southern Illinois physicians marvel at the recovery of Dr. Bartz, prominent surgeon of Campbell Hill, who has been released from the Southern Illinois hospital for the insane.
Dr. Bartz became violently delirious and was committed to the asylum.
Physicians there discovered that defective teeth were the cause of his condition and after these were extracted, Dr. Bartz, in two days' time, became normal.
Bucci on “B”:
Dear readers:
I don’t have much to talk about today except that the NYS Academy of Trial Lawyers is presenting a free virtual CLE on diversity on 6/15.
https://trialacademy.org/?pg=events&evAction=showDetail&eid=102842&evSubAction=listAll
I was told by this firm’s Amber Storr. I am planning to attend for sure. I learned so much from Hurwitz & Fine’s diversity presentation.
The other thing I can always talk about is the pandemic. So, I guess things are getting back to what we used to consider normal. Firms and corporations are making their employees come back to the office so the commute (and being stuck in traffic) returns. Some people spend three hours or so getting back and forth from work and, at least in our profession, time is money. Giving up time for a commute like that after not commuting for a year must be painful. On the other hand, working from the office promotes interaction with colleagues, which is important and fun. We do Teams meetings to continue to interact on substantive issues and have a laugh. Works for me.
Now I know cases on Coverage B may not often come up in your practice or company, but all these readers and no one has reached out to me. This will give me a complex. Talk to you next time.
Diane
Diane L. Bucci
Winston Churchill’s Mother Loses a Foot:
The Evening World
New York, New York
11 Jun 1921
LADY R. CHURCHILL
HAS FOOT CUT OFF
Break in an Ankle so Serious Former
Jennie Jerome Undergoes Operation
LONDON, June 11. —The physicians of Lady Randolph Churchill, mother of Winston Spencer Churchill, Secretary for the Colonies, who before her marriage to the late Lord Randolph Churchill was Miss Jennie Jerome of New York, found it necessary to amputate her foot last night.
The amputation was made necessary by an accident suffered by Lady Churchill in the country two weeks ago when she slipped on a stair and broke her ankle in two places. To-day she was reported to be doing well.
Dear Nutmeg Newsies,
Well, it almost happened. Last week, I was scheduled for my first in-person court appearance since March 2020. I was all set to drive from Hartford to federal court in Bridgeport, to appear before Judge Bolden. To be honest, I was even looking forward to the hour-long drive in each direction. But, alas, it was not to be. Late in the afternoon the email came rescheduling the appearance via Zoom. I was crestfallen.
The courts aside, life in Connecticut is quickly returning to normal. While masks remain prevalent (and you will get sideways glances if you walk into the market sans mask), most establishments have re-opened in full. Connecticut is one of the vaccine leaders in the nation, with more than 70% of adults and 50% of 16- and 17-year-olds vaccinated, and a positivity rate below 1%.
With COVID-19 in retreat and the temperatures cracking 90 degrees, we may just have a nice summer.
Be smart and be safe.
Lee
Lee S. Siegel
A Brief Visit to the Majors for an Excellent Hitter:
Being Good Doesn’t Necessarily Help Keep in the Majors
Roy Lund "Red" Ostergard (May 16, 1896 – January 13, 1977) was a pinch hitter in Major League Baseball. He was born in Denmark, Wisconsin, and attended college at Southwestern University. He had his Major League debut 100 years ago this week with the Chicago White Sox. He was inserted as a pinch hitter 11 times that summer, hit 4 singles, and scored 2 runs. That was the only time he ever appeared in the majors. He left with a .364 batting average.
Ostergard then played in the Texas League from 1923 to 1925. He put up good hitting numbers there, batting over .320 all three seasons and hitting a total of 59 home runs. He set the Texas League record for grand slam home runs in 1923 with six. In fact, that year he hit eight home runs in nine games between August 28 and September 3, with six in succession came with the basis full. He then spent one year in the Southern Association and one year in the South Atlantic League.
Hi All,
As we approach mid-June, it finally feels like summer has arrived! We put up our pool last weekend and my son finally got to swim last night now that the water has warmed up and he had a blast! I imagine we will be spending a lot more time in the water this summer!
On the work front, it is busy as usual, and the files seem to keep coming in. This week, I found a case from the U.S. District Court for the Middle District of Tennessee in which the insurer brought a declaratory judgment action against its insured seeking a judicial declaration that it had no duty to defend or indemnify the insured in an underlying lawsuit pursuant to an environmental professional liability policy. However, when the underlying suit was dismissed with prejudice, there was a disagreement between the parties as to whether the mootness doctrine from Article III of the Constitution applied. Read on to find out the result!
Until Next Time,
Patty
Patricia A. Rauh
Saskatoon Daily Star
Saskatoon, Saskatchewan, Canada
11 Jun 1921
Dog Takes Prize.
Dies When Judged
Champion Bulldog at Boston
Succumbs to Heat and Excitement
BOSTON, June 11. —Censor, an English bulldog was the best dog at the annual show of the Ladies Kennel Association of Massachusetts, when prizes were awarded yesterday but a few moments afterward he was dead. Extreme heat and the nerve strain incident to exhibition were said to have caused heart failure. It was the first time Censor had been benched in competition.
Hi everyone:
In this edition of The Examen, we will examine cases on:
ØThe 2nd Dept. ruling that Gov. Cuomo's Executive Orders Extending Legal Time Limits During the Pandemic Constituting a "Toll" Not a "Suspension".
ØInsurer’s proof of timely mailing of PIP claim forms sufficient and did not need to also prove mailing by certified mail. Testimony of claims examiner who did not have direct supervisory authority over defendant's mail personnel was sufficient to establish that the denial of claim forms was timely mailed.
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Insurer moved for summary judgment on the ground that medical provider failed to submit additional documentary verification within 120 days, but motion denied because it failed to support with admissible evidence its good cause for investigating Plaintiff's alleged noncompliance with the licensing statutes. Medical provider’s cross motion for SJ also denied. Insurer identified evidence which raised factual issues of medical provider’s ineligibility to receive No Fault benefit payments due to non-compliance with licensing statutes. This defense is not precluded by Defendant's untimely denial of Plaintiff's claims. As Plaintiff had not provided the requested verification, the Court also denied Plaintiff's Cross-Motion.
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A N.Y. Court granted an insurer’s Fed. R. Civ. P. 12(b)(6) motion to dismiss Plaintiff’s complaint upholding a denial of coverage for business losses associated with the COVID-19 pandemic.
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I had the pleasure of presenting virtually last week at Pennsylvania Auto Crime Investigator's Association conference on “The Opioid Epidemic’s Addiction for Insurance Claims” (Identifying drug inspired auto claims and analyzing the coverage issues involved, i.e., “crack rides”). Great organization, you should check it out.
In honor of Major League Baseball being played in Buffalo, this edition’s encouraging word is from the Great Bambino, the Sultan of Swat, the Colossus of Clout (Babe Ruth): “Every strike brings me closer to the next home run.”
If you and I are not yet friends on LinkedIn, please send me a connection request.
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
The Buffalo Times
Buffalo, New York
11 Jun 1921
HEILMAN HITS HOME RUN, LOSES
IT WHEN HE BATS OUT OF TURN
By Associated Press
NEW YORK, June 11. —Applause was all that was accorded Harry Heilman of Detroit for a home run which he hit, but which does not appear in the Washington – Detroit box score printed today. He hit the ball into the bleachers with one man on base in the first inning yesterday and when it was discovered that it was not his turn to bat, the hit was disallowed. Veach, who lost a turn at bat through the incident, smashed the ball over the fence for a homer in the fourth inning.
Two home runs were made yesterday by Earl Sheely of the Chicago Americans who led the Pacific coast last year with 33 homers.
A Slugging bee between Cleveland and New York resulted in a total for the two teams of 37 hits for 58 bases. Ruth made his 17th homer of the season.
The St. Louis Nationals have a winning streak of seven straight victories, having made a clean sweep in their four-game serious with Brooklyn.
Dear Readers:
This Monday, I had my first ever in-person court appearance, and my first ever appearance before a judge! The appearance, for a pretrial conference, was in Canandaigua, New York, which is about a 1.5-hour drive from our Buffalo office. I appeared before Judge Frederick Reed, who was very friendly and recommended some nice wine bars for me to check out in Canandaigua. The conference was for a multi-party case, and I got to introduce myself to about six other attorneys who also attended the conference. It was great to finally meet fellow members of the Bar in person. Everything proceeded smoothly, other than a smoke alarm going off at the end of the conference (false alarm, fortunately!). I am looking forward to many more in-person appearances.
Today’s column features just one case: a Supreme Court, Bronx County, case in which a defendant, sued by a plaintiff who suffered a construction accident, sought third-party indemnification from plaintiff’s employer. The Court rejected the indemnification claim, relying heavily on the workers’ compensation insurance policy that the employer had with an insurer.
Best Wishes,
Nicholas J. Heintzman
Buffalo Evening News
Buffalo, New York
11 Jun 1921
Honeymooners’ Sanity Doubted
After Four Days in Hotel Room
Broken Hot Water Faucet Drives Couple Out
In Club of Steam and Trouble Follows.
After a four-day honeymoon, practically all of which, according to the police, was spent in a room in the Hotel Statler, Vincent Luongo. 28 years old, of Brooklyn, and his wife, Catherine, 19 years old, were removed today to the City hospital for observation as to their sanity.
A hot water faucet was broken in their room this morning, the police say, and the place was filled with clouds of steam. They ran from the room under the hallucination that an attempt was being made to suffocate them with poison gas.
They went into Swan street where they are alleged to have created a disturbance. Patrolmen Ferdinand Rebham and Harvey McNiff were called. A good-sized stone was found in the woman's pocket, the police say, and both she and her husband made an attack on Patrolman Rebham and are said to have bit him on the arm.
The couple have been suffering from various hallucinations since their arrival here, the police were told. They feared to leave their room, it is claimed, because they thought enemies were lying in wait to assault them. They did not order much food and that which they did order, they did not always eat. The wife first tasted the food before she would permit the husband to have any, fearing that it might be poisoned. The steam from the hot water tap is said to have done considerable damage to the wallpaper and the furnishings of the room this morning.
Luongo gave his address as 125 North Portland avenue, Brooklyn, He said he was married a few days ago and came to Buffalo intending to visit Niagara Falls on the honeymoon.
North of the Border:
After an absence of a few months, I am, once again, contributing Canadian insurance coverage developments to supplement the incredible depth and breadth of this newsletter … have a look and if anything tweaks your interest, please don’t hesitate to contact Dan, or myself, at [email protected]. Although I run a coverage practice out of Calgary, Alberta, I routinely prepare coverage opinions on coverage matters arising elsewhere in Canada, other than in the province of Québec.
We are in month 15 of pandemic restrictions, but a light is glowing dimly at the end of this COVID tunnel. Almost 70% of those in Alberta aged 12 and over have received their first dose of one of the vaccines and the number who have received their second dose is steadily increasing. Subject to the arrival on our shores of the Delta variant, or something like it, perhaps, just perhaps, the US / Canada border will open by the end of the summer and some semblance of normalcy will return to our lives. Here’s hoping.
Heather
Heather Sanderson
Headlines from this week’s issue, attached:
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
-
While the Owner’s Policy had been Cancelled for Non-Payment, Vehicle in Accident was Not Uninsured Because Driver’s Policy was in Place. Finding in Framed Issue Hearing Not Disturbed
-
Reservation of Rights Letter No Substitute for Disclaimer. Prejudice Not Required to Demonstrate Lack of Cooperation
PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper
- Suit Limitation Clause “From Occurrence of Loss Event” Enforced
DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley
- No cases to report.
WILEWICZ’S WIDE WORLD OF COVERAGE
Agnes A. Wilewicz
- Nothing new in the land of the Second Circuit.
BARNAS ON BAD FAITH
Brian D. Barnas
-
Bad Faith Claim Dismissed on Summary Judgment where Insurer’s Release Contained Waiver of Subrogation Language After Settlement Offer was Conditioned on No Hold Harmless or Indemnity Provisions
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
-
Bad Faith Pleading Standards in Connecticut, High Hurdles Inconsistent Results
Diane L. Bucci
-
Is Marketing by Obtaining Personal Information About Accident Victims from the Motor Vehicles Department a criminal violation of the Driver's Privacy Protection Act of 1994?
-
Do Not Intentionally Place Cameras to Watch People Undress. No Coverage under the Sexual/Physical Abuse Liability Coverage Endorsement
OFF THE MARK
Brian F. Mark
-
U.S. Court of Appeals Finds Construction of Retaining Wall Arose Out of the Construction of a Residential Structure, Thus Triggering Policy’s Habitational New Construction Exclusion
BORON’S BENCHMARKS
Eric T. Boron
RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell
[email protected]
Regulatory Wrap-Up
-
DFS Implements Consensus Amendments to Various Provisions of Title 11 of the NYCRR
CJ on CVA and USDC(NY)
Charles J. Englert III
-
Nothing new on the USDC or CVA fronts.
RAUH’S RAMBLINGS
Patricia A. Rauh
-
Declaratory Judgment Action Dismissed as Moot When Underlying Lawsuit Was Dismissed with Prejudice and there is No Longer a ‘Case’ or ‘Controversy’ Between the Parties
ruMIRNAtions
Mirna. M. Santiago
-
Guest Author Sean Griffin (From Property Casualty 360): Why selecting diverse law firms makes sense for insurers.
STORM’S SIU EXAMEN
Scott D. Storm
·Gov. Cuomo's Executive Orders Extending Legal Time Limits During the Pandemic Constitute a "Toll" Not a "Suspension," According to the Second Department
- Insurer’s Proof of Timely Mailing of PIP Claim Forms Sufficient and Did Not Need to Also Prove Mailing by Certified Mail. Testimony of Claims Examiner Who Did Not Have Direct Supervisory Authority Over Defendant's Mail Personnel was Sufficient to Establish that the Denial of Claim Forms were Timely Mailed
- Insurer Moved for Summary Judgment on the Ground that Medical Provider Failed to Submit Additional Documentary Verification Within 120 Days, but Motion Denied Because It Failed to Support with Admissible Evidence its Good Cause for Investigating Plaintiff's Alleged Noncompliance with the Licensing Statutes. Medical Provider’s Cross Motion for SJ Also Denied. Insurer Identified Evidence which Raised Factual Issues of Medical Provider’s Ineligibility to Receive No Fault Benefit Payments Due to Non-Compliance with Licensing Statutes. This Defense is Not Precluded by Defendant's Untimely Denial of Plaintiff's Claims. As Plaintiff had Not Provided the Requested Verification, the Court Also Denied Plaintiff's Cross-Motion
- The Court Granted Defendant's Fed. R. Civ. P. 12(b)(6) Motion to Dismiss Plaintiff’s Complaint Upholding the Denial of Coverage for Business Losses Associated with the COVID-19 Pandemic
HEINTZMAN’S HIDEOUT
Nicholas J. Heintzman
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Court Dismisses Defendant’s Claim for Third-Party Indemnification Brought Against Plaintiff’s Employer Where Employer Demonstrated that it had a Workers’ Compensation Insurance Policy and Payments Were Made to Plaintiff Under Said Policy
,
NORTH OF THE BORDER
Heather Sanderson
Sanderson Law
Calgary, Alberta, Canada
-
Auto Insurance in British Columbia
-
Whether a Commercial Policy Applies to Pure Loss of Use
We love hearing from you.
Dan
Hurwitz & Fine, P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in 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
ASSOCIATE EDITOR
Agnes A. Wilewicz
ASSISTANT EDITOR
Patricia A. Rauh
INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
[email protected]
Steven E. Peiper, Co-Chair
Michael F. Perley
Agnieszka A. Wilewicz
Lee S. Siegel
Brian F. Mark
Diane L. Bucci
Mirna Martinez Santiago
Scott D. Storm
Thomas Casella
Brian D. Barnas
Eric T. Boron
Ryan P. Maxwell
Charles J. Englert
Patricia A. Rauh
Nicholas J. Heintzman
Diane F. Bosse
Joel R. Appelbaum
FIRE, FIRST-PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
[email protected]
Michael F. Perley
Scott D. Storm
Eric T. Boron
Brian D. Barnas
NO-FAULT/UM/SUM TEAM
Dan D. Kohane
APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]
Mirna Martinez Santiago
Diane F. Bosse
Topical Index
Kohane’s Coverage Corner
Peiper on Property and Potpourri
Dishing out Serious Injury Threshold
Wilewicz’s Wide World of Coverage
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
06/09/21 State Farm Mutual v. Rodriguez
Appellate Division, Second Department
While the Owner’s Policy had Been Cancelled for Non-Payment, Vehicle in Accident Was Not Uninsured Because Driver’s Policy Was in Place. Finding in Framed Issue Hearing Not Disturbed
This was an application to stay the arbitration of a claim for uninsured motorists (“UM”) benefits.
State Farm brought the action to stay arbitration, as is required (within 20 days of receipt of the arbitration demand). Rodriguez, the claimant, asserted that he was injured when his bicycle was struck by a car driven by Zhong, owned and registered to All Team Concept, Inc, (“All Team”). All Team’s policy had been cancelled prior to the accident, so Rodriguez claimed he was entitled to UM benefits under a household policy with State Farm.
State Farm claimed that a personal auto policy issued by Allstate to the driver Zhong, was in effect and therefore the vehicle was not uninsured. Allstate was made a party to the proceeding, a framed issue hearing was held and the court ruled that Allstate’s policy was in fact, in effect, and therefore stayed the arbitration.
The burden of proof was on State Farm to prove the existence of coverage and the fact finding here will not be disturbed.
06/01/21 The Burlington Insurance Company v. Sublink Ltd.,
Appellate Division, First Department
Reservation of Rights Letter No Substitute for Disclaimer. Prejudice Not Required to Demonstrate Lack of Cooperation
Based on the allegations of the complaint, along with Burlington's supporting affidavits, Supreme Court correctly denied Burlington's motion for a default judgment against Sublink declaring that it is not obligated to defend or indemnify, because Burlington has failed to establish that its disclaimer was timely.
The reasonableness of any delay is computed from the time that the insurer becomes sufficiently aware of the facts which would support a disclaimer, and "where the basis for the disclaimer was, or should have been, readily apparent before the onset of the delay, any explanation by the insurer for its delay will be insufficient as a matter of law. In this case, the disclaimer was based on non-cooperation and the court acknowledged that it is difficult to determine when an insured’s non-cooperation becomes apparent.
Here, counsel retained by Burlington sent Sublink's principal written letters on May 8, 2015 and May 19, 2017, and retained counsel's calendar clerk made numerous calls starting in August 2017. Thus, by the time Burlington issued its May 23, 2018 reservation of rights letter, Burlington already possessed all of the necessary information regarding Sublink's failure to cooperate, and Burlington's September 5, 2019 disclaimer was untimely.
Burlington's argument that it was required to wait for the Second Department's determination in connection with prior preclusion order in the underlying action based on Sublink's failure to appear for deposition is unavailing. An insurer is not required to establish prejudice due to noncooperation before it may disclaim.
Editor’s Note: One of the most difficult defenses to establish is an insured’s lack of cooperation. In this case, the insurer had written several letters and made several calls to try to secure the insured’s cooperation. Whether those efforts were sufficient, was never reached by the court. Instead, it determined that by the time it issued its reservation of rights letter, some 16 months prior to the disclaimer, it had sufficient information to disclaim.
This reminds us all that a reservation of right letter does not suffice when a disclaimer is required.
PEIPER on PROPERTY (and POTPOURRI)
06/08/21 Iken-Murphy v. State Farm Ins. Co.
Appellate Division, First Department
Suit Limitation Clause “From Occurrence of Loss Event” Enforced
In this judiciously worded decision, the Appellate Division upheld State Farm’s motion for summary judgment on the two-year suit limitation clause. In reaching its decision, the Court advised that there is no prohibition on an insurer limiting its potential exposure to legal action to a date certain from the “occurrence of a loss event.”
In so holding, the Court also rejected plaintiffs’ arguments that State Farm waived its right to assert the limitation clause. To avoid application of the clause, plaintiffs needed to demonstrate that State Farm intentionally “relinquished” the defense. Here, they made no such showing.
DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley
No cases to report.
WILEWICZ’S WIDE WORLD of COVERAGE
Agnes A. Wilewicz
Nothing new in the land of the Second Circuit.
Brian D. Barnas
06/01/21 Eres v. Progressive America Insurance Company
United States Court of Appeals, Eleventh Circuit
Bad Faith Claim Dismissed on Summary Judgment where Insurer’s Release Contained Waiver of Subrogation Language After Settlement Offer was Conditioned on No Hold Harmless or Indemnity Provisions
Villareal was insured by Progressive. Four days after learning of the accident it determined it should tender the full policy, $10,000 to both Eres and her son’s estate. Progressive offered that amount to Eres’ attorney the next day, but it was informed that Eres needed to await the result of the criminal proceedings and settle a dispute with her estranged husband about who would represent the son’s estate. Progressive consistently followed up with Eres’ counsel during the criminal proceedings.
On March 25, 2009, Progressive received a letter demanding the policy limits, $650 for Eres’ son’s personal belongings lost in the crash, and an affidavit of no excess. The settlement was conditioned on the release only releasing Villareal and expressly prohibited hold harmless and indemnity provisions. The deadline was set for Good Friday, April 10, 2009. Progressive’s claims examiner Susan Winkler requested a $20,000 check two days after receiving the letter. Progressive also retained outside counsel, Katherine Shadwick, to represent Villareal and assist in responding to the demand. Progressive’s in-house counsel assisted in preparation of the response.
On April 8, 2009, Progressive delivered its response, which included a check for the policy limits, $650 for the personal belongings, and a release only naming Villareal. The affidavit of no excess was also provided. However, the releases also reserved Eres' right to pursue and recover future health and medical expenses from other responsible parties. Importantly, though, the reservation included a caveat: “[S]aid reservation does not include the party(ies) released who is/are given a full and final release of all claims, including, but not limited to, past, present, or future claims for subrogation arising out of the above-referenced accident.”
Eres’ counsel responded that he viewed the proposed release as a rejection of the settlement offer. He wrote Progressive that the proposed document released Villareal from all claims, including but not limited to past, present or future claims for subrogation arising out of the above referenced accident. Progressive received the response and wrote back expressing its disagreement that the release contained hold harmless or indemnity language. It also offered to strike the subrogation language.
Erse did not respond. Instead, she sued Villareal in state court and won a judgment of more than $10 million, which was affirmed on appeal. In so doing, the court rejected the argument that Progressive had settled the claim on Villareal’s behalf. The court concluded that the language releasing claims for subrogation was in the nature of a hold harmless or indemnification agreement.
Eres then sues Progressive for bad faith. The Eleventh Circuit dismissed the bad faith claim on summary judgment. It reasoned that Progressive made an early decision to tender the policy limits, stayed in touch with Eres while the criminal proceedings were ongoing, and promptly moved to satisfy the time limited demands. Progressive also offered to remove the language Eres had objected to from the release. All of these actions showed Progressive worked diligently, and with the same haste and precision as if it were in the insured’s shoes, to avoid an excess judgment against the insured.
Eres’ bad faith argument relies primarily on the contention that Progressive provided an overbroad release that was not the mirror image of her demand. The Eleventh Circuit disagreed.
First, while an overbroad release may be evidence of bad faith, the analysis must focus on the totality of the circumstances. Unlike in other cases with overbroad language, Progressive in this case had offered to strike the offending language from the release and did not insist upon its inclusion.
Second, Progressive’s release did not include express hold harmless language. No case in Florida prior to the decision on appeal had held that a waiver-of-subrogation clause was in the nature of a hold harmless or indemnification provision. A reasonably prudent person in Progressive’s shoes would not necessarily have known that a waiver-of-subrogation clause was tantamount to a hold-harmless or indemnity provision.
The court also rejected Eres’ argument that Progressive’s failure to comply strictly with the release amounted to bad faith. While Progressive could have been more careful in its review and preparation of the release, and there are ways it could have potentially improved its claim process, this showed, at worst, some negligence. It did not raise a possible inference of bad faith.
Lee S. Siegel
05/19/21 Faieta v. Allstate Fire & Casualty Ins. Co.
Superior Court of Connecticut, Fairfield Judicial District
-and-
05/17/21 New England Systems, Inc. v. Citizens Ins. Co. of America
United States District Court, District of Connecticut
Bad Faith Pleading Standards in Connecticut, High Hurdles Inconsistent Results
Time for a bit of a reminder on Connecticut bad faith law. As we know, Connecticut maintains a two-tiered system of bad faith claims—statutory and common law. Under the statutory construct, insureds bring claims under the Connecticut Unfair Trade Practices Act (“CUTPA”) and the Connecticut Unfair Insurances Practices Act (“CUIPA”); common law claims are asserted for breach of the implied covenant of good faith a fair dealing. Experience shows that the statutory pleading standard is a higher bar for insureds while common law claims are more likely to survive a motion to strike or dismiss, but not always.
The cases for this edition continue to bear this out. In New England Systems, the insured sued Citizens Insurance Company for statutory and common law bad faith, as well as breach of contract. New England Systems was insured under a Data Breach Coverage Form, affording reimbursement for cyber breach restoration expenses and for business interruption loss. New England Systems was the subject of a ransomware attack. For more than sixty days, the insured attempted to repair its systems and was unable to perform contract work for its clients, because of the damage to its systems from the cyberattack and because its employees were occupied with repairs. The insured requested that Citizens pay for business interruption coverage, but Citizens denied. New England Systems sued, and the carrier moved to strike the bad faith claims.
CUTPA prohibits “unfair or deceptive acts or practices in the conduct of any trade or commerce,” providing a private right of action. CUIPA is limited to unfair or deceptive practices specific to the business of insurance, listing 21 acts that are unfair practices, but without a private right of action. A private plaintiff seeking redress for a violation of CUIPA may allege that the practices defined by CUIPA constitute actionable CUTPA violations. At common law, a breach of the implied covenant of good faith and fair dealing is available where the insured alleges that the carrier impeded the plaintiff's right to receive reasonably expected contract benefits in bad faith.
In New England Systems, the court found that the insured did not adequately plead a CUTPA/CUIPA violation. The insured alleged that Citizens misrepresented its cyber policy benefits in its advertising and on its website. The court found Citizens’ disclaimer fatal to the false advertising claim. “The disclaimer puts consumers on notice that all coverage decisions are measured against the issued policy, and NSI does not point to any particular language on the webpage that would tend to mislead a reasonable consumer.” The court also found the insured’s claims that Citizens engaged in unfair settlement practices inadequate because it did not allege facts establishing a “general business practice.” Any prior alleged acts were insufficiently similar in order to establish a general practice, the court reasoned.
All that said, the same general allegations were satisfactory to set forth a common law breach of the implied covenant claim, which the court let stand for pleadings purposes.
The state court, however, held the plaintiff to a far higher standard, requiring some viable allegation of more than mere negligence. In Faieta, the plaintiff alleged that Allstate acted in bad faith in settling her UIM claim. In its motion to strike, Allstate asserted that the plaintiff's allegations, even if proven, failed to allege a legally sufficient claim of bad faith. Faieta, Allstate argued, did not allege an intent to mislead, deceive, or defraud. The court found her argument that Allstate refused to make a reasonable offer in a timely manner, was insufficient to show that Allstate acted with purposeful intent that creates a reasonable inference of a sinister motive. Merely alleging that Allstate failed to fulfill its contractual obligations in a reasonable time period, the court held, was insufficient to state a viable common law bad faith claim. As a result, the court struck the plaintiff’s common law bad faith claim.
Two courts, two different results.
BUCCI on “B”
Diane L. Bucci
06/01/21 N.C. Farm Bureau Mut. Ins. Co. v. Lanier L. Grp., P.A.,
North Carolina Court of Appeal
Is Marketing by Obtaining Person Information About Accident Victims from the Motor Vehicles Department a Criminal Violation of the Driver's Privacy Protection Act of 1994?
The insured, Lanier L. Group, PA (“LLG”) was a personal injury law firm that advertised by sending marketing materials to individuals involved in automobile accidents. LLG obtained the names and addresses of the potential clients from the North Carolina Division of Motor Vehicles accident reports.
LLG was a defendant in a class action filed in the States District Court for the Middle District of North Carolina captioned Garey v. James S. Farrin, Case No. 1:16-cv-00542-LCB-JLW. The plaintiffs complained that LLG obtained and used their “protected personal information” in connection with advertisements for legal services without the consent of the plaintiffs in violation of the Driver's Privacy Protection Act of 1994, 18 U.S.C. § 2721 et seq. (“DPPA”). The allegations included:
140. Defendants knowingly obtained and used one or more Plaintiff's protected personal information from a motor vehicle record as described above.
141. Each Defendant knowingly obtained, disclosed and used one or more Plaintiff's protected personal information from a motor vehicle record for the purpose of marketing that Defendant's legal services.
....
143. When each Defendant sent its above-described mailing containing the words “This is an advertisement for legal services” to one or more Plaintiffs, Defendants knowingly disclosed and used said Plaintiff's personal information from a motor vehicle record.
144. Defendants knowingly obtained, disclosed and used Plaintiffs’ personal information from a motor vehicle record for the purpose of marketing legal services.
145. Advertising for legal services for the solicitations of new potential clients is not a permissible purpose for obtaining motor vehicle records under the DPPA. Maracich v. Spears, 570 U.S. 48, 133 S. Ct. 2191, 186 L.Ed.2d 275 (2013).
146. Defendants knowingly obtained, disclosed and used Plaintiffs’ personal information from a motor vehicle record in violation of the DPPA. (emphasis supplied).
The trial court granted the Farm Bureau’s summary judgment motion finding that the Garey suit did not trigger Plaintiff's duty to defend.
On appeal, the Farm Bureau argued that the Garey claims were precluded by the following exclusion:
This insurance does not apply to:
a. “Personal injury” or “advertising injury”;
...
(4) Arising out of the willful violation of a penal statute or ordinance committed by or with the consent of the insured.
The DPPA, 18 U.S.C. § 2721, proscribes the knowing disclosure of personal information and highly restricted personal information. 18 U.S.C. § 2725(3) defines “personal information” as “information that identifies an individual, including an individual's photograph, social security number, driver identification number, name, address (but not the 5-digit zip code), telephone number, and medical or disability information, but does not include information on vehicular accidents, driving violations, and driver's status.” 18 U.S.C. § 2725(3).
The DPPA, 18 U.S.C. § 2725(4) defines “highly restricted personal information” as an individual's photograph or image, social security number, medical or disability information” but does not include information on vehicular accidents, driving violations, and driver’s status.” 18 U.S.C. § 2725(3).
18 U.S.C. § 2723 criminalizes knowing violations. The code also creates a civil cause of action for knowing violations in 18 U.S.C. § 2724. A knowing violation of the DPPA, which gives rise to a civil cause of action, is also a violation of the penal criminal provision.
While the DPPA does include a criminal aspect, the analysis was whether the willful standard in the statute was met by the Garey allegations of “knowingly.
The court held that an “knowing” violation of the DPPA is an allegation of a “willful” violation of the DPPA. The injury alleged in the underlying complaint, which is based upon Defendants having “knowingly obtained, disclosed and used Plaintiffs’ personal information from a motor vehicle record in violation of the DPPA,” is injury arising out of the “willful” violation of a penal statute and that violation is excluded from coverage under the plain terms of the policy.
05/20/21 Atain Ins. Co. v. Katalyst Fitness, LLC
Michigan Court of Appeal
Do Not Intentionally Place Cameras to Watch People Undress. No Coverage under the Sexual/Physical Abuse Liability Coverage Endorsement
“Mathew,” one of the owners of Katalyst Fitness (the “gym”) allegedly installed hidden surveillance cameras in the gym’s restrooms and changing facilities to secretly record persons in various stages of undress. The court first addressed the Physical Sexual Abuse Exclusion, which provides that the policy “does not apply to any ‘occurrence,’ [sic] suit, liability, claim, demand or causes of action arising out of or that in any way involves the physical abuse, sexual abuse or licentious, or immoral or sexual behavior[.]”
The gym argued that the exclusion was ambiguous in that the second provision of the exclusion stated that the insurance did not apply to bodily injury, property damage and personal and advertising injury. The first provision, however, did not have this limiting language so, argued the gym, it covered any injuries, rendering the Exclusion ambiguous. According to the gym, if the entire Exclusion was meant to apply only to bodily injury, property damage and personal and advertising injury, there was no reason not to put the bodily injury, property damage, personal and advertising injury in only the second paragraph.
The court held that the specificity in the second provision did not render the exclusion ambiguous because the second provision refers to the type of damages while the first provision addresses conduct regardless of the resulting damages.
The gym also argued that the “physical-sexual abuse” exclusion's use of “licentious, or immoral or sexual behavior” was ambiguous because “coverage would depend not on the act, but on the mens rea of the person engaged in the act and/or happenstance. The gym used the example that the act of installing a camera in a bedroom to eavesdrop on someone would not be excluded unless while attempting to eavesdrop, the camera recorded someone in a state of undress. The court characterized this argument properly by holding that there was no ambiguity in this case in part because Mathew’s actions clearly constituted sexual abuse or licentious, or immoral or sexual behavior.
Although courts generally first analyze whether there is coverage before determining whether an exclusion applies here, the court next addressed what coverage was available under the policy’s “Liability Coverage Form,” which included “Sexual and/or Physical Abuse” (“SPAL”), which provided:
We will pay on your behalf all sums which you shall become legally obligated to pay as DAMAGES because of injury to any person arising out of SEXUAL AND/OR PHYSICAL ABUSE, caused by one or your EMPLOYEES, or arising out or your failure to properly supervise. We shall have the right and duty to defend any suit against you seeking such DAMAGES, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and such settlement of any claim or suit as we deem expedient, but we shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of our liability has been exhausted.
“Sexual and/or physical abuse” was defined under the SPAL as “sexual or physical injury or abuse, including assault and battery, negligent or deliberate touching.”
The gym argued that Matthew's conduct amounted to “sexual injury,” within the meaning of the SPAL coverage. However, applying the doctrine of noscitur a sociis, i.e., the contract interpretation principle that when words of have certain meanings suggesting something in common, they should be assigned a permissible meaning that makes them similar. According to the court, physical injury, physical abuse, and sexual abuse all involve physical contact as did assault, battery, and negligent or deliberate touching.
The court agreed that in this context, “sexual or physical injury or abuse” had to involve physical contact or the imminent threat of same. The court relied on “the doctrine of noscitur a sociis,” i.e., to decide that “sexual injury” requires physical contact. The doctrine stands for the proposition that when several words are in a document suggesting that they have something in common, they should be assigned a permissible meaning that makes them similar. Since all of the other language in the SPAL coverage involved physical contact, the court concluded that the SPAL did not provide coverage because Matthew’s actions did not involve actual touching.
At the trial court level, the court concluded that coverage was excluded because Matthew was not an insured, but the court did not need to reach this issue having decided there was no coverage and an exclusion applied.
OFF the MARK
Brian F. Mark
06/01/21 HT Servs., LLC v. Western Heritage Ins. Co.
United States Court of Appeals for the Tenth Circuit
U.S. Court of Appeals Finds Construction of Retaining Wall Arose Out of the Construction of a Residential Structure, Thus Triggering Policy’s Habitational New Construction Exclusion
This declaratory-judgment action arises out of an underlying construction defect action related to the construction of a residential community. The plaintiff, HT Services, LLC is a land developer. Beginning in 2011, HT Services developed a residential community known as Willow Creek. HT Services was involved in the design and construction of the improvements at Willow Creek and was insured under consecutive commercial general liability policies issued by the defendant, Western Heritage Insurance Company (“Western”).
When the Willow Creek homeowners association (“HOA”) sued HT Services for negligent design and construction of a retaining wall in 2016, HT Services asked Western to defend and indemnify it. Western denied coverage and refused to defend HT Services in the underlying lawsuit.
After settling with the HOA, HT Services sued Western in state court asserting claims for declaratory judgment, breach of contract, and bad faith. Western removed the case to federal court, which granted summary judgment in Western's favor.
In its motion for summary judgment, HT Services argued that the underlying complaint triggered a duty to defend. The Court of Appeals applied Colorado law in examining the coverage dispute, and found no duty to defend due to applicable policy exclusions.
The Western policies contained a "Habitational New Construction" exclusion, which excludes coverage for losses “arising out of, relating to or in any way connected with ‘your operations,’ ‘your work’ or ‘your product’ involving the development, construction, conversion and/or demolition of:
1. "mixed-use" structures;
2. condominiums;
3. town homes; or
4. any other type of residential structure including "multiple unit" residential structures:
whether by any insured, an entity to which any insured owes an indemnity obligation, or any other entity.”
Although HT Services argued that a retaining wall is not a "residential structure," the Court noted that the terms of the foregoing exclusion are broad, applying to lawsuits "arising out of, relating to or in any way connected with" the construction of residential structures. As the retaining wall was constructed as part of the development of the Willow Creek residential community, the Court found that the alleged defects in the retaining wall fall within the "Habitational New Construction" exclusion.
The Western polices also excluded coverage for "faulty workmanship" under Exclusion j.(6), which states that "[t]his insurance does not apply to . . . '[p]roperty damage' to . . . [t]hat particular part of any property that must be restored, repaired or replaced because 'your work' was incorrectly performed on it." The Court determined that the HOA’s allegations that it suffered damages resulting from HT Services' "defectively . . . constructed retaining walls," fell squarely within this exclusion.
Finding that both of the above exclusions applied to the loss, the Court affirmed the holding of the district court that Western had no duty to defend. Accordingly, the Court also dismissed HT Services’ claims of breach of contract and bad faith.
Eric T. Boron
Tune in next edition for more from the high courts around the U.S.
RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell
[email protected]
06/10/21 Comprehensive Insurance Disclosure Act
New York State Legislature
Proposed Legislation by Both State Legislative Houses Requires Defendant’s Disclosure Of “Complete Information” For Any Insurance Agreement Within Sixty Days Of Answer. Thousands Flee.
Zero-hour legislative bills proposed in both the New York State Senate and Assembly (Bill Nos. A08041 and S07052), which would require that all parties provide notice and proof of the existence and contents of any insurance agreement, including coverage amounts and a laundry list of other information, under which any person or entity may be liable to satisfy part or all of a judgment within sixty days of serving an answer in an action. The Assembly Bill was reported out of the Ways and Means Committee today, following a 34-0 vote, and subsequently reported favorably out of the Rules Committee, following a 21-8 vote. The Senate Bill currently resides in the Senate Judiciary Committee
Coined, the “Comprehensive Insurance Disclosure Act,” the bill proposes an amendment to the current CPLR 3101(f). That provision, as it currently exists, provides as follows:
(f) A party may obtain discovery of the existence and contents of any insurance agreement under which any person carrying on an insurance business may be liable to satisfy part or all of a judgment which may be entered in the action or to indemnify or reimburse for payments made to satisfy the judgment. Information concerning the insurance agreement is not by reason of disclosure admissible in evidence at trial. For purpose of this subdivision, an application for insurance shall not be treated as part of an insurance agreement.
However, according to the Sponsor Memorandum, the above is insufficient for a number of reasons:
In personal injury cases, disclosure of complete and accurate information about the nature and extent of insurance coverage is often delayed. There is a confusing and often conflicting array of case law regarding what must be disclosed and when. Not only do these delays clog our overburdened courts, they force injured New Yorkers to wait for the justice they deserve. This can be solved by simply clarifying the nature, extent, and timeliness of mandated disclosure of insurance policies in statute.
This amendment will reduce the use of delaying tactics by explicitly compelling disclosure of the complete primary, excess, and umbrella policies implicated by the claim, as well as directing disclosure of other claims, contracts, or agreements that may deplete the available coverage, along with current residual limits of policies that have been eroded by other payments. The information is required to be provided within sixty days after a defendant files his or her answer.
Accordingly—well, according to the bill’s sponsors—the following amendment to the language of CPLR 3101(f) is proposed:
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Any defendant, third-party defendant, or defendant on a cross-claim or counter-claim shall provide to the plaintiff, third-party plaintiff, plaintiff on counter-claim, and any other party in the action within sixty days after serving an answer pursuant to rule three hundred twenty or section three thousand eleven or three thousand nineteen of this chapter notice and proof of the existence and contents of any insurance agreement under which any person or entity may be liable to satisfy part or all of a judgment that may be entered in the action or to indemnify or reimburse for payments made to satisfy the entry of final judgment. Information and documentation pursuant to this subdivision shall include:
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all primary, excess and umbrella policies, contracts or agreements issued by private or publicly traded stock companies, mutual insurance companies, captive insurance entities, risk retention groups, reciprocal insurance exchanges, syndicates, including, but not limited to, Lloyd's Underwriters as defined in section six thousand one hundred sixteen of the insurance law, surplus line insurers and self-insurance programs sold or delivered within the state of New York;
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a complete copy of any policy, contract or agreement referred to in subparagraph (i) of this paragraph, including, but not limited to, declarations, insuring agreements, conditions, exclusions, endorsements, and similar provisions;
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the contact information, including telephone number and e-mail address, of any person or persons responsible for adjusting the claim made to or against the person or entity described in subparagraph (i) of this paragraph, including third-party administrators and persons within the insuring entity to whom the third-party administrator is required to report;
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the amounts available under any policy, contract or agreement to satisfy a judgment described in this subdivision or to reimburse for payments made to satisfy the judgment;
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any lawsuits that have reduced or eroded or may reduce or erode such amounts referred to in subparagraph (iv) of this paragraph, including the caption of any such lawsuit, the date the lawsuit was filed, and the identity and contact information of the attorneys for all represented parties therein; and
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the amount, if any, of any payment of attorney's fees that have eroded or reduced the face value of the policy, along with the name and address of any attorney who received such payments.
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A defendant, third-party defendant, or defendant on a cross-claim or counter-claim required to produce to a plaintiff or third-party plaintiff or plaintiff on a counter-claim all information set forth in paragraph one of this subdivision has an ongoing obligation to make reasonable efforts to ensure that the information remains accurate and complete, and provide updated information to any party to whom this information has been provided within thirty days of receiving information rendering the prior disclosure inaccurate or incomplete in whole or in part. This obligation shall exist during the entire pendency of the litigation and for sixty days after any settlement or entry of final judgment in the case inclusive of all appeals.
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For purposes of this subdivision, an application for insurance shall be treated as part of an insurance agreement and shall be disclosed.
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Information concerning the insurance agreement is not by reason of disclosure admissible in evidence at trial.
The bill further requires sworn certification by both defendant and its attorney that the information is accurate and that reasonable efforts have been made to ensure that the information remains accurate as per the newly proposed CPLR 3101(f)(2).
Maxwell’s Minute: We round-tabled this bill yesterday—the only other day of its existence until today. The consensus: This is another bill fixing a non-existent problem.
With good reason, the insurance application is not included within the current mandatory disclosures under New York law. Most commercial applications contain important financial information, and this bill would lead to abuse of such information in the name of increased settlement demands, above and beyond insurance policy limits and increased settlement pressure in avoidance of excess verdicts.
This bill appears a clear attempt to bypass defense counsel in pursuit of the carrier (i.e. the claim adjuster) who they must believe will be easier to influence without the filter of experienced defense litigator. The bill robs both the carrier and the insured defendant of the protections afforded by retaining counsel.
Defendants currently provide insurance information as part of initial disclosures, including excess and umbrella coverage; and carriers have an obligation to disclose erosion of limits, whether by judgment, settlement, or defense expenses within limits. None of this is combative, delayed, or the subject of motion practice. And sworn certification of the same is simply a spit in the face of defense counsel for, again, what amounts to unnecessary conjecture contained within the Sponsor Memorandum that standard discovery results in delay tactics and gamesmanship in one direct.
At the very least, the assertions in the Sponsor Affidavit that “delay tactics” and other problems abound should be put to the test over the course of a full legislative session and actual hearings. Provide evidence. This is not the type of bill to introduce and pass in two days.
Regulatory Wrap-Up
06/09/21 New Consensus Amendments to Insurance Regulations
Department of Financial Services
DFS Implements Consensus Amendments to Various Provisions of Title 11 of the NYCRR
New amendments have been made to various provisions of the New York State Insurance Regulations contain in Title 11 of the NYCRR, in large part implementing new language for outdated provisions. However, there are a few substantive changes as well:
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11 NYCRR 55.1(d) concerning group accident and health insurance is amended to refer to Insurance Law Section 4235, instead of 4225.
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11 NYCRR 62-4.1(c) is amended to apply to cities with a population of one million or more persons, instead of those of over 400,000 persons.
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11 NYCRR 62-4.2(c) is amended by repealing the Anti-Arson Application (NYFA-1) Part 1 and adding a new Anti-Arson Application (NYFA-1) Part 1. The language of the new form can be viewed on page 3 and 4 of the link above.
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11 NYCRR 136-2.2(e), (f), and (g) are amended to refer to investment managers, rather than money managers, with investment manages defined as set forth in Retirement and Social Security Law section 424-a(2)(a). Additionally “placement agent or intermediary” is defined as having the meaning set forth in Retirement and Social Security Law section 424-a(2)(a).
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11 NYCRR 136-2.4(d) is amended to prevent, rather than simply address potential conflicts of interest by removing language requiring the Comptroller to report and review on various issues through mandatory disclosure submission, indicating instead that the
fund shall not engage, hire, invest with, or commit to an investment manager that is using the services of a placement agent or intermediary to assist such investment manager in obtaining investments by the fund, nor shall the fund engage, hire, invest with, or commit to an investment manager without obtaining from such investment manager a certification in the form and manner prescribed by the fund stating that such investment manager has not used the services of a placement agent or other intermediary to assist such investment manager in obtaining investments by the fund.
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11 NYCRR 136-2.5(g) is amended to delete language which had indicated that the Comptroller shall disclose on the OSC public website, on at least an annual basis, instances where an investment manager has paid a fee to a placement agent or intermediary. In doing so, subsections (5) and (6) became subsections (4) and (5).
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11 NYCRR 216.6(h) is amended by updating the name and address required in any notice rejecting any element of a claim involving personal property insurance. This boilerplate language shall now read as follows:
“Should you wish to take this matter up with the New York State Department of Financial Services, you may file with the department either on its website at http://www.dfs.ny.gov/consumer/fileacomplaint.htm or by writing to the Consumer Assistance Unit, New York State Department of Financial Services, at: One State Street, New York, NY 10004; One Commerce Plaza, Albany, NY 12257; 1399 Franklin Avenue, Garden City, NY 11530; or 535 Washington Street, Suite 305, Buffalo, NY 14203.”
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11 NYCRR 216.7(d)(3) is amended by updating the name and address required in any letter of explanation or rejection of any element of a claim. This required boilerplate language shall now read as follows:
“Should you wish to take this matter up with the New York State Department of Financial Services, you may file with the department either on its website at http://www.dfs.ny.gov/consumer/fileacomplaint.htm or by writing to the Consumer Assistance Unit, New York State Department of Financial Services, at: One State Street, New York, NY 10004; One Commerce Plaza, Albany, NY 12257; 1399 Franklin Avenue, Garden City, NY 11530; or 535 Washington Street, Suite 305, Buffalo, NY 14203.”
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11 NYCRR 218.5(a) is amended by updating the name and address required in any notices of an insurer’s refusal to issue, cancellation or nonrenewal, except where the cancellation is for nonpayment of premium; and on all notices of termination of agents’ and brokers’ contracts or accounts, which are subject to this Part. This required boilerplate language shall now read as follows:
If you have any questions regarding this termination, please contact this company's representative at (company phone number, name of company representative, company address).
The New York Insurance Law prohibits insurers from engaging in redlining practices based upon geographic location of the risk or the producer. If you have any reason to believe that we have acted in violation of such law, you may file a complaint with the department either on its website at www.dfs.ny.gov/consumer/fileacomplaint.htm or by writing to the New York State Department of Financial Services, Consumer Assistance Unit, at either One State Street, New York, NY 10004 or One Commerce Plaza, Albany, NY 12257.
Charles J. Englert III
Nothing new on the USDC or CVA fronts.
RAUH’S RAMBLINGS
Patricia A. Rauh
06/01/21 Evanston Insurance Company v. ECE Services, PLLC
United States District Court, Middle District of Tennessee
Declaratory Judgment Action Dismissed as Moot When Underlying Lawsuit Was Dismissed With Prejudice and there is No Longer a ‘Case’ or ‘Controversy’ Between the Parties
This case involves an insurance coverage dispute wherein the Plaintiff, Evanston Insurance Company (“Evanston”) seeks a declaratory judgment that it has no duty to defend or indemnify its insured, Defendant ECE Services, PLLC (“ECE”) in connection with a state-court lawsuit filed against ECE.
ECE develops drawings and specifications for various environmental projects and also oversees the independent contractors in carrying out these projects. ECE obtained an environmental professional liability policy (the “Policy”) from Evanston with effective coverage dates of September 23, 2017 to September 23, 2018.
In 2015, ECE contracted with the State of Tennessee (the “State”) to design and oversee a project involving dam repair services at a state park. One of the terms in the contract between the State and ECE required that ECE approve J&S Construction Co. Inc.’s (“J&S”) concrete mix designs before J&S could begin work on the dam. ECE did eventually approve J&S’s designs with conditions, and J&S substantially completed the dam repair services in April 2016. However, the State did not pay J&S for its repair services, so J&S filed a lawsuit against the State for breach of contract. The State then filed a third-party complaint against ECE alleging that ECE designed a flawed concrete formula, failed to monitor J&S during the project, and was professionally negligent in the performance of its duties under the contract (the “Underlying Lawsuit”).
ECE tendered the lawsuit to Evanston asserting that Evanston had a duty to defend and indemnify ECE against the State’s claims. Evanston then filed this action seeking a declaratory judgment that it owed no such duties to ECE. ECE then filed a counter claim against Evanston for breach of contract and a declaratory judgment in its favor.
While this case was pending, however, the Underlying Lawsuit against ECE was dismissed with prejudice and since ECE paid less than $50,000 (the self-insured retention amount in the Policy), they moved to dismiss this case and its counterclaim as moot. Evanston, on the other hand, argued against dismissal and the mootness argument claiming that the claim had not been resolved and that without a declaratory judgment, they are exposed to later claims from ECE regarding the Underlying Lawsuit.
In its decision, the Court addressed the justiciability doctrine of mootness derived from Article III of the Constitution and how a case becomes “moot” when the issues presented are no longer live or the parties lack a cognizable interest in the outcome. Further, a motion to dismiss for mootness is properly characterized as a motion to dismiss for lack of subject matter jurisdiction, or a 12(b)(1) motion. The Court ultimately agreed with ECE in a finding that this case is now moot. The Court reasoned that the mootness argument “makes logical sense” since ECE is not pursuing any further claims against Evanston and admits that Evanston has no obligation to ECE under the terms of the Policy. The Court found Evanston’s arguments against dismissal as vague and containing unsupported arguments. Therefore, the court granted ECE’s Motion to Dismiss as Moot.
Mirna M. Santiago
We are pleased to offer a superb article written our friend Sean Griffin from the Dykema firm on the importance to insurers in hiring a diverse firm. Sean can be reached at [email protected]. This article is reprinted with permission from the December 20, 2020 online edition of NUPropertyCasualty 360 © 2020 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact [email protected].
Scott D. Storm
06/02/21 Brash v. Richards
Appellate Division, Second Department
Gov. Cuomo's Executive Orders Extending Legal Time Limits During the Pandemic Constitute a "Toll" Not a "Suspension," According to the Second Department
On June 2, 2021, the Appellate Division, 2nd Department held that the series of executive orders issued by Gov. Cuomo as a result of the COVID-19 pandemic, constitute a “toll” rather than a “suspension” of filing deadlines applicable to litigation in the New York courts.
This case involved the time limitation contained in CPLR 5513(a) for the taking of an appeal. According to the respondents, the notice of appeal was untimely served and filed, because, in their view, Governor Cuomo suspended filing deadlines in civil litigation in the New York courts until November 3, 2020. In contrast, the appellant argued that Governor Cuomo tolled such filing deadlines, meaning that the appellant had 30 days from November 3, 2020, to serve and file the notice of appeal. As a result, the appellant maintained that the notice of appeal, served and filed on November 10, 2020, was timely.
A toll suspends the running of the applicable period of limitation for a finite time period, and the period of the toll is excluded from the calculation of the relevant time period. Unlike a toll, a suspension does not exclude its effective duration from the calculation of the relevant time period. Rather, it simply delays expiration of the time period until the end date of the suspension, here November 3, 2020.
Executive Law § 29-a(1) provides that the Governor “may by executive order temporarily suspend specific provisions of any statute, local law, ordinance, or orders, rules or regulations, or parts thereof, of any agency during a state disaster emergency, if compliance with such provisions would prevent, hinder, or delay action necessary to cope with the disaster.” Executive Law § 29-a(2)(d) provides that any such order “may provide for the alteration or modification of the requirements of such statute, local law, ordinance, order, rule or regulation suspended, and may include other terms and conditions.”
On March 20, 2020 Governor Cuomo issued Executive Order No. 202.8 (9 NYCRR 8.202.8), which provided:
I hereby temporarily suspend or modify, for the period from the date of this Executive Order through April 19, 2020 the following:
In accordance with the directive of the Chief Judge of the State to limit court operations to essential matters during the pendency of the COVID-19 health crisis, any specific time limit for the commencement, filing, or service of any legal action, notice, motion, or other process or proceeding, as prescribed by the procedural laws of the state, including but not limited to the criminal procedure law, the family court act, the civil practice law and rules, the court of claims act, the surrogate’s court procedure act, and the uniform court acts, or by any other statute, local law, ordinance, order, rule, or regulation, or part thereof, is hereby tolled from the date of this executive order until April 19, 2020.
Governor Cuomo later issued a series of nine subsequent executive orders that extended the suspension or tolling period, eventually through November 3, 2020. Finally, Executive Order No. 202.72 (9 NYCRR 8.202.72), issued on November 3, 2020, reiterated that the ”toll“ would no longer be in effect as of November 4, 2020.
The 2nd Dept. ruled that Governor Cuomo’s March 20, 2020 executive order, No. 202.8, expressly and plainly provided that the subject time limits were “hereby tolled,” and two of the subsequent executive orders referred to the temporary alternation of the subject time limits as a “toll” (Executive Order Nos. 202.67 and 202.72).
The Court rejected the argument that Governor Cuomo did not have the statutory authority to do so. It had been argued that as Executive Law § 29-a, while expressly granting the Governor the authority to suspend statutes, does not expressly grant the Governor the authority to “toll” them. The Court was not persuaded, saying that the language “in Executive Law § 29-a(2)(d) indicates that the Governor is authorized to do more than just “suspend” statutes during a state disaster emergency; he or she may ‘alter[ ]’ or ‘modif[y]’ the requirements of a statute, and a tolling of time limitations contained in such statute is within that authority”.
Therefore, the subject executive orders tolled the time limitation contained in CPLR 5513(a) for the taking of an appeal until November 3, 2020. Accordingly, the notice of appeal, which was served and filed on November 10, 2020, well within 30 days of November 3, 2020, was timely.
05/21/21 JCC Medical, P.C., as Assignee v. Lancer Insurance Co.
Appellate Division, Second Department
Insurer’s Proof of Timely Mailing of PIP Claim Forms Sufficient and Did Not Need to Also Prove Mailing by Certified Mail. Testimony of Claims Examiner Who Did Not Have Direct Supervisory Authority Over Defendant's Mail Personnel was Sufficient to Establish that the Denial of Claim Forms were Timely Mailed
Judgment in favor of defendant dismissing the complaint. Action by a provider to recover assigned first-party no-fault benefits. The issue was defendant's proof of timely mailing of the EUO scheduling letters and the denial of claim forms. As defendant established that the EUO scheduling letters were timely mailed to plaintiff by first class mail, it was irrelevant that defendant failed to establish that copies of such letters were also mailed to plaintiff by certified mail, return receipt requested. In addition, the testimony of defendant's no-fault claims examiner was sufficient to establish that the denial of claim forms were timely mailed to plaintiff notwithstanding that the no-fault claims examiner did not have direct supervisory authority over defendant's mail personnel.
05/26/21 Apazidis, M.D., P.C. v. State Farm Mutual Automobile Ins. Co.
Civil Court of the City of New York, Queens County
Insurer Moved for Summary Judgment on the Ground that Medical Provider Failed to Submit Additional Documentary Verification Within 120 Days, but Motion Denied Because it Failed to Support with Admissible Evidence its Good Cause for Investigating Plaintiff's Alleged Noncompliance with the Licensing Statutes. Medical Provider’s Cross Motion for SJ Also Denied. Insurer Identified Evidence which Raised Factual Issues of Medical Provider’s Ineligibility to Receive No Fault Benefit Payments Due to Non-Compliance with Licensing Statutes. This Defense is Not Precluded by Defendant's Untimely Denial of Plaintiff's Claims. As Plaintiff had Not Provided the Requested Verification, the Court Also Denied Plaintiff's Cross-Motion
Plaintiff sued Defendant to recover unpaid PIP benefits for medical services provided to Plaintiff's assignor, plus attorneys' fees and statutory interest. Defendant moved for summary judgment dismissing the complaint on the ground that Plaintiff failed to provide additional documentary verification within 120 days (11 NYCRR § 65-3.8[b][3]). Plaintiff cross-moved for summary judgment on its claims against Defendant.
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Insurers must pay or deny No-Fault benefit claims "within thirty (30) calendar days after receipt of the proof of the claim", 11 NYCRR § 65-3.8[c].
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"New York Law prohibits unlicensed individuals from organizing a professional service corporation for profit or exercising control over such entities".Business Corporation Law §§ 1507.
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"A provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such service in New York..." (11 NYCRR § 65-3.16[a][12]).
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Corporate practices evincing a willful, material noncompliance with licensing and incorporation statutes may establish a medical provider's ineligibility to receive reimbursement.The elements of common law fraud need not be shown if noncompliance with the above described licensing requirement is established through admissible evidence.
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Failure to establish timely payment or denial of the claim precludes the insurer from offering evidence of its defense to non-payment.
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However, the defense that a health care provider is ineligible to receive No Fault insurance benefit payments is not subject to preclusion.
While Defendant denied Plaintiff's claims well after the thirty (30) days required for timely payment or denial, Defendant may delay payment pending an investigation of Plaintiff's alleged noncompliance with licensing and incorporation statutes, but only upon showing good cause to pursue the investigation.
"An applicant from whom verification is requested shall, within 120 calendar days from the date of the initial request for verification, submit all such verification under the applicant's control or possession or written proof providing reasonable justification for the failure to comply" (11 NYCRR § 65-3.5[o]).
Defendant argued that Plaintiff's 2017 corporate tax returns and account records for Chase Bank checking, savings, debit card, and Visa card were necessary to verify the medical necessity of the billed services, and whether the ownership, control, and operation of Plaintiff complied with New York State licensing requirements. Plaintiff countered that Defendant failed to respond to Plaintiff's objections to the Verification Request, show good cause for the remaining documents requested, or substantiate the necessity of the request.
Contrary to Plaintiff's contention, tax returns and bank statements were probative on whether a medical service provider complied with licensing laws. While mere allegations of fraud would be sufficient to sustain a motion to compel discovery of evidence of noncompliance with licensing laws, here Defendant sought summary judgment which requires admissible evidence. Defendant failed to support its good cause with admissible evidence for investigating Plaintiff's alleged noncompliance with the licensing statutes.
Defendant presented a sworn affidavit of an SIU investigator detailing Defendant's investigation of Plaintiff, as part of an alleged broader scheme of non-compliance with licensing laws, leading to the Verification Request at issue. In her affidavit, the investigator quoted the Dr.’s testimony at an EUO but failed to present the transcript and, therefore the account was hearsay. The investigator also quoted an affirmation of the Dr. to illustrate an inconsistency but did not present the affirmation, which rendered the assertion hearsay.
Defendant relied on the truth of the Dr.’s EUO testimony and his affirmation to establish good cause for requesting verification from Plaintiff which in the context of a summary judgment motion requires admissible evidence. Since Defendant failed to demonstrate its prima facie entitlement to a judgment as a matter of law, the court must deny Defendant's motion for summary judgment.
In pertinent part, 11 NYCRR §65-3.5[o] provides that the "insurer shall advise the applicant in the verification request that the insurer may deny the claim if the applicant does not provide within 120 calendar days from the date of the initial request either all such verification under the applicant's control or possession or written proof providing reasonable justification for the failure to comply." Here, Defendant's Verification Request and Defendant's follow up request letters advised that if “NY Chiro and Rehab, P.C.” does not provide within 120 calendar days from the date of this initial verification request all of the documents identified above or written proof providing reasonable justification for the failure to comply. However, the Plaintiff in the instant matter is Apazidis, M.D. As such, Defendant failed to comply with the requirement in 11 NYCRR § 65-3.5[o].
Given that "NY Chiro and Rehab P.C." appears in the advisory of all four (4) separate letters, the reference is less likely to be a typographical error. Alleged typographical errors in correspondence have been given legal effect. Defendant's motion for summary judgment dismissing Plaintiff's complaint is denied.
Regarding the Cross-Motion, Plaintiff bore the burden to show it submitted the statutory claim forms indicating the fact and amount of the loss sustained and "that payment of no-fault benefits was overdue". Here, Defendant's denial of claim forms acknowledging receipt of Plaintiff's claims constituted prima facie evidence that Defendant received Plaintiff's claims and that the denial was overdue. However, an ineligibility of receiving No Fault insurance benefit due to non-compliance with licensing statutes defeats such prima facie showing.
Based on foregoing discussion, Defendant had identified the existence of evidence in Plaintiff's exclusive control which raised the issue of Plaintiff's ineligibility to receive No Fault benefit payments. Because the remaining requested verification, factual issues exist as to Plaintiff' eligibility to receive No Fault benefit payments. Since Defendant's defense of Plaintiff's ineligibility to receive No Fault benefit payments is not precluded by Defendant's untimely denial of Plaintiff's claims and Plaintiff still has not provided the requested verification, this Court also must deny Plaintiff's Cross-Motion.
05/24/21 Deer Mountain Inn LLC v. Union Ins. Co.
United States District Court, Northern District of New York
The Court Granted Defendant's Fed. R. Civ. P. 12(b)(6) Motion to Dismiss Plaintiff’s Complaint Upholding the Denial of Coverage for Business Losses Associated with the COVID-19 Pandemic
Plaintiff operates the Deer Mountain Inn, a country inn and restaurant located in Tannersville, New York. Plaintiff on behalf of itself and a putative multi-state class and New York sub-class of similarly situated businesses, brought this action against Defendant seeking damages and declaratory relief in connection with Defendant's denial of insurance coverage for certain of Plaintiff's business losses associated with the COVID-19 pandemic. The Court granted Defendant's Fed. R. Civ. P. 12(b)(6) motion to dismiss.
The Court found that the Policy's Business Income and Extra Expense Provisions unambiguously do not provide coverage for the losses noting that a number of New York state and federal courts have considered claims virtually identical to Plaintiff's, involving the same policy language and similar arguments. These courts have uniformly found that, under New York law, the loss that Plaintiff complains of—the loss of use of property for its intended, economically beneficial purpose as a result of the Closure Orders—is not the type of "direct physical loss of . . . property" the Policy contemplates. As these courts have found, this type of loss falls outside the scope of that term because it does not result from any direct, physical compromise to the integrity of the insured property, whether in the form of visible structural alteration or damage or a less tangible, but still distinctly physical, problem such as noxious gas, odor, contamination or increased risk to the property's physical integrity.
The Court also held that the Policy's Civil Authority Provision unambiguously does not provide coverage for the losses. In regard to the Policy's Virus Exclusion and other exclusions in the Policy, the Court said that these exclusions only apply if entitlement to coverage under one of the Policy's provisions is first established, and therefore, because the Court concludes that Plaintiff fails to establish entitlement to coverage under the Policy, it need not reach the question of whether these various exclusions would apply.
Nicholas J. Heintzman
06/03/21 Torres-Cabrera v. 237 W. 54 Owner, LLC
Supreme Court, Bronx County
Court Dismisses Defendant’s Claim for Third-Party Indemnification Brought Against Plaintiff’s Employer Where Employer Demonstrated that it had a Workers’ Compensation Insurance Policy and Payments Were Made to Plaintiff Under Said Policy
Plaintiff was injured while performing construction work on a hotel elevator. Plaintiff brought a personal injury action against defendant 237 West 54th Owner LLC (“237 West”), the hotel owner. 237 West commenced a third-party action against plaintiff’s employer, third-party defendant USA Labor for Hire Inc. (“Labor”), seeking contractual and common-law indemnification. Labor sought summary judgment to dismiss 237’s indemnification claims.
The issue was whether Labor properly secured workers’ compensation for its employees such that it was protected from third-party liability. Labor submitted proof of plaintiff’s employment with Labor, information about the workers’ compensation insurance policy between Labor and Wesco Insurance (“Wesco”), and workers’ compensation payments Wesco made to plaintiff under the policy. The Court held that this evidence demonstrated that there was no question of fact that plaintiff received workers’ compensation benefits from Wesco on Labor’s behalf, and, as such, there was no basis 237 West’s indemnification claims. Thus, it granted summary judgment for Labor.
Heather Sanderson
SANDERSON LAW
Legal Counsel
Auto Insurance in British Columbia
The Vehicle Insurance Amendment Act, which received Royal Assent in the British Columbia Legislative Assembly on August 14, 2020, came into effect on May 1, 2021.
On April 30, 2021, insurance coverage for claims arising from the use and operation of motor vehicles that occurred in British Columbia was premised upon full tort. British Columbia was the only full tort auto insurance jurisdiction in Canada. When the clock ticked past midnight on the morning of May 1, that regime ended. Some say for good. In its place, the government owned Insurance Corporation of British Columbia is offering a no-fault system with no recourse to the courts. The livelihoods of defence and plaintiff counsel have been upended. However, they are a resourceful lot, and most will land on their feet.
Despite the seismic change in British Columbia, modified tort lives on in several Canadian provinces. Alberta, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador have a cap on general damages for defined “minor injuries” arising from motor vehicle accidents. Manitoba, and Quebec are pure no-fault, and Saskatchewan is quasi- no-fault.
However, changes are afoot … Alberta is considering a no-fault scheme similar to British Columbia. In the meantime, it is tweaking its existing system. Royal Assent was given December 9, 2020, to an Alberta bill that will come into effect in stages in early 2022. This bill, solely applicable to compensation arising from the use and operation of motor vehicles in Alberta, limits the number of experts involved in injury lawsuits; makes changes to the rate and accumulation of pre-judgment interest and makes changes to compensation for property damage.
Similar changes are being considered in New Brunswick.
These are interesting times as the provincial governments react to the perception that premiums are escalating; compensation for vehicles related injuries and losses is difficult or is not assessable.
Surespan Structures Ltd. v. Lloyds Underwriters, 2021 BCCA 65.
A painful lesson on policy drafting has emerged from a complicated dispute on the application of a project specific professional liability policy. In that case, a design-build contractor spent in excess of $10 million repairing cracks in load-bearing precast elements of the project’s parkades – mitigating further damage and repairing /correcting this significant defect.
QBE issued a policy that covered:
- The insured’s liability for its errors or omissions that led to “damages arising from a claim;”
- paying the insured for the costs of correcting defects in the work (a mitigation of damage coverage);
- legal costs for defending any civil suit or arbitration “arising from a claim;” and
- Supplementary expenses related to claims costs.
The insured demanded re-payment of the repair expense under the mitigation section of the policy.
The policy states in several instances that “the maximum amount the insurer will pay for each claim and in the aggregate for all claims made against the insured during the policy period and covered by this policy is [$10 million].”
QBE stated that coverage is limited to $10 million. The insured and the trial court disagreed stating that the coverage was limitless. The British Columbia Court of Appeal upheld the trial judgment. They declared that the policy was clear that the per claim and aggregate limit was $10 million. However, those limits did not apply to the mitigation of damage coverage, as that coverage did not apply to “a claim”. A “claim” is dependent upon third party liability; this coverage is akin to a first party loss where the insurer makes a payment directly to an insured without third party involvement. QBE’s argument that no one contemplated that the mitigation policy coverage would be limitless fell on deaf ears. The policy was declared to be unambiguous. Extraneous evidence of intent would not be used to make coverage inferences. The policy will be enforced as written.
Whether a Commercial Property Policy Responds to Pure Loss of Use
We previously reported on MDS Inv. Factory Mutual Insurance Company (FM Global), 2020 ONSC 1924 and its potential application to the myriad of COVID-19 business interruption class action lawsuits pending, but not yet heard, in Canadian courts. That trial level decision is being appealed but, in the meantime, it is being touted as authority for the proposition that pure loss of use of property is within the scope of an all-risk policy.
But not so fast. As the British Columbia Supreme Court pointed out in Prosperity Electric v. Aviva Insurance Company of Canada, 2020 BCSC 1171, FM Global failed to consider a 2015 British Columbia Court of Appeal decision, Acciona, that held that “physical loss or damage” does not include loss of function or loss of marketability. “Physical loss” and “Damage” means an alteration in the appearance, shape, colour or other such material dimension. In a carriage motion on several of the pending class actions, an Ontario trial court suggested in Workman Optometry et al v. Aviva Insurance Company, 2021 ONSC 142, at para. 29, that a property-damage-dependent loss of income claim is required to succeed on a commercial property policy. Further afield but highly influential is the decision in TKC London Ltd. v. Allianz Insurance PLC, [2020] EWHC 2710 which held that coverage under a commercial property policy is triggered by the physical loss of property which is not something that is transitory or temporary.
Hopefully, the Ontario Court of Appeal will follow these signposts and take the opportunity to provide strong leadership on this thorny issue when it hears the appeal in FM Global.
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