Coverage Pointers - Volume XXII, No. 3

Volume XXII, No. 3 (No. 568) 
Friday, July 24, 2020
A Biweekly Electronic Newsletter

As a public service, Hurwitz & Fine, P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York, New Jersey, 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.

The summer is rushing by, so different than each of us expected.

[For those of you who love my 100 years ago stories, and I know that so many of you do, you might really enjoy the story about Rosemary Lomas.]

Another special thank you to my friend Heather Sanderson for another superb Canadian submission in this week’s issue.

I was pleased to complete my service as President of the National Foundation for Judicial Excellence this past week and move into the position of Board Chair.  For those who do not know what wonderful work the NFJE does in educating state appellate judges or justices, please visit our website.

This week has been one of providing continuing education programs to regional and national clients.  In our most recent issue, I described one of the training sessions available.  The response was so great, that I feel compelled to include it again:

Risk Transfer Training:

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

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

New York Coverage Protocol Training:

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

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

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


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

  • Employment & Business Pointers aims to provide our clients and subscribers with timely information and practical, business-oriented solutions to the latest employment and general business law developments.  Contact Joseph S. Brown  [email protected] to subscribe.
  • Premises Pointers:  This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!).  Please drop a note to Jody Briandi at [email protected] to be added to the mailing list.
  • Labor Law Pointers:  Hurwitz & Fine, P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at [email protected] to subscribe.
  • Products Liability Pointers:  Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving.  Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up-to-date with the latest developments and trends, and providing useful practice tips and litigation strategies.  This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies.  Contact Brian F. Mark at [email protected] to subscribe.
  • Medical & Nursing Home Liability Pointers.  Hurwitz & Fine, P.C.’s newest legal alerts contain timely news on the impact of COVID-19 on medical and nursing home liability claims.  Contact Chris Potenza at [email protected] to subscribe.

OK, this is My Favorite Story from 100 Years Ago:

The Bismarck Tribune
Bismarck, North Dakota

24 Jul 1920


Rosemary Lomas Takes Winchester Prize in Competition With Many Others

            Rosemary Lomas, daughter of Mr. and Mrs. W. P. Lomas, of Bismarck, won the Winchester Prize, amounting to $25 in cash, and the honor of being the best mathematician in Burleigh county.  Announcement was made today by W. E. Parsons, county superintendent of schools that Miss Lomas has received the highest grade on the examination papers which the six contestants handed in Monday afternoon.

            The other contestants for the prize were:  Mary Ellison, of Sterling; Laura Rupp, of Baldwin; Henry Swanson, of Canfield; Eva Johnson of Menoken; and Edward Lenihan, of burnt Creek.

            The Winchester prize is awarded annually to the eight best graduates of the Burleigh county schools who possesses the best knowledge of arithmetic.  Their ability is tested by competitive examinations.

            The prize is paid from a trust fund established as a memorial to the late Judge Winchester.  During his life the Judge took an active interest in educational work throughout the county.

Editor’s note:  For those who know me and realize I have nothing to do with my free time, you will recall that every so often, a story catches my eye and I’m curious about the postscript.  This one, that for reasons I cannot explain, was one of those stories.

I wondered what happened to Rosemary Lomas, the recipient of the $25 Winchester Prize, so I did a little digging.  What I found out about her, I included in a note to her great-grandson, Francis Wick, who I found as the President and CEO of Wick Communications, a media company located in Arizona, that owns newspapers throughout the country.  I wrote to Mr. Wick the other day, attaching this clipping and several others to my posting:

Mr. Wick:

I’m a lawyer in Buffalo and publish a newsletter called Coverage Pointers and am an amateur historian.  Every issue, I include random stories from 100 years before and sometimes, as a hobby, see an interesting one and follow up on it.  My next issue is on Friday, 7/24 and I came across this story from the 7/24/1920 issue of the Bismarck Tribune.

Your great-grandmother was the focus of the story.  I don’t know if you knew of her, or her award, but either way, I thought I would send it along.

I followed Rosemary’s family history, and learned, that she was the daughter of Walter Pierce Lomas and Margaret Lenore Rapp.  Walter was the son of Charles Franklin Lomas and Rosa Bella Pierce.  He was the oldest of their 12 children.

Anyway, you probably know that Rosemary eventually married your grandfather Milton whose obituary appeared in the Arizona Republic on December 2, 1981, recounting his passing (that’s attached as well), on November 30, 1981, survived by your father and uncle.  Anyway, you likely know all that, but you might get a kick out of the story about your great-grandmother.  I’m going to carry the story of your great-grandmother in my newsletter this week, if you want to comment!

As you can see from the yearbook pix, she was a beautiful young woman.

Anyway, so you see that I’m not as crazy as this email appear to make me, here’s a link to our latest issue – you will note by Hundred Years Ago stories, interspersed in my cover note.  If I don’t hear from you, no problem.  If you want to add a quotable quote, and if you know what she did with her math skills or otherwise, seeing that you are in the publications business yourself, we’d love to include it.



Mr. Wick responded the following evening, and it appears my email gave him some background on his ancestors that he knew nothing about:

Mr. Kohane.

Thank you for the kind and very unexpected email. As much as I'd like to say our family history has been shared readily, it hasn't and this email will and its accompanying clippings become part of my own archives. Your interest and newsletter just inspired another man.


Francis L. Wick

He then added this comment, after checking with his cousins::

'Though Rosemary was known for her beauty and intellect, most of us in the family have benefited from the latter though wished at times for the former. She was a wonderful mother and grandmother to those who knew her well.'

Peiper on Property and Potpourri:

I joined the Coverage Pointers staff in 2007.  My arrival marked an expansion to the fourth H&F column, and the first to focus on first party insurance issues.  Since that time, CP’s topic list has grown to keep pace with our growing team of lawyers.  I have written CP columns from Europe to Hawaii and Florida to Alaska.  None of them, however, have been as challenging as those written during the last four months.

This issue marks the last, hopefully, that will be produced from a team of totally remote contributors.  Due to the great work of our “return to office committee,” next week marks a reboot for in-office work.  I, for one, look forward to an opportunity for more interaction with colleagues.  I am also delighted that this small step, if only symbolically, recognizes the challenges we’ve met and overcome since mid-March.

We thank you for your patience as we’ve learned new technology and fought with wonky wifi and cellular service.  Brighter days, hopefully, abound for us and all of you.  

Steven E. Peiper

[email protected]


A Century Ago – Consider Buying Auto Insurance:

Lansing State Journal
Lansing, Michigan

24 Jul 1920



            Prudent motorists by the thousands buy insurance to protect them against contingent liabilities growing out of injury to person or property, remarks a writer in the American Motorist. This form of insurance, he says, has grown to enormous proportions during the last decade, and some policies of this kind have proven a grievous disappointment to the holders thereof when put to a final test.

            “These disappointments,” continues the writer, “have for the most part arisen by reason of the interpretation placed upon some rider attached to the policy which was passed over as unimportant by the motorist at the time, but which later developed into a hole of fair size; large enough in many instances to require the assistance of a court to decide what was really intended by the words used.

            “When buying insurance of this kind, or any other kind for that matter, if the terms are not perfectly plan, questions should be asked freely.

            “But in asking questions it should be remembered that any explanation made by the agent will not be binding upon the company unless incorporated in the policy itself.  The agent may be perfectly honest in his explanation, or interpretation, of clauses in a policy, yet after all it may amount only to his opinion, and unless made a part of the written policy, will be but the equivalent to the historic scrap of papers that has been written about so voluminously since the summer of 1914.  This ideal policy is one that speaks for itself, and the terms of which are plain to the everyday man.

            “When the motorist buys insurance of this kind, he wants a certain kind of protection; and above all he should demand a policy framed in such a manner as to enable him to know, within a reasonable degree, just what he is getting for his money, without having to resort to the courts for an interpretation of the document.”


Wilewicz’ Wide-World of Coverage:

Dear Readers,

We hope these missives find you happy and healthy. For my part, I’m moderately both, and that feels like a success these days.

As you may know, I have always been a voracious reader, typically averaging 60-70 books a year. And, as I believe I’ve written previously, I would say the mix was generally 70% fiction, 20% nonfiction, and 10% biography/memoir. Yet, with all of the distractions of late, I have found it rather difficult to stay on such a pace, despite the weeks-long lockdowns. Nevertheless, I did want to highlight a couple of books I finished recently that might be of interest to you all as well.

First, and for my lawyer-ladies’ book club, we read Where the Crawdads Sing by Delia Owens. This was a surprisingly good tale, that combines a coming-of-age story with murder mystery and courtroom drama. It was very well written and paced perfectly for a hot summer read. I also listened to the Audible version of Ian Fleming’s Casino Royale, the first book in the original James Bond series. The audiobook is read by Dan Stevens, who played in Downton Abbey, and he did an excellent job at creating the mood and styling of 1960s espionage. Both worthy options to consider as we move through these throes of summer.

Now, here at Wilewicz’ Wide World of Coverage, we usually bring you the very latest from the Second Circuit, or other Federal Circuit courts around the country. However, this week, the Second Circuit was quiet on issuing coverage decisions – avoiding coverage obligations, as it were. Moreover, my colleagues below, including Brian Barnas, Brian Mark, and Diane Bucci, called dibs on cases of note from around the country. Be sure to check out their columns for the latest in Federal high court decisions, and tune in here next time for cases hot off the Circuit Court presses.

Until next time, stay cool!

Agnes A. Wilewicz

[email protected]


Insurance Considered Boring a Century Ago – How Things Have Changed:

Arkansas Democrat
Little Rock, Arkansas

24 Jul 1920

Insurance Is “Dry” To Most People

-- That’s Why YOU Should Be Informed

-- The majority of people buy insurance without a second thought.  They unconsciously think it a dry, unattractive subject and think it one that is not easily understood.  This lack of knowledge keeps many holders of property and owners of automobiles from giving it the attention and study it deserves.

-- Insurance in its true form means protection and security just aa real and just as certain as the promise of our Government to pay back the face value of its bonds at maturity.

-- Our next advertisement will deal with the fallacy of so-called savings of “one-third or more” in insuring in what is known as Inter-Insurance Exchanges.

Insurance Club of Little Rock


Barnas on Bad Faith:

Hello again:

Sports have been back in a limited capacity for a while, but things are really going to heat up in the next week or so.  MLB Opening Day is tonight, and it’s a great matchup between the Yankees and their $324 million-man Gerrit Cole and the defending World Series Champion Washington Nationals and Max Scherzer.  I was pretty excited about the possibility of my Blue Jays coming to play here in Buffalo, but unfortunately that doesn’t seem like it will be happening.  I was on board with playing at PNC Park in Pittsburgh, which happens to be my favorite ballpark in all of baseball, but that isn’t happening either.  It’s pretty wild that the season starts today, and we still don’t have a home ballpark.  Next week we have the NBA starting and the NHL players are starting to report to Toronto and Edmonton.  It’s going to be a jam-packed fall sports calendar, and after months of watching old games or nothing at all, I am absolutely ready for it.

My case this week is a Coverage B dispute from the Ninth Circuit.  The bad faith allegation in this one is a little different: the insured alleged that the insurer interfered with the prosecution of its counterclaims against the plaintiff in the underlying action in bad faith.  However, the record showed that the insured had settled that claim for $250,000, and the insurer gave the insured due notice of its settlement position.  The insured’s successful and self-initiated efforts to settle its counterclaims did not give rise to bad faith liability.

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

Brian D. Barnas

[email protected]


Medical Advice on Keeping Children Safe:

Kenosha News
Kenosha, Wisconsin

24 Jul 1920

            These summer months bring sickness and death.  Much of both is preventable.  Adults violate the most common rules and babies languish and die because of the lack of proper parental precaution.

            The big idea is to keep cool and be moderate in all things, going to excess in none.  East sparingly.  Give vegetables and fruits the shade over meats.  It isn’t necessary any longer to warn against the use of alcoholic stimulants.  But don’t use them, even if procurable.  Use cool water, rather than iced water.  Lemonade is good; so is orangeade and the drink made of the lime.

            The daily bath is a wonder worker in hot weather.  Twice daily, morning and evening, is still better.  Clad yourself coolly.  Be comfortable of dress.  Abandon tight things.  Follow the “early to bed” precept in warm weather.  Don’t worry.  Don’t fret.  Don’t “get all het up” over anything.  Be sane and sensible about your eating, drinking, clothing, labor and recreation, and so increase your changes of “saying it with flowers” to the fellow who acts counter to these simple sentences.

            And wise mothers will fortify the baby against the effects of Old Sol.  Don’t overdress.  The cotton shirt, the diaper and a slip are enough when it is hot.  Physicians say that bathing in tepid water with a little baking soda added, cools the skin, reduces irritation, induces sleep and increases resistance.  Keep the flies away.  Keep baby’s food clean.  Give him plenty of sleep and he’ll come out of the summer heat as well and as healthy as his parents if they show wisdom in caring for themselves.

Off the Mark:

Dear Readers,

Many businesses are starting to reopen on Long Island and as a result, traffic has noticeably increased.  Normalcy seems to be returning.  This past Monday, we returned to our Melville office for the first time since we moved.  We had moved in March, right as everything was closing down due to the pandemic.  Since the move, we have had very little access to the new space.  As you can imagine, there is still plenty of unpacking and organizing to do.  Luckily, there is air conditioning.

This edition of “Off the Mark” brings you a recent construction defect decision from the United States Court of Appeals for the Third Circuit.  In Nautilus Ins. Co. v. 200 Christian St. Partners LLC, the Court of Appeals examined a carrier’s obligation to defend and indemnify its insureds, finding that a duty to defend was owed as the underlying complaints alleged the active malfunction of products, as opposed to only faulty workmanship for which coverage would not be owed.

Stay cool …

Brian F. Mark
[email protected]


Huge Jury Verdicts, 100 Years Ago:

Elmira, New York

24 Jul 1920


            A jury in city court yesterday granted a $19.27 judgment in favor of Albert R. Hill of this city in the case against Ben Diamond, proprietor of the Diamond Automobile Wrecking Company on East Water street.  The papers in the case state that Mr. Hill was sold a defective magneto presented as in first class condition.  The magneto cost $25 and later Mr. Hill declares he was compelled to pay $19.27 to place the magneto in first class condition.


Boron’s Benchmarks:

On the one hand, it feels like time has slowed during this COVID-19 pandemic.  We’re anxious for the pandemic to come to an end, but we know we’ve got a ways to go, perhaps a long ways to go.  That, for me, is what makes the days feel as if they are going by so slowly.

On the other hand, things have happened during the pandemic to make it feel like time is speeding up.  While cleaning and organizing and re-cleaning and re-organizing our basement, my wife and I have re-discovered old family photo albums.  We sure took a lot of pictures in the old days.  There’s nothing like looking through sets of old photo albums to make it feel like time is speeding up.  In some of the old photos I actually appear to be a young man.  Where has the time gone?

As I write this personal note, the belated first pitch of the 2020 MLB “season” is one day away from being thrown out.  I have heard that perhaps Dr. Anthony Fauci will be doing the honors this year, but I’ll let our resident sports journalist, Mr. Brian Barnas, investigate and either confirm or further advise. In any event, I’m very thankful that baseball is (almost) back.

Some of my fondest memories over the years are baseball memories.  Those old photo albums in our basement include photos of me as a kid on the ball diamonds in my Lincoln Park Lions baseball uniform, with my Dad coaching me. Newer photo albums include sets of photos of my son and my daughters on the diamond in their baseball/softball uniforms, with me coaching them.

As the Terrance Mann character recited about baseball in the Field of Dreams movie, “this field, this game, it’s part of our past…it reminds us of all that once was good and could be again.”  So, without further adieu, and without fans in the stands either, nonetheless - let’s Play Ball!

Yours truly, the author, editor-in-chief, and creative force behind Boron’s Benchmarks, the Coverage Pointers beat monitoring and reporting on insurance coverage decisions of the high courts of the 49 states not named New York, has scoured the internet for insurance coverage decisions issued within the past two weeks by state supreme courts.  Alas, I’ve come up empty.  Apparently, COVID-19 and the national Independence Day celebrations have been a double whammy on decisions being issued over the past two weeks.

Until next time, be well.

Eric T. Boron
[email protected]


Yale Tuition Skyrockets:

New-York Tribune
New York, New York

24 Jul 1920

Yale Increases Tuition Fee From $240 to $300

            NEW HAVEN, July 23.—Tuition in the undergraduate departments of Yale University will be increased from $240 to $300 with the fall term, it was announced to-day.  The corporation at a recent meeting sanctioned the increase, and provision is made whereby a student now in college who may feel obliged to do so may ask that the increase be omitted.

            The increase is attributed to the higher costs of maintaining the university.  In April 1919, the tuition fee was increased from $160 to $240. 


Barci’s Basics (On No Fault):

Hello Subscribers!

I hope you are all still staying healthy and safe! My answers to last issue’s topics are as follows: 1) I dislike hot weather. My ideal temperature is in the 60’s – when you can wear shorts or a sweater and be comfortable. So, to beat the heat, I tend to stay inside, drink a lot of water, and eat ice cream. Not very exciting. If you have some good tips, I am all ears (or eyes to read in an email); 2) The first thing I do when I wake up in the morning is hit snooze. I know it is a terrible habit, and I am trying to break it, but I just don’t wake up naturally at a reasonable time without an alarm and when my alarm goes off, I can’t be bothered to get up right away. I also don’t have to answer to anyone when I wake up in the morning though, which, if I did, I’m sure would change things; 3) My go-to potluck/party recipe is usually a dessert – probably cupcakes, the kind depending on the mood.

That’s me for this week. For the next two weeks consider these topics:

  • What is the best stage show you’ve seen recently (can be a concert, musical or play)?
  • Have any nightmare roommate stories?

Keep sending me your best answers and check back next issue for mine!

On the no-fault front, I have two cases for you. One that discusses proof, or disproof, of medical necessity for summary judgment; the other that failure to attend scheduled examinations under oath is a condition precedent to coverage.

That’s all folks,

Marina A. Barci
[email protected]


What’s New in the American League?:

Richmond, Indiana

24 Jul 1920


(By Associated Press)

            CHICAGO, Ill., July 24.—Driving out thirteen hits in eight games, Tris Speaker, manager of the Cleveland Americans, today is leading the race for the batting championship of the American league with an average of .416.  George Sisler, star first baseman with St. Louis, the batting leader a week ago, is second in the list with .405.  Joe Jackson, of Chicago, is third with .403.

            “Babe” Ruth, the home-run king, boosted his average five points as a result of cracking out thirteen hits including a quartette of home runs, and is in fourth place with an average of .387.  Ty Cobb the Detroit star signalized his return to the game with a hitting drive that boosted his average from .318 to .331.

            Ruth is setting the pace for run getters, having scored 94 times, with Speaker, the runner-up with 32 tallies.  Ruth also has negotiated 240 total bases in hutting, while his closest rival is Sisler with an even two hundred. 


Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

This week, I returned to the office for the first time since March—my daily calendar serving as a time-capsule-esque reminder of the beginning of our out-of-office seclusion. Funny story is that now, my wife and I are treating my office time as productive-seclusion, as I sit at home today watching our children. Should be an interesting time for us as we head towards a return to daycare in September.

Today’s column focuses on the first charges filed by DFS against any Covered Entity for violations of its new Cybersecurity Regulations (23 NYCRR Part 500). A title insurance company allegedly allowed vulnerabilities to linger that exposed 850 million documents, including many that contained personal, nonpublic information for many of its consumers.

Until next time,

Ryan P. Maxwell

[email protected]


Drive Up Undertaker Service:

The Morning Call
Allentown, Pennsylvania

24 July 1920


Successor to

116 South Eighth St.
Phone:  Bell 854—Cons. 1271

Auto Service if Desired


CJ on CVA and USDC(NY):

Hello all,

I’m very pleased to report that I’m writing this cover note from the comfort of my office on the 13th Floor of the Liberty Building. It’s been almost four months since I last worked anywhere other than my own home, and I cannot tell you how good it feels to get out of the house. Hopefully my return to downtown Buffalo is the start of our return to normalcy.

Applying English law, can a reinsurer claim that they do not have to pay a valid claim because the laws of the state which governed the underlying policy have changed since the reinsurance policy was issued?  This week I bring you a case from the Southern District of New York addressing answering that question.  Read on to find the answer.

Happy Reading!

Charles J. Englert, III
[email protected]       


Child Abuse Charges Affirmed:

The Los Angeles Times
Los Angeles, California

24 Jul 1920



Portland Woman Convicted of Horribly Mistreating Children Left in Care


PORTLAND, July 23.—Mrs. Rita Malthus, 40 years old, today was sentenced in the Municipal court to serve six months in jail and pay a fine of $500 on conviction of having beaten and otherwise maltreated three small children which had been left in her care, the eldest 4 years old.

The children were brought into the court during the trial, their bodies and faces covered with bruises and lacerations.

Mrs. Malthus had taken the children to board while their mothers went out to work.  Notice of appeal from the verdict was given.

The jury returned its verdict within twenty minutes from the time it had filed from the jury box.

Judge Rossman increased the bail bond from $500 to $1000, pending an appeal to the Circuit court.

The municipal courtroom was packed with several hundred spectators, mostly women, who had been drawn to the trial by the stories of bitter cruelty which had been told by witnesses for the prosecution yesterday.

The expected defense of the woman failed to materialize.  Except for herself and husband and a lodger, who admitted he did not know of conditions in the Malthus household, she had no evidence to offer to refute the mass of testimony given Thursday by neighbors who asserted they had on many occasions seen the woman administer cruel and inhuman punishment to children.

During a particularly searching cross-examination by special Prosecutor Kramer, the woman became so confused that one minute she would deny statements she had made the moment before.


Dishing Out Serious Injury Threshold:

Dear Readers,

Hopefully everyone is doing well and enjoying the summer as it speeds by us. I was lucky to be able to spend last weekend by the lake in Pennsylvania with my family. We were able to take the boat out and, with some liquid courage, I was able to get back up on the wakeboard, just like riding a bike.

In the Serious Injury Threshold world, there is a case of merit that came out of the Appellate Division, Second Judicial Department. Interestingly, it pertained to the admissibility of defendant’s biomechanical expert testimony.  Significantly, the Court found that while biomechanical expert testimony is generally admissible, the Court found that the testimony elicited herein did not have the proper foundation, and, as such, that testimony was precluded.

Stay safe,

Michael J. Dischley
[email protected]  


100 Years Ago – Ratification of Suffrage Amendment on the Brink of Passage:

The Journal and Tribune
Knoxville, Tennessee

24 Jul 1920


            Nashville, July 23.—In her first public appearance since coming here in the interest of the ratification of the suffrage amendment by the approaching legislature, Mrs. Carrie Chapman Catt, president of the National American Woman’s Suffrage association, today told the Kiwanis club there were two reasons why Tennessee should be the thirty-sixth state to ratify.

            First, ratification was favored by both parties; second, Tennessee should ratify to prevent America being outstripped by European countries.

            Referring to a recent visit to the Geneva meeting of the International Woman Suffrage Alliance, she said:

            “It seemed strange at this congress to hear German, Austrian and Hungarian women talk of voting and sitting in their national parliaments, when the United States, the greatest republic in the world, had not finished the task of enfranchising its women.”


Bucci on “B” :

Hello Readers:

This week, I attended a Risk Transfer Presentation given by Dan Kohane.  I don’t have to tell you how great a lawyer Dan is…you know because you subscribe.  But I had never seen a Kohane coverage presentation before (where have I been?!) and was amazed at how he simplified risk transfer issues, which are complicated for many people, and provided a roadmap of exactly how to analyze the issues.  I would highly recommend it for your company(ies).  You will not be disappointed.

Speaking of disappointment, I’m complaining about the weather again.  We really need the weather here in the northeast to cooperate, and it isn’t, much like some insureds.  It’s too hot and humid to get outside much, especially when the central air is so comfortable.  But without enjoying the outdoors, I feel like I’m watching the summer go by in some surreal fashion…sitting here, waving at it.  I scheduled a mediation today for September, and I couldn’t believe that we’re so close to the end of summer.  The thing I love most about summer is the light late into the evening.  So much more enjoyable than the winter’s darkness.  I’m kind of giving myself the creeps.

On the work front, I recently filed a number of declaratory judgment actions and am interested to see how they proceed.  Some of my colleagues are attending virtual conferences, depositions, and mediations, but in my ongoing cases, the courts keeps adjourning everything again and again, as though they’re waiting for the pandemic to end before proceeding.   I can’t imagine when that will be given the predicted second round in the fall.  Very busy though…apparently the virus does not stop the claims from coming, which is a good thing because I like being busy.  I have some good Coverage B cases to talk about this issue, as well.

Enough about me.  What’s on your mind?  Call or email whenever and for whatever reason!

Diane L. Bucci

[email protected]


Buffalo Storm Damage Rampant:

The Buffalo Times
Buffalo, New York

24 Jul 1920


Storm Facts in Nutshell

            BUFFALO AND WESTERN NEW YORK suffered heavy property damage in the worst July storm in history of local weather office.

            TWO AND A HALF INCHES OF RAIN, NEARLY an average month’s fall, flooded streets, blocked sewers, stalled traffic and inundated farms.

            LARGE HAILSTONES DAMAGED crops and fruit trees in Erie and Niagara counties and in Canada.

            A 60-MILE GALE WRECKED 15 HOMES IN Ebenezer and late reports being received today indicate that the damage is heavier than at first reported.

            LIGHTNING SET FIRE to several homes in the city, wrecked a tower of the Federal Post office Building and felled scores of trees in the residential section and in the country.

            STREET CARS WERE DELAYED HOURS, telephone and telegraph service crippled, thousands of pedestrians were stranded for hours and excursion boat service was at a standstill.

            HORNELL REPORTED TODAY MUCH of the city under water following a cloudburst after the storm.  Hamburg reports fire started by lightning destroying several barns.  Troop I barn at Orchard Park struck by lightning.  Other Western New York towns report severe effects of the storm.

John’s Jersey Journal:

A blackboard sign on a wall

Description automatically generated

Dear Subscribers:

It feels like life is inching back to normal. Mediations and depositions are moving forward and it feels good to keep moving litigated files forward. In a return to normalcy, I am back in the office a few days a week. A place I haven’t really been to in four months.

I’ve gotten used to my new routine. My dog, Donald, rolls in and crashes on his bed by my desk and sleeps the day away through client calls, mediations, video conferences, and team meetings. Waking up occasionally to bark or to steal a piece of cheese or pepperoni from me. Now that’s changing, and I am sure it will be a harder transition for my dog than myself. He won’t miss me, but he will miss the snacks.

New Jersey courts issued two insurance decisions in the past week. A Coverage B case came down from the New Jersey Appellate Division. Diane, our in-house expert on Coverage B, has written up the case in her column, Bucci on B. The case involves an interesting scheme by a software company who published their competitor’s software online and informed customers they could continue to use the competition’s software. One of the threshold issues was whether this solicitation of customers constituted an “advertisement”, triggering a duty to defend the copyright infringement claim. I won’t spoil it for you.

I wish I could say I have an interesting case to report on. Last time, we had subrogation and SIRs. The issue before that, enforcement of a watercraft exclusion. This week we have a straightforward case enforcing a subcontractor exclusion. A subcontractor was injured, the exclusion applied and was unambiguous, so Evanston won the day. They were unopposed but a win is a win.

I’ve added it to my list of cases to cite in my next motion premised on an independent contractor / subcontractor exclusion.

Hope you all are well, and if we can help, let us know.

John R. Ewell

[email protected]


Defining the “Sensible Woman”:

The Brooklyn Citizen
Brooklyn, New York

24 Jul 1920


            The women employed by the B. R. T. Company as ticket agents and in other capacities have made up their minds to accept the recent addition of 10 per cent. to their wages as a temporary settlement of their claims. What they will do is what good sense must suggest to the car conductors and other male employees, namely, to take what they can get, and while continuing at work initiate a movement to get more as soon as the company can be shown to be in a position to do more.

This is the reverse of the policy favored by the mere strike-promoting element.  According to this element it is immaterial to the employee whether the company goes bankrupt or not.  It is no part of their concern, they say, to enable the receiver to meet his legal obligations or to bring pressure upon the public authorities in favor of an increased rate of fare that would, if conceded, provide the means for the paying of better wages.

But the women have been better advised. They show a degree of good, common sense that cannot be too warmly commended to the male members of the railroad association.


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

This was today’s headline in the Connecticut Law Tribune, “Get Used to It: Court Administrator Says Online Proceedings Are Here to Stay.” The Judicial Branch issued a 32-page handbook assisting attorneys and parties with the new “Remote Justice Virtual Courtroom.” The Remote Justice Virtual Courtroom permits the court to hold on-the-record remote hearings by videoconference, using Microsoft Teams. Over the long run, the Chief Court Administrator points out, the platform will reduce costs, saving time, decreasing in court-delay, and eliminate travel time.

Maybe it’s wishful thinking but perhaps the days of showing up to court only to find that your case is number 51 out of 52 on the docket are in the past. If a 90-minute drive to court (each way) and two hours of waiting around are reduced to a 30-minute video conference from your office, think about all the extra time we will have to spend with our families – or to play golf, yes, definitely more golf.

Be smart, be safe, wear a mask.

Lee S. Siegel

[email protected]       


Can’t Pay the Fine, Do the Time:

The Buffalo Enquirer
Buffalo, New York

24 Jul 1920


            Margaret Murphy, no home, was provided with home for the next 50 days by Judge Standart in city court today.  Margaret has appeared many, many times before the court on charges of being drunk.  Inability to pay the fine imposed was the cause of the free lodging.

            Frank H. Starks, No. 370 Potomac avenue, paid a fine of $10 and the following paid $5:  Alfred Mehltretter, No. 7 Paul Place; Robert Wilson, No. 292 Fulton street; Eugene Carr, no home; George Patton, No. 176 Seneca street.  Ten others who pleaded guilty of their first offense were given suspended sentence. 


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

Dear Subscribers,

Last weekend my friend and I went to a lavender field at Kin Loch Farmstead, about 30 minutes outside of Buffalo. It was lovely! Although I have about 4 large pots of lavender on my porch, I’m too emotionally attached to cut them down, but I don’t mind hanging outside with a friend, supporting a local business, and getting even more lavender. In Western New York, things have been open for a couple weeks but most of my activities still involve being outside with my “quaranteam”. Although there have been some really hot days, especially for those without AC, I am trying to appreciate them because we’re almost into August and fall is right around the corner, and I will miss these warm days. Accordingly, this is my reminder to all those who may have a short summer or warm season to enjoy it now because you will miss it when you’re digging your car out of knee-high snow.

Cara A. Cox
[email protected]


Dear Readers,

It’s mid-summer in Alberta. Sun, blue sky and, finally, warmth. On Tuesday, the mountains beckoned and I took an unscheduled day off. Driving west with the 180 degree view of the foothills of the Canadian Rockies in the windscreen was liberating. Those impressive peaks put all of our problems into perspective.  My takeaway is that very few of our problems really matter. Taking time off allows us to time to resolve the problems that count.

Heather Sanderson
Sanderson Law (Alberta, Canada)

[email protected]


What a Way of Checking on the Cleanliness of a Market:

The Miami Herald
Miami, Florida

24 Jul 1920



“Best Way To Tell Whether Place Is Clean Or Not
Is To Notice Number Flies Hanging Around”—Dr. Lanier.

            Practically all of the meat shops are endeavoring to comply with the city ordinance regulating these places of business.  This was shown in one of the regular tours of inspector Dr. W. T. Lanier, city health officer and Dr. Frank Rigdon, dairy and food inspector, yesterday, a Herald reporter accompanying the health board officials on their trip.

            “The best way to tell whether a place is clean or not,” said Dr. Lanier, “is to notice the number of flies handing around.  Of course, it is impossible to keep all of the flies out, but a dealer in foodstuffs who desires to comply with the conditions of cleanliness required by the city will take all precautions, and his place will not be bothered by flies.”


Jen’s Gems:


I am writing this note before we leave for the drive-in movies tonight.  My oldest, Ella, has been begging to go for about a week now.  She does not care at all about what is playing.  She just wants to stay up late, wear her pajamas and eat snacks out of the back of the car (I guess, who can really blame her).  I did point out that, given the current situation, we are paying to see a three-year-old movie that is currently available for free on Disney Plus, but she did not care.

Moving on to my column this week, I am reporting on a trial court decision which addresses a dispute between an insured and insurance broker concerning a professional errors and omissions policy which limited coverage to “insured services.”  Unfortunately, there appears to have been an error and the description of the “insured services” on the insured’s application did not match what ultimately appeared on the quote and/or policy.  And, when a claim came in, the carrier denied coverage, in part, because the claim did not fall within the definition of “insured services.”

Hope everyone has a good night.

Jennifer A. Ehman

[email protected]


To the Workhouse for You…:

Buffalo Morning Express and
Illustrated Buffalo Express

Buffalo, New York
24 Jul 1920

Matt McGorey again goes to workhouse for being drunk.

            Matt McGorey, a character well known to the police, who, when he is not in the penitentiary, lades in lower Main street, was yesterday fined $50 by Judge Standart for being drunk.  It was more than McGorey felt like paying and he went to the workhouse.  Gus Goehle, court clerk, complained that McGorey has cost the court more for pen points used in writing his name in the court docket than any other of the frequent visitors.

            Along with McGorey were twelve other men who pleaded guilty to being drunk.  All said it was their first conviction and sentence was suspended.


Headlines from this week’s issue:

Dan D. Kohane
[email protected]

  • The Presumption of Permissive Use was Overcome by Substantial Evidence that Vehicle was Left with Garage for Repair, not for Joy Ride
  • Motion to Dismiss Coverage Lawsuit, at Pleading State, based on Documentary Evidence Denied because Affidavit of Insured Cannot be Considered on Factual Issue
  • Pedestrian, as a Member of LLC, Can Receive SUM Coverage under LLC’s SUM Policy.  For the Purposes of SUM Coverage, an LLC is More Like a Partnership, than a Corporation, so SUM Coverage Follows the Members


Steven E. Peiper

[email protected]


  • Only Facts, not Opinions, Can Give Rise to Defamation
  • Broad Language of Appellate Bond Extends Beyond Jury Verdict to Include all Pre and Post-Judgment Interest
  • Post-Concussion Syndrome is Categorically Not Enough to Trigger a Grave Injury, but Total Disability from Future Employment Might
  • Preclusion Order Upheld after Plaintiff Failed to Appear a Three Consecutive Court-Ordered Deposition Dates


Michael J. Dischley
[email protected]

  • Defense Expert Testimony Precluded for Lack of Proper Foundation


Agnes A. Wilewicz

[email protected]

  • Second Circuit avoiding coverage this week.


Jennifer A. Ehman

[email protected]

  • Court Denies Insurance Broker’s Motion for Summary Judgment in Lawsuit Arising from Policy Obtained with Incorrect Insured Services Definition


Brian D. Barnas
[email protected]

  • Insurer did not Interfere with Insured’s Prosecution of its Counterclaims in Bad Faith


John R. Ewell
[email protected]

  • New Jersey Federal Court Upholds Subcontractor Exclusion to Deny Coverage for Subcontractor Injury


Lee S. Siegel

[email protected]

  • It’s All Fun and Games Until the Insurance Company Denies a Defense


Diane L. Bucci
[email protected]

  • Claims of Infringement of Trade Name and Service Marks Do Not Constitute Claims of Advertising Injury—Keep Your Insurer in the Loop  
  • No Coverage for Advertising Injury Offenses and Three Exclusions Apply
  • Here, There Is Coverage for Advertising Injuries and No Exclusions Apply


Brian F. Mark
[email protected]

  • Third Circuit Court of Appeals Holds Underlying Claims of Active Malfunction of a Product Constitute an “Occurrence,” Requiring a Duty to Defend


Eric T. Boron

[email protected]

  • Check back next issue.


Marina A. Barci

[email protected]

  • Medical Expert Opinion Shows Questions of Fact around Medical Necessity to Beat Summary Judgment Motion
  • Failure to Appear for Scheduled EUO’s Violates a Condition Precedent to Coverage


Ryan P. Maxwell
[email protected]

Regulatory Wrap-Up

  • DFS Charges First Violation of DFS’s New Cybersecurity Regulations


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

[email protected]

  • Where a Reinsurance Policy Contains a Jurisdiction Clause, Changes in that Jurisdiction’s Laws is Risk Assumed by the Parties


Cara A. Cox

[email protected]

Heather Sanderson
Sanderson Law (Alberta, Canada)

[email protected]

  • I Do, But Not Right Now: Wedding and Event Cancellation Coverage


Stay healthy.  Stay safe.

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 New Jersey and Connecticut.
In addition, Dan D. Kohane is a Foreign Legal Consultant, permit no. 000241, issued by the Law Society of Upper Canada, and authorized to provide legal advice in the Province of Ontario on matters of New York State and federal law.
Dan D. Kohane
[email protected]
Agnes A. Wilewicz
[email protected]
John R. Ewell
[email protected]  
Dan D. Kohane, Chair
[email protected]
Steven E. Peiper, Co-Chair
[email protected]  
Michael F. Perley
Jennifer A. Ehman 
Agnieszka A. Wilewicz
Lee S. Siegel
Brian F. Mark 
Diane L. Bucci
Brian D. Barnas
John R. Ewell
Eric T. Boron
Marina A. Barci
Ryan P. Maxwell
Charles J. Englert
Cara A. Cox
Diane F. Bosse
Joel R. Appelbaum
Steven E. Peiper, Team Leader
[email protected]
Michael F. Perley
Eric T. Boron
Brian D. Barnas
Jennifer A. Ehman, Team Leader
[email protected]
Marina A. Barci
Jody E. Briandi, Team Leader
[email protected]
Diane F. Bosse  
Topical Index
Kohane’s Coverage Corner
Peiper on Property and Potpourri
Dishing out Serious Injury Threshold
Wilewicz’s Wide World of Coverage
Jen’s Gems
Barnas on Bad Faith
John’s Jersey Journal
Lee’s Connecticut Chronicles 
Off the Mark
Boron’s Benchmarks
Barci’s Basics (on No Fault)
Ryan’s Capital Roundup
CJ on CVA and USDC(NY)
Bucci On “B”
Cara’s Canadian and Cross-Border Connections (with Heather Sanderson)


Dan D. Kohane
[email protected]


07/22/20 Allstate Ins. Co. v. Shim
Appellate Division, Second Department 
The Presumption of Permissive Use was Overcome by Substantial Evidence that Vehicle was Left with Garage for Repair, not for Joy Ride This was an application to permanently stay arbitration of an uninsured motorists claim.

Shim and Pae (“the respondents”) were allegedly injured as a result of a motor vehicle accident that occurred in New York during which their vehicle, owned by Jae Kan Shim, was struck by a 2003 Acura owned by Johnson, insured by State Farm, and operated by Frierson, who fled the scene of the accident. State Farm disclaimed coverage. Accordingly, Shim and Pae filed a demand for uninsured motorist arbitration with Jae Kan Shim's insurer, Allstate.  
Allstate commenced this proceeding permanently stay arbitration, adding Johnson, Frierson and State Farm to the proceeding. A framed hearing on issue of nonpermissive use was held.  The court found that the owner of the 2003 Acura, Johnson, "only gave vehicle keys and permissive use to Murph's Garage for service and repair of her vehicle and not to potential buyer, Shabazz or others to use." The court determined that there was no permissive use and thus a valid uninsured motorist claim could be pursued and the Second Department agreed.
Vehicle and Traffic Law § 388(1) imputes to the owner of a motor vehicle the negligence of one who uses or operates that vehicle with the permission, express or implied, of such owner and there is strong presumption of permission.
Here, based on witness credibility, the court found that Johnson, a life-long resident of Pennsylvania and the owner of the 2003 Acura left the 2003 Acura with the keys at Murph's Garage located in Coatesville, Pennsylvania, for Murph, the mechanic, to perform certain repair work on the vehicle. Johnson testified that she told Murph that he could take his time fixing the Acura, but she did not authorize him to allow anyone to use the vehicle.  
Johnson later learned that Murph allowed Shabazz to take the vehicle. Johnson testified that she did not give Murph, Shabazz, or anyone permission to use her vehicle. She did not know Frierson, the individual who was operating her vehicle in New York on October 7, 2016, at the time of the accident.
The record established that the presumption of permissive use was overcome by substantial evidence.  

07/22/20 Bonavita v. Government Employees Ins. Co.
Appellate Division, Second Department
Motion to Dismiss Coverage Lawsuit, at Pleading State, based on Documentary Evidence Denied because Affidavit of Insured Cannot be Considered on Factual Issue

On March 21, 2013, Bonavita was driving a car owned by Molinari (collectively referred to as “B&M”) when the vehicle was involved in a multivehicle accident on the Meadowbrook Parkway in Hempstead. Phillips, someone in another car sued them both (“underlying action”).
B&M sued GEICO seeking a judgment declaring that, pursuant to an insurance policy issued to Bonavita's mother, (“Mrs. B”), GEICO is obligated to defend and indemnify them in the underlying action. It was claimed that that Bonavita's use of Molinari's vehicle qualified for "temporary substitute auto" or "non-owned auto" coverage under the policy.  

GEICO moved to dismiss the complaint based on documentary evidence. GEICO arguing B&M were not entitled to coverage under the policy because, among other things, the vehicle being driven by Bonavita on the date of the accident was neither a "temporary substitute auto" or a "non-owned auto" as defined in the policy. GEICO submitted an affidavit of its claims examiner, an affidavit of its attorney, a letter sent to GEICO from the plaintiffs' counsel, a letter from GEICO disclaiming coverage, a copy of the GEICO policy, and declaration sheets issued by GEICO between July 2012 through January 2013.  
B&M opposed with an affidavit of Bonavita, who claimed that he was the son of the policyholder and resided at her home.
A motion to dismiss a complaint pursuant to CPLR 3211(a)(1) on the ground that a defense is founded on documentary evidence may be appropriately granted only where the documentary evidence utterly refutes the plaintiff's factual allegations, conclusively establishing a defense as a matter of  law.  While judicial records, as well as documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially undeniable, would qualify as documentary evidence in the proper affidavits, deposition testimony, and letters are not considered documentary evidence for a motion directed at the pleadings.
This was NOT a motion for summary judgment but a motion on the pleadings.
Accordingly, based on the allegations in the complaint, which allege that coverage did not exist, and disregarding the Bonavita’s affidavit, the motion was denied and the case can proceed to discovery. Editor’s Note:  An “atta-lawyer” to Brian Hussy from the Scahill firm.  Right decision on this motion. GEICO may eventually succeed in establishing its position, but not on a motion directed to the pleadings.  

Matter of United Financial Cas. Co. v. Tekel
Appellate Division, Second Department 
Pedestrian, as a Member of LLC, Can Receive SUM Coverage under LLC’s SUM Policy. 

For the Purposes of SUM Coverage, an LLC is More Akin to a Partnership, than a Corporation, so SUM Coverage Follows the Members. Tekel sustained injuries when, as a pedestrian, he was struck by a vehicle. After settling with the tortfeasor driver for the full limit of the driver's insurance policy, Tekel submitted a claim for supplementary underinsured motorist (SUM) benefits pursuant to a commercial automobile insurance policy issued by a Progressive Casualty Insurance Company’s underwriting arm, United Financial (“Progressive”) to Air Repair, LLC (“Air Repair”) of which Tekel was the sole member.  
Progressive denied coverage on the ground that Tekel did not meet the definition of an insured under the SUM endorsement, as he was not the named insured on the policy and, at the time of the accident, was not occupying a motor vehicle insured for SUM under the policy.
Following Terkel's demand for arbitration, Progressive sought permanent stay of arbitration.
Where an automobile insurance policy contains a SUM provision and is issued to an individual, that individual and others in his or her family may be afforded SUM coverage under the policy when such person is injured in any vehicle, including a vehicle owned and insured by a third party'.  When such a policy is issued to a corporation, however, the SUM provision does not follow any particular individual, but instead covers any person injured while occupying an automobile owned by the corporation or while being operated on behalf of the corporation.  
On the other hand, instances where the policy is issued to a partnership "are readily distinguishable”, partnerships being a combination of individuals, who can suffer injuries and do have spouses, households and relatives. Here, the policy was issued to a limited liability company, which is more akin to a partnership than a corporation.
The term "insured" must be resolved in Tekel's favor. The SUM endorsement defines the term "insured" to mean "you, as the named insured and, while residents of the same household, your spouse and the relatives of either you or your spouse" (see 11 NYCRR 60-2.3). Although the declarations page identifies the LLC as the named insured, it also states that supplemental spousal liability insurance coverage (see 11 NYCRR 60-1.6; Insurance Law § 3420[g]), "will be included within your bodily injury liability coverage at no additional premium charge." Also, both the uninsured motorist endorsement and SUM endorsement contain a provision for survivor rights coverage.

Steven E. Peiper
[email protected]


07/22/20 Melis v. Van Wickler
Appellate Division, Second Department 
Only Facts, not Opinions, Can Give Rise to Defamation

Mr. Van Wickler was injured when his parked car was struck by a stolen vehicle.  Apparently, plaintiff was incorrectly arrested as the driver of the stolen vehicle and was later cleared on all charges.  During the pendency of his arrest, however, Ms. Van Wickler made statements about plaintiff to a local reporter which must not have been too flattering.  Plaintiff then sued Ms. Van Wickler for defamation.  
GEICO provided insurance on the stolen vehicle.  It disclaimed coverage to plaintiff, with copy to the owner of the vehicle, when it was under the impression plaintiff was the perpetrator of the theft.  Plaintiff appears to have taken objection to various statements made in the denial letter because he also sued GEICO for defamation.   
Both Van Wickler and GEICO’s motions to dismiss were granted, and plaintiff then pursued the instant appeal. In affirming the dismissal of the claims against Ms. Van Wickler, the Court noted that her statements were actually opinions.  Since defamation can only be proven by demonstrating the declarant made false statements of fact (and opinions aren’t facts), her comments were not actionable.  GEICO’s motion was affirmed because the statements it made in the denial letter were subject to a qualified privilege insofar as they were presented to the insured owner of the stolen vehicle and his wife.    

07/17/20 Tornatore v. Cohen
Appellate Division, Second Department
Broad Language of Appellate Bond Extends Beyond Jury Verdict to Include all Pre and Post-Judgment Interest

Defendant is a chiropractor who was sued due to alleged professional malpractice.  Defendant’s insurer, Allied, defended the matter through trial which resulted in a substantial jury verdict in favor of the plaintiff.  Allied then pursued an appeal of the judgment on behalf of defendant Cohen, and issued an appellate bond so to as stay execution of the judgement during the pendency of the appeal.  
When the judgment was affirmed, plaintiff moved to liquidate the appellate bond and to also recover pre and post-judgment interest.  Allied opposes plaintiff’s demand for interest on the basis that the appellate bond limits liability to the sum of the bond.   
The Appellate Court noted that “a surety’s ‘obligation upon its undertaking is defined solely by the language of the bond’.”  Notably, the bond at issue indicated that Allied was bound to pay the amount of the judgment.  In addition, however, the bond also provided that Allied would also pay the “sum directed to be paid by the judgment or order.”  The judgment, of course, required both the verdict from the jury, but also all pre/post-judgment interest.  Because the language of the bond, as a whole, was not limited to a fixed sum, Allied was obligated to pay the identified jury verdict plus all applicable interest.   

07/16/20 Goundan v. Pav-Lak Contr., Inc. 
Appellate Division, First Department 
Post-Concussion Syndrome is Categorically Not Enough to Trigger a Grave Injury, but Total Disability from Future Employment Might 

Plaintiff was employed by D&D Electrical when he sustained a traumatic brain injury during the course of his work.  When the Pav-Lak was subsequently sued under Labor Law principles, it, in turn, commenced a claim for common law indemnification against D&D Electrical.   
It appears D&D Electrical tendered its defense to its workers’ compensation carrier, Norguard.  Norguard assumed the defense, but then moved to intervene in the action arguing that the alleged injury sustained by plaintiff was not a grave injury as defined by the Workers’ Compensation Law.  As such, Norguard asserted that the claim for common law indemnity should be dismissed.  A dismissal would then result in Norguard’s defense obligation being extinguished.  
In affirming the trial court, the Appellate Division agreed that Norguard met its initial burden that plaintiff must have sustained a grave injury in order for common law indemnity to be sought from his employer.  However, the Court also noted evidence adduced by plaintiff which cited the Social Security Administration’s determined that plaintiff’s condition meant he could “not perform any ‘past relevant work’ and that there are no jobs in the national economy that he can perform.”  As such, the Court reasoned that a question of fact existed as to whether plaintiff’s traumatic injury constituted a “grave injury” under the statute.   
07/16/20 Center Sheet Metal v. Cannon Design, Inc. 
Appellate Division, First Department 
Preclusion Order Upheld after Plaintiff Failed to Appear a Three Consecutive Court-Ordered Deposition Dates 

Plaintiff really wanted to avoid producing a witness from its insurance company, Apsen, for deposition in this matter.  So much so, that plaintiff ignored three specific Orders from the trial court requiring the appearance.  On this Record, the trial court finally issued an Order precluding plaintiff’s from adducing any proof from Aspen at the time of trial.   
Plaintiff then appealed, and sought to compel the very deposition that it steadfastly had ignored.  In affirming the trial court, the Appellate Court noted that the trial court was within its right to issue the Order of preclusion.  In so holding, the Court noted that the failure to comply with the previous Orders need not have been willful.   

Michael J. Dischley
[email protected]  


07/08/20  Guerra v. Ditta
Appellate Division, Second Department
Defense Expert Testimony Precluded for Lack of Proper Foundation

In an action to recover damages for personal injuries, the plaintiff appeals from (1) an order of the Supreme Court, Kings County (Wavny Toussaint, J.), dated July 22, 2016, and (2) an order of the same court dated May 4, 2017. The order dated July 22, 2016, denied the plaintiff's motion for an evidentiary hearing on the issue of alleged juror misconduct and denied that branch of the plaintiff's motion which was pursuant to CPLR 4404(a) to set aside a jury verdict on the issue of damages in the interest of justice and for a new trial on the issue of damages.
The parties were involved in a rear-end motor vehicle collision on May 25, 2010. The accident occurred when the traffic light at which the parties were stopped turned green. The defendant took his foot off his brake, and his vehicle struck the rear of the plaintiff's vehicle. The plaintiff alleged that she sustained significant injuries to her back as a result of the accident. Summary judgment on the issue of liability was granted to the plaintiff and a trial was held on the issue of damages.
Prior to trial, the plaintiff moved to preclude the defendant's proffered biomechanical expert, Kevin K. Toosi, from testifying or, in the alternative, for a hearing pursuant to Frye v United States (293 F 1013 [DC Cir]). The motion was denied. Toosi testified at trial that the plaintiff's injuries could not have been caused by the accident. The jury returned a verdict in the defendant's favor, finding that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). The plaintiff moved pursuant to CPLR 4404(a) to set aside the jury verdict on the issue of damages in the interest of justice and for a new trial on the issue of damages. The plaintiff also moved for an evidentiary hearing to determine whether one of the jurors committed misconduct and improperly influenced the verdict. In an order dated July 22, 2016, the Supreme Court denied the motion for an evidentiary hearing on the issue of alleged juror misconduct. In an order dated May 4, 2017, the court denied that branch of the first motion which was to set aside the jury verdict in the interest of justice and for a new trial on the issue of damages. The plaintiff appeals from both orders.
The Appellate Division agreed with the defendant that setting aside the verdict was not warranted in the interest of justice due to the Supreme Court's determination not to hold a Frye hearing. "A court need not hold a Frye hearing where it can rely upon previous rulings in other court proceedings as an aid in determining the admissibility of the proffered testimony" (People v LeGrand, 8 NY3d 449, 458; see Shah v Rahman, 167 AD3d 671, 673). "Absent a novel or experimental scientific theory, a Frye hearing is generally unwarranted" (People v Brooks, 31 NY3d 939, 941). The court properly relied upon a decision of this Court and a decision of the Appellate Term, First Department, in determining that biomechanical engineering is a scientific theory accepted in the field (see Plate v Palisade Film Delivery Corp., 39 AD3d 835; Gonzalez v Palen, 48 Misc 3d 135[A], 2015 NY Slip Op 51101[U] [App Term, 1st Dept]; see also Shah v Rahman, 167 AD3d at 673).
However, the Appellate Division disagreed with the Supreme Court's determination that there was a proper foundation for the admission of Toosi's opinions and testimony. Separate and distinct from the Frye inquiry is the "admissibility question applied to all evidence—whether there is a proper foundation—to determine whether the accepted methods were appropriately employed in a particular case'" (People v Brooks, 31 NY3d at 941, quoting Parker v Mobil Oil Corp., 7 NY3d 434, 447). "The question is whether the expert's opinion sufficiently relates to existing data or is connected to existing data only by the ipse dixit of the expert" (People v Brooks, 31 NY3d at 941 [emphasis and internal quotation marks omitted]). Here, the defendant failed to establish that Toosi's opinions related to existing data and were the result of properly applied accepted methodology (see Pascocello v Jibone, 161 AD3d 516; Dovberg v Laubach, 154 AD3d 810, 813; cf. Clemente v Blumenberg, 183 Misc 2d 923 [Sup Ct, Richmond County]). Thus, Toosi's testimony should have been precluded.  
Accordingly, the Court reversed the Order dated May 4, 2017, insofar as appealed from, grant that branch of the plaintiff's motion which was pursuant to CPLR 4404(a) to set aside the jury verdict on the issue of damages in the interest of justice and for a new trial on the issue of damages, and remit the matter to the Supreme Court, Kings County, for a new trial on the issue of damages.

Agnes A. Wilewicz
[email protected]


Second Circuit avoiding coverage this week.  

Jennifer A. Ehman
[email protected]


07/15/20 Shedler & Cohen, LLP v. AON/Albert G. Ruben Ins. Servs., Inc.
Supreme Court, New York County 
Hon. Melissa Crane  Court Denies Insurance Broker’s Motion for Summary Judgment in Lawsuit Arising from Policy Obtained with Incorrect Insured Services Definition 

Defendant AON/Albert G. Ruben Ins. Services, Inc. (“AON”) was the insurance broker for plaintiff.  In March 2008, AON placed professional errors and omissions coverage on plaintiff’s behalf with a member of the Chubb Group.  The Chubb Policy required Chubb to defend and indemnify plaintiff for all claims arising out of plaintiff’s “Insured Services.”   
For the 2015-2016 renewal, plaintiff’s application described its business as including “Professional services,” “bookkeeping,” “business & personal accounting,” and “business management.”  As in prior years, AON provided plaintiff with a quotation containing the definition of “Insured Services.”  However, for this particular renewal, the quotation only included “data processing services; business and personal tax preparation services; medical claim preparation services; pension/profit sharing supervision services” as covered services.   
On January 14, 2016, plaintiff received notice of allegations claiming wrongful conduct in connection with the firm’s work for a client, Jennifer Rush.  Ms. Rush claimed that, in connection with her divorce proceedings, she learned that under plaintiff’s management, her ex-husband’s separate property was protected and indeed increased substantially during the marriage while her separate property was commingled with the community funds and generally managed to her detriment.
After receiving notice, plaintiff tendered the claim to Chubb.  In response, Chubb advised that it would provide a defense but reserved its rights regarding coverage citing two exclusions:  1) a bookkeeper exclusion which removed coverage for any claim “based upon, arising from or in consequence of any…commingling of any money, monetary instrument or securities;” and 2) an investment adviser exclusion which removed coverage for claims arising from improper use of commingled funds.  The claim then went into suit, and a year later, Chubb issued a supplemental reservation of rights letter advising that the policy covered “wrongful acts” committed in the performance of the insured services which were identified as those on the quotation (not the application).  And, in Chubb’s view, the allegations did not constitute “data processing services; business and personal tax preparation services; medical claim preparation services; pension/profit sharing supervision services.”  It further advised that accordingly the bulk of the claims would be uncovered.   
Plaintiff ultimately settled the Rush Action for $1 million, accepting $500,000 from Chubb in exchange for not pursuing coverage.  It then commenced this action again AON.
The court first considered AON’s motion for summary judgment.  AON argued that even if it failed to obtain the coverage plaintiff requested, there was no proximate cause since the commingling exclusions would still be in the policy and apply.   The court rejected this argument pointing out that the underlying plaintiff did not allege merely commingling, but also incorrect business advice and that the allocation of payment for certain property unfairly favored her ex-husband.  The court also noted that Chubb’s supplemental letter was clear that it also denied coverage based upon the insured’s failure to satisfy the definition of “insured services” (not just on the commingling exclusions).
Lastly, the court noted that plaintiff did not fail to mitigate damages when it settled with Ms. Rush.  Having no coverage due to AON’s failure to obtain it, plaintiff was understandably reluctant to risk a substantial judgment against it and settled to control its own destiny.  
However, with regard to plaintiff’s cross-motion, that motion was likewise denied.  The court disagreed with plaintiff’s argument that the commingling exclusion in the Chubb Policy would not preclude coverage and therefore AON is somehow liable.  The court concluded that such an argument was not applicable to AON.

Brian D. Barnas
[email protected]


07/16/20 Scottsdale Ins. Co. v. PTB Sales, Inc.
United States Court of Appeals, Ninth Circuit
Insurer did not Interfere with Insured’s Prosecution of its Counterclaims in Bad Faith

Scottsdale issued a CGL policy to PTB.  PTB was sued by Brooks in an intellectual property dispute.  Scottsdale defensed PTB under a reservation of rights and contributed to a settlement pursuant to a reservation of rights to recoup the proceeds.  Scottsdale brought a declaratory judgment action against PTB seeking reimbursement of the defense costs and settlement expenses paid.  PTB countersued alleging breach of contract and bad faith.
The court concluded that Scottsdale had no duty to defend PTB in the underlying action.  It ruled that some claims were not covered under Coverage B and others were excluded by the prior publication, known injury, and intellectual property exclusions.  
The Ninth Circuit also concluded that Scottsdale properly reserved its rights to recoup defense costs and settlement expenses.  Scottsdale’s reservation of rights explicitly stated it would only fund a defense subject to a reservation of the right to seek reimbursement of funds paid towards defense of claims not covered under the policy.  This was reiterated in three subsequent communications.  Scottsdale’s settlement offers were also made contingent on the right to seek reimbursement for any judgment or settlement paid.
Scottsdale also received summary judgment on PTB’s bad faith counterclaim.  PTB argued that Scottsdale interfered with its prosecution of its counterclaim against Brooks in bad faith.  However, the record showed that PTB voluntarily settled its counterclaims against Brooks for $250,000, and that PTB entered into the settlement agreement with notice that Scottsdale had reserved its rights to recoup settlement expenses.  The court found no evidence that Scottsdale interfered with PTB's successful and self-initiated effort to settle its claims against Brooks for $250,000.

John R. Ewell
[email protected]  


07/14/20 Evanston Ins. Co. v. M & M General Carpentry et al. 
United States District Court, District of New Jersey 
New Jersey Federal Court Upholds Subcontractor Exclusion to Deny Coverage for Subcontractor’s Injury 

Evanston Insurance Company (“Evanston”) issued CGL coverage to M & M General Carpentry. The case arises out of a home construction project in Livingston, New Jersey. The general contractor BCS, subcontracted work to M & M, who in turn subcontracted work to Flores Contractors (“Flores”). A Flores employee was working at the job site when he sustained injuries, which were ultimately fatal (the “Decedent”).
The Evanston policy contained the following subcontractor exclusion:  
This endorsement modifies insurance provided under the following:
B. The following Exclusion is added:
This insurance does not apply to:
Bodily Injury to Contractors or Subcontractors
“Bodily injury” to any:
(1) Contractor or subcontractor while working on behalf of any insured;
(2) Employee, volunteer worker, leased employee or temporary worker of such contractor or subcontractor; or
(3) Additional subcontractor, including the employees, volunteer workers, leased employees or temporary workers of such contractor or subcontractor indicated in Paragraph (1) above.
This exclusion applies: (a) Even if the claim against any insured alleges negligence or other wrongdoing in the: (i) Selection, hiring or contracting; (ii) Investigation;
(iii) Supervision or monitoring; (iv) Training; or (v) Retention
of any contractor or subcontractor for whom any insured is or was legally responsible and whose acts or omissions would be excluded by Paragraph (1), (2) or (3) above.
(b) Whether the insured may be liable as an employer or in any other capacity;
(c) To any obligation to share damages with or repay someone else who must pay damages because of the injury; and
(d) To liability assumed by the insured under an “insured contract.”
During Evanston’s investigation, M & M General confirmed it hired Flores—the Decedent’s employer. Evanston advised the subcontractor exclusion applied to bar coverage and disclaimed coverage. Evanston filed a Declaratory Judgment action to confirm its disclaimer.
Evanston moved for default judgment against all parties. Accepting the facts as true, Evanston established that the Decedent was a subcontractor of the insured. Therefore, the clear and unambiguous subcontractor exclusion precluded coverage for the underlying incident and underlying accident. The District Judge ruled that no coverage existed under the policy.
Note: This decision is “Not for Publication” and therefore, only has precedential value in limited circumstances.  

Lee S. Siegel
[email protected]  


07/08/20  Atain Specialty Ins. Co. v. Hank’s Dairy Bar, Inc.
United States District Court, District of Connecticut
It’s All Fun and Games Until the Insurance Company Denies a Defense

Steven Devost was toppled by a runaway large inflatable ball while enjoying an ice cream outing at Hank’s Dairy Bar. I inferred the ice cream part, but that’s why you go to a Dairy Bar in this state, as our University of Connecticut graduates can attest. Devost suffered a broken elbow, requiring surgical repair, and resulting in nerve damage. He sued Hank’s Dairy Bar, alleging that it “encouraged children to push the large ball down the hill when [it] knew or should have known that such activity would likely result in injury.”   
Hank’s tendered the suit to Atain Specialty for defense and indemnity under its commercial general liability policy. But Atain served up a triple scoop of denials, and sorry, not even a cherry on top. Atain claimed in this declaratory judgment action that its Game Exclusion precluded coverage. Unfortunately for Attain, its arguments melted away like a cup of vanilla ice cream abandoned in the Connecticut summer sun.    Relying on three subsets of the Game Exclusion, Atain moved for summary disposition. The Exclusion provided that the policy did not apply for any occurrence   arising, in whole or part, out of the ownership, maintenance, operation, set-up, take-down, participation in, or any other use by any person, of…:   d. Moon Bounces, Moon Walks, Space Walks or other inflatable games or devices; g. Boxing games, punching games, or any games that involve kicking; j. Any other game or device that measures or requires the use of any physical force or strength   Devost responded that the large inflatable ball fell “far outside the scope” of the three provisions of the Games Exclusion, which were “manifestly designed” to “void from coverage a particular class of complex devices and systems, including rock climbing walls, moon bounces, paintball, and bungee jumping.”    Judge Stefan Underhill tasted Devost’s argument and dove in. “I conclude that the Games Exclusion is, at best, ambiguous. It is not clear from the plain language of the exclusion whether the large inflatable ball described in the Underlying Complaint is excluded under the Games Exclusion. Because I am required to resolve any ambiguity in favor of the insured, I am unable to hold that Devost’s claim falls beyond the scope of coverage.”   Elaborating, the court found untasteful Atain’s argument that the plain language of the Games Exclusion shows a clear intent to exclude all inflatable games and devices from coverage. Tastier was Devost’s claim that a reasonable policyholder would not construe the Games Exclusion to extend to basic, everyday children’s activities because the list itemizes specific large, complex, and extreme activities.    The court also rejected bowls of arguments that Devost was engaged in a game:
Devost does not allege that he was injured while participating in a “contest, for amusement or for a prize,” such as soccer or dodgeball. Although a large inflatable ball may be used in a “game,” the item itself is only a piece of sports equipment. Under Atain’s view, a basketball or football could constitute “an inflatable game” despite never being dribbled
 or thrown by a participant. That interpretation, however, is not entirely consistent with the ordinary meaning of the term.   The court, therefore, granted Devost’s motion, finding that Atain owed Hank’s a defense in the underlying action and that the Game Exclusion was inapplicable.    Next, the court will take up the more controversial dispute: sprinkles or jimmies?

Diane L. Bucci
[email protected]


07/20/20 Premier Pools Mgmt. Corp. v. Colony Ins. Co
United States Court of Appeals, Ninth Circuit (California law)
Claims of Infringement of Trade Name and Service Marks Do Not Constitute Claims of Advertising Injury—Keep Your Insurer in the Loop    

Premier Pools Inc. (“PPI”) sued Colony’s insured, Premier Pools Management Corp. (PPMC”), in Texas state court alleging that PPMC licensed co-defendant Shan Pools to use the name Premier Pools and Spas and began advertising Shan as its Dallas/Fort Worth location.  PPI alleged that the insured had taken advantage of its well-known name and mark, and its reputation for providing services of the highest quality.  PPI alleged that the insured’s actions caused confusion, a loss of business and harmed its reputation for quality.  PPI alleged claims for trademark infringement, trademark dilution, and unfair competition. Premier Pools Mgmt. Corp. & Shan Pools v. Premier Pools, Inc., No. 05-1401388-CV, 2016 WL 4258830, at *1 (Tex. App. Aug. 12, 2016).   
PPMC tendered the lawsuit to Colony, which denied the tender, prompting the declaratory judgment action for coverage.  First, there was an appeal not relevant here regarding whether PPMC was an insured.  The appellate court, finding that it was an insured, remanded the case for a decision Colony’s alleged duty to defend.     
The trial court first evaluated whether the insured use of PPI’s name constituted a personal or advertising injury claim.  The potentially available coverage would have to arise out of one of the following offenses:
‘Personal  and  advertising  injury means’ injury, including consequential ‘bodily injury’, arising out of one or more  of  the  following  offenses:  The use  of  another's  advertising  idea  in your  ‘advertisement’;  or  Infringing upon another's copyright, trade dress or slogan in your ‘advertisement.’ ”
At least according to PPMC, the offense of [o]ral  or  written  publication,  in  any manner,  of  material  that  slanders  or libels  a  person  or  organization  or disparages a person's or organization's goods,  products  or  services was also at issue.  
“‘Advertisement’  means  a  notice  that  is  broadcast  or published  to  the  general  public  or  specific  marketing segments about your goods, products or services for the purpose of attracting customers or supports.”
When notified of the PPI action, Colony communicated with PPI’s attorney in the PPI action, who allegedly advised that there was no claim that PPMC was using PPI’s advertising idea, nor were there claims for infringement, copyright, trade dress or slogan in the first instance.  There was a second trial in the PPI v. PPMC case, because although PPI prevailed on the issues, the jury did not award damages.  The Second Amended Petition (“SAP”) alleged “Common Law Trademark, Trade Name and Service Mark Dilution.  In support of its claim, PPI alleged that Shan Pools forged and distributed a Better Business Bureau (“BBB”) letter attributing a complaint filed against PPMC to PPI, in which PPMC was complicit.  However, PPMC did not tender the SAP to Colony.   
The court first examined whether there was a claim for disparagement despite that it had not been pled.  In analyzing California law, the court noted:
There are two elements to  a  disparagement  claim  in  the  context  of  commercial liability coverage: A false or misleading statement (1) must specifically refer to the plaintiff's products or business, and (2)  must  clearly  derogate  that  product  or  business.  Each requirement must be satisfied by express mention or by clear implication.
The court held that there was no claim for disparagement because PPMC was not accused of casting aspersions at PPI but instead of using its name to promote its own product.  PPMC contended that the BBB letter disparaged PPI.  Again, however, the SAP was never tendered to Colony so the BBB letter could not trigger a duty to defend.     PPMC next argued that the use of PPI’s name constituted the use of its advertising idea because PPI testified that it relied only on its name and reputation to obtain business, along with yard signs where its pools were installed.  The trial court noted that in under California the use of another’s name was not the use of another’s advertising idea.  In order to satisfy that burden, PPMC would have had to show that it stole an advertising idea, but here, PPMC only used PPI’s name.   
PPMI alleged next that the duty to defend was triggered by slogan infringement claims.  The trial court noted that the 9th Circuit has defined slogan to mean a “brief, attention-getting phrase used in advertising and promotion or a phrase
 used repeatedly as in promotion.” Id at 1088 (citing Street Surfing, LLC v. Great Am. E & S Ins. Co., 776 F.3d 603, 608 (9th Cir. 2014)).  PPMC argued that a name can be a slogan.  However, the court held that PPI did not allege that it its name was a slogan but only that it was a valuable brand and declined to find coverage for a claim that was not made.   
PPMC next argued that the PPI complaint stated a claim of trade dress infringement, which refers to the design or packaging of a product that may acquire a distinctiveness which serves to identify the product with its manufacturer or source.  PPI did not allege that PPMC copied its packing or design.  Thus, this claim too was denied.
On appeal, the 9th Circuit affirmed the trial court’s decision.  It did not provide additional analysis but simply held that the district court was correct in its reasoning.  It did set forth the standard in California for determining if there is use of another’s advertising idea, stating, “[t]he proper test is whether the patents at issue involve any process or invention which could reasonably be considered an advertising  idea.” (citations omitted) According to the 9th Circuit, the use of the name Premier Pools was not a process or invention that could be an advertising idea as a matter of California law.   
07/16/20  Scottsdale Ins. Co. v. PTB Sales, Inc United States Court of Appeals, Ninth Circuit (California law) No Coverage for Advertising Injury Offenses and Three Exclusions Apply In the underlying action, Brooks Automation Inc. (“Brooks”) sued PTB Sales, Inc. for trademark infringement, copyright infringement, trade secret misappropriation, conversion, unfair competition, and unfair business practices. Scottsdale paid to defend PTB and paid to settle the case.  In the declaratory judgment action that followed, Scottsdale, having correctly reserved its rights, sought reimbursement of the sums it expended in the defense and settlement of the Brooks Action, contending that the Brooks Action did not involve covered claims.   
PTB was an independent service organization (ISO), which serviced, repaired, and rebuilt cryogenic pumps (“cryopumps”) and component parts. Brooks is a cryopump manufacturer that manufactured three generations of cryopumps. Brooks also provided services and parts for its cryopumps. PTB began servicing, repairing, and rebuilding the first two generations of Brooks cryopumps in 2000 or 2001 necessarily purchasing the parts from Brooks. In 2009, PTB began servicing and rebuilding the third generation of Brooks cryopumps.  
PBT allegedly perfected systems that enabled it to process orders and to achieve a shorter turn-around time than Brooks’ own.  PTB also enjoyed a warranty return rate similar or lower than Brooks. PTB was the only significant competitor with Brooks for servicing Brooks cryopumps.
In November 2011, Brooks notified PTB that it would not sell any more parts to PTB, asserting that it had a policy against selling to retailers, despite having sold parts to PTB for a decade.  After objection, Brooks withdrew its termination with respect to the first two generations of cryopumps but maintained its termination with respect to the third generation of cryopumps.   
Brooks alleged that PTB violated its intellectual property and other rights, improperly portrayed to customers that they can have their Brooks products serviced or refurbished by PTB and achieve the high level of quality that Brooks provides, at a lower cost. Brooks alleged that PTB stole its business and diminished its brand reputation and goodwill because it did not provide the high level of quality and service that Brooks provided.   
Brooks issued two cease and desist letters to PTB on December 2015 and May 2016.  In the May 2016 letter, Brooks accused PTB of having “been engaged in a blatant violation of Brooks' intellectual property rights by removing or masking Brooks' product labels and affixing PTB labels in their place. In the December 2015 letter, Brooks accused PTB of disseminating copies of Brooks' user manuals with PTB's logo and contact information, making the manuals available on PTB's website, and gaining unauthorized access to Brooks' software. Brooks asserted that PTB's actions were “likely to deceive and mislead consumers and potential purchasers, and constituted trademark infringement, unfair competition, false advertising and deceptive business practices in violation of ... the Lanham Act ... and California Unfair Competition and False Advertising Law ....”  
Scottsdale issued an insurance policy to PTB effective beginning on September 26, 2016. The potentially applicable advertising offenses were:   
f. The use of another's advertising idea in your “advertisement”; or
g. Infringing upon another's copyright, trade dress or slogan in your “advertisement”.
“Advertisement” was defined in the Policy as: A notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters. For the purposes of this definition:
a.  Notices that are published include material placed  on the Internet or on similar electronic means of  communication; and
b.  Regarding web sites, only that part of a web site that is about your goods, products or services for the purposes of attracting customers or supporters is considered an advertisement.
The following exclusions were addressed:  
c.  “Personal and advertising injury” arising out of oral or written publication, in any manner, of material whose first publication took place before the beginning of the policy period. ... i. “Personal and advertising injury” arising out of the infringement of copyright, patent, trademark, trade secret and other intellectual property rights. Under this exclusion, such other intellectual property rights do not include the use of another's advertising idea in your “advertisement.”
However, this exclusion does not apply to infringement, in your “advertisement”, of copyright, trade dress or slogan. ... l.  “Personal and advertising injury” arising out of the unauthorized use of another's name or product in your email address, domain name or metatag, or any other similar tactics to mislead another's potential customers.
(By endorsement) this insurance does not apply to “personal and advertising injury” arising from an offense:
a. That occurs during the policy period and, prior to the policy  period, an insured listed under Paragraph 1. of SECTION II - WHO IS AN INSURED or an “employee” authorized by you to give or receive notice of an offense or claim, knew that the “personal and advertising injury” had occurred prior to the policy period, in whole or in part. If such a listed insured or authorized “employee” knew, prior to the policy period, that the “personal and advertising injury” occurred, then any continuation, change or resumption of such offense during or after the policy period will be deemed to have been known prior to the policy period; or
b.  That occurs during the policy period and was, prior to the policy  period, known to have occurred by any insured listed under Paragraph 1. of SECTION II - WHO IS AN INSURED or an “employee” authorized by you to give or receive notice of an  offense or claim, includes any continuation, change or resumption of that “personal and advertising injury” after the end of the policy period.
The district court held:   
Brooks' claims sounding in copyright, trademark, unfair competition, unfair business practices, and conversion, and those claims related to PTB's placement of labels on Brooks' equipment, either do not constitute an advertising injury in the first instance, or are excluded from coverage under one or more of the intellectual property, prior publication, and known injury exclusions…Although PTB contends that it modified its label design within the policy period, those changes still, according to Brooks, [previously] created a false endorsement or association between PTB and Brooks…For purposes of both the prior publication and known injury exclusions, any changes to the labels were immaterial to the injury Brooks alleged, and otherwise satisfy the known injury exclusion because the plain language of the exclusion applies to “any continuation, change or resumption of such offense during or after the policy period” and are therefore “deemed to have been known prior to the policy period.”
The Ninth Circuit affirmed.  It held that PTB failed to establish that the underlying allegations implicated “the use of another’s advertising idea” or infringement of copyright, trade dress or slogan in its advertising. Instead, according to the court, Brooks’ claims were essentially centered on trademark infringement, which isn’t covered even if the infringement was involved advertising.  The court agreed that the prior knowledge exclusion applied based on Brooks’ cease and desist letters and that the letters also established that the prior knowledge exclusion applied and, because that letter contended that PTB had already used the offending labels, the prior publication exclusion was satisfied.  The court also held that the intellectual property exclusion applied because of the focus on trademark infringement claims.   

07/10/20 Superior Integrated Solutions v. Mercer Ins. Co. of NJ
New Jersey Superior Court, Appellate Division
Here, There Is Coverage for Advertising Injuries and No Exclusions Apply

Reynolds & Reynolds Company (Reynolds) sued Mercer’s insured, Superior Integrated Solutions, Inc. (Superior) alleging copyright infringement, contributory copyright infringement, tortious interference with contract, and violation of the Computer Fraud and Abuse Act.  
Reynolds developed and provided an automobile dealer management system, ERA, which provides a hosted server connected with car dealerships’ computers, provided by Reynolds to the dealerships.  The ERA included the ERAccess.exe file, a licensed terminal emulator software copyrighted by Reynolds that provided a secure gateway for transmission from the hosted server to the dealerships’ computers so that they can access, organize and obtain information about their customers.  Superior coordinates and integrates software applications for car  dealers' use  in  managing  their  financial  and  customer information.   
Reynolds customers signed agreements that, among other things, precluded them from allowing third party integrators access to the programs/files.  Reynolds allegedly discovered that another executable program file, sysdiagx.exe had been downloaded on the dealership computers’ hard drives.  Superior allegedly created sysdiagx.exe by unlawfully copying a previous version of ERAccess. According to Reynolds, Superior's services had “little or no value to Reynolds'[s] customers unless [Superior had] access to ERA or could integrate with ERA.  Reynolds concluded that Superior persuaded Reynolds' customers to allow access to the computers so that it could peddle its services for a fee.  Reynolds alleged that Superior’s copyright infringement caused it to lose customers and created technical difficulties with the program.   
The coverage at issue insured against:  
1. Advertising Injury arising out of an offense committed in the course of advertising goods, products, or services of your business/operations covered by this policy.
“Advertising injury” means:  1. Infringement of copyright, slogan, title or trade dress. 2. Misappropriation of advertising ideas or style of doing business. 3. Oral or written publication of material that: slanders or libels a person or organization; disparages a person's or organization's goods, products, or services. 4. Oral or written publication of material that violates a person's right of privacy. The Exclusions at issue precluded coverage for “[i]njury arising out of oral or written publication of material, done by or at the direction of any insured with knowledge that such is false or such would violate the rights of another and would inflict the injury,” and for “[i]njury arising out of oral or written publication of material whose first publication took place prior to the beginning of this policy or such coverage under this policy.”
The policy also contained a “Computer Software Professional Activities” exclusion, which precluded coverage as follows:  
Under Part II B, the Contractual Supplemental Coverage and the Personal Injury/Advertising Injury Supplemental Coverages do not apply to damages arising out of the rendering of, or failure to render, any professional advice, product or service by you or on your behalf in connection with the selling, licensing, franchising, creation of, modification of, integration of, or furnishing of internet access, website design, or computer software including electronic data processing programs, downloadable programs, designs, specifications, manuals and instructions.
The motion judge found that the claims qualified as advertising injury because Reynolds alleged Superior infringed its copyright by copying, distributing, and selling Reynolds's program and by instructing Reynolds's customers on how to install the software, which Superior made available for download on its website, triggering coverage for copyright infringement.  The motion court also found that the Computer Software Professional Activities Exclusion could not be applied because it essentially rendered the advertising injury coverage illusory. The motion court found that the policy’s exclusion for Statutory Communication Violation Exclusion applied to claims relating to the Consumer Fraud and Abuse Act, but because some claims were covered, Mercer had a duty to defend.   
On appeal, Mercer contended that selling is not advertising, and the Reynolds's complaint never alleged any advertising.   According to the appellate court, Superior’s acts of making itself and its product known to Reynolds customers constituted advertising and, pointed out the court, the way the policy was written, it was broad enough to be triggered based simply on allegations of copyright infringement because that was a covered offense.   
Mercer argued that the complaint never alleged that the copyright infringement was caused by Superior’s advertising.  The appellate court held that only a causal connection between the advertising and the injury had to be shown in order to establish advertising injury.  According to the court, Reynolds allegations that but for the copyright infringement, Superior could not successfully solicit Reynolds’ customers, constituted the necessary causal connection.    
Turning to the exclusions, Mercer argued that the trial court failed to address the intended injury exclusion (injury arising out of oral or written publication of material, done by or at the direction of any insured with knowledge that such is false or such would violate the rights of another and would inflict the injury).  The court disagreed, holding that the exclusion precluded coverage for intended injuries, not intended acts.  According to the court, Reynolds never alleged that Superior intended to cause injury.  The court also recognized that an allegation of intentional harm was not enough to deny the duty to defend unless there was subjective evidence that the insured intended the harm.  It further pointed out that the offenses were not limited to negligent acts.  It also noted that the duty to defend would not be extinguished because Reynolds did not have to prove intent to prove copyright infringement.  
With respect to the Computer Software Professional Activities Exclusion, the court held that it applied only Superior's rendering of service or advice to its customers or other covered persons. It does not apply to a claim made by a third party for injuries caused by Superior where Superior was not selling computer software programs to that party.
Although there had been an earlier lawsuit between the two entities in 2009, the court held that the prior publication exclusion did not apply because Reynolds never alluded to the 2009 publication in the present lawsuit and, in any event, the 2009 action was unrelated to the copyright infringement alleged in Reynolds's 2012 complaint.  

Brian F. Mark
[email protected]


07/16/20 Nautilus Ins. Co. v. 200 Christian St. Partners LLC
United States Court of Appeals, Third Circuit 
Third Circuit Court of Appeals Holds Underlying Claims of Active Malfunction of a Product Constitute an “Occurrence,” Requiring a Duty to Defend

This declaratory-judgment action arises out of two underlying construction defect actions.  In the underlying actions, the homeowner plaintiffs claimed that 200 Christian Street Partners, LLC, Virgil Procaccino, and Arthur Elwood (“the insureds”) were liable for defects in the construction of their homes.  The insureds sought coverage from Nautilus Insurance Company (“Nautilus”) as policy holders.  The policies issued by Nautilus included CGL coverage.  Nautilus agreed to defend the insureds in the underlying actions, subject to a reservation of rights.   
Nautilus commenced a declaratory-judgment action, seeking a declaration that it had no duty to defend or indemnify its insureds in the underlying actions.  Nautilus argued that the underlying complaints alleged faulty workmanship, which was not covered under the Nautilus insurance policies.  The District Court determined that Nautilus owed a duty to defend the insureds as the underlying complaints sufficiently alleged product-related tort claims that may fall within the scope of coverage of the relevant insurance policies. Nautilus appealed.
The Court of Appeals noted that the Pennsylvania Supreme Court had held that the definition of “accident” required to establish an “occurrence” under the policies could not be satisfied by claims based upon faulty workmanship.  The Court acknowledged that there is a distinction between a claim of faulty workmanship, for which an insurer does not have a duty to defend, and a claim of an "active malfunction" of a product, for which an insurer does have such a duty, since an active malfunction is sufficiently fortuitous as to constitute an "occurrence."
Nautilus argued that the claims in the underlying complaints stemmed from the insureds' alleged faulty workmanship, so the defects alleged were not "occurrences."  However, the Court of Appeals determined that the underlying complaints alleged the use of faulty materials, and the active malfunction of products, such as the windows and moisture barriers.  The Court held that these active product malfunctions constituted "occurrences" under the Nautilus policies.  Accordingly, the Court of Appeals affirmed the holding of the District Court.

Eric T. Boron
[email protected]


In my search I did not find any cases from the High Courts of the other 49 states. Check back next issue.

Marina A. Barci
[email protected]  


07/08/20 Healthplus Surgery Ctr., LLC v. Global Liberty Ins. Co. of N.Y.
Appellate Division, Second Department
Medical Expert Opinion Shows Questions of Fact around Medical Necessity to Beat Summary Judgment Motion

The plaintiff, a NJ medical provider, commenced this action to recover no-fault benefits. The carrier moved summary judgment on the basis that the services provided to the insured were not medically necessary and that the claim for one particular expense was not reimbursable under the NJ medical fee schedule (since the medical services were provided in NJ, the NJ fee schedule applies) based on an independent medical examination. In opposition, plaintiff submitted an expert affidavit opining that the services were medically necessary and that the disputed device could qualify for reimbursement under the NJ administrative code. Thus, the carrier’s motion was denied.  

07/09/20 Kemper Independence Ins. Co. v. Cornerstone Chiropractic
Appellate Division, First Department
Failure to Appear for Scheduled EUO’s Violates a Condition Precedent to Coverage

Kemper moved for summary judgment on the basis that several of the claimant’s medical provider’s had no right to collect no-fault benefits. Kemper noticed examinations under oath of both the claimant and one of his medical provider’s, JS. The claimant failed to subscribe and return the EUO’s transcripts, thus violating a condition precedent that warranted denial of the claims. In addition, JS failed to appear for two duly scheduled EUO’s. JS argued that the second notice was untimely, but the Court determined that the follow-up notice being sent one day late was a technical defect that was excusable under the regulations. Thus, the carrier’s motion was granted.  

Ryan P. Maxwell
[email protected]


Regulatory Wrap-Up
07/22/20 In re First American Title Ins. Co. Department of Financial Services 
DFS Charges First Violation of DFS’s New Cybersecurity Regulations

DFS implemented its Cybersecurity Regulation (23 NYCRR Part 500) in March 2017. DFS provided a brief background into its Cybersecurity Regulation in a recent press release available here. According to that press release, the Cybersecurity Regulation implemented was the culmination of substantial industry input, in which DFS surveyed nearly 200 regulated banking institutions and insurance companies, met with a cross-section of those surveyed and cybersecurity experts during the drafting period, and granted two rounds of notice and comment. DFS’ Cybersecurity Regulation served as a model for other regulators, including the U.S. Federal Trade Commission, multiple states, and the National Association of Insurance Commissioners (NAIC).  
After the regulation was fully implemented that March 2019, DFS instituted a new DFS Cybersecurity Division—the first such Division for any financial industry regulator nationwide. The DFS Cybersecurity Division was placed on equal footing with DFS’ Banking, Insurance, and Consumer Protection and Financial Enforcement Divisions.
On Tuesday, DFS filed a statement of charges against First American Title Insurance Company—the first ever alleged violations of 23 NYCRR Part 500 to be charged.  First American, as a licensee authorized to write title insurance in New York was subject to 23 NYCRR Part 500 as a “Covered Entity” under 23 NYCRR § 500.01(c). DFS alleges that First American exposed millions of documents containing sensitive personal information of consumers (“Nonpublic Information”).  
Nonpublic Information is defined pursuant to 23 NYCRR 500.01(e) and 500.01(g) to include, inter alia, bank account numbers, mortgage and tax records, Social Security Numbers, wire transaction receipts, and drivers’ license images. The Statement of Charges indicates that Nonpublic Information (“NPI”) means:
“all electronic information that is not publicly available and is:  
(1) Business-related information of a Covered Entity the tampering  with which, or unauthorized disclosure, access or use of which, would cause a material adverse impact to the business, operations or security of the Covered Entity;  
(2) Any information concerning an individual which because of name, number, personal mark, or other identifier can be used to identify such individual, in combination with any one or more of the following data elements:   (i) social security number,  (ii) drivers’ license number or non-driver identification card number,  (iii) account number, credit or debit card number, (iv) any security code, access code or password that would permit access to an individual’s financial account, or (v) biometric records; and  
(3) Any information or data, except age or gender, in any form or medium created by or derived from a health care provider or an individual and that relates to (i) the past, present or future physical, mental or behavioral health or condition of any individual or a member of the individual's family,  (ii) the provision of health care to any individual, (iii) payment for the provision of health care to any individual.”
According to the Statement of Charges, First American’s regular course of business involved collecting, storing, and transmitting the personal information of millions of consumers. That information was stored in a document repository known as FAST image repository (“FAST”). In April 2018, FAST housed 65 million documents tagged as containing NPI, and a random sampling of the remaining 680 million untagged documents in the FAST repository indicated that 30% of those untagged documents also contained NPI. As of May 2019, FAST housed over 850 million documents.  
In addition to FAST, First American also maintained a web-based title document delivery system, EaglePro, which allowed for documents housed in FAST to be accessed by the recipient of a link in an email without requiring login or authentication. Additionally, following an updated to EaglePro in 2014, the URL for each link shared via EaglePro included an ImageDocumentID number that was assigned a sequentially numbered ImageDocumentID. By changing one or more digits in the ImageDocumentID contained within the EaglePro link URL could access more than 850 million documents contained in FAST without requiring login or authentication prior to viewing.
After First American conducted an internal penetration test of EaglePro in December 2018, the vulnerability was detected. It was discovered that “more than 5,000 documents exposed by EaglePro had been subjected to Google  search engine indexing, i.e., collection and storage of data by Google to facilitate later information retrieval in the course of open-source Google searches by the public.” Still, six-months after the vulnerability was detected, First American failed to correct it despite hundreds of millions of documents potentially exposed.
“On May 24, 2019, Brian Krebs, a journalist who reports on cybersecurity issues,  published an article revealing that Respondent had exposed 885 million documents — dating as far back as 2003 and many containing NPI — by rendering the documents openly accessible to the public.” Only after Mr. Krebs published his findings did First American report the incident to DFS as required by 23 NYCRR 500.17 and publicly disclosed that it “shut down external access to a production environment with a reported design defect that created the potential for unauthorized access to customer data.”
First American was charged with violations of 23 NYCRR 500.02, .03, .07, .09, .14(b), and .15:
• 23 NYCRR 500.02:  o Requires that each Covered Entity maintain a cybersecurity program designed to protect the confidentiality, integrity and availability of the Covered Entity’s Information Systems.   o The cybersecurity program must be based on the Covered Entity’s Risk Assessment and designed to perform core cybersecurity functions, including identifying and assessing internal and external cybersecurity risks that may threaten the security or integrity of NPI stored on the Covered Entity’s Information Systems. • 23 NYCRR 500.03: o Requires that a Covered Entity maintain a written policy or policies, approved by a Senior Officer or the board of directors (or an appropriate committee thereof) or equivalent governing body, setting forth the Covered Entity’s policies and procedures for the protection of its Information Systems and the NPI stored on those Information Systems.   o Further requires that the cybersecurity policy shall be based on the Covered Entity’s Risk Assessment and address the following areas, among others:   ▪ data governance and classification ▪ access controls and identity management ▪ risk assessment.
• 23 NYCRR 500.07: o Requires that a Covered Entity shall limit user access privileges to Information Systems that provide access to NPI and shall periodically review such access privileges. • 23 NYCRR 500.09: o Requires each Covered Entity to conduct a periodic Risk Assessment of the Covered Entity’s Information Systems to inform the design of the cybersecurity program, which shall allow for revision of controls to respond to technological developments and evolving threats and shall consider the particular risks of the Covered Entity’s business operations related to cybersecurity, NPI collected or stored, Information Systems utilized and the availability and effectiveness of controls to protect NPI and Information Systems.   o Requires that the Risk Assessment be carried out in accordance with written policies and procedures and shall be documented. Among other things, such policies and procedures shall include:  ▪ criteria for the assessment of the confidentiality, integrity, security,  ▪ availability of the Covered Entity’s Information Systems and Nonpublic Information, including  • the adequacy of existing controls in the context of identified risks; and  • requirements describing how identified risks will be mitigated or accepted based on the Risk Assessment and how the cybersecurity program will address the risks. • 23 NYCRR 500.14(b): o Requires that as part of its cybersecurity program, each Covered Entity is required to provide regular cybersecurity awareness training for all personnel, and such training must be updated to reflect risks identified by the Covered Entity in its Risk Assessment. • 23 NYCRR 500.15: o Requires that Covered Entities implement controls, including encryption, to protect NPI held or transmitted by the Covered Entity both in transit over external networks and at rest.  This section allows for the use of effective alternative compensating controls to secure NPI in transit over external networks and at rest if encryption of such is infeasible.  Such compensating controls must be reviewed and approved by the Covered Entity’s CISO.  To the extent that a Covered Entity is utilizing compensating controls, the feasibility of encryption and effectiveness of the compensating controls shall be reviewed by the CISO at least annually.
DFS’ Statement of Charges seeks the imposition of civil monetary penalties against First American and the issuance of an order requiring First American to remedy its violations of 23 NYCRR Part 500.  

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


07/16/20 Ins. Co. of the State of P.A. v. Equitas Ins.
United States District Court, Southern District of New York
Where a Reinsurance Policy Contains a Jurisdiction Clause, Changes in that Jurisdiction’s Laws is Risk Assumed by the Parties

The Insurance Company of Pennsylvania (“ICSOP”) brought an action against Equitas Insurance Limited (“EIL”) for breach of reinsurance policies. ICSOP issued an umbrella liability policy (“Umbrella Policy”) to Castle & Cook, Inc. (now Dole Food Company, “Dole”), covering losses exceeding the limits of an underlying policy. The Umbrella Policy had  a coverage period of October 1, 1968 through October 1, 1971, and a limit of $20,000,000. The Umbrella Policy covered liability for inter alia “property damage, caused by or arising out of each occurrence happening during the policy period.” The Umbrella Policy had no pollution exclusion, and disputes under the policy were to be litigated in accordance with the laws of the State of Hawaii.   ICSOP is a whole owned member company of American International Group (“AIG”), and AIG procured a facultative reinsurance policy from certain underwriters at Lloyd’s of London in two layers (the “Reinsurance Policies”). In 2009 EIL assumed the reinsurance obligation under the Reinsurance Policies from Lloyd’s. The Reinsurance Policies reinsured the Umbrella Policy in the total amount of $7,234,125 per each $20,000,000 per occurrence limit. The “Schedule” in the Reinsurance Policies provided that the “perils and interest reinsured hereunder” would be “as original.” The Reinsurance Policies also contained a notice provision requiring immediate notice of any occurrence likely to result in a claim.  
In 1996, a Dole subsidiary developed a housing tract in Carson, California. In May 2008, hazardous levels of petroleum hydrocarbons were found in the soil and groundwater of that tract. In 2009, the homeowners sued Dole to recover damages for the environmental pollution, Dole gave notice to AIG and its subsidiaries (ICSOP). In 2016, Dole and its insurer reached a settlement, under which AIG agreed to pay the full $20,000,000 under the Umbrella Policy. After paying the settlement ICSOP billed EIL for the reinsured portion of the loss, which EIL refused to pay.  
The parties agreed that there were no issues as to material facts, and that English law governed the Reinsurance Policies. Under English law, settlements paid under the reinsured policy are presumed to be covered as a matter of law by the reinsurance policy if the reinsured can prove: 1) that the reinsured has actually paid the settlement sums, and 2) that the claim arguably falls within the insurance/reinsurance policy under which the payment was made as a matter of law. English law also applies a strong presumption in favor of “back-to-back” coverage, which means that liability under a facultative reinsurance policy is coextensive with the underlying insurance policy, where a reinsured has sufficiently proven that it is entitles to indemnification, the burden shifts to the reinsurer to prove otherwise.  
ICSOP argues that the EIL is obligated to indemnify ICSOP for the reinsured portion of its $20,000,000 settlement payment to Dole under the Umbrella Policy, as mandated by Hawaii’s adoption of the “all-sums” principle. ICSOP contends that the parties intended the Reinsurance Policies to provide co-extensive coverage, and that the follow-the-settlements provision in the Reinsurance Policies obligates EIL to pay a settlement that falls within the terms of the Umbrella Policy. (A follow-the-settlements provision provides that the reinsure agrees to indemnify insurers in the event that they settle a claim by their assured.) Supporting this position ICSOP submits English case law that stands for the proposition that, where an insurance contract and a reinsurance contract contain the same or similar language, but are governed by different laws, the reinsurance contract is presumed to have the same effect as the underlying insurance contract. In Forsinkringsaktieselskapet Vesta v. Butcher, the House of Lords held “to uphold the parties’ contractual intent, the legal effect under the foreign law of the underlying insurance policy must be given to all clauses which define and limit the scope of the cover, regardless of what the law governing the reinsurance policy mandates. [1989] AC 852 at 903 (emphasis added). Based on this reasoning coverage through the Reinsurance Policies is understood to be provided “back-to-back” with the reinsured policy.  
EIL however, argues that Vesta should not be applies because there was an inability on the part of the parties to predict what law would govern. The court disagrees as the Umbrella Policy specifies that the laws of the State of Hawaii apply, and even tough Hawaii law may have changed or expanded over time the parties were clearly aware of what law would apply to the Umbrella Policy. Therefor the development in Hawaii law, including the adoption of the “all-sums” principle was a risk assumed by the parties. Accordingly, the court granted summary judgment in favor of ICSOP, allowing it to recover under the Reinsurance Policies.  

Cara A. Cox
[email protected]

Heather Sanderson
Sanderson Law (Alberta, Canada) [email protected]  


I Do, But Not Right Now: Wedding and Event Cancellation Coverage
As wedding season has been postponed for many this year, some are proceeding with more intimate ceremonies. However, what about the couples who are unable to proceed due to illness or choose to wait until next year? It appears most vendors and venues are understanding and willing to reschedule without additional costs, but what’s a couple to do if vendors and venues request additional money or refuse to prorate costs due to limits on gatherings or outright refuse to reschedule?
For example, an Atlanta couple was left with a costly decision when their venue would only reschedule the wedding for an additional $6,500, along with forfeiture of the deposit, or simply lose the $12,000 already paid.1 Many couples are surprised but do not have a lot of options when their vendors and venues’ contracts explicitly state there are no refunds (or rescheduling).  
In Canada, two companies saw an opportunity. Apollo Insurance Solutions Ltd., Canada’s largest online insurance marketplace, has joined forces with K&K Insurance Canada to add Special Event and Wedding coverage to Apollo’s online insurance products.2 However, this type of insurance is not novel in the U.S.
Per Travelers Insurance, pre-pandemic, illness and injury comprised only 5% of top reasons wedding claims were paid in 2018, with “other unexpected glitches” making up 6%.3 It is likely this number will be larger this year, with almost 3.9 million reported cases as of July 22, 2020, per the CDC.4
Given the high number of reported cases, a portion will include couples who planned to marry this year. It appears if a groom and/or bride were to become ill with COVID-19, then there would be coverage. The problem is that such policies likely do not cover cancellations arising from the concern of the virus or executive orders prohibiting large gatherings. 
Wedding or event cancellation policies typically protect couples from physical loss or damage that prevents the wedding from taking place, such as a snowstorm in the northeast or wildfires on the west coast. Some, as noted above, may also provide coverage if a bride or groom becomes ill. Accordingly, it is important to read such policies. For example, an event cancellation policy may exclude coverage where there is a “prohibition of the event by local ordinance, regulation or statute in existence as of the date of issue…” or explicitly “fear of travel”.  
Additionally, it would behoove potential claimants to act with urgency if postponing is necessary where a policy may require the insureds to “provide timely notice to the contracted provide of any goods or services in order to diminish or avoid a loss after it was necessary to cancel or postpone the event.”  If a policy does not cover or excludes such incidents, then potential insureds should consider opting for additional communicable disease or pandemic coverage, like All-England Lawn Tennis Club. All-England, which organizes the Wimbledon tournament, had selected such coverage for the past 17 years and it paid off this year. All-England’s carrier is set to pay out $141 for Wimbledon being cancelled as a result of the pandemic.5 Such coverage may help couples who were lucky enough to reschedule their wedding without incurring large costs and prepare for a wedding later on or couples who are starting to plan for their wedding.  

1 La’Tasha Givens, Atlanta Couple Planning Their Wedding Would Be Charged $6,500 to Reschedule Their Date, 11 Alive, July 9, 2020,
2 David Dyck, Apollo Adds Online Special Event Insurance Product to the Exchange, Canadian Underwriter, July 21, 2020,
3 Daniel Bortz, Field Notes: Wedding Insurance 101, The New York Times,  Feb. 4, 2020,
4 Cases in the U.S., Centers for Disease and Control and Prevention, July 22, 2020,

5 Isabel Togoh, Report: Wimbledon’s Organizer’s Set for a $141 Million Payout After Taking Out Pandemic Insurance, Forces, Apr. 9, 2020,

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