Coverage Pointers - Volume XXII, No. 4

Volume XXII, No. 4 (No. 569)
Friday, August 7, 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.  Our Long Island office has an annoying situation.  It lost power in the storm the other day and it is not yet restored. We feel for them and it has impacted a couple of columns.

Happy August, or as happy as it can be.  Finally, I’ve returned to the office, socially distant and mask-protected when out of my private space.  It’s nice to be back and interacting with lawyers, live, rather than on Teams, Zoom, etc.


Breaking News: Decided August 6, 2020

New COVID-19 Business Interruption Decision Denies Coverage without Direct Physical Loss

Click for Link to H&F Blog and Decision
Superior Court of D.C. Sides With Insurance Carrier, Finds No COVID-19 Business Interruption Coverage

Lee S. Siegel ([email protected])
Ryan P. Maxwell ([email protected])

A second court has now found that a typical property insurance policy does not provide business interruption coverage for COVID-19 losses. In Rose’s 1, LLC, et al. v. Erie Insurance Exchange (Case No. 2020 CA 002424 B), Washington D.C. Superior Court Judge Kelly A. Higashi found for Erie Insurance, holding that, as a matter of law, COVID-19 does not cause direct physical damage to property, which is a prerequisite to coverage. Also, importantly, Judge Higashi concluded that despite the absence of the widely discussed virus exclusion, “even in the absence of such an exclusion, Plaintiffs would still be required to show a ‘direct physical loss.’”

Erie issued a commercial property policy to Rose’s 1, one of many restaurants around the country severely impacted by the pandemic. Judge Higashi distilled the coverage battel to its essence, writing that “the parties dispute whether the closure of the restaurants due to Mayor Bowser’s orders constituted a ‘direct physical loss’ under the policy.”

The court dismantled the policyholder’s arguments. Plaintiffs first argued that “the loss of use of their restaurant properties was ‘direct’ because the closures were the direct result of the Mayor’s orders without intervening action.” However, the court noted that the “orders were governmental edicts that commanded individuals and businesses to take certain actions. Standing alone and absent intervening actions by individuals and businesses, the orders did not effect (sic) any direct changes to the properties.”

Next, the plaintiffs argued that “their losses were ‘physical’ because the COVID-19 virus is ‘material’ and ‘tangible,’ and because the harm they experienced was caused by the mayor’s orders rather than ‘some abstract mental phenomenon such as irrational fear causing diners to refrain from eating out.’” However, the court found that the plaintiffs “offer[ed] no evidence that COVID-19 was actually present on their insured properties at the time they were forced to close. And the mayor’s orders did not have any effect on the material or tangible structure of the insured properties.”

Finally, the plaintiffs argued that “by defining ‘loss’ in the policy as encompassing either ‘loss’ or ‘damage,’” Erie was required to “treat the term ‘loss’ as distinct from ‘damage,’ which connotes physical damage to the property,” and positing that “‘loss’ incorporates ‘loss of use,’ which only requires that Plaintiffs be deprived of the use of their properties, not that the properties suffer physical damage.” Unpersuaded, the court determined that the words ‘direct’ and ‘physical’ modify the word ‘loss.’ Any ‘loss of use’ must be caused, without the intervention of other persons or conditions, by something pertaining to matter—in other words, a direct physical intrusion on to the insured property. The stay-at home orders were not a direct physical intrusion.

The court noted that the plaintiffs’ papers were devoid of caselaw standing “for the proposition that a governmental edict, standing alone, constitutes a direct physical loss under an insurance policy.” Agreeing with Erie, the court cited New York caselaw such as Roundabout Theatre Co. v. Continental Casualty Co., 302 A.D.2d 1, 2-3 (N.Y. App. Div. 2002), in which “courts have rejected coverage when a business’s closure was not due to direct physical harm to the insured premises,” but rather government closure orders like the D.C. closure order at issue in this case.

This decision follows first the denial of a preliminary injunction by the Southern District of New York in Social Life Magazine and, second, the granting of summary disposition of no coverage by a Michigan state court in Gavrilides Management Co. Now, with Rose’s 1, the courts continue to agree with insurers that the pandemic does not represent a ‘direct physical loss’ of property.

It’s nice to see courts recognizing that words mean something.


I really appreciate how flexible and understanding everyone has been.  Working remotely has been fine, with excellent document management and time keeping systems making practice as seamless as being in the office.

The usual array of very interesting cases populates this issue (which is attached).  Look to the bottom of this cover note for the headlines and the issue of Coverage Pointers, which is attached as a .pdf file.  Feel free to share it with your colleagues and they need only drop me a note at [email protected] to subscribe.

As of today, we’ve summarized 718 Covid-19 Business Interruption lawsuits.  Click here for the link to our materials.  We’re adding about 25-30 a week.

We are now starting to see casualty cases, from employment practices to wrongful deaths arising out of nursing home and rehab centers.  Watch this space.

Last issue I spoke about risk transfer training.  The response was absolutely overwhelming so I repeat 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 eight 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.  We are booking into the fall.


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.


Selling Music, 100 Years Ago:

Norwich Bulletin
Norwich, Connecticut

07 Aug 1920

Our Summer Record Club

            You pay $1.00 down; you take $10.00 worth of records; any you wish from our vast stocks; then you pay $1,00 per week toward the balance.

            Isn’t that an easy way to buy your records? But don’t wait, as the membership is growing every day.  How’d you like some of these in your first $10.00 assortment?

“Oh, By Gosh”

“So Long Oolong”

24-34 Franklin Street

“Where They Give You


Peiper on Property and Potpourri:

In person learning has again returned to Hurwitz & Fine.  For the first time since March, the firm welcomed staff back to work on July 27th.   We, like the rest of the world, transitioned to a remote model for most of the past four months.  While it worked, Zoom calls cannot replace day-to-day interactions with colleagues.  Even if those interactions are six feet apart and muffled by ever present facemasks.

While the H&F family has rejoined a traditional work model, my own family continues to await final approval for the upcoming school year.  It looks like my kids will be embracing the hybrid model of some in-person learning, some video conferencing and some self-guided study.  My eighth-grade daughter will thrive in this model, but we have some ongoing concerns about my sixth-grade son’s “self-guided” study situation.  Any thoughts on Fortnite as a class for credit?  He did complete his first of two mandatory reading assignments on time so perhaps there is reason for optimism.

Video appearance appears to a way of life of the upcoming Fall conference schedule as well.  I am scheduled to speak at DRI program in November which was just moved to “online,” and I’ve seen several other organizations move to that model as well.  Again, the optimist in me points out that attendance and participation in those 8:00 am slots will be much greater with a “join from home” model.  To make it as authentic as possible, though, we’d suggest making sure to have dessert and an extra-glass of wine the night before.

A final thought on training.  Dan has been busy providing updated training on basic NY coverage protocol and risk transfer.  On the first party side of things, we have a few options for you to consider as well.

  • Defending the Company in NY – methods to protect the claims file and responding to growing threats of bad faith and extra-contractual claims;

  • Appraisal is not a four-letter word;

  • Investigating Business Interruption Damages Claims;

  • CAT Toolbox – managing and marshalling troops in times of chaos.

If you’re interested in any of these, or any other topic, please do not hesitate to drop us a line. Dessert choices are left up to you.

That’s it for now.  Health and safety to all.

Steven E. Peiper

[email protected]


Candidate Warren Harding Recorded for Posterity:

Hartford Courant
Hartford, Connecticut

07 Aug 1920



Takes Sixty-Mile Auto Ride—Indianans to Call Aug. 20

            Marion, Ohio, Aug. 6.—Senator Warren G. Harding today received another string of visitors swept through a bale of accumulated letters, disposed of a miscellany of details that have been awaiting his attention at headquarters, and then set out for a sixty-mile automobile ride, his first real diversion this week from the cares of the campaign.  Once of his odd jobs during the day was to make five speeches, his only audience, however, being the operator of a recording apparatus for phonograph records and the speeches all were excerpts from his previous public deliverances.  The records are to be distributed by the republican national committee as a means of carrying the front porch campaign into every locality.

            As a result of candidate’s political conferences his headquarters announced tonight that one of the first big delegations to come from outside Ohio would be from Indianapolis.  August 20 was set as the date after Senator Harding had talked over arrangements with a group headed by Elias C. Jacoby, chairman of the Indianapolis Harding club.  They told the nominee that more than 2,000 Indianans would be present. 


Wilewicz’ Wide-World of Coverage:

Dear Readers,

Between all of the school closures, court closures, illnesses, excessive heat, and now hurricanes, it has been difficult sometimes to find joy during this tumultuous year. In our house, as I previously reported, we’ve been keeping busy with reading, paint-by-numbers, and catching up on old shows. We have also invested in a few new gadgets to fill the time, including an iPad Pro and a couple of Kindle Fires. Beyond that, the days continue to blend together while we await news from the schools as to reopening plans. My kid, who actually loves school, cannot wait until some protocol is in place. Whether in person, remote, or a hybrid, she just wants to get back into a routine, start high school, and have something to do besides tv shows and chores. In the meantime, we continue to enjoy this “longest summer vacation ever” and try to find joy in the little things around us.

In other news, no news on the coverage front from the Second Circuit. While the court appears to be issuing lots of decisions on other types of cases, insurance coverage is being neglected. Here’s hoping that changes soon.

Until next time,

Agnes A. Wilewicz

[email protected]


Should Women Have Had a Sense of Humor, 100 Years Ago?:

Press and Sun-Bulletin
Binghamton, New York

07 Aug 1920


            If women had a better sense of humor, the solemnity of men would give them merriment enough to compensate for half their troubles.  For example, the gravity with which the New York Times chides two women charged with election frauds in Chicago is sufficient to have Lot’s wife smile after she had turned to salt.

            Five polling clerks are on trial for tampering with tally sheets and making false returns at last year’s primary, but no editorial tears are shed for the three who happen to be men.

            Crooked polling clerks are among the oldest tools employed by crooked politicians.  No one has suggested that the ballot ought to be taken away from men because crooked men insist upon crowding into politics.

            Women are not all saints.  One woman, mentioned in the Bible, had seven devils cast out of her; and the recent rioting at the Bedford Reformatory had led to the use of steam baths and ice-packs to get the devils out of a score of women convicts confined there.

            The attitude of the Times on the suffrage question suggest that attitude of the Turk on the domestic question.  The Turk puts his women in a harem to keep them from temptation.  But this cozy masculine method doesn’t keep women from temptation; it only keeps the Turks from civilization.


Barnas on Bad Faith:

Hello again:

One of the reasons the first four days of the NCAA Tournament is so great is there are meaningful sporting events on all day.  March Madness was canceled this year, but we’re getting a taste of March in August.  The last couple days have had NHL games starting at noon, and there have been live NBA, NHL, and MLB games on nonstop into the early hours of the morning.  After months of no live sports, we now have more sports to choose from than ever.  I’ve been making up for lost time as best I can.

Turns out I was wrong last week when I lamented the fact that the Blue Jays weren’t coming to Buffalo.  Their first game here will be on August 11, 2020, and preparations are ongoing for their arrival at Sahlen Field.  I’ve been taking walks during the day to check on the progress, and things appear to be coming along nicely.  Unfortunately, my scouting mission to identify places near the ballpark to see the games revealed that options are extremely limited.  Unless you have an apartment or office space in one of two buildings near the park, you will be stuck watching on television like the rest of us.  While I’d love the chance to see an MLB game in person in my hometown, it will still be cool to see it on television.  If only I could get the Jays to start playing a little better.

My case this week is a motion to dismiss a bad faith claim that was granted by the Western District of Pennsylvania.  The Plaintiffs’ plead facts that demonstrated there was a dispute as to the value of the claim.  However, there were no facts alleged to explain how or why the offer made by Geico was anything other than a legitimate dispute as to the value of the claim, which does not necessarily give rise to bad faith.  Thus, the bad faith claim was dismissed.  The insured plaintiffs were given the opportunity to serve an amended complaint.

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

Brian D. Barnas

[email protected]


Police Case Fails:

Poughkeepsie Eagle-News
Poughkeepsie, New York
07 Aug 1920



Leadbitter Unable to Catch the Rider Who Shot Through City at 60 Miles an Hour.

            Movie stuff was pulled between Traffic Officer George Leadbitter and a man riding a motorcycle on Market Street at a high rate of speed, late Friday evening.  The motorcycle raced through market Street, over Washington and north at a rate of speed which was estimated by witnesses to exceed 60 miles an hour.  The policeman failed to catch up with his quarry and although he shot several times over his head the man failed to heed the warning.

            Dr. John A. Card started in pursuit after the machine on which Leadbitter was riding was hindered by the light going out, and did not even get near the man, although he went as far as the Hudson River State Hospital.

Off the Mark:

Dear Readers,

After being back in the office for two weeks, we lost power due to tropical storm Isiasis and remain without power.  Such is life.  I’m sure we will be back by the end of the week.  At least I hope so.

This edition of “Off the Mark” brings you a recent construction defect decision from the United States District Court for the Eastern District of Pennsylvania.  In Atain Ins. Co. v. Xcapes & Craig Lessor, the US District Court examined a carrier’s obligation to defend and indemnify its insured, finding that no duty to defend or indemnify was owed as the underlying complaint did not contain a single allegation potentially coming within the policy's coverage.

Until next time …

Brian F. Mark

[email protected]


I Guess Only Christians Could Cut Stone, a Century Ago:

The Brooklyn Daily Eagle
Brooklyn, New York

07 Aug 1920

GIRLS, Christians, over 18, for pleasant work in precious stone cutting factory.  Apply with written references or with parents.  STANDARD CALIBRE CO., 316 Herkimer street.


Boron’s Benchmarks:

First, our sympathies go out to all of our readers dealt a mighty blow by once-hurricane-turned-tropical-storm-Isaias. Second, our sympathies go out to the TV and radio broadcasters who likely had to practice pronouncing the storm Isaias’s name over and over before taking to the airwaves to report on it. I understand the prevailing pronunciation for the name of the storm is “ees-ah-EE-ahs”.  So simple, right?  Then why did I hear one of our local TV broadcasters who shall remain nameless mispronouncing it as “is-eh-EYE-eh-ess”?  Sounded like he was asking whether the last four letters of storm’s name were a-i-a-s, rather than pronouncing its name. 

I’ve had a pretty OK past two weeks.  I’ve been back into my office for four of the past 10 workdays.  So great to see and speak with my colleagues in person, rather than just on a computer screen!

In case you’re curious, Western New York was spared any meaningful hit from storm Isaias.  No power outages.  Our frozen ice cream sandwiches made it through the night without incident…except for two of them…which, according to the Ice Cream Sandwich Life Expectancy Table we keep on our freezer door, were each about to exceed their  window of goodness last night.  Suffice to say my wife and I make every effort to avoid windows of goodness closing.    

This edition of Boron’s Benchmarks, the Coverage Pointers beat monitoring and reporting on insurance coverage decisions of the high courts of the 49 states not named New York, reports on a Supreme Court of Michigan Opinion issued July 29, 2020, in a declaratory judgment action addressing whether Meemic Insurance Company, an insurer issuing policies to educators in the Midwest, can void its automobile insurance policy and stop paying no-fault benefits by enforcing the antifraud provision in the policy. Can the contractual defense of fraud, occurring after the fact apply to void coverage mandated by Michigan’s no-fault statute? To find out, go ahead and read the majority’s Opinion, the Concurrence, and the substantial footnotes of the Michigan Supreme Court provided for your review in the actual Coverage Pointers section. Just don’t hitch a ride on top of the hood of a vehicle to get over to the Coverage Pointers section.  You also have the option to start by reading my write-up of the Opinion, and then decide if you want to go on and read the full Opinion. This window of goodness will remain open, over on Coverage Pointers, for as long as the internet lives.  The internet is…a window of…goodness?  Hey what can I say? I’m a glass-half-full kind of guy, who also thinks dashes and hyphens are woefully-under-u-til-ized.

Until next time, be well.

Eric T. Boron

[email protected]


The “Babe” Continues to Swat:

Buffalo Courier
Buffalo, New York

07 Aug 1920



Mackmen Jolt Cleveland by Winning Close One—White Sox Win.

            Detroit, Aug. 6.—Babe Ruth, home-run champion, added two more circuit blows to his string in the second game of the Tiger-Yankee series here today, bringing his total for the season to forty-one.  New York won the game, 11 to 7.

            Ruth’s first home run came in the third inning.  The first time up he knocked the ball to the top tier of the bleachers in center field.  The second in the sixth inning, cleared the wall over right field.  The second drive scored Peckinpaugh and Ward ahead of Ruth.  Quinn was hit hard and was removed in favor of Mogridge in the third.  Oldham relieved Dause in the eighth. 


Barci’s Basics (On No Fault):

Hello Subscribers!

I hope you are all still staying healthy and safe! For some reason it feels like a very long time since our last newsletter. Maybe it’s the anticipation of returning to the office, or maybe it’s because I turned a year older and am officially responsible for my own health insurance now. Either way! My answers to last issues topics are as follows: 1) This question was inspired by everyone’s recent watching of Hamilton on Disney+. I have not seen the show on stage myself, but having watched the original cast production now I can concretely say I don’t understand the hype (which was also my feeling before I watched it). It was a great show, don’t get me wrong, but it’s certainly not the best show I’ve ever seen. I do appreciate that it brought a lot of people to musical theater though in the past few years than otherwise would have gone! That being said, the best show I’ve seen in recent years is tied between Come From Away and Dear Evan Hansen. I saw both last year and would recommend that everyone see them ASAP. Both have phenomenal soundtracks, the message in Dear Evan Hansen is so important, and, if you like the historical aspect of Hamilton, Come From Away is a very interesting look at the aftermath of 9/11; 2) I have quite a few nightmare roommate stories! I won’t spend all my time typing them out for you, but if you ever need a good laugh feel free to ask me about them. I will leave you with this one that is less nightmarish and more disgusting. When I transferred to UB, I lived in a dorm with a foreign student from China. She was very nice, but rarely ever in the room with me. One day I came back to the room and saw that she had brought yogurt and sushi back from the dining hall. It was a Thursday night and I was leaving for the weekend. After I had packed my weekend bag and my roommate still wasn’t back, I left her a note letting her know I would be gone all weekend and that she was welcome to put the yogurt and sushi and anything else in my fridge if she needed to. Well, when I got back on Monday, I saw the yogurt and sushi were still on the desk with my note! After 5 days!! I was already running late for class and was only there to drop my weekend bag off, so I figured I’d deal with it when I got back. Well, when I got back I found my roommate at her desk eating the same yogurt and sushi! Needless to say, I was quite grossed out and did not look at her the same way after that. Maybe she had a stomach of steel? That’s me for this week. For the next two weeks consider these topics:

  • What is your favorite thing about the city/town you live in?

  • Do you think there is a sport missing from the Olympics that should be included?

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

On the no-fault front, I have two cases for you both involving default judgments related to payment of no-fault benefits. Out of the First Department, the case deals with whether a default declaratory judgment that a carrier does not owe no-fault benefits to a claimant precludes said claimant from bringing a personal injury action against the insured under the theories of res judicata and collateral estoppel. Then the Second Department case deals with the elements that a carrier must meet in order to successfully obtain a default declaratory judgment to not pay no-fault benefits.

That’s all folks,

Marina A. Barci

[email protected]


Jealous Husband Murders Wife – Kids Turn Him In:

Albany Democrat-Herald
Albany, Oregon

07 Aug 1920


Former Linn County Woman Drowned by Husband Jury Reports

            Mrs. Minnie Cecil Anderson the Brownsville young woman who was drowned in the Columbia river near Astoria last Sunday, was murdered by her husband, Olaf Anderson, according to the coroner’s jury, which returned its verdict yesterday.

            The verdict was given after Anderson had made a confession, following three days of grilling.  The verdict was as follows:

            “We find that Minnie Cecil Anderson came to her death by drowning at the hands of her husband, Olaf Anderson, August 1, 1920, while he was in a jealous and quarrelsome frame of mind.”

            Anderson’s statement, according to a dispatch from Astoria was as follows:

            “I’ll tell you the whole truth.  My boy’s story is true.  I drowned my wife.”

            “Sunday morning we started out for a ride in my brother’s boat and went toward the Miller Sands,” he said.  “My wife and I were quarreling.  She said she was doing to leave me and take both the children.  That made me mad.  After we had tied the boat to the stake, I got up from my seat, went behind my wife, picked her up and then jumped overboard backward, intending to drown both of us.  After getting into the water, I saw that the children, who were in the boat, were about to fall overboard, so I let go of my wife and went back to the boat.  I saw Mrs. Anderson twice for a second before she went down.  When Wilfred, my 4-year-old son, asked me where his mamma was, I told him ‘Mamma has been drowned.” I then came back to town and reported the drowning to Coroner Hughes.”

Editor’s note:  I followed the story so see what happened to the murdering husband. While in prison in October, he took a towel and hanged himself.


Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

What I wouldn’t give for a normal summer with my wife and the kids. Our oldest is three, and many can certainly understand where I’m coming from when I say that he needs more physical activity outside, with his friends. As I have heard on many occasions, the earliest memories that stick with you are from your third year on this Earth, and I want him to get a jumpstart on a normal childhood soon enough.

This week’s Legislative List features a bill which rolls back immunity provisions for the healthcare industry. Only time will tell if the timing on this one was correct. Also, in the Regulatory Wrap-Up, we discuss DFS’ part in providing some resolution for those impacted by the Nazi occupation of France and looting that occurred.

Although I didn’t write about this bill, it is worth noting (and could not be better timing) that a new law in New York authorizes the manufacture and sale of ice cream or other frozen desserts made with liquor.

Until next time,

Ryan P. Maxwell

[email protected]


Don’t Get Caught in the Rain, 100 Years Ago:

Deseret News
Salt Lake City, Utah

07 Aug 1920

Paper Suits to Make Bow Here (By Associated Press.)

            WASHINGTON, Aug. 7.—Paper suits much in vogue in Germany and Austria soon will make their appearance in the United States and if inquires to the department of commerce can be taken as an indication of the probable demand they may become even more popular in the lower-the-cost-of-living campaign than as the lowly overall a short time ago.

            Cable orders for samples of the suits have been dispatched by the department of commerce, it was announced today, and when the samples arrive they will be displayed not only in Washington, but also in the department’s district and co-operative offices located in important cities of the country.

            Explaining its order for the samples, the department issued this statement:

            “This action was taken because of the wide interest created by the publication of a recent dispatch from England that a large quantity of such suits were on display in English stores …


CJ on CVA and USDC(NY):

Hello all,

The long wait is over. On July 31, 2020, the NYS Legislature sent the extension of the CVA “look-back” period (S7082/A9036) to the Governor for his signature, and on Monday August 3, 2020, the “look-back” period was officially extended to August 14, 2020. Unfortunately, there has been little litigation surrounding coverage issues with the CVA thus far. Much of the CVA adjacent litigation (meaning litigation not dealing directly with the causes of action set forth in the complaints) has focused on constitutional challenges to the law (which have been denied) and issues surrounding the bankruptcy of various dioceses in the state. I suspect that this will change as more institutions and organizations begin to seek coverage for these claims, and the dates of loss in the complaints move from the 1960s towards the late 1980s when abuse and molestation exclusions became more popular. As always, stay tuned to these pages and our website for any breaking news.

In today’s issue I’m looking for a little audience participation. I highlight a case from the Eastern District of New York involving a broken-down Ferrari, a miscommunication with a high-end car dealership, and an auto policy theft exclusion. I save my impressions for the end, but I want to know, do you think the exclusion applies? Shoot me an email and let me know, I’ll report any statistically significant results in the next issue.

Happy Reading!

Charles J. Englert, III

[email protected]



The Buffalo Enquirer
Buffalo, New York

07 Aug 1920



(By the International News Service.)

            New York, Aug. 7.—Frank Hathaway, a California oil man, was fined $25 by a justice of the peace at Lynbrook, L.I., for striking his caddy with a golf stick after the boy had gone on strike for higher pay. 


Dishing Out Serious Injury Threshold:

Out of power in Long Island. Be back next issue!

Michael J. Dischley

[email protected]


Riots in Illinois:

New-York Tribune
New York, New York

07 Aug 1920


Illinois Riots Renewed; More Troops Called

Fresh Disorders Break Out in Foreign Quarter of West Frankfort In Spite of Presence of Soldiers

Eight Are Reported Dead Italian Residents Beaten as the Exodus Continues; Loss From Fire Heavy

Special Dispatch to The Tribune

            WEST FRANKFORT, Ill., Aug. 6.—Race rioting, after being quelled by the arrival of 500 or more state troops this morning, broke out anew this afternoon, and resulted in Major Satterfield wiring Governor Lowden for 500 additional troops.  He indicated that the situation in the district was critical.  Foreigners of all descriptions are being beaten on sight, and the road leading from West Frankfort are filled with fleeing families.  Soldiers are reported to have been attached by the rioters this afternoon.

            Eight persons were reported killed in the fighting last night and to-day between English-speaking residents and foreigners, who made up about half of the population of 10,000.  The report could not be confirmed. Officers on Major Satterfield’s staff were unable to obtain the names of any dead.  Scores were injured and the property loss resulting from fire is estimated at tens of thousands of dollars.


Bucci on “B”:

Hello all,

I hope everyone is safe and sound today.  Here in Connecticut and on Long Island, we experienced the winds and rains of Isaias on Tuesday.  Many, including our Long Island office, lost power.  Good thing everyone is set up to work from home.

My yard is covered with large tree branches that I can’t move.  It’s kind of cool though, it’s like something other than Covid.

Hope to have more next issue.  Take care.

Diane L. Bucci

[email protected]


Black Lives Mattered 100 Years Ago, but Few were Listening:

Buffalo Evening News
Buffalo, New York

07 Aug 1920

NEGROES WANT MORE RIGHTS International Convention Is Working for Improvement of Conditions of Race.

NEW YORK, Aug. 7.—Five hundred negroes, meeting daily in long sessions, are devising an international “bill of rights” for the black race and arranging a program for its realization.

The negroes are delegates to the first international convention of the Universal Negro Improvement association.  They come from almost every country where negroes have colonized, and one hears the accent of the Caribbean “cockney” mingling with the soft drawl of the south.

Among the leaders are an admiral of the Haitian navy, a prince from Abyssinia, and the mayor of Monrovia, Liberia.

The association claims a membership of 1,000,000 and has as its eventual goal solidarity among the 400,000,000 negroes of the world.  The program calls for the establishment of the supremacy of the black race throughout Africa, regardless of governments established there by European nations.  The Belgians, English, and the others would be invited to get out.  If they didn’t, they would be forced out.

This week the delegates have listened to reports from various sections of the world, setting forth the economic, social, and political position of the negroes under various flags, according to Scott Ferris, editor of the Negro World, and spokesman for the association, social and political discrimination and industrial exploitation of the negro in all lands have been revealed.

On the basis of the reports, the bill of rights will be drawn, setting forth the claims of the black race upon society.  There are evidences that the demands will be more radical in tone than anything the negroes have ever collectively produced before.  They will be based on conditions in northern and southern United States, in the union of South Africa, in the British possessions, in the Virgin Islands, and everywhere where there is a considerable negro population.


John’s Jersey Journal:

A blackboard sign on a wall

Description automatically generated

Dear Subscribers:

Our regular subscribers know that in addition to reporting on recent insurance law decisions, we occasionally climb up on our soapbox and vent about cases we disagree with. Today is my day to make the climb.

I’ll start with the undisputed facts. Plaintiff, who was bit by a dog, sues dog owner. Plaintiff amends complaint to also challenge liability carrier’s denial of coverage to dog owner by adding the carrier as a direct defendant.

New Jersey follows the same principle as New York. Since a claimant is a stranger to the policy, she cannot assert a direct action against the defendant’s carrier unless she either (1) takes an assignment (confession of judgment); or (2) she obtains a judgment and the judgment is not paid by the tortfeasor. Ross v. Lowitz, 222 N.J. 494, 513 (2015). Liability carrier moves to dismiss because, without a judgment or assignment, claimant had no standing to sue it.  State court dismisses the carrier without prejudice.

Carrier then files affirmative DJ in federal court.  Dog owner moves to dismiss asserting the Entire Controversy doctrine applies. New Jersey’s Entire Controversy doctrine requires a party to a lawsuit bring all of their legal claims that relate to the same set of facts in one single suit. The federal court dismisses the DJ action with prejudice, and rules that carrier has to bring any claims against dog owner in state court.

Why? Because all the parties were there and the carrier knew it wanted declaratory relief, the court reasoned.

By this logic, a plaintiff can keep insurance carriers out of federal court simply by suing them in state court despite no legal standing to do so. Then the carrier is anchored in state court if it wants to litigate coverage at some point.

Why is it that a claimant can, by taking this course, deprive the carrier of its right to federal court jurisdiction? The decision is wrong in my view. The decision overlooks that the Entire Controversy should not apply where the party bringing a defendant into court has no legal or equitable right to do so.

The decision is summarized in the attached issue. I will be watching this one to see if it is appealed.

In the meantime, if you have any questions or claims involving New Jersey law, let us know, we’d be happy to work through the issues with you.

John R. Ewell

[email protected]


Suffrage is Around the Corner:

El Paso Times
El Paso, Texas

07 Aug 1920



            NASHVILLE, TENN., Aug. 6.—With only two days left before the convening of the extra session of the legislature, with much work done and much yet to be done, forces engaged on both sides of the fight to secure the ratification by Tennessee of the federal suffrage amendment are redoubling their efforts today.

Headquarters of the various factions are humming. Workers come early and stay late. Staffs are being Increased.  The daily volume of work grows.

As the time for preliminary efforts gets shorter no stone Is being left unturned to bring home to the legislators of Tennessee the points involved in the ratification of the amendment.

The Tennessee League of Women Voters has sought eminent legal opinion from all over the state and has on its side the opinion of Assistant Attorney General Frierson, State Attorney Thompson, Charles E. Hughes, special counsel for the league and scores of others.


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

Welcome to the dog days of summer. They were historically the period following the heliacal rising of the star system Sirius, which Hellenistic astrology connected with heat, drought, sudden thunderstorms, lethargy, fever, mad dogs, and bad luck. In Finland they last, officially, from July 22nd to August 22nd. We had some bad luck here in Connecticut. While Hurricane Isaias sent “some rain” to my parents in Florida, it knocked over trees and took out the power all across Connecticut. We were forced in my house, wait for it, to read books (audible gasp!). Trauma counselors are working with my children. It’s touch and go…This edition, my column chronicles the recent decision from the Connecticut Supreme Court to sanction Alex Jones for his violent on-air rant against opposing counsel in the Sandy Hook Elementary School shooting denial case. The Court tackles the competing interests of the First Amendment right to free speech and the courts’ interest in the fair administration of justice. It’s heady stuff.

Be kind to each other and wear a mask. It just might save your life.

Lee S. Siegel

[email protected]


Bootleg Alcohol?:

The Buffalo Enquirer
Buffalo, New York

07 Aug 1920



Effect Domestic made Booze Has on Consumer

Will Guide Judge as to Its Alcoholic Content

(Chicago Tribune Service for THE BUFFALO ENQUIRER.)

            Washington, Aug. 7.—A person producing home-made beverages from fruits will have to use his own discretion in deciding whether the alcoholic content is intoxicating in fact. This was learned from inquiries at the offices of the prohibition commissioner, as to how far anyone could go under the recent ruling, allowing cider and fruit juices in the home.

If a person can drink a wine with 15 per cent of alcohol in it and it is not in fact intoxicating—that is if he can walk out the front door of his home, and down the steps without attracting attention such as staggering or calling the neighbors bad names, all well and good. If arrested and carried before a court, the judge will be the person to determine if the beverage was intoxicating in fact.

Only a fruit juice that ferments by the orderly process of standing is lawful. Here is the way some of the juices act when left strictly alone, without addition of sugar or application of heat:

Blackberry juice will contain as much as 4 per cent alcohol.

Concord and similar types of grapes can be hardly expected to register higher than 10 per cent.

The Muscat grape of California, having a higher sugar content, will go to 15 or 16 per cent.

The berry juices generally have the alcoholic content nearest the limit set by the drys. Loganberries, blackberries, raspberries, strawberries and the sweeter varieties of cherries come in the same class. All contain about 4 per cent of alcohol.


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

Dear Subscribers,

Hope you are doing well and taking advantage of the “last month” of summer! I am taking advantage by taking day trips on the weekend to Central New York to see my brother whenever he’s not working. Most recently, I met up with him in Ithaca. After kayaking down the Buffalo River a couple weeks ago (if you’re in the area, I recommend booking with Elevator Alley Kayak because you start by all the grain elevators and may even get to see a large dry bulk cargo barge loading grain), I suggested to my brother that we try kayaking on Cayuga Lake. Although the kayaks with Elevator Alley were better quality, in my novice opinion, the water on Cayuga Lake (which is one of the eleven Finger Lakes) was so much more welcoming. Instead of the murky Buffalo River water, the clear, blue water of this particular Finger Lake was inviting enough that we went swimming off the kayaks almost immediately. It was a beautiful day and given the border is still closed, which means no access to Canadian beaches, I’ll stick with visiting the Finger Lakes for all my swimming needs. Stay healthy and don’t forget the sunblock!

Cara A. Cox
[email protected]


We are in the midst of two weeks of glorious summer weather.  So what do we do? Time to re-stain our deck, as well as clean and re-stain our wooden patio furniture. What a job, but the result is immediate (we sometimes lack that level of immediacy in the legal profession) and beautiful (I wouldn’t call even the most brilliant pleading ‘beautiful’).  That’s why we need to diversify our lives and look for success where we can find it. Even if it is a newly-stained deck.

Heather Sanderson
Sanderson Law (Alberta, Canada)

[email protected]


Can’t Get Divorced without Being Married:

The Buffalo Times
Buffalo, New York

07 Aug 1920


            AKRON—He’ll have to prove he’s married before he can get a divorce!  Walter C. Payne told Presiding Judge Spicer that “some time in September 1912, in St. Louis, the parties named in the suit agreed between themselves to live together as man and wife.”  Now they want to end the agreement.  “You’ll have to prove a common-law marriage existed before I can grant a divorce,” the judge ruled. 


Jen’s Gems:

Jen sends her best.


Jennifer A. Ehman

[email protected]


ADR 100 Years Ago:

The Buffalo Commercial

Buffalo, New York

07 Aug 1920



Chicago Association of Commerce

Arranges for Commercial Arbitration



Obviates Undesirable Publicity, Delay, Expense And Enmity

By the Associated Press.


            CHICAGO, Aug. 7.—Avoidance of business lawsuits in favor of arbitration is urged on local businessmen by the Chicago Association of Commerce.  The association has arranged for commercial arbitration under the state law and has designated a committee to promote it.  In an address to businessmen the committee says of its work:

            “If you have any commercial disputes in your business, you can avoid the many disadvantages of court action by using the facilities of the Chicago Association of Commerce for commercial arbitration.  You will thus obviate undesirable publicity, delay, expense, enmity and the danger of having your matter determine by a jury unfamiliar with your line.

            “An Illinois statute in arbitration and awards provides for commercial trade court.  The rules of the Chicago Association of Commerce for the conduct of arbitration, under this statute, have been approved by the Superior Court of Cook county and by the municipal court of the City of Chicago.


Headlines from this week’s issue, attached:

Dan D. Kohane

[email protected]

  • Broker Not Liable for Failure to Secure Workers Compensation Insurance
    Under CG 00 01 Form, AI Coverage Provided to Contractor is Generally Primary to Contractor’s Own Coverage (Form Dependent, of Course)

  • 48-Day Delay in Disclaiming Based on Employee Exclusion was Untimely where Carrier Could Not Explain Reason for Delay

  • Insurer Did Not Submit Enough Proof to Establish Right to Default Judgment in Declaratory Judgment Action
    Good Analysis of Coverage Trigger Under SUM Policy


    Steven E. Peiper

    [email protected]

  • Shut out this week.  See you in two weeks.


Michael J. Dischley

[email protected]

  • Power outage on Long Island. See next issue for Serious Injury Threshold decisions.


Agnes A. Wilewicz

[email protected]

  • Second Circuit quiet on coverage once again.


Jennifer A. Ehman

[email protected]

  • Trial Court Finds Tenant’s Insurer Must Reimburse Owner’s Insurer Relative to Claims Arising Out of a Fire at the Leased Premises


Brian D. Barnas

[email protected]

  • Allegations of Value Dispute were Insufficient to State a Claim for Bad Faith


John R. Ewell

[email protected]

  • New Jersey Federal Court Locks Liability Insurer Out of Federal Court


Lee S. Siegel

[email protected]

  • Court Has Inherent Power to Sanction a Litigant’s Speech


Diane L. Bucci

[email protected]

  • Sorry, no good Coverage B decisions this issue


Brian F. Mark
[email protected]

  • US District Court Finds No Duty to Defend or Indemnify Insured as Underlying Allegations of Faulty Workmanship and Breach of Contract did not Trigger Coverage


Eric T. Boron

[email protected]

  • Antifraud Provision in Auto policy Ruled Invalid and Unenforceable 


Marina A. Barci

[email protected]

  • Carrier’s Successful DJ Action against Claimant Does Not Preclude Claimant from Bringing Personal Injury Action against Insured
  • Carrier Must Prove Entitlement to Judgment on Merits in Default Action, even When Opposing Parties Fail to Answer


Ryan P. Maxwell

[email protected]

  • New Law Amends Provisions Regarding Health Care Facilities and Professionals Providing Care for Persons During the COVID-19 Emergency

Regulatory Wrap-Up

  • DFS Collaborated with the Fondazione Cerruti and Filed Successful Claims with the Commission for the Compensation of Victims of Spoliation Resulting from the Anti-Semitic Legislation in Force During the Occupation (CIVS)


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

[email protected]

  • Miscommunication Between a Vehicle Owner and Dealer Creates an Issue of Fact as to the Auto Policy’s Theft Exclusion


Cara A. Cox

[email protected]

Heather Sanderson
Sanderson Law (Alberta, Canada)

[email protected]

  • We are now in the Canadian COVID-19 Class Action Flood Season
  • American Lawsuits and Class Actions


That’s all there is.  Stay healthy. Stay strong.


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]

08/05/20       Da Silva v. Champ Construction Corp.
Appellate Division, Second Department
Broker Not Liable for Failure to Secure Workers Compensation Insurance
The plaintiff commenced this action for construction site-claimed damages,  He was employed by Champ Construction (“Champ”), at the time.

Champ started a third-party action against an insurance broker, Champ claimed that Logan had agreed to procure workers' compensation coverage for the construction project, yet failed to do so.

An insurance broker may be held liable under theories of breach of contract or negligence for failing to procure insurance upon a showing by the insured that the agent or broker failed to discharge the duties imposed by the agreement to obtain insurance, either by proof that it breached the agreement or because it failed to exercise due care in the transaction.  Here, Champ did not show, prima facie, the existence of an agreement by the third-party defendants to procure workers' compensation insurance for this project, nor that the third-party defendants specifically undertook a duty to procure such an insurance policy.

In addition, the broker argued that Champ didn’t suffer any damages because under Section 56 of the WCL, the plaintiff received benefits from the general workers' compensation fund relating to this occurrence.

Champ argued that as a result of the brokers failure to procure insurance, its general liability carrier disclaimed coverage as to a contractual indemnification cross claim asserted by the general contractor for this project. However, the record shows that its general liability insurance carrier disclaimed coverage for that claim based on a policy exclusion for claims relating to injuries incurred in the scope of a claimant's employment. It didn’t matter because the indemnification contract was not validly executed.

Champ argued that the broker made a material misrepresentation of fact as to the procurement of insurance in the certificate of insurance.  The court held that the Certificate was "issued as a matter of information only and confer[red] no rights upon the certificate holder."

Editor’s note:  Kudos to Christopher Russo from Traub Lieberman for his success on this one.  My only issue with the decision is the determination that Champ was not damaged by the lack of Workers Compensation insurance.  If it had been in place, Champ would not be a defendant in the lawsuit and since the indemnity agreement was not validly executed, it would not have been a third-party defendant either. But, what do I know?

07/31/20       Mazo v. DCBE Contracting, Inc.
Appellate Division, First Department
Under CG 00 01 Form, AI Coverage Provided to Contractor is Generally Primary to Contractor’s Own Coverage (Form Dependent, of Course)

Neither Iconic nor DCBE are entitled to summary judgment dismissing plaintiff's common-law negligence claim or on DCBE's contribution claim against Iconic. Insofar as building staff retained the keys and controlled access to the mechanical room where plaintiff's accident occurred, any failure to lock the door was not a dangerous condition created by Iconic or a proximate cause of the accident. Rather, the dangerous condition that caused the accident was the unsecured plywood left unattended without warnings. Contrary to Iconic's and DCBE's contentions that they owed no duty to plaintiff because they did not launch a force of harm, issues of fact exist as to their roles in creating the dangerous condition, including whether the plywood was unfastened at Iconic's behest.

Although DCBE is an additional insured under the Harleysville primary policy, Harleysville is entitled to a declaration that the Harleysville primary policy is excess to the primary coverage available to DCBE under DCBE's ProSight policy.

The Harleysville primary policy provides that coverage under the additional insured endorsement shall be excess over any other available insurance unless the underlying written contract between DCBE and Iconic requires such additional insured coverage to be primary. The relevant subcontract between DCBE and Iconic does not specifically require Iconic to procure primary insurance covering DCBE as an additional insured. Thus, by its plain terms, the Harleysville primary policy provides excess coverage to DCBE

The ProSight policy issued to DCBE provides primary coverage except that such coverage shall be excess over any other primary insurance available to DCBE as an additional insured under another policy. Because the insurance available to DCBE as an additional insured under the Harleysville primary policy is excess, and DCBE has no other insurance available to it as an additional insured, the Harleysville primary policy is excess to the primary coverage available to DCBE under the ProSight policy. Accordingly, Harleysville has no duty to defend DCBE as an additional insured.


07/29/20       Bowers v. Grier
Appellate Division, Second Department
48-Day Delay in Disclaiming Based on Employee Exclusion was Untimely where Carrier Could Not Explain Reason for Delay

Guest Author:  Justin R. Waytowich, Keidel, Weldon & Cunningham, LLP

In an appeal brought by Third-Party Defendant Rutgers Casualty Insurance Company (“Rutgers”), the Second Department affirmed the lower court’s order which granted Defendant/Third-Party Plaintiff Arcadia Management Services, Inc.’s (“Arcadia”) motion for summary judgment declaring that Rutgers was obligated to provide defense and indemnification to Arcadia in the underlying first-party personal injury action brought by an employee of Visual Construction, Inc. (“Visual”) due to an untimely disclaimer made 48 days after receiving the tender.

Arcadia is a construction contractor.  Visual was a construction company that Arcadia hired for a specific project.  By contract between them, Arcadia was to be an Additional Insured on Visual’s liability policy.  Rutgers insured Visual, as its Named Insured, under such a liability policy.  The policy contained an Employee Exclusion that excluded coverage for any accident, claim or suit by an employee of Visual for personal injuries.

Following an alleged injury by an employee of Visual and the filing of the underlying personal injury suit, Visual notified and tendered to Rutgers.  Rutgers investigated the matter and determined that there was no coverage based on the Employee Exclusion.  On August 16, 2016 Rutgers disclaimed to Visual citing the Employee Exclusion.  On September 27, 2016, Arcadia served Rutgers with a “notice of tender” seeking coverage as an additional insured.  Rutgers received it on September 28, 2016. By letter dated November 11, 2016 but mailed November 15, 2016 Rutgers disclaimed.  This was 48 days after the Arcadia tender. The disclaimer to Arcadia contained nothing substantive.

The Second Department found that Arcadia established a prima facie entitlement to judgment as a matter of law by demonstrating that Rutgers failed to provide notice of its disclaimer “as soon as is reasonably possible” in violation of Insurance Law §3420(d)(2), and that under the circumstances, Rutgers 48-day delay in disclaiming was unreasonable as a matter of law.

Editor’s Note: Atta Lawyers to Keidel, Weldon & Cunningham, LLP, White Plains, NY (Howard S. Kronberg and Justin R. Waytowich of counsel), who successfully handled this matter

07/29/20       Ameriprise Ins. Co. v. Kim
Appellate Division, Second Department
Insurer Did Not Submit Enough Proof to Establish Right to Default Judgment in Declaratory Judgment Action
The appeal involves the refusal of the lower court to grant a default judgment in a declaratory judgment action.

Ameriprise Insurance Company (“insurer”), issued an automobile insurance policy to the defendant Kim and his wife which covered a 2012 Chevrolet for the period from May 14, 2017 through November 14, 2017. Pursuant to the policy, Kim reported to the insurer that on August 14, 2017, the subject vehicle was involved in a hit-and-run accident in Queens, in which another vehicle allegedly reversed and struck the subject vehicle while it was parked, and then fled the scene.

Insurer conducted an investigation and concluded that neither Kim's claim nor those of his no-fault benefit assignees were covered under the policy. It then  commenced this action seeking a declaration that it has no duty to indemnify the defendants for any claims arising out of the subject accident.

Most of the defendants, including Kim and many of the medical providers failed to appear or answer the complaint. The insurer sought a default.

Here, while the insurer submitted proof of proper service of the summons and the complaint, the non-answering defendants' default, and the facts constituting the plaintiff's claim, the plaintiff's submissions in support of the motion failed to establish its right to the declarations sought.  Without that proof, a default could not be entered.

07/24/20       Gross v. Travelers Ins. Co.
Appellate Division, Fourth Department
Good Analysis of Coverage Trigger Under SUM Policy

Gross seeks to collect supplemental uninsured/underinsured motorist (SUM) benefits under an insurance policy issued to him by Travelers. Gross and his wife, and another insured under that policy, were injured when their vehicle was rear-ended by a vehicle operated by a nonparty tortfeasor. Travelers provided SUM coverage and bodily injury coverage, each with limits of $300,000 per person and $300,000 per accident. The tortfeasor's policy, issued by nonparty The Hartford, contained bodily injury coverage with limits of $100,000 per person and $300,000 per accident. Gross settled his underlying personal injury liability claim for the tortfeasor's $100,000 per person policy limit, and plaintiff's wife settled her claim for $16,000. Gross submitted a SUM claim to defendant, which denied it on the ground that plaintiff's SUM coverage was not triggered

The statute creating SUM coverage, Insurance Law § 3420 (f) (2) was enacted to allow an insured to obtain the same level of protection for himself [or herself] and his [or her] passengers which he [or she] purchased to protect himself [or herself] against liability to others.

  • Under Insurance Law § 3420 (f) (2), an insured's [SUM] coverage is triggered when the limit of the insured's bodily injury liability coverage is greater than the same coverage in the tortfeasor's policy".

  • When determining whether SUM coverage is triggered, "the necessary analytical step . . . is to place the insured in the shoes of the tortfeasor and ask whether the insured would have greater bodily injury coverage under the circumstances than the tortfeasor actually has" which requires a comparison of each policy's bodily injury liability coverage as it in fact operates under the policy terms applicable to that particular coverage.

Here, a comparison of the two policies at issue, in light of the circumstances of this case, demonstrates that plaintiff would be afforded greater coverage under his policy than under the tortfeasor's policy.

  • The tortfeasor's policy would have provided Gross with only $100,000 of coverage for bodily injury, whereas plaintiff's policy would have provided him with up to $300,000 of coverage for bodily injury.

  • Although Gross’ SUM benefits would be reduced by the amount paid to his wife under the policy's $300,000 per accident maximum, he is still afforded more coverage under his policy than under the tortfeasor's policy because the bodily injury limit for an accident in which two people are injured would be $200,000 under the tortfeasor's policy, which is less than the coverage afforded by plaintiff's policy.

Consequently, the SUM provision of plaintiff's policy was triggered.


Steven E. Peiper

[email protected]

Shut out this week.  See you in two weeks.


Michael J. Dischley
[email protected]

Power outage on Long Island. See next issue for Serious Injury Threshold decisions.


Agnes A. Wilewicz

[email protected]

Second Circuit quiet on coverage once again.


Jennifer A. Ehman

[email protected]

07/27/20       Trumbull Equities LLC v. Mt. Hawley Ins. Co.
Supreme Court, New York County
Hon. Robert R. Reed

Trial Court Finds Tenant’s Insurer Must Reimburse Owner’s Insurer Relative to Claims Arising Out of a Fire at the Leased Premises

There is a lot in this one so bear with me.  Plaintiff, Trumbull Equities LLC (“Trumbull”), owned and Plaintiff, Alma Realty Corp., managed a building located in Long Island City.  In 2006, Trumbull entered in to a 15-year lease with non-party Vordonia Contracting & Supplies Corp. (“Vordonia”) to rent a portion of the first floor of the building.  The lease required Vordonia to procure insurance naming Trumbull as an additional insured.  Vordonia complied with this requirement by procuring a policy of general liability insurance from Mt. Hawley.

On November 22, 2008, a fire occurred in Vordonia’s leased space.  According to the Fire Incident Report, the fire originated in a “lacquer spray booth” on the first floor. 

Two firefighters were injured while fighting the fire and significant damage was caused to the building.  Mt. Hawley was notified a few days later of the fire when it received an initial subrogation letter from Tower (Trumbull’s insurer), advising that Tower’s investigation revealed that Vordonia was responsible for the fire and that it intended to assert a claim as Trumbull’s subrogee for the resulting damage to Trumbull.

Lawsuits were filed by both firefighters and building tenants who suffered property damage as a result of the fire.

In 2009, Mt. Hawley issued its initial coverage position with respect to the two claims by the firefighters.  In that letter, Mt. Hawley agreed to defend its named insured, Trumbull and Alma based upon its understanding that the fire arose from work being performed by an employee of Vordonia.   The letter referenced the additional insured provision in the Mt. Hawley policy which afforded coverage “with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to you [Vordonia].”  It also advised that as Trumbull’s real estate manager, Alma also qualified as an insured.

In 2011, Mt. Hawley updated it coverage position advising that it would no longer defend Trumbull or Alma in any of the underlying actions based upon a purported “conflict of interest” due to Plaintiffs’ subrogation claim against Vordonia.  The letter advised that the joint representation would be severed, and while Mt. Hawley would continue to represent Vordonia, it suggested that Tower retain separate counsel to defend Trumbull and Alma. 

In 2012, Plaintiffs commenced this action seeking a judgment declaring that Mt. Hawley must defend and indemnify Trumbull and Alma as insureds under its policy on a primary basis for all the underlying actions.  It appears that this lawsuit sat for a number of years and during that time, Tower settled both of the personal injury lawsuits filed by the firefighters on behalf of Trumbull, and Mt. Hawley settled all the lawsuits on behalf of Vordonia. 

Thereafter, in mid-2018, Tower sent Mt. Hawley a First Set of Interrogatories asking “whether Mt. Hawley contended that the injuries and damage resulting from the fire did not arise out of the ownership, maintenance or use of that portion of the premises leased to Vordonia.  Mt. Hawley responded that “it does not so contend to the extent the question is directed to the scope of coverage under the additional insured endorsement at issue.”  Mt. Hawley also indicated in response that it relied upon coverage positions taken with respect to certain suits based upon late notice and a failure to provide notice of suit papers.

Tower then moved for summary judgment in this declaratory judgment action seeking a declaration that Mt. Hawley breached its duty to defend and indemnify Trumbull and Alma and sought recovery of a portion of the indemnity payment (looks to be the remainder of the Mt. Hawley aggregate) and defense costs.  In response, Mt. Hawley’s main opposition was that Tower was estopped from prosecuting this declaratory judgment action since it did nothing in this case for 3 ½ years, and during that time, all the underlying actions were settled, Mt. Hawley closed its files and it took down its reserves.  Mt. Hawley, in turn, argued it was prejudiced by the delay in prosecution of this action.  It also argued that since Tower elected to control Trumbull and Alma’s defense and settlements without pursuing declaratory judgment, it cannot now (four years later) seek defense and indemnity.

The court disagreed finding that Tower was not estopped from pursuing this litigation noting that while both Tower and Mt. Hawley settled the underlying actions, neither took any action to discontinue or dismiss this action.  The court also noted that  Mt. Hawley could have served a 90-day demand to resume prosecution and file a note of issue.  Yet, it did not, but instead elected to close its file and take down its reserves.

The court next considered Mt. Hawley’s argument concerning Tower’s control of Trumbull and Alma’s defense and the settlements.  It rejected any argument based upon estoppel noting that Tower took over the defense and handled the settlements because Mt. Hawley informed Tower that it would no longer defend Trumbull or Alma.

The court then found that Trumbull did qualify as an insured under the leased premises endorsement in the Mt. Hawley policy and Alma likewise qualified as an insured based upon coverage for managing agents.  While Mt. Hawley argued that coverage was only to be afforded to the named insured’s managing agent, the court declined to adopt that view finding that the agreement to assume the risk was clear.  The court also noted that in one of the lawsuits, Mt. Hawley withdrew coverage for Trumbull, but continued to defend Alma.  It also rejected any arguments based upon late notice by Trumbull or Alma.

The court moved on to a discussion of the $5,000 deductible in the Mt. Hawley policy.  The parties disputed whether Mt. Hawley properly applied the $5,000 deductible (which was paid 7 times for 7 lawsuits) to defense costs.  Tower argued that it should have been applied to indemnity and in turn created $35,000 in additional indemnity funds.  The court rejected this argument finding that Mt. Hawley was free to apply the deductible to defend costs.

Lastly, the court awarded Tower prejudgment interest, but found that it would not “reward” Tower for allowing the case to languish for years, and in turn set the date for prejudgment interest at November 15, 2016, the first date after settlement payments were made.  This was a date, in the court’s view, when Tower took affirmative steps to advance litigation in formal court proceedings. 


Brian D. Barnas
[email protected]

08/04/20       Taylor v. Geico Choice Ins. Co.
United States District Court, Western District of Pennsylvania
Allegations of Value Dispute were Insufficient to State a Claim for Bad Faith

Brad Taylor was diving a vehicle owned by Dawn Taylor, who was in the front passenger seat.  Plaintiffs were rear-ended and injured by a driver who did not have auto insurance.  Dawn Taylor had obtained UM coverage from Geico.

On July 26, 2019, the Taylors placed Geico on notice that they intended to pursue UM coverage for the accident through Dawn Taylor’s policy.  On November 1, 2019, Plaintiffs submitted to Geico a demand package, which included medical records. Geico made an offer to Dawn Taylor for $20,000, and to Brad Taylor for $3,000, to compensate them for their injuries. On December 19, 2019, Plaintiffs submitted to Geico Plaintiff Dawn Taylor’s lost wages claim of $17,812. On December 20, 2019, Geico increased Plaintiff Dawn Taylor’s offer to $23,000. A little over one month later, Geico informed Plaintiffs that it would not evaluate Plaintiff Dawn Taylor’s lost wages claim.

The Taylors commenced an action against Geico for breach of contract and statutory bad faith.  Geico removed the case to federal court and filed a motion to dismiss the bad faith claim.

Plaintiffs alleged that Geico received information supporting the claim, made an offer that was insufficient, and failed to consider the lost wage claim.  Plaintiffs then added a laundry list of generic allegations to the breach of contract claim.  The court determined this was insufficient to state a claim.  There were no facts alleged to explain how or why the offer made by Geico was anything other than a legitimate dispute as to the value of the claim, which does not necessarily give rise to bad faith.  No facts were alleged showing that Geico lacked a reasonable basis for its offer or that it recklessly disregarded a lack of reasonable basis for that offer.

Accordingly, the court granted the motion to dismiss.  However, the dismissal was granted without prejudice.  Plaintiffs were given leave to file an Amended Complaint within 20 days.


John R. Ewell
[email protected]

07/22/20       Providence Mutual Fire Ins. Co. v. Fernandez et al.
United States District Court, District of New Jersey
New Jersey Federal Court Locks Liability Insurer Out of Federal Court

In May 2019, Daniela Sanchez sued in New Jersey Superior Court alleging a dog bite injury. She sued the homeowner, Karina Acosta, alleging premise liability claims and also sued Gaston Fernandez, the dog owner. Acosta is covered by a homeowner’s policy issued by Providence Mutual. Providence Mutual disclaimed coverage to Fernandez.

Sanchez amended her complaint to name Providence Mutual as a direct defendant. I.e., asserting a direct claim against the tortfeasor’s carrier without obtaining a judgment or assignment. Providence Mutual appeared and moved for dismissal, asserting that under New Jersey law, Sanchez, as a claimant, was a stranger to the insurance policy and could not sue until a judgment was obtained. The Superior Court granted Providence Mutual’s motion and dismissed Providence Mutual without prejudice (in the event a judgment was obtained).

Providence Mutual then filed an affirmative declaratory judgment action against Fernandez, Acosta, and Sanchez in New Jersey federal court, asserting diversity jurisdiction. Sanchez immediately moved for dismissal, asserting that New Jersey’s Entire Controversy Doctrine required Providence Mutual to assert its claim for declaratory relief in state court.

New Jersey Civil Practice Rule 4:30A provides, in part: “Non-joinder of claims or parties required to be joined by the entire controversy doctrine shall result in the preclusion of the omitted claims to the extent required by the entire controversy doctrine...” New Jersey’s entire controversy doctrine is that state’s “idiosyncratic application of traditional res judicata principles” that “‘embodies the principle that the adjudication of a legal controversy should occur in one litigation in only one court; accordingly, all parties involved in a litigation should at the very least present in that proceeding all of their claims and defenses that are related to the underlying controversy.’”

Plaintiff Providence Mutual argued that the entire controversy doctrine does not bar its federal action for declaratory relief because, among other arguments, requiring Providence Mutual to litigate its claims for declaratory relief in state court would be inequitable.

Providence Mutual asserted that requiring it to litigate its declaratory relief claim in state court is inequitable because “nothing would stop every personal injury Plaintiff from naming a tortfeasor’s insurance carrier as a defendant to preclude the carrier from seeking declaratory judgment in Federal Court in the event a coverage issue arose.”

The District Court disagreed, and ruled that that requiring Providence Mutual to raise its declaratory relief claim in state court is not unfair because Providence Mutual was aware of its claim during the pendency of the state court action.

The District Court dismissed the insurer’s DJ Complaint with prejudice, leaving Providence to litigate its DJ action in state court.


Lee S. Siegel

[email protected]

07/23/20       Lafferty v. Jones
Supreme Court of Connecticut

Court Has Inherent Power to Sanction a Litigant’s Speech

Warning: this is not an insurance coverage case. We are continuing to follow litigation arising from the Sandy Hook Elementary School massacre.

In a case of first impression, the Connecticut Supreme Court held that sanctions imposed for extrajudicial statements made by a party to pending litigation did not run afoul of the First Amendment. The Court, in a unanimous decision, held that where the speech of an attorney or party to a litigation interferes with the administration of justice, it has the obligation to safeguard the fairness of the proceedings through the administration of sanctions.

On December 14, 2012, Adam Lanza murdered twenty children and six staff members in a mass shooting at Sandy Hook Elementary School in Newtown, Connecticut. Conspiracy theorists questioned the shooting. One of those ‘Sandy Hook Deniers’ is the far-right political extremist Alex Jones. Using his then national media platform, Jones disputed the tragedy, calling it a hoax and labelling the grieving parents actors. In response to statements made by Jones and other individuals featured on his radio show, the plaintiffs brought three consolidated civil actions in 2018. The complaints alleged counts of invasion of privacy by false light, defamation and defamation per se, intentional infliction of emotional distress, and negligent infliction of emotional distress, all of which were accompanied by counts of civil conspiracy. In addition, the complaints claimed violations of the Connecticut Unfair Trade Practices Act.

Connecticut, in 2017, adopted a strong anti-SLAPP law that allows defendants to file a special motion to dismiss when a complaint is based on the opposing party's exercise of, inter alia, its right of free speech. The trial court, however, permitted the plaintiffs some limited discovery. Despite delaying tactics and other obstreperous conduct by Jones, there ultimately was substantial compliance. The plaintiffs, however, discovered child pornography embedded in the metadata and turned the data over the FBI.  That set Jones off, sending him down the warpath.

On Friday, June 14, 2019, Jones and his attorney, Norman Pattis, appeared together on Jones’ radio broadcast to discuss the pending case. Jones explained to the broadcast audience that someone had embedded child pornography in e-mails turned over to the plaintiffs in discovery. Jones then began a long invective against those whom he believed had planted the child pornography, including the plaintiffs’ attorney, Christopher Mattei.

Jones: I’m here to tell the little pimps, the Senator Murphys and the prosecutor, the Obama appointed prosecutor [who’s] doing all this, bitch, I don’t need to talk about poor dead kids to have listeners….

They say you’re a pedophile. We knew it was coming. And when the Obama appointed [United States] attorney demanded, out of 9.6 million e-mails in the last seven years since Sandy Hook, metadata, which meant tracking the e-mails and where they went, well, we fought it in court. The judge ordered for us to release a large number of those e-mails. That’s Chris Mattei [who] got that done, a very interesting individual with the firm of Koskoff & Koskoff run by Senator Murphy and Senator Blumenthal that say, for America to survive, quote, I must be taken off the air. ...

You’re trying to set me up with child porn. I’m going to get your ass. One million dollars. One million dollars, you little gang members. One million dollars to put your head on a pike. One million dollars, bitch. I’m going to get your ass. You understand me now?...

And I’m just asking the Pentagon and the patriots that are left, and 4chan and 8chan, and Anonymous, anybody [who’s] a patriot, I am under attack, and if they bring me down, they’ll bring you down. I just have faith in you. I’m under attack. And I summon the mean war. I summon all of it against the enemy. ...

The trial court found that Jones was noncompliant with discovery, and that in the broadcast, Jones accused Mattei of committing a felony and then harassed, intimidated, and threatened him. The FBI and the Connecticut State Troopers investigated threats against Mattei and his family and Mattei was required to hire private protection. As a sanction, the trial court denied Jones access to the special motion to dismiss afforded by the anti-SLAPP suit statute.

On appeal, Jones claimed that the trial court (1) improperly sanctioned him in violation of his First Amendment rights, (2) abused its discretion in fashioning sanctions for discovery noncompliance, and (3) denied him due process by failing to afford a meaningful opportunity to be heard.

The Supreme Court, although agreeing with Jones that the trial court’s inherent powers  are subject to constitutional limitation, held that the sanctions did not run afoul of the First Amendment because they addressed speech that was an imminent and likely threat to the administration of justice. Accordingly, it was not an abuse of the trial court’s discretion to sanction the defendants for their discovery violations and Jones’ vituperative speech.

The defendants argued that, because Jones’ broadcast was not a true threat, did not incite violence, and did not constitute fighting words, the trial court’s sanction was impermissible under the First Amendment. In response, the plaintiffs claimed that the sanctions were a constitutionally permissible exercise of the trial court’s authority to sanction bad faith litigation misconduct, which includes the harassment and intimidation of opposing counsel. Second, the plaintiffs argued that the broadcast was not protected speech because it was a true threat.

Engaging in a lengthy evaluation of  First Amendment precedent, the Court cautioned that when acting under its inherent powers, a court should proceed with caution “[b]ecause of their very potency, inherent powers must be exercised with restraint and discretion.” Chambers v. NASCOInc., 501 U.S. 32, 44, 111 S. Ct. 2123, 115 L. Ed. 2d 27 (1991). This cautionary approach requires that any exercise of the inherent power to sanction be limited by constitutional concerns. As a result, a trial court’s exercise of its inherent authority to sanction a party for harassing or threatening speech in the context of litigation is limited by the protections of the First Amendment, the Court wrote. “The First Amendment requires courts to tread warily when restricting litigants’ speech. They may do so only when necessary to protect the fairness or integrity of the particular But,

As the Court noted, the hallmark of the protection of free speech is to allow free trade in ideas—even ideas that the overwhelming majority of people might find distasteful or discomforting. But, “The [United States] Supreme Court has held that speech otherwise entitled to full constitutional protection may nonetheless be sanctioned if it obstructs or prejudices the administration of justice.” (citations omitted).

The Court acknowledged the clear and present danger standard, but instead applied a reasonable likelihood standard. “The determination of whether a particular statement is likely to interfere with a fair trial involves a careful balancing of factors, including consideration of the status of the attorney, the nature and timing of the statement, as well as the context in which it was uttered.” (citations omitted). If the speaker is a party to the litigation, the government’s interest in ensuring the fair administration of justice is heightened. Judicial restrictions on a litigant’s speech are more permissible than judicial restrictions on comments made by an outsider to the litigation, such as the press, the Court observed.

The trial court’s duty to ensure a fair trial for those appearing before it permits some restrictions on harassing and threatening speech toward participants in the litigation. Without the ability to place such restrictions, trial courts will be left defenseless to stop both actual interference and perceived threats to just adjudications. Courts must have the ability to restrict the rights of participants to the extent necessary to protect the fairness of the litigation, the panel reasoned. “Although litigants do not surrender their First Amendment rights at the courthouse door...those rights may be subordinated to other interests… [f]or instance, on several occasions [the] [c]ourt has approved restriction on the communications of trial participants where necessary to ensure a fair trial for a criminal defendant.... In the conduct of a case, a court often finds it necessary to restrict the free expression of participants, including counsel, witnesses, and jurors.”

Speech is more likely to interfere with the administration of justice if it is calculated to intimidate or threaten other participants in the litigation. “It is without question that courts may sanction parties and their attorneys who engage in harassment of their opponents. ... The [f]irst [a]mendment does not shield improper tactics used by litigants to advance their interests, even if those tactics involve communication of a message.”

The Supreme Court considered whether the sanction was narrowly tailored to achieve the government’s substantial interest in ensuring the administration of justice, and found it was. “The findings that led the trial court to sanction the defendants are consistent with our aforementioned standard. Specifically, the trial court found that, on the June 14, 2019 broadcast, Jones (1) accused opposing counsel of a felony (“planting child pornography”), (2) used threatening language toward opposing counsel through violent rhetoric, and (3) harassed and intimidated opposing counsel, calling him “a bitch, a sweet little cupcake, a sack of filth,” and declaring war on him. It is obvious that the central reason why Jones’ speech was censured and why it ultimately could pose a threat to the administration of justice is its genuine potential to influence the fairness of the proceedings. Specifically, Jones’ broadcast produced additional threats to those involved in the case and created a hostile atmosphere that could discourage individuals from participating in the litigation.”

The Court concluded that Jones’ broadcast posed an imminent and likely threat to the administration of justice. As a party to a judicial proceeding, Jones is a participant in a government function and is under the court’s jurisdiction. The trial court penalized the defendants in a restrained manner in order to preserve the judicial process, the Court held. This willful disregard was exacerbated by Jones’ conduct during the June 14, 2019 broadcast. The trial court found that Jones’ actions were “indefensible, unconscionable, despicable, and possibly criminal,” and that the “deliberate tirade and harassment and intimidation against Attorney Mattei and his firm [were] unacceptable and sanctionable.

Accordingly, “[T]he court appropriately dealt with two issues in a proportional sanction that was more measured than the individual punishments of civil or criminal contempt that have been upheld as a consequence for similar conduct. Indeed, the court refrained from imposing the more severe sanction requested by the plaintiffs, specifically, defaulting the defendant. The court selected a lower penalty, namely, the revocation of special statutory benefit, because the defendants abused the process set out in the statute through their discovery practices. Accordingly, we conclude that the trial court did not violate the First Amendment when it imposed sanctions on the basis of Jones’ broadcast, which presented an imminent and likely threat to the administration of justice.

With this procedural aspect now in the rearview mirror, the case should proceed with discovery, namely depositions, and towards merit-based motion practice.


Diane L. Bucci
[email protected]

Sorry, no good Coverage B decisions this issue.


Brian F. Mark
[email protected]

07/20/20       Atain Ins. Co. v. Xcapes & Craig Lessor
United States District Court, Eastern District of Pennsylvania
US District Court Finds No Duty to Defend or Indemnify Insured as Underlying Allegations of Faulty Workmanship and Breach of Contract did not Trigger Coverage

This declaratory judgment action arises out of an underlying construction defect action related to masonry work performed at the home of Yuri and Elza Tyshko.  In the fall of 2013, the Tyshkos contracted with Xcapes and Craig Lessor, a home improvement contractor, to perform masonry work on their home.  After being paid in full, Xcapes began the renovation work.  After noticing that "the sidewalk work, front wall work, and side walls were defective," the Tyshkos complained of workmanship deficiencies with Xcapes's work. 

Despite the workmanship issues, the Tyshkos entered into a second contract with Xcapes for work to their pool and patio area in March 2014.  In May 2014, Lesser executed a "promissory note" guaranteeing that he would remedy the issues with the October work by redoing the sidewalk at the front of the house including the landing due to stone being loose and not properly adhered to the base concrete.  The Tyshkos paid Xcapes a portion of the second contract, but, after again becoming dissatisfied with Xcapes's work, they refused to pay the remainder of the balance.

As a result of the payment dispute, Xcapes stopped work, "leaving the pool and patio area in complete disrepair."  The repair work agreed to in May was also left unfinished.

Litigation ensued, with the underlying complaint alleging breach of contract (Count I), unjust enrichment/quasi contract (Count II), as well as violations of the Home Improvement Consumer Protection Act (Count III) and of the Unfair Trade Practices and Consumer Protection Law ("UTPCPL") (Count IV).  In sum, the underlying lawsuit alleged that the Tyshkos were harmed as a result of Xcapes's failure to perform the agreed-upon work, both in that they lost money by paying for work that was never done, and in that their property was damaged by work that was done incorrectly, or started but not finished.

Xcapes sought coverage from Atain Insurance Company (“Atain”) under its general liability policies with respect to the underlying lawsuit.  While Atain agreed to defend Xcapes under a reservation of rights to deny coverage and withdraw from defense, it now seeks a declaration that it has no duty to defend or indemnify Xcapes.

Under the Atain policy, coverage for "property damage" was limited to instances of damage "caused by an 'occurrence,'" where an "occurrence" was defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions.

Atain argued that it had no duty to defend or indemnify Xcapes in the underlying lawsuit because the suit did not allege 'property damage' caused by an 'occurrence,' as required for coverage under the policy.  Specifically, Atain argued that the Tyshkos' claims arose from allegations of breach of contract and faulty workmanship, and that property damage arising from breach of contract or faulty workmanship does not qualify as an "occurrence."  Xcapes disagreed, arguing that its claims did not exclusively arise from breach of contract or faulty workmanship.

The Court noted that under Pennsylvania law, property damage caused by faulty workmanship does not qualify as an "occurrence."  Similarly, Pennsylvania law excludes coverage for breach of contract claims, which, like damages arising from faulty workmanship, are not considered sufficiently fortuitous to be accidental.

The Court reviewed the underlying complaint finding that it repeatedly referred to Xcapes's "workmanship deficiencies," "workmanship issues," and "defective" work, as well as to work that was "not completed," "incomplete" or not "finish[ed]," in violation of the parties' agreements.  Likewise, the specific counts also identify multiple instances of faulty workmanship or incomplete work.             

Though Xcapes did not deny that the Tyshkos potentially made some allegations sounding in breach of contract or faulty workmanship, it attempted to meet its burden of proving coverage by arguing that the underlying complaint also contained some clear-cut allegations of a covered "occurrence."  Specifically, Xcapes argued that the complaint alleged damage to property "outside the scope and areas" of the parties' agreements, and, that, by definition, such damage "would not be foreseeable or caused by faulty workmanship" and would therefore qualify as an "occurrence."  Xcapes identified a number of tasks, described in the complaint as "incomplete" and offered by the Tyshkos in support for their breach of contract claim, as outside the scope of the parties' agreement.  However, the Court held that even assuming that the allegations did identify damage to areas outside the scope of the parties' agreements, it did not follow that damage to these areas could not, by definition, have been caused by faulty workmanship.

The Court looked to case law from the Superior Court of Pennsylvania, holding that property damage could be attributable to "faulty workmanship" even where the damage extended "beyond . . . the work product of the insured," provided the damage was "a foreseeable result" of that faulty workmanship.  Moreover, the Court pointed out that Xcapes' argument that allegations of damage to property "outside the scope and areas of work for which the contracts required it to perform" qualify as an "occurrence" ignores the fact that these allegations form the basis of a breach of contract claim, a type of claim which itself cannot trigger coverage under a general liability policy.  Otherwise stated, the problem with Xcapes's alleged failure to remove, replace and repair the items described in the complaint is not so much that Xcapes's work with respect to these items was done poorly, but that it was not done at all, allegedly in violation of the parties' agreement.  Therefore, the Court held that Xcapes was not entitled to coverage as a result of damages arising from their alleged failure to remove, replace and repair certain items on the Tyshko property.

The Court held that because the underlying complaint did not contain a single allegation potentially coming within the policy's coverage, Atain had no obligation to defend or indemnify Xcapes in the underlying lawsuit.


Eric T. Boron

[email protected]

07/29/20       Meemic Ins. Co. v Fortson
Michigan Supreme Court
Antifraud Provision in Auto policy Ruled Invalid and Unenforceable 

The Supreme Court of Michigan affirmed the Court of Appeals on July 29, 2020, but on different grounds, remanding the case to the Circuit Court for further proceedings.  Circuit Court had initially granted summary disposition to Meemic Insurance Company (“Meemic”) in this declaratory judgment action in which Meemic alleges fraudulent representations were made to it concerning attendant-care services purportedly provided to an insured by his parents under Michigan no-fault benefits.  The Court of Appeals had reversed the Circuit Court ruling, and remanded.  After Meemic’s application for leave to appeal the Court of Appeals’ decision, the Michigan Supreme Court held that the antifraud provision of the Meemic auto insurance policy at issue was invalid to void the Meemic policy, and was not a basis for avoiding statutory no-fault obligations.

Here are the background facts.  In 2009, then 19-year-old Justin Fortson was riding on the hood of a vehicle when the driver sped up and turned suddenly, throwing Justin off the car. Justin suffered a fractured skull and a traumatic brain injury (TBI) requiring constant “24/7” supervision.  From 2009 until 2014,his mother Louise Fortson submitted payment requests at $11/hour to Meemic for the attendant-care services she and her husband Richard provided their son Justin, asserting that they provided full-time supervision; Meemic routinely paid the benefits. In 2013, Meemic investigated Richard and Louise’s supervision of Justin and discovered that they had not provided Justin with daily direct supervision; in fact, Justin had been periodically jailed (233 days in jail all totaled) for traffic and drug offenses and had spent time at an inpatient substance-abuse rehabilitation facility (for another 78 days) at times when Richard and Louise stated they were providing full-time supervision.  Meemic terminated Justin’s no-fault benefits and filed suit, asserting claims of breach of contract, fraud, common-law statutory conversion, and unjust enrichment. Meemic alleged that Louise and Richard had fraudulently represented the attendant-care services they claimed to have provided and sought to void the policy under its contractual antifraud provision, terminate any future liability for no-fault benefits, and require Louise and Richard to reimburse Meemic for the fraudulently obtained attendant-care statement payments. Louise and Richard counterclaimed, arguing that Meemic breached the insurance contract by terminating Justin’s benefits and refusing to pay for attendant-care services.

Most often, when we think of auto insurance fraud we think of things like false statements made about where the insured auto is garaged, or omitted history of past accidents or traffic law infractions, or failure to disclose additional drivers.  But such matters concern fraud in the procurement, i.e., application fraud.  Not the after-the-fact fraud, which is what was at issue here. 

The antifraud provision of the policy issued by Meemic to the Fortsons provided as follows:

This entire policy is void if any insured person has intentionally concealed or misrepresented any material fact or circumstance relating to:

A. This insurance;

B. The Application for it;

C. Or any claim made under it.

The Supreme Court of Michigan stated the “issue before the Court is the extent to which a contractual defense like the one here is valid and enforceable when applied to coverage mandated by [the Michigan no-fault statute]”.  Applying Michigan law, the Supreme Court of Michigan held that the contractual antifraud provision could be effective to void the policy for fraud only if it were based upon a defense to mandatory no-fault coverage or upon a common-law defense that has not been abrogated by the act.  Because Meemic’s contractual fraud defense was neither grounded in the no-fault act nor the common law, it was held to be “invalid and unenforceable”.  

In dicta, the Opinion did state that “[T]he upshot is that insurers can avail themselves of both statutory defenses and common-law defenses that the no-fault law has not displaced.”  You’ll have to get your state’s no-fault law out to review if you wish to figure out how Meemic’s suit would have fared in your state, I suppose.  For New York no-fault help, we – meaning Professor Kohane and his well-schooled colleagues who were almost uniformly his no-fault students in by-gone Buffalo Law School days - are of course ready, willing and able here at Hurwitz & Fine to help you through any no-fault “situation” you may have.  


Marina A. Barci
[email protected]

07/23/20       Rojas v. Romanoff
Appellate Division, First Department
Carrier’s Successful DJ Action against Claimant Does Not Preclude Claimant from Bringing Personal Injury Action against Insured

This case concerns the preclusive effect on claims and issues in a personal injury action from a prior no-fault benefits action. In the present action, plaintiff was a pedestrian that was allegedly hit by defendants in a motor vehicle accident. In the prior action, Nationwide, the defendants insurer, brought a declaratory judgment action against plaintiff seeking a declaration that it was not obligated to pay no-fault benefits to him under the defendants policy because the injuries sustained by plaintiff did not come from the use and operation of an insured vehicle and that the injuries were caused while he was operating a motorcycle, which is not covered under the no-fault statute. Nationwide obtained said declaration via default judgment.

Defendants now attempt to dismiss plaintiff’s case against them on the grounds of res judicata (claim preclusion) and collateral estoppel (issue preclusion) as a result of the Nationwide judgment. Claim preclusion prevents re-litigation between the same parties, or those in privity with them, of a cause of action arising out of the same transaction or series of transactions that either were raised or could have been raised in the prior proceeding. The “lynchpin of re judicata” is that it applies only when a claim between the parties has been previously brought to final conclusion. Issue preclusion prohibits the re-litigation of issues argued and decided in a previous case, even if the second suit raises different causes of action. Under issue preclusion, the prior judgment must conclusively resolve an issue actually litigated and determined in the first action and can be asserted only against a party to the first action, or one in privity with a party.

First, because the declaratory judgment was granted on default in the Nationwide case, the issues were never actually litigated, so collateral estoppel cannot apply to the personal injury action. As for res judicata, the Court determines that it does not apply to the instant action either as the plaintiff and defendant are litigating a claim against each other for the first time. Even though Nationwide had named the defendants in the declaratory judgment action, the defendants did not file any cross claims against the plaintiff and the two parties were not adversarial to each other in that action. The Court also found that defendants could not base the claim preclusion in privity because Nationwide was not litigating that case on the basis of the defendants liability for the accident, but rather whether it contractually owed no-fault benefits to the plaintiff. Therefore, plaintiffs personal injury case against defendants can proceed and the motion to dismiss was denied.

07/29/20       Ameriprise Ins. Co. v. Kim
Appellate Division, Second Department
Carrier Must Prove Entitlement to Judgment on Merits in Default Action, even When Opposing Parties Fail to Answer

Ameriprise was notified of a hit and run accident by its insured. After conducting an investigation, Ameriprise concluded that neither the insured’s claim nor his no-fault benefit assignees were covered under the policy. Thus, Ameriprise commenced an action against the insured and 18 of his medical providers, for judgment that, pursuant to the policy, it had no duty to indemnify the insured or any of his assignees. All defendants failed to appear or answer the complaint. Since all the defendants failed to answer, Ameriprise moved for default judgment. The Court found that, although proper proof of service was submitted, the facts constituting Ameriprise’s claim were not supported in the motion by evidence. Thus, default was denied.


Ryan P. Maxwell
[email protected]

08/03/20       Healthcare Immunity Prospectively Amended To Remove Those Arranging Healthcare Services
New York State Legislature
New Law Amends Provisions Regarding Health Care Facilities and Professionals Providing Care for Persons During the COVID-19 Emergency
This week, Monday, Governor Cuomo signed Bill No. A10840 into law. The new law was passed in recognition that “[w]hile New Yorkers as well as our health care providers need to remain careful and vigilant, the peak of the crisis facing our health care system has passed for now . . . .” Accordingly, the law narrows the focus and coverage of the temporary immunity provisions of Public Health Law Article 30-D to excise, prospectively, immunity for those healthcare facilities and workers whose activities involve “arranging” health care services—as opposed to diagnosis, treatment, or the assessment or care of those with confirmed or suspected COVID-19 exposure.

Notably, this law also removes from the definition of “health care services” “the care of any other individual who presents at a health care facility or to a health care professional during the period of the COVID-19 emergency declaration.” Thus, immunity is only extended to liabilities incurred directly in the diagnosis and treatment of confirmed or suspected COVID-19 patients who presents at a medical facility or to a medical professional.

As this is a prospective removal of immunity for those “arranging” health care services, it is only effective from the date the law was passed, which was August 3.

Maxwell’s Minute: With the rising cases around the country, time will tell if this move was the right one. I, for one, can certainly envision a tangled web of lawsuits pointing to different effective dates of immunity granted for certain “health care services” under various definitions in needlessly protracted litigation because the New York legislature acted prematurely.

Regulatory Wrap-Up

07/29/20       Holocaust Claims Processing Office Facilitates Compensation Settlements for Three Old Master Paintings Looted by Nazis
Department of Financial Services
DFS Collaborated with the Fondazione Cerruti and Filed Successful Claims with the Commission for the Compensation of Victims of Spoliation Resulting from the Anti-Semitic Legislation in Force During the Occupation (CIVS)
Superintendent of Financial Services Linda A. Lacewell announced last week that DFS’ Holocaust Claims Processing Office (HCPO) facilitated compensation agreements for three significant paintings by Italian and Dutch old masters looted by Nazis.  Jacopo del Sellaio’s Madonna and Child, Jacopo Tintoretto’s Holy Family, and Pieter de Bloot’s Scene in a Dutch Farmhouse were part of Dr. Gustav Arens sizable art collection.

Collaborating with the Fondazione Cerruti, the HCPO facilitated compensation for Dr. Anna A. Unger’s heirs for the del Sellaio painting and filed successful claims with the Commission for the Compensation of Victims of Spoliation Resulting from the Anti-Semitic Legislation in Force During the Occupation (CIVS) for compensation for the Tintoretto and de Bloot.

Providing comment, DFS Superintendent Lacewell stated that

Dr. Unger’s heirs deserved compensation for their losses, and we are proud that the DFS HCPO team played an important role through international collaboration to deliver long-awaited restitution to the family. No amount of money can make up for the persecution of the past, but we hope these agreements represent a small measure of justice and closure. I applaud the Cerruti Foundation and the CIVS for the commendable way they handled these claims and resolved these issues for the family.

Upon his passing in 1936, Dr. Arens’ daughters Dr. Anna A. Unger and Lise Haas inherited his collection, with Dr. Unger inheriting the del Sellaio, Tintoretto and de Bloot. When Austria was annexed into Nazi Germany, Dr. Anna Unger’s husband was imprisoned and the whole family expelled from their native country immediately after his release.

In 1942, German authorities looted the family’s artwork while it was stored in France prior to the family’s emigration to the United States. With the help of the American Military, the Ungers recovered many of their paintings after World War II, but the del Sellaio, Tintoretto and de Bloot remained unlocated at that time.

The Unger’s, including the youngest daughter, Grete Unger Heinz, still hold fond memories of the missing pieces:

At almost 93, I had lost hope that this beloved Italian Renaissance painting belonging to my parents would ever resurface,” said Mrs. Heinz.  “I am pleased not only that the Cerruti Foundation has reached an equitable agreement with the Unger family heirs, including a full account of the painting’s troubled history, but also that I might yet see the work itself in the Castello di Rivoli Museum in my lifetime.

Carolyn Christov-Bakargiev, Director of Castello di Rivoli Museo d’Arte Contemporanea that shared in this recent resolution noted that she was

extremely pleased that our Museum, together with the Cerruti Foundation and the heirs of Ann and Friedrich Unger, was able to successfully resolve a decades-long Holocaust restitution claim. Through scholarly provenance research on the Cerruti collection, and thanks to the HCPO, we were able to identify the heirs of this Renaissance painting lost during World War II,  compensate them for their loss, and keep the painting  in the Museum, for the public enjoyment. This artwork by Jacopo del Sellaio (1441-1493), so loved by its original owners, and also by Mr. Francesco Federico Cerruti (1922-2015), who acquired it in 1987 with no knowledge of its troubled past, has finally found peace.

Unbeknownst to the Unger family, the del Sellaio was sold at the Galerie Fischer, Lucerne in 1974 and again at Christie’s London in 1985, where it was acquired by the dealer Gianfranco Luzzetti who later sold it to the Italian art collector Francesco Federico Cerruti—unaware of the painting’s tainted past.

After Cerruti’s death, the foundation learned of the painting’s history. Fondazione Cerruti sought to make amends and contacted the HCPO, reaching a settlement with Dr. Unger’s family. The painting is on permanent loan from the Fondazione Cerruti to the Castello di Rivoli Museo d’Arte Contemporanea in Torino along with the rest of Cerruti’s collection.

Through HCPO’s filing with the CIVS, Dr. Unger’s heirs also received monetary compensation for Tintoretto’s Holy Family and de Bloot’s Scene in a Dutch Farmhouse, which have never resurfaced.  Unlike previous CIVS decisions, compensation was based on the appraised value of the paintings in insurance documents from the 1930s and not post-war compensation values.


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

07/10/20       Vartanov v. American Modern Home Ins. Co.
United States District Court, Eastern District of New York
Miscommunication Between a Vehicle Owner and Dealer Creates an Issue of Fact as to the Auto Policy’s Theft Exclusion

Plaintiff owned a 2019 Ferrari Portofino (the “Vehicle”) and insured the vehicle with American Modern Home Insurance Co. (“American Modern”). Plaintiff was listed as the primary driver on the policy and his wife was listed as an occasional driver. On March 3, 2019 plaintiff’s wife was driving the vehicle and noticed a warning light come on. She communicated this to plaintiff who then texted his dealer. The dealer attempted to troubleshoot the problem over the phone, but after no success told plaintiff’s wife that she needed to call the dealer to arrange for vehicle pick up. Later that day plaintiff sent the dealer a text message saying, “please pick up the car,” to which the dealer replied, “yes working on it.” On March 4, 2019, plaintiff left the car outside of his house, unlocked, with the key inside. However, the Vehicle was never picked up, and the plaintiff never put the Vehicle back in his garage. On March 5, 2019, the Vehicle was again left outside, unlocked, with the key inside. The vehicle was then stolen from plaintiff’s driveway.

Plaintiff then made a claim under his insurance policy with American Modern. American Modern then denied the claim. The policy states: “We will pay for loss to ‘your covered auto’ caused by … [inter alia] [t]heft or larceny.” The policy then provides various exclusions including the following:

14. Loss or Damage to “your covered auto” when not stored in a locked “garage facility”

“Garage facility” as used in this part is a permanent structure which is capable of protecting the vehicle from the elements, is fully enclosed, and all entranceways must have a functioning locking mechanism.

This exclusion (14) does not apply to “your covered auto” when it is being used for “Occasional Pleasure Use.”

“Occasional pleasure use” means the vehicle is:

1. [U]sed for activities consistent with and related to participation in vehicle exhibitions, vehicle club activities, parades, leisure/pleasure drives, or maintenance;

a. The following uses are not considered leisure/pleasure drives:

(1) As your “principle means of transportation”;

(2) As substitute transportation for a “principal means of transportation”;

(3) To or from work;

(4) To or from school; or

(5) For business or commercial use

2. [I]n transit to or from, in attendance at, or located at the lodging of the named insured during overnight vehicle exhibitions, vehicle shows, vehicle club activities leisure/pleasure drives, or parades; or

3. [I]n transit to or from or located at a repair/restoration facility for service or restoration related functions.

American Modern moved for summary judgment, arguing that exclusion (14) applied. Plaintiff moved for summary judgment arguing that the exception to the exclusion applied. Predictably, the court denied both motions, stating that whether or not the Vehicle was undergoing maintenance or in transit for maintenance is a question of material fact, which must be left for a jury to determine.

CJ’s Take:

I say the exception to the exclusion applies. Why? Plaintiff had a relationship with this dealer, and that relationship involved the dealer picking up the Vehicle for maintenance. When plaintiff left the keys in his vehicle, he reasonably assumed that the car would be picked up by the dealer, repaired, and subsequently returned. While the car sitting in his driveway does not literally fit the exception to the exclusion (i.e. it was not being worked on, sitting at the dealership, or actually in transit)  it is reasonable to expect the period of time the car sits in the driveway awaiting pick-up to be included in “transit to or from…a repair facility.”

I took an informal poll of three other coverage attorneys, two agreed that the exception to the exclusion applied one did not. I’d like to hear what everyone else thinks, shoot me an email and let me know, if you were on the jury, how you’d vote.


Cara A. Cox
[email protected]


Heather Sanderson
Sanderson Law (Alberta, Canada)

[email protected]

Cara’s Cross-Border Connection: Heather

We are now in the Canadian COVID-19 Class Action Flood Season

Heather Sanderson
[email protected]

As of the end of July 2020, 44 class actions have been filed in Canada arising out of the presence of SARS-COV-2 in this country which has spawned the disease known as COVID 19.  It's not surprising, but at the same time, to have 44 class actions across the country arising from this virus is a little numbing.

Jasminka Kalajdzic, an associate law professor at the University of Windsor and director of the Class Action Clinic,was quoted in an article posted to on May 8, 2020 saying “Any time there is mass harm, lots of people suffering financially, physically, they're looking to hold people accountable, entities accountable.”

There is no doubt that there is massive financial suffering. CBC news reported on August 5, 2020 that a record number of large Canadian businesses have filed for creditor protection under the Companies’ Creditors Arrangement Act (CCAA). An alternative to bankruptcy, companies that owe at least $5 million can file for protection from their creditors to either restructure the business and continue to exist on new financial terms, or supervise an orderly wind-down of the business and sell off assets to pay back anyone it owes money to.  Similar to “Chapter 11” bankruptcy filings in the United States, CCAA proceedings are typically used as a last resort for companies that have run out of options and time.

COVID-19 has the greatest impact on those who have pre-existing conditions. The same holds true for businesses that were walloped by the sudden onset of lockdown. Only the nimble who were able to pivot to the new working conditions and limited economy carried on.  Those businesses that had prior problems largely continued on a downward track. A record 10 Canadian companies sought CCAA protection in May and 12 more followed in June, which is also a record. Some are faceless but others are well known. A sample list includes: Women’ clothiers, Reitmans and Frank & Oak; shoe seller, Aldo; hot drink purveyor, David’s Tea; the high-flying entertainer, Cirque du Soleil; travel agency Flight Hub; outdoor retailer, Sail.

However, CCAA is not an option for the thousands of Canadian small businesses who suffered financially under the social distancing measures. For them, the only hope is to adapt to the new economy while attempting to access insurance coverage.  A myriad of individual lawsuits and arbitrations have been filed against insurers. However, the prohibitive cost of funding a lawsuit which, given the majority of commercial property policies, have little chance of success, means that class actions are the only viable avenue to sustain any hope of obtaining any insurance coverage for the majority of these businesses.

My good friends, John Nicholl and Heather Gray who are with the Toronto office of Clyde & Co., have tracked these class actions since the middle of March when the lockdowns began. They have sent near monthly bulletins on the status of these actions to their clients. According to their efforts, 15 class actions have been filed in Canada claiming business interruption losses from property insurers under various iterations of commercial property coverage.  The Canadian court system does not have the equivalent of the American MDL procedure. Some of these class actions will be consolidated. Some will be stayed to allow others to proceed.  Issues of which courts, in which province, will have jurisdiction will have to be sorted.

Of those actions, one has been filed in Saskatchewan (but it may be discontinued or stayed in favour of an action filed by the same firm and one other in Ontario); seven have been filed in Québec; five have been filed in Ontario and 2 have been filed in British Columbia.



JKT Holdings Ltd. v. Aviva Canada Inc. et al., Sask. QB, Regina, Court file no. QBG 795/20 (the “JKT Holdings Action”). Filed by the Merchant Law Group, Regina, Saskatchewan, the defendants in the second amended action filed April 20, 2020 form an almost complete list of all insurers issuing property and casualty insurance in common law Canada. The class is all residents of Canada who have claims against any of the insurers named as Defendants for COVID 19-related business interruption claims.  The claim acknowledges that the insurance contracts entered into by the members of the class are different (para. 28) but then lists a series of supposed "common features" which in fact apply to all insurance contracts as a matter of basic insurance law (para 28). The SOC ignores the actual terms of the insurance contracts.



9306-6876 Québec Inc. v. Intact Compagnie d’Assurance, Québec SC, District of Montreal, Court file no. 500-06-001056-205 (the “9306-6876 Action”) This action was also filed by the Merchant Law Group. The proposed class consists of all dentists and dental clinics in Québec who purchased insurance policies from Intact that included business interruption or “operating loss” coverages.  Much of the claim is identical to the JKT Holdings Action and seems to be filed on behalf of a group insured under a program policy.

Centre de santé dentaire Gendron Delisles inc. c. La Personnelle assurances générales inc. et al, Québec SC, District of Montreal, Court file no 500-06-001057-203 (the “Gendron-Delisles Action”) This the third class action filed by Merchant Law Group and the second for that firm in Québec.  The defendants are Groupe Promutuel Fédération de Sociétés Mutuelles d’Assurances Générales, Royal & Sun Alliance du Canada, Société d’Assurances, Economical, Compagnie Mutuelle d’Assurance, La Capitale Assurances Générales inc., Desjardins Groupe d’Assurances Générales inc.  This mirrors the allegations in the 9306-6876 Action as the proposed class is also dentists and dental clinics. Will this be consolidated with the 9306-6876 Action?

Centre Dentaire Boulevard Galeries d’Anjou Inc. v. L’Unique Assurances Générales Inc., Québec SC, District of Montreal, Court file no. 500-06-001054-200 (the “Galeries d’Anjou Action”). This action was filed by Kugler Kandestin; the proposed class is dental clinics insured by L’Unique Assurances Générales Inc. under a “L’Unique Office Package”. The body of the claim suggests that this claim is related to the 9306-6876 Action filed against Intact.

Panex-El inc. c. Intact Compagnie d’Assurance, Québec SC, District of Ste-Hyacinthe, Court file no 750-06-000006-202 (the “Panex-El Action”). Filed by Adams Avocat; the proposed class consists of all persons or corporate entities insured by Intact who incurred a business interruption or extra expense loss resulting from COVID-19.  The claim alleges that as the Intact policies are “all risks” and COVID-19 is a peril that is not specifically excluded, business interruption losses must be covered. The allegations refer to the business interruption, prohibited access, damage to neighbouring premises, damage to premises of suppliers or clients, and extra expense sections of the Intact policy. Possible responses of the insurers to those coverage issues are set out in the April 30 and May 15, 2020 editions of this newsletter.

9369-1426 Québec Inc. dba Restaurant Bâton Rouge v. Allianz Global Risks US Insurance Company, Québec SC, District of Montreal, Court file no. unknown (the “Bâton Rouge Action”) Filed by Spiegel Sohmer, the proposed class (paraphrased) are all restaurants and bars in the province of Québec forced to suspend in-person services due to COVID-19 control orders.  The particulars of the Allianz policy in issue are neither pled nor discussed. The same firm issued two other virtually identical actions with the same description of the class but one is against Promutuel and the other is against Intact: 9092-1651 Québec Inc. dba Restaurant Elixor v. Promutuel Réassurance dba Promutuel Assurance, Québec SC, District of Montreal, Court file no. 500-17-001067-202 (the “Elixor Action”) ;9281-2536 Québec Inc. dba 21st Century Foods vs. Intact Insurance Company, Québec SC, District of Montreal, Court file no. 500-06-0001070-206 (the “21st Century Foods Action”).  All three of these actions comment on the speed of the denials. In the 21st Century Foods action against Intact, it is alleged that the insured spoke to its broker about advancing a claim and before it was even submitted, Intact issued a denial. The action goes on to say that Intact declared publicly that it would not be paying COVID-19 business interruption claims unless there was direct physical loss or damage.



McCallum v. Aviva Insurance Company of Canada, Ontario SCJ, London, Court file CV-20-00000981-00CP (the “McCallum Action”). Filed by Lerners LLP in London, Ontario, the plaintiff insured is a denturist who purchased a commercial package policy through an insurance program offered to denturists and hearing aid specialists. The class is described as all those who purchased this type of program coverage. The policy included a Restricted Access clause that read in part as follows:  This Form insures the actual loss of “business income” sustained while access to the “premises” is restricted in whole or in part by: …(b) order of civil authority resulting from any of the following occurrences, subject to the waiting period of 24 hours: …(ii) an outbreak of a contagious or infectious disease that is required by law to be reported to government authorities. The action disputes Aviva’s denial that the Restricted Access coverage i) only applies to outbreaks that occur at the insured premises, and ii) does not in any event provide coverage for global pandemics such as COVID-19.

The Royal Canadian Legion, Victory Branch #317 v. Aviva Insurance Company of Canada, Ontario SCJ, London, Court file CV-20-00001041-00CP (the “Royal Canadian Legion Action”), also filed by Lerners LLP defines the class as all Royal Canadian Legions across Canada (British Columbia excepted) who purchased program coverage from Aviva that contained  restricted access coverage with language similar to that pled in the McCallum Action.

Workmen Optometry Professional Corporation et al. v. Aviva Insurance Company of Canada et al., Ontario SCJ, Toronto, Court file no. CV-20-00643488-00CP (the “Workman Optometry Action”) filed by Koskie Minsky LLP and Merchant Law Group LLP in Toronto on July 6, 2020.  This action is touted to be an “omnibus” business interruption claim that will replace the JKT Holdings Action. The class is defined as “…all persons and corporations in Canada, except for Excluded Persons, who contracted with a Defendant for any kind of Business Interruption Insurance (as defined above) and who suffered losses as a consequence of COVID-19, or decisions regarding COVID-19.”  The action names an impressive list of Canada’s property and casualty insurers, but strangely omits three who were named in the JKT Holdings Action (AIG Insurance Company of Canada, Chubb Insurance Company of Canada and Everest Insurance Company of Canada). Further, there is no representative plaintiff for 10 of the insurers who are listed as Defendants. The action alleges that the Defendants refused to honour their policy obligations, in some cases, even before the losses were formally claimed, which represents “…an industry wide, collective and common wrong”.

Nordik Windows Inc. v. Aviva Insurance Company of Canada, Ontario SCJ, Toronto, Court file no. CV-20-00643386-00CP (the “Nordik Windows Action”) Issued by Thomson Rogers in Toronto on July 3, 2020. This action defines the class as all those who purchased business interruption coverage from the sole defendant, Aviva, that contained “Negative Publicity” or “Restricted Access” coverage that referred to the outbreak of an infectious or contagious disease as per the same coverage pled in the McCallum Action.

Roshan Holdings Inc. v. Aviva Insurance Company of Canada, Ontario SCJ, Court File No CV-20-00001194-00CP, London, Ontario, July 23, 2000, (the “Roshan Holdings Action”), filed by Lerners LLP, the class is defined as (paraphrasing) all those who were part of the hotel program insurance coverage underwritten by Aviva who were impacted by the COVID-19 closure orders throughout Ontario. That coverage contained the restricted access extension pled in the two other Lerners LLP actions discussed above:  the “McCallum Action” and the “Royal Canadian Legion Action as well as the “Nordik Windows Action” action filed by Thomson Rogers.


British Columbia

Kyle-Moffat v. Novex Insurance Company et al., BCSC, Vancouver, Court file no. VLC-S-S-205979 (the “Kyle-Moffat Action”). Filed in Vancouver on June 5, 2020 by Rice Harbut Elliott LLP, the action names as the class all persons residing in Canada that were insured by Intact Insurance Company (Novex is alleged to be indistinguishable from Intact) through Lackner McLennan Insurance Ltd. Lackner is alleged to be the largest provider of insurance to massage therapists (the representative plaintiff is a massage therapist). The action alleges that Lackner “…knew, or ought to have known, that such businesses would be adversely affected by pandemics, quarantines and orders of civil authorities relating to social distancing…” and failed to arrange appropriate coverage.

Dr. Amer A. Khakwany Inc. v. Intact Insurance Company, BCSC, Vancouver, Court File No. VLC-S-S-206399 (the “Kharwany Action”).  Filed by Klein Lawyers LLP, Vancouver, the proposed class (paraphrasing) are those persons in Canada who had insurance policies with Intact that offered “all risks” insurance coverage who were improperly denied the benefit of that coverage due to closures mandated by the presence of COVID-19 in the community. Other than the typical all risk coverage agreement, no specific policy wording is pled. The action specifically mentions that the policy does not exclude viruses or pandemics.  The potential impact of the absence of such an exclusion to the coverage analysis was discussed in the April 30, 2020 newsletter.


Other Class Actions Spawned by the COVID-19 Public Health Measures

Related to the efforts to recover financial losses caused by the public health measures to control COVID-19 are a series of class actions that may be insured claims under a variety of commonly held liability policies. The proliferation of these actions suggests that the legal profession and insurance claims examiners will not be out of business anytime soon:

  • 13 actions against nursing homes;

  • 4 actions claiming damages for cancellation of travel arrangements;

  • 1 action claiming damages on behalf of federal inmates;

  • 3 against educational institutions for return of fees paid;

  • 1 alleging illegal restrictions on travel

  • 4 for return of tickets (including one against a school board for failure to return funds raised by parents for end-of-school year travel)

  • 1 alleging a false positive on COVID-19 testing

  • 1 action against employers for failure to take COVID-19 precautions

  • 1 action for wrongful termination of employees without notice or cause due to the impact of the COVID-19 public health orders


Once again, many thanks to Clyde & Co.’s John Nicholl and Heather Gray for allowing me to stand on their shoulders and present this information.


Cara’s Cross-Border Connection:

American Lawsuits and Class Actions

The Coverage Team at Hurwitz & Fine, P.C., has been tracking COVID-19 business interruption complaints filed and a survey and summaries of these complaints can be found here, which include class actions.

However, here are some highlights from the survey and summaries:

  • Although many retailers and restaurants have filed complaints, other plaintiffs include casinos, escape rooms, bowling alleys, graphic designers, a ski pass holder, minor league baseball teams, and wine club.

  • In May, lawsuits were filed in 28 states, including the District of Columbia, but that number has increased to 39.

  • Out of the over 700 complaints filed, approximately 180 are class actions (over 4 times as many as Canada).

  • Class actions have been filed against over 70 carriers.

  • In alphabetical order, the following carriers currently have the most class actions filed against them: Aspen American Insurance Company, Cincinnati Insurance Company, Inc., Erie Insurance Exchange, The Hartford, Lloyd’s, Sentinel Insurance Company, Ltd., Society Insurance, and Travelers

  • As of now, the states with the highest number of complaints filed to date are Pennsylvania (89), California (75), Florida (69), Illinois (69), and Ohio (57).

  • Currently, the states with only one business interruption complaint filed are New Hampshire, Rhode Island, Utah, and West Virginia.

  • Los Angeles mayor, Eric Garcetti, was individually named in five complaints.

When it comes to liability lawsuits in the U.S., a lot still seems uncertain given legislative attempts to curb liability against certain groups. For example, Senate Majority Leader Mitch McConnell has been pushing liability protections for all U.S. employers, including schools, child care providers, and . However, many oppose the proposed “liability-shield”, including major league sports players, unions and workers’ rights advocates, and trial attorneys. Accordingly, time will tell whether there will be an increase in liability litigation. Although Canada and the U.S. are neighbors, there are many differences between how each is handling the pandemic and that includes litigation. However, this should not be a surprise given the U.S. has been seen as being the most litigious country and home to 80% of the world’s attorneys.

© Hurwitz & Fine, P. C. 2020
All rights reserved


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