Coverage Pointers - Volume XXII, No. 7

Volume XXII, No. 7 (No. 572)
Friday, September 18, 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.

For our new subscribers, our newsletter is attached; this kind missive is our “cover letter”.  We hope you enjoy both.

We also love to salute those lawyers whose accomplishments are justifiably lauded by the community:

Mike Perley wins "Leaders in Law" award

Congratulations to Mike Perley who has been selected for the “Leaders in Law” award from The Daily Record. The Leaders in Law award honors attorneys who have shown dedication to the legal profession and selfless, tireless commitment to the community. He will be honored Nov. 11 at a virtual celebration from the publication.

Hope all is well with you and yours.  The courts are still quiet, with decisions sparse, following the summer court closures.  We can expect a flurry of activity from the appellate courts over the next 30 days.  So, there’s not a lot of exciting case law in this issue, but sometimes, a lack of excitement is a good thing.

It’s funny.  We are extraordinarily busy on the coverage front and so many of my coverage colleagues across the country are experiencing the same uptick.  It seems that insurers are cutting down the number of firms handling coverage work and so those of us who are busy, are getting busier.  We’re fortunate to have 17 lawyers doing almost exclusively coverage work, so we have the depth available for the work that’s arriving.

It’s an interesting mix of new kinds of claims.  Keep those cards and letters coming in.

I’ve spent a good deal of time, probably twice a week, providing education training for our clients.  Insurers are using this interesting time wisely, to educate their claims staff via Zoom, Meetings, or other media platforms.  Interested in training?  The most popular has been Risk Transfer Training.

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

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

New York Coverage Protocol Training:

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

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

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

Other options:

  • Child Victims Act: Insurance Issues
  • Most Common Mistakes Made in Handling New York Coverage and How to Prevent Them
  • Life after Burlington – How Do We Resolve “Additional Insured“ Issues?
  • Life after Carlson – When is a Policy “Issued or Delivered in New York” to Trigger Draconian Requirements of CPLR 3420(d)(2)?
  • Tenders, Additional Insured Obligations, Indemnity Agreements and Priority of Coverage
  • Chaos Breeds Resolution: Mediation and the Role of Coverage Counsel in Resolving Chaos
  • Strategic Approaches to Resolving Insurance Coverage Disputes:  Do We Defend and Start a DJ? Do We Sit Back and Wait?
  • Good Faith, Consequential Damages and Extra-Contractual Liability - the New York Experience
  • NY Coverage Letters - Nuts & Bolts: How to Create and Write and Timely Send a Disclaimer Letter and NY’s Special Dangers with Reservation of Rights Letters
  • Uninsured and Underinsured Claims Handling
  • Preventing Bad Faith Claims - First Party Cases
  • Preventing Bad Faith Claims - Liability Cases
  • The Primary and Excess Relationship
  • The Cooperation Clause - How to Handle
  • The Serious Injury Threshold
  • No Fault – Nuts and Bolts
  • An Auto Liability Policy Primer
  • A CGL Policy Primer
  • A Homeowners Liability Policy Primer
  • EUO's Under First Party Policies
  • Insured-Selected Counsel: When is it Necessary and How to Avoid and Control?
  • ADR and How to Get to "Yes"
  • “Other Insurance”
  • Employment Matters: NYS Sexual Harassment Training
  • Vicarious Liability Related to Employers and Automobiles
  • Applying New York’s No-Fault and Serious Injury Threshold Laws



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.


Peiper on Property and Potpourri:

On March 4, 2020, I flew to JFK for an appearance in New York County Supreme Court.

On March 6, 2020, I appeared at the Genesee County Supreme Court at oral argument for summary judgment.

On March 13, 2020, I conducted a deposition of plaintiff.

From that point on, it has been all zoom, or teams, or skype, or telephone.  Until this week, that is.  This week, alone, I conducted depositions, appeared at oral argument and traveled to a site inspection with other real-life human beings.  I can certainly wait to board an airplane again, but it is nice to be back to “normal” interactions.  Here’s to even better days ahead.

Our column this week addresses a couple of interesting procedural cases out of the Second Department. The first, dealing with a motion to vacate a default, follows the long-standing line of cases that holds delay occasioned by an insurer will not relieve a default on the insured defendant.  I’ve always been troubled by that rule.  In practical terms, I surely understand it.  Ultimately, it is the carrier who pays for the loss, and no court is going to lose sleep over holding an insurer to task for a procedural error.

The carrier, however, is not the litigant.  Given how the law prefers a case to be decided on its merits, it would surely seem fair to say that a litigant who defaults purely due to an inaction by its insurer should be given its day in court.  The default, after all, is not entered against the insurer, but rather the insured who, as far as we know, complied with all of its obligations and responsibilities.  We know it won’t change, but it doesn’t make it unfair.

The second decision involves a 90-day demand.  There is a very important counseling point in that decision.  Unless you file a 90 demand, you are not entitled to relief.  You can’t “me too” it; you must individually request a resumption of prosecution if you want to avail yourself of a dismissal opportunity.  Be forewarned.

At close, we note that Mike Perley has been recognized as a Leader in Law by the Daily Record this year.  Dan’s note above explains the characteristics sought for inclusion in this group so there is no need to repeat them here

For those of you who have never met Mike, however, I can assure you he not only meets the criteria…he far exceeds it. He has been a tireless volunteer for local and state bar initiatives and is also frequently tapped to assist state and federal court programs as well.  He is a vital part of our firm, and is always ready to mentor, counsel or just listen to his fellow lawyers.  I am delighted to hear of his much-deserved recognition.

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

Steven E. Peiper

|[email protected]


Huge Explosion Rocks Wall Street:

The Oneonta Star
Oneonta, New York

18 Sep 1920

Evidence That Blast Was Work of Radicals Is in Hands of Probers

            Washington, Sept. 17.—Evidence that yesterday’s explosion in the New York financial district was the work of radicals was in the hands of the department of justice tonight, and agents of the government were searching for the persons responsible for the crime.

            William J. Flynn, Chief of the department’s bureau of investigation, who is in New York conducting the principal inquiry into the explosion, reported to the department during the day that everything pointed to an anarchist bomb as the cause of the explosion.  Chief Flynn’s report, which is understood to give detailed evidence to support the conclusion, was not made public, but officials declared that the department was making every effort to round up all persons having advance information of the supposed plot.

            How far from the scene of the bombing the investigation is leading was not indicated, but it was said that radical sections of New York were being searched for suspects.

            Attorney General Palmer and Assistant Attorney General Francis P. Garvan, who has been in charge of the department’s activities against radicals, left for New York today, to aid Chief Flynn in the direction of the case.  The Attorney General, however, is expected to continue on to his home in Pennsylvania after conference with the federal officials on the ground.

            Dr. Charles E. Munroe, consulting explosives engineer of the Bureau of Mines, also left for New York to assist the other government experts.  Dr. Munroe conducted the investigation of the explosion in the capital here a few years ago.  The Bureau of Mines was advised today by one of its experts in New York that marks left by the explosion were similar to those caused by a small war bomb.

            Further damage to government buildings is not looked for by treasury officials.  Every precaution, however, is being taken in all parts of the country.


Wilewicz’ Wide-World of Coverage:

Dear Readers,        

Not much to report this week on the home front. School-from-home continues without too many blips. Taking attendance has proven difficult for the teachers and homework is down in comparison to prior years. But, all in all, not having to go anywhere at the crack of dawn has proven delightful. In fact, being able to wake up approximately 60 seconds before the start of class, rather than an hour or two before, has been quite convenient.

Now, this week in the Wide World of Coverage, we bring you one outside of our home Federal Circuit, from the Seventh Circuit, in fact. The Seventh covers cases from Illinois, Indiana, and Wisconsin, and here we bring you Greene v. Westfield Insurance, stemming from the Northern District of Illinois. In that case (summary and link to the decision in the attached), a wood recycling plant was alleged to have polluted hundreds of neighboring homes and property. When a class action was brought against them, they defended the case but did not notify their insurance company. Moreover, their policies with Westfield included known loss language and exclusions for expected or intended injuries. Following years of litigation (and multiple suits), the coverage declaratory judgment action eventually made its way up to the Seventh Circuit Court of Appeals. In short, however, those exclusions for known loss and expected injuries were preclusive. An insured cannot seek coverage for claims that arose before its policy periods, and the class action plaintiffs themselves were seeking damages that went back that far. Moreover, the insured here could have expected claims to have been brought, when there were years of complaints about the plant and then litigation that they did not tell the carrier about. Interestingly, there was no discussion of pollution exclusions or anything of that nature. Rather, the case rested on the fact that these were known losses, as these clearly were.

We again hope that the Second Circuit will bring us some interesting coverage decisions in the coming weeks. But if they don’t, I’ll continue to make my way around the country seeking interesting coverage decisions for your reading pleasure and continued edification.

Until next time,

Agnes A. Wilewicz

[email protected]


Women on Juries?  Oh No!:

The Spokesman-Review
Spokane, Washington

18 Sep 1920


Sister of Convicted Man Begins Tirade in Courtroom Following Verdict


T. H. Bishop Convicted of Stabbing Manuel Nelson in Fight Over Young Girl.

            T. H. Bishop, who was convicted yesterday on a second degree assault charge in connection with the stabbing of Manuel Nelson, was led from Judge Blake’s court room and told to “keep his mouth shut” after he had begun to abuse Deputy Prosecutor W. C. Meyer.  A sister of Bishop began a tirade against the courts.  The jury’s verdict carries with it a sentence of from one to ten years in the penitentiary.

            Bishop stabbed Nelson when Nelson found his 17-year-old daughter at Boone and Calispel street in the company of Bishop, who is married.

            After Judge Huneke had heard the verdict and left the court room, Deputy Sheriff Butts took charge of the prisoner and motioned for Deputy Prosecutor Meyer to come over where women were caressing Bishop.  Prosecutor Meyer stated in answer to questions that he would aid if an appeal was desired.

“My God, Such a Jury of Hens.”

            “There is no justice in the courts.  My God, such a jury of hens,” exclaimed Mrs. Sweney, a sister of Bishop.

            “But, my dear lady, the jury, like myself, only did what the law required,” explained Meyer.

            “Oh, God, such courts!  You prosecuted him, so do not say ‘dear lady,’” continued Mrs. Sweney.

            “This is the kind of justice you get in the United States,” was Mrs. Bishop’s comment.

            “Yes, we know you were against us,” said Bishop’s mother.

            “Do not talk to him.  This is what they pay him for doing,” returned Bishop.  Meyer started to leave the room.

            “Yes, but you know you did not use the truth,” argued the mother.  “Why, this girl has been on the streets since she was 12 years old.  You know he should not have been tried.”

            “I wish to tell you right now that any man would have done just what this father did if his 17-year-old girl, not mentally strong, has been taken out at night,” replied Meyer.  “Tell me why your son had the big knife.”


Barnas on Bad Faith:

Hello again:

This weekend is going to be a sports bonanza.  We have the US Open in golf, college football, NFL football, premier league soccer, NBA playoffs, baseball, NASCAR, and possibly a game seven in the NHL playoffs.  I’m going to have to invest in a couple of additional televisions.

In my column you will find the Fortune case from Florida.  There the court found that the insurer’s invocation of the appraisal process and payment of the appraisal award after the statutory bad faith cure period expired did not cure, as a matter of law, an alleged violation for failing to attempt to settle claims in good faith.  The case was remanded for further proceedings on the bad faith claim.

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

Brian D. Barnas

[email protected]


T.R. v. F.D.R.:

The New York Times
New York, New York

18 Sep 1920



“Does Not Have the Brand of Our Family,” Says Theodore.

            SHERIDAN, Wyo., Sept. 16.—Lieut. Col. Theodore Roosevelt and Raymond Robins, addressing two large audiences here today, denounced the League of Nations as “the Wilson League”” and attacked Cox’s pre-war attitude as they alleged it was reflected in the Democratic nominee’s newspaper.

            Roosevelt, addressing a troop of Rough Riders who met him at the station, and referring to Franklin D. Roosevelt, Democratic Vice Presidential nominee, said:

            “He is a maverick—he does not have the brand of our family.”

            A large crowd met the speakers at the train and escorted them through the streets to the hall where they spoke.


Off the Mark:

Dear Readers,

I hope everyone had a relaxing Labor Day weekend.  We made one final trip to the beach and did some obligatory barbequing.  I even got some snapper fishing in with my youngest, which he seems to enjoy despite his short attention span.  All in all, it was a nice unofficial ending to a strange summer. 

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 Burlington Ins. Co. v. Shelter Structures, Inc., the U.S. District Court examined the duty to defend claims of faulty workmanship, finding that the underlying claims did not constitute an “occurrence” under the policy.

Stay safe everyone …

Brian F. Mark

[email protected]


Political Correctness?  Nah.:

The Buffalo Enquirer
Buffalo, New York

18 Sep 1920



Timely Contents, Open to Buffalo Children.

            Many of the schoolteachers of Buffalo who attended a special screening of the wonder film, “Shipwrecked Among Cannibals” yesterday expressed amazement and wonder that the two intrepid American cameramen could pass through so many wild experiences and still live.  They agreed that the picture was one of the most interesting ever shown in Buffalo.

            “THE ENQUIRER is to be commended on its enterprise in conducting a contest on cannibals just at the time when this picture is first shown in Buffalo,” said a school teacher, “and I am going to urge all my pupils not only to enter the contest, but to see the picture as well.”

            The picture will be shown at the Palace theater all next week, starting Sunday, as has been announced in THE ENQUIRER and the Universal Film exchange—the producers of the wonder picture—are conducting a contest in conjunction with the engagement to test the knowledge of small children regarding the habits and customs of these man-eating savages.

            Prizes of $10, $7.50, $5, and of Palace theater tickets, will be given to school children who submit the best list of answers to the set of 10 questions which appear in THE ENQUIRER next Monday.  There will be six prizes and only 10 questions to answer.  There are no exacting conditions and there is no expense in connection with taking part in the contest.  All school children in attendance at any of the public schools of Buffalo are privileged to enter.

            Remember the full list of questions will be printed in the Enquirer next Monday.  Watch for them.


Boron’s Benchmarks:

Perhaps I shouldn’t admit this, but I sometimes re-read old books in my library because while I generally recall they were good reads, I can’t exactly recall why I think that.  I just started my latest re-read last night.  The book is The Road Less Traveled: A New Psychology of Love, Traditional Values and Spiritual Growth, by M. Scott Peck.  First published in 1978, during my college days, the book is said to have sold over 10 million copies. Upon opening it up again, it only took me a moment to recall what makes the book so intriguing.  It is its stark opening statement, “Life is difficult.”  Indeed, 42 years later, it still is.  The “life is difficult” acknowledgment serves as a reminder to me that my perspective impacts my feelings.  So, rather than bemoaning the fact that I too often seem to get the short end of the stick, I am dedicating myself for the next two weeks to try to spend a few more minutes each day embracing and celebrating my blessings.  Can’t wait to get back into my re-read tonight. 

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 Alaska Opinion issued September 4, 2020, presumably bringing to an end years of litigation against GEICO following a pickup truck crash into a cabin injuring the cabin owner and causing property damage to the cabin and grounds due to a resultant spill of heating oil.

The cabin owner had sued GEICO’s insureds and GEICO for alleged bodily injury and property damage.  GEICO paid out its policy limits on behalf of its insureds to resolve the cabin owner’s claims against the insureds.  But the settlement did not resolve the cabin owner’s claims against GEICO for alleged failure by GEICO to promptly clean up the heating oil spill.  The litigation history included summary judgment for GEICO in the superior (trial) court, an appeal of the grant of summary judgment to the Supreme Court of Alaska, a reversal and remand back to the superior court for a hearing on whether GEICO had assumed a duty to the cabin owner to clean up the heating oil spill independent of the duty GEICO owed to its insureds to provide liability coverage, and an evidentiary hearing in the superior court whereby it was determined GEICO owed no independent duty to the cabin owner.

On appeal of the evidentiary hearing determination by the superior court, the Supreme Court of Alaska affirmed the judgment of the superior court on September 4, 2020, opining that GEICO, after paying liability limits to settle the cabin owner’s claims against its insureds, owed the cabin owner no independent or actionable duty to promptly clean up the heating oil spill.

Until next time, be well.

Eric T. Boron

[email protected]


Hyphenated American a Moral Hazard – 100 Years Ago:

The Buffalo Commercial

Buffalo, New York

18 Sep 1920



Doesn’t Blame Foreign-Born For Conflicting Sympathies During War


We Must Avoid Meddling Abroad If All Classes Are To Be United

            MARION, Sept. 18.—Warning against the dangers of a hyphenated citizenship, Senator Harding told a gathering of foreign born Americans here today that he believed the United States must avoid “meddling’ in the affairs of other nations if all classes of American citizens are to be united in loyalty to the government.  He declared he did not blame the foreign born for conflicting sympathies during the world war and asserted that the fault belonged to the nation itself.  The task of thoroughly Americanizing those of foreign extraction he said, had been neglected and must now be taken up with new determination.

            “We are unalterably against any present or future hyphenated Americanism,” he said.  “We have put an end to prefixes.  The way to unite and blend foreign blood in the life stream of America is to put an end to groups; an end to classes; an end to special appeal to any of them; and end to particular favor for any of them.


Barci’s Basics (On No Fault):

Hello Subscribers!

I hope you are all still staying healthy and safe! I am so glad that fall weather has arrived. I am very much hoping and looking forward to at least a few weeks with windows open and no need for air conditioning or heat to be on. My roommate took to decorating our house in full fall/Halloween décor a few weeks ago and it has made the place quite festive!

Last week I asked what is something you use every day that you could live without? For me, a microwave came to mind. I don’t necessarily use it every day, but I do use one quite often. I could definitely live without it for the food aspect, the stove or oven can be used for that. However, I’m not sure how I would reheat coffee when necessary, although I guess that could also be done on a stove or I’d have to get a smaller size cup so that it doesn’t get cold before I finish it. The real challenge would be a hot pack -- I really don’t know how I would warm that up without a microwave, but I could live without it if I needed to as well. For next time consider:  do you collect anything? If so, what, or if not, what would you collect if you wanted to start? Keep sending me your best answers and check back next issue for mine!

On the no-fault front, I have one very non-traditional case that discusses how a no-fault scheme ended up with someone incarcerated. Enjoy!

That’s all folks,

Marina A. Barci

[email protected]


Buss Fare:

The Birmingham News
Birmingham, Alabama

18 Sep 1920


            CHICAGO.—It cost Samuel Domko $8 a week alimony to throw a kiss to a blonde across the street.  “Kisses,” long distance or otherwise, belong to your wife,” ruled the judge when Mrs. Domko brought her complaint to court.  “And $8 a week out of your wages will belong to her from now on.”


Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

This past Sunday, my three-year-old started soccer at the park around the corner from our house. I have never played organized soccer a day in my life, but it was great to be back on a playing surface—the pitch, if you will—for athletic endeavors. Gone are my days of athletic competition: collegiate, youth, or otherwise. But now that I can live vicariously through my children, that fire has been rekindled. And rekindled for a sport that I, myself, will have to learn. Who knew (some of you did, I assume) that foot-eye coordination can be trained by using your feet to stand up tipped-over orange cones? Who knew that “control”—standing with one foot on top of a ball—requires balance that three-year-old’s simply don’t yet possess? I cannot wait to see what’s in store next week—and its jersey day. Who doesn’t love new gear?

Also, football is back! (That’s it, that’s the comment).

This week, our Legislative List features a newly proposed Assembly bill that would eliminate qualified immunity for law enforcement officers found to have deprived the rights of individuals under color of law. We also return to our From the Filings Cabinet segment to share a recent filing disapproval issued, in part, on an overbroad coverage proposed for “cyber bulling”.

Until next time,

Ryan P. Maxwell

[email protected]


Advice to the Teenaged Lovelorn:

The Buffalo Times
Buffalo, New York

18 Sep 1920



            We are two girls 16 years of age and would like you to help us.

            Is it right for us to speak to young men when we are not acquainted with them?

            And when boyfriends ask, is it right to let them kiss us good-night when they come home with us?




It is very wrong to speak to young men to whom you have not been introduced.  They will soon get tired of speaking to you if you pay no attention to them.

            And, my dears, never kiss a boy good-night unless you are engaged to him.

            Such actions only cheapen you in their eyes.


CJ on CVA and USDC(NY):

Hello all,

Fall is certainly in the air, the temps are cooler, pumpkins are popping up on peoples’ front porches, but most importantly, football is back! This past weekend we saw a superb display of athleticism from the Buffalo Bills in their 27-17 victory over the New York Jets. While the absence of fans in the stadium was odd, life felt almost normal as my brother-in-law and I yelled at the TV, and I ate far too much chicken wing dip on Sunday afternoon. I hope week one of the NFL season went the way you’d hoped it would, and all of your fantasy teams are succeeding.

This week we turn to a CVA case brought against two neighboring school districts alleging abuse by a teacher employed by both districts. This decision may prove to be beneficial to institutions named in CVA actions whose only connection to the claim is the alleged abuser, as the court ruled that a duty to the plaintiff was not owed when the plaintiff attended a different school district and the alleged abuse occurred within the plaintiff’s district.

Happy Reading!

Charles J. Englert, III
[email protected]       


How Many Wives are Enough?:

Asheville Citizen-Times
Asheville, North Carolina

18 Sep 1920




            Odell Newton charged with bigamy, was found guilty yesterday in the superior court, and was sentenced by Judge B. F. Long of Statesville, to three years on the Buncombe County roads.

The state rested its case after the submission of all the evidence, and the attorneys for the defense, realizing that the preponderance of evidence foreshadowed a verdict of guilty, also submitted without any final pleas.

The verdict was reached in exactly six minutes. But one ballot was taken, it is understood, as the jurymen were agreed as to the guilt of the prisoner.

In the prosecution the state attempted to show that Newton had gone through the formality of marriage with Miss Annie Wilson, daughter of Mrs. Hester A. Wilson, 20 Marjorie Street, three days after he had sent his wife and child to visit his parents in Gainesville, Ga.

His wife returned after three weeks had passed, to find that her husband, an employee of a typewriter repair company on Government street had ostensibly married another woman and left for Salisbury a few days before.  She notified the officers and a search was made for Newton which finally led to his arrest and subsequent conviction.

Newton in his defense said that he had never married the woman purporting to be his first wife but said that he had lived with her as his wife for several years. He said that the child whom the woman claimed was hers, and the daughter of Newton, was adopted by him in El Paso, Texas, on Sept. 30, 1918.  He introduced a document which he claimed was a copy of the legal adoption of the child.  In the paper it said:  "I adopt John J. Pershing of unknown parentage now of the age of three weeks as my legal heir, here by conferring upon him all the rights and privileges both in law, and equity appertaining to this act of adoption."


Dishing Out Serious Injury Threshold:

Dear Readers,

Hope everyone enjoyed the long weekend and was able to soak up every last bit of sun. Thanks to the nice weather, I was able to spend time outside with family. Unfortunately, summer is nearly over but, with the way this year has been going, it may be for the best.

In the Serious Injury Threshold world, there have been no significant opinions from the Appellate Division. However, there is an interesting one from New York County that has to do with the quality findings of defendant’s expert in securing summary judgment for the defendant.

Stay safe,

Michael J. Dischley
[email protected]  


Woman Sane, People Cheer:

The Washington Times
Washington, District of Columbia

18 Sep 1920



Mrs. Jennie Dyrenforth Cleared of Lunacy Charge in Justice Gould’s Court.


False Affidavits Put Eccentric War

Veteran’s Widow in Asylum, Attorney Argues.

            Amid loud applause from the spectators, Mrs. Jennie Dyrenforth, widow of Gen. Robert G. Dyrenforth, former Commissioner of Patents, who at his death July 4, 1910, left a will with many eccentric provisions, was pronounced of sound mind by a jury in Justice Gould’s court yesterday afternoon.



            Committed to St. Elizabeth’s Hospital for the Insane three weeks ago for thirty days’ observation on affidavits of her daughter, Mrs. Rose Knowlton, of the De Sota apartments.  Thirteenth street and Massachusetts avenue, with whom she lived, and Alfred S. Smith.  Mrs. Dyrenforth was brought into justice Gould’s court yesterday before a lunacy jury on a writ of habeas corpus by her lawyers, T. Morris Wampler and Foster Wood.

            Although Dr. Percy L. Hickling, District Alienist, testified before the jury that Mrs. Dyrenforth is of unsound mind, other witnesses, intimate friends of the woman, declared in their opinion she was sane, and the jury quickly brought its verdict, which freed the woman from the asylum.



            In his statement before the jury, Attorney Wampler charged that Mrs. Dyrenforth, who owns considerable Washington real estate, has been a victim of a conspiracy.  Attorney Wampler declared that in furnishing affidavits to have Mrs. Dyrenforth committed for thirty days to the asylum, it was said she was indigent, that she had no property, and was of unsound mind.


Bucci on “B”:

Nothing new on the Coverage B front. Check back next time!

Diane L. Bucci

[email protected]


A Buffalo Subway? Not Then and Not Now:

The Buffalo Commercial
Buffalo, New York

18 Sep 1920


            In the grand little game of “Who’s Loony Now?” that we play so often in Buffalo the newest and latest feature is that proposed by the gentleman who would have subways built under Mainstreet, particular at Shelton Square and Chippewa street.  Highly original thought, what?  Subways! And presto, this great and growing city is in the metropolitan class and one need worry no longer about the jay-walking ordinances!

            Granting that the time is rapidly approaching when subways for vehicle as well as some of the foot traffic will be needed, this does not seem to be the time.  We are stepping on the toes of the city’s debt limit now.  We fear the subways may have to wait a while. 


John’s Jersey Journal:

A blackboard sign on a wall

Description automatically generated

Dear Subscribers:

After nothing to report last time, we are pleased to report new and exciting insurance coverage cases from the Garden State.

New Jersey Trial Court Denies Insurer’s Motion to Dismiss Business Income Claim for Losses due to Covid-19.

This one is worth the read if you want a preview of what’s to come. There is very little law in New Jersey interrupting “direct physical loss”. The carrier took an aggressive position (apparently seeking to make law on the issue) and moved to dismiss that the plaintiffs did not sustain direct physical loss. The trial judge considered the arguments, but without prior precedent and without any discovery, thought it was wise to allow discovery to proceed on the policyholder’s claims it sustained direct physical loss.

The decision suggests that New Jersey trial courts will allow discovery in business income cases alleging losses due to Covid. This reminds me of the early Hurricane Sandy cases. Initially, the policyholders won numerous victories at the trial level against their home insurers for flood damage. Once the cases reached the Appellate Division, there was a correction and the policies were enforced as written. Once the Appellate Division clarified the law, the tide turned and trial courts started awarding judgment in favor of the insurer. Perhaps the same will happen here?

Issue of Fact whether Insured’s Effort to Maintain Heat was Reasonable

Homeowners and commercial property policies often contain an exclusion that precludes coverage for damage resulting from pipe freeze-up. More specifically the exclusion excludes coverage for freezing of a plumbing, heating, air conditioning or sprinkler system caused by freezing, and any leakage or overflow from the broken pipes (the Frozen Plumbing Exclusion).

The Frozen Plumbing Exclusion then restores coverage if (1) the insured made reasonable efforts made to keep the building heated or (2) if the water supply was shut off and the water lines drained. The goal of the exclusion is to ensure that unoccupied buildings have heat maintained, particularly since it is days, months, or even a year before the flooded and water-damaged building is discovered.

Today’s case, Titley v. Hanover Insurance Company, illustrates the challenge of litigating such cases. The exclusion does not apply when the insured used reasonable efforts to maintain heat. While some cases are so clear that the court can rule as a matter of law, reasonableness is often a jury question.

In this particular case out of New Jersey, the insured left the premises for 11 months. While he was away, the sidewalk on his street was repaired and the gas company or municipal contractor shut off his gas. Without any gas supply, his furnace did not run and the water lines in the house froze and burst, causing extensive water damage. The water damage that was not discovered by anybody for months.

The carrier argued that the insured failed to use reasonable effort to maintain heat because the insured received gas bills for eight months that expressly stated that there had been no gas usage. Apparently, these bills said ZERO therms of propane had been delivered. The carrier argued that had the insured read the gas bills, he would have known there was no heat.

The insured had entered into an equal pay plan where the gas company estimated his yearly usage and charged equal rate across the year for his energy usage. The insured argued that since he kept being billed by the gas company, he believed there were no issues with the gas supply to his home.

The insured also argued that he acted reasonably by setting the thermostat at 60 degrees.

The United States District Court, District of New Jersey found a question of fact on reasonableness. Thus, the matter will proceed to a jury to determine whether or not the insured acted reasonably.

John R. Ewell

[email protected]


Dead Men Pay No Notes:

Elmira, New York

18 Sep 1920


Jury Returns Verdict of No Cause in Damage Suit Brought as Result of Automobile Mishap.

            The jury in the action of Benjamin Diamond against Henry A. Ziegler and Henry Bowman to recover on a note, returned a verdict in county court yesterday afternoon of no cause of action.

            Mr. Diamond sued the defendants to recover for the damage done to a Ford automobile which was rented to Ziegler.  Since the action was started Ziegler met death by drowning.

            Mr. Bowman was riding with Ziegler at the time of the accident.  The men were on their way to Cold Brook.  The car tipped over on a curve in the highway and was wrecked completely.

            On the stand, Mr. Bowman testified that he did not know the car had been rented and that he was in no way a party to the rental of the machine.  After the mishap, Mr. Bowman says he was in a dazed condition and that when Mr. Diamond appeared on the scene and asked Mr. Ziegler and himself to sign a paper he did so not knowing its purport.  The paper proved to be a note for $400, which was supposed to cover the damage to the car.

            Mr. Diamond testified that he checked up with Messrs. Ziegler and Bowman on the damage to the car and that both knew they were signing a note to pay for the damage. 


Lee’s Connecticut Chronicles:

Hello once again to my Nutmeg Newsies. Well, two very important events transpired since we last met. My attempt to regain my fantasy football crown is off to a great start. As my loyal readers well know, I am a founding member of the Armchair Gladiator Fantasy Football League – the longest continuing running and best fantasy football league in the land (prove me wrong, I dare you). After back-to-back titles in 2017 and 2018, filling my trophy case with a dizzying seven championships, 2019 was a forgettable ninth place finish. Paced by QB Russel Wilson, and an outstanding WR corps including Adam Theilen and Calvin Ridley, my team is, once again, in the hunt for glory.

Oh, and the Connecticut Supreme Court, you know, home of the insurance capital of the country, joined Washington state and Illinois, effectively requiring carriers to defend and bring a declaratory judgment in all duty to defend coverage disputes. Just a little change in the law. I did not have this one on my 2020 Disasters Bingo Card. Read on for the details.

A happy and a healthy New Year to all who celebrate. In fact, happy New Year to everyone. We all could use a Sweet New Year. Shanah Tovah Umetukah.

Lee S. Siegel

[email protected]       


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

Dear Subscribers,

Over Labor Day weekend, I visited my brother to celebrate his birthday. My sister and I met him at Ithaca Beer Company and in true upstate New York fashion, the brewery was located on top of a hill overlooking a corn field. It was a beautiful day and although we were unable to visit any of the parks because they were at capacity due to everyone having the same idea, it was a lovely way to enjoy the end of summer.

Cara A. Cox
[email protected]


All the time at home has caused us to undertake the kitchen/family room reno that we have put off for the last five years. Arranging contractors has become my part-time job. However, the contracts are arranged, and we now have a start date – right after the Canadian Thanksgiving in October. I’m looking forward to it being done but not looking forward to living through it.

Heather Sanderson
Sanderson Law (Alberta, Canada)

[email protected]


Infrequent Flier:

The Times-Tribune
Scranton, Pennsylvania

18 Sep 1920


            New York, Sept. 18.—Mrs. C. J. Goff, eighty-seven years old, tried out flying at Camp Edwards, Sea Girt, N.J., and gave it her entire approval.

            “Am I too old?” she asked Lieutenant Paul Micelli as she presented herself in front of the flyer’s plane.

            “Not a bit,” he assured her, and carefully strapped her in the passenger’s cockpit.  The plane roared along the ground, shot into the atmosphere and climbed zenithward.  At 2,000 feet the pilot turned and looked at his passenger.  She told him to go higher.  He came down in a few dives and spirals.

            “Was that ten minutes?” Mrs. Goff queried as she was helped out.  She was assured that that time had also flown.

            “Well, I’m coming back Sunday,” she announced as she left the filed in an automobile for Asbury Park, where she is staying. 


Headlines from this week’s issue, attached:

Dan D. Kohane
[email protected]

  • Question of Fact as to Whether MVAIC Applicant was New York State Resident, Necessitating Hearing


Steven E. Peiper

[email protected]

  • Insurance Company Failure is an Insufficient Reason to Vacate Default
  • 90-Day Demand is Not One Size Fits All; Only the Serving Party is Entitled to Relief


Michael J. Dischley
[email protected]

  • Plaintiff’s Expert Chiropractor Failure to Rebut Defendant Expert Findings Fatal to Defendant’s Motion for Summary Judgment


Agnes A. Wilewicz

[email protected]

  • Seventh Circuit Finds No Coverage for Class Action Stemming from Wood Recycling Plant’s Pollution, Where Claims were Known by the Insured Prior to Policy Inception, and Damages were Expected or Intended by the Insured


Jennifer A. Ehman

[email protected]

  • Crunch time for me; see you in a couple of weeks.


Brian D. Barnas
[email protected]

  • Payment of Appraisal Award after Statutory Cure Period was Insufficient to Cure Bad Faith Allegations in Civil Remedy Notice as a Matter of Law


John R. Ewell
[email protected]

  • New Jersey Trial Court Denies Insurer's Motion to Dismiss Covid Business Interruption Claim Saying Insurer Did Not Rule Out Possibility of Direct Physical Loss. Claim Allowed to Move Forward to Discovery
  • In First-Party Claim for Damage after Pipe Freeze Up, New Jersey Federal Court Finds Question of Fact whether Insured Acted Reasonably to Maintain Heat


Lee S. Siegel

[email protected]

  • Court Finds a Duty to Defend Uncertain Claims, Encourages Declaratory Judgment Actions


Diane L. Bucci
[email protected]

  • Nothing to Report from the Coverage B World.


Brian F. Mark
[email protected]

  • U.S. District Court Finds Claims of Faulty Workmanship Against Insured do not Constitute an “Occurrence”


Eric T. Boron

[email protected]

  • Auto Insurance Policy – Supreme Court Affirms Superior Court’s Judgment for Insurer – No independent Duty of Insurer to Third Party


Marina A. Barci

[email protected]

  • Fraudulent No-Fault Insurance Scheme Lands Provider in Prison


Ryan P. Maxwell
[email protected]

Legislative List

  • Assembly Bill No. 10978 Would Allow for Damages and Reasonable Fees Associated with Deprivation of Rights Under Color of Law

From the Filings Cabinet

  • Cyberbullying Coverage Expenses Must be Limited to Acts of Violence or Threatened Acts of Violence


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

[email protected]

  • To Assert a Claim under the Theory of Premises Liability After Injury by a Third Party the Defendant Must Have Had the Opportunity to Control the Third Party who Caused Plaintiff’s Alleged Injury 


Cara A. Cox

[email protected]

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

  • How Unintentional Translation Mistakes Created Intended Coverage
  • Back to School: Colleges and Universities Take on Carriers


Please be careful out there.  Please stay healthy.  Please wear masks.  Please socially distance.  We all know it’s not fun, but we so want you to stay healthy.



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.

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]

09/16/20         Mele v. Motor Vehicle Accident Indemnification Corp. Appellate Division, Second Department
Question of Fact as to Whether MVAIC Applicant was New York State Resident, Necessitating Hearing

Mele sought leave pursuant to Insurance Law § 5218 to commence an action against the Motor Vehicle Accident Indemnification Corporation (“MVAIC”) in connection with an alleged hit and run accident in Brooklyn. MVAIC contended that the petitioner failed to establish that he was a "qualified person" pursuant to Article 52 of the Insurance Law because he failed to submit any objective proof that he was a New York State resident at the time of the alleged accident.

A petitioner seeking leave of court to commence an action against MVAIC has the initial burden of demonstrating that he or she is a "qualified person" within the meaning of Insurance Law § 5202 and making an evidentiary showing that he or she has satisfied certain other statutory requirements.

Here, there are triable issues of fact as to whether the petitioner is a resident of New York, and, therefore, whether he is a "qualified person".


Steven E. Peiper
[email protected]

09/16/20         Rochdale Ins. Co. v. Fairview Nursing Care Center, Inc. Appellate Division, Second Department
Insurance Company Failure is an Insufficient Reason to Vacate Default

Plaintiff’s subrogor sustained a loss due to the alleged negligence of Fairview. After paying the loss, Rochdale commenced the instant subrogation action by service of a Summons and Complaint. When Fairview failed to answer timely, Rochdale moved for a default judgment and was granted the same on December 26, 2018.

Defendant moved to vacate the default citing its insurance company’s delay in processing the claim. The only proof provided was by way of an attorney affidavit from defendant’s attorney. The Court affirmed the lower decision by noting that counsel’s bare allegation that the carrier was responsible for defendant’s failure to appear was insufficient.

Peiper’s Point – Just an observation, nothing more, but most courts normally don’t lend a sympathetic ear to an argument that is principally “the insurance company screwed up.”


09/16/20         Pavilion Park Slope Cinemas 9, LLC v. Pro Century Corp. Appellate Division, Second Department
Day Demand is Not One Size Fits All; Only the Serving Party is Entitled to Relief

Plaintiff was served by Pro Century with a 90-day demand to resume prosecution of its case. When the period expired, Pro Century moved to dismiss. As part of its application, Pro Century established that the demand was properly mailed and received by plaintiff’s counsel. In response, plaintiff’s attorney argued the delay was caused by law office failure. However, as the claims were “conclusory and unsubstantiated,” the Appellate Division affirmed the trial court’s decision to dismiss the claims against Pro Century.

Notably, however, the other co-defendants who did not serve a 90-day demand were not able to avail themselves of the Order. The 90-day clock only began to run in favor of the requesting party, Pro Century.


Michael J. Dischley
[email protected]

09/08/20         Armstrong v. Marmolejos Supreme Court, New York County
Plaintiff’s Expert Chiropractor Failure to Rebut Defendant Expert Findings Fatal to Defendant’s Motion for Summary Judgment

This matter stems from a motor vehicle incident which occurred on December 11, 2016, when plaintiff, a bicyclist allegedly sustained serious injuries as a result of an automobile accident with defendant’s vehicle.

Defendant alleged that plaintiff has failed to demonstrate the existence of a “serious injury” as defined under Section 5102(d) of the Insurance Law as the injuries alleged are not causally related to the underlying accident and is a result of degenerative changes. Defendant submitted the Independent Medical Examination Report of Dr. Arnold T. Berman and Dr. Stephen W. Lastig. In his June 20, 2019 report, Dr. Berman opined that plaintiff “did not sustain any permanent injuries and has no functional loss or disability as a result of the accident on 12/11/2016”. Dr. Berman found that plaintiff had a normal range of motion in the cervical spine, thoraco-lumbar spine, bilateral shoulders, bilateral hips, and bilateral knees. Dr. Berman noted that plaintiff has no residuals and no aggravation to multilevel discogenic disease in the lumbar spine and no aggravation to a prior total left hip replacement. In his October 12, 2019, independent radiology report Dr. Lastig opined that plaintiff suffers from degenerative disc disease and degenerative spondylosis and found no findings in the knee causally related to the underlying accident. Thus, defendant made prima facie showing of entitlement to summary judgment on the issue of serious injury and the burden shifted to plaintiff

In opposition, plaintiff failed to address defendant’s claims of degenerative injuries. Plaintiff attached chiropractor progress reports of Dr. Mark Heyligers who does not conclude that plaintiff’s condition is causally related to the accident and in addition to not providing plaintiff’s ranges of motion or the normal ranges of motion, the reports do not address defendant’s claims of degeneration. Here, plaintiff’s physicians do not address degeneration and plaintiff’s opposition has failed to raise an issue of fact as to defendant’s assertion that plaintiff has not suffered a serious injury as a result of the accident.

Thus, defendant has satisfied their burden and defendant’s motion for summary judgment on the issue of “serious injury” as defined by Insurance Law § 5102(d) is granted.


Agnes A. Wilewicz

[email protected]

06/25/20         Carmine Greene v. Westfield Insurance Company United States Court of Appeals, Seventh Circuit
Seventh Circuit Finds No Coverage for Class Action Stemming from Wood Recycling Plant’s Pollution, Where Claims were Known by the Insured Prior to Policy Inception, and Damages were Expected or Intended by the Insured

VIM Recycling (VIM) began operating a wood recycling plant in Elkhart, Indiana, in 2000. Soon after, neighboring residents began complaining of considerable pollution emanating from the site, including smoke, dust, and odors in the air and seeping into the ground. In 2009, a group of 1,025 neighbors started a class action lawsuit against VIM, and protracted litigation ensued. The first lawsuit sought injunctive relief and damages under various Federal laws, including the Resource Conservation and Recovery Act. While that matter was litigated and eventually dismissed, during that time VIM never notified its insurance carrier, Westfield, about the claims or the suit. Thereafter, in 2010, the same plaintiffs filed a nearly identical suit in Indiana state court. VIM did seek coverage from Westfield for that claim. Two weeks after VIM gave notice to its carrier, Westfield first learned of the earlier lawsuit.

Westfield investigated the claims and ultimately determined that there was no coverage for them, in part based upon the insured’s late notice but also based on various policy exclusions. They thus started a declaratory judgment action in Federal Court, against VIM and the neighbors, to confirm their coverage position. The carrier won the case primarily because of the insured VIM’s late notice in notifying them of the claims and suits for which they sought coverage.

Meanwhile, the underlying state court action began to fall apart. While VIM’s lawyers were initially successful in winning dismissal of the claims, without Westfield’s involvement, VIM’s counsel withdrew from the case and VIM never retained another attorney. VIM’s failure to defend itself in the suit ultimately resulted in a default judgment totaling $50.56 million, plus $273,000 litigation costs. But after securing the judgment, the neighbors found that they would be unable to recover much from VIM, so they filed suit directly against Westfield. They instituted proceedings to “garnish” or recover money pursuant to Federal

Rule of Civil Procedure 69, which permits recovery of a money judgment that one party owes another. They sought to garnish Westfield’s indemnity obligation to VIM as per its insurance policies, in order to satisfy the default.

However, two exclusions in Westfield’s policies barred recovery for anyone. First, each of Westfield’s policies contained exclusions for “known claims”, specifically stating that they did not cover losses “if a listed insured or authorized employee knew prior to the policy period, that the bodily injury or property damage occurred” and that “any continuation, change or resumption” of the property damage or bodily injuries “during or after the policy period will be deemed to have been known prior to the policy period.”. Similarly, the policies also precluded coverage for claims that were expected or intended from the standpoint of the insured. In this case, the evidence was clear. VIM knew about the neighbor’s claims and complaints before Westfield’s policies even incepted. The neighbors themselves, seeking damages that began as early as 2003, asserted that they had notified VIM of the problems very shortly after the plant opened. As such, the exclusions undoubtedly applied.


Jennifer A. Ehman
[email protected]

Crunch time for me; see you in a couple of weeks.


Brian D. Barnas
[email protected]

09/04/20         Fortune v. First Protective Ins. Co. District Court of Appeal of Florida, Second District
Payment of Appraisal Award after Statutory Cure Period was Insufficient to Cure Bad Faith Allegations in Civil Remedy Notice as a Matter of Law

The insureds purchased a homeowner’s property policy from First Protective. The insured property was damaged by Hurricane Irma on September 10, 2017. A claim was filed. First Protective investigated the loss and determined that the amount of the loss was $3,013.20. The insureds disagreed and presented First Protective with their public adjuster’s estimate.

First Protective then invoked the appraisal process on December 2, 2017. On January 8, 2018, the insureds filed a Civil Remedy Notice alleging statutory bad faith violations. One of the allegations was that First Protective made a lowball offer and flagrantly breached its duty of settle claims in good faith. First Protective generally denied the allegations. It claimed that it did not owe any insurance proceeds to the insureds, it had not committed any acts of bad faith, and that it had appropriately sought appraisal to resolve the dispute as to the amount of the loss.

On June 1, 2018 an appraisal award in the total amount of $121,516.55 was entered. On Jul 17, 2018, First Protective paid the net amount owed. This bad faith action was filed on October 25, 2018. First Protective filed a motion to dismiss or, in the alternative, for summary judgment. It argued that it fully cured any alleged bad faith during the cure period by complying with the appraisal process.

A Florida statute provides that an insurer commits bad faith by not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests. As a condition precedent to filing an action pursuant to the statute, a plaintiff must give the Florida Department of Financial Services and the insurer sixty days’ written notice of a violation. The insurer may cure the violation within sixty days if the damages are paid or the circumstances giving rise to the violation are corrected. An insured is not prevented from sending a CRN prior to a determination of liability of damages.

The court concluded that the insurer’s invocation of the appraisal process and payment of the appraisal award after the cure period expired did not cure, as a matter of law, an alleged violation for failing to attempt to settle claims in good faith. The court below improperly had concluded that the invocation of the appraisal process by First Protective and the payment of the award after the cure period cured the alleged bad faith. The case was remanded for further proceedings on the bad faith claim. The court expressed no opinion on the factual issue of whether First Protective acted in bad faith.


Diane L. Bucci

[email protected]

Nothing to Report from the Coverage B World.


John R. Ewell
[email protected]

08/13/20         Optical Services USA v. Franklin
Mutual Ins. Co.
Superior Court of New Jersey

New Jersey Trial Court Denies Insurer's Motion to Dismiss Covid Business Interruption Claim Saying Insurer Did Not Rule Out Possibility of Direct Physical Loss. Claim Allowed to Move Forward to Discovery

Franklin Mutual Insurance Company (“FMI”) issued a business owners policy to plaintiff, Optical Services. FMI issued the business owners policy to the plaintiff, Stong OD Ewing NJ, LLC (“Stong OD”). Optical Services and Stong OD filed separate claims seeking loss of business income caused by the closure mandated by Governor Murphy’s March 21, 2020 Executive Order Number 107 suspending the operation of non-essential retail businesses on the account of the Covid-19 pandemic. Plaintiffs closed their businesses on March 20, 2020 and have not reopened to date. Plaintiffs allege that Executive Order Number 107 mandated the closure of their businesses. FMI issued letters dated April 6, 2020 and April 14, 2020 to Optical Services USA/JC1 and Stong OD denying their claims for business income and related expenses.

Both policies contained the BU04010110 Business Owners Policy Form. The plaintiffs allege that the – the plaintiffs allege that Optical Services and Stong OD Ewing NJ, LLC purchased business interruption insurance from insurers to protect their business from an – an unanticipated crisis. The plaintiffs further allege that the policies issued by FMI provide coverage for loss of income resulting from a necessary interruption of plaintiffs’ businesses caused by direct covered losses and temporary closures required by orders of a civil authority.

Plaintiffs filed for Declaratory Judgment on June 25, 2020. On July 15, 2020, FMI filed a pre-answer motion to dismiss.

Notwithstanding the lack of discovery, the defendant argued three points. The first legal argument is that the Court should dismiss the complaint for failure to state a legally cognizable claim. The second legal argument is that the plaintiffs did not sustain direct physical loss or direct physical damage to or destruction of covered property precluding coverage for business income or extra expenses under the FMI policy. Lastly, the defendant argues that the plaintiff’s occupancy of their respective properties was not prohibited by civil authorities because of a loss at a local premises not owned or occupied by the plaintiffs precluding civil authority coverage under the FMI policies.

The plaintiffs argued that they state claims for coverage under the policies because they suffered a direct covered loss and were forced to close their business by order of a civil authority. Plaintiffs further alleged that they state claims for loss of income coverage because they suffered a direct covered loss under the policy, and they state claims for civil coverage because the closure order prohibited the plaintiffs from accessing their business.

The Court reasoned as follows:

Naturally, each of the respective arguments advanced by the parties requires a fact-sensitive analysis wherein the respective parties have failed to present a sufficient record before this Court for a legal determination of their respective positions.

There has been no discovery produced to the Court for consideration, no affidavits, no certifications, or sworn testimony derived from depositions. In fact, discovery has not been undertaken by the parties with respect to the declaratory relief sought in the Complaint. Notwithstanding these deficiencies, the Court will endeavor to address the legal arguments advanced by the respective parties on the extremely limited record provided to the Court.

The defendant, FMI, conceded that the plaintiffs’ business operations were interrupted by an executive order based on the risk of the Covid-19 virus transmission throughout the State of New Jersey.

The issue before the Court is the interpretation of a direct covered loss under the policy and whether or not there was physical damage to the plaintiffs’ business. The plaintiffs argued that the loss of physical functionality and the use of their business constitutes a covered loss under the policies. The plaintiffs argued that Governor Murphy’s executive order prohibited access to the plaintiffs’ premises.

FMI argued that the plaintiffs failed to state a claim for civil authority coverage because the complaint does not allege that property damage occurred elsewhere leading to the loss of access to plaintiffs’ business. The defendant acknowledged in its moving papers that presumably the plaintiffs will argue that while their properties were not physically damaged, they sustained a physical loss by operation of the Governor’s executive order. FMI argues that the plaintiffs’ loss of use of their respective properties does not constitute a direct physical loss and therefore is not a direct covered loss defined by the policies.

The Court ruled that FMI did not provided the Court with any controlling legal authority to support their version of the interpretation of the defined terms in the policy.

The defendant argued that there is a plain meaning of “direct physical loss” and the closure of the plaintiffs’ business does not qualify for purposes of coverage. The Court found this to be a blanket statement unsupported by any common law in the State of New Jersey or by a blanket review of the policy language.

Moreover, there has been no discovery taken in this matter which would provide guidance to the Court. Therefore, the Court held: “Plaintiff[s] should be permitted to engage in issue-oriented discovery and also be permitted to amend [their] complaint accordingly prior to an adjudication on the merits of any policy language.”

In Wakefern Food Corp. v. Liberty Mutual Fire Insurance Company, 406 N.J.Super. 524 (App. Div. 2019), the Court held: “Since the term “physical” can mean more than material alteration or damage, it is incumbent on the insurer to clearly and specifically rule out coverage in the circumstances where it was not to be provided.” The Court found such argument compelling for purposes of surviving a Motion to Dismiss in the absence of any complete record for disposition.

The Court further noted that:

There is an interesting argument made before this Court that physical damage occurs where a policy holder loses functionality of their property and by operation of civil authority such as the entry of an executive order results in a change to the property.

The plaintiffs are offering in advancing in a novel theory of insurance coverage in this matter that warrants a denial of the Motion to Dismiss at this early stage of the litigation. As such, this Court must afford the plaintiffs an opportunity to engage in issue- oriented discovery with FMI in order to fully establish the record with respect to direct covered losses and to amend the Complaint accordingly if required.

The New Jersey Superior Court denied the insured’s motion to dismiss, allowing discovery to proceed forward.

Author’s Note: Oral decision. If you would like a copy of the transcript, please let me know.


09/02/20         Titley v. Hanover Ins. Co. and Massachusetts Bay Ins. Co. United States District Court, District of New Jersey
In First-Party Claim for Damage after Pipe Freeze Up, New Jersey Federal Court Finds Question of Fact whether Insured Acted Reasonably to Maintain Heat

Richard Titley (“Plaintiff”) obtained a homeowner’s insurance policy with Massachusetts Bay Company (“Mass Bay”) providing coverage on an “all risks” basis. The policy contained the following exclusion:

We do not insure, however, for loss:

  1. Caused by:

a. Freezing of a plumbing, heating, air conditioning or automatic fire protective sprinkler system or of a household appliance, or by discharge, leakage or overflow from within the system or appliance caused by freezing. This exclusion applies only while the dwelling is vacant, unoccupied or being constructed, unless you have used reasonable care to:

  1. Maintain heat in the building; or
  2. Shut off the water supply and drain the system and appliances of water.

Around March 1, 2017, Plaintiff left his home to temporarily live with his son in Texas while Plaintiff underwent a double knee replacement. Upon departure, Plaintiff set his thermostat to 60 degrees. Plaintiff’s water supply was never shut off. Plaintiff kept a key with his neighbor and notified local police he would be away for a period of time. Plaintiff did not hire or otherwise request anyone to check on his house in his absence.

Plaintiff’s mail was forwarded to his son’s home while he was away. Plaintiff never received express notice that his gas supply was turned off but did receive and pay eight monthly gas bills from South Jersey Gas.

Plaintiff did not return to New Jersey until nearly a year later. Before Plaintiff entered his home, he fell exiting the car which transported him from the airport. Id. As a result of the fall, 911 was dispatched and emergency responders transported Plaintiff to a hospital in an ambulance. At this time, the responders opened the door to Plaintiff’s property and discovered major flooding and water damage.

Plaintiff filed an insurance claim immediately. After inspection, it was clear the damage was caused by radiator pipes freezing and bursting as a result of no heat being supplied to the house. Plaintiff discovered that his gas was turned off by South Jersey Gas and/or a municipal contractor in connection with sidewalk repairs.

Mass Bay denied Plaintiff’s claim stating that “since your loss is the direct result of the gas line being locked out and freezing, we must take the position that your claim does not fall within the terms of your policy.”

Plaintiff asserted Mass Bay breached the insurance policy contract by denying the claim. Specifically, Plaintiff argued he exercised reasonable care in maintaining heat to the property enough to fall within the exclusion to coverage provision. Mass Bay argued that Plaintiff’s actions were unreasonable as a matter of law and therefore the denial did not breach the policy guarantees.

The policy precludes coverage from damage resulting from frozen pipes unless the insurer uses reasonable care to maintain heat. Thus, the issue is whether a jury could find on this record that Plaintiff used reasonable care to maintain heat in his home during his prolonged absence.

The Court found that a jury could very well find that Plaintiff acted reasonably and found it difficult to believe a jury would find otherwise. It was undisputed that Plaintiff left the house with the thermostat set at 60 degrees, left spare keys with neighbors, and notified the police he was leaving. While Plaintiff received notice before he left that some municipal repairs “could” result in a gas outage, the Court found nothing in the record suggesting Plaintiff had any reason to know that the interruption was certain, or even likely, to happen.

Mass Bay’s reliance on Plaintiff’s gas bills did not alter the Court’s conclusion. Mass Bay argued that Plaintiff’s gas bills showed no usage of gas, and he received those bills while staying with his son. Thus, Mass Bay contended that Plaintiff should have known that no heat was being maintained. The Court rejected this argument. Rather than paying for his actual usage, Plaintiff agreed to a billing plan that spread out his utility costs over the entire year in equal installments. Thus, each bill reflected that Plaintiff owed payment to South Jersey Gas, rather than reflecting that Plaintiff owed nothing. Plaintiff argued the bills obscured – or at least called into question – whether there actually no gas was being supplied to the house for months in a row.

Therefore, the Court denied the carrier’s motion for summary judgment on the breach of contract claim.


Lee S. Siegel
[email protected]

09/09/20         Nash Street, LLC v. Main Street America Assurance Co. Supreme Court of Connecticut
Court Finds a Duty to Defend Uncertain Claims, Encourages Declaratory Judgment Actions

In a case of first impression, the Connecticut Supreme Court held that an insurer must afford a defense where coverage is “uncertain.”

So, who had Connecticut doing its best Washington State impression on their 2020 bingo card of disasters? Well, certainly not this observer. Perhaps motivated to increase work for coverage lawyers and encourage the filing of declaratory actions ala Illinois, the Court did an “ole,” sidestepping entirely the issue of whether the carrier correctly denied coverage. A disturbingly unanimous court held that the issue of coverage was, somehow, immaterial in a coverage case. Instead, the Court, relying on Washington state precedent (always dangerous), held that when no Connecticut appellate authority has interpreted particular policy language, but courts in other jurisdictions have interpreted the same language in a manner that could result in coverage, the legal uncertainty as to how a court might interpret the language may give rise to a duty to defend. Citing, among others,  American Best Food, Inc. v. Alea London, Ltd., 168 Wn. 2d 398, 229 P.3d 693 (Wash. 2010) (insurer had duty to defend when cases from other jurisdictions suggested that exclusion did not apply, and there was no controlling case from Washington courts).

Let’s talk a little bit about uncertainty. We are, or at least should be, familiar with factual uncertainty. A factual uncertainty exists when it is unclear from the four corners of a complaint whether the allegations fall within coverage. Because the duty to defend is broader than the duty to indemnify, just the possibility of coverage triggers the duty. When the facts are disputed, say for example was it an excluded assault or a covered self-defense, the duty to defend is triggered because the carrier is not entitled to resolve factual uncertainties on its own.

Here, the Court’s troubling illustration of factual uncertainty posited that where a complaint is silent on a date of loss essentially all of the insured’s carriers, from time immemorial, have a duty to defend until a court determines when the injury occurred. Still, the duty to defend will last only until the factual ambiguity is resolved.

A legal uncertainty, the Court wrote, arises when it is unclear how a court might interpret policy language. “Legal uncertainty can arise in at least two ways. First, as this court has recognized, ambiguous policy language can give rise to the duty to defend… Second, a duty to defend may arise if there is a question as to whether ‘‘the cases governing the insurance policy [will] be read to impose coverage in a given situation…”.

Here, it is the Court’s extension of the duty to defend to legal uncertainty that makes news. Extending the scope of the duty to defend, the Court found legal uncertainty mandates a defense obligation when there is either an ambiguity in a policy or a split of authority in other jurisdictions as to the meaning of a particular policy provision, and Connecticut law is silent on the issue. Unlike factual uncertainty, legal issues of contract interpretation are the province of judges.

Underlying discovery is unnecessary to resolve whether the complaint falls within or without coverage. Still, the Court held that an insurer cannot avoid a duty to defend until the legal uncertainty of coverage is resolved. This holding ignores

that, from the carrier’s perspective, there is no legal uncertainty. The carrier is interpreting its policy as providing no coverage, something done hundreds of times a day, and is not weighing facts over which it has no control. Inherently, in every disputed coverage case, there remains legal uncertainty until the trial court rules and the appellate court affirms the correctness of an insurer’s decision not to defend.

Returning to the case at hand, let’s put these legal issues in context. The plaintiff, Nash St., owned a home in Milford that was damaged by both hurricanes Sandy and Irene. Unlucky. A contractor, New Beginnings, was retained to renovate the house. A subcontractor was retained to lift the house and to do concrete work on the foundation. While the subcontractor was lifting the house, it shifted off and collapsed. At the time of the collapse, the only work being performed was the lifting. New Beginnings and/or its subcontractor caused the collapse by failing to ensure that the cribbing was secure. The house sustained extensive physical damage.

Nash St. sued New Beginnings, which tendered the complaint to its carrier, Main Street, which declined to defend. Nash St. was awarded $558,007.16 when New Beginnings defaulted and then commenced a direct action against Main Street in an effort to collect the unsatisfied judgment. On cross-summary judgment motions, both sides agreed that there were no disputed facts, only contract interpretation issues. Main Street argued that the CGL policy’s business risk exclusions, commonly the j(5) and (6) exclusions precluded coverage.

Under exclusion k (5), the policy excludes coverage for property damage to ‘‘[t]hat particular part of real property on which you or any contractor or

subcontractor working directly or indirectly on your behalf is performing operations, if the ‘property damage’ arises out of those operations................................... ’’ Under exclusion k (6), the policy excludes coverage for property damage to ‘‘[t]hat particular part of any property that must be restored, repaired or replaced because ‘your work’ was incorrectly performed on it.’’

The parties disputed the interpretation of the phrase “that particular part.” Main Street argued that the entire house was being lifted and, therefore, in this context any damage from the collapse of the structure was excluded. Nash St argued, I believe unpersuasively, that New Beginnings was only working on the foundation under the house, and not the house itself, at the time of the collapse. The trial court agreed with me, and Main Street, and granted the insurer summary judgment. The Court summarized that decision:

The court stated that the parties agreed that the only issue was whether exclusions k (5) or (6) ‘‘preclude[d] coverage for the property damage to the entire house that occurred as a result of the [house's] shifting [off of] the cribbing and collapsing at the time that grading and foundation work was being performed.’’ The court concluded that exclusions k (5) and (6) were clear and unambiguous, and ‘‘‘that particular part of real property’’’ on which New Beginnings or the subcontractor was performing operations was the entire house. As such, the court concluded that these exclusions precluded coverage, and, thus, the defendant had no duty to defend or to indemnify New Beginnings.

Nash St. appealed. The Supreme Court framed the issue in a way that avoided a legal interpretation of the meaning of these standard exclusions:

[W]e are mindful that our inquiry is not whether exclusions k (5) and (6) preclude coverage; nor does this case require us to determine conclusively what those exclusions mean. The only question we must answer is whether there was any possibility of coverage at the time New Beginnings tendered defense to the defendant.

Instead of deciding whether Main Street was correct that there was no coverage or it was wrong and it owed the underlying judgment—which was the risk the carrier took in denying coverage and allowing its insured to default, the Court asked whether it was possible that there was coverage at the time the complaint was tendered.

[B]ecause the plaintiff alleged damage to “the house and the renovation work therein,’’ we must consider whether legal uncertainty existed regarding the coverage issue in dispute. That is, was it possible, at the time New Beginnings tendered defense to the defendant, that this court, if presented with the issue, could construe ‘‘that particular part’’ in exclusions k (5) and (6) to mean that any portion of the alleged damage would fall outside the scope of the exclusions?

Now, it’s been a long time since I took Evidence in law school, but I strongly recall Professor Kessler (the now retired Richard J. Cardali Distinguished Professor of Trial Advocacy at Hofstra University School of Law) saying, you can’t ask a witness if something is possible because “anything is possible.” The Supreme Court must have been absent that day, because it launched into an analysis as to whether it was possible if faced with this question might it have sided with the insured’s contract interpretation. Oddly, there was nothing hypothetical here, the Court was in fact faced with making this decision, just in a direct-action setting and not in a declaratory judgment setting. The Court could have resolved the coverage issues both for the instant parties and to settle Connecticut law. A simple result, Main Street’s interpretation was right, and it wins, or its interpretation was wrong, and it pays.

But no, after weighing cases from various jurisdictions, the Court concluded that if asked the question it might have gone one way or the other. That lack of certainty in how it would rule in this case, the Court determined, triggered Main Street’s duty to defend. “Because such an uncertainty works in favor of providing a defense to an insured, exclusions k (5) and (6) did not relieve the defendant of its duty to defend New Beginnings.” Because it breached the duty to defend, under Connecticut law, Main Street may not subsequently argue that these exclusions absolved it of its duty to indemnify. The Court remanded the case to the trial court for determination of Main Street’s non-exclusionary defenses that were not considered below.

Here’s the big takeaway: although the Court gives lip service to the notion that Connecticut law does not require an insurer to always defend and bring a declaratory judgment action (see footnote 4), well, it does just that. “Although our case law does not require it, the prudent, if not ordinary, course would have been for the [insurer] to defend its insured under a reservation of rights and separately pursue a declaratory judgment action to resolve the legal uncertainty at issue.”

Today, as the Court suggests, vigilant Connecticut insurers, in the absence of black letter, controlling precedent, must defend their insureds and commence a coverage action, or risk waiving their defenses to coverage.


Brian F. Mark
[email protected]


9/04/20           Burlington Ins. Co. v. Shelter Structures, Inc.
United States District Court for the Eastern District of Pennsylvania

U.S. District Court Finds Claims of Faulty Workmanship Against Insured do not Constitute an “Occurrence”

This declaratory-judgment action arises out of an underlying construction defect action related to the construction of a hangar to store an airship. The underlying plaintiff, Sceye Sarl (“Sceye”), contracted with Shelter Structures (“Shelter”) to design and construct the Hangar, which was to comply with all applicable codes and standards, including being able to withstand wind speeds of up to 115 miles per hour.

The underlying plaintiff alleged that the hangar “failed in winds far below the design requirements of the applicable building code.” It collapsed and destroyed the airship stored within. The underlying complaint sought damages due to breach of contract and negligence and alleged that the hangar had both design and construction defects.

At the time of the collapse, Shelter had a CGL insurance policy with Burlington Insurance Company (“Burlington”). When Sceye commenced the underlying suit, Shelter sought to have Burlington defend and indemnify it against Sceye's claims. Burlington denied coverage and filed this action seeking a declaration that it had no duty to defend or indemnify Shelter.

After determining that Pennsylvania law governed, the Court examined Burlington’s coverage obligations relative to the underlying action. The policy issued by Burlington provides that Burlington will defend Shelter against suit and pay damages arising from "bodily injury" and "property damage" caused by an "occurrence." The contract defines an "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful condition."

Under Pennsylvania law, claims for faulty workmanship are not covered by occurrence-based provisions like this one because the term "accident" "implies a degree of fortuity that is not present in a claim for faulty workmanship."

Shelter argued that the windstorm should be considered an occurrence under the policy. However, the Court pointed out that the underlying complaint did not allege a windstorm. It alleged that the hangar "failed in winds far below the design requirements of the applicable building code" and that "the actual wind forces were less than half of what the [h]angar should have been constructed to resist." The Court held, that based solely on the underlying complaint, the failure of the hangar was the foreseeable result of the allegedly faulty workmanship, which is not an occurrence under Pennsylvania law.

Shelter had also argued that where third-party property is damaged, faulty workmanship may be considered an occurrence. The Court clarified that Pennsylvania case law has merely held that faulty workmanship does not preclude the finding of an occurrence when third-party property is damaged. An underlying complaint must still allege that the damage was caused by "an unexpected and undesirable event" that "falls within the definition of the term 'occurrence' under the [policy]" for there to be a duty to defend.

Finally, Shelter argued that because it was merely the seller of a structure "engineered, manufactured, and erected by others," and not the actual manufacturer and builder of the hangar, the failures of the subcontractors should be considered an occurrence under the policy. The Court rejected such an argument, pointing out that if it were to accept this argument, it would swallow the occurrence requirement and render the policy language mere surplusage.

Because the underlying complaint did not allege an occurrence, the Court held that Burlington had no duty to defend or indemnify Shelter in the underlying action.


Eric T. Boron
[email protected]

09/04/20        Martinez v. GEICO et al. Supreme Court of Alaska
Auto Insurance Policy – Supreme Court Affirms Superior Court’s Judgment for Insurer – No independent Duty of Insurer to Third Party

In November 2011, Joshua Martinez was driving a pickup truck when he lost control and crashed into a cabin, injuring the cabin owner Charles Burnett and causing property damage, including a spill of heating fuel. Burnett owner asked Martinez’ insurance company GEICO to pay Burnett to do the cleanup himself, but GEICO refused because Burnett did not have the qualifications required by the Alaska DEC. Cleanup of the spill of heating fuel stalled for over a year while the effects of the spill on the property and Burnett’s health allegedly worsened. Burnett sued the Martinezes and GEICO in September 2012, while his property was still awaiting cleanup.

In March 2014, after the property cleanup was completed, Martinez and his father, the truck's owner, settled with Burnett for the maximum limits of the insurance policy, with Burnett reserving his claims for the delayed property cleanup against GEICO. The parties agreed to dismiss with prejudice “all claims that were or could have been asserted” by Burnett against the Martinezes.

In September 2014, the superior (trial) court granted summary judgment to GEICO on Burnett’s remaining claims, finding GEICO owed Burnett “no actionable duty”, because, as the trial court opined, “GEICO’s duties run to its insureds, the Martinezes, not to Burnett.”. GEICO had argued to the superior court that a liability insurer owes no duty of good faith and fair dealing to a third- party claimant, contending that as a matter of law it owed Burnett no duty to act reasonably in handling the property cleanup.

In early 2017, the Supreme Court of Alaska reversed the trial court’s grant of summary judgment to GEICO, holding GEICO “may owe Burnett an independent duty” (as defined by Restatement (Second) of Torts, Section 323 – “Negligent Performance of Undertaking to Render Services”.   The Alaska Supreme Court remanded the case to superior court for an evidentiary hearing or trial at which Burnett was to have an opportunity to try to establish that “independent duty” as a factual matter.

In April 2018, the superior court held an evidentiary hearing to decide whether GEICO had assumed a duty to Burnett owner independent of the duty GEICO owed its insureds. The superior court found there was no such duty. Burnett’s appeal of that ruling brings us to the September 4, 2020 opinion issued by Supreme Court.

The Alaska Supreme Court held that the superior court did not clearly err in its findings of fact about the existence of an independent duty (that Burnett had not shown there to be any independent duty owed to him by GEICO) and that superior court did not violate Burnett’s due process rights. The Alaska Supreme Court further concluded that the Martinezes were no longer parties to the case at the time they sought to renew their participation in it, and their arguments that they were entitled to either joinder or intervention were waived for lack of briefing. In sum, the Supreme Court affirmed the superior court's judgment.


Marina A. Barci
[email protected]

09/09/20         United States of America v. Kogan
United States District Court, Southern District of New York Fraudulent No-Fault Insurance Scheme Lands Provider in Prison

Although this is not really a no-fault case, the defendant was incarcerated for fraud related to a no-fault insurance scheme, so I thought it would be interesting to include. The defendant’s claim here is that he should get a compassionate release for home arrest due to heightened risks related to COVID-19, which the Court denied. The defendant found himself jailed for concurrent terms of 50 months after he plead guilty to two counts of health care fraud in 2016 and one count of insurance fraud in 2017.

In the no-fault insurance scheme, which took place between approximately March 2014 and June 2016, an acupuncturist set up two professional corporations at the request of the defendant. The defendant actually controlled the businesses and paid the acupuncturist a salary from a portion of the proceeds (keeping the rest himself), but the businesses were registered in the acupuncturist’s name only. The defendant also coached the acupuncturist how to lie about his involvement in the practices during an “Examination Under Oath” in which she was questioned by representatives of an insurer. The defendant had been accused of fraudulent no-fault insurance schemes in the past by several of the major no-fault insurers, and had entered into settlement agreements with two of the largest (Geico and Liberty Mutual) to resolve their claims against him.

Pursuant to one of the settlement agreements, he had agreed not to submit any future billing — under his name, or under the name of any entity in which he had direct or indirect ownership or control — without giving advance notice to the insurer. A total of $293,851 was paid by Geico and Liberty Mutual for services performed by the acupuncturist’s companies. Had the insurers known the truth — that the acupuncture clinics were in fact controlled by the defendant despite being registered in the acupuncturist’s name — they would not have paid the claims due to the fraudulent incorporation of the companies.


Ryan P. Maxwell
[email protected]

Legislative List

09/09/20         Proposed Bill Would Provide Civil Action for Deprivation of Rights Under Color of Law
New York State Assembly

Assembly Bill No. 10978 Would Allow for Damages and Reasonable Fees Associated with Deprivation of Rights Under Color of Law

On September 9, the New York Assembly’s Rules Committee introduced, on behalf of Assemblymember Pamela J. Hunter, a bill that seeks to end the defense of qualified immunity for law enforcement for the deprivation of an individual’s rights, as well as provide a state cause of action that may be brought by injured individuals and the Attorney General.

Citing more than five decades of “extraordinary leeway” in the performance of law enforcement duties, the Sponsor Memorandum for this bill notes that “qualified immunity has far too often given the police the ability to brutalize and harm our communities, particularly communities of color, even during the most routine encounters.” Specifically, its noted that qualified immunity has been extended to law enforcement by the U.S. Supreme Court and further expanded thereafter. Assemblymember Hunter calls on New York legislators to “join our colleagues in Colorado, who became the first state to eliminate qualified immunity this month,” and “be part of the national movement to stop these killings and erase this stain on society's record.”

If signed into law, a new section 79-Q of the Civil Rights Law would be created, which would hold liable any person or public entity that deprives an individual of their rights while acting under color of law. A prevailing plaintiff that catalyzes change in a defendant’s conduct would be afforded reasonable attorney’s fees and costs; however, a defendant would be entitled to defense costs and fees should any such action be found frivolous. Additionally, the Attorney General would be empowered to bring a civil action for relief on behalf of the state and the injured party. If the Attorney General prevails, the court is required to order any award of damages to the injured party.

With respect to indemnity for any such damages, a public entity would be required to indemnify its public employees for any liability incurred by the employee and for any judgment entered against the employee for claims arising under this section. However, such public entity would be prohibited from indemnifying a public employee if the person was convicted of a criminal violation for the conduct from which the claim arises.

Most importantly, the newly proposed §79-Q of the Civil Rights Law would provide that qualified immunity or a defendant's good faith but erroneous belief in the lawfulness of their conduct shall not be a defense.

From the Filings Cabinet
09/08/20         Cyber Bullying Coverage Impermissibly Broad Department of Financial Services
Cyberbullying Coverage Expenses Must be Limited to Acts of Violence or Threatened Acts of Violence

On September 8, DFS disapproved a Family Cyber Protection filing for, among other reasons, exceeding the permitted scope of coverage for cyberbullying.

Specifically, in its disposition, DFS advised that “it is this Department’s position that cyberbullying coverage expenses can only be for the acts of violence or threatened acts of violence.” DFS had noted in its objections to the filing that “cyberbullying in and of itself is not always an act or threatened act of violence.” Providing an example, DFS indicated that “we do not consider ‘harassment’ as an act of violence or threatened act of violence; and so, cannot be covered.”

Given the above, the carrier was directed to amend the filing’s definitions of cyber bullying “to make it clear that the act is an actual or threatened violent act.” DFS also took issue with the coverage trigger included, providing that “due to the nature of this coverage, the coverages being provided on a ‘discovery’ basis as opposed to an ‘occurrence’ basis may not be acceptable” and requested that the carrier “demonstrate that the coverage being provided are on an ‘occurrence’ basis.”


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


09/14/20         Kathleen Reno v. Wheatland-Chili Central School et al.
Supreme Court, Monroe County
To Assert a Claim under the Theory of Premises Liability After Injury by a Third Party the Defendant Must Have Had the Opportunity to Control the Third Party who Caused Plaintiff’s Alleged Injury

Plaintiff brought an action under the CVA against both Wheatland-Chili Central School District (WCCSD) and Churchville-Chili Central School District (CCCSD) alleging that she was abused by a teacher employed by both districts, however plaintiff was only a student at WCCSD and the abuse occurred on property owned by defendants. Plaintiff asserted causes of action against both defendants sounding in: Negligence based on the failure to supervise the teacher and plaintiff and the failure to protect plaintiff from a known danger, negligent hiring, negligent training and supervision, and negligent retention. Defendant CCCSD moved to dismiss all causes of action against it, as it owed no duty to plaintiff.

Plaintiff’s causes of action against CCCSD rely on CCCSD owing plaintiff a duty of care based upon a theory of premises liability and in loco parentis. The court held that CCCSD could not be held liable under a theory of premises liability, as it had no control over Raftery when he was not on CCCSD property. In order to assert a viable claim under a theory of premises liability for injury by a third party the court holds the defendant must have the opportunity to control the conduct of the third party.

Additionally, the court holds that plaintiff’s reliance on the theory of in loco parentis is also misguided. Plaintiff, being a student of WCCSD was never owed a higher duty by CCCSD. Even if the abuse had occurred on CCCSD property, the theory of in loco parentis would still not provide plaintiff grounds to assert a claim because it is a duty owed only by a school to its students, not students of a neighboring district.

Plaintiff also moved to amend her complaint to include a cause of action against both WCCSD and CCCSD for failure to report the claims abuse pursuant to Social Services Law § 413. The court rejects this proposed amendment because Social Services Law § 413 only requires the reporting of abuse by a person legally responsible for a child, as defined by the statute. A teacher is not defined by the statute as a person legally responsible for a child, therefore the trigger to report under Social Services Law § 413 was never triggered.


Cara A. Cox
[email protected]


Heather Sanderson Sanderson Law (Alberta, Canada)

[email protected]

Cara’s Cross Border-Connection: Heather
07/04/20         Hector Chiasson et al. v. Intact Ins. Co., 2020 NBCA 37 New Brunswick Court of Appeal
How Unintentional Translation Mistakes Created Intended Coverage

The town of Lamèque, New Brunswick, is on the picturesque Acadian Peninsula, surrounded by the Gulf of St. Lawrence. In July of 2016, Lamèque was the home of Hector Chiasson, his wife Anna Chaisson and their teenage son Jean- François Chaisson. The Chaissons are, like most of their neighbours, a French speaking family.

Intact Insurance issued a homeowners’ policy to the Chaissons which named Hector and Anna Chaisson as named insureds. Their teenage son, Jean- François was an additional insured under the Intact policy as he was living in his parents’ household.

On the Canada Day long weekend in July of 2016, Jean-François and three of his friends were celebrating their high school graduation some 10 hours away by car at the “The Beach Club” in Pointe-Calumet, Quebec. Pointe Calumet is on the north shore of the St. Lawrence, near the western tip of the Island of Montreal. The Beach Club is a top North American destination for electronic music (top 40, mix of EDM and hip hop). It has a capacity of more 10,000 and features artists every weekend.

Aerial shot of the Beach Club


While leaving the Beach Club, Jean-François and his friends found themselves in an altercation with James Bohn, an American fellow who at the time was residing in Minneapolis, Minnesota. No criminal charges ensued and therefore there was no convictions arising from the incident. However, Bohn sued Jean-François, as well as his three friends, their parents, and their insurers in the Quebec Superior Court. Quebec permits direct action against insurers which is why the insurers were included.  The action alleged assault and intentional infliction of bodily harm. Intact refused to defend Jean-François as it stated that the allegations of liability are excluded. Intact agreed to defend his parents.

Jean-François, together with his parents applied in the New Brunswick Court of Queen’s Bench for an Order directing that Intact defend Jean-François. In an unreported judgment, the application judge dismissed the Chaissons’ application, holding that Intact did not have a duty to defend Jean-François. The Chaissons appealed to the New Brunswick Court of Appeal.

As is usual in these cases, the Court of Appeal analyzed the allegations against the policy wording. However, in this case, the New Brunswick Insurance Act requires all policies to be written in both of Canada’s official languages, English and French. Any inconsistencies between the two versions must be resolved in favour of the insured.

The Court of Appeal held that “there are glaring inconsistencies between the two versions of the policy”. The English version of the coverage agreement limited coverage to accident injuries to someone or their property. The French version did not mention property damage and did not limit the coverage to accidental injuries. As a result, the French version offered broader coverage for bodily injury. The coverage for defence costs and indemnity payment was identical and applied to unintentional injury permitting the Court of Appeal to conclude that unless excluded “…Intact provides personal liability protection to their insured if sued for bodily injury or property damage anywhere in the world but that Intact is only liable for defence costs and compensatory damages if the injury or damage was unintended.”

Intact relied upon an intentional acts exclusion that in the English policy excluded claims arising from bodily injury or property damage caused by either an intentional act, a criminal act or a criminal failure to act. As for the French version, the Court of Appeal stated “To say the French version of this exclusion is very poorly drafted is an understatement. It creates both an absurdity and a significant ambiguity. The first part of the exclusion eliminated all coverage for bodily injury or property caused by any person insured by the policy whether intended or not. Then, it created a separate category of exclusion (unnecessary given the preamble to the exclusion) for damages caused by the criminal acts or failures to act of those insured. The Court of Appeal concluded: “This absurdity/ambiguity must be interpreted against its author-Intact.”

The Court concluded that the true construction of the policy meant that Jean- François was covered for damages caused by his intentional acts unless those intentional acts constitute criminal acts. As there was a possibility of coverage in this case, Intact was obliged to defend him. Intact was ordered to pay a total of $5,000 in costs for the proceedings on appeal and before the application judge.

Given the legislation in New Brunswick mandating that coverage be issued in both languages, the result would likely have been the same if the insureds were English speaking. However, as they were French speaking the errors in the French translation were material.

Watch those translations. They can create unintended coverage.


Cara’s Cross-Border Connection
Back to School: Colleges and Universities Take on Carriers College students are “back”. However, many students will not be able to experience higher education like those prior to COVID-19. When the fall semester began, schools needed to make choices of in-person classes, online classes, or a mix of the two. At the start of this semester, it appears most colleges and universities in the United States had opted for remote learning, while approximately 20% of colleges and universities were offering mostly in- person classes, and 16% were offering a mixed experience.1 Some institutions are permitting students on campus, but only at partial capacity, like the State University of New York at Buffalo2, which elected a hybrid approach with housing and dining having remained open but having capped in-person classes to 25% capacity.3

Despite the obvious changes to dorms and classroom experience, a student’s bill generally reflects the pre-pandemic experience, such as technology fees, student activity fees, and laboratory fees. However, two items may stand out compared to others: tuition and room and board fees. Depending on the college or university, tuition and/or room and board appear to be the largest source of revenue. This is especially true for out-of-state students; whose tuition is typically more than in-state students and may have elected to not travel across state lines this semester.

However, what is a college or university do when they lose their two largest sources of income? Is there a claim for such losses? For the institutions that preemptively elected to have an entirely remote experience for students this fall, it is unlikely they have a covered claim given the lack of any property damage on campus, which this Column discussed at length previously. Conversely, the institutions that chose to carry on with business as usual or change their operations, are now incurring additional costs associated with that choice.

For colleges or universities that have permitted in-person classes, there have been a surge of cases with the influx of students arriving to campus.4 In response to increased cases on campus, institutions are either switching entirely to remote learning, like Colorado College5, or implementing a quarantine protocol, like the University of Tennessee at Knoxville.6

Regardless, all these decisions have financial costs, such as reduced “rental” income due to limited capacity or reducing multi-person dorm rooms to 1-person quarantine/isolation rooms; alternative housing for students who are removed from dorms because their dorm rooms are being utilized for quarantine; sanitizing and disinfecting costs; enforcing quarantine protocols, like hiring police officers to guard quarantined dorms; or large events like sporting events or concerts.

As colleges and universities are feeling the financial losses, business interruption claims are being made and lawsuits are being filed against carriers who have denied coverage. For example, the University of Saint Thomas (“UST”), a private university in Texas, filed a complaint against American Home Assurance Company. UST argues the “physical presence of the virus on UST’s campus have caused direct physical loss and damage to covered properties. UST has and will continue to sustain direct physical loss and damage covered by the Policy, including but not limited to, business interruption, extra expense, interruption, by civil authority, limitations on ingress and egress, and expenses to reduce loss.” However, the issue of whether or not the risk of COVID-19 was a foreseeable risk may affect coverage. For instance, another college that has filed a complaint against its carrier is Benedictine College. Benedictine College is located in Kansas and shut down its campus in March but welcomed back their largest incoming freshman class last month in order to provide students an in- person experience, including athletics.7

The other question that will likely be debated is whether or not colleges and universities mitigated the damage. Take UST, which arguably is on end of the mitigation spectrum. UST eventually shut down its campus after confirmed cases of the virus appeared on campus this past March, and to date, UST remains closed and operates exclusively on a remote basis. Conversely, Benedictine College opened its doors to students last month to begin the fall semester.

However, like Dr. Fauci warned in May would happen8, Benedictine College saw a rise in cases as soon as students returned to campus and county health officials issued an order to quarantine the entire campus. However, Benedictine College pushed back when county and eventually the County and College arrived at a compromise.9

Although we have seen a handful of cases related to business interruption claims having been dismissed already, cases where colleges and universities experienced positive cases on campus either this past spring or this fall may not be as quickly determined given the various approaches taken by colleges and universities, which will likely affect whether coverage is provided.

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2 Considered to be the “flagship” of the State University of New York system, with over 30,000 students enrolled as of 2019,




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