Coverage Pointers - Volume XXII, No. 8

Volume XXII, No. 8 (No. 573)
Friday, October 2, 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.

Happy October to my friends everywhere.  We are delighted you’re with us and hope all are healthy and regaining prosperity.

For our newbie subscribers, this is our cover letter, replete with notes from our column authors and historical tidbits from the newspapers, 100 years ago today.  The actual issue of Coverage Pointers is attached.  Past issues are available on our website and an updated search engine on the site will help you find older cases that you may want to review.  We have over 22 years of them!

Trials are starting, on a limited basis in some places in New York State. We are handling lots of Child Victims Act coverage and defense cases.  All kind of class actions, some COVID related, some not, are leading to interesting coverage issues. There’s been a steady decrease in the number of Business Interruption suits but a steady increase in other CGL. E&O, D&O and employment lawsuits.  Have questions?  Bring them on.

These past two weeks, we’ve been doing a good deal of risk transfer training, having three presentations, all on Risk Transfer, to some 200 people.  We continue to upgrade the presentation, and invited Paul Simon and Art Gunfunkel to offer their lyrics.  Poor Julio was injured down in the Queen of Corona school yard, in our current version.  Risk transfer questions, abound.

So much of the 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 and related platforms, programs on risk transfer.  If your shop can benefit from that training, let me know and we can arrange a date and time to help train your staff.

Keep calling with situations,  we love to help.

A special thank you to our Canadian friend, contributor, and colleague, Heather Sanderson. She’s terrific!

 

New York Coverage Protocol Training:

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

1. Are you sending out reservation of rights letter in NY claims? 

2. Do you know the “30-day” rule?

3. Are you certain you know who gets copies of coverage position letters in New York?

4. If the insured fails to respond to 10 letters seeking cooperation, can you successfully deny coverage for lack of cooperation?

5. If the insured gives you notice of an accident, five years after it occurred, in violation of notice obligations in the policy, is that enough to sustain a late notice disclaimer?
    

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

 

Newsletters:      

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

• Employment & Business Pointers aims to provide our clients and subscribers with timely information and practical, business-oriented solutions to the latest employment and general business law developments.  Contact Joseph S. Brown  [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:

Apologies, in advance, for not having much to say this week.  Courts are lean on first party issues right now.  Everyone has an experience with a return to Fall normalcy, and I will resist the urge to provide further commentary on mine.  I hope everyone is safe and getting used to work/school/sport with a mask.  

I’ll simply leave you with a suggestion for your Netflix watching in the coming months.  If you are a child of the spectacular decade that was the 1980’s, I would strongly encourage you to take up the Kobra Kai re-boot of the old Karate Kid trilogy.

Yes, it is a bit “teen love story” for me.  Yes, it also probably a little heavy on the cheese factor.  But, believe me, it is worth the 25 minutes or so per episode for the very conspicuously placed references to your youth.  From the some of the t-shirts worn by the characters, to pop culture references you haven’t heard in years, you can’t go wrong.  In one of the final episodes, it had me pulling up images of trapper keepers to explain to my 11-year-old the legacy of those gloriously ineffective plastic and Velcro concoctions.  By the way, for those of you who know what I’m talking about, I also had the fighter jet version, and it, indeed, was awesome.  Then…and now.

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

Steve
Steven E. Peiper
[email protected]

 

Besame’ Mucho, but be Careful Where:

The Times
Munster, Indiana
02 Oct 1920

WHERE KISSING IS A CRIME.

            The Spanish are sticklers for propriety, if we may judge from a dispatch from Madrid which tells that a visitor in taking leave of his wife at the door of a hotel kissed her.  The act was done under the eyes of a policeman and the osculatory husband speedily found himself in the clutches of the law.  He was informed that he had committed a serious offense against the law of the Spanish capital and that ignorance of the law provided no excuse.

            If it might be presumed that the offense lay in the fact that he kissed his wife, the dispatch corrects any such assumption by saying further that it is an equal offense to kiss any woman while in the streets of the city, with or without her consent.  Thus there is no discrimination as to women.  However, the culprit, we are further informed, was let off with a reprimand that probably impressed on his consciousness the gravity of the crime.

            So far as the information to us goes, the prohibition applied to kissing on the streets.  Whether it extends further is not stated.  It possibly also has to be done in the sight of a policeman.  If the young Spanish lovers are discreet they may seek a park, like some do in this land of liberty.  At any rate they would probably be cautious enough to glance around to see who might be looking.  We never would have suspected that the Spaniards were afflicted with “blue” laws.  They have never been puritanical.  However, those addicted to kissing their wives will do well to be careful while in Spain.

 

Wilewicz’ Wide-World of Coverage:

Dear Readers,

Things have really picked up in the Courts and in the Wide World of Coverage. We are seeing a significant uptick in virtual appearances, plus Zoom depositions and EUOs have been proceeding mostly without a hitch. Judges appear to be amenable to appearance time changes, and they seem to be back to issuing decisions on motions. While certainly not back to “normal”, things do appear to have stabilized and are progressing as we navigate these turbulent waters together.

Lots has been going on with extracurriculars of late as well. As you know, I hold a couple of leadership positions in the ABA’s TIPS – the Tort Trial & Insurance Practice Section. There, we have spent the last six months getting increasingly creative with how to continue to provide content, put on CLE programs, and create networking opportunities. Frankly, the pandemic has made some of these things far easier to undertake, with the main barrier to entry (i.e., cost) being a thing of the past. It is actually easier to network and connect with colleagues around the country in virtual happy hours, rather than travelling across multiple states to meet one time a year. Now if we could only figure out a way to share food and drink without constantly having to bring-your-own.    

In any event, next up is the three-day TIPS Fall Meeting. While this was originally scheduled to be held in Arizona, all of the committee business meetings, events, and receptions will be virtual this year. I will be attending throughout, so if you see me, feel free to use the chat box to say hi. Note also that you don’t have to be in leadership to attend (as was the case in years’ past). Rather, all ABA members are welcome to join and participate.

Until next time, stay well,

Agnes
Agnes A. Wilewicz
[email protected]

 

The Opposite Problem – No Kissing, No Marriage :

The Oklahoma City Times
Oklahoma City, Oklahoma
02 Oct 1920

WIFE HAS RELIGIOUS AVERSON TO KISSING; HUBBY GETS DIVORCE

            DENVER.—Because his wife had a religious aversion to kissing, Alvia Hammit was awarded a preliminary decree of divorce in Judge Butler’s court.

            Hammit told the court that his wife considered kissing “sinful,” and when he disagreed with her religious scruples she announced that “if I had not believed I could convert you I would never have married you.”

 

Barnas on Bad Faith:

Hello again:

I have an interesting bad faith decision from New York in my column today that discusses the voluntary payment doctrine in detail.  After an automobile accident, the excess carrier was not placed on notice until six weeks before the trial of the underlying action.  The excess carrier participated in settlement negotiations and contributed towards the eventual settlement, but it reserved its rights against the primary carrier.  The Second Department concluded that the voluntary payment doctrine did not bar the subsequent bad faith action.  The court reasoned that applying the voluntary payment doctrine in such circumstances would allow primary carriers to benefit from their own bad conduct and discourage settlement of claims on behalf of insureds.

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

Brian
Brian D. Barnas
[email protected]

 

Liquor Ain’t Quicker:

The New York Times
New York, New York
02 Oct 1920

Flask Caused Arrest of Reynolds Hitt And Woman in Washington Dining Room

Special to The New York Times.

            WASHINGTON, Oct. 1.—A man whose name is entered on the police blotter as “Reynolds Hitt (John Johnson)” and a woman whose name is registered as “Alma Miller” were arrested last night in a Pennsylvania Avenue hotel, charged with violating the Federal liquor laws.  Mrs. Minna C. Van Winkle, superintendent of the woman’s division of the Metropolitan Police Department, made the arrest, charging the man with unlawfully transporting liquor and the woman with disorderly conduct.

            The police say that the man gave the name of “John Johnson,” but was recognized as Reynolds Hitt.  The Washington address which is affixed to the name is the same as that of Robert Stockwell Reynolds Hitt, former Minister to Panama and Guatemala and in the service of the diplomatic corps in Rome, Paris and Berlin during the years 1901-1910.  Robert Stockwell Reynolds Hitt is the son of the late R. P. Hitt, for many years Chairman of the House Committee on Foreign Affairs.

            Hitt’s companion also gave a Washington address, but is said to be from New York and a former war worker.  She is said to have three sisters living in Washington.  She gave her age as 21 and Hitt or Johnson told the police he was 44 years old.

            Hitt and the woman were dining in the hotel when Mrs. Van Winkle caught the glint of a silver half pint flask.  As soon as she satisfied her that the contents of the flask were a part of the meal, she walked over to the table and quietly informed the diners that they were under arrest.  They went out of the dining room with Mrs. Van Winkle and one of her lieutenants, Miss Scofield.

            At the House of Detention both furnished bonds for their appearance in court this morning, but neither appeared when the time came for their trial. 

 

Off the Mark:

Nothing new or exciting to report on in my personal life or in the construction defect world.  I’m confident there will be more cases to discuss in two weeks.

Until then, stay safe.

Brian
Brian F. Mark
[email protected]

 

One Hundred Years Ago – Group Life Insurance Given to Employees:

The Buffalo Enquirer
Buffalo, New York
02 Oct 1920

 

GROUP LIFE INSURANCE IS GIVEN TO EMPLOYEES

            Group life insurance has been presented to the employees of the Morgan-Babcock store.  Certificates in the amount of $500 each were presented to the 85 employees by William A. Morgan.  Mr. Morgan, in presenting the certificates, explained the features involved and complimented the employees on their splendid co-operation and loyalty, which he frankly stated were contributing so largely toward the success of the business.

            Under the plan adopted, with each additional year of service the insurance will automatically increase $100 up to a maximum of $1,500.  The premiums are to be paid entirely by the Morgan-Babcock store.

Editor’s Note:  See next article.

 

Boron’s Benchmarks:

I don’t know about you, but when October comes each year (and it will be October by the time you read this personal note), I feel at least a bit of regret (and sometimes more) for not having gotten out and enjoyed to a greater extent our glorious Western New York summer days.  Yes, cooler temperatures are coming, but that is not the issue for me at this time of year.  The issue is the gradual loss of daylight hours.  Yesterday, I worked until about 7:00 p.m.  In June or July, a 7:00 p.m. quitting time would have still left me a couple of hours of remaining daylight to walk, bike, jog, garden, or just study cloud formations.  Yesterday, it was just about totally dark at 7:00 p.m.  Ugh.  And, we have now reached the seasonal point in the year where it is again dark every morning as I get out of bed…and will be for a bunch of months to come.  Double Ugh.  Oh well, at least it is, as they say, good sleeping weather.  And, I did have a great summer.  And, each season of the year has its plusses and minuses, come to think of it.  And, I do have a great job.  And, I am healthy, and so is my wife.  And it is absolutely certain that six months from now, I’ll be singing a completely different tune about the daylight issue.  As Harry Chapin used to sing, “All my life’s a circle… the seasons spinning ‘round again, the years keep rolling by. ”  Hope you had a great summer too, and now…on to soaking in the spectacular views around Western New York of the splendid fall foliage.

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 Kentucky Opinion issued September 24, 2020, unanimously affirming, on a de novo review, the grant of summary judgment awarded by the trial court to a commercial auto insurer.  The Kentucky Supreme Court held the commercial auto policy at issue, under the facts of the claim, did not provide UIM coverage to the sole shareholder of the named insured, a professional service corporation which was, somewhat ironically, plaintiff’s own law firm, applying the definitions of “Who Is An Insured” in the commercial auto policy purchased by the plaintiff’s law firm.

Until next time, be well.

Eric
Eric T. Boron
[email protected]

 

A Nice Perk – as Long as It Lasts – 100 Years Ago:

Buffalo Courier
Buffalo, New York
12 Jan 1923

 

BOSTON STORES CO. PURCHASES BIG EAST SIDE ESTABLISHMENT

Morgan & Babcock Firm Disposes of Business at Fillmore Avenue and Broadway to Large Chain Store Concern—Valuable Acquisition to Growing Community.

            The Boston Stores Co. of Columbus, Ohio, yesterday purchased the W. A. Morgan & Babcock store at Fillmore avenue and Broadway.  The sale of the store, which is one of the largest on the east side, was handled by the Harrison Real Estate corporation.  Mr. Morgan, who sold the store, acquired it three years ago from John Eckhardt.

            The sale is one of the largest transfers of store property in Buffalo in some time.  Th Boston Stores concern is one of the largest operators of chain stores in the country, owning seventy-two stores in large cities.  A. J. Kobacker is president of the company and J. L. Gickman will be manager of the new addition at the northwest corner of Fillmore avenue and Broadway.

            The Fillmore-Broadway section is one of the fastest growing districts of Buffalo.  It is believed the purchase of the property by the Boston Stores Co. will be a great asset to the potential growth of the large east side center.

Editor’s Note:  Don’t know what happened to the life insurance from the previous article.

 

Barci’s Basics (On No Fault):

Hello Subscribers!

I hope you are all still staying healthy and safe! Last time I asked if you all were collectors of anything. I am not a collector, although if I was, it would be books. I love to read, but unless I really love a book and want to read it again, I tend to donate them to the library when I’m done. Although, this past weekend I ended up in a used bookstore and found many books I owned as a child and regretted donating, so I bought I think ten books back.  Since I don’t have any interesting things that I collect, I went into a google hole looking for unique items that others collect. Some of the quirkiest included back scratchers, soap bars, toenail clippings, umbrella sleeves, belly button fluff, sugar packets, water bottle labels, traffic cones, airline barf bags, do not disturb hotel signs, and banana label stickers. I couldn’t have made some of those up if I tried!

For next time consider: what do you think that other people think you’re good at? Ask around and see what answers you get, they might surprise you! Keep sending me your best answers and check back next issue for mine!

On the no-fault front, courts have been very slow with their no-fault decisions lately. Usually there are a good number of cases to choose from, at least from the city court levels, to report on, but that has not been the case in the last few issues. I am not surprised, as these are not typically high priority cases, but it is something to watch. The one case I have for you today is another slightly out-of-the-box federal court case in which Allstate attempts to subpoena records from financial institutions to prove that a radiology provider is not an Article 28 facility entitled to no-fault benefits. Enjoy!

That’s all folks,

Marina
Marina A. Barci
[email protected]

 

As of 1920, 43 States Adopted Workman’s Compensation Laws:

The Chat
Brooklyn, New York
02 Oct 1920

 

Labor’s Gains of a Decade in Compensation Laws Against Industrial Accidents

            With workmen’s compensation laws enacted to date in 43 states and in Alaska, Porto [sic] Rico and Hawaii, in addition to the measure adopted by the Federal Government for its half-million civilian employees, rapid progress is being made toward providing industrial accident insurance at cost through state funds, according to a statement issued by the American Association for Labor Legislation.

            “Now that Georgia has at last enacted a workmen’s compensation law,” the statement says, “there remain only five states, and these non-industrial states in the South, without social insurance protection against industrial accidents.  This means that more than five-sixths of the map of the United States has been covered by compensation laws within ten years.  There has been a marked tendency in nearly all states to strengthen the law in the direction of more liberal benefits, shorter waiting periods before payment begins and wider scope. 

           

Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

My boys impress me more and more each day. Our oldest (3yo) can spell his favorite things (he asks for them frequently enough), and listens to his soccer coach’s every word. Our youngest (11mo) can stand tall (with some assistance) and is chattier than ever. His attempts to repeat anything you say have made me further realize that, these days, some things are better left unsaid.

The Buffalo Bills are 3-0, and Josh Allen is taking the country by storm. It is a welcomed change to have national media buzz about our QB position and, although some plays are less than polished, 10TDs, 1 INT, 1,000+ yds, +70% comp., through three games is nothing to balk at. Oh, and he has 33 TDs and only 3 INTs in his last 14 games. #GoBills #LouderForThoseInTheBack

In today’s column, we have a pair of write-ups in our Regulatory Wrap-up from DFS. The first is recent guidance issued pertaining to the ramifications of climate change on the insurance industry and expectations to ensure financial stability moving forward. The second, is a feel-good story involving the resolution of a WWII-era looting related claim. Sometimes, doing the right thing is rewarded in spades.

Until next time,

Ryan
Ryan P. Maxwell
[email protected]

 

We Needed Fire Insurance Then, and Now:

Times Herald
Olean, New York
02 Oct 1920

JUST IN TIME!

            Once there was a man who said he didn’t need fire insurance.  Never had a fire—guessed he could get along without a policy.  Upon our persuasion he did let us write him up.  His house burned down that night.  He got his money.  Was he glad?  Think men, think!  We are ready for insurance business any business day.

SADLER & FARLEY, Agency

Shaffer Block

Olean, N. Y.                      Phone 747-M

Sutin Block

Wellsville, N. Y.                 Phone 37-M

 

CJ on CVA and USDC(NY):

Hello all,

As I write this, it seems as the skies have opened up outside my office window. After a long stretch of beautiful weather, the rainy fall is upon us. Usually around this time of year I start planning a ski trip for January or February. For many reasons it does not seem like I’ll be doing that this year. Instead, I have taken to Instagram to get my travel fix. If you are looking to scratch the travel itch, I recommend searching a particular location or region and escaping reality for a few minutes.

This week I have two cases from the Southern District to report. The first reminds us that the application of a policy’s “Other Insurance” clause must be interpreted along with the policy as a whole. The second case interprets the interplay between exclusions in a policy, just remember, an exception to one exclusion does not always apply to every exclusion in a policy.

Happy Reading!

CJ
Charles J. Englert, III
[email protected]       

 

Watch out for Stolen Stockings:

The Buffalo Enquirer
Buffalo, New York
02 Oct 1920

 

STEAL LINGERIE

Brock Store in Broadway Loses Much Valuable Goods.

            Lingerie burglars made a big haul last night at the millinery establishment of Max Brock, No. 1010 Broadway, and got away without the policeman on the beat seeing them.  When Mr. Brock took an inventory of his stock this morning, here’s what was missing:

            One hundred sixty high priced georgette waists; seven dozen waists of a cheaper grade; three dozen petticoats, five dozen camisoles, two dozen sweaters and 10 dozen pairs of silk stockings.

            The thieves got in through a window.  Police believe a truck was used to cart the goods away.  Mr. Brock said he had not had time to estimate his loss in money, but he said it would run high.  Police are working on the theory a woman was implicated in the theft. 

 

Dishing Out Serious Injury Threshold:

Dear Readers,

So, September is already over. At this rate 2021 will be here before we know it and we can, hopefully, leave 2020 behind us. I hope everyone is staying well and is enjoying the cooler weather and is planning some fall activities that can be enjoyed safely.

In the Serious Injury Threshold world, there was one interesting decision out of the Second Department which found that defendants failed in meeting their prima facie burden as defendant’s examination of the plaintiff failed to identify the plaintiff's usual and customary activities during the specific relevant time frame, and did not compare the plaintiff’s pre-accident and post-accident activities. Just another lesson in how thorough deposition questioning can be invaluable evidence to be used in threshold motions.

Stay safe,

Michael
Michael J. Dischley
[email protected]  

 

White Sox Deny Black Sox Scandal – at Least Then :

The Buffalo Commercial
Buffalo, New York
02 Oct 1920

 

WHITE SOX TRIO DENY GUILT AND WILL FIGHT CASE

By the Associated Press

            NEW YORK, Abe Attell, former featherweight champion, whose name has been connected with rumors that the 1919 world series was “fixed” by a syndicate of gamblers, will be forcibly brought to the office of District “Attorney Swann of New York for questioning, if he can be found.

            District Attorney Swann is announcing this today said there was a special law under which he could proceed and in addition, he thought the rime would come under the grandy larceny statute.  Sinister gambling after the games had been “fixed” would constitute “grand larceny by trick and device”, he said.

            “Abe Attell has been openly boasting that he knows the syndicate of gamblers who put across the dishonest deal with certain White Sox players, I understand,” said District Attorney Swann.  “I feel that the time for him to come forward and tell all he knows is now.  I have three process servers looking for him—virtually all scouring the city for him.

            “I want to know if any of the money was paid or won in New York county and if so the names and addresses of the persons who won the money as a result of the corrupt agreement.  This would constitute a felony in this county.”

            Eugene McGee a partner of William J. Fallon, counsel for Attell said today that Mr. Fallon has informed the district attorney’s office that he will not produce his client unless there is a charge placed against him.  “If he (Attell) is indicted he will meet the indictment either in this city or Chicago,”  Mr. McGee said his partner had told the district attorney, adding that Attell is not going to volunteer any statement if his counsel can prevent it.

 

John’s Jersey Journal:

Dear Subscribers:

This past month feels like one of the busiest months of my life. After months of seeing depositions adjourned, suddenly, more and more attorneys have learned the ropes of a virtual deposition and are ready to move their cases forward. Which is good. A moving case is the best kind of case.

The past few weeks for me have been a bit of a whirlwind. In addition to the uptick in work, my wife changed jobs during a pandemic. We purchased a beautiful building lot in the country where we plan to build our dream home someday. Years from now. Currently, it is a field of grass. My wife has already found a floorplan, which she printed and drew in her modifications. The land is situated on a small lake, about 22 acres, within a community. There is also a fishing pond stocked with fish. I am counting the days until spring when we plan to buy kayaks. I might even buy a fishing pole.

 

New Decision on New Jersey’s Deemer Statute

The focus of today’s issue of John’s Jersey Journal is New Jersey’s Deemer Statute. Where an accident occurs within New Jersey, the Deemer Statute deems out-of-state policies to provide the New Jersey minimum insurance requirements.  The outcome can be interesting.

A husband and wife, Florida residents, were driving through New Jersey when they got into an accident. The wife sued her husband for negligence and the other driver. Their policy had a $500,000 liability limit. It also contained an intra-family exclusion, which is permissible in Florida, but not New Jersey.

The wife sued her insurer seeking the $500,000 policy for her husband’s negligence. The insurer opposed saying the policy’s intra-family exclusion precluded coverage. So, is she entitled to $500,000 or zero? Neither.

The Appellate Division ruled that she was entitled to $15,000. They reasoned that the policy’s intra-family exclusion applied to bar coverage for the $500,000 limit. However, due to New Jersey’s Deemer Statute, the policy was deemed to provide the minimum coverage of $15,000 in liability coverage. An interesting result, but not a surprising result. Earlier this year, in February, the New Jersey Supreme Court ruled on out-of-state policies and explained the Deemer Statute. We wrote it up here for you.

New Jersey law on out-of-state policies can be summed up this way. If the out-of-state policy has exclusions that are enforceable in the home state, it can apply to reduce the liability limit. You could think of it as a “step-down” provision.  However, the insurer must provide the minimum liability limit of $15,000.

If you have a New Jersey situation or questions on New Jersey law, feel free to give me a call. My cell is (716) 220-1478. Happy to help.

John
John R. Ewell
[email protected]

 

Trade References for Husband – 100 Years Ago:

The Kansas City Sun
Kansas City, Missouri
02 Oct 1920

 

HUSBAND WANTED!

            Lady 32, healthy, well built, dark complexion in business, widow with property, would like to meet or correspond with an intelligent man – farmer or business man, or one with a good position.  Object, matrimony.  Will exchange references.  No triflers need apply.  Address all mail to Willetta Jackson, 1304 Euclid Avenue, Kansas City, Mo.

 

Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

It is truly a season of renewal. Yes, the calendar has turned to October, the mercury is dropping, and the New England leaves are now shades of brilliant yellow, bright orange, and burnt sienna as they make their way to a certain death. It is in these changes that we find revitalization. In the sports world, regular seasons have ended, but the records are wiped clean and everyone starts on an even plane as the playoffs begin.

My family and surely many people in your lives just celebrated Rosh Hashana and Yom Kippur, the Jewish New Year and Day of Repentance. As with secular New Year, we use this time to reflect on the year gone by and look with hope towards the year to come. America looks to do the same at this time as we send our children back to school, face a tumultuous election, and with perhaps more hope than evidence look to turn the page on the Coronavirus. But COVID-19 and the misery it has wrought does not define us. Whether we are on the left, the right, or the undecided does not define us. Whether our team wins or loses does not define us. We define ourselves by our effort, by our caring, by our deeds, and by our hope. There is breathtaking power in redemptive hope.

Hoping for a Sweet and a Safe New Year for all of us,

Lee
Lee S. Siegel
[email protected]       

 

Exchange Business Acumen for Wife – 100 Years Ago:

The Springfield News-Leader
Springfield, Missouri
02 Oct 1920

GENTLEMAN—Age 30, desires to correspond with young lady; object matrimony; prefer blond or brown hair and blue eyes and some knowledge and experience in business, so that we can work together and build our fortune and home together as equal partners.  Address “A” care of Republican.

 

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

Hello Subscribers!

Family and friends from across the country have tried to convince me to leave upstate New York. Most of their arguments have to do with the weather. However, as each day passes and the leaves change from shades of green to bursts of yellow, red, and orange, I am reminded why I love the Northeast. Although I don’t like that my face hurts in the depths of winter as the wind rips through Western New York, I can even appreciate that because the landscape also changes. The best way to get through the “colder” months of the Northeast, is to embrace it. No one knows what this winter will bring, but my advice is to get out there! Go apple picking, go on hikes, and keep enjoying cozy outdoor fires. Until next time, stay safe subscribers!

Cara A. Cox
[email protected]

Busy week. Check back next time.

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

 

Those Cars are SO Expensive:

The Caney Daily Chronicle
Caney Kansas
02 Oct 1920

CARS COMING DOWN ALL ALONG THE LINE

            The monkey wrench which Ford recently threw into the high-price machinery is having the effect of causing dealers to chop off a big slice of the price at which cars have been selling.

            The Studebaker corporation has informed the Blackledge Sales Co. that in the future the price of the special will be $125 less and the super-six $200 less.

            V. C. Waller announces that the price of the Maxwell is now $1100, $160 having been sliced off.

The Dodge company announces that they will not reduce the price of their car, but that remains to be seen.

Nothing has yet been heard from the Chevrolet or the Paige, but the Gillihan Garage is expecting word any day.

It is reported that the Hudson-Tonor Motor Co. have received word of a cut of $200 and $450 on Essex and Hudson cars respectively, but this has not been verified.

Various other auto producers are expected to announce their future policies in the near future.

 

Headlines from this week’s issue, attached:

KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]

• All quiet on the coverage front these past two weeks.

 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]

• Failure to Comply with Strict Rules for Service on a Foreign Corporation Results in Dismissal of the Lawsuit

 

DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley
[email protected]

• Defendant’s Failure to Identify Plaintiff's Usual and Customary Activities During 90/180 Days After Accident is Fatal to Claim

 

WILEWICZ’S WIDE WORLD OF COVERAGE
Agnes A. Wilewicz
[email protected]

• All’s quiet at the Circuit Courts

 

JEN’S GEMS
Jennifer A. Ehman
[email protected]

• Trial Court Finds Duty to Defend Owner Not Triggered Despite Contractor’s Presence as a Direct Defendant

 

BARNAS ON BAD FAITH
Brian D. Barnas
[email protected]

• Excess Insurer’s Contribution to Settlement of Underlying Action Did Not Bar its Claim for Bad Faith against Primary Carrier

 

JOHN’S JERSEY JOURNAL
John R. Ewell
[email protected]

• New Jersey’s Deemer Statute Deems Out-of-State Auto Policies to Provide the Minimum Coverage and Strikes Down Any Unenforceable Exclusions under New Jersey Law

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]

• Bad Faith is Still a High Bar in Connecticut

 

OFF THE MARK
Brian F. Mark
[email protected]

• No noteworthy construction defect cases to report on this edition

 

BORON’S BENCHMARKS
Eric T. Boron
[email protected]

• Plaintiff is Not an Insured and Does Not Qualify for UIM Coverage under the Terms of the Commercial Policy

 

BARCI’S BASICS (ON NO FAULT)
Marina A. Barci
[email protected]

• Court Admonishes Allstate for Having Overbroad Subpoenas when the Carrier is Trying to Establish a Provider is Not an Article 28 Facility Allowed Reimbursement of No-Fault Benefits

 

RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell
[email protected]

Regulatory Wrap-Up

• DFS Sets Expectations for NY Insurers Regarding the Severe and Increasing Cost of Climate Change

• DFS Holocaust Claims Processing Office Resolves WWII-era Looted Art Claim for 16th Century Drawing

 

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

• Only When a Commercial General Liability and Directors & Officer’s Insurance Policy Cover the Same Exact Risk is the Commercial General Liability Policy Primary for Purposes of Defense Costs

• Policy Exclusions are to be Read in Seriatim. If Any One Exclusion Applies, there is No Coverage even if the Exclusions are Inconsistent with Another

 

CARA’S CANADIAN AND CROSS-BORDER CONNECTIONS (WITH HEATHER SANDERSON)
Cara A. Cox
[email protected]

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

• When Home Becomes School: Coverage under Homeowners Policies

 

Stay healthy, wear masks, register to vote, and keep those cards and letters coming in.

Dan

 

Hurwitz & Fine, P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in 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.

NEWSLETTER EDITOR
Dan D. Kohane
[email protected]

ASSOCIATE EDITOR
Agnes A. Wilewicz
[email protected]

ASSISTANT EDITOR
John R. Ewell
[email protected]

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
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

FIRE, FIRST-PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
[email protected]

Michael F. Perley

Eric T. Boron

Brian D. Barnas

NO-FAULT/UM/SUM TEAM
Jennifer A. Ehman, Team Leader
[email protected]

Marina A. Barci
 

APPELLATE TEAM
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)

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

 

KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]

Not a single decision from the New York appellate courts, over the past two weeks, that merits review in this column. 

 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]

09/17/20       Garrow v. Pittsburgh Logistics Systems, Inc.
Appellate Division, Third Department
Failure to Comply with Strict Rules for Service on a Foreign Corporation Results in Dismissal of the Lawsuit

Plaintiff commenced this action by filing a Summons with Notice in March of 2018.  One of the named defendants, Pittsburgh Logistics Systems (“PLS”), is organized under the laws of the Commonwealth of Pennsylvania.  Plaintiff effectuated service by personally delivering a copy of the Summons to an authorized agent of the Secretary of State and by also sending a certified mail, return receipt requested copy of the Summons to PLS’ business address as maintained by the PA Department of State.  It is conceded that the certified mail was never received by PLS, and was returned as unclaimed to plaintiff’s counsel – a fact which went unrealized by plaintiff’s counsel for several months.

Plaintiff then filed the Complaint in June of 2018, and PLS eventually received notice of the action from a co-defendant in July of 2018.  PLS immediately moved to dismiss for lack of personal jurisdiction.  In support of its argument, PLS noted the strict requirements of Business Corporation Law § 307 which governs service of process on foreign corporations.  Specifically, a party seeking to effect service through the NYS Secretary of State and certified mailing must then file an affidavit of compliance within 30 days of the return-receipt.

The trial court denied PLS’ motion to dismiss, and granted an extension of time under CPLR § 2004/CPLR 306-b which enabled plaintiff to cure the defect.  On appeal, the Appellate Division noted that the defect in process was a “jurisdictional defect” and thus could not be cured by application of CPLR § 2004.  That section only permits litigants to cure irregularities in their papers.

The Court noted that Section 306-b does provide a right to, in effect, restart the time to secure service.  However, the court must analyze whether to grant relief under the standards that have been delineated by the Court for that particular section.  Rather than simply affording time to cure the defect, the trial court was required to assess whether plaintiff can establish good cause for the failure to secure service within the 120 day time period or, in the alternative, that the interests of justice dictates an extension.

Here, there was no good cause shown.  Plaintiff’s counsel simply did not comply with the red letter of the law as proscribed under BCL § 307.  Without any showing of “reasonable diligence” in its effort to comply with service, plaintiff could not meet his burden.

The Appellate Division also noted that the interests of justice did not dictate a different result.  As part of its evaluation, the Court considered all relevant factors including the merits of the proposed claim, the potential application of the statute of limitations, the length of the delay and the promptness of the requested relief.  Here, the record revealed that plaintiff’s counsel was aware that the certified mail was returned months prior to any issue regarding service was raised.  Further, there is no indication as to why the matter would not be subject to the statute of limitations absent an extension on service.   

 

DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley
[email protected]

09/23/20       Jong Cheol Yong v. Grayline NY Toures, et al.
Appellate Division, Second Department
Defendant’s Failure to Identify Plaintiff's Usual and Customary Activities During 90/180 Days After Accident is Fatal to Claim

In an action to recover damages for personal injuries, the plaintiff appeals from an order granting defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The plaintiff commenced this action to recover damages for personal injuries that he allegedly sustained in a motor vehicle accident on October 9, 2013.

On appeal the Appellate Court found that the defendants failed to meet their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The papers submitted by the defendants failed to eliminate triable issues of fact regarding the plaintiff's claim, set forth in the bill of particulars, that he sustained a serious injury under the 90/180-day category of Insurance Law § 5102(d).

Specifically, the Appellate Division found that while the defendants relied upon the transcript of the plaintiff's deposition testimony to establish, prima facie, their entitlement to summary judgment under the 90/180-day category, this evidence failed to identify the plaintiff's usual and customary activities during the specific relevant time frame, and did not compare the plaintiff's pre-accident and post-accident activities during that relevant time frame. Since the defendants failed to meet their prima facie burden, it is unnecessary to determine whether the papers submitted by the plaintiff in opposition were sufficient to raise a triable issue of fact.

Accordingly, the Appellate Court ruled the Supreme Court should have denied the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

 

WILEWICZ’S WIDE WORLD OF COVERAGE
Agnes A. Wilewicz
[email protected]

All’s quiet at the Circuit Courts.

 

JEN’S GEMS
Jennifer A. Ehman
[email protected]

09/16/20       Greater N.Y. Mut. Ins. Co. v. New York Mar. & Gen. Ins. Co.
Supreme Court, New York County
Trial Court Finds Duty to Defend Owner Not Triggered Despite Contractor’s Presence as a Direct Defendant

This decision arises out of a personal injury action seeking damages for injuries sustained by the underlying plaintiff when he tripped and fell while walking on the sidewalk at 425 Riverside Drive in Manhattan.  Defendant is defending its insured, Rock Group NY Corp. (the contractor), and plaintiff is defending the owner.  Plaintiff submits that the owner is an additional insured under defendant’s policy and asserts that because the accident was caused by the contractor’s negligence, defendant must defend the owner as well.  Plaintiff also asserts that defendant’s policy is primary and noncontributory.

Defendant argued in response that while the contractor was performing scaffolding work at the premises, the injured plaintiff did not allege that the dangerous condition that caused his fall was related to the scaffolding work.  Defendant further argued that the contract submitted by plaintiff was inadmissible and claimed that it did not specifically provide coverage for Mayflower as it only identified RCR (the real estate manager).

In considering the arguments, the court explained that the language “caused, in whole or in part” as used in the relevant additional insured endorsement requires proximate causation.  The contract here required that the contractor get insurance coverage naming the RCC and its affiliates as additional insured.  In determining whether a defense was owed, the court noted that while plaintiff contented that the underlying plaintiff tripped and fell upon scaffolding or sidewalk shed materials, it failed to other any documents in support.  And, instead merely attached the underlying complaint.  In the court’s view, that pleading contained only reference to scaffolding and states the contractor was contracted to construct scaffolding at the premises.  This was, in the court’s view, not a specific allegation that the underlying plaintiff’s trip and fall was caused by the scaffolding.  The court also noted that there had been no finding of liability in the underlying action and, consequently, no ruling that the underlying plaintiff was injured as a result of the contractor’s performance (or nonperformance) of work.  It then concludes that “the vague allegations in the underlying lawsuit could support a finding that [the underlying plaintiff] was simply a pedestrian who tripped and fell on the sidewalk near the premises…the Court cannot tell whether the underlying accident happened because of the Contractor’s work or because of something else…”

Author’s Note:  I find this decision tough to get behind.  Courts routinely instruct that the duty to defend is governed by the allegations in the complaint, not outside facts.  Given the contractor was a named defendant in the underlying action, there certainly seems to have been enough to trigger a duty to defend (even if indemnity had to wait).  It seems as if the court should have considered whether the allegations could support a finding that the underlying plaintiff’s injury was connected to the scaffold, instead of only considering whether the contractor could have been relieved of liability.

 

BARNAS ON BAD FAITH
Brian D. Barnas
[email protected]

09/23/20       Metropolitan Property and Casualty Ins. Co. v. GEICO
Appellate Division, Second Department
Excess Insurer’s Contribution to Settlement of Underlying Action Did Not Bar its Claim for Bad Faith against Primary Carrier

On October 23, 2006, a vehicle owned and operated by Colvin was involved in an accident with a vehicle operated by Gomez. Colvin was insured under a primary automobile insurance policy issued by GEICO with policy limits of $100,000/$300,000, and an excess policy issued by MetLife with a policy limit of $1,000,000. In January 2011, Gomez commenced an action against Colvin's estate to recover damages for personal injuries.

Before the underlying personal injury action was commenced, despite being aware of the existence of the excess insurance policy issued by MetLife to Colvin, GEICO never notified MetLife of Gomez's claim against Colvin.  In December 2011, GEICO tendered its policy limit of $100,000 to Gomez to settle the underlying personal injury action. Gomez rejected GEICO's offer.  On November 30, 2012, approximately six weeks before trial in the underlying personal injury action was scheduled to start, Gomez's counsel informed MetLife of the underlying personal injury action.  Subsequently, on January 22, 2013, Gomez agreed to settle the underlying personal injury action for $150,000. GEICO contributed $100,000 toward the settlement and MetLife contributed $50,000. MetLife reserved its rights against GEICO.

MetLife commenced this action against GEICO to recover damages for breach of the implied covenant of good faith and fair dealing, alleging bad faith.  First the court concluded that the voluntary payment doctrine did not apply.  The voluntary payment doctrine does not bar an excess insurance carrier, such as MetLife, that contributed to a settlement of an underlying action from seeking to recover its settlement contribution from a primary insurance carrier, such as GEICO, based on the primary carrier's alleged bad faith.  Despite an excess insurance carrier's decision to contribute to a settlement, an excess insurance carrier may later maintain an action against a primary insurance carrier for breaching its duty of good faith in defending and settling claims over which it exercised exclusive control, provided that the excess insurance carrier reserved its rights at the time of the settlement.  The court reasoned that applying the common-law voluntary payment doctrine would allow primary insurance companies to benefit from their own bad conduct.

 

JOHN’S JERSEY JOURNAL
John R. Ewell
[email protected]

09/18/20       Botlagudur v. Travelers
New Jersey Superior Court, Appellate Division
New Jersey’s Deemer Statute Deems Out-of-State Auto Policies to Provide the Minimum Coverage and Strikes Down Any Unenforceable Exclusions under New Jersey Law

Defendant Krishna Botlagudur was driving a car with his wife, plaintiff Suseela Botlagudur, as a passenger, when the car was involved in an accident in East Brunswick, New Jersey. Both plaintiff and defendant were Florida residents when the accident occurred. Plaintiff sued both her husband and the driver of the other vehicle for her physical injuries. Plaintiff also filed an action for declaratory relief against Travelers, who was her insurer, seeking $500,000, the limit for liability coverage under the Travelers policy.

The Travelers policy was issued in Florida. The Travelers policy included an exclusion that barred liability coverage for family members (“intra-family exclusion”). The Travelers policy also included a provision as to out-of-state coverage:

OUT OF STATE COVERAGE

If an auto accident to which this policy applies occurs in any state or province other than the one in which "your covered auto" is principally garaged, we will interpret your policy for that accident as follows:

A. If that state or province has:

. . . .

2. A compulsory insurance or similar law requiring a nonresident to maintain insurance whenever the nonresident uses a vehicle in that state or province, your policy will provide at least the required minimum amounts and types of coverage.

In plaintiff’s action against Travelers, the trial judge granted summary judgment in favor of plaintiff. The judge struck the intra-family exclusion from the Travelers policy, finding that while such exclusion was permitted under Florida law, it was unenforceable under New Jersey law. The judge also found that a provision in the policy, which guaranteed "at least" the minimum amounts and types of coverage required under the laws of another state where an accident occurs, was ambiguous. The judge thus determined that plaintiff was entitled to the maximum liability coverage under the policy. Travelers appealed.

The Appellate Division began its analysis by first determining whether New Jersey’s Deemer Statute affords plaintiff coverage under these circumstances. Pursuant to the Deemer Statute, in relevant part,

Any insurer authorized to transact or transacting automobile or motor vehicle insurance business in this State…, an insurer authorized to transact or transacting insurance business in this State, which sells a policy providing automobile or motor vehicle liability insurance coverage, or any similar coverage, in any other state or in any province of Canada, … shall include in each policy coverage to satisfy at least the liability insurance requirements [N.J.S.A. 39:6B-1] or [N.J.S.A. 39:6A-3], … whenever the automobile or motor vehicle insured under the policy is used or operated in this State.

N.J.S.A. 17:28-1.4.

The Deemer Statute is so named because it 'deems' New Jersey insurance coverage and tort limitations to apply to out-of-state policies." In-state insurers that write policies in New Jersey, insurers such as Travelers that have issued an out-of-state policy but that also write auto policies in New Jersey, remain obligated under the Deemer Statute to guarantee New Jersey's $15,000/$30,000 bodily injury liability limits in their out-of-state policies, regardless of the actual terms of those policies.

The Appellate Division ruled that Travelers was liable to plaintiff for bodily injury damages less than or equal to the $15,000 per person limits established in the Deemer Statute. See N.J.S.A. 17:28-1.4. Under the express terms of the Travelers policy, Travelers was only liable for bodily injury coverage if the insured was legally responsible for coverage due to their fault in an accident. The Travelers intra-family exclusion barred any such coverage for "bodily injury to [the named insured or a spouse] or a family member." However, the Travelers out-of-state policy provided that, in the event plaintiff would become injured in an accident in another state, the Travelers policy would be interpreted to conform with any law of that state "requiring a nonresident to maintain insurance whenever the nonresident uses a vehicle in that state or province," and that the Travelers policy would provide plaintiff with "at least the required minimum amounts and types of coverage." As such, the Travelers policy contemplated that where an applicable statutory minimum existed for bodily injury to the insured, such as that imposed by the Deemer Statute, Travelers would cover bodily injury for the insured up to the statutory minimum.

The Appellate Division concluded that Travelers was liable to plaintiff for bodily injury coverage in an amount not to exceed the statutory minimum afforded under the Deemer Statute, that being $15,000 for her physical injuries. Moreover, since there was no coverage for intrafamily claims, Travelers' liability was not required to provide more than the amount required by the Deemer Statute, as compared to a claim for which there was coverage but in an amount less than what was required by New Jersey.

The Appellate Division reversed the decisions of the motion judge granting of summary judgment to plaintiff and denying summary judgment to Travelers. Accordingly, Travelers was only liable to the plaintiff for $15,000, not $500,000.

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]

08/17/20       Maverick Constr. Mgmt. Servs., Inc. v. Liberty Mut. Ins. Co.
Superior Court of Connecticut

-and-

09/10/20       Dane v. UnitedHealthcare Ins. Co.
Second Circuit Court of Appeals
Bad Faith is Still a High Bar in Connecticut

A pair of recent decisions construing Connecticut law reinforce the high pleading bar an insured faces in order to viably assert a bad faith claim. The Second Circuit affirmed dismissal of a bad faith claim because the insured did not allege that it suffered a loss of money due to an unfair act. And, a Hartford Superior Court struck a bad faith count because the insured did not allege that the so-called bad faith was part of a pattern or practice of misconduct.

As we’ve previously covered in this space, Connecticut employs a two-part statutory bad faith construct known as CUTPA/CUIPA. Under Connecticut law, claims based on illegal insurance practices are governed by the Connecticut Unfair Insurance Practices Act (CUIPA). But CUIPA does not afford a private right of action, so Connecticut insureds use the Connecticut Unfair Trade Practices Act (CUTPA) as a vehicle to bring CUIPA claims. CUTPA prohibits unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce, and provides a private right of action. Under CUTPA, an insured must plead that they suffered an ascertainable loss of money or property as a result of an unfair or deceptive act; and that that the act is part of a pattern or practice.

In Dane v. UnitedHealthcare, the Second Circuit found that the insured could not allege an ascertainable loss of money, which was fatal to his bad faith allegations. Dane claimed that UnitedHealthcare overcharged consumers in the management of an AARP-sponsored Medigap insurance program because of royalties it paid to AARP. The royalty fee is a payment to license AARP's intellectual property in connection with the United Medigap program. Dane alleged that “[b]ut for [d]efendants' unlawful and deceptive acts,” he “would not have willingly agreed to pay an illegal 4.9% charge above the premiums due to” United. In a putative national class action, Dane asserted a number of causes of action, including a CUIPA/CUTPA violation.

The carrier successfully dismissed the complaint and the Circuit Court affirmed. The panel found that the complaint could not successfully allege a loss of money arising from a deceptive act. Finding that the complaint at most alleged an overpayment, the appeals court held: “We conclude that Dane's unlawful rebate claim fails as a matter of law because, even assuming without deciding that the royalty fee was an unlawful rebate in violation of CUIPA, Dane did not plausibly allege any ascertainable loss arising from the payment of his Medigap premiums. Dane concedes that he paid the premium rate approved by state regulators and received the Medigap insurance for which he contracted…. Thus, there can be no ascertainable loss ‘that is capable of being discovered, observed or established.’ Dane has not plausibly alleged any identifiable loss, and, indeed, although he was aware of the AARP royalty arrangement at the start of this litigation, he nevertheless remained enrolled in the Medigap program and continued to pay his premiums in full.”

In Maverick Constr. Mgmt. Servs., Inc. v. Liberty Mut. Ins. Co., the Superior Court dismissed the plaintiff’s bad faith claims, finding that even if true the bad faith claim was a singular wrongful act and not a pattern or practice, as required to plead a CUTPA violation. “Maverick's problem is that Liberty's handling of this matter isn't enough to expose it to liability under the applicable law, the Connecticut Unfair Trade Practices Act, General Statutes § 42-110b (CUTPA). Instead, under the Connecticut Supreme Court's 1986 decision in Mead v. Burns, Maverick would have to claim something it doesn't claim here: that Liberty Mutual's wrongdoing in this case was part of a pattern or practice of wrongdoing rather than merely an isolated incident.” Maverick argued that it need not prove a pattern because it did not reach its CUTPA claim via CUIPA.

The court observed that, “Maverick pins its hope for a route around CUIPA to CUTPA on the [Supreme] Court saying that a CUTPA violation might come from “arguably, some other statute” and its later repetition of this phrase—again unelaborated—where the court omits the word “arguably.” For three reasons, Maverick's CUTPA claim still fails. ….The Court earlier and unequivocally held that with the insurance business to come under CUTPA you must come first within the structure of CUIPA. That statement is what the court must enforce here, not an equivocal and unexplained suggestion that the Court might not have meant what it just emphatically said.”

Moreover, the court found Maverick’s bypassing of the pattern and practice requirement to be absurd. “And even if the statute did provide a direct route to CUTPA, why should a single violation of this statute deserve the label unfair trade practice when none of the things expressly labelled unfair trade practices in CUIPA are similarly actionable as isolated incidents? After all, the list in CUIPA includes matters far more serious than late payment of a claim, including things like false advertising, defamation, coercion, and fraudulent bookkeeping. Maverick's reading would amount to saying that while single instances of egregious things expressly labeled unfair insurance practices can't be unfair practices under CUTPA, less egregious things not labelled unfair practices in other statutes could be.”

Accordingly, the court struck the plaintiff’s bad faith count.

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

 

OFF THE MARK
Brian F. Mark
[email protected]

No noteworthy construction defect cases to report on this edition.

 

BORON’S BENCHMARKS
Eric T. Boron
[email protected]

09/24/20       Isaacs v. Sentinel Ins. Co.
Plaintiff is Not an Insured and Does Not Qualify for UIM Coverage under the Terms of the Commercial Policy

In January 2015, Michael Baumann struck Appellant, personal injury attorney Darryl Isaacs, with Baumann’s truck while Isaacs rode his bicycle on River Road in Jefferson County, Kentucky. Isaacs and his wife Theresa sued Baumann, and that claim was settled for Baumann’s liability insurance limits. Because Baumann’s policy limits did not cover the amount of Isaacs’s injuries, Baumann was an underinsured motorist pursuant to Kentucky Revised Statute (KRS) 304.39-320. Since Baumann was an underinsured motorist, the Isaacs’s filed claims for underinsured motorist (UIM) coverage under their personal car insurance policy and under the commercial insurance policy that covered vehicles owned by and used in the course of business at Darryl Isaacs’s law firm (Isaacs & Isaacs). The couple’s personal automobile insurance policies paid UIM benefits; however, Appellee, Sentinel Insurance Company, denied the UIM claims under its commercial policy issued to Isaacs & Isaacs.

The issue before the Supreme Court on appeal was whether plaintiff Darryl Isaacs was “An Insured” under the Sentinel commercial policy issued to Isaacs & Isaacs.

The Sentinel commercial policy included a section entitled “B. Who Is An Insured”, providing:

If the Named Insured is designated in the Declarations as:

1. An individual, then the following are “insureds”:

The Named Insured and any “family members.”

a. Anyone else “occupying” a covered “auto” or a temporary substitute for a covered “auto.” . . . .

b. Anyone for damages he or she is entitled to recover because of “bodily injury” sustained by another “insured.”

2. A partnership, limited liability company, corporation or any other form of organization, then the following are “insureds”:

a. Anyone “occupying” a covered “auto” or a temporary substitute for a covered “auto.” . . . .

The Sentinel commercial policy listed “Isaacs & Isaacs, P.S.C.” as the named insured on its declarations page—not Darryl Isaacs. Isaacs did not purchase the Sentinel policy and had no direct involvement on matters related to his firm’s commercial insurance policy, as those matters were delegated to other law firm employees. The vehicles covered by the Sentinel policy were kept at the law firm for its use except for the car Isaacs drove to and from work. The automobiles were an accounting asset and expense of the firm and employees were only permitted to use them for business purposes. Isaacs was not operating one of the automobiles covered by the Sentinel policy at the time Baumann struck Isaacs’s bicycle with a motor vehicle.

On a de novo review of the trial court’s grant of summary judgment to Sentinel and the court of appeals’ affirmance, the Supreme Court of Kentucky concluded the trial court correctly determined there were no issues of material facts in dispute and as such Darryl Isaacs was not entitled as a matter of law to UIM coverage because Isaacs was not “occupying” a covered “auto” or a temporary substitute for a covered “auto” at the time Isaacs was struck on his bicycle by Baumann’s truck. 

 

BARCI’S BASICS (ON NO FAULT)
Marina A. Barci
[email protected]

09/22/20       Allstate Ins. Co. v. All County, LLC
United States District Court, Eastern District of New York
Court Admonishes Allstate for Having Overbroad Subpoenas when the Carrier is Trying to Establish a Provider is Not an Article 28 Facility Allowed Reimbursement of No-Fault Benefits

All County provides diagnostic radiology services and bills providers under the no-fault scheme. Allstate claims that All County made misrepresentations to the Department of Health when it applied for Article 28 licensure, including about its true owners. In order for a provider to receive payments from no-fault benefits, it must be a registered Article 28 facility. Allstate contends that it is entitled to claw back any payments it made to All County for this reason. In order to prove that All County is not an Article 28 facility, Allstate attempted to subpoena documents from third parties about All County’s financial information as necessary information to establish the ownership of All County. All County objected to these subpoenas as being overbroad and disproportional. The court determined that Allstate’s requests for documents were overreaching and should have instead simply asked for any documents related specifically to All County from each institution. The court thus granted a protective order and gave suggestions to Allstate as to how it could subpoena documents in a more streamlined manner.  

 

RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell
[email protected]

Regulatory Wrap-Up
09/22/20       Climate Change and Financial Risks
Department of Financial Services
DFS Sets Expectations for NY Insurers Regarding the Severe and Increasing Cost of Climate Change

On September 22, DFS issued Insurance Circular Letter No. 15 (2020), concerning its view that climate change poses a major threat to the safety and soundness of the financial services industry. This Circular Letter outlines DFS’ expectations for the insurance industry, while simultaneously seeking to open a dialogue as to how DFS may best support efforts to manage the financial risks from climate change.

Setting the stage, Circular Letter No. 15 indicates that “[t]he aggregate cost of billion-dollar natural disasters in the U.S. more than quadrupled from the 1980s to the 2010s,” and that “[f]or every one degree Celsius increase, the combined value of market and nonmarket damages across the U.S. economy is about 1.2% of gross domestic product.” By 2060, DFS estimates that climate change damages will amount to almost 3% of GDP. Additionally, DFS notes the disproportional affects to disadvantaged communities.

Regarding the insurance industry, DFS articulates that due to climate change, “[p]hysical risks arise from the increasing frequency, severity, and volatility of acute events, such as hurricanes, floods, and wildfires, as well as chronic shifts in weather patterns, such as droughts disrupting agriculture production.” This, in turn, “affect[s] both sides of insurers’ balance sheets—assets and liabilities—as well as their business models.” Providing an example,

“climate change has been shown to increase the severity and frequency of storm surges and hurricanes. It is estimated that single- and multi-family residential homes in New York City with $334 billion of reconstruction value are at high risk of storm surges. Two thousand commercial mortgage-backed securities (“CMBS”), worth more than $56 billion, were identified as exposed to flooding along the East and West Coasts, with more than half estimated to lie outside Federal Emergency Management Agency (“FEMA”) flood zones. Properties outside FEMA flood zones are more likely to be underinsured, which would reduce the value of the related CMBS. Climate change also worsens water stress. The Dutch Central Bank concluded that water stress globally poses a significant risk to the Dutch financial sector, as roughly 20% of its exposure is located in extremely water stressed regions around the world. New York insurers with global investments could be similarly affected.”

Equally troubling, “[t]ransition risks arise from society’s transition towards a low-carbon economy, driven by policy and regulations, low-carbon technology advancement, and shifting sentiment and societal preferences.” This has broad impact as it results in devaluation of assets due to such transition, including within the fossil-fuel industry and carbon-intensive infrastructure, real estate and vehicles. These transition risks potentially “lower corporate profitability, lower property values, and lower household wealth.” The related financial and credit market losses will impact insurer assets, and increased litigation against fossil-fuel companies and others will affect insurer liabilities and certain business lines.

Digging further into the property and casualty market:

“property/casualty insurers are adversely affected by this year’s strong hurricane season. In addition, they could suffer from the multibillion-dollar write-offs by oil companies due to the hastened move away from fossil fuels driven by the pandemic, and a resulting reduction in longer-term oil price expectations. Furthermore, as insurers’ underwriting and investments are exposed to global markets, even if existing federal government policy is impeding the low-carbon transition in the U.S., the transition is still happening globally and therefore can impact insurers’ balance sheets.”

In Circular Letter No. 15, DFS reminds insurers that it issued guidance three years ago, Insurance Circular Letter No. 9 (2017) (Climate Change and Sustainability), “which urged insurers to manage resources prudently in their operations and to provide incentives to their policyholders to adopt environmentally friendly practices.”

Setting expectations moving forward, Circular Letter No. 15 provided that it “will publish detailed guidance consistent with international best practices on climate-related financial supervision and welcomes input from industry in that process.” However, prior to implementing such detailed guidance, DFS gave a high-level overview of these expectations:

“At a high level, DFS expects all New York insurers to start integrating the consideration of the financial risks from climate change into their governance frameworks, risk management processes, and business strategies. For example, insurers should designate a board member or a committee of the board, as well as a senior management function, as accountable for the company’s assessment and management of the financial risks from climate change. An enterprise risk management function and the Own Risk and Solvency Assessment process should address climate change as a reasonably foreseeable and relevant material risk and should consider how it impacts risk factors such as investment risk, liquidity risk, operational risk, reputational risk, strategy risk, and underwriting risk. In addition, insurers should start developing their approach to climate-related financial disclosure and consider engaging with the Task Force for Climate-related Financial Disclosures framework and other established initiatives when doing so. Questions pertaining to an insurer’s approach and activities related to the financial risks from climate change will be integrated into DFS’s examination process starting in 2021.”

As a launch point, DFS “will organize a series of global knowledge exchange webinars to allow industry participants to share their goals, experiences, and lessons learned to date in their efforts to manage the financial risks from climate change.”

Maxwell’s Minute: In a related Press Release, DFS indicated that a Memorandum of Understanding (MOU) was announced between DFS and New York State Energy Research and Development Authority (NYSERDA), in which DFS and NYSERDA outline a plan to work together to leverage the state’s financial sector to address the effects of climate change, support the implementation of New York’s ambitious climate goals, and enhance New York communities’ climate resilience. DFS and NYSERDA intend to accelerate the creation of innovative insurance and financial products to speed up the development and deployment of key low-carbon technologies by providing technical support, regulatory guidance, and facilitating market access.” That MOU can be found here.

 

09/24/20       Resolution of WWII Art Claim
Department of Financial Services
DFS Holocaust Claims Processing Office Resolves WWII-era Looted Art Claim for 16th Century Drawing

The heirs of Dr. Arthur Feldmann obtain resolution in restitution claim concerning Gabriel Jacques de Saint-Aubin’s drawing entitled Young Woman Seated, holding a fan in her right hand.

Providing a summary of the history surrounding the drawing, DFS indicated that:

Dr. Feldmann, a prominent Jewish lawyer from Brno, Czechoslovakia, was also a well-known collector of Old Master drawings.  His collection consisted of over 750 drawings by Dutch, Italian and French 16th and 17th century artists.  On March 15, 1939, the Nazis invaded Brno and requisitioned the Feldmann villa for use as officer quarters and looted all the Feldmann’s household goods and possessions, including the drawings collection.  Like the fate of many European Jews at the time, Dr. Feldmann lost his livelihood, all of his property, and eventually his life, after being arrested, tortured, and suffering a stroke.  His wife Gisela was sent to Theresienstadt and later perished at Auschwitz.  Dr. Feldmann’s two sons, fled Czechoslovakia in 1940, and survived the war.

Since the end of World War II, the heirs of Dr. Feldmann have tirelessly sought to recover his drawings collection.  Over sixty years later, Dr. Feldmann’s grandson, Uri Peled, continues to seek to preserve his grandfather’s legacy and recover his looted drawings. 

The drawing was recently obtained in good faith by a private German collector, who subsequently discovered the work’s tainted history after conducting research of his own and happening upon the DFS Holocaust Claims Processing Office’s Lost Art Database. Feldmann’s heirs were generously offered the return of the drawing, no strings attached. Instead, the heirs chose to gift the drawing to the collector in recognition of his diligence and upstanding offer.

DFS’s announcement indicates that “[t]o date, the HCPO has responded to thousands inquires and received claims from 46 states and 39 countries. The office has helped secure over $181 million in offers for bank, insurance, and other losses. The office facilitated settlements involving 162 cultural objects.”

 

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

09/08/20       Greater New York Mutual Ins. v. Continental Cas. Co.
United States District Court, Southern District of New York
Only When a Commercial General Liability and Directors & Officer’s Insurance Policy Cover the Same Exact Risk is the Commercial General Liability Policy Primary for Purposes of Defense Costs

Plaintiff brought this suit seeking a declaratory judgment that Defendant is obligated to contribute on a co-primary basis in the costs incurred by Plaintiff in a state court action defending 444 Park Owners, Inc. (“444”), a corporation insured by both parties. Plaintiff issued a commercial general liability policy (“CGL”) to 444 and Defendant issued a directors and officers liability policy (“D&O”) to 444. Defendant moved for summary judgment arguing that Plaintiff’s obligation to defend at least one allegation in the state court action entails a broad duty to defend the entire state court action as the primary insured, and Defendant’s policy pursuant to its “Other Insurance” clause is excess to Plaintiff’s CGL policy.

It is undisputed that both policies were in effect at the time of the alleged conduct in the state court action, and that both policies would have independent covered certain allegations set forth in the state court action. Coverage under the CGL policy is triggered by allegations of property damage, and overage under the D&O policy is triggered by allegations of constructive eviction, partial constructive eviction, and invasion of privacy.  What was in dispute is the application of each policy’s “Other Insurance” Clause. The CGL policy’s other insurance clause states:

This insurance is primary except when [a number of conditions which are not relevant in this case occur.] If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary.

In contrast the D&O policy’s other insurance clause states:

If any Loss resulting from any Claim is insured under any other policies, this Policy shall apply only to the extent the Loss exceeds the amount paid under such other valid and collectible insurance whether such other valid and collectible insurance is stated to be primary, contributory, excess, contingent or otherwise, unless such other valid and collectible insurance is written only as specific excess insurance over this Policy.

The court found that the CGL policy clearly covers the allegation of property damage in the state court action, and the policy’s “Other Insurance” clause provides that it is primary. The court then stated “[i]t is settled that a primary insurer has the obligation to defend without any entitlement to contribution from an excess insurer.” However, the court then reasoned that this application of law does not necessarily trigger the D&O’s “Other Insurance” clause. The court, when reading the D&O policy in whole, interpreted the D&O’s “Other Insurance” clause as only being triggered when both the D&O and underlying policy cover the same risk.  Defendant then argued that the allegations of constructive eviction or partial constructive eviction are covered under the CGL policy’s “Personal and Advertising Injury” coverage part, however the court ruled that there was insufficient evidence to decide this point as a matter of law.

09/28/20       Fordec Realty Corp. v. Travelers Excess and Surplus Lines Co.
United States District Court, Southern District of New York
Policy Exclusions are to be Read in Seriatim. If Any One Exclusion Applies, there is No Coverage even if the Exclusions are Inconsistent with Another

This action concerns the scope of coverage provided by an insurance policy issued by defendant (“Travelers”) to plaintiff (“Fordec”). The policy provided property coverage for a parking garage owned by Fordec. Within the policy period the parking garage sustained damage due to a partial collapse. Fordec filed a claim with Traveler’s, which Traveler’s denied based upon the following exclusion:

D. EXCLUSIONS

1. The Company will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.

. . .

j. COLLAPSE OF BUILDINGS

Collapse of buildings meaning an abrupt falling down or caving in of a building or substantial portion of a building with the result being that the building or substantial portion of a building cannot be occupied for its intended purpose.

(1) This exclusion will not apply to collapse of buildings if the collapse is caused by one or more of the following:

(a) A “specified cause of loss”;

(b) Decay or insect or vermin damage that is hidden from view, unless the presence of such decay or insect or vermin damage is known to the insured prior to the collapse;

(c) Weight of people or personal property;

(d) Weight of rain that collects on a roof;

(e) Use of defective material or methods of construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling or renovation. However, if the collapse occurs after the construction, remodeling or renovation is complete and is caused in part by a cause of loss listed in j. (1)(a) through (d) above, the Company will be liable for loss or damage caused by the collapse even if use of defective material or methods in construction, remodeling or renovation contributes to the collapse.

In the event collapse results in a Covered Cause of Loss, the Company will be liable only for such resulting loss or damage by that Covered Cause of Loss.

. . .

2. The Company will not pay for loss or damage caused by or resulting from any

of the following:

. . .

c.        (1) Wear and tear or depletion;

(2) Rust, corrosion, erosion, fungus, decay, deterioration, wet or dry rot, mold, hidden or latent defect or any quality in the property that causes it to damage or destroy itself;

(3) Settling, cracking, shrinking, bulging or expansion;

. . .

However, in the event that an excluded cause of loss that is listed in 2.c.(1) through (6) above results in a “specified cause of loss,” the Company will pay for the loss or damage caused by that “specified cause of loss.”

Traveler’s moved for summary judgment based on its denial letter, the policy exclusions, and an engineering report. The engineering report determined that “the collapse was precipitated by complete corrosion of the corners of the two connection angles” and “due to rusting (corrosion).” In opposition to the motion Fordec argued that because the rust and corrosion caused the collapse, the collapse was “hidden from view” and thus the exception to the collapse exclusion applied. Traveler’s then argued that even if Fordec could prove the hidden decay exception would apply, the application of the exclusion for rust, corrosion, decay, etc. would still apply to bar coverage. Magistrate Judge Fox issued a Report and Recommendation (“R&R”), which recommended ruling for Travelers as all parties do not dispute the facts of how the property damage occurred (rust and corrosion) and that the exclusion for rust, corrosion, decay, etc. correctly applies. The R&R further states that the exception to the collapse exclusion cannot be applied to any other exclusion, and because the exclusion for rust, corrosion, decay, etc. applies independently of the collapse exclusion, coverage was properly disclaimed.

Fordec then challenged Judge Fox’s R&R, however the court disagreed with Fordec’s position. The court looked to New York law which holds, insurance “[p]olicy exclusions are to be read seriatim and, if any one exclusion applies, there is no coverage since no one exclusion can be regarded as inconsistent with another.” Fordec argued that because there was in fact a collapse, the exception to the collapse exclusion must apply to the loss. Relying on the case law cited above, the court disagreed with Fordec’s position. The court reasoned that while the discovery of corrosion does make the exception to the collapse exclusion applicable, the exclusion for rust, corrosion, decay, etc. unambiguously denies coverage.
 

CARA’S CANADIAN AND CROSS-BORDER CONNECTIONS (WITH HEATHER SANDERSON)
Cara A. Cox
[email protected]

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

When Home Becomes School
Coverage under Homeowners Policies

As the school year is under way, some schools have already shuttered due to outbreaks.^[1] Parents’ concerns of sending their children to school or the closure of primary and secondary schools have resulted in a shift to virtual learning. Unfortunately, “distance learning” has its downsides, including inadequate support and education for both rural and metropolitan students.^[2] Accordingly, many parents are shifting to homeschooling their children. However, parents, who either need to work during “school hours” or would rather rely on experienced teachers, are establishing “Pandemic Pods”.^[3] In some of these arrangements, parents are banding together in small groups to create an in-person classroom environment, including “recruiting teachers to lead their pods and paying as much as $125,000 under these arrangements…”^[4]

However, parents and homeschool teachers beware… once entering the realm of homeschooling and paying someone or receiving money to teach or care for your or others’ children within your home, there may be coverage issues if an injury were to occur.

In a homeowner’s policy with a business pursuits exclusion, such an exclusion may state that coverage does not apply to bodily or personal injury “arising out of or in connection with a business engaged in by an insured.” Additionally, “business” may be defined as a “trade, profession or occupation.” Traditionally, the business pursuits exclusion arises when an insured has a homeowner’s policy, is operating a business at the insured premises but fails—intentionally or unintentionally—to relay this information to the carrier, and a claimant is injured while on the premises. When this occurs, if the carrier learns that the insured was operating a business on the premises, coverage may be denied. However, the business pursuits exclusion may also contain an exception for activities which are “ordinarily incident to non-business pursuits.” Jurisdictions interpret the business pursuits exclusion and exceptions differently. However, in New York, such an exclusion and exception focus the application of such provisions by examining whether “the injury was caused by an act that would not have occurred but for the business pursuits of the insured, said act is beyond the scope of the policy; however, if the injurious act would have occurred regardless of the insured's business activity, the exception applies and coverage is provided even though the act may have had a causal relationship to the insured's business pursuits.”[5] Accordingly, whether it’s a teacher who is welcoming a pod of students into his or her home or a parent taking care of the neighborhood kids for a fee, both should be cautious of the policy coverage implications involved with such arrangements.