Coverage Pointers - Volume XXII, No. 9

Volume XXII, No. 9 (No. 574) 
Friday, October 16, 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.

There are several interesting cases in my column this issue – an “assault and battery” case where the insured tried, unsuccessfully, to avoid the impact of an A&B exclusion by focusing on premises security claims.  With such an exclusion, coverage was denied.

You’ll also find another case where the court refused to find a lack of cooperation by the policyholder.  Lack of cooperation is a very difficult burden for an insurer to establish.  Check out Agnes’ column for a very interesting and complex asbestos coverage case from the Fourth Department.  You’ll also find in this note, our usual array of news stories from 100 years ago today.

Canadian Thanksgiving/Indigenous Peoples’ Day/Columbus Day has come and gone.  Besides being significant for those three reasons, it is also the ceremonial closing of our beach home in Fort Erie, Ontario, on the lovely north shore of Lake Erie and our return home to Buffalo (an excursion of 16.6 km (or 10.3 miles)).  That can take as much as 25 minutes, with Bridge traffic or 17 minutes, without.

In any event, we canceled the trip home this month, because we never were able to cross the border to get to our Canadian property in the first place, so there was no good reason to plan a trip home  The COVID border lockdown has shut the Canadian/US border since March 21.  The Province of Ontario was happy, of course, to accept my property tax payments in lieu of my presence.

Coverage Mediation:

We provide insurance coverage mediation services to try to resolve disputes between and among insurers.  Avoid precedent that may bite you a year from now and try to resolve cases by mutual agreement.  If you need a coverage mediator, call me.

Training:

This has been another week of continuing education programs.  Along with my new friend, Sarannah L. McMurtry, General Counsel of Acceptance Insurance Company, we presented the first of a three-day FDCC CGL Boot Camp program.  We presented to 100 claims professionals and lawyers on Coverage 101 – The Steps to Analyzing General Liability Coverage, which includes the “patent always pending” Kohane Coverage Formula.  For those companies that would like some training for claims folks on analyzing CGL coverage and crafting coverage letters are not already using,   [C = WI] - [WO] x CPC]  let me know and we’d be happy to provide educational opportunities.

Western New York Legal Elite:

The Firm was delighted to have six of our partners listed as Buffalo Business First’s Legal Elite honorees, peer selected:

  • Jody Briandi
  • Dan Kohane
  • Ann Evanko
  • Mike Perley
  • Andrea Schillaci
  • Kevin Zanner

Legal Elite is a list published annually of the region’s top attorneys. 141 WNY attorneys were included in 2020’s list.

Federation of Defense & Corporate Counsel (FDCC) 2020 Insurance Industry Institute (“I-3”): From Virtual to Reality:

The 2020 Insurance Industry Institute (I-3) will be held "virtually" November 5-6, 2020. Sessions will be conducted online with the opportunity for "live" question & answer sessions with the speakers following the virtual sessions. We will conclude each day with a Virtual Networking Session.

Registration is free and open to FDCC members, their clients and colleagues. EACH ATTENDEE MUST REGISTER SEPARATELY. Please forward this registration link to your colleagues and guests so that they may register for the Symposium.

CLE will be complimentary for all attendees.

To review agenda and register, click here.

The 2020 I-3 is being offered at NO CHARGE to attendees. There will be opportunities to interact with FDCC Sponsors through virtual booths and individual appointments and we encourage you to do so. More information regarding the Virtual Trade Show will be forthcoming.

Once you complete this registration, you will receive a confirmation. If you do not receive a Confirmation Email within 24 hours, please check your "spam" filters or email Danielle Scott at [email protected]. This confirmation email will verify that we have your correct email information to forward the ZOOM Invitation as we get closer to the meeting.

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.

Child Victims Act (CVA) Coverage Training:

Handling claims of injury which is alleged to have occurred upwards of 30 years ago has presented new challenges to carriers. Our training will provide guidance on how to navigate what to do when an insured presents only minimal proof of coverage, how to approach questions related lost or missing policies, and how to handle a CVA claim from first notice through issuing a coverage position.

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.  
     
  • 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:

The Property section has a couple of new decisions upon which to report this week.  The first deals with a fairly fundamental issue that, surprisingly, doesn’t come up all that often.  In the Downstairs Cabaret case, the Appellate Division, Fourth Department, noted that before any interpretation of policy language is conducted, a court must first discern whether coverage for the proposed loss was actually purchased.  In that case, we presume the policy language must have included references to business income loss.  As such, the insured presented a claim for losses occasioned out of damage to the property. 

However, a review of the policy revealed that business income coverage was never purchased by the insured. Thus, regardless of the claims submitted, where the insured elected not to purchase a certain option of protection, coverage cannot attach.

Simply, you can’t collect on what you don’t have.

In response to the very unpleasant discovery that a policy’s scope and reach is limited, an insured invariably responds by suing his/her/its broker.  The second case we review this week, Waknin, should be kept handy for responding to this argument.

In Waknin, after the insured lost coverage due to the insured dwelling being vacant, he blamed the broker for not properly obtaining unoccupied building coverage.  The E&O claim fell flat when it was established that the insured had the policy long before the loss.  As policyholders are deemed to have read and understood their policies, no complaint could be heard from the insured.

These two cases follow the long-established rule that coverage follows what was purchased.  Read the policy, the whole policy, and you can’t go wrong.

Steve
Steven E. Peiper
[email protected]

 

Good Advice a Century Ago – Buy Life Insurance Before You Die:

The Berkshire Eagle
Pittsfield, Massachusetts
16 Oct 1920

If You Have Not Waited Too Long

            We would be glad to consider your application for life insurance upon any plan suited to your needs.

            A monthly income payable to your wife, after your death, is very desirable and appreciated by those now receiving its benefits.

BERKSHIRE LIFE INSURANCE COMPANY
PITTSFIELD, MASS.

 

Wilewicz’ Wide-World of Coverage:

Dear Readers,

Fall is finally and fortunately here, though it has been a bit of a downer without our annual trip to the pumpkin farm and apple picking weekend. Nevertheless, we are making the best of it, from decorating the house with leaves, harvesting farmers’ market sunflowers and grocery store gourds, to prepping for some socially distant trick-or-treating coming up. To that end, we were recently inspired by an Ohio dad who created a candy chute to affix to your porch handrail and send candy a safely six-feet down. We were able to score a giant tube (the innards of a large carpet roll from our local Home Depot) and spray painted it orange. It’s about 8 feet long and we plan to prop it atop our handrail and propel candy down to kids. That, coupled with a trio of animatronic witches that we secured, who that will brew potions from the porch steps amidst a smoke machine we already had, and we should be all set to celebrate a rite of autumn.

Now, this week in the Wide World of Coverage, we bring you something closer to home. As you know, in this column we write about Federal Circuit Court coverage cases generally, but often dabble in environmental coverage more specifically (my personal fave). I especially love asbestos and other toxic/mass  we have Carrier Corp. v. Allstate, from our own Fourth Department Appellate Division.

In Carrier v. Allstate, the upstate Fourth Department addressed a couple of issues that come up frequently in toxic tort cases. First, whether corporate reorganization agreements can transfer insurance coverage rights to successor companies (they can, depending upon their language). Second, what trigger of coverage analyses are appropriate for asbestos cases (here, they found an issue of fact due to contradictory medical expert reports submitted). Finally, the proper allocation methods for towers of coverage for long-tail tort actions (see the attached summary, along with link to the brief but detailed decision in my column).

With that, be well everyone, and stay safe.

Until next time,

Agnes
Agnes A. Wilewicz

[email protected]

 

Political Prediction – Harding Will Not Be Elected President:

The Muscatine Journal
Muscatine, Iowa

16 Oct 1920

 

CLAIMS HARDING DOOM IS SEALED DEMO CHAIRMAN SAYS CAMPAIGN ON VERGE OF COLLAPSE

Congressman Doremus Declares Republic Leaders “Merely Whistling to Keep up Courage.”

(Associated Press Leased Wire.)

            Chicago, Ill., Oct. 16.—Senator Warren G. Harding, in his recent speech at Des Moines, Iowa, “sealed his doom, so far as this election is concered,” Congressman Frank E. Doremus, chairman of mid-western headquarters of the democratic national committee, said in a statement today.

            “The republic campaign is on the verge of collapse.” Mr. Doremus’ statement continues. “The republicans and progressives are coming to Cox literally by the thousands.  The republican leaders are making a frantic effort to stem the tide which had set in with irresistible force.

            “When Senator Harding at Des Moines deliberately turned his back on the league of nations and all reservations thereto, he sealed his doom so far as this election is concerned. …”

Editor’s Note: By the way, in case you missed it, the Harding/Coolidge ticked did beat the Cox/FDR ticket, receiving 60.3% of the popular vote, carrying 37 of the 48 states and winning in the Electoral College by 404 to 127.

 

Barnas on Bad Faith:

Hello again:

For the second straight issue I have a New York bad faith case to write about.  The VanNostrand case in this week’s column is a typical bad faith refusal to settle cases with the result we often see in these cases in New York:  a finding of no bad faith by the insurer.

The underlying plaintiff was involved in an auto accident in September 1999, and she obtained a $300,000 judgment after a jury trial.  The insured had policy limits of $100,000 with NYCM.  The insured assigned his rights to a bad faith claim to the underlying plaintiff in exchange for an agreement not to seek the amount of the excess judgment from him personally.

The case had previously gone up to the Appellate Division in 2015.  In that decision, the Second Department had disqualified the underlying plaintiff’s attorney from representing her in the bad faith action because he was an essential witness.  The court also had ordered the attorney to appear for a deposition.

Now addressing the merits of the bad faith claim, the Second Department concluded that NYCM was entitled to summary judgment dismissing the case.  The court ruled that NYCM had a rational basis for believing the underlying plaintiff had not sustained a serious injury, which would have precluded her from recovering in the underlying action.  Specifically, the underlying plaintiff missed less than one month of work, made no claim for lost wages, was no longer treating for injuries sustained in the accident, and the defense had positive medical expert reports.  As such, the bad faith plaintiff could not establish that NYCM acted with gross disregard for the insured’s interests necessary to establish a bad faith claim.

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

Brian
Brian D. Barnas

[email protected]

 

Heir Today, Gone Tomorrow:

Daily News
New York, New York

16 Oct 1920

Missing $1,000,000 Heiress Found in Cell Awaiting Prison Sentence

            The puzzling disappearance of Marie Barreiro, twenty-two, heiress to a million dollar sugar plantation in Santo Domingo, was solved yesterday when she was lco9ated in the Tombs prison, awaiting sentence on a charge of shoplifting.

            Miss Barreiro is a dashing beauty of the creole type, and claims to be the niece of a former President of Santo Domingo.  She is employed as a designer by an embroidery concern at 105Madison avenue.

            Last Saturday she left her place of business at noon, saying that she was going on a shopping trip.  Her disappearance was reported to the police when she failed to keep an appointment with her sister, Anna, at her home at 136 West Ninety-fourth street.

            According to the police Miss Barreiro gave the name of Mary Lagaro when she was arrested in a Broadway department store and refused to give an address.

            At the time of her arrest Miss Barreiro was sell supplied with money and had in her handbag a check for her monthly allowance from Santo Domingo.

            Miss Barreiro, having pleaded guilty to petty larceny, will appear for sentence in Special Sessions next Monday. 

 

Off the Mark:

Dear Readers,

Although they miss being with their friends, my kids seem to be doing well with remote learning.  I guess we’ll find out if they really are when report cards are received.  With Halloween coming up, we haven’t decided what our plans will be as far as trick-or-treating is concerned.  I’m leaning towards taking them out for a quick walk around a block or two and then calling it.  Or course, with appropriate social distancing observed and masks worn at all times.  A friend of mine is planning on simply throwing out any candy his kid gets.  I don’t know that I have the will power to throw out all of those innocent peanut butter cups and Snickers bars.  I think I will just wait it out until safe to consume. 

This edition of “Off the Mark” brings you a recent construction defect decision from the United States District Court for the Western District of Washington.  In The Phoenix Ins. Co. v. Diamond Plastics Corp., the U.S. District Court examined a carrier’s duty to defend its insured in an underlying action alleging property damage due to the delivery and installation of defective pipes.

Stay safe everyone …

Brian
Brian F. Mark
[email protected]

 

It was Canadian Currency, After All:

The Buffalo Enquirer
Buffalo, New York

16 Oct 1920

MAN WHO SAYS HE PAID $7 FOR WHOLE FAMILY ARRESTED WITH WOMAN

Edward Hornbushel of Toronto Said to Have Admitted Purchase of Wife and Four Children of Trueman Saunders, Also of Canadian City.

            When Edward Hornbushel, 40 years old, gave $7, so he alleges, to Trueman Saunders, 36 years old, both of Toronto, for Mrs. Saunders and her four children, he may have thought he had a bargain, but languishing in the police cell here today he probably thinks the added price of his liberty makes the “deal” an expensive one.

            Acting on the information of Martin Levy, a Toronto police officer, Policewoman Jeanne Grey arrested Hornbushel and Mrs. Saunders at No. 125 Niagara street, where they have been living, with the four Saunders children, since coming from Canada recently.  Steps are being taken with a view to have them deported as undesirables.  They will probably be proceeded against in Canada, it is said.

            Hornbushel and Mrs. Saunders claim Saunders did not use his wife well.  He went away for a week, they allege, and wrote Hornbushel making the latter the proposition to buy the Saunders family.  The bargain was later consummated in the Saunders home, the prisoners alleged, and Saunders went away and has not been heard from since, they allege.  Hornbushel boarded at the Saunders home.

            The children, who are at the shelter, are:  Corina, 14 years old; Herbert, 11; Dorothy, 8; Alex, 10.

 

Boron’s Benchmarks:

Did you ever hear the saying, “the past is the past”?  On its face, who can dispute the saying?  But, usually, the speaker is saying “the past is the past” for the purpose of making a more significant point.  As I write this column, the sting of the Buffalo Bills’ utter dismantlement at the hands of the COVID-19-depleted Tennessee Titans on Tuesday night football (last night) has not yet abated for this Buffalo Bills’ fan. I really feel the need to tell myself “the past is the past” to help me forget as quickly as possible what I witnessed last night.  Actually, I need to dig into the slightly deeper past to give me hope for a rebound next week by the Bills against – oh no – last year’s Super Bowl Champs, the Kansas City Chiefs.   Interesting, isn’t it, how our perspective about “the past” influences how we project or guesstimate the future and/or how we value what has occurred, hasn’t occurred, might have occurred, or might still occur, given “the past”.  Taking the full five-game season of the Bills to date into account as “the past”, based on the Bills’ 4 wins versus 1 loss overall 2020 season record, I am encouraged that maybe we do have more than a hope and a prayer for next Monday night’s game against the mighty Kansas City team.  We’ll see.

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 Delaware Opinion issued October 2, 2020, affirming judgment awarded after a jury trial court to an insured on the insured’s business interruption claim.  The opinion, though lengthy, is a good read.  And, come to think of it, business interruption claims often involve consideration and analysis of “the past” to determine coverage issues and ultimately, when there is coverage, the amounts of business interruption losses to be paid to the insured.  One’s perspective on “the past” makes a difference, it seems.  Chin up and on to the next game, Bills fans.  Because there’s nothing as great as a comeback story.

Until next time, be well.

Eric
Eric T. Boron

 

Voter Registration Came to an End, 100 Years Ago:

The Buffalo Times
Buffalo, New York

16 Oct 1920

THIS IS THE LAST DAY OF REGISTRATION.

            This is our last opportunity impress upon those who have not registered up to now, the registration necessity.  It is likewise your last opportunity to register if you have not registered hitherto.  If you omit to register today, you cannot vote on the 2nd of November.

            The election the coming November, not only decides our national policies for the next four years, but it decides the mission and place of America in world civilization.

            In its State and local aspects, it is fraught with tremendous significance to the great commonwealth of New York, to every community in it, and to every citizen of every community.

            To neglect to register is by one’s own admission to declare oneself unworthy to be an American citizen.

            If you are a still unregistered, go to the booth and register at once.  Do not put off his vital civic duty to the closing hours of this, the last day.  The hours will quickly resolve themselves into minutes and those who wait till a late hour are likely to lose the few minutes necessary to perform the act of registration.  Register now!

 

Barci’s Basics (On No Fault):

Hello Subscribers!

I hope you are all still staying healthy and safe! Last time I asked what you thought that other people think you are good at. I got some basic answers like cooking, baking, and various sports, but one that stood out was hacky sack. Personally, I never understood the draw of hacky sack, but I am impressed to know someone who has that talent! I think others would think I am good at decorating, gift giving, and baking to name a few things. I asked one of my coworkers what he thought I was good at, and he said sarcasm and baking, which seems accurate.

For next time consider: what song always makes you happy when you hear it?

On the no-fault front, I’ve got one pretty interesting case from the Second Department that discusses what the attorney’s fee regulations under the no-fault law are and why it exists as they do now. Enjoy!

That’s all folks,

Marina
Marina A. Barci

 

Prohibition Nabs Another:

Buffalo Evening News
Buffalo, New York

16 Oct 1920

NEW YORKERS NABBED TRANSPORTING BOOZE

Speeding Auto Held Up on Broadway Nets 50 Gallons.

            Two men who claim to hail from New York city, who were speeding toward Buffalo in a big automobile on the Broadway road near Bowmansville, at 3 o’clock this morning, were stopped by federal prohibition agents, who claim to have found 50 gallons of grain alcohol in cans in the machine. Both men were brought to the Pearl street police station and locked up, charged with transporting liquor.

They gave their names as Sam Cortese, 31 years old, a grocer of 311 East 45th street, New York, and Louis Leone, 24 years old, a chauffeur, of 245 East 28th street, New York.  The men had a slip of paper with 318 Fargo avenue written on it.  They said they were going to that address.

The two were later arraigned before Commissioner Keating on charges of transporting alcohol and their police bail of $500 was raised to $750 each by Commissioner Keating, who gave as his reason that he believed in making the bail fit the magnitude of the offense charged.  Heretofore bail in liquor cases has been uniformly $500.  The date of hearing in the case was set for next Saturday. 

           

Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

To all my fantasy footballers: Tuesday Night Football makes for some interesting roster decisions in the age of COVID-19. For me, the NFL has been a welcomed breath of fresh air. But, with the Titans outbreak, and the Buffalo Bills game in jeopardy, I found myself holding my breath. Will this season be sustainable? With the rigidity of the NFL schedule, we forge ahead into the unknown.

Speaking of the Bills, I am writing this on Tuesday, just before noon—seven and half hours to game time. Prediction? Bills by one-hundred. Okay, 27-20 Bills. Josh Allen (2 TDs, 250 yards); Singletary (1 TD, 84 yards). How’d I do?

This issue, we have two proposed bills in the New York State Assembly. The first would result in a complete repeal of New York’s no-fault laws under Article 51 of the Insurance Law. The second would provide COVID-19 liability protections to educators providing in-person instruction to students.

Until next time,

Ryan
Ryan P. Maxwell

[email protected]

 

Mrs. Hill Still Looking, Now Only Worth $30,000 (She claims Far More in Previous Newspapers):

The Leader-Post
Regina, Saskatchewan, Canada

16 Oct 1920

$30,000 OF WEALTH GOES WITH AN ATTRACTIVE WIDOW WHEN SHE MARRIES.  Write quick.  Address Mrs. A. L. Hill, Box 373, So. Jacksonville, Fla.

MARRY WITHIN SIXTY DAYS.  Send no money for our new guarantee marriage plan.  Nothing ever like it in America.  Address Pilot Pub. Co., Desk 47, Marshall, Mich.

YOUNG LADY WITH MEANS wishes the acquaintance of a congenial Gentleman; object matrimony.  Box 73, Arc. Sta., Los Angeles, Cal. 

 

CJ on CVA and USDC(NY):

Hello all,

What a two weeks it has been to be a Buffalo Bills fan. After a convincing win against the Raiders on October 4, and questions about whether or not the game against the Titans would be a go, the Bills are no longer undefeated, and the hopes of an undefeated season are now gone. I’m generally a very even keeled sports fan, but I noticed myself yelling at the TV a little more than usual last night. But, unlike some people calling into the local sports talk station, I still have hope that this Tuesday’s performance was merely a blip on the radar. While we’re forced to go up against Kansas City on Monday, I think the Bills will be able to re-group and get back to the business of winning.

It seems that the District Courts have been quiet in terms of insurance coverage decisions. This week we are going back to discussing the CVA. In my column I discuss an interesting decision by Judge Silver, in Kings County Supreme Court. The Plaintiff, a Florida resident, sought to bring a CVA claim against the Diocese of Brooklyn, for abuse which allegedly occurred in Florida. Plaintiff’s position was, since the Diocese of Brooklyn knew of the priest’s propensities prior to his transfer to Florida, he should be able to recover under the CVA. Judge Silver disagrees. Plaintiff, predictably, is appealing the order.  I’ll be following the docket to see what becomes of the appeal and reporting back here.

Happy Reading!

CJ
Charles J. Englert, III

 

Famous Horse, Hangs it Up:

New York Herald
New York, New York

16 Oct 1920

MAN O’WAR TO RACE NO MORE

Owner Makes Positive Announcement Of Withdrawal of Famous Horse

REFUSES $50,000 PURSE

Samuel D. Riddle Declines to Let Animal Run at Latonia Track.

Special Dispatch to The New York Herald.

            PHILADELPHIA, Oct. 15.—The Great Man O’War will race no more. Samuel D. Riddle so announced this afternoon and said that not even his closest friends would be allowed to see the horse until the animal has had a chance to pull himself together and rest after his victory over Sir Barton and long ride from Canada.  Furthermore, Mr. Riddle wired to J. O. Keene, Kentucky sportsman, refusing another race for a $50,000 purse.

            “You may state positively that the horse will remain in strict seclusion,” aid Mr. Riddle this afternoon.  “This is flat and final; even my dearest friends will not allowed to see him, so any persons who may go to the trouble or inconvenience to try to see the horse are wasting their time.

            “The horse surely will be shown at rose Tree on Wednesday.  And this is probably the last time he will be seen in these parts, for he will then travel South, and it is a question if he ever will be in this section again. 

 

Dishing Out Serious Injury Threshold:

Dear Readers,

As the year continues to fly by, Halloween is almost upon us. It may be a little different this year, but I hope everyone is able to enjoy themselves and take a break from all this craziness with some unhealthy candies.

In the Serious Injury Threshold world, there were a couple interesting cases coming out of the First Department. The first has to deal with defendants obtaining expert reports from a neurologist and emergency medicine specialist as to how plaintiff’s injuries were pre-existing and inconstant with plaintiff’s alleged injuries. Similarly, the second pertains to plaintiff’s experts failing to adequality address defense expert’s claims that plaintiff’s injuries pre-existed the subject accident.

Stay safe,

Michael
Michael J. Dischley

 

Losing His Life, in the Saddle:

Daily News
New York, New York

16 Oct 1920

LAWYER STRICKEN PLEADING IN COURT, DIES OF APOPLEXY

            Stricken with apoplexy as he finished an impassioned plea before Justice Callaghan in the Supreme Court yesterday, William Adams Robinson, one of New York’s best known criminal lawyers, died an hour later at the Methodist Episcopal Hospital, Brooklyn.

            He was fifty years old and lived at 249 Argyle road, Brooklyn, with his wife and four children.  He had always had a peculiar aversion to Friday and usually chose to remain at home on that day with his family.

 

John’s Jersey Journal:

A blackboard sign on a wall

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Dear Subscribers:

Last time, we had a case interpreting New Jersey’s Deemer Statute. Today, the saga continues with another.

Washington, who lives in New York, purchased auto insurance with Personal Injury Protection (PIP) coverage. He drove into New Jersey. While a pedestrian, he was struck by a New Jersey motorist. Washington filed a claim for PIP benefits with his insurer who paid out the full $50,000 PIP limit.

He then sued his insurer claiming that, under New Jersey’s Deemer Statute, he was entitled to PIP benefits in an amount greater than the policy limits of his New York policy.

What Washington failed to realize is that the purpose of the Deemer Statute is not to provide additional coverage to folks who fail to buy sufficient insurance coverage (and could have). The purpose of the Deemer Statute is to ensure that if New Jersey residents are injured by out-of-state drivers, whose carrier transacts business in New Jersey, New Jersey citizens are protected. Specifically, New Jersey residents can rest assured that if they are struck by an out-of-state driver, they will generally be able to recover the minimum liability coverage, $15,000 per person, $30,000 per accident. The legislative purpose of the statute was to protect New Jersey residents against folks from other states who do not carry liability insurance, or do not carry at least the state minimum.

Mr. Washington was asking the Court to ignore the fact that he could have purchased a higher PIP limit in his home state, New York. I, for one, do not understand how this case reached the Appellate Division, who addressed this exact issue three years ago.

On a personal note, I am enjoying fall. Erin and I recently went apple picking at a local orchard, which was a fun experience. Erin has been making apple pie and other apple desserts I enjoy. Our front porch is adorned with a mix of red and white pumpkins, which we only discovered this year. I thought all pumpkins are orange, so naturally, I thought they were painted pumpkins. They’re real. Who knew? It is my favorite time of the year, and the weather is perfect.

Be well. Stay safe.

John
John R. Ewell

 

Children Jailed for Skipping School – 100 Years Ago:

The Evening World
New York, New York

16 Oct 1920

TRUANTS, TO TOMS; ONE A BRIDE TO BE

Convicted Under New Law and Get Day in Jail When They Can’t Pay $2 Fine.

            The first arraignments under the new section of the Compulsory Education Law, applying to children between the ages of sixteen and eighteen who have not completed their secondary education, were before Magistrate Harris in Municipal Term court, when one seventeen-year-old boy was fined $2 and two sixteen-year-old girls were convicted and given prison sentences of one day each when they did not have money to pay $2 fines.

            Molly Sobine, giving her age as sixteen years and three months, of No. 65 East 105th Street, was up on as summons issued  by Miriam Meylan, a Board of Education truant officer, who said that the girl has refused to go to school when she talked to her Oct. 7 and that previously she had missed school for thirteen days.  The girl said that she was working and for what reason did not attend school.  When she was convicted she sobbed and said she had not expected to be fined and did not have $2 with her.  She was sent to the Tombs to serve one day.

            Hannah Kahn, age sixteen years five months, of No. 23 Goerck Street, charged with not attending school, said that she was engaged to be married and that for that reason she did not see why she should have to go to school.  She was also convicted and fined $2 with the alternative of one day in prison.  Not having $2 with her she was sent to the Tombs.

            One seventeen-year-old boy convicted , paid his fine of $2 and was released with a warning to return to school.  More than 100 parents were before the court in cases of children under the age of sixteen who did not attend school.

 

Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

It’s been a quiet fortnight in and about the Connecticut courts when it comes to insurance law. One of our local hospitals learned an important lesson about reporting malpractice claims to not only its primary insurer on a timely basis but to its excess insurers as well. A costly lesson in a bad baby case.

Pre-second wave COVID life slowly returns to normal in the Constitution State, but for how long? While businesses inch forward towards normalcy, hospitalizations and positivity rates are at their highest since June (even while remaining among the lowest in the country).

Be vigilant, be safe. Wear a mask.

Lee
Lee S. Siegel
[email protected]       

 

Will a Car Shrink in Hot Water?:

Buffalo Evening News
Buffalo, New York

16 Oct 1920

 

Don’t Use Hot Water On Surface of Auto

Is hot water good for the surface of the car?  It is not, according to American Motorist, which goes on to say:

Hot water has a markedly deteriorating effect on the varnished surface of a well-finished automobile body.  Tepid water is ideal, although cool water may be used without harm.  After the car has been properly washed and wiped with chamois, it is time well spent to go over it thoroughly with a high grade automobile or piano polish.  Use good grade cheese cloth and be sure to rub until the last trace of wet polish has been removed, as a film of polish left on the surface of the car quickly collects a heavy coating of dust.  

 

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

Dear Subscribers,

So, what's a couple Buffalonians to do on a Sunday when the Bills game is rescheduled? Go to Letchworth State Park, of course! Dubbed the "Grand Canyon of the East", Letchworth is a sight to see any time of the year, but an even more incredible sight during the fall. The Genesee River runs through the gorge and over three waterfalls. Therefore, it's no wonder readers of USA Today selected Letchworth as the Best State Park in the United States in 2015. Although New York State does not have any national parks, it makes up more than enough with heavy hitters like Letchworth and the Adirondacks, which are just two of the 180 state parks New York has to offer. Jim and I planned to arrive early to avoid the busy afternoon, and we did alright considering we only hit the snooze button twice on an early Sunday morning. When we arrived, there were not many cars or people, so we headed down a scenic looking path. Over a couple hours later, we emerged back from the trail and found that it seemed like everyone else from WNY to CNY and Pennsylvania had the same idea. We planned on exploring the waterfalls but elected to find a sunny area to relax before heading back home. Unfortunately, I don't have many photos from this weekend, so please enjoy this photo of a train crossing one of the waterfalls that I captured last year when I was sitting and enjoying being outside, because yes, it's that idyllic.

Additionally, like I said last issue, there's still time to enjoy the outdoors. However, I encourage all of you who may not like the cold, to embrace the Norwegian concept of friluftsliv: "open air living". What does this mean? Based on what I’ve read, it appears to mean embracing the outdoors, no matter the weather because "there's no bad weather, only bad clothing!" Although I grew up enjoying outdoor activities in the Adirondack winters (e.g., skiing, sledding, snowmobiling), I have unfortunately shifted towards going into hibernation mode once the cold makes itself comfortable in WNY. I do not know what this winter will hold, but I am committed to taking time to get outside this winter. Not only has research demonstrated the positive effects of being outside, I think a little time with nature will be especially good for everyone this winter. Stay safe!

Cara A. Cox

 

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

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)

Headlines from this week’s issue:

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

  • Burlington Strikes Again – Duty to Defend Additional Insured Based on Allegations; Premature to Determine Duty to Indemnify
  • Plaintiff Could Not Compel SUM Carrier to Issue a “Consent to Settle” Letter
  • Failure to Cooperate, Examined; Carrier Failed to Demonstrate “Willful and Avowed Obstruction”
  • An Assault by any Other Name is an Assault and Excluded under an “Assault and Battery” Exclusion

 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

  • No Coverage for Business Interruption where the Coverage is not Referenced, nor Otherwise Endorsed, on the Policy’s Declarations Page
  • Coverage Properly Excluded for Unoccupied Premises Damaged in Fire

 

DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley

  • Plaintiff’s Failure to Rebut Defendant Expert Claims that Injuries Were Preexisting Failed to Raise a Triable Issue of Fact
  • Plaintiff’s Failure to Rebut Defendant Expert Claims that Injuries Were Preexisting Failed to Raise a Triable Issue of Fact

 

WILEWICZ’S WIDE WORLD OF COVERAGE
Agnes A. Wilewicz

[email protected]

  • Fourth Department Addresses Transfer of Insurance Coverage to Successor Companies and Analyzes Injury-in-Fact and Allocation in Asbestos Cases

 

JEN’S GEMS
Jennifer A. Ehman

  • Trial Court Concludes that Two Lawsuits Arising out of Exposure to Hepatitis from the Same Restaurant Employee Constituted Separate Occurrences

 

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

  • Insurer Had Rational Basis for Concluding Jury in the Underlying Action would Conclude that Plaintiff had not Suffered a Serious Injury

 

JOHN’S JERSEY JOURNAL
John R. Ewell

  • New Jersey’s Deemer Statute: Out-of-State Auto Policies Are Not Deemed to Provide PIP Benefits to Pedestrians Struck by New Jersey Drivers

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

  • No Excess Coverage for Late Reporting of Medical Malpractice Action

 

OFF THE MARK
Brian F. Mark
[email protected]

  • Washington Federal Court Finds “Occurrence” Resulting from Installation of Defective Pipes and Duty to Defend

 

BORON’S BENCHMARKS
Eric T. Boron

  • Business Interruption Coverage – Judgment for Insured After Jury Trial Affirmed

 

BARCI’S BASICS (ON NO FAULT)
Marina A. Barci

  • Attorney’s Fee Regulations under No-Fault Law are Rational

 

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

Legislative List

  • Assembly Proposes Repeal of Article 51 of the New York State Insurance Law of Some Other Insurance Product Yet Developed
  • Assembly Proposes Limitation on the Liability Faced by Schools Conducting In-Person Instruction

 

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

  • 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 the Costs of Defense

 

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

Heather Sanderson
Sanderson Law (Alberta, Canada)

[email protected]

  • Taking Flight: Canadian Airline Coronavirus Insurance Policies

 

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


10/08/20       Citizens Ins. Co. of America v. The American Ins. Co. 
Appellate Division, First Department
Burlington Strikes Again – Duty to Defend Additional Insured Based on Allegations; Premature to Determine Duty to Indemnify


The lower court properly determined that The American Insurance Company (“AIC”) had a duty to defend Sahara as an additional insured, because there is a reasonable possibility that coverage for Sahara, under the AIC policy, is implicated.
 
AIC's MultiCover endorsement of the commercial general liability policy, that "[a]ny person or organization is included as an additional insured, but only to the extent such person or organization is legally obligated to pay for bodily injury, property damage or personal and advertising injury caused by your acts or omissions." In Burlington, the Court of Appeals held that when an endorsement providing additional insured coverage, as here, "is restricted to liability for any bodily injury caused . . . by the acts or omissions of the named insured, the coverage applies to injury proximately caused by the named insured" Such endorsement, the Court of Appeals explained, is "intended to provide coverage for an additional insured's vicarious liability or contributory negligence, and to prevent coverage for the additional insured's sole negligence"  
 
Since the underlying personal injury complaint here contains allegations that all defendants, including Sahara, are liable for bodily injuries, and that all defendants, including Market Corner, were a proximate cause of those injuries, AIC's duty to defend is triggered.
 
However, it was premature to declare that defendant AIC is obligated to indemnify (as opposed to only defend) Sahara in an underlying personal injury action on a loading dock located on the property leased to Sahara. AIC's policy affords coverage to Sahara as an additional insured for bodily injury proximately caused by AIC’s named insured, which had an easement to use the leading dock but it has not yet been determined whether AIC's named insure.
 
10/07/20
       McGookin v. Berishai
Appellate Division, First Department
Plaintiff Could Not Compel SUM Carrier to Issue a “Consent to Settle” Letter

These actions arise from an accident that occurred on November 24, 2014 in the Bronx.  McGookin, a pedestrian, and several other people, were injured by a car driven by Berishai. McGookin sued Berishai for the personal injuries he had sustained, as did others. The parties settled in mediation and the settlement agreement was signed on September 7, 2018.
 
It appears that McGookin did not following the SUM conditions before he settled the claim, giving the insurer 30 days to offer to front the money, before he issued a release.  That’s Condition 10 in the SUM endorsement:
 
10.  Release or Advance: In accidents involving the insured and one or more negligent parties, if such insured settles with any such party for the available limit of the motor vehicle bodily injury liability coverage of such party, release may be executed with such party after thirty calendar days actual written notice to us, unless within this time period we agree to advance such settlement amounts to the insured in return for the cooperation of the insured in our lawsuit on behalf of the insured.
 
We shall have a right to the proceeds of any such lawsuit equal to the amount advanced to the insured and any additional amounts paid under this SUM coverage. Any excess above those amounts shall be paid to the insured.
 
Inexplicably, nobody seemed to pay attention to that provision in this decision.
 
On September 25, 2018, counsel for plaintiff sent a letter to Nationwide Mutual Insurance Company (“Nationwide”), his insurer, informing it that plaintiff had sustained personal injuries in a car accident and that he intended to pursue an underinsured motorist claim. Nationwide denied coverage on the ground of untimeliness.  That’s was one reason to deny coverage.  The other reason, if Nationwide knew about it, was because of the failure to seek consent prior to settlement.
 
On October 24, 2018, plaintiff moved, inter alia, to compel Nationwide to provide him with a consent-to-settle letter. There is no such provision in the SUM endorsement.  The lower court refused as Nationwide was not a party in the underlying lawsuit.  Good call.
 
On October 8, 2018, plaintiff filed a demand for underinsurance arbitration with Nationwide with the American Arbitration Association in Orange County, plaintiff's county of residence. Nationwide responded, as it should have, by moving before the Supreme Court, Orange County, to permanently stay arbitration.  McGookin f did not oppose the motion and Nationwide's stay application "on the ground of late notice of the accident and claim."
 
In February 2019, plaintiff commenced the action against Nationwide by petition and order to show cause to compel Nationwide to tender a consent-to-settle letter so that plaintiff could pursue the underinsured coverage he had through Nationwide. Supreme Court denied plaintiff's motion to compel Nationwide to provide a consent-to settle letter, on the basis of res judicata
 
The court properly denied plaintiff's motion to compel Nationwide to provide a consent-to-settle letter.  The Orange County action involved the same parties and the court in that action rejected plaintiff's claim against Nationwide for uninsured motorist.
 
10/07/20        DeLuca v. RLI Ins. Co.
Appellate Division, Second Department
Failure to Cooperate, Examined; Carrier Failed to Demonstrate “Willful and Avowed Obstruction”


DeLuca commenced this action for a judgment declaring that the defendant, RLI Insurance Company (“RLI”) was obligated to satisfy a judgment that she obtained against ML Specialty Construction, Inc. (“MLSC”), in an underlying action. DeLuca seeks to enforce the judgment that she obtained in the underlying action against the insurer pursuant to a marine and commercial general liability policy (“policy”) issued by RLI to MLSC.  RLI had denied coverage on lack of cooperation.
 
This was a “direct action” allowable by Insurance Law 3420(a)(2) by a judgment creditor against a carrier after it had obtained a judgment against an insured and it remain unpaid. The money judgment here was just under $300,000.
 
RLI contended that it was not obligated to satisfy the judgment in the underlying action because it had properly disclaimed coverage due to MLSC's refusal to cooperate.  
 
Where an insured's failure or refusal to cooperate is asserted by an insurer as a defense in an action pursuant to Insurance Law § 3420(a)(2), "the burden shall be upon the insurer to prove such alleged failure or refusal to cooperate" (Insurance Law § 3420[c][1]). "Since the defense of lack of co-operation penalizes the plaintiff for the action of the insured over whom he [or she] has no control, and since the defense frustrates the policy of this State that innocent victims . . . be recompensed for the injuries inflicted upon them, the courts have consistently held that the burden of proving the lack of co-operation is a heavy one indeed" .
 
Accordingly, "[t]o effectively deny coverage based upon lack of cooperation, an insurance carrier must demonstrate (1) that it acted diligently in seeking to bring about the insured's cooperation, (2) that the efforts employed by the insurer were reasonably calculated to obtain the insured's cooperation, and (3) that the attitude of the insured, after his or her cooperation was sought, [*3]was one of willful and avowed obstruction" Thrasher v United States Liability Ins. Co.
 
As a general matter, "[a]n insured's duty to cooperate is satisfied by substantial compliance" Mere efforts by the insurer and mere inaction on the part of the insured, without more, are insufficient to establish non-cooperation as 'the inference of non-co-operation must be practically compelling'.
 
The third prong may be established by an insurer's showing that its insured "engaged in an unreasonable and willful pattern of refusing to answer material and relevant questions or to supply material and relevant documents". Of course, once an insurer has "disclaimed liability under the policy the insured's duty to comply with the co-operation clause of the policy ceases"  
 
Here, the insurer contended that MLSC's principal, Michael Stoicescu, refused to cooperate and thereby breached the subject policy. The insurer did not allege that any other individuals associated with MLSC failed to cooperate. Although the insurer claimed that Stoicescu refused to cooperate in the underlying action, it is undisputed that he appeared for an examination before trial where he testified at length. The insurer failed to identify any information that Stoicescu refused to disclose, or any document that he refused to provide in connection with the underlying action.  The insurer's contention that Stoicescu refused to respond to certain telephone calls and letters was insufficient to show "an attitude of willful and avowed obstruction"
 
Furthermore, although the insurer submitted evidence to show that, after years of litigation, Stoicescu had stated during one or more telephone calls that he would not attend a trial in the underlying action, any such statements were made before a date for the trial had even been set and the insurer did not allege that Stoicescu actually failed to appear for any required court.
 
10/02/20       NHJB, INC., D/B/A Molly’s Pub v. Utica First Ins. Co.
Appellate Division, Fourth Department
An Assault by any Other Name is an Assault and Excluded under an “Assault and Battery” Exclusion


This action involving a dispute over insurance coverage arises from an incident that occurred in May 2014 during which Sager sustained fatal injuries when a bar manager at a nightclub shoved him, causing him to fall down an entire flight of stairs. The bar manager ultimately pleaded guilty to manslaughter in the first degree  and was sentenced to 18 years in prison.  The nightclub at issue was operated by plaintiff NHJB, Inc., doing business as Molly's Pub (collectively referred to as “Molly’s”), whose sole shareholder was plaintiff Norman Habib.
 
Utica First insured Molly’s and it disclaimed coverage when initially notified about the incident within days of its occurrence. After a personal injury action was commenced against Molly’s and Molly’s sought coverage from Utica First, which again disclaimed coverage, relying in large part on an assault and battery exclusion contained within the policy.
 
Molly’s then started this declaratory judgment action, alleging that Utica First is obligated to defend and indemnify plaintiffs in the underlying personal injury action. Defendant answered and asserted several counterclaims.  
 
Although the court concluded that the incident constitutes an occurrence under the terms of the policy, coverage for the incident is precluded by the policy's assault and battery exclusion.
 
In their motion for partial summary judgment, Molly’s contended that, inasmuch as the 27th cause of action in the underlying personal injury action seeks damages under a theory of premises liability, there is at least one cause of action that is not precluded by the assault and battery exclusion, and that defendant must therefore defend plaintiffs on all causes of action. The court disagreed, finding that all of the claims against plaintiffs in the underlying action are " 'based on' " or arise out of the bar manager's assault, "without which [the plaintiff in the underlying personal injury action] would have no cause of action" (Mount Vernon Fire Ins. Co. v Creative Hous., 88 NY2d 347, 350 [1996] Despite the conclusory allegations of premises liability, there is simply no suggestion that Sager fell of his own accord.   A determination on this issue need not await discovery in the personal injury action. The analysis of whether an exclusion applies "depends on the facts whichnare pleaded, not the conclusory assertions" contained in the underlying complaint.  

 

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


10/09/20        Downstairs Cabaret, Inc. v. Wesco Ins. Co.
Appellate Division, Fourth Department
No Coverage for Business Interruption where the Coverage is not Referenced, nor Otherwise Endorsed, on the Policy’s Declarations Page


The policyholder commenced this action seeking recovery for damages arising from flood.  In addition, the insured sought additional coverage for losses caused by the interruption to its business.  Wesco denied the request for business interruption where the coverage was not purchased.
 
The Appellate Division noted that upon review of the policy, the Declarations Page acknowledged coverage only “for which a Limit of Insurance is shown.”  Here, “[a]ctual loss of business income…is neither described nor limited by the declarations.”  Because business income coverage was not part of the declarations, it follows that coverage simply did not exist for the insured’s claims.  
 
10/07/20        Waknin v. Liberty Mutual Ins. Co.
Appellate Division, Second Department 
Coverage Properly Excluded for Unoccupied Premises Damaged in Fire 


This action arises out of a fire loss which occurred in September of 2011.  Over a year earlier, plaintiff’s previous insurer cancelled coverage on the subject premises because it was classified as a “vacant dwelling.”   Plaintiff then contacted Liberty Mutual insurance agent, DiPierna, to inquire about replacement coverage.  The application was executed on August 5, 2010, and subsequently renewed the following year, August of 2011.  
 
Upon receipt of notice of the fire, Liberty disclaimed due to a material misrepresentation in the application process.  Apparently, plaintiff represented the premises was “owner occupied” when, in fact, he did not reside there and hadn’t resided there for some time.  
 
Plaintiff responded by commencing this lawsuit asserting breach of contract and fraud against Liberty Mutual, and further asserting a Cause of Action for negligence against Agent DiPierna  On Liberty’s summary judgment, counsel produced evidence that the policy only provided coverage if it was used as a premises.  Here, the evidence established that no one lived at the location during the entirety of the time Liberty underwrote the risk. To that end,  Liberty produced a transcript of the plaintiff’s deposition, as well as an earlier statement of his to Liberty investigators, both of which acknowledged the premises was vacant since at least 2010.  
 
In addition, Liberty also produced a copy of the insurance application wherein plaintiff answered “no” to a question inquiring as to whether the premises was “under construction” or “undergoing significant renovation or remodeling.”  Thus, to the extent plaintiff argued the home was uninhabitable due to its condition, his argument was belied by misrepresentations on the application.  
 
Finally, plaintiff acknowledged that he had received a copy of the policy in both 2010 and 2011.  As such, he was deemed to have known coverage would not be extended for unoccupied premises.  As such, the Court affirmed the trial court’s decision which upheld Liberty’s denial of coverage.  
 
Plaintiff’s fraud claim was similarly disposed by summary judgment.  Plaintiff argued that he had relied upon Liberty and DiPierna’s assurances that coverage would attach.  Here, however, because plaintiff was provided with copies of the policy, he could not have justifiably relied upon any claim that coverage attached when it was plainly excluded by the action terms of the insuring agreement.
 
Finally, the negligence claims against DiPierna were dismissed.  DiPierna was able to establish that plaintiff only made a “general request” for homeowners’ coverage.  Neither DiPierna, nor Liberty, received a specific request that the policy be endorsed to provide coverage for vacant/unoccupied structures.  Where, as here, no special relationship existed between DiPierna and plaintiff, DiPierna was under no duty to provide further guidance on the type of policy plaintiff needed.  His duty was only to obtain the policy requested, which is what DiPierna clearly did here.   


 
DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley


10/01/20        Stickney v. Akhar, et al.
Appellate Division, First Department
Plaintiff’s Failure to Rebut Defendant Expert Claims that Injuries Were Preexisting Failed to Raise a Triable Issue of Fact


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.
 
On appeal the Appellate Court found that defendants established prima facie that plaintiff did not suffer a serious injury to her cervical or lumbar spine by submitting a neurologist's affirmed report finding that plaintiff had normal range of motion and that her alleged injuries had resolved. Defendants also submitted an affirmed report by an emergency medicine specialist who reviewed plaintiff's emergency room records and opined that those records were inconsistent with plaintiff's claimed injuries.
 
In opposition, the Appellate Court found that plaintiff failed to raise an issue of fact. Although her physician found recent limitations in range of motion of her cervical and lumbar spine, his opinion that the alleged injuries were caused by the accident was conclusory. He did not address the degenerative conditions found in plaintiff's own radiologist's MRI reports or explain why plaintiff's current symptoms were not related to the preexisting conditions.
 
Therefore, the Appellate Court held that defendants were entitled to the dismissal of the 90/180-day claim in the absence of evidence of a causal connection between plaintiff's neck and back conditions and the subject accident. Moreover, according to plaintiff's testimony, she was confined to home for only about six weeks after the accident. As such, plaintiff’s 90/180 claim was also dismissed.
 
10/06/20       Gomez v. Drew, et al.
Appellate Division, First Department
Plaintiff’s Failure to Rebut Defendant Expert Claims that Injuries Were Preexisting Failed to Raise a Triable Issue of Fact


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.
 
On appeal the Appellate Court found that the defendants established, through the injured plaintiff's own medical records, that her lumbar spine injuries, including a disc herniation, were not caused by the accident, but that she had a pre-existing condition for which she was already on disability leave from work before the accident. Defendants also established that plaintiff did not sustain a serious injury to her cervical spine, through the affirmed report of their radiologist who opined that X-rays taken after the accident showed only minor degenerative conditions and no evidence of traumatic injury.
 
The Appellate Court found that plaintiff failed to raise a triable issue of fact, as her doctors failed to address her preexisting lumbar conditions and explain why they were not the cause of her claimed serious injuries. Nor did her doctors provide any "objective basis or reason" to support a finding of aggravation of the preexisting lumbar conditions, or of any injuries different from those preexisting conditions. Furthermore, plaintiff submitted no objective medical evidence of injury to her cervical spine, and her own medical records showed she had normal range of motion in the cervical spine.
 
Accordingly, the Appellate Court ruled that given the absence of any injuries causally related to the accident, plaintiff's 90/180 day claim also fails. Plaintiff also failed to submit any evidence supporting her claim that she did not return to work after the accident due to a medically determined injury.


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


10/09/20       Carrier Corp. v. Allstate Ins. Co., et al.
Appellate Division, Fourth Department Fourth Department
Addresses Transfer of Insurance Coverage to Successor Companies and Analyzes Injury-in-Fact and Allocation in Asbestos Cases

Carrier Corporation and Elliott Company were once-related entities that have since faced numerous lawsuits relative to personal injuries that allegedly arose from exposure to asbestos in their products. In this declaratory judgment action, they sought coverage under a number of policies, including a fifth layer set of excess issued by Fireman’s Fund. Following various dispositive motions, the issues ultimately up for appeal. At issue in particular were mainly two things: 1) whether the corporate reorganization agreement that spun off Elliott’s predecessor business transferred from Carrier to Elliott the right to insurance coverage for liabilities arising out of business activities conducted by the predecessor prior to that date, and 2) what the trigger of coverage determination should be (whether injury-in-fact) and thus what the allocation method up the coverage tower should be.
 
First, the question of collateral estoppel came into play because the issue of the transfer of insurance rights was actually adjudicated by prior court decisions and Elliott was denied summary judgment on the matter at that time. However, the court here found that a denial of summary judgment did not necessarily mean an adjudication on the merits. Rather, "a summary judgment motion presents a snapshot of the proof at a moment in time, and the denial of such a motion establishes nothing except that summary judgment is not warranted at [that] time and does not constitute an adjudication on the merits. Further, [the court] concluded that, following extensive discovery in the action before [it], plaintiffs met their initial burden on the motion by establishing with extrinsic evidence in admissible form that, notwithstanding the ambiguity arising from the absence of an exhibit referred to in the reorganization agreement that ostensibly was to set forth the assets being transferred, the insurance rights were transferred to Elliott under the reorganization agreement.” As such, they were not collaterally estopped from making the arguments but rather the transferred of insurance rights indisputably occurred as a matter of law.
 
Secondly, the court addressed whether the injury-in-fact in an asbestos action occurs from the first date of exposure through death or the filing of a suit, thereby triggering each and every policy in effect from the date of exposure. To this point, the court wrote: “The subject excess policies obligate defendant to indemnify the insured for its ultimate net loss—all sums actually paid or which the insured is legally obligated to pay for covered damages after deduction of all recoveries or salvage—in excess of an umbrella policy, which covers personal injuries caused by or arising out of an occurrence. Following form of the umbrella policy, the subject excess policies define an occurrence to include ‘a continuous or repeated exposure to conditions which unexpectedly and unintentionally result in personal injury . . . during the policy period,’ and define personal injury, in relevant part, as ‘bodily injury (including death at any time resulting therefrom), mental injury, mental anguish, shock, sickness, disease, [and] disability.’ The parties do not dispute that the applicable test in determining what event constitutes personal injury sufficient to trigger coverage is injury-in-fact, ‘which rests on when the injury, sickness, disease or disability actually began.’ Rather, the parties dispute when an asbestos-related injury actually begins: plaintiffs assert that injury-in-fact occurs upon first exposure to asbestos, while defendant denies that assertion and instead maintains that injury-in-fact occurs only when a threshold level of asbestos fiber or particle burden is reached that overtakes the body's defense mechanisms.”
 
However, in this case the appellate court concluded that triable issues of fact remained because the medical expert reports that were submitted were contradictory. One claimed that asbestos damage occurs immediately after exposure, while the other opined that the harm only occurs when a threshold level of exposure is reached so as to overtake bodily mechanisms or functions. Since the issue ultimately was one of credibility, it had to be presented to a jury and not determined by a law judge.  
 
Finally, with respect to allocation, the Appellate Division said that the trial court “properly concluded that the losses among triggered policies must be allocated through the all sums method, which ‘permits the insured to collect its total liability . . . under any policy in effect during the periods that the damage occurred, up to the policy limits’. The non-cumulation and prior insurance provisions incorporated in the fifth-layer excess policies ‘plainly contemplate that multiple successive insurance policies can indemnify the insured for the same loss or occurrence by acknowledging that a covered loss or occurrence may 'also [be] covered in whole or in part under any other excess [p]olicy issued to the [insured] prior to the inception date' of the instant polic[ies],’ thus rendering all sums the appropriate allocation method. The court also properly concluded that vertical exhaustion— which "allow[s] the [i]nsureds to access each excess policy once the immediately underlying policies' limits are depleted, even if other lower-level policies during different policy periods remain unexhausted"—is required here”.  
 

JEN’S GEMS
Jennifer A. Ehman

 

09/30/20        RSUI Indem. Co. v. Aspen Specialty Ins. Co.
Supreme Court, New York County
Hon. Arlene P. Bluth Trial Court Concludes that Two Lawsuit Arising out of Exposure to Hepatitis from the Same Restaurant Employee Constituted Separate Occurrences

This decision arises out of exposure to hepatitis at a McDonald’s restaurant.  Plaintiff issued an umbrella policy to the franchise, and defendant issued a primary policy.  There were two underlying cases premises on the exposure/potential exposure to hepatitis.  One case was brought by the estate of a patron at the restaurant, Bennett, who alleged died after contracting HAV from an infected restaurant employee.  The other litigation involved class members who alleged that they purchased food from the restaurant and were potentially exposed to HAV by consuming food and drinks prepared by the infected employees.  The class members did not allege that they contracted HAV; rather, they endured various tests and vaccinations as a result of the potential exposure.   
 
The issue in this case is whether the who pieces of litigation arose from the same occurrence (thus both implicating the same per occurrence limit).  In grouping them together, defendant argued that all of the underlying plaintiff consumed food or drink at the same McDonald’s restaurant from October 31, 2015 through November 8, 2015, and the event that gave rise to each of the allegations was the alleged manufacture of the contaminated food over a nine-day period.  This defendant argued established a close temporal and spatial relationship between the incidents.  It also argued that grouping language was not necessary for the court to conclude that the multiple incident of potential exposure constituted a single occurrence.  In opposition, plaintiff argued that the determinative factor was that the plaintiffs were injured by separate meals.    
 
Applying the unfortunate events test, since the policy did not contain aggregating or grouping language, the court concluded that the Bennett matter and the class action were separate incidents for purposes of the subject insurance policy.  The court equated the situation to individual exposure to asbestos constituting separate occurrences.  While the court acknowledged the common cause – the McDonald’s employee who allegedly spread HAV to customers – it concluded there was no close temporal or spatial relationship that would justify viewing these incidents as arising out of a single occurrence.  The infected employee served people on different days and, as the parties admitted, the Class Action concerned potentially exposed individuals (none of whole claimed that they had been infected) while the Bennett case alleged wrongful death from HAV exposure.  Simply because the potential exposure came from the same source does not compel a finding that it was a single occurrence under the facts presented here.
 

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


10/07/20       VanNostrand v. New York Cent. Mut. Fire Ins. Co.
Appellate Division, Second Department
Insurer Had Rational Basis for Concluding Jury in the Underlying Action would Conclude that Plaintiff had not Suffered a Serious Injury


In 2000, the plaintiff commenced an underlying action against Mario Froehlich, among others, to recover damages for personal injuries she sustained in a September 1999 automobile accident. After a jury trial, she eventually obtained a judgment in the principal sum of $300,000. In exchange for the plaintiff agreeing not to seek recovery from Froehlich in excess of his liability insurance policy limit of $100,000, Froehlich assigned to the plaintiff his rights to any bad faith claim he may have against his insurer New York Central Mutual Fire Insurance Company.
 
The plaintiff and Froehlich thereafter commenced this action against New York Central alleging bad faith failure to settle within the policy limits.  New York Central moved for summary judgment.  The lower court denied the motion, but the Second Department reversed and granted the motion.  The evidence submitted by the defendant established that it had a rational basis for concluding that a jury in the underlying action could find that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident, which would preclude her from recovery in the underlying action.
 
Specifically, the defendant monitored the plaintiff's claim in the underlying action and, among other things, retained expert physicians to examine the plaintiff and review the MRI films of her spine. One of the defendant's experts concluded that the alleged disc herniation at L5-S1 did not involve any root impingement. As far as the alleged disc herniation at C3-C4 was concerned, the defendant's expert found no herniation and, at most, a bulge. Moreover, it was undisputed that the plaintiff returned to work within one month of the accident and did not seek recovery for lost wages. It was further undisputed that as of November 2001, two years after the accident, and at the time of trial in April 2013, the plaintiff was not taking any medication or undergoing any further treatment. In opposition, the plaintiff failed to raise a triable issue of fact.  


JOHN’S JERSEY JOURNAL
John R. Ewell

 

10/07/20       Washington v. Progressive Ins. Co.
New Jersey Superior Court, Appellate Division
New Jersey’s Deemer Statute: Out-of-State Auto Policies Are Not Deemed to Provide PIP Benefits to Pedestrians Struck by New Jersey Drivers

On January 30, 2019, plaintiff, Don Washington drove his car from his home in New York state to North Bergen. After shopping and exiting a store, plaintiff walked in a crosswalk toward his parked car when he was struck by another
 driver and injured. Plaintiff applied for personal injury protection (PIP) benefits under his New York policy, which contained a $50,000 limit on PIP benefits. Progressive paid PIP benefits on plaintiff's behalf, ultimately exhausting the policy limits. Plaintiff sued Progressive. Noting Progressive was authorized to conduct business and issue automobile insurance policies in New Jersey, plaintiff asserted that N.J.S.A. 17:28-1.4 (the Deemer Statute) applied and required reformation of his policy to provide coverage up to New Jersey's mandatory PIP policy limits, i.e., $250,000. See N.J.S.A. 39:6A-4(a).
 
Progressive moved to dismiss the complaint in lieu of filing an answer. It argued that the Deemer Statute did not apply because plaintiff was a pedestrian at the time of the accident.
 
Progressive cited the Appellate Division’s decision in Leggette v. Government Employees Insurance Co., in which, on similar facts, the Court held that  "an outof-state automobile policy is [not] deemed by N.J.S.A. 17:28-1.4 to provide PIP benefits when the named insured is injured by a New Jersey driver while a pedestrian." 450 N.J. Super. 261, 267 (App. Div. 2017). Because plaintiff had exhausted the benefits under his New York policy, Progressive argued dismissal was appropriate.
 
Plaintiff argued that Leggette rested on erroneous interpretations of both the Deemer Statute and N.J.S.A. 39:6A-4 and, therefore, was wrongly decided. The trial court dismissed Progressive, and plaintiff appealed.
 
In relevant part, the Deemer Statute provides:

[a]ny insurer authorized to transact . . . automobile . . . insurance business in this State . . . which sells a policy providing automobile . . . liability insurance coverage, or any similar coverage, in any other state . . . shall include in each policy coverage to satisfy at least the personal injury protection benefits coverage pursuant to [N.J.S.A. 39:6A-4] . . . 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 Court explained that the Deemer Statute "was in response to a growing number of cases where New Jersey residents were injured in accidents caused by out-of-state drivers whose insurance coverage was less than New Jersey's statutory requirements" and was intended "to reduce the demands on the Unsatisfied Claim and Judgment Fund."
 
N.J.S.A. 39:6A-4 requires:

every standard automobile liability insurance policy . . . shall contain personal injury protection benefits for the payment of benefits without regard to negligence, liability or fault of any kind, to the named insured . . . who sustain[s] bodily injury as a result of an accident while occupying . . . or using an automobile, or as a pedestrian, caused by an automobile or by an object propelled by or from an automobile[.]
 
(Emphasis added).

Every policy must provide for the payment of PIP benefits "in an amount not to exceed $250,000 per person per accident." N.J.S.A. 39:6A-4(a).
 
Plaintiff argued that the Deemer Statute's specific reference to N.J.S.A. 39:6A-4, and, in turn, that statute's specific reference to mandatory PIP coverage for injuries to "a pedestrian[] caused by an automobile[,]" means he was entitled to PIP benefits in an amount greater than the policy limits of his New York policy. The Appellate Division rejected that syllogism in Leggette, and reaffirmed that rejection in this case.
 
The Appellate Division explained that “requiring [the insurer] to provide greater PIP coverage than was purchased by plaintiff — its New York insured — simply because plaintiff used his car to cross the state line into New Jersey runs counter to the various legislative goals of the Deemer Statute.”
 
No case in the history of New Jersey’s jurisprudence suggests that the Legislature intended to provide out-of-state residents with increased PIP benefits when injured as a pedestrian simply because they had driven their cars into New Jersey. Simply put, the goal of the Deemer statute is to protect New Jersey residents by deeming out-of-state policies to have the state’s minimum liability coverage. It is not to provide additional first-party benefits to out-of-state residents, who could have purchased higher coverage limits if desired. Judgment for the insurer affirmed.  
 

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

 
10/09/20    Day Kimball Healthcare, v. Allied World Surplus Lines Ins. Co.
United States District Court, District of Connecticut
No Excess Coverage for Late Reporting of Medical Malpractice Action


Meagan Corona gave birth to her daughter at Day Kimball Hospital, in Putnam, Connecticut, in 2013. The infant was diagnosed with cerebral palsy and transferred to the neonatal intensive care unit at UMass Medical Center. In 2015, the family sued Day Kimball and the delivering doctor for negligence in the management of the labor and delivery of the infant, claiming that the baby suffered an avoidable brain injury that caused the CP. The suit also alleged that a surgical sponge was left in the mother, requiring surgical removal and related injuries. AWAC afforded first layer umbrella coverage over a series of primary covers, including a Lexington professional liability policy. Steadfast Insurance afforded a second layer umbrella on a follow-form basis to the AWAC policy.   The professional liability policies, as is typical, were issued on a claims made and reported basis, meaning that there is coverage only for claims first made and reported during the applicable policy period regardless of when wrongful acts occurred. The hospital and doctor reported the birth incident to Lexington the day after the delivery, but notice was not provided to AWAC and Steadfast until March 2017, well after the commencement of the on-going malpractice action. The umbrella carriers denied coverage and this coverage action followed.   Addressing the carriers’ motion to dismiss, the District Court held that the hospital and doctor were not entitled to coverage. Judge Dooley, in a footnote, disposed of the insureds’ claim for excess malpractice coverage. “In the Complaint, Plaintiffs assert that they have coverage under Insuring Agreement A. There is no question that Insuring Agreement A provided excess coverage for the professional liability policy under which Lexington is currently defending the Plaintiffs. In its motion to dismiss, therefore, Allied World expended considerable effort to demonstrate, and did so persuasively, that as a “claims-made and reported policy” coverage would only be provided for claims made within the applicable policy period, regardless of when the events giving rise to the claims occurred. The Plaintiffs did not make any claim in connection with the underlying lawsuit within the applicable policy period. Accordingly, the Plaintiffs do not have coverage under Insuring Agreement A.”   The insureds argued that they were also entitled to coverage under the occurrence-based Insuring Agreement C, which provides excess coverage for employee benefits related claims. The insureds’ arguments truly strained credulity.   Insuring Agreement C provided: “The Insurer will pay on behalf of the Insured, subject to the Limit of Liability set forth in the Declarations, Loss and Defense Expenses in excess of the Applicable Underlying Limit for the insurance identified in Items 3 and 4 of the Schedule of Underlying Insurance which the Insured becomes legally obligated to pay as a result of a Claim covered by such Scheduled Underlying Insurance.” Item 3 was identified as Employee Benefits coverage and Item 4 Automobile Liability coverage. As the court pointed out, AWAC’s scope of coverage was defined by the Schedule of Underlying Insurance.
 
The Plaintiffs argued that reading the policies as a whole, Insuring Agreement C's use of the word “insurance” instead of “coverage” meant that Insuring Agreement C provides excess coverage for all matters covered by the Lexington Policy, to include the underlying lawsuit. Since Insuring Agreement A refers to the “coverage identified in Item 1 of the Schedule of Underlying Insurance,” and Insuring Agreement C refers to the “insurance identified in Items 3 and 4 of the Schedule of Underlying Insurance,” the scope of Insuring Agreement C is coextensive with the Lexington Policy.    Judge Dooley agreed with all of you that this is a ridiculous argument. “The use of two largely interchangeable words does not create ambiguity nor upend the clear structure set-up by the relationship between the Schedule of Underlying Insurance and the individual Insuring Agreements. The Insuring Agreements specifically identify the item or items within the Schedule of Underlying Insurance to which they provide excess coverage. The Schedule of Underlying Insurance then specifically and unambiguously identifies, among other attributes, the type of coverage and the underlying policy to which each item refers. To find that the word “insurance” rather than “coverage” in the scope of coverage provision of Insuring Agreement C subverts the plain structure of the Allied World Policy would require the court to “torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity[.]”   The motion to dismiss was granted and we would be truly embarrassed for the profession if an appeal to the Second Circuit was pursued.   

OFF THE MARK
Brian F. Mark
[email protected]


10/09/20       The Phoenix Ins. Co. v. Diamond Plastics Corp.
United States District Court, Western District of Washington 
Washington Federal Court Finds “Occurrence” Resulting from Installation of Defective Pipes and Duty to Defend


This declaratory-judgment action arises out of an underlying construction defect action related to pipe provided for a construction project.  The underlying plaintiff, H.D. Fowler Company (“Fowler”), the pipe supplier for the project, brought suit against Diamond Plastics Corporation (“Diamond”) alleging that the pipes Diamond provided for the project “suddenly and physically failed as workers attempted to install it” and that during the process of removing the damaged pipe, “other property at the site was physically damaged” and “portions of the project site could not be used for construction.”
 
The Phoenix Insurance Company (“Phoenix”) provided Diamond commercial general liability insurance.  Phoenix commenced a declaratory-judgment action seeking a declaration that it had no duty to defend Diamond in the underlying action.  Diamond filed a motion for partial summary judgment seeking a declaration that Phoenix had a duty to defend it in the underlying action.
 
After reviewing a carrier’s duty to defend in Washington, the Court looked to the allegations of the underlying complaint and the policy issued to Diamond.  The Diamond policy applies to "those sums that [Diamond] becomes legally obligated to pay as damages" because of "bodily injury" or "property damage" caused by an "occurrence."  An "occurrence" is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." 

In opposition to Diamond’s motion, Phoenix argued that Diamond's alleged delivery of defective pipe was not an "accident" and, therefore, the events at issue did not constitute an "occurrence."  In support of its motion, Diamond relied on Washington case law holding that unintentional mis-manufacture of a product constitutes an “occurrence” and that negligent construction and negligent design claims fall within the definition of a fortuitous event.   
 
Based on its review of the underlying complaint and the policy, the Court determined that the underlying complaint alleged an “occurrence” as defined under Washington law.
 
The policy defines "property damage" as "[p]hysical injury to tangible property, including all resulting loss of use of that property" and "loss of use of tangible property that is not physically injured."  The underlying complaint alleged that during the process of removing Diamond's faulty pipe, other property at the project site was physically damaged.  The Court found that the underlying complaint articulated "property damage," as defined under Washington law.  Therefore, the Court held that absent an applicable policy exclusion, Phoenix had a duty to defend Diamond.
 
In a further effort to avoid coverage, Phoenix asserted a number of exclusions.  Phoenix first points exclusion k., which excludes coverage for "'[p]roperty damage' to 'your product.'"  As the underlying complaint alleged injury based upon damage to the construction site, i.e., other property—not damage to Diamond's property, the Court found exclusion k. to be inapplicable.
 
Phoenix next looked to exclusion m., which bars coverage for "'property damage' to 'impaired property' or property that has not been physically injured."  However, the underlying complaint alleged that "the project site was physically damaged" during the removal of the damaged pipe.  As such, the Court found that exclusion m. did not apply.
 
Phoenix also pointed to exclusion n., which bars coverage for "[d]amages claimed for . . . the . . . recall . . . removal or disposal of . . . 'your product' . . . if such product . . . is withdrawn or recalled from the market . . . from use . . .
 
because of a known or suspected defect, deficiency, inadequacy or dangerous condition in it."  The Court noted that Phoenix failed to point to any authority applying the recall exclusion in the manner Phoenix was attempting to do.  Conversely, Diamond cited to cases declining to bar coverage under this provision when, like here, a product is not actually recalled from the market.  Accordingly, the Court held that exclusion n. did not apply.
 
Lastly, Phoenix pointed to exclusion j., which excludes coverage for "'[p]roperty damage' to . . . [t]hat particular part of any property that must be restored, repaired or replaced because 'your work' was incorrectly performed on it."  According to the policy, "your work" means "[w]ork or operations performed by . . . and [m]aterials . . . furnished in connection with such work."  However, the Court noted that the underlying complaint did not allege that Diamond performed any work at the job site, only that Diamond shipped pipe to be installed at the site and that upon installation it "suddenly and physically failed."  As such, the Court determined that exclusion j. was inapplicable.
 
Accordingly, the Court held that Phoenix had a duty to defend Diamond in the underlying action and thus, granted summary judgment in favor of Diamond.

BORON’S BENCHMARKS
Eric T. Boron


10/02/20       XL Ins. America Inc v. Noranda Aluminum Holding Corp. 
Supreme Court of Delaware 
Business Interruption Coverage – Judgment for Insured After Jury Trial Affirmed 


This is, for an insurance coverage geek, an interesting albeit lengthy opinion.  It is an interesting read for those who deal with business interruption coverage claims.  My general summary of the lengthy opinion follows.   Following two operation-disabling accidents, Noranda Aluminum Holding Corp (“Noranda”) - an insured aluminum-products manufacturer whose “all-risks” property-insurance policy included business-interruption coverage - did not rebuild its damaged facility and consequently did not resume operations.  Noranda and its insurers agreed that the failure to rebuild and resume operations does not negate the business-interruption coverage. But when Noranda submitted its business-interruption claim, the parties could not agree on how to calculate Noranda’s “gross-earnings loss”, which is the measure of the insurers’ liability under the relevant policy. A lawsuit in the Superior Court ensued. After a seven-day trial, the jury found in favor of Noranda, and the insurers appealed.   At trial in the Superior Court, the proverbial “battle of the experts” was put forth for juror consideration.  Noranda’s damages expert relied upon a model measuring Noranda’s gross-earnings loss by comparing the value of Noranda’s production had the accident not occurred with the value of its production after the accidents had it repaired and resumed operations with due diligence. In opposition, the insurers contended Noranda’s expert’s model is inconsistent with the policy's formula for calculating gross-earnings loss and that it grossly exaggerated the amount of the insured's claim. The insurers also challenged Noranda’s expert's factual assumptions and claimed he improperly included amounts that Noranda had waived in an earlier property-damage settlement.    Noranda elected to pursue its business-interruption loss under the GROSS EARNINGS formula of the Policy, which provides that Noranda's loss is to be measured as follows:  

1) The recoverable GROSS EARNINGS loss is the Actual Loss Sustained by the Insured of the following during the PERIOD OF LIABILITY:  

a) Gross Earnings; 
b) less all charges and expenses that do not necessarily continue during the interruption of production or suspension of business operations or services;  
c) less ordinary payroll; and  
d) plus all other earnings derived from the operation of the business.  
e) Ordinary Payroll ... to the extent such payroll continues following the loss and would have been earned had no such interruption happened.   

The Policy defines the “PERIOD OF LIABILITY” of a business-interruption claim as the period beginning at the time of the accident and “ending when with due diligence and dispatch the building and equipment could be: 

i) repaired or replaced, and
ii) made ready for operations, under the same or equivalent physical and operating conditions that existed prior to the damage.”

The Policy defines “Gross Earnings” as “the net sales less cost of all raw stock, materials and supplies used in such production.”    The parties retained opposing expert forensic accountants who each calculated Noranda's business-interruption loss. Noranda retained Christopher Hess, and the Insurers retained Peter Karutz.    The parties agreed that subpart (a) of the GROSS EARNINGS formula (the “Gross Earnings Component”) was designed to measure the insured's loss of Gross Earnings during the PERIOD OF LIABILITY. In calculating the Gross Earning Component, the parties further agreed that a comparison should be made between Noranda's Gross Earnings if the accidents had not occurred (the “But For World”) with Noranda's Gross Earnings if the accidents occurred and Noranda made repairs (the “Hypothetical Repair World”). Both parties reasoned that this was the appropriate comparison for determining the Gross Earnings Component because the Policy requires Noranda to mitigate its losses. The parties further agreed that, had Noranda repaired the Smelter, Noranda's Gross Earnings would gradually ramp up—increasing production thereby reducing its earnings loss—as the two frozen pots were brought back into operation. Thus, Noranda's Gross Earnings loss would gradually decrease over the PERIOD OF LIABILITY.  

The parties differed, however, as to whether the comparison between the But For World and the Hypothetical Repair World applied to all components of the GROSS EARNINGS formula. According to Hess, Noranda's expert, this comparison applied across all parts of the GROSS EARNINGS formula. According to Karutz, the Insurers’ expert, the But For World and Hypothetical Repair World comparison only applied to the Gross Earnings Component, not to subpart (b) (the “Charges and Expenses Component”) or subpart (c) (the “Payroll Component”).  

On appeal, the Insurers made three arguments, all challenging the admissibility of Hess's testimony before the jury. First, the Insurers contend that Hess's damages calculation was inconsistent with the Policy's GROSS EARNINGS formula because it included labor expenses associated with the hypothetical restart of the Smelter. (Supreme Court’s opinion stated it understood “the Insurers’ principal methodological complaint to be that, although Noranda's hypothetical earnings during the liability period—including those associated with a gradual restart of the potlines—should be taken into account, thereby reducing its gross-earnings loss, the labor expenses that would necessarily be incurred to generate those earnings should not”). Second, the Insurers argued Hess's damages calculation was based on such facially unreliable factual assumptions as to render it inadmissible as a matter of law. Finally, the Insurers argued Hess's calculation included damages that Noranda had waived as part of the propertydamage settlement.  

Noranda cross-appealed the trial court's judgment as a matter of law regarding the electrical expense associated with restarting repaired pots, arguing that, because that expense was associated with restarting the pots and not repairing the pots, it is an ordinary expense covered by the GROSS EARNINGS formula.  

The Supreme Court of Delaware affirmed the entirety of the result in the Superior Court, holding:  Noranda’s expert's damages model was consistent with the relevant policy provisions; the trial court's determination that the factual assumptions made by the expert were sufficiently reliable for the jury to consider was not an abuse of discretion; the insurers’ claim that the earlier propertydamage settlement precluded a portion of the insured's recovery is without merit; and, the Superior Court correctly concluded Noranda’s increased electrical expense was not, as presented, properly added to Noranda’s gross-earnings loss.  

One take away (and, of course, there are others in this lengthy opinion). Jury findings are nearly sacrosanct on appeal. The following from the Delaware Supreme Court’s opinion reflects this truism:   

“Admittedly, it might seem counter-intuitive that Noranda would keep their employees on the payroll during a lengthy plant shut down. But the evidence in the form of a historical precedent and Hess's experience supported that assumption. And that same history and experience provided a basis, rooted in the evidence, for the increased labor expense during the hypothetical ramping-up period. Having failed to persuade the trial court that these assumptions were mere “guesswork,” the Insurers were free to cross-examine Hess vigorously (they did) and make their argument to the jury (they did that as well). That the jury found Hess's assumptions more credible than the Insurers’ critique of them does not provide a basis for reversal.”  


BARCI’S BASICS (ON NO FAULT)
Marina A. Barci


10/07/20       Matter of CIP Physical Therapy, P.C. v. Lawsky
Appellate Division, Second Department
Attorney’s Fee Regulations under No-Fault Law are Rational 


CIP brought this proceeding to challenge the revisions to 11 NYCRR 65-4.6 regarding payment of attorney’s fees under the no-fault insurance law. Insurance Law § 5106(a) states that if a valid no-fault claim is overdue, the claimant shall recover reasonable attorney’s fees for services necessarily performed in securing payment of the overdue claim. Prior to February 2015, the regulations provided a minimum attorney’s fee of $60, generally limited to 20% of the benefits plus interest awarded by the arbitrator or court, up to $850. Subsequently, the statute eliminated the minimum fee and raised the maximum fee to $1,360. The maximum fee does not apply in cases that present novel or unique issues that involve varied and extraordinary skills.  
 
CIP argued that the new regulations were contrary to § 5106(a), irrational, and that the elimination of a minimum fee makes it impossible to attorneys to receive reasonable compensation for low-value claims. The Court found that the maximum fee was appropriate because it does not apply to complex cases, and that the elimination of the minimum fee was rational because attorney’s were manipulating claims, i.e. separately prosecuting multiple claims for the same patient at the same provider to obtain multiple fees, and thus CIP’s petition was denied. 



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


Legislative List

 
10/07/20       Proposed Repeal of New York State No-Fault
New York State Assembly
Assembly Proposes Repeal of Article 51 of the New York State Insurance Law Of Some Other Insurance Product Yet Developed


Last week, a bill was introduced in the New York State Assembly (A11026) that would repeal New York’s no fault insurance system in five years. Specifically, Section 1 of the bill provides in its entirety that “Article 511 of the insurance law is REPEALED.”  
 
Under Article 51 of the New York Insurance Law, vehicle owners are required to maintain personal injury protection as part of their overall automobile insurance. The New York Court of Appeals has indicated that the no-fault legislative scheme “reflects a felt need to provide a more adequate and efficient system of financial responsibility for compensating victims of automobile accidents.” American Transit Ins. Co. v. Abdelghany, 80 N.Y.2d 162 (1992). “No fault” coverage is intended to allow for the quick payment of medical expenses, lost earnings and other out-of-pocket expenses resulting from injuries sustained in an accident, regardless of fault.
 
However, the Sponsor Memorandum indicates that some states like Nevada, Georgia, Connecticut and Colorado have repealed their no-fault laws in favor of other models. In framing the purpose of this bill, the Sponsor Memorandum provides that:


“policymakers, consumers and members of the industry have all raised substantial questions regarding the efficacy, integrity and general success of no-fault insurance in New York and in other states as well. Advocates for comprehensive no-fault reform have demonstrated its failures, including abuse due to fraudulent claims and activities, sky-rocketing premiums and costs, questionable benefit thresholds, protracted processes and redundancy in primary health insurance.”


In setting a five-year sunset for Article 51 following this bill’s passage, its indicated that the industry, consumers and regulators would be provided ample opportunity to “wind down and develop a better insurance product and structure for all New York drivers.” Within 60-days of its passage, DFS would be directed to review and recommend additional changes to any law that may require amendment or repeal due to the repeal of Article 51.
 
10/07/20       Proposed Liability Protections for In-Person Instruction 
New York State Assembly
Assembly Proposes Limitation on the Liability Faced By Schools Conducting In-Person Instruction


The Assembly proposed a new bill (A11025) that would limit the liability of school districts that are compliant with New York State re-opening guidelines issued by the New York State Departments of Education, Health, and the Governor’s Office.
 
There has been much discussion since the pandemic began regarding the implementation of certain liability protections for medical providers, businesses, employers and others due to the widespread nature of COVID-19 and its crippling impact on the economy. With the reopening of schools, questions abound regarding the adequacy of protections afforded to students, teachers, administrators and others.  
 
According to the Sponsor Memorandum:

“This bill would protect school districts that conduct inperson instruction from litigation, as long as they adhere to Governor Cuomo's Executive Orders and the New York State Departments of Education and Health guidelines. Without this pertinent legislation, small school districts in our state are at risk of falling into deeper economic trouble than this health and economic crisis has put them in.”
 

Section 1 of the proposed bill indicates that “any school that holds in-person instruction in compliance with individual school plans approved by the state . . . . shall not be liable for any damages due to a person contracting novel coronavirus, COVID-19, while attending such in-person instruction.”
 
If passed, this bill would take effect immediately.

 

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


08/14/20       E.F. v. Diocese of Brooklyn
Supreme Court of the State of New York, Kings County
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 the Costs of Defense


Plaintiff commenced this action under the CVA, however, unlike most CVA lawsuits plaintiff brough this suit to recover against defendant based on negligent acts which occurred in Florida. According to plaintiff’s complaint, her was abused by Fr. William Authenrieth, whose career began in the Diocese of Brooklyn in 1962 before Fr. Authenrieth was transferred to the Diocese of Orlando in 1973. The complaint alleges, inter alia, that Fr. Authenrieth was a known sexual abuser while in Brooklyn and that his reassignment was made because of his sexual misconduct with children. Defendant moved to dismiss plaintiff’s complaint pursuant to CPLR § 3211(a)(5) and § 202. Plaintiff, predictably, opposed.  
 
Defendant argued that the CVA necessarily applies to violations of the New York Penal Law, and therefore does not implicate criminal conduct that occurred outside of New York. Furthermore, even if the court found that the plain language of the CVS does not preclude plaintiff’s lawsuit, New York’s borrowing statute, CPLR § 202, does as it would require the lawsuit to be timely under both New York and Florida’s statute of limitations. While defendant did not argue the suit was untimely under New York law, it did argue that the suit was untimely under Florida law.  
 
Plaintiff argued that the legislative history of the CVA “does not demonstrate an intent to limit the statute by excluding the claims of nonresidents where, as alleged here, a New York defendant harbored a known sexual predator and then affirmatively transferred him to prey on children in another state.” Plaintiff contended that because Fr. Authenrieth worked as a priest in defendant’s parishes the suit is valid based upon the legislatures intent to hold New York Defendants, and as defendant’s actions allegedly led to plaintiff’s abuse, the defendants should be held liable under New York Law.    
 
The court first analyzed the language of the CVA itself. The CVA requires that a revived action be based upon conduct “which would constitute a sexual offense as defined in article [130] of the penal law.” Therefore, the court concluded that the CVA’s application is prompted by specific criminal acts within New York, as defined by New York’s Legislature. The court the followed that analysis concluding that none of the identified sections of New York’s Penal Law apply to criminal conduct that occurred in Florida, therefore plaintiff’s claims were improper under the CVA. The court then solidified this point by quoting from the CVA’s sponsor memo, which clearly indicates that the CVA was designed to help survivors of sexual abuse in New York State. Therefore, the court found dismissal was proper under the CVA.
 
Moving onto CPLR § 202 the court determined that even if plaintiff’s claim could survive under the CVA it would be barred by § 202. The court held that CPLR §202 provides that a cause of action is timely if it is timely under both the statute of limitations of New York and of the jurisdiction in which the cause of action accrued. Plaintiff’s negligence claims accrued in 1978 when the last alleged assault occurred. Even though plaintiff argued that the doctrines of fraudulent concealment and equitable estoppel tolled his claims under Florida’s statute of limitations, even if this court afforded plaintiff every favorable inference and applied such a toll, Florida’s four-year statute of limitations expired well before plaintiff commenced this action in 2019.  
 
Defendant’s motion was then granted, and this action dismissed.  
 

CARA’S CANADIAN AND CROSS-BORDER CONNECTIONS (WITH HEATHER SANDERSON)
 
Heather Sanderson Sanderson Law (Alberta, Canada)
[email protected]  

 

Taking Flight: Canadian Airline Coronavirus Insurance Policies
 
Airlines line Emirates and Virgin began offering free COVID-19 coverage. This is not surprising given travelers’ concerns or restrictions regarding air travel that has led to devastating losses of revenue and jobs for many airlines. With the holidays quickly approaching, or already here for our Canadian friends (happy belated Thanksgiving!), airlines are trying to ease would-be fliers’ concerns over traveling within or outside of the country. Most recently, Air Canada and WestJet have also begun offering coronavirus travel protection. For those thinking it may be worth getting on a plane and feel comforted by the notion of coronavirus insurance, it is still important to understand what these policies will and will not cover because if it sounds too good to be true, it probably is. Take for example Air Canada’s policy. Air Canada’s policy is issued by The Manufacturers Life Insurance Company (Manulife) and includes the following exclusions and limitations:

  • Coverage is limited to residents of Canada. 
  • Coverage is limited to trips outside Canada which are 21 days or less in length.
  • The policy does not provide any insurance for one-way tickets. 
  • The traveler must be covered by a government health insurance plan for the entire duration of their trip.
  • Coverage may be limited to claims related to pre-existing medical conditions (including any disease or sickness, including symptoms of undiagnosed conditions), whether disclosed or not. 
  • The policy does not provide any insurance related directly or indirectly to cruises.
  • Coverage may be cancelled or changed by the carrier at any time without notice.

 
One notable condition requires travelers who fall ill to obtain pre-approval for medical treatment related to the coronavirus:  
 
… must call the Assistance Centre before obtaining emergency treatment, so that we may provide pre-approval of treatment. If it is medically impossible for you to call prior to obtaining emergency treatment, we ask that someone call on your behalf as soon as possible. Otherwise, if you do not call the Assistance Centre before you obtain emergency treatment you will have to pay 20% of the eligible medical expenses we would normally pay under this insurance.1
 
WestJet has also started offering a similar policy, underwritten by North American Air Travel Insurance Agents Ltd. (d/b/a TuGo)2. WestJet’s policy provides similar limitations and excludes: 

  • Coverage is only available for travel that starts and ends between September 18, 2020 and August 31, 2021. 
  • Coverage is not limited to only residents of Canada. Those visiting Canada and traveling on a WestJet flight (including codeshare flights booked and ticketed by WestJet) or vacation package are eligible for coverage. However, residents of Canada are only eligible for coverage is traveling outside of Canada. 
  • Coverage terminates on the 21st day of a round-trip ticket, but WestJet’s policy does provide coverage for one-way trips and such coverage is terminated on the 7th day from departure date.

 
A brief review of these two policies shows that not all coronavirus insurance policies are equal. The lure of having some level of reassurance on your travel plans during this time is understandably enticing, but it is imperative to know what you are getting if insurance is a factor when deciding to travel by plane. At this time, it does not appear any American airlines have begun offering coronavirus insurance. 
 
1 https://www.aircanada.com/content/dam/aircanada/portal/documents/PDF/en/emergency-medicalcertificate-insurance_en.pdf
2 https://www.westjet.com/assets/wj-web/documents/en/westjet_certificate_2020-09.pdf

 

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