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Coverage Pointers - Volume XXIII, No. 11

Volume XXIII, No. 11 (No. 603)
Friday, November 12, 2021
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 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.  We want to make your life easier, help you solve your problems and provide you with the tools you need to succeed in what you do.

We do love reaching out to you on Fridays, bringing you the latest and greatest coverage decisions from around New York, Connecticut and elsewhere in the country.  Don’t forget to tell your colleagues and friends about our publication(s). They do make great holiday gifts.

Interesting case on policy rescission based on misrepresentations out of the Second Department that was decided on November 10.  It’s in my column (Thandi).  Even an innocent misrepresentation can lead to a homeowners policy rescission if the insurer would not have issued that policy had it known the truth.

Upcoming CLE – I’m speaking at the DRI ICPS in NYC:

I am always honored to be invited to speak at the DRI Insurance Coverage and Practice Symposium.  This year’s program is being held, live, at the Sheraton New York Times Square Hotel on December 9-10.   Click here to register:

This year, I’ll be on the dais, talking about:

Sex Abuse Claims
Analyzing coverage for child victim sex abuse cases can be challenging. Because many states have revival statutes, old policies are triggered. This session will detail strategies to streamline the identification of policies at issue and will address related allocation issues

Dan D. KohaneHurwitz & Fine, PC, Buffalo, NY

Other Training Programs:

Also, mark your calendar for the PLRB Claims Conference and Expo to be held in San Antonio on April 3-6, 2022.  John Hanlon and I will be presenting on risk transfer (contractual liability and additional insured claims).  Stay tuned.

About twice a month, our coverage group puts on some kind of a training program, either for a national, state, or local bar organization, for a trade group, or a regional or local claims conference, or for an insurer who has requested training.  As you look ahead to 2022, reach out.  Here are some topics on which we’ve provided continuing education in the past:

Casualty/Liability Coverage Trainings

  • A CGL Policy Primer

  • A Homeowner's Liability Policy Primer

  • A No Fault Primer

  • A UM/SUM Primer

  • ADR and How to Get to "Yes"

  • An Auto Liability Policy Primer

  • An EPLI (Employment Practices Liability Insurance ) Primer

  • Applying New York’s No-Fault and Serious Injury Threshold Laws

  • Avoiding Bad Faith and Spotting the Setup Scenario

  • Bad Faith

  • Business Income Coverage

  • Chaos Breeds Resolution: Mediation and the Role of Coverage Counsel in Resolving Chaos

  • Child Victims Act: Insurance Issues

  • Connecticut Insurance

  • Construction Defect Coverage Claims

  • Coverage B - Understanding Personal and Advertising Coverages

  • Cyber & Privacy Claims: Finding the Coverage

  • Fidelity Coverage: Does Direct Still Mean Direct?

  • Good Faith Claims Handling

  • Good Faith, Consequential Damages and Extra-Contractual Liability – the New York Experience

  • Insurance 101 -- An Introduction to the CGL Policy

  • Insured-Selected Counsel: When is it Necessary and How to Avoid and Control?

  • Life after Burlington – How Do We Resolve “Additional Insured“ Issues?

  • Life after Carlson – When is a Policy “Issued or Delivered in New York” to Trigger Draconian Requirements of CPLR 3420(d)(2)?

  • Most Common Mistakes Made in Handling New York Coverage Problems and How to Prevent Them

  • Navigating Liability Risks and the Litigation Process with and for Your Client

  • No Fault – Nuts and Bolts

  • NY Coverage Letters – Nuts & Bolts: How to Create and Write and Timely Send a Disclaimer Letter and NY’s Special Dangers with Reservation of Rights Letters

  • Preventing Bad Faith Claims – Liability Cases

  • Rise of the Robots - The Coming Age of Automation in Automobiles

  • Strategic Approaches to Resolving Insurance Coverage Disputes: Do We Defend and Start a DJ? Do We Sit Back and Wait?

  • The Cooperation Clause - How to Handle

  • The Defend or DJ Dilemma

  • The Examination Under Oath: What is it and How to Prepare

  • The Ins, Outs and Forgetaboutits of Third-party practice, Indemnity and Anti-subrogation

  • The Primary and Excess Relationship

  • The Serious Injury Threshold

  • Too Many Claimants, Not Enough Limits

  • Vicarious Liability Related to Employers and Automobiles

  • You, Me, and the Oxford Comma in Insurance

  • What You Need to Know, to Get What you Need (and Protect What You Have)- Exploring Discovery Disputes in Insurance Claims

 

First Party Property Trainings

  • “Oops”, Ethics in Claim Handling and Underwriting

  • 1st & 3rd Party Coverage Issues Related to Mold

  • 1st-Party Bad Faith and Consequential Damages Litigation:  Case Law Review

  • Advance Payments on First-Party Property Claims:  What Adjusters Need to Know

  • Annual Update on the Most Prominent Property Coverage Cases in the Past Year

  • Automobile Diminution in Value Claims: 1st-Party and 3rd-Party Coverage and Liability Issues

  • Business Income Coverage

  • Cat Cleanup - Legal and Regulatory Pitfalls to Avoid

  • COVID-19 First Party Coverage Issues

  • Diminution in Value and Utility Company Liability Claims

  • Discoverability of Insurer and Independent Adjuster File Materials

  • Discoverability of Special Investigation Unit Files and Cheese – What Do They Have in Common?

  • ED - Discovery of Electronic Evidence

  • Effective Liability Disclaimers and Coverage Denials under Insurance Law § 3420(d)(2)

  • Engineers, Accounts and Lawyers - Investigation Business Interruption Losses

  • First Party Property Coverage Issues:  Proof of Loss Forms, Broad Evidence Rule, Public Adjuster Issues and Subrogation

  • First Party Property Issues (Intentional Acts; Material Misrepresentation in the Application; Proof of Loss Forms.

  • First-Party Property Issues Regarding Two-Year Contractual Suit Limitations Conditions and Replacement Cost Coverage

  • Fraud Investigations Involving Mortgagee Claims – Some Common issues (Property Preservation or Property Decimation)

  • Fraud Issues in Weather-Related Claims

  • Good Faith First Party Claims Handling

  • Insurance Starts at Home- Review of First Party Homeowners' Claims

  • Is Your Fire Expert Qualified?  NFPA 1033 “Standards for Professional Qualifications for Fire Investigators”.  Recent Industry Trends Related to Property Claims

  • Lack of Cooperation; and Lack of Capacity

  • Looking for Fraud, and Finding it Too

  • Material Misrepresentation in the Application for Insurance as an Affirmative Defense to Automobile Claims in New York

  • Pardon the Interruption - Business Interruption Coverage in NY

  • Practical Application of the Noncooperation Defense in New York: 1st Party v. 3rd. Party Claims

  • Primer on Appraisal

  • Primer on Proof of Loss Forms (Practical Use and Case Law Review)

  • Prominent 1st-Party Property Issues from a Coverage Litigation and Forensic Accounting Perspective

  • Property Training: Reoccurring Issues

  • Regulation 64 – What Every Property Adjuster and Special Investigator Should Know

  • Rental and Loaner Car Coverage and Liability Issues

  • Sharing with and Requesting Information from Law Enforcement: Statutory & Regulatory Rights and Obligations

  • Special Investigation Training (Most Recent Relevant Topics)

  • Taking Effective Recorded Statements

  • The Broad Evidence Rule

  • The Green Revolution - Evolving Risks in Green Construction

  • The Seven Deadly Sins of Property Adjusting

  • Things That Make You Want to Same “Hmmm”: Material Misrepresentations in the Application for Insurance and Concealment

  • Top Ten Statutes and Regulations Pertaining to First-Party Property Claims

 

Newsletters:      

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

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

  • Premises Pointers:  This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!).  Please drop a note to Jody Briandi at [email protected] to be added to the mailing list.
     

  • Labor Law Pointers:  Hurwitz & Fine, P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at [email protected] to subscribe.
     

  • Products Liability Pointers:  Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving.  Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies.  This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies.  Contact Brian F. Mark at [email protected] to subscribe.
     

  • Medical & Nursing Home Liability Pointers.  Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Chris Potenza at [email protected]  to subscribe.

     

Peiper on Property and Potpourri:

Pardon the brevity of my note this week.  I’m in downtown Columbus, Ohio, getting ready to speak at DRI’s Complex Coverage Forum.  It’s good to have something to say, a place to say, and people to say it to.  The topic is on adjusting business interruption losses, and the breadth and scope of the coverage as defined by the Business Income endorsement. 

I’m joined on the dais by Jason Uloswceh from MDD.  Here’s hoping Jason is ready to handle all of the math questions.

As for our column this week, be sure to check out the Otsego Fire case for a good discussion on the principles behind the material misrepresentation doctrine.

See you in two weeks.  

Steve
Steven E. Peiper

[email protected]

 

A Century Ago – Good Recommendation:  “RTFP”:

The Buffalo Times
Buffalo, New York
12 Nov 1921

 

Schumacher Urges People to Read Co-Insurance Clause in Fire Policy

            Keep your fire insurance up to 80 per cent. of the value of what is insured so the co-insurance clause on fire insurance policies will not affect you.

            That is the advice of William J. Schumaker, veteran insurance dealer, of No. 197 Pearl Street, to all persons contemplating buying new fire insurance or changing their old policies.

            “There has been considerable misunderstanding about the 80 per cent. reduced rate average clause, or sometimes called the co-insurance clause in fire policies,” Mr. Schumaker said. “It is my desire that all people, as well as my clients, be acquainted with this matter.”

            The clause means, in brief, that if at the time of fire your insurance is less than 80 per cent of the value you will be paid such proportion of your loss as the amount of insurance carried bears to 80 per cent. of the value. As long as your fire insurance covers 80 per cent of the value, you have nothing to worry about, Mr. Schumacher continued. However, if your insurance and your loss should both be less than 80 per cent of the value, then you lose.

 

Wilewicz’ Wide-World of Coverage:

Dear Readers,

Hopefully everyone had a fun Halloween. This year, my daughter didn’t dress in a costume per se, but rather she attended a masquerade party, so she got dolled up in formal wear and a venetian mask. It was lovely, and yet startling as to how grown up she looked. Meanwhile, though the weather cooperated, and it was near perfect outside, we didn’t get as many trick-or-treaters as in years’ past. As such, we now have hundreds of pieces of candy left (we usually get hundreds of visitors since we live in the city). I may have to bring them into the office or something!

Now, this week in the Wide World, Franco Mirolo once more joins our column. Franco discusses a Fourth Circuit’s opinion in Jowite Ltd. P’ship v. Fed. Ins. Co. and addresses the issue of whether an ensuing loss exception in a design exclusion can be both the “ensuing loss or damage” and the “peril not otherwise excluded.” While the insured argued that it was possible, the court disagreed and said that the exception cannot reasonably be understood to mean that a loss could be both an “ensuing loss or damage” and the “peril not otherwise excluded.” The full summary and a link to the opinion are attached.

Until next time,

Agnes
Agnes A. Wilewicz

[email protected]

 

100 Years Ago – Women Equality Amendment Proposed:

 

The Buffalo Times
Buffalo, New York
12 Nov 1921

A TWENTIETH CONSTITUTIONAL AMENDMENT?

            By the suggested twentieth amendment to the Constitution of the United States it is proposed in brief, to abrogate “in every respect, the common law disabilities of women.” The attitude of the American press toward this proposed amendment ranges from accepting it as a matter of course, a logical corollary of the Nineteenth Amendment, to branding it “a silly joke.” And the demarcation line between these two points of view coincides pretty closely with the Mason and Dixon Lines.

            Now that women have been given the right of ballot, “Why should there be any objection to giving them such property and other civil rights as will place them on an equality with men?” asks the Canton (O.) News (Dem.), for “the archaic idea that a man should have control of his wife’s property any more than that of another women should be abandoned.” American women “are entitled to this protection,” declares the Rock Island (Ill.) Argus (Dem.), and the Emporia Gazette (Rep.) finds “nothing in the program to which any man can object.” It feels therefore that “any denial of the full program by any State is unfair to the women of that State,” and that its passage as a federal measure should have “smooth sailing.”

 

Barnas on Bad Faith:

Hello again:

For this Veterans Day issue, I just offer a thanks to all who have served or are serving in the United States Armed Forces.  The case in my column is not yet available in any link I can find.  If you are interested, drop me an email, and I will be happy to send you a pdf copy.

Brian
Brian D. Barnas

[email protected]

 

Cattle for Dowery?:

The Buffalo Times
Buffalo, New York
12 Nov 1921

Brides Bought on Installment Plan

LONDON, Nov. 12.—A Basuto girl is looked upon by her father as his bank, for when she reaches a marriageable age the bridegroom will have to hand over a specified number of cattle before he can take her from her father’s hut.

            There is little love and romance in a Basuto girl’s marriage. This is not to say that she had no feelings or does not hear the call of romance. Like every girl in the world, these things come into her life, and she thinks and dreams as we all do.

            But there is no wooing or winning and none of the beauty of realized young dreams for her.

            The man who wants her does not consult her—He has known her, and she has probably pleased his eye, and so the dusky Hendriks goes to the father and says he wishes to marry Maluma.

            The matter is then discussed by the heads of the family and their relations, and the girl gets to know of the coming marriage only by chance word that may be dropped here and there.

            Generally, the principal point of discussion among the heads of the family is how many cows and sheep are to be handed over to the father by the bridegroom as “lobola” (a marriage dowry) for the girl.

            This being arranged—usually a payment of so many cows down and so many to be handed over later—the girl is informed that Hendriks is to be her husband for better or for worse—generally worse—and whether he be quite an old man, or a young man Maluma has to sacrifice herself and go, as she is told.

 

Off the Mark:

Dear Readers,

The kids had a great time trick-or-treating and now have way too much candy.  Of note, one house we came across had candy for the kids and wine for the adults.  Although I did not partake, it was very thoughtful and appreciated. 

With the high prices of turkeys this year, I wonder how many people will opt for a non-traditional spread.  We are considering doing just that and grilling some steaks.  Of course, we will still have all the appetizers to fill up on before the big meal.  Decisions, decisions …

Kyle Ruffner graciously provided another case summary for “Off the Mark.”  This edition brings you a construction defect case from the United States District Court for the Eastern District of Pennsylvania.  In Atain Ins. Co. v. Basement Waterproofing Specialists, Inc., the Court examined the carrier’s duty to defend and indemnify and held that the carrier did not owe a defense or indemnity obligation to its insured as the underlying claims sounded in breach of contract and intentional acts.

A special thanks to all the veterans out there.

Brian
Brian F. Mark

[email protected]

 

All We are Saying, is Give Peace a Chance:

The New York Times
New York, New York
12 Nov 1921

A Permanent Peace Must Come

Today the conference on the limitation of armament begins its sessions.

Under conditions never before attained, amid a tangle of war-born results and grave possibilities, representatives of the great nations of the world are meeting in Washington to consider cutting down their bankrupting armament programs.

Perhaps the most important conference that has ever taken place in the history of the world, the safety of our lives and our homes, the course of the future, will turn upon it. And a bleeding and confused world gravely awaits its results.

Speaking for the women of America—yes, for the women of the world—we urge the high hope that every possible aid will be given this great undertaking by each nation involved, that every statesman meeting in Washington will contribute his best effort, that every citizen, understanding the momentous occasion, will lend to it his good will.

We hope profoundly that there will be nothing provisional about the decision to make war impossible; that peace will be permanent, that a federated humanity will rise out of the chaos of today. We believe that the influence of the four women appointed to advise America’s delegates will help greatly to make this result possible.

May success, alike to all nations, attend the conference.

 

Boron’s Benchmarks:

Raise your hand if you took full advantage of your once-a-year 25-hour day last weekend, the gift of our Daylight-Saving Time “fall back” of our clocks. Sometimes I think of it as two 24.5-hour days, back-to-back.  Anyhow, I did not get an “extra hour of sleep” on the recent overnight upon which we all moved our clocks back one hour.  To the contrary, I simply experienced an extra hour of wakefulness.  Sad to say, nothing epic happened during my extra hour of wakefulness this past weekend.  Perhaps some planning ahead is in order – as to how best to use my extra hour of wakefulness during the first weekend of November in 2022.  But this is not something I am going to lose sleep over.  Except, of course, on March 13, 2022.     

Getting to the important stuff, for this edition of Boron’s Benchmarks, we offer for your consideration a Supreme Court of Nevada opinion issued October 28, 2021, in Zurich American Insurance Company vs. Ironshore Specialty Insurance Company, addressing certified questions posed to the Supreme Court of Nevada by the U.S. Court of Appeals, Ninth Circuit. Two certified questions asking how Nevada law would rule, were as follows: (a) does the insured or the insurer bear the burden of proving an exception to an exclusion of coverage; and (b) may the party that bears that burden rely upon extrinsic evidence to carry its burden?  The case write-up you will find in Coverage Pointers is Hannah Cominsky’s thoughtful presentation.  A worthy read.

Eric
Eric T. Boron

[email protected]

 

Another Way to Save the World:

The New York Times
New York, New York
12 Nov 1921

URGE BIRTH CONTROL TO AID WORLD PEACE

            Birth control as a factor to bring about world peace was advocated at the First American Birth Control Conference, the opening session of which was held yesterday at the Plaza. The disarmament conference and Congress were urged, in telegrams, to appoint commissions to study birth control.

            Baroness Keikichi Ishimoto, of Japan, in a letter to Mrs. Margaret Sanger, which was read at yesterday’s conference said:

            “To put the principles of birth control into practice is the only way to secure the world’s peace; and isn’t it the best chance to propagate this idea during the Washington conference? The Voluntary Motherhood League of Japan sends best wishes to the American Birth Control Conference.”

            The speakers at yesterday’s sessions included Mrs. Edith Houghton Hooket, Baltimore; Dr. S. Adolphus Knopf of the University of Paris; Dr. Alive Butler of Cleveland; Dr. Aaron J. Rosanoff of King’s Park State Hospital; Dr. Roswell H. Johnson of the University of Pittsburgh; Dr. C. C. Little of the Carnegie Institute; Miss Virginia C. Young of New York, who spoke on “The Problem of the Delinquent Girl,” and J.O.P. Bland, of London.

            E.C. Lindeman, professor of sociology at the North Carolina College for Women, said in a paper read by one of the delegates, that it would be necessary for students of the sciences with which birth control is identified to educate a large part of the public and the legislators to their viewpoint. “Politicians and statesmen” he said, “would not of themselves see reason for doing anything about humanity until civilization was nearer decay than at present time. And then it might be too late.”

 

Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

Do better, Bills. Please and thank you. And please, again, for good measure.

This edition of Ryan’s Capital Roundup features a new law signed by Governor Hochul permitting courts to award attorney’s fees in a broader swath of discrimination cases under the Executive Law, which raises an interesting question. Do those fees awarded a prevailing claimant constitute damages because of bodily injury?

Until next time,

Ryan
Ryan P. Maxwell

[email protected]

 

The Unknown Soldier:

Buffalo Courier
Buffalo, New York
12 Nov 1921

GOTHAM’S MILLIONS MOURN AND HONOR UNKNOWN SOLDIER

Tens of Thousands Follow Arlington Ceremonies Through Amplifier.

            New York, Nov. 11 (By Associated Press).—New York’s throbbing heart of trade was stilled today in reverent tribute to that heroic heart forever stilled that was laid to rest with the highest honors the world could pay, in Arlington National cemetery.

            A vast crowd in and around Madison Square Garden obeying the same trumpet call that summoned the throng at Arlington to attention at noon, stood with bowed heads, motionless, for two minutes, offering prayers for the dead and for perpetuation of the pence he died to win.

 

Wheels of Industry Silent.

            At the same moment, the city’s wheels of industry droned into silence; transportation ceased; tugs and ferries idled in the harbor; telephone service was suspended; telegraph instruments ceased their clatter. Citizens everywhere—in their homes, in their offices, in the great railroad terminals, even on the streets—stood with bared heads bowed in homage to the symbolic unknown who had died that they might live.

            Flags at half-mast flew throughout the city. Public buildings, military posts, visiting ships in the harbor – ships that bear the flags of nearly all the nations of the world, not excepting the German – displayed their colors in mourning.

            Observance of the sacred moment centered at Madison Square Garden, where telephonic amplifying devices had been set to unite Arlington and New York.
 

CJ on CVA and USDC(NY):

Hello all,

Not much to report from Buffalo. Charlie survived his first Fall Back on a “normal” sleep schedule, meaning that his parents did too! I always find adjusting to the early sunsets to be quite difficult and it will certainly take some time to get used to driving home in the dark.

The District Courts offered little in terms of insurance coverage decisions. However, I do have an interesting CVA case for your enjoyment. In Doe v. State of New York, Claimant filed a claim against New York State alleging the State was negligent in the assignment and supervision of an assigned attorney. The State then filed a motion to dismiss, which was granted for the reasons outlined in this edition’s column.

See you in two weeks,

CJ
Charles J. Englert, III

[email protected]       

 

Designated Drinker:

Buffalo Morning Express and Illustrated Buffalo Express
Buffalo, New York
12 Nov 1921

GLAD DAY FOR THE DRINKS ARRAIGNED IN THE CITY COURT

Most of them were turned loose to be pinched again by the cops.

 

SOME TOUGH LADS FINED

Worst churl of all was one who resented kind act of a motorman.

            Only one of the ten drunks arraigned before Judge Harry B. Lamson in city curt yesterday admitted that he had been drunk. He was John McGovern, a stranger in the city, who alleged he was a sailor during the war and wounded in service. He was in an ugly mood when arrested. Because of the occasion, Judge Lamson suspended sentence.

 

Dishing Out Serious Injury Threshold:

Dear Readers,

Thanksgiving is nearly upon us, and Christmas decorations are already up in stores. It seems like the end of the year is nearly here in a year that has felt like it has flown by. I hope everyone gets the opportunity to enjoy the year-end seasons, beginning with Thanksgiving, with friends and family.

In the Serious Injury Threshold world, we bring you a case that deals with a 17-month gap in treatment, which precludes plaintiff from establishing a serious injury within the meaning of Insurance Law § 5102(d).

Be well,

Michael
Michael J. Dischley

[email protected]  

 

But Don’t Drink Wood Alcohol:

The Buffalo Enquirer
Buffalo, New York
12 Nov 1921

 

Wood Alcohol Killed Buffalo Man, Verdict

(Special Telegram to The Enquirer.)

            Bridgeburg, Ont., Nov. 12.—Buffalo’s potent moonshine caused the death of a Bridgeburg man yesterday, when a coroner’s jury, empaneled by Dr. J.R. Mencke, associate coroner, decided that Walter Whitehead, 43 years old, met death through alcoholic poisoning.

Whitehead went to Buffalo Thursday with a party of friends in an automobile. While returning in the auto later in the evening, he was taken violently ill. Before medical aid could reach him, he died in terrible agony.

Several drinks of alleged whiskey which he had consumed in Buffalo were immediately charged as the trouble. A postmortem examination yesterday revealed the fact that the man had died from the effects of wood alcohol poisoning.

 

Bucci on “B”: 

Hello all,

Not much to talk about in the Coverage B arena this week, although we did bring you the Tenth Circuit Court of Appeals case that we originally discussed when the trial court decision was issued, in our May 1, 2020, edition. 

Just for the record, I did go to Salem for Halloween, but I pooped out on the party.  The costumes were great, but the real action happened after my bewitching hour, and sleep won.  Good thing I had so much fun when I was younger.   

I’m almost afraid to comment on the weather here in the New York Metro area, it’s been so sunny and glorious that I’m torn.  I’d like the weather to continue all the way through winter but, on the other hand, I know that if it did, it would be because of climate change and that isn’t good for us.  So, I’ll welcome the cold snow for three months.  At least I’m not in Buffalo like so many of my colleagues.  Now that is a hard winter. 

Diane
Diane L. Bucci

[email protected]

 

Judge v. Cave Man – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
12 Nov 1921

Doesn’t Go with Judge Rathbun

(Special Telegram to The Enquirer.)

            Hornell, Nov. 12.—“Cave man stuff won’t go in this town,” warned Recorder Fay P. Rathbun in passing sentence today on George Johnson, a husky teamster, arraigned in city court on a charge of assaulting his wife.

            Mrs. Johnson said that her husband came home at noon yesterday and was visibly displeased because dinner was not on the table. He slapped her a couple of time to emphasize the fact that his wishes as lord and master of the domicile must be more studiously respected. When his wife remonstrated at the rough stuff, he knocked her down to prove that he was in earnest. Mrs. Johnson hurried to police headquarters and secured a warrant.

            Johnson not only admitted the assault but seemed a little boastful of his prowess, intimating that as he was the lady’s husband, he had a perfect right to beat her up now and then.

            Recorder Rathbun accepted the teamster’s plea of guilty and imposed a fine of $50 with an alternative of 50 days in jail. Johnson said he would not pay.

 

Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

In this edition we do what most Connecticut lawyers like to do this time of year—we visit Florida. Yes, four Connecticut insurance giants, using lawyers from White Plains, New York and Philadelphia, Pennsylvania, duke out issues of Florida additional insurance law in a Hartford County Superior Court. Yeah, this makes a whole lot of sense. The outcome, we’re sure, left Larry the Stag (now after 200 years referred to as ‘the Buck’) happy and the others perhaps rethinking their strategy. Read on for the details.

In other news, did you know that watching the New York City Marathon is not only inspiring but also exhausting? As my followers may recall, my daughter lives on the UWS near Central Park (UWS=upper west side, for the uninitiated). We spent a few hours on Sunday following the Marathon runners and watching the watchers. The racers and their supporters throw off an enormous amount of energy—it's palpable. From the awe-inspiring para-athletes to the intriguing costumes and creative signs [one of my favorites was an older woman holding a sign reading: “I trained all week to hold this sign”], it was an awful lot of fun. According to my Fitbit, we walked almost 10 miles in and around the crowds. That’s got to be harder than running 26.2 miles on a cleared-out course. Right?

Be smart and keep keeping safe.

Lee
Lee S. Siegel

[email protected]       

 

Oldest Lawyer in Brooklyn Passes:

New York Tribune
New York, New York
12 Nov 1921

Daniel Tredwell, Oldest Brooklyn Attorney, Dead

Originator of Title Insurance Business; Also Won Prominence in Field of Poetry

Daniel M. Tredwell, ninety-six years old, the oldest lawyer in Brooklyn, and originator of the title insurance business, died late Thursday at his residence, 546 Carolton Avenue, Brooklyn.

Mr. Tredwell was born in Hempstead, L. I., and moved to Brooklyn when he began practicing law in 1848. He was a poet of some distinction, having published his first book of poems soon after his removal to Brooklyn. He was at one time on the writing staff of "The Brooklyn Daily Freeman," published many years ago by Walt Whitman. Up to the time of his death Mr. Tredwell was associated with the Home Title Insurance Company and was at one time president of the United States Title Company. In 1912, Mr. Tredwell issued a volume of sketches entitled "Personal Reminiscences of Men and Things in Long Island."

Mr. Tredwell is survived by one daughter, Mrs. Ida Tredwell Butler. Mrs. Tredwell died in 1908. Funeral service will be held at the residence to-day at 1 o'clock. Interment will be at Hempstead, L. I.

 

Rauh’s Ramblings:

Hi all!

First off, Happy Veteran’s Day to all who have served! I don’t have anything interesting to report this week.  I am still trying to get used to the time change.  I hate that it gets dark by 5:00 p.m. and never really understood why changing the clocks back is necessary in the first place. I think winter would be slightly more bearable if we had more daylight, but oh well!

I have a case today from the Seventh Circuit involving a plaintiff who was denied continuation of his long-term disability benefits and sued under ERISA arguing that the insurer’s review process was flawed, and its decision was arbitrary. In short, the Seventh Circuit disagreed.

I hope everyone has an enjoyable week!

Patty
Patricia A. Rauh

[email protected]       

 

Epidemic Concerns – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
12 Nov 1921

Big Fronczak Warns About "Mild" Cases

If every case of scarlet fever were properly isolated and every "mild" case treated as If it were severe, the number of cases would be comparatively few, warns the health department. Increases in the prevalence of scarlet fever are largely attributed to the large number of mild or "missed" cases which have gone unrecognized. This permits a chance for the causative agent to build up a virulence from which fatal cases often result, Dr. Fronczak asserts. Failure of families to call a physician, together with difficulty in diagnosing all cases before other individuals have been exposed, are the prime reasons for the disease being communicated by the "missed" cases.

Secondary infections arising from scarlet fever, such as nephritic, or Bright's disease, defective vision and hearing, heart trouble, and other serious organic complications, are even more dangerous than the direct effects of the disease itself, and make imperative its recognition and restriction by parents, teachers and physicians, it is declared.

 

Storm’s SIU Examen:

Hi everyone:

I have six cases for you this week:

  • Question of Fact Whether the Property was the “Residence Premises” of the Plaintiff -- Whether She had Habitual and Permanent Contacts with the Property that Demonstrated She Resided There.
     

  • No Duty to Defend or Indemnify Where Insured Shot the Claimant.
     

  • Personal Injury Complaint and Notice of Removal Failed to State an Amount in Controversy in Excess of $75,000 as Required for Federal Diversity Jurisdiction.
     

  • Question of Fact Whether Collapse Was Caused by Hidden Decay.  Bad Faith Claim Dismissed. 
     

  • Cancellation of Auto Policy Due to Insufficient Funds Upheld When Premium was Set Up to Be Automatically Withdrawn from Account on Recurring Request; Receipt of Cancellation Notice Presumed Based on the “Mailbox Rule”.
     

  • Witnesses Ordered to Testify in Federal Bench Trial in Person Rather Than Remotely.
     

Michael Dischley and I will be presenting a training seminar for a carrier on “Failure to Reasonably Maintain Heat Claims”.  If this is something you may be interested in for your claims professionals, please let us know.  We will be pleased to present it for you too.   

This week’s encouraging word is the definition of “perseverance”: “steady persistence in a course of action, a purpose, a state, etc., especially in spite of difficulties, obstacles, or discouragement”. 

Talk to you soon,

Scott
Scott D. Storm

[email protected]

 

And They All Rolled Over, and One Fell Out …:

The Evening World
New York, New York
12 Nov 1921

4 HURT IN ROW OVER CROWDING IN BED

Tired Armistice Day Parader Starts Fight That May Cost Life.

Donato Ziglario, twenty-seven years old, Italian army veteran, who lives with Rosso Cappetta, a contractor, at No. 14 Church Street, South Orange, N.J., took part yesterday In the Armistice Day parade in Newark, returned home tired and in bed got into a row with his roommate, Thomas Devito. He accused Devito of taking up too much room in bed.

Capetta and his wife tried to restore peace and were severely cut with a razor. Patrolman Kernan was called. Ziglario, it is alleged, rushed at him. In the fight an artery in the policeman's leg was severed. Kernan hit Zlglario over the head with his revolver, broke the butt of the weapon and fractured his adversary's skull.

 

Heintzman’s Hideout:

Happy November everyone. It has been a warm and delightful Fall in Buffalo, and I’ve been gleefully enjoying my favorite season. Last night, my alma mater, the Duke Blue Devils, beat the Kentucky Wildcats in the Champions Classic in Madison Square Garden. Duke’s heralded freshmen, Paolo Banchero and Trevor Keels, both had great games. Three of Duke’s starters had cramping issues in the second half, but Duke held on to beat Kentucky 79-71. Keels in particular was impressive—showing unexpected poise running the pick and roll and absolutely smothering Kentucky’s star freshman, TyTy Washington.

Two cases this week: in the first, an insurer tries and fails to disclaim no-fault coverage on the grounds that the medical services claimants received were unrelated to the subject car accident, and in the second, a claimant loses no-fault coverage after MVAIC demonstrates that claimant did not provide timely notice of his accident and corresponding claim.

Nick
Nicholas J. Heintzman

[email protected]

 

Planning a Thanksgiving Party – 100 Years Ago:

Times Herald
Olean, New York
12 Nov 1921

Now is the Time to Plan Thanksgiving Party

Thinking about a Thanksgiving party, of course!

And perhaps, if it is to be a very gay event and you have lots of time, you'll string popcorn and cranberries and make festoons effective places.

Then you must have pumpkin chips as a part of your refreshments. Select a deeply colored pumpkin, peel it and slice it very thin. To each pound of chips add a pound of sugar and a gill of Iemon juice with the grated rind. Stir well and let stand overnight. Then cook slowly until tender. Skim the chips out. let them stand two days to get firm and then put them in a jar with just enough sirup to keep them moist.

Spices may be added to this if desired. It is quite like a very costly preserve.

The sandwiches should, of course, be minced turkey or chicken and hot spiced cider is a nice addition.

 

North of the Border: 

November 11 is Remembrance Day in Canada. Every year at this time I pause and think about my grandfather’s generation. Every boy born on both sides of my family between 1890 and 1900 either volunteered or was drafted into the Canadian Expeditionary Force during the First World War. One of them didn’t come home.

Corporal Lawrence Crawford, my grandfather’s cousin, had volunteered. He arrived in England in September of 1915 and two months later, was sent to France. On June 3, 1916, he was serving with the Princess Patricia Canadian Light Infantry on the Ypres Salient in Belgium. His unit was part of General Currie’s 1st Division that was ordered to take the ground between Hill 60 and Sanctuary Wood. They succeeded, but, Lawrence, part of the artillery, who was just 20, and not old enough to vote, was wounded and taken prisoner. His personnel records first declare that he was missing, but by mid-August, he was unofficially declared dead. By November of 1917 it was official. His widowed mother in Edmonton, Alberta, received a war service gratuity of $180.00 and, in 1921, the Memorial Cross, which, to this day, is given to the mother, widow or widower of any member of the Canadian Forces who loses their life in conflict.

In June of 2019, 103 years after my distant cousin was declared dead, I found Lawrence Crawford’s name inscribed on the Menin Gate; one name among the names of 54,395 Commonwealth soldiers who died in the Salient but whose bodies have never been identified or found.  However, in 2015, Lawrence’s body was found. He was lying in an unmarked grave in a British cemetery. Lawrence was reinterred with others from his unit in a Commonwealth war cemetery. His is now one cross amongst thousands.

The pandemic has been tough, but 1914-1918 was hell.

Heather
Heather Sanderson

[email protected]

 

Headlines from this week’s issue, attached:

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

  • Claims against Insurance Agents Survive Early Motion to Dismiss
     

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

  • Material Misrepresentation Found Where Carrier Demonstrated It Would Not Have Issued the Same Policy “But For” the Misstatement

 

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

  • Defendant’s Expert Failed to take into Account the Operative Findings when Opining that the Subject Injury was Not Causally Related

 

WILEWICZ’S WIDE WORLD OF COVERAGE
Agnes A. Wilewicz

[email protected]

  • Fourth Circuit Holds That an Ensuing Loss Exception in a Design Exclusion Cannot be Reasonably Understood to Mean That a Loss can be Both the “Ensuing Loss or Damage” and also the “Peril Not Otherwise Excluded”

 

BARNAS ON BAD FAITH
Brian D. Barnas

[email protected]

  • Geico did not Act in Bad Faith by Rejecting Settlement Offer where it Possessed Limited Information about the Claim and Damages

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

  • No Obligation to Reimburse Defense Costs Paid on Behalf of a Mutual Insured

 

OFF THE MARK
Brian F. Mark
[email protected]

  • U.S. District Court Finds No Duty to Defend as Underlying Claims Sounded in Breach of Contract, and, as such, did not Constitute an “Occurrence.”

 

BORON’S BENCHMARKS
Eric T. Boron

[email protected]

  • Insured Holds Burden of Proof on Exclusion Exceptions

 

BUCCI ON “B”
Diane L. Bucci

[email protected]

  • TCPA Statutory Damages Appeals

     

RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell

[email protected]

  • New Law Permits the Award of Attorney’s Fees and Expert Witness Fees For Prevailing Parties Under Executive Law

 

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

[email protected]

  • The State of New York Cannot Be Liable for The Negligence of Assigned Counsel

 

RAUH’S RAMBLINGS
Patricia A. Rauh

[email protected]

  • Denial of Plaintiff’s Long-Term Disability Benefits Was Neither Arbitrary nor Was the Review Process Flawed According to ERISA Standards

 

STORM’S SIU EXAMEN
Scott D. Storm

[email protected]

  • Question of Fact Whether the Property was the “Residence Premises” of the Plaintiff -- Whether She had Habitual and Permanent Contacts with the Property that Demonstrated She Resided There
     

  • No Duty to Defend or Indemnify Where Insured Shot the Claimant
     

  • Personal Injury Complaint and Notice of Removal Failed to State an Amount in Controversy in Excess of $75,000 as Required for Federal Diversity Jurisdiction
     

  • Question of Fact Whether Collapse Was Caused by Hidden Decay.  Bad Faith Claim Dismissed 
     

  • Cancellation of Auto Policy Due to Insufficient Funds Upheld When Premium was Set Up to Be Automatically Withdrawn from Account on Recurring Request; Receipt of Cancellation Notice Presumed Based on the “Mailbox Rule”
     

  • Witnesses Ordered to Testify in Federal Bench Trial in Person Rather Than Remotely

 

HEINTZMAN’S HIDEOUT
Nicholas J. Heintzman

[email protected]

  • Insurer Tries and Fails to Disclaim No-Fault Coverage on the Grounds that the Medical Services Claimants Received were Unrelated to the Subject Car Accident
     

  • Claimant Loses No-Fault Coverage after MVAIC Demonstrates that Claimant did not Provide Timely Notice of his Accident and Corresponding Claim

 

NORTH OF THE BORDER
Heather Sanderson

[email protected]

  • A Deductible is not a Retention

 

 

Happy Veterans Day and thank you to all who have served our nation.

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 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
Patricia A. Rauh

[email protected]

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
[email protected]

Steven E. Peiper, Co-Chair
[email protected]

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Diane L. Bucci

Scott D. Storm

Thomas Casella

Brian D. Barnas

Eric T. Boron

Ryan P. Maxwell

Charles J. Englert

Patricia A. Rauh

Nicholas J. Heintzman

Diane F. Bosse

Joel R. Appelbaum

Franco Mirolo (Admission Pending)

Kyle A. Ruffner (Admission Pending)

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

Michael F. Perley

Scott D. Storm

Eric T. Boron

Brian D. Barnas

NO-FAULT/UM/SUM TEAM
Dan D. Kohane
[email protected]

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

Barnas on Bad Faith

Lee’s Connecticut Chronicles

Off the Mark

Boron’s Benchmarks

Bucci on “B”

Ryan’s Capital Roundup

CJ on CVA and USDC(NY)

Rauh’s Ramblings

Storm’s SIU Examen

Heintzman’s Hideout

North of the Border

 

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

11/03/21       Copacabana Realty, LLC v. A.J. Benet, Inc.
Appellate Division, Second Department
Claims against Insurance Agents Survive Early Motion to Dismiss


An insurance broker was sued for breach of fiduciary duty to its client, the policyholder.  The claim was dismissed, the broker having established, prima facie, that its alleged breach of fiduciary duty in advising the insurer of its opinion that the policy did not provide coverage of the claim did not cause the insurer to deny the claim.

An insurance agent or broker has a common-law duty to obtain requested coverage for a client within a reasonable amount of time, or to inform the client of the inability to do so. to set forth a case for negligence or breach of contract against an insurance broker, a plaintiff must establish that a specific request was made to the broker for the coverage that was not provided in the policy'"). Thus, the duty is defined by the nature of the client's request. However, where a special relationship develops between the broker and client, the broker may be liable, even in the absence of a specific request, for failing to advise or direct the client to obtain additional coverage.

Here, the broker failed to meet its initial burden of tendering sufficient evidence to demonstrate the absence of triable issues of fact with respect to whether the plaintiff client made a specific request for coverage which was not obtained Those claims remain.

However, there are triable issues of fact exist as to whether a specific interaction took place between the plaintiff and the defendant regarding a question of coverage related to the plaintiff's renovation work on the insured property that could give rise to a special relationship between the parties Accordingly, the court should have denied that branch of the defendant's motion which was for summary judgment dismissing the third cause of action, which alleges negligent misrepresentation.

 

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

 

11/10/21       Thandi v. Otsego Mut. Fire Ins. Co.
Appellate Division, Second Department
Material Misrepresentation Found Where Carrier Demonstrated it Would Not Have Issued the Same Policy “But For” the Misstatement

Plaintiff purchased property in Floral Park and applied for a homeowner’s policy from defendant in connection with the closing on that real estate transaction.  In the application, plaintiff indicated that the Floral Park location would be “owner-occupied” and also represented that plaintiff did not own, rent or occupy any other real estate. 

At the time of the application, however, plaintiff resided a property he owned in New Hyde Park.  Plaintiff remained at New Hyde Park while renovations were undertaken at the Floral Park property. Within three weeks of the policy’s issuance, and while plaintiff still resided at New Hyde Park, the Floral Park property was damaged by fire.   Six weeks later, Otsego disclaimed coverage on the basis that plaintiff’s application contained a material misrepresentation. 

In the subsequent litigation, plaintiff submitted an affidavit that he intended to move in at the time of the application and only decided to perform renovations after the Otsego policy was procured. Moreover, plaintiff stated he planned to move into the Floral Park property within two weeks of the date of the fire. 

In support of Otsego’s argument, the company submitted an affidavit of its secretary who stated they do not generally issue policies on properties which are not owner-occupied.  In the very rare circumstances where such a policy may be issued, the coverage is endorsed with several policy forms which limit the exposure.  As such, Otsego argued that it would have been categorically impossible for this policy to have been issued had there been no misrepresentation on the application.

In finding for Otsego, the Appellate Division first noted the rule that a material misrepresentation is found where there is proof that the insurer would not have issued the policy “but for” the inaccuracy.  Further, the Court also affirmed the long-standing principle that a material misrepresentation does not have to be intentional, a mere mistake can give rise to the loss of coverage.  

In reaching its conclusion, the Court also addressed the fact that Otsego conduced an inspection of the property approximately one week after the policy was issued and requested additional information from the plaintiff relative to apparent renovations and possible vacancy issues.  The Court apparently concluded that the inspection and request for information did not waive Otsego’s material misrepresentation defense. 

 

DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley

[email protected]

10/28/21       Kathryn Iannillo, et al. v. Mordechai Felberbaum
Appellate Division, Third Department
Defendant’s Expert Failed to take into Account the Operative Findings when Opining that the Subject Injury was Not Causally Related

This appeal was from that part of an order of the Supreme Court (Schick, J.), entered December 3, 2020 in Sullivan County, which denied defendant's motion for summary judgment dismissing the serious injury claims under the permanent consequential limitation of use and significant limitation of use categories.

In July 2017, plaintiff Kathryn Iannillo was involved in a motor vehicle accident that allegedly caused injuries to her left wrist and cervical and lumbar spine. Iannillo and her spouse, derivatively, commenced this action against defendant, the driver of the vehicle that hit Iannillo's vehicle, asserting claims for loss of consortium and serious injuries under Insurance Law § 5102 (d). Discovery ensued, following which defendant moved for summary judgment dismissing the complaint, asserting that plaintiff did not sustain a serious injury as defined in Insurance Law § 5102. The Supreme Court partially granted the motion to the extent of dismissing the claims for serious injury under the significant disfigurement, permanent loss of use and 90/180-day categories, but denied the motion as to the categories of permanent consequential limitation of use and significant limitation of use, finding that triable issues of fact existed with respect thereto. Defendant appeals from so much of the court's order as partially denied his motion.

In support of his summary judgment motion, defendant submitted Iannillo's medical records, her May 2019 deposition testimony and reports from Robert C. Hendler, a board-certified orthopedic surgeon who examined Iannillo in July 2019 and reviewed her underlying medical records. During her deposition, Iannillo recounted her past medical history, revealing that she had carpal tunnel surgery on her left hand in 2009 and that a 2000 car accident had injured her "whole back." She further confirmed that, before the subject accident, she had been diagnosed with herniated discs in her lumbar spine and bulging discs in her cervical spine. As to her symptoms after the subject accident, although Iannillo testified that she did not feel much pain at the scene of the accident and proceeded to work thereafter, she later became "really stiff" and left work to go to the hospital, where she complained of pain in her left wrist, neck and shoulder. Iannillo then went out on a previously scheduled vacation and returned to work the following week as scheduled, confirming that no medical restrictions were placed on her work at that time. Iannillo underwent surgery to her left wrist in December 2017 — performed by orthopedic surgeon Gabriel Dassa — and testified that she continued to use a wrist brace on a daily basis to manage pain. Iannillo testified that it was difficult to drive and that she was prone to dropping household items. She further explained that her husband had taken over certain household chores and their physical intimacy had waned. That said, she continued to perform her job functions as required and could not think of any activity that was completely diminished as a result of her injuries.

The medical records from Crystal Run Healthcare, where Iannillo was examined on the day of the accident, report a pre-accident history of carpal tunnel surgery on her left wrist, physical therapy for pain in her left "hand/wrist" in 2014, and a November 2015 incident in which Iannillo got her left hand stuck under a tire, requiring medical treatment for a suspected soft tissue injury. As to Iannillo's spine, the medical records also document a herniated disc dating back to at least 2014 and that she sought medical treatment for back pain within six months of the subject accident. The physical examination on the date of the accident indicated tenderness in Iannillo's cervical and lumbar spine and an "active painful range of motion" in her left wrist. Although the X rays did not detect any fractures or dislocations, mild soft tissue swelling in the left wrist was noted. Moreover, MRIs performed in August 2017 indicated multilevel degenerative disc disease in the cervical spine, disc herniation and disc bulging in the lumbar spine and fluid in the distal radioulnar joint of the left wrist, which may have indicated "an occult pinhole tear of the cartilage," even though no tear was directly observed.

To meet his prima facie burden, defendant primarily relied on Hendler's reports, which were based on his review of the medical records and physical evaluation of Iannillo. During the physical examination, Hendler observed a normal range of motion in Iannillo's left wrist, and cervical and lumbar spine. Hendler ultimately opined that, at the time of the accident, Iannillo "may have sustained cervical and lumbosacral sprains, with temporary exacerbation" of her "pre-existing degenerative joint disease and degenerative disc disease of the neck and low back." However, he found no indication of a continued disability to Iannillo's spine and "no permanent findings in her neck or back that would be causally related to the accident of record." After reviewing the preoperative MRI study of Iannillo's left wrist, along with Dassa's operative report and the intraoperative photographs, Hendler "did not see any tear of the [triangular fibrocartilage complex]" (hereinafter TFCC) as reflected in the operative report. While he acknowledged that Iannillo "may have sustained a mild sprain of the left wrist" from the accident, he concluded that "there were no findings at the time of the [December 2017] surgical procedure that would be considered posttraumatic in nature." Accordingly, he ultimately opined that the December 2017 surgery to Iannillo's left wrist was not causally related to the subject accident.

On this record, the Appellate Court found that defendant satisfied his prima facie burden of demonstrating that Iannillo did not sustain a serious injury to her spine within the meaning of Insurance Law § 5102 (d). Defendant submitted evidence that Iannillo had been involved in a 2000 motor vehicle accident that caused injuries to her "whole back," and that she had preexisting conditions in her cervical and lumbar spine, including disc herniation and bulging. Upon examining Iannillo and reviewing her medical records, Hendler ultimately characterized the degenerative disc disease reflected in the August 2017 MRI images as "pre-existing" and found that she had "no present disability" and "no permanent findings . . . that would be causally related to the accident of record." Hendler's opinions, coupled with the medical records documenting Iannillo's preexisting conditions, support a prima facie finding that Iannillo did not suffer a permanent consequential limitation and/or significant limitation of use of her spine as a result of the subject accident. As defendant satisfied his prima facie burden, the burden shifted to plaintiffs to raise a triable issue of fact in opposition.

In opposition to the motion, plaintiffs submitted, among other things, clinical reports by Dassa, Sukeb Datta and Aditya Patel — physicians who treated Iannillo after the accident — along with the report of John Ioia, a physician who evaluated Iannillo in March 2018. Although these physicians documented, among other things, "multilevel degenerative disc disease" and bulging discs in Iannillo's cervical and lumbar spine and opined that these conditions were causally related to the subject accident, they did so in a conclusory manner and completely failed to account for Iannillo's preexisting conditions affecting her spine or to demonstrate that the subject accident may have exacerbated such prior conditions. As such, plaintiffs failed to raise a triable issue of fact sufficient to defeat the motion as it relates to the alleged spinal injury.

However, with regard to Iannillo's left wrist injury, the Appellate Court found that Hendler concluded that he did not observe a tear of the TFCC in reviewing the preoperative MRI and intraoperative photographs. Finding no tear, Hendler concluded that there was no posttraumatic pathology to relate the need for surgery to the accident. Hendler did not, however, account for Dassa's actual operative findings. Specifically, upon an "[a]rthroscopic examination of the wrist," Dassa found a "TFCC tear" and performed a "[p]artial TFCC excision and debridement." That Hendler may not have observed a TFCC tear in the films does not account for Dassa's visualization and actual repair of the TFCC tear during the surgery. Using Hendler's own reasoning, the existence of a tear evidences a posttraumatic pathology that relates the surgery to the accident. For his part, Dassa opined that the TFCC tear was causally related to the accident. In circumstances such as this — where the opinion of a defendant's expert is premised upon a flawed accounting of the injury — defendant's prima facie burden to establish his entitlement to judgment as a matter of law on the left wrist claim is not satisfied. Dassa further opined, following his examination of Iannillo on August 6, 2019, that she continued to complain of pain and had "significant range of motion impairments" in her left wrist, indicating a "significant level of permanency." Although we recognize that Iannillo's other treating physicians documented that she had a full range of motion in her left wrist without pain following the 2017 surgery, viewing the evidence in a light most favorable to the nonmoving party, we conclude that a triable issue of fact remains as to whether she sustained a permanent consequential limitation of use or a significant limitation of use of her left wrist as a result of the accident.

Accordingly, the Appellate Court found that the Supreme Court properly denied the motion for summary judgment as it related to these categories of serious injury with respect to Iannillo's left wrist.

 

WILEWICZ’S WIDE WORLD of COVERAGE (featuring Franco Mirolo)
Agnes A. Wilewicz

[email protected]

11/04/21       Jowite Ltd. P’ship v. Fed. Ins. Co.
United States Court of Appeals, Fourth Circuit
Fourth Circuit Holds That an Ensuing Loss Exception in a Design Exclusion Cannot be Reasonably Understood to Mean That a Loss can be Both the “Ensuing Loss or Damage” and also the “Peril Not Otherwise Excluded”

Federal Insurance Company (“Federal”) issued an all-risk insurance policy to Jowite Limited Partnership (“Jowite”). Jowite owned a series of apartment buildings in Easton, Maryland. In 1999, Jowite learned that one of the buildings, Building 300, was sinking into the ground. Several unsuccessful repairs to Building 300 were attempted between 1999 and 2013. In 2015, a construction company inspected the building and recommended that it be demolished completely. Jowite filed a claim with Federal seeking coverage for the damage caused by ground settling. Federal retained an engineer, who observed that the damage to the building was the result of ongoing settlement over the building’s lifetime. Jowite retained its own engineer, who concluded that the root cause of the problem was inadequate design and construction of the building foundation.

Federal disclaimed coverage citing defective design and settling exclusions. Under the terms of the policy, the design exclusion did not apply to ensuing loss or damage caused by or resulting from a peril not otherwise excluded, and the settling exclusion did not apply to ensuing loss or damage caused by or resulting from a specified peril. Jowite sued Federal for breach of contract and both parties moved for summary judgment. The district court denied Jowite’s motion and granted Federal’s, concluding that both exclusions barred coverage. On appeal, Jowite argued that the lower court improperly interpreted the “ensuing loss” exception to the design exclusion, and that it erred by refusing to apply the “efficient proximate cause” rule to conclude that the defectively design and construction of Building 300 was the proximate cause of the loss, instead of the settling.

The court of appeals affirmed the district court’s decision, ruling that Jowite was not entitled to coverage. The court said that Jowite’s argument that the collapse of Building 300 could be both the “peril” and the “loss or damage” under the ensuing loss exception to the design exclusion strips the exclusion of any real meaning. The court further held that the ensuing loss exception could not reasonably be understood to mean that the collapse of the building would be both the “ensuing loss or damage” and the “peril not otherwise excluded.” The court did not review the district court's analysis of the settling exclusion because the result would have remained unchanged.

 

BARNAS on BAD FAITH
Brian D. Barnas

[email protected]

 

11/05/21       Capitol Specialty Insurance Corporation v. GEICO
United States District Court, Central District of California
Geico did not Act in Bad Faith by Rejecting Settlement Offer where it Possessed Limited Information about the Claim and Damages

On September 18, 2015, Collins collided with a motorcycle operated by Juan Martinez while driving her own car.  Geico had issued an auto liability policy to Collins with $50,000 in liability coverage.  Collins reported the accident to Geico and provided a description of the accident, and thereafter Geico assigned 80% liability to Collins and 20% liability to Martinez.

Collins was employed by Nu-Era as a home health care nurse at the time of the accident, and she was driving home from a client visit.  Capitol insured Nu-Era under a primary and umbrella policy, which each had $1 million in liability limits.

Between September 2015 and November 2016, Geico made requests to Martinez's counsel for proof of Martinez's liability insurance and medical bills and records.  On or around December 5, 2016, Martinez sent a letter to Geico requesting the policy limit and requesting a response by December 19, 2016, by mail.  The demand letter only included eight pages of medical records and no medical bills.  Geico again attempted to contact Martinez about his letter and to obtain medical bills and insurance information.  Martinez did not respond.  Geico eventually responded in a letter dated December 16, 2016, advising that it was unable to meet the demand based on lack of information.

On January 6, 2017, Martinez filed an underlying lawsuit in state court.  The lawsuit settled in March 2019 with Plaintiff contributing its $2 million policy limit.  Plaintiff filed a lawsuit against Geico alleging bad faith based on failure to accept Martinez’s settlement offer. 

The court concluded that Geico did not act in bad faith in refusing the settlement offer.  Geico requested medical bills and records from Martinez for 14 months prior to the demand and again attempted to obtain information after the demand was received.  Geico indicated a willingness to resolve the claim, but it needed additional information to do so.  Thus, no reasonable jury could have concluded that Geico acted in bad faith in rejecting the settlement offer.  The court noted that while the implied duty to settle is intended to protect the insured from excess exposure, “the doctrine conversely does not exist to require insurers to denigrate their own interests by settling for the policy limits in the absence of sufficient evidence supporting the conclusion that the claim against the insured would exceed policy limits.

 

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

10/21/21       Hartford Cas. Ins. Co. v. XL Ins. America, Inc.
Superior Court of Connecticut, Hartford Judicial District
No Obligation to Reimburse Defense Costs Paid on Behalf of a Mutual Insured

When do four mainstays of the Connecticut insurance industry all agree that their dispute is governed by Florida law—when they are fighting over who owes the defense for a bridge collapse at Florida International University. As you may recall, the almost brand-new pedestrian bridge collapsed within days of completion, killing six and injuring ten. The collapse captured national headlines, as it was all on video.

Munilla Construction Management, LLC (MCM) was the general contractor for the construction of the Pedestrian Bridge. MCM was insured under a commercial general liability policy issued by Greenwich Ins. Co. In the Underlying Lawsuits, the injured plaintiffs alleged that MCM was responsible for the installation and completion of the bridge and for providing the labor, equipment, and materials necessary to perform all of the work. MCM entered into a purchase order with RC Group (RC), which was insured under a commercial general liability policy issued by The Hartford. Pursuant to the purchase order, RC was obligated to add MCM as an additional insured to its CGL coverage.

In June 2018, MCM tendered the Underlying Lawsuits to The Hartford. Acknowledging its defense obligation, The Hartford agreed to participate in the defense subject to a reservation of rights that MCM only qualifies as an additional insured for liability caused by RC's operations, but that MCM is not an additional insured for liability arising out of RC's professional negligence.

Despite agreeing to defend, apparently The Hartford did a dine and dash, leaving Greenwich holding the $6 million tab. The Hartford argued that 1) MCM is not an additional insured under the RC CGL policy; 2) there is no coverage for MCM because the claims in the Underlying Lawsuits do not allege that MCM is vicariously liable for RC's conduct, and 3) RC's conduct falls entirely within the professional services exclusion. Greenwich countered that it was rubber and The Hartford glue, everything The Hartford said bounced off of it and stuck to you. Greenwich also argued that the Hartford's coverage was primary, and Greenwich's is secondary.

The parties agreed that Florida law applied. Under Florida law, an insurer cannot recover from another insurer costs incurred in defending a mutual insured. “It is well established under Florida law that ‘there is no right of reimbursement to defense costs between primary insurers of a common insured.’” Pennsylvania Lumbermens Mut. Ins. Co. v. Indiana Lumbermens Mut. Ins. Co., 43 So.3d 182, 186 (Fla.Dist.Ct.App. 2010).

The Hartford claimed that Greenwich was obligated to provide a primary defense and indemnity to MCM as an additional insured under a policy issued to another subcontractor-defendant, therefore, at worst the carriers are mutual insurers of MCM. Greenwich countered that the reimbursement obligations should be determined only under the Hartford-RC policy without consideration of other coverages to other parties.

The court wasn’t buying Greenwich’s argument. “Greenwich cites no authority for the proposition that it can properly leverage MCM's status as an additional insured under the Hartford/RC policy while ignoring MCM's status as an additional insured under the Greenwich/Barnhart policy. Its argument is inconsistent with Florida law, which, unsurprisingly, looks to all applicable policies to determine the obligations among multiple insurers. “When deciding the priority of coverage among multiple insurers, Florida courts generally rely on the language of the several policies ...” (Internal quotation marks omitted.) Auto-Owners Ins. Co. v. Great American Ins. Co., 479 Fed. App'x 228, 233 (11th Cir. 2012).” Accordingly, the trial court did not determine whether MCM was a proper additional insured or if the professional services exclusion precluded coverage. Instead, the court found that the undisputed facts put Greenwich in the same position as primary insurer for MCM through both subcontractor policies, making MCM the carriers’ mutual insured.

Greenwich already filed its notice of appeal.

 

OFF the MARK (featuring Kyle Ruffner)
Brian F. Mark
[email protected]

 

11/03/21       Atain Ins. Co. v. Basement Waterproofing Specialists, Inc.
United States District Court for the Eastern District of Pennsylvania
U.S. District Court Finds No Duty to Defend as Underlying Claims Sounded in Breach of Contract, and, as such, did not Constitute an “Occurrence.”

This declaratory-judgment action arises out of an underlying construction defect action related to the repair of a home, including the installation of a French drain system, repairing a crack in a wall, and reinforcing said wall.  The owner of the home, Gary Budman, hired Basement Waterproofing Specialists, Inc. (“Basement, Inc.”) to perform the repair work on his property.  Immediately following the completion of the work, flooding occurred, and the allegedly repaired wall had fracturing and bowing.

Mr. Budman reached out to Basement, Inc. and Basement’s engineer determined that a French drain system would not be sufficient to prevent the water issues and that the work should have been performed on the outside of the property.  Budman then filed suit against Basement, Inc. asserting claims for breach of contract, negligence, consumer fraud, common law fraud, and breach of the covenant of good faith and fair dealing. Basement, Inc. demanded that Atain Insurance Company (“Atain”), its insurance carrier, provide coverage for the underlying action.

After denying Basement, Inc.’s claim, Attain commenced a declaratory-judgment action seeking a declaration that it did not owe Basement, Inc. a duty to defend or indemnify.  Basement, Inc.’s insurance policy with Atain provided coverage for bodily injury and property damage caused by an “occurrence”, defined by the policy as an “accident”. Attain argued the damage to the property was not a covered “occurrence” under the policy.

Pennsylvania law holds that a general liability policy protects against accidental injury, not merely contractual disputes.  Therefore, the Court held that Budman’s breach of contract claim against Basement, Inc. was not an “occurrence” because the allegation arose out of the insured’s contractual obligations.  In addition, courts have consistently held that claims based on faulty workmanship do not amount to an “occurrence”, and damages that are the foreseeable result of faulty workmanship lack the degree of fortuity for an “occurrence” to have taken place.  

Budman alleged that Basement, Inc. was negligent in its failure to properly install a French drain system.  Although framed as a negligence claim, the Court reasoned that Budman essentially alleged Basement, Inc. failed to provide the services it was contractually obligated to provide.  Since the water issues and structural damage to the property in this case were a foreseeable consequence of the failure to properly install the French drain system, the Court held that the damage was not a covered “occurrence”.  In addition, the Court held that fraudulent behavior constitutes an intentional act, so the statutory and common law fraud claims asserted by Budman were not covered “occurrences”.  Accordingly, the Court granted Atain’s motion for judgment on the pleadings and held Atain did not owe Basement a duty to defend or indemnify.

 

BORON’S BENCHMARKS (featuring Hannah Cominsky)
Eric T. Boron

[email protected]

 

10/28/21       Zurich American Ins. Co. v. Ironshore Specialty Ins. Co.
Supreme Court of Nevada
Insured Holds Burden of Proof on Exclusion Exceptions

Faced with opposing decisions from two Federal District Courts, the Supreme Court of Nevada recently had the last word on whether an insured or an insurer has the burden of proving the applicability of an exception to an exclusion of coverage in an insurance policy. The Supreme Court held that the burden falls on the insured when attempting to prove the existence of an insurer’s duty to defend. Additionally, the Supreme Court expressly held that an insured can properly rely on any extrinsic evidence available to the insurer at the time the defense is tendered, making it possible for an insured to go outside the allegations of a complaint to help show the insurer has a duty to defend.

This dispute arises from various construction defect cases brought against development companies that were responsible for building thousands of homes in Nevada during the early 2000s. The subcontractors were insured by Zurich for the duration of the construction but then switched to Ironshore after the construction was completed. The exclusion at issue was found in Ironshore’s “Continuous or Progressive Injury or Damage” exclusion which excluded coverage for property damage “which first existed, or is alleged to have first existed, prior to the inception of the policy.” The exclusion provides an exception for property damage that is sudden, accidental, and takes place within the policy period. When Zurich sued Ironshore for, among other things, a declaration that Ironshore owed a duty to defend the subcontractors in the underlying lawsuits, Ironshore argued that its duty to defend was not triggered because the underlying complaints did not sufficiently allege any potential for coverage.

One district court rejected Zurich’s argument on summary judgment that the sudden and accidental exception applied although none of the complaints in the underlying suits alleged any sudden damage. The court reasoned that Zurich failed to meet its burden and did not provide sufficient evidence, implicitly placing the burden to establish the exception applied on Zurich. The Court assumed extrinsic evidence was available to Zurich, but the issue was not expressly addressed. On the other hand, the conflicting decision of the other district court found that because the underlying complaints were so lacking in allegations regarding the specificity of when and how the property damage occurred, Ironshore could not prove that the damage wasn’t sudden and accidental, thus placing the same burden on the insurer.

The Nevada Supreme Court looked at the opposing decisions and examined trends in other jurisdictions, finding that the majority rule was to place the burden on the insured. The Court also noted that Nevada law requires the insured to bear the initial burden of establishing the potential for coverage. Consider the Dan Kohane Insurance Coverage Formula, Coverage = [(What’s In – What’s Out) + (Compliance with Policy Conditions)]. Nevada law requires an insured to bear the initial burden of establishing the potential for coverage, or anything that falls within the “What’s In” parenthesis. The Court reasoned that an exception to an exclusion provides coverage where there usually would not be any and thus also falls under “What’s In.” Because establishing an exception to a policy exclusion operates to provide coverage in the same way that the initial burden of establishing coverage does, it too should fall on the insured. Taking note of additional considerations under Nevada evidence law, the Court decided that placing the burden on the insured comports with Nevada law as a whole and fell in line with the majority rule.

 

BUCCI on “B”
Diane L. Bucci

[email protected]

10/02/21       Nat'l Union Fire Ins. Co. of Pittsburgh v. Dish Network, LLC,
Tenth Circuit Cur of Appeals
TCPA Statutory Damages Appeals

The United States along with four states brought suit against Dish Network under the for illegal telemarketing practices in violation of, among others, the Telephone Consumer Protection Act (“TCPA”).  The prayer for relief sought statutory damages and penalties as well as injunctive relief under the TCPA. 

The complaint alleged that Dish Network and its authorized dealers used illegal solicitation techniques to sell Dish products and services.  Among other things, they were accused of violating Do Not Call Lists, engaging in abandoned call practices, violating its obligation to limit prerecorded sales pitches to two (2) to for the telemarketer to connect to the sales representative.  You know, those constant and annoying telephone calls. The TCPA permits a cause of action with statutory damages for anyone who prosecutes the caller in an effort to stem the never-ending calls. 

National Union, one of Dish Network’s umbrella carriers, brought suit against Dish Network for a declaration of no coverage, arguing that remedies under the TCPA qualified as penal, and are therefore not insurable under Colorado law. 

On appeal, the court addressed the decision in a related case involving the same complaint, Ace Am. Ins. Co. v. Dish Network, LLC, 173 F. Supp. 3d 1128 (D. Colo. 2016), aff'd, 883 F.3d 881 (10th Cir. 2018), where the court granted summary judgment to the insurer(s) holding that the TCPA statutory damages sought in the underlying action were penal and therefore uninsurable under Colorado public policy.  Ace relied on the three-part test enunciated in Kruse to determine if the damages were penal.  The test questions whether (1) the statute asserted a new and distinct cause of action; (2) the claim would allow recovery without proof of actual damages; and (3) the claim would allow an award in excess of actual damages. 178 P.3d at 1201.  Based on Ace and Kruse v. McKenna, 178 P.3d 1198 (Colo. 2008), overruled on different grounds by Guarantee Tr. Life Ins. Co. v. Est. of Casper by & through Casper, 2018 CO 43, 418 P.3d 1163. 

The Kruse court enunciated a three-part test to determine if damages are penal including whether (1) the statute asserted a new and distinct cause of action; (2) the claim would allow recovery without proof of actual damages; and (3) the claim would allow an award in excess of actual damages. 178 P.3d at 1201. 

Dish Network argued that the Colorado Supreme Court’s decision in Rooftop Restoration, Inc. v. American Family Mutual Insurance Co., 418 P.3d 1173 (Colo. 2018), discredited the test in Ace and allegedly controlled the case at bar.  As explained by the court, the Rooftop Restoration decision did not undermine Kruse. The Colorado Supreme Court did not apply the Kruse test because there was no need, the statute at issue was not penal.  According to the court, the test need not be applied when the penal or non-penal damages issue was clear. 

Dish then contended that the telemarketing calls cause the “loss of use” of the recipient’s telephone because the recipient of such a call cannot use the phone for other purposes during the call. However, the government plaintiffs did not make any such claim.  Because Colorado is a four corners state, the duty to defend was limited to the claims in the underlying complaint.  None of those, held the court, sought relief for loss of use of the telephone for the recipient of the call. 

The government plaintiffs also sought injunctive relief but there was no duty to defend because the occurrence or offense had not yet occurred. 

 

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

Legislative List

11/03/21       New Law Expands Award of Attorney’s Fees and Expert Witness Fees In Discrimination Cases
New York Governor’s Office
New Law Permits the Award of Attorney’s Fees and Expert Witness Fees for Prevailing Parties Under Executive Law

Last week, New York Governor Kathy Hochul signed Chapter 566 of the Laws of 2021 into law, which amends the Executive Law with the intent to allow for an award of attorney's fees and expert witness fees in all appropriate cases of discrimination. Notably, the law provides certain limitations including that a prevailing respondent or defendant make a motion requesting such attorney's fees and show that the action or proceeding was frivolous.

According to the Sponsor Memorandum, under this new law, effective February 1, 2022, Executive Law § 297(10) is amended to remove a

“limitation on the provision of attorney's fees to housing discrimination cases . . . so that attorney's fees can be awarded in appropriate cases in other areas of the Division's jurisdiction, such as employment and places of public accommodation.”

Justifying this expansion, the Sponsor Memorandum continues, indicating that

“The majority of cases filed under the Executive Law are employment cases. Often, discrimination victims have been terminated, or forced to leave their jobs because of intolerable conditions such as pervasive sexual harassment and are frequently not in a position to pay for legal representation. Although the law provides for Division attorneys or agents to present cases at a public hearing when probable cause has been found, there [were] no provisions for legal representation in the investigation and conciliation stages of the Division proceedings, nor [were] there provisions for representation for persons who pursue their claims directly in State court.  [This] provision for an award of attorney's fees in employment and other discrimination cases [is] consistent with the discrimination laws of many other states, as well federal law, and [] permit[s] a more robust enforcement of the law for the general benefit of the public. Awards for expenditure of fees for expert witnesses [will] be awarded in a like manner, so that the Division will have the benefit of a complete record in making its determinations. “

Maxwell’s Minute: Discrimination cases in New York just got a little more interesting for insurers. Pretend for a moment that your insured is sued for employment discrimination and there are allegations that the discriminatory conduct resulted in emotional harm to the claimant. Under Executive Law §297(10), a court is permitted to “award reasonable attorney's fees attributable to such claim to any prevailing party,” most notably the claimant, where “the respondent has been found liable for having committed an unlawful discriminatory practice.” The question becomes whether this statutory right to attorney’s fees would extend recovery of those fees as covered damages under standard insuring grant language. In other words, are attorney’s fees awarded under Executive Law §297(10) in a case alleging “bodily injury” included as “damages because of ‘bodily injury’”.

In a slightly different context, the Navigation Law provides that “[i]ndirect damages include an attorney's fee incurred by a property owner against the discharger in such an action.” Starnella v. Heat, 14 A.D.3d 694 (2nd Dep’t 2005) (citing AMCO Intl. v. Long Island R.R. Co., 302 A.D.2d 338, 754 N.Y.S.2d 655 (2nd Dep’t 2003); Strand v. Neglia, 232 A.D.2d 907, 909, 649 N.Y.S.2d 729 (2nd Dep’t 1996)); Fuchs & Bergh, Inc. v. Lance Enterprises, Inc., 48 A.D.3d 626, 853 N.Y.S.2d 106 (2nd Dep’t 2008). These types of damages under the Navigation Law, albeit expressly labeled therein as “indirect damages”, may be considered “damages because of ‘property damage’” under a standard insuring grant.

Food for thought.

 

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

10/28/21       Doe v. State of New York
New York State Court of Claims
The State of New York Cannot Be Liable for The Negligence of Assigned Counsel

Claimant filed this Claim on August 13, 2020, pursuant to the Child Victims Act to recover damages for alleged sexual misconduct perpetrated by Jeffrey Bernstein, an attorney assigned by Bronx County Family Court pursuant to County Law article 18-B to represent Claimant in a custody proceeding. On October 28, 2020, Claimant amended the claim alleging that Bernstein sexually abused Claimant on several occasions in 1989 in a conference room in the Bronx Family Courthouse. Defendant moved to dismiss the Amended Claim on the ground that it fails to state a cause of action upon which relief can be granted. Defendant argued that Mr. Bernstein, an attorney assigned to represent Claimant pursuant to County Law article 18-b, was not an employee or agent of the State and, as such, the State cannot be held liable for any wrongdoing committed by him. The Amended Claim asserts that State was negligent "in the hiring, vetting, supervising, retention, and control of the New York Unified Court System, their 18b attorneys, and, more specifically, . . . Jeffrey Bernstein”. However, New York Law is consistent in holding that the State cannot bey held liable for negligence committed by assigned counsel. Accordingly, Claimant’s claim alleging that the State was negligent in its assignment of Mr. Bernstein was dismissed.

Claimant additionally alleged that the State is liable under a theory of premises liability. However, the Court ruled that no such theory could be liberally construed from the facts alleged in the Amended Claim. The Amended Claim specifically alleged that the State "owed a duty to Claimant to use reasonable care to keep their minor clients safe from sexual abuse and to exercise such care in their hiring, retention and supervision of their agents, officers, attorneys, servants and employees". Even affording every favorable inference to Claimant, the Court ruled that the Amended Claim only alleges that the State the duty owed to Claimant is limited to the appointment, retention, and supervision of assigned counsel. In particular, the Amended Claim alleged the State breached its “duty to supervise and prevent known risks of harm to its minor children by its attorneys,” thus limiting the extent of the State’s negligence to the breach of the States duties to supervise attorneys appointed to represent indigent clients.

 

RAUH’S RAMBLINGS
Patricia A. Rauh

[email protected]

11/03/21       Feeney v. Unum Life Insurance Co. of America
U.S. Court of Appeals, Seventh Circuit
Denial of Plaintiff’s Long-Term Disability Benefits Was Neither Arbitrary nor Was the Review Process Flawed According to ERISA Standards

Plaintiff, Arthur Feeney (“Mr. Feeney”) received long-term disability benefits from defendant insurer, Unum Life Insurance Company of America (“Unum”) for injuries he sustained in June 2014 when he fell from a scaffold at his home, sustaining a concussion, as well as knee and back injuries.  After a year of receiving the benefits, Unum decided that he was no longer “disabled”, as defined by the employee-welfare benefit plan and discontinued the benefits.  Mr. Feeney sued to have his benefits reinstated under § 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 (“ERISA”), arguing that Unum’s review process was flawed and its decision to discontinue benefits was arbitrary.  The District Court determined, however, that Unum reasonably justified its decision and granted Unam’s motion for judgment on the pleadings.  Mr. Feeney appealed to the U.S. Court of Appeals for the Seventh Circuit.

Following Mr. Feeney’s fall, he was seen several times by Dr. Wirth, a family physician, who tended to his complaints of confusion and difficulty concentrating as well as his complaints of knee and back pain.  He was also referred to and participated in physical therapy.  Dr. Wirth submitted treatment notes and a certification of disability to Unum indicating that Mr. Feeney still suffered from short-term memory loss, visual disturbances, and problems with balance and coordination.  Based on these notes, Unum approved Mr. Feeney’s claim for benefits through the date of his physical therapy discharge in October 2014, but Unum also advised that it was unclear whether Mr. Feeney remained disabled after that date and that they would continue to evaluate his claim.

Unum consulted with a different family physician, Dr. Brown, who concluded that Mr. Feeney had regained the physical and cognitive capacity to return to work and that his x-rays showed no abnormalities in his knees or back.  Unum submitted Dr. Brown’s evaluation to Dr. Wirth, who provided a second certification of disability to Unum, stating that Mr. Feeney still suffered from cognitive impairment and was scheduled to undergo cognitive testing in March 2015.  Unum agreed to extend Mr. Feeney’s benefits pending those test results and also requested that Mr. Feeney undergo a physical exam as well.

In March 2015, Mr. Feeney underwent an IME with Dr. Snyder, who concluded that Mr. Feeney had no strength, balance, or coordination limitations and could return to work.  The following month, Mr. Feeney was seen by a neuropsychologist, Shanna Kurth, for a cognitive evaluation, but Mr. Feeney refused to authorize these medical records to Unum.  In the following months, Mr. Feeney continued treatment with Dr. Wirth, who authorized steroid injections for knee pain.  An MRI of Mr. Feeney’s spine and a bone scan revealed old injuries or degenerative changes, but no new abnormality.

In July, Unum again had Dr. Brown review Mr. Feeney’s more recent medical records and she concluded that Mr. Feeney did not have any work-precluding limitations after October 2014.  Soon thereafter, Unum discontinued Mr. Feeney’s benefits because his medical records did not support the existence of work-precluding impairments after October 2014.  Unum stated that Mr. Feeney’s subjective complaints of pain to Dr. Wirth were not supported by imaging studies or physical examinations and that Mr. Feeney had not provided any evidence to counter the IME doctor’s conclusion that he could perform the duties of his job.

Mr. Feeney first filed an administrative appeal, provided additional medical records, and underwent more IME’s, but Unum still concluded that Mr. Feeney had no long-term physical or cognitive limitations preventing him from returning to work and upheld the termination of his benefits.

Two years later, Mr. Feeney sued Unum under ERISA to have his long-term disability benefits reinstated.  He argued that Unum had arbitrarily terminated his disability payments after a flawed review process that denied him “full and fair review.”  The District Court concluded that Unum’s decision to discontinue Mr. Feeney’s benefits was fair and reasonable.  The Judge determined that it was not arbitrary or capricious for Unum to reach the decision that it did, based on the many doctors that concluded Mr. Feeney did not have work-precluding functional limitations.

On appeal, Mr. Feeney argued that Unum’s review of his claim was tainted by a structural conflict of interest that caused it to favor the opinions of its file-reviewing physicians over the opinion of Dr. Wirth.  The Court of Appeals disagreed with this assertion by pointing out that Unum had retained numerous doctors to review Mr. Feeney’s claim.  Finally, Mr. Feeney argued that Unum improperly denied his administrative appeal based solely on one of the doctor’s “paper review” without a current physical examination.  However, the Court stated that there is no presumption under ERISA against a “paper review”, which enables doctors to evaluate medical information, to balance test results against the subjective opinions of treating physicians, and to provide an expert opinion without direct consultation.  The Court of Appeals affirmed the District Court’s ruling.

 

STORM’S SIU EXAMEN
Scott D. Storm
[email protected]

10/27/21       Cerci v. Hartford Fin. Services Group, Inc.
United States District Court, W.D. Pennsylvania
Question of Fact Whether the Property was the “Residence Premises” of the Plaintiff -- Whether She had Habitual and Permanent Contacts with the Property that Demonstrated She Resided There

Cerci brought a breach of contract claim alleging Hartford inappropriately denied her claim on the basis that her property was not a "residence premises"; and a bad faith claim alleging that it did not have a reasonable basis for denying her claim.  

Hartford argues for summary judgment because Cerci was not "residing" at the Property at the time of the fire and the Property was not the "residence premises".  Additionally, it argues that summary judgment should be granted in its favor on the bad faith claim because no record evidence exists that it lacked a reasonable basis for how it handled Cerci's claim. Cerci counters that whether she resided at the Property is a disputed factual matter and that the facts deduced in discovery sufficiently support her reasonable expectation of coverage.  She also contends that multiple facts support her bad faith claim, and it is a matter best left for the jury.

The Magistrate Judge issued a Report and Recommendation recommending that Hartford's motion be denied, ultimately determining that material issues of fact remain as to both of Cerci's claims and a jury must determine "if Cerci had habitual and permanent contacts with the Property that demonstrate she resided there", if Cerci received the Policy such that the terms "residence Premises" would be readily apparent to her, if Cerci had a reasonable expectation of coverage and if Hartford had a reasonable basis for its denial of coverage.

The Court agreed with the analysis of the issues and legal conclusions reached by the Magistrate Judge. 


10/29/21       State Farm Fire and Casualty Co. v. Walker
United States District Court, E.D. Pennsylvania
No Duty to Defend or Indemnify Where Insured Shot the Claimant

An underlying personal injury action had been filed against Walker in the Court of Common Pleas, Montgomery County for injuries that occurred in his home. State Farm had provided a defense for Walker in that action expense and now sought declaratory judgment that it did not have a duty to defend or indemnify Walker because the alleged injuries are not covered.  

The Underlying Complaint alleges that Walker "acting in an erratic manner, proceeded to point and fire a gun at" Kwak, and caused her to sustain serious bodily injuries seeking compensatory and punitive damages from Walker for assault and battery, negligence, and intentional infliction of emotional distress. In Walker's answer he alleges that he acted in "justifiable self-defense" to protect himself from an imminent threat of bodily harm posed by Kwak, who was wielding a baseball bat.

State Farm denied coverage alleging the incident was not caused by an occurrence and based upon policy exclusions that the resulting bodily injuries were either: (1) a result of a willful and malicious, or criminal, act or omission of the insured; (2) was intended by the insured; or (3) would have been expected by the insured based on a reasonable person standard.  The second and third exclusion have an exception: coverage is not excluded for bodily injury resulting from the use of reasonable force to protect persons or property. 

After construing all allegations and reasonable inferences in the light most favorable to the nonmoving party, the Court held that, as a matter of law, State Farm did not have a duty to defend or indemnify Walker in the underlying action.

An insurer's duties to defend and indemnify depend upon a determination of whether the language of the third party's complaint triggers coverage under the insurance policy.  In making this determination, Pennsylvania courts look solely to the allegations within the four corners of the complaint.  "[T]he particular cause of action that a complainant pleads is not determinative," instead courts "look at the factual allegations contained in the complaint" to determine whether coverage has been triggered.  The allegations in the underlying complaint are "liberally construed in favor of the insured," and "if any doubt or ambiguity exists, it must be resolved in favor of coverage." 

The policy defines an occurrence as an accident. An accident is "an unexpected and undesirable event, or something that occurs unexpectedly or unintentionally."  The key term is "unexpected," which implies a degree of fortuity. 

State Farm argues that the factual allegations in the Underlying Complaint do not describe an accident or occurrence, but rather an intentional act of assault and battery. Conversely, Walker argues that the Underlying Complaint adequately alleges an occurrence because it alleges that Walker acted "in an erratic manner" and "erratic" evinces a sense of chaos and disorder.

The Court found that the Underlying Complaint contains no factual allegations that Walker's act was accidental or unintentional. A chaotic situation does not render all subsequent events unintentional or unexpected. The allegation that Walker, "acting in an erratic manner, proceeded to point and fire a gun at" Kwak is an allegation of intentional conduct, not an accident.  Because the factual allegations in the complaint do not constitute an occurrence, no duty to defend is triggered.

Defendant also points to the negligence counts in the Underlying Complaint as evidence that the action could potentially come within the policy's coverage, but the Court looks solely to the factual allegations contained in the complaint, and the pleaded causes of action are not determinative.  The Court found that the alleged conduct does not constitute an occurrence, and therefore the negligence counts in the Underlying Complaint, on their own, cannot trigger the insurance policy. After finding no coverage under the policy, the Court said that it does not need to consider whether any of the policy's exclusions apply. 
 

10/27/21       Hatchett Works v. Colony Ins. Co.
United States District Court, E.D. New York
Personal Injury Complaint and Notice of Removal Failed to State an Amount in Controversy in Excess of $75,000 as Required for Federal Diversity Jurisdiction

Defendant filed a notice of removal from New York State court, invoking diversity jurisdiction under 28 U.S.C. § 1332. To establish diversity jurisdiction, the removing party bears the burden of demonstrating that the $75,000 amount-in-controversy requirement of 28 U.S.C. § 1332(a) is satisfied.  Given "congressional intent to restrict federal court jurisdiction" and "the importance of preserving the independence of state governments," the Court must "construe the removal statute narrowly, resolving any doubts against removability."  Where the complaint does not clearly state the amount in controversy, the removing party must "allege facts adequate to establish that the amount in controversy exceeds the jurisdictional amount," otherwise the Court lacks jurisdiction. 

In this case, the complaint does not state an amount in controversy; it requests only a declaration that Defendant must indemnify and defend Plaintiff in a related personal injury case. In such cases, the amount in controversy is the value of the defense and indemnification.  The complaint in this case attaches as an exhibit the complaint in the underlying personal injury case, but that complaint does not clearly state the amount in controversy. It alleges that the plaintiff "sustain[ed] serious, severe, and permanent personal injuries, and has suffered and will continue to suffer physical pain, mental anguish, and loss of earning capacity" but such allegations "do not permit the Court to draw a reasonable inference—as opposed to speculating— that the damages or amount in controversy exceeds $75,000."  The personal injury complaint also states that the plaintiff "suffered damages in an amount that exceeds the jurisdictional limits of all other courts that would otherwise have jurisdiction" but that language refers to the lower courts of New York, which may not entertain actions seeking to recover more than $25,000, well below the $75,000 threshold required for federal diversity jurisdiction. The complaint in this case and its attachments therefore do not clearly state the amount in controversy.

In addition, Defendant's notice of removal also fails to "allege facts adequate to establish that the amount in controversy exceeds the jurisdictional amount."  The notice of removal contains only one allegation about the amount in controversy, stating that, "upon information and belief, damages of more than $75,000, exclusive of interest and costs, is at stake."  Such conclusory, boilerplate statements come nowhere near alleging facts sufficient for this Court to draw reasonable inferences that the amount-in-controversy requirement has been satisfied. The Court thus finds that Defendant's allegations in its notice of removal are insufficient to support the exercise of diversity jurisdiction. Remand is therefore appropriate. 


10/26/21       Covenant Realty v. Westminster American Ins. Co.
United States District Court, E.D. Pennsylvania
Question of Fact Whether Collapse Was Caused by Hidden Decay.  Bad Faith Claim Dismissed

Covenant alleges that Westminster, in bad faith, breached its contractual obligations by failing to cover the damage caused by the collapse of a glass skylight atrium at Covenant's property.  Westminster moved for summary judgment, which granted in part and denied in part.

Westminster issued a Business Owner's Special Policy to Covenant, insuring its four-story apartment building.  Pursuant to Additional Exclusion 2, the Policy "do[es] not pay for loss or damage involving collapse, caving in, or impairment of structural integrity, including but not limited to sagging, bowing, bending, leaning, separation of parts of the property, or inadequacy of load bearing capacity." This exclusion does not apply where the loss results from a "specified peril[]," such as a "windstorm."

Although the Policy specifically excludes collapse, it includes an "Additional Coverage of Collapse" provision, which covers "loss or damage to covered property caused by the sudden and abrupt collapse of a covered building or a portion of a covered building . . . caused by hidden decay of a structural component of the building or structure, unless an ‘insured' knew of or could reasonably be expected to suspect the presence of such decay prior to the sudden and abrupt collapse."

Covenant retained a public adjuster to investigate its cause and assist with the claims-submission process. Westminster retained an adjuster and a structural engineer to conduct an investigation of the cause who came to a differing conclusion as to the cause as asserted by the PA. 

Covenant alleged that a windstorm and heavy rain contributed to the collapse of the roof atrium system.  However, weather reports from NOAA show no record of rain and a peak wind speed of 21 MPH at the time of the Collapse.  In contrast, Westminster's adjuster and engineer concluded that heavy winds and rain could not have caused the Collapse. They explained, the glass panels were sloped and designed to drain rain/precipitation directly off of it onto the flat roof system and away from the glass/steel so water could collect on this system.  They opined that the failure of the structure was not the result of a one-time weather-related event.

Both parties agree that the Collapse was caused, at least to a degree, by decay, deterioration, and rot within the atrium, but the parties disagree as to whether that decay was hidden. Covenant claims it was not aware of decay in the atrium prior to the Collapse. Westminster's adjuster and engineer disagree—they both uncovered signs of wear and tear around the atrium, which they claim would have been visible before the Collapse. Westminster's adjuster and engineer also found that the roof was covered in roofing mastic which they argue proves Covenant knew the roof was deteriorating. Covenant's adjuster counters that, even though there may have been visible signs of wear and tear following the Collapse, prior to the collapse, the wear and tear would not have been visible through Covenant's "natural, normal routine of checking the building."

Westminster denied Covenant's claim due to "rot, wear[,] tear, deterioration and maintenance related issues." Specifically, Westminster stated that the "evidence of deterioration . . . would have been known to [Covenant] based on multiple layers of roof mastic that w[ere] applied to the roof" and "rust on the metal framing holding the glass and the wood supports attached to the brick."  Covenant argues that the Collapse is covered under the Policy because it was caused by either (1) a windstorm or (2) hidden decay.  Covenant pointed Westminster to the Policy's Additional Coverage for Collapse provision, arguing that the "application of roof mastic may be evidence of either maintenance or preventative maintenance applied for the proper upkeep," and explained that the deterioration had been hidden and was only revealed after the Collapse.

Covenant commenced this suit in the Court of Common Pleas asserting a breach of contract claim and a bad faith claim in violation of 42 Pa. Stat. and Cons. Stat. § 8371. Westminster then removed the case to this Court.

Westminster moved for summary judgment.  First, it argues that the terms of the Policy do not provide coverage because the undisputed evidence shows that the Collapse was not caused by a covered peril, i.e., a windstorm. Second, that the loss was caused by rot, wear, tear, and/or deterioration of the atrium and that Covenant knew or at least could reasonably be expected to suspect that this rot, wear, tear, and/or deterioration existed prior to the collapse of the atrium, and therefore is not covered by the Policy's additional coverage provisions. Last, Westminster argues that it conducted a good faith investigation as to the cause of Covenant's loss, and therefore, the bad faith claim fails.

Covenant contends that the Collapse was the result of high winds and heavy rains from a storm that swept through the Philadelphia area on the DOL.  However, the NOAA reports upon which Covenant relies show that on the DOL there was no rain and winds were no greater than approximately twenty miles per hour. And, even assuming there had been heavy rain and strong winds on the night of the Collapse, Covenant fails to show that the rain and winds caused the atrium to collapse. Both Westminster's adjuster and engineer found that the A-frame design of the atrium promoted drainage and would have prevented water from pooling on the roof of the atrium and causing the Collapse. Covenant's adjuster's unfounded conclusions in this regard do not create a genuine issue of material fact as to whether a storm could have caused the Collapse. 

Next, Covenant argues that, even if the Collapse was not caused by a windstorm, there is a genuine issue of material fact as to whether the Collapse was caused by hidden decay. With this the Court agreed.  Covenant's owner testified that his employees regularly maintain the roof and that he himself was on the roof just a few months prior to the Collapse and did not see any signs of decay or deterioration. He also testified that the decay was not visible through his "natural, normal routine of checking the building."

Although Westminster's adjuster and engineer took photographs showing dry and wet rot, decay, rust, deterioration, and wear and tear in and around the, which they contend show that the decay was not hidden, these photographs were taken after the Collapse. As such, these photographs fail to demonstrate what degree of decay was visible prior to the Collapse.

Westminster's experts also attempt to point to the application of large amounts of roofing mastic on the building as a sign that Covenant was aware the building's roof, including the atrium, was in disrepair. Covenant, however, states that the roofing mastic was applied for remedial and/or preventative maintenance and does not demonstrate that Covenant knew of or could reasonably be expected to suspect the presence of such decay.

The Court denied Covenant's bad faith claim. To establish a claim for bad faith denial of insurance coverage under Pennsylvania law, a plaintiff must show with clear and convincing evidence: "(1) that the insurer lacked a reasonable basis for denying benefits; and (2) that the insurer knew or recklessly disregarded its lack of reasonable basis." 

Westminster immediately conducted an investigation into the cause of the Collapse, hiring two professionals, an adjuster and a structural engineer.  They both found evidence that Covenant knew or should have known of the decay for several reasons: the post-Collapse photographs showed visible rust, rot, deterioration, and wear and tear; and the application of roofing mastic suggested the roof was in a state of disrepair. These reports gave Westminster reasonable bases for denying Covenant's claim. Covenant failed to point to any evidence from which a jury could clearly and convincingly find that Westminster lacked a reasonable basis for denying benefits and knew or recklessly disregarded its lack of a basis. 


10/21/21       Gonzalez v. State Farm Mut.  Auto. Ins. Co.
United States District Court, E.D. Pennsylvania
Cancellation of Auto Policy Due to Insufficient Funds Upheld When Premium was Set Up to Be Automatically Withdrawn from Account on Recurring Request; Receipt of Cancellation Notice Presumed Based on the “Mailbox Rule”

This breach of contract action was originally brought by Plaintiff in the Court of Common Pleas then removed by State Farm to this Court.  Gonzalez alleges that State Farm breached the auto insurance policy when it denied his claims for medical expense benefits and UIM benefits following a motor vehicle collision.  Gonzalez also added a count for bad faith.  The Court granted State Farm’s motion for summary judgment.

State Farm contends it is entitled to summary judgment because Gonzalez's policy had been canceled for failure to pay the premium and that the cancellation was justified because on that date the account contained insufficient funds.  Gonzalez had signed a Request for State Farm Payment Plan's Recurring Monthly Payment Option (“SFPP”) pursuant to which he authorized State Farm "to deduct/charge monthly recurring payments required for the payment of insurance...from either my financial account or credit/debit card."  Gonzalez also provided his debit card account number linked to his checking account with the Bank.  The SFPP cautioned that "If any transaction is not honored by my financial institution, the policies or loans will be considered not paid" and that "the date of the actual deduction/charge may vary based on the processing times of the financial institutions." Gonzalez acknowledged that pursuant to the SFPP, direct debits were made by State Farm from Gonzalez's checking account with the Bank.

Unfortunately, when it was time for the subject payment in question to be deducted from Gonzalez's checking account, the account reflected a negative balance.  As a result, the payment was declined by the Bank for insufficient funds. Gonzalez acknowledged that the payment was never debited from his account. Despite acknowledging the fact that the Bank mailed monthly paper statements to him, Gonzalez further admitted that he did not monitor his checking account to see what monies were coming out.

Although a check in the amount of $800.00 was later deposited into Gonzalez's account, by that time State Farm's request for authorization has already been denied by the Bank for insufficient funds.  Relying on the testimony of a bank representative, Gonzalez contends that there is a genuine issue of material fact as to whether State Farm’s request for the subject premium from his checking account was submitted as a recurring request (as claimed by State Farm) or as an "everyday debit transaction" (as testified to by bank representative) and thereby breaching the SFPP. According to bank representative, a recurring request would trigger Gonzalez's overdraft protection whereas an everyday debit transaction would not.

The bank representative's testimony was flatly refuted by State Farm's SFPP Account Inquiry System — Billing and Payment Breakdowns document which shows that all of the State Farm's monthly requests to the Bank were marked as "recurring," including the subject transaction.  The bank representative cited no documentary evidence to support her testimony that the request was submitted by State Farm as an "everyday debit transaction," instead relying solely on some vague "report" from the Bank's "cold storage." In short, the recurring request State Farm made on the date in question was the exact same recurring request it had made on the previous months, only this time Gonzalez did not have sufficient funds in his account. In addition, any issue over whether Gonzalez's overdraft protection should have been in fact been triggered when the recurring request from State Farm was presented is more properly directed to the Bank, not State Farm.

State Farm gave Gonzalez another opportunity to maintain his insurance policy when it mailed to him the Notice of Cancellation. This Notice advised Gonzalez that if State Farm received the subject payment of $85.87 by a date certain, his policy would continue with no lapse in coverage. Despite admitting that the address on the Notice was his current address, Gonzalez testified that he did not receive the Notice. In response, State Farm invokes the “mailbox rule”.

Under the mailbox rule, “[p]roof of mailing creates a rebuttable presumption of receipt of the mailed item.”  “[T]he party who is seeking the benefit of the presumption must adduce evidentiary proof that the letter was signed in the usual course of business and placed in the regular place of mailing.”  This evidence may be direct evidence that the letter was mailed, or evidence of business custom.  Once a party brings forward evidence showing that it mailed the letter at issue, a rebuttable presumption arises.  Testimony from the addressee that the letter was not received is not, standing alone, sufficient to rebut the mailbox rule's presumption. 

Here, State Farm is entitled to the presumption of receipt of the Notice because it has demonstrated through an unrefuted affidavit of a State Farm Printing, Inserting and Mailing supervisor that the Notice was placed in the regular place of mailing. Specifically, the Supervisor averred that a Non-Pay Cancellation Notice was mailed on a date certain to Gonzalez's address and that the Notice was processed for delivery at the Harrisburg (Pennsylvania) Postal Processing and Distribution Center. The only information Gonzalez presented to rebut the presumption of receipt is his own testimony that he never received the Notice.  However, mere testimony by Gonzalez that the Notice was not received does not rebut the mailbox rule's presumption of receipt.

Since it is entitled to summary judgment on the breach of contract claim, it follows that State Farm is entitled to summary judgment on the bad faith claim.


10/8/21         Berkley Custom Insurance Managers v. York Risk Services Group, Inc.
United States District Court, S.D. New York
Witnesses Ordered to Testify in Federal Bench Trial in Person Rather Than Remotely

Berkley Custom Insurance Managers moves to present two of its witnesses remotely by videoconference at the bench trial. The two witnesses are Berkley's Vice President of Claims (Ronzello) and its disclosed claims handling expert (Yessman).  Plaintiff claims that Ronzello lives in Louisiana and is the sole caretaker for his wife, who is wheelchair-bound with a broken leg in a cast and requires Ronzello's assistance with many basic day-to-day tasks. Permitting him to testify remotely would allow him "to continue to care for his wife without the necessity of leaving her for several days and trying to find alternate care."  Regarding Yessman, counsel claims "Yessman is currently obligated to be in Switzerland for the weeks of November 1st and November 8th to testify in a multi-party arbitration, and his testimony cannot be rescheduled." 

Authority to permit remote testimony is conferred by Fed. R. Civ. P. 43(a). That rule provides: "For good cause in compelling circumstances and with appropriate safeguards, the court may permit testimony in open court by contemporaneous transmission from a different location."  Testimony in person in open court is the default and general rule. The Advisory Committee Notes to the 1996 amendment that deleted the requirement that testimony be given orally and that permitted testimony by contemporaneous transmission from a different location stresses the "importance of presenting live testimony in court." It states: "The most persuasive showings of good cause and compelling circumstances are likely to arise when a witness is unable to attend trial for unexpected reasons, such as accident or illness, but remains able to testify from a different place." Courts, for example, have permitted remote testimony when witnesses who are at higher risk have been unable to travel and to appear personally in court due to the COVID-19 pandemic. 

Plaintiff has not presented good cause or compelling circumstances for either witness to testify remotely. As to Ronzello, Plaintiff's explanation appears to be convenience. Plaintiff does not dispute that alternative care can be obtained for Ronzello's wife during the few days trial is expected to last (and the even shorter period he is expected to testify). As to Yessman, Plaintiff offers no real reason whatsoever. Plaintiff states that he would be unavailable to testify at trial, but the trial date was set at the conference on June 15, 2021. If a critical witness were unavailable to testify, the time to raise that would have been when the Court scheduled trial or shortly thereafter and not on the eve of trial. Defendant emphasizes correctly the value of in-court testimony in judging credibility and persuasiveness. The Court determined that direct testimony could be by declaration precisely because it would have the opportunity to judge demeanor when the witnesses appear in Court. There is also the element of unfairness. Defendant has made arrangements for its witnesses to appear in Court at inconvenience to them; it would be unfair to permit Plaintiff to present its witnesses remotely (particularly over objection) because of inconvenience to those witnesses.

 

HEINTZMAN’S HIDEOUT
Nicholas J. Heintzman

[email protected]

10/29/21       Hereford Ins. Co. v Best Empire Med., P.C.
Supreme Court, New York County
Insurer Tries and Fails to Disclaim No-Fault Coverage on the Grounds that the Medical Services Claimants Received were Unrelated to the Subject Car Accident

Plaintiff Hereford Insurance Company (“Plaintiff”) sought a declaratory judgment that it owed no duty to pay the cost of services Defendant medical providers (“Medical Providers”) billed to Defendant claimants (“Claimants”). The action arose out of a motor vehicle accident in which Claimants rode in a taxicab that was insured by Plaintiff. Claimants sought coverage under the policy Plaintiff provided to the taxicab. Plaintiff disclaimed coverage on the grounds that the medical services Claimants received were not causally related to the accident.

Plaintiff first moved for default judgment against several of the Medical Providers and Claimants. The Court dismissed the default judgment motion on the grounds that Plaintiff’s service was improper as Plaintiff: 1) improperly resorted to affix-and-mail service before exhausting other service options; 2) failed to serve an agent authorized to receive service on behalf of the Medical Providers; and 3) failed to submit an affidavit indicating that additional service of the summons by first class mail had been made on the Claimants at their last known addresses.

The Court found that service was proper on only one of the Defendants—Claimant Josue Almonte, who failed to appear in the action. However, Plaintiff failed to state sufficient factual allegations to enable the Court to determine that the medical services Almonte received were not causally related to his accident. The police report showed that Almonte was a passenger in the taxicab and was injured in the accident. Almonte also testified that he received medical treatment at the scene and was taken to the hospital in an ambulance. Nor was there any indication that Almonte’s description of treatment was inconsistent with the billing from the Medical Providers received by Plaintiff. Thus, Plaintiff failed to state sufficient factual allegations to enable the Court to determine that a viable cause of action existed, and Plaintiff’s motion for default judgment was denied.

 

11/01/21       Advanced Recovery E. & S. v MVAIC
Claimant Loses No-Fault Coverage after MVAIC Demonstrates that Claimant did not Provide Timely Notice of his Accident and Corresponding Claim

Plaintiff, a medical care provider and assignee of no-fault benefits, sued Defendant MVAIC for unpaid no-fault benefits for services provided to Plaintiff’s assignor, Dressman. MVAIC moved for summary judgment dismissing Plaintiff’s complaint on the ground that Dressman was not a qualified person to receive no-fault benefits because Dressman failed to timely report the accident to the police and failed to timely file a notice of claim with MVAIC.

Defendant bore the burden of demonstrating that Dressman was not entitled to no-fault benefits. Defendant presented two affidavits from its claims employees that attested Dressman never submitted a notice of claim and proof of timely report of his accident. Plaintiff challenged the evidence as inadmissible. However, MVAIC demonstrated that the affidavits were sufficiently supported by accompanying letters showing MVAIC’s verification request letters it sent Dressman regarding his notice of claim. The affidavits also sufficiently testified to the methods MVAIC used to track notice of claims and accident reporting (or lack thereof). Plaintiff presented no evidence in its opposing papers that demonstrated Dressman’s compliance with the notice of claim and accident reporting requirements. Finding MVAIC’s evidence sufficient, the Court granted its summary judgment motion.

 

NORTH OF THE BORDER
Heather Sanderson

[email protected]

Distillery S.E. Development Corp. et al v. Temple Insurance Company and Aviva Insurance Company of Canada

2021 ONSC 1908, Ontario Trial (Superior Court of Justice)
A Deductible is not a Retention

Claims within the deductible of a liability policy must be defended where the deductible does not apply to defence costs.   The Ontario Superior Court of Justice determined in a decision rendered March 23, 2021, that the insurers who issued a Project Specific Wrap-Up Liability Policy had to defend a claim against the developer and sub-contractor even though the claim against them fell within the $10,000 dollar deductible of the policy. However, the policy, which contained the usual obligation to defend covered claims, specified that the deductible only applied to covered property damage and that the terms of the policy apply irrespective of the application of the deductible.

Those words and the structure of the policy convinced the trial court that the insurers were obliged to defend.

In reaching its decision, the Court did not discuss the difference between a deductible and a retention.  A retention is not the same as a deductible.

In order to keep insurance premiums affordable, many large entities assume a portion of their own risk in self-insured retentions. Retentions are not deductibles. Under a retention, the insured ‘retains’ the legal risk up to the limit of the retention and the insurers whose policies sit above the retention assume the risk thereafter. As a result, a retention applies to judgments and settlements as well as defence costs and other defined claims expense up to the limit of the retention.  Further, the primary policy sitting above the retention often states that the policy is excess to the retention.

The inclusion of defence costs in a retention expresses the insuring intent that the insurer’s duty to defend is only triggered when the retention is exhausted. As a result, a retention that includes the payment of defence costs is a form of primary coverage. It is not a deductible.  As the Ontario court stated in this case, where the deductible only applies to property damage and not to defence costs, the “…Insurer has a duty to defend regardless of the deductible if a Property Damages claim is advanced against the insured.” The insurers in this case ought to have succeeded in denying the duty to defend if the ‘deductible’ applied to the first dollar of defence costs expended as well as property damage.

An important aspect of this decision is the discussion of the allocation of defence costs between covered and uncovered claims. It was clear from the Statement of Claim that not all claims were covered. The insurer argued that “it is apparent from …[the]… Statement of Claim that 99% of the claims against …[Group #1 of the insureds] …are uncovered claims and 98.5% of the claims against …[ Group #2 of the insureds] … are uncovered claims. Thus, the Insurer submits that there should be allocation orders making it responsible for 1.0% … and 1.5% of …[the] … defence costs…[respectively].

The Court correctly stated that the obligation of the insurer is to defend covered claims. At the end of the matter there may be an order requiring the insureds to bear the costs of the defence effort solely devoted to claims that are not covered.  That determination is in keeping with the other Canadian authorities on point.

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