Coverage Pointers - Volume XXIII, No. 14

Volume XXIII, No. 14 (No. 608)
Friday, December 24, 2021
A Biweekly Electronic Newsletter

Hurwitz & Fine, P.C.
1300 Liberty Building
Buffalo, New York 14202
Phone: 716-849-8900
Fax: 716-855-0874

Long Island Office:
575 Broad Hollow Road
Melville, New York 11747
Phone: 631-465-0700
Fax: 631-465-0313


© Hurwitz & Fine, P. C. 2021
All rights reserved
 

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:

See the source image

Do you have a situation?  We love situations. 

Attention Scrooge Wannabes: For those of you who want to go straight to the headlines for this issue, click here.  Of course, you’ll miss all of the fun, the commentary, the cover notes by our editors, the history, the Christmas spirit and the rest.  For those who want to go directly to this week’s issue of Coverage Pointers, it’s attached.

For the rest of you:

Merry Christmas and Happy New Year.  We wish you the best for the holiday season and are sending this newsletter, just a bit earlier this week, so you can share it with Santa Claus when he shows up in your home.

I was delighted to speak at the DRI Insurance Coverage & Practice Symposium in NYC two week on the Child Victims Act and the Search for Lost Policies.  For those interested in the PowerPoint, just let me know and I’m happy to share.

 

Expert Witness and Mediation Services:

By the way, if you are looking for an expert witness or a mediator to help resolve coverage or risk transfer issues, feel free to reach out.  For insurers battling with each other over coverage issues and justifiable concerned about developing precedent that may work against them in their next case, mediation is an excellent alternative.

 

The Streak Continues – New York Continues to Avoid the Onslaught of Bad Faith Decisions:

You can use this cocktail party conversation with your insurance and lawyer friends, as you share a Christmas or New Year’s cocktail:

Ready?  Write this down.

It has been 23 years, six months, and 13 days since any New York State appellate court in New York has affirmed a finding of bad faith against any insurance company for any reason. The last affirmance was on June 11, 1998, in Smith v. General Accident Insurance Company

Each year we wonder whether the streak will continue on the legislature will intervene.  We are hopeful for the former and fear the latter.

 

A Look Back at CP’s 2021 Activity:

We love producing this newsletter for our thousands of subscribers.  It is the product of the dedication of our column editors and our support staff, Donna Boice and Jessica Oates, and the produced for the benefit of our diverse audience.  To publish this newsletter, we read and digest every New York and Connecticut appellate decision, opinions from the high courts and federal circuits throughout the country, and, with the help of Heather Sanderson, the courts in Canada as well.  We try to digest and foresee trends and advise you, in advance, of what we see developing in the field.

We so appreciate your feedback, when we receive it, knowing that our publication has a positive impact for your company or in your practice.

In the last issue of each calendar year, we pause to look back on the previous 12 months’ activities.  We were pleased to provide over 500 reviews and commentaries this year, and again, I want to thank our H&F CP team for all they do for you. 

See the source image

This year’s gold star goes to Scott Storm, whose articles on SIU and Fraud were the most frequent offerings for the 2021 calendar year.  Thanks to Nick Heintzman for his help with the “count”:

Storm

Storm’s SIU Examen

90

Kohane

Kohane’s Coverage Corner

84

Peiper

Peiper on Property (and Potpourri)

46

Maxwell

Ryan’s Capital Roundup

40

Bucci

Bucci on “B”

32

Barnas

Barnas on Bad Faith

31

Englert

CJ on CVA and USDC (NY)

29

Heintzman

Heintzman’s Hideout

27

Dischley

Dishing Out Serious Injury Threshold

26

Boron

Boron’s Benchmarks

22

Siegel

Lee’s Connecticut Chronicles

22

Rauh

Rauh’s Ramblings

19

Wilewicz

Wilewicz’s Wide World of Coverage

17

Santiago

ruMIRNAtions

16

Sanderson

North of the Border

14

Mark

Off the Mark

10

Barci

Barci’s Basics (On No Fault)

4

Perley

Liening Tower of Perley

1

Total

 

 

 

 

526

 

 

News Flash – We Don’t Do Everything, Everywhere, But We Can Help:

No alternative text description for this image

At least one every three weeks, perhaps more than that, I am asked to refer a client to an out-of-state attorney who has a particular specialty or concentration. There are few greater professional pleasures I have than doing so. Through wonderful organizations like the FDCC, ADTA, DRI, American College of Coverage Counsel, Harmonie Group, and the Armadillos, I am blessed to have so many wonderful colleagues who can make provide clients and friends with great representation.

You need help somewhere else in the US, Canada or elsewhere?  We can help.

 

Christmas Cheer:

And, making its seasonal reprise, is our 11-year-old Christmas offering, with thanks to my Christmas Elves for their contributions, years ago:

Christmas Coverage
or
A Policy for Saint Nicholas


Dan D. Kohane

With apologies to Clement Moore (or less)

Special Editorial Thanks to the Christmas Elves:  
Tim Sullivan, John Intondi, Mike Perley and Rich Traub

T'was the night before Christmas, and all through the land.
Few coverage advisors were still in demand.
The policies still showed on both desk and on screen,
My eyes only open with thanks to caffeine.

Most company's adjusters had left for the day.
And most coverage lawyers had little to say.

It was surely the moment to turn out the light,
Shut down the computer, put work out of sight.

Then the phone started chirping, it startled my poise,
Not the typical ring-tone, but an odd sounding noise.

It jingled like sleigh bells, instead of a "ding,"
I knew I must answer, despite everything.

A Christmas Eve caller?  What could be the need?
But the sound of the music, would just not recede.

I was really not looking for Christmas Eve banter,
Imagine my shock when the caller was Santa!

"I need some advice, sir" said a somber Saint Nick,
"My Christmas Eve Policy is three inches thick."

I don't mean to bother, but I'm wrought with confusion
"I don't understand this new 'Gifting Exclusion.'"

"It carves out the nasties, the mean and the haughty.
It favors the good ones and leaves out the naughty. 

My coverage appears to have holes like Swiss Cheese,
I'm afraid if I'm sued, I will twist in the breeze."

"A products exclusion? A chimney one too?
Elf employment exception, I'm screwed through and through.

Just what is still covered? I sure am confounded,
With all of these issues, I'm fear that I'm grounded."

"With a sleigh full of sacks and reindeer at the ready,
I'm starting to feel just a tad too unsteady.

My belly has acid, my knees are a 'quiver
With millions and millions of toys to deliver."

"I want you to help me, I fear a disclaimer.
This policy's scary; I need you to tame her.

We must surely save Christmas, for good girls and boys,
And Amazon won't refund "squat" on the toys.

The holiday challenged; I sure knew my mission
We needed to craft a new ISO edition.

Santa needed an ally, a comrade, a fighter,
On the opposite side was a Grinch Underwriter.

I am sure you'd imagine how hard it would be
To secure for Saint Nick a late-night policy.

Without coverage gaps, so that Santa could fly,
To save Christmas Day, we were destined to try.

The person in charge of the coverage for Nick,
Had left the shop early, was feeling quite sick.

Perhaps it was sadness, or guilt or just gumption,
He thought he'd killed Christmas, a well-placed assumption.

In order to soften his hardening heart,
We had to play coy, we had to be smart.

We needed to dazzle that Grinch with our guile,
To show him the risk was sure worth his while.

Worse yet, betwixt and between stood a broker,
A bloodsucker culled from the mind of Bram Stoker.

Through him we must go, around or about,
He'd bring pressure to bear, he's really got clout.

"It's Santa," we'd say, "who'd sue him for cash?" 
"Another broker can get us a better deal in a flash.

We'll go to the market if a deal can't be made;"
The Grinch saw his bonus beginning to fade.                   

From the cream of the crop, a new team we'd assemble,
To get Santa protection, to weaken his tremble.

We'd send out the e-mail, we'd tweet, and we'd twitter
We needed to find the best of the litter.

The other apt choice, as the time slipped on by,
Was to use those fine people, to make him comply.

By plane and by car, by boat and by train.
We beckoned this family to join in refrain.

And gather they did, first a few then a score,
Lawyers and brokers, claims folks and more.
Much more than a choir, it was surely a throng,

Together they gave voice to a beautiful song.

And they reached that man's spirit, his heart and his soul,
And in no time at all, they'd accomplished their goal.

"Give me my pen", the Grinch yelled to his clerk.
I knew then and there that our ploy it had worked.

"Exclusions begone!  Limitations not there!
We'll provide him his coverage, no need to beware."

And so, it was written, and Santa could jet,
And Christmas was saved, the best Yuletide yet.

On cold winter night, when you're hearing his jingle,
When the children are sleeping and in comes Kris Kringle,

Remember that coverage protected his flight,
Happy Christmas to all, and to all a good night.

 

Training, Training and More Training:

Schedule your in-house training for 2022.  Need a topic?  Here are 160 or so coverage topics from which to choose.

 

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.

     

    Note from the Insurance Library:

     

    Our firm is a member of the Insurance Library, one of the great research institutions on insurance n the nation.  Located in Boston, with Paul Tetrault, J.D., CPCU, as its Executive Director, it is a tremendous resource for old policy forms, journals and periodicals that are fully  searchable and for the most part, downloadable.

    The Insurance Library, founded in 1887, is a repository for the history of insurance and is a provider of research, education, and networking events to the insurance and risk management community. If you don’t know about the Insurance Library, click above and take a look.

    I asked Paul to offer you some historical  insurance tidbits and he offered noted from publications from 100 years ago, 75 years ago and 50 years ago:

    From the December 24, 1921 edition of The Standard:

    Under “General Field Notes”:

    “Sparks from a chimney falling on a shingle roof caused a serious fire last week at the West Hartford home of President Louis F. Butler of the Travelers Insurance Company.  Mrs. Butler, who is an invalid, was carried in safety to a neighbor’s hours a few moments before the ceiling in her room fell.”

    From the December 26, 1946, edition of The National Underwriter:

    Under a headline, “’Phone Girl Is a Big Asset” [note the use of an apostrophe to denote that the word Phone is an abbreviated form of Telephone, along with the use of Girl to refer to a professional woman], the publication reported:

    “The importance of the telephone as a door to their business is often overlooked by business concerns, including insurance companies, but Kansas City Fire & Marine and R.B. Jones & Sons have long realized the value of this significant position.  In a recent survey made but the telephone company, Mrs. Helen Volz, switchboard operator at the Kansas City company and agency, scored a 100% rating.  Mrs. Volz has been with the R.B. Jones & Sons since 1920, going to them from the telephone company.”

    From the December 17, 1971, edition of The Standard:

    “Under a headline “Uniformity in No Fault Fed. Guidelines Urged,” the publication reported:

    “A need for a uniform approach or for federal guidelines for no fault auto insurance due to the proliferation of a variety of no fault programs in the several states was sounded during the first annual meeting of the Insurance Services Offices in New York City last week.”

     

    Peiper on Property and Potpourri:

    Happy Holidays! It looks like in addition to December 24th, we’ve had a number of silent nights over the past two weeks.  I’m sure Santa’s bag will deliver a plethora of interesting decisions in the New Year, but for now we’ll simply take this light load as an opportunity to have a little more time for last minute shopping. 

    We would be remiss if we did not extend our gratitude to NYSBA for giving us an opportunity to present as part of the What Every Trial Lawyer Needs to Know series.  This time the focus was on first party/property insurance, and the presentation is preserved (at least we think so) at the NYSBA website if you’re looking for a good CLE (if we say so ourselves).  That means I had the opportunity to speak to members of DRI (addressing complex business interruption claims), PLRB (working through the work product exclusions) and NYSBA (Property Primer) all within the last 6 weeks.  Not to mention, we’ve thrown in a few trainings for clients as well. 

    Of course, Dan has been quite busy this past Fall too with NYSBA, DRI and FDCC presentations among a number of other training sessions with clients. 

    Scott Storm is also a remarkable resource for information, and much sought-after presenter.

    When I joined this firm over 15 years ago now, I walked into a culture where the lawyers “got involved.”  It was expected to be thought leaders in our respective niches, and to accept the responsibility of sharing our research, experience, and practice tips with our fellow lawyers.  It is a noble goal, and one which I have been proud to keep going (if only for the small part I’ve played). 

    There is no better evidence of our commitment to our goal to share information and encourage discussion than this newsletter that you’re reading right now.  Literally hundreds of hours go into this production every year, and I don’t think I’ve ever sent a legal bill out for any of it.

    That said we’re thankful to have the opportunity to speak and write (each one of us), and grateful that folks appear to be interested in what we have to say.  Even if most of you are now simply a number on the list of attendees that are somewhere on the other side of a screen. 

    Anyway, my missive today is a thanks to all of you who are supportive of our efforts and so encouraging with kind words and compliments afterward. 

    Stay well. 

    Steve
    Steven E. Peiper

    [email protected]

     

    A Woman Governor?

    Parsons Daily Republican
    Parsons, Kansas
    24 Dec 1921

    May be Woman Governor

    Pierre, S.D., Dec. 23—South Dakota may be governed by a woman. “Maybe,” if Miss Alice Loraine Daflay, named by the non-Partisans of the state, is elected in 1922. The state convention named her its choice as candidate for governor at the next election. She is at present a member of the faculty of the state normal school in Madison, Wis.

    She came in third in the general election.

     

    Editor’s Note: 

    If you don’t remember the story of the FIRST woman governor in the United States,  I offer you this article by my good friend Robert Tayloe Ross, that appeared in the August 21, 2020, edition of Coverage Pointers. Robert tells us the story of his grandmother, who had that distinction: Robert Tayloe Ross is a fine Virginia-based defense and coverage lawyer and a partner in the firm of Midkiff, Muncie & Ross ([email protected]).  I’ve known him for years and we often speak at PLRB Claims Conference meetings.

     

    Nellie Tayloe Ross - by Robert Tayloe Ross:

    A person wearing a hat

Description automatically generated

    Robert is also a long-time subscriber of Coverage Pointers, itself a respectable thing to be!

    Years ago, he told me of his grandmother, Nellie Tayloe Ross.  Nellie was the first woman in America so be elected governor of a state of our union, in a contested race, and that was the State of Wyoming (in 1924).  I asked Robert if he would be so kind to share his grandmother’s story with our readership on this 100th anniversary of suffrage.  He was kind enough to do so and his grandmother’s story, follows:

    Nellie Tayloe Ross was an early pioneer for women’s rights in the United States.  In 1924, only four years after passage of the Nineteenth Amendment granting women the right to vote, she was elected the first woman governor in the United States. She was thrust into politics when her husband, William Bradford Ross, the governor of Wyoming, died in office in 1924. This left Nellie, the mother of three sons, in debt and with no means to support herself and her family. At the time, Nellie, who was intelligent, tactful, and dignified, had limited exposure to politics, solely from her membership in the Cheyenne Women’s club, where political topics were discussed, and from informally advising her husband on political issues. Her only other exposure to government was from her employment as a kindergarten teacher as a young woman.

    Despite her inexperience, she was elected governor and was inaugurated on January 5, 1925. During her tenure as governor, she pursued a progressive agenda, which included proposed legislation to increase safety for coal miners, to provide more funding for public education, and to protect women employed in industrial jobs.

    Following her term as the Chief Executive in Wyoming, Governor Ross became a well-known national speaker and speechwriter, encouraging women to run for office and to influence public policy through their votes. This drew her into national politics. She campaigned for Democrat Al Smith in his 1928 presidential run, and she implored women to turn out to cast their votes for Smith. At the Democratic Convention, she wrote and delivered a speech seconding Smith’s nomination. Notably, at the convention, Governor Ross received 31 votes for vice-president on the first ballot, from ten different states!

    After the 1928 Democratic Convention, Governor Ross became the Vice Chairman of the Democratic National Committee and the Director of the Committee’s Women's Division. In that position, she moved to Washington, D.C., and led the national campaign seeking the women’s vote for Franklin D. Roosevelt. After his victory, President Roosevelt named Governor Ross the Director of the U.S Mint, the first female to hold the position. She held that position for twenty years. As Director, Governor Ross employed a flexible management style, based upon common sense and relationship building. She was a competent and effective executive respected by government leaders and employees alike. She cut costs and increased efficiency as she modernized the Mint, also implementing an incentive program under which employees were rewarded for suggestions to improve efficiency.

    While serving as Director of the Mint, Governor Ross continued speaking around the country, promoting the advancement of women. Her story is timeless. She was able to balance her personal and family life with her public life through her strong interpersonal skills and ability to adapt to changing circumstances. Governor Ross died in 1977 at the age of 101. Her remarkable life and career have been an example to women for generations.

    Sources used in this article are primarily the author’s personal knowledge, as well as newspaper articles, historical websites, encyclopedias and other resources.

    Editor’s note:  Thank you, Robert.

     

    Wilewicz’ Wide-World of Coverage:

    Merry Christmas! And Happy Holidays! I genuinely love this time of year. It’s just peaceful (albeit stressful at times) and hopeful. After the last two years of crazy, we plan to have a calm and quiet celebration. As usual, lots of good Polish food, and presents on Christmas Eve after dinner. Christmas morning is usually a late start, with a brunch of leftovers. It’s nice that the holiday is on a weekend this year, so that Boxing Day is on a weekend as well.

    Now, this week in the Wide World of Coverage, again we have Franco Mirolo discussing a Circuit Court case for us:

    In Pham v. TransAmerica Premier Life Insurance, the Fifth Circuit reversed a grant of summary judgment in favor of defendant TransAmerica. The dispute between the parties was whether an application for life insurance had been amended, which was central to the question of whether the insured was covered at the time of her death. The plaintiffs referred to sufficient evidence to raise a genuine dispute of fact as to whether the application was indeed amended, and the defendant failed to raise arguments conclusive enough to show that it was not amended. Therefore, the Court ruled that summary judgment was not warranted because there was a genuine dispute of fact that needed to be resolved by a factfinder, and it reversed and remanded for further proceedings.

    All I want for Christmas is…ice cream! Like in Thanksgiving, I will spend the Holidays downstate with friends and their family. This time around, I will be experimenting with brigadeiro ice cream. Brigadeiro is a Brazilian dessert made with condensed milk, cocoa powder, and butter. I have never made brigadeiro before, let alone brigadeiro ice cream, but it sounds delicious! Anyway, wish me luck. Merry Christmas and Happy Holidays! Cheers!    ~Franco

    Happy Holidays, Merry Christmas, and Happy New Year to all! See you in 2022.

    Agnes
    Agnes A. Wilewicz

    [email protected]

     

    Debs to Receive Clemency:

    Asbury Park Press
    Asbury Park, New Jersey
    24 Dec 1921

    DEBS IS FREED BY HARDING CLEMENCY

    Sentences of 23 Other War Prisoners
    Commutated Pardons For Five.

    WASHINGTON, Dec. 24.—Telegrams were sent out by Attorney General Daugherty today formally advising wardens of the various federal penitentiaries at the Christmas commutation by President Harding of 24 persons convicted of war time offenses, including Eugene V. Debs, socialist leader.

    The telegrams informed the wardens that the sentences of the 24 persons had been commuted to expire Christmas day. Department of justice officials said that while all of the prisoners, including the five former soldiers for whom pardons were issued also, could be released at midnight tonight but the house of release was a matter for the wardens to decide. The wardens, it was said, doubtless would be guided by the wishes of those benefiting from the presidential clemency.

    Editor’s Note:  Eugene Victor "Gene" Debs (November 5, 1855 – October 20, 1926) was an American socialistpolitical activisttrade unionist, one of the founding members of the Industrial Workers of the World (IWW), and five times the candidate of the Socialist Party of America for President of the United States. He was convicted under the Espionage Act in 1918 for giving a speech which was claimed to “incite mutiny”.

     

    Barnas on Bad Faith: 

    Hello again:

    Merry Christmas and Happy Holidays.  Hopefully, unlike me, you have completed all of your shopping and can enjoy the season without that additional stress of finding last-minute gifts. I love Christmas, and this year we get Christmas with a side of NFL football to go with our typical slate of basketball offerings.  All I really want for Christmas is a Bills win over the Patriots in Foxboro on Boxing Day though, if we are being honest.

    In honor of Josh Allen’s college, I have a bad faith case from Wyoming in my column this week.  The insureds sought UIM coverage after settling their case against the underlying tortfeasor.  They also brought a bad faith cause of action based upon an alleged improper denial of benefits.  The court dismissed both claims.  Since the tortfeasor and the insureds had the same amount of coverage, UIM coverage was not available.  In addition, the bad faith claim failed because the only allegations were with respect to the denial of the claim and the court concluded that the insureds could not establish a right to coverage.

Brian
Brian D. Barnas

[email protected]

 

“Socialism to End in Russia,” says US Government:

Buffalo Morning Express and
Illustrated Buffalo Express
Buffalo, New York
24 Dec 1921

RUSSIANS TO ABANDON
OLD SOCIALIST RULE

U.S. Commerce Department
makes this prediction; cites events.

By the Associated Press.

Washington. D. C., Dec. 23.—Abandonment of socialism in Russia is predicted by recent changes in the economic policy of the soviet government, according to a review of the situation in that country on the basis of statements in the soviet controlled press issued tonight by the commerce department.

A new economic policy, the department said, is being evolved by the Bolshevist leaders, aiming at the partial re-establishment of private trade and industry and at increasing the incentive to production. Communistic management of industry in Russia, It added, had resulted in a great decline of production and a general disorganization of economic life which has been commented upon emphatically by soviet newspapers, while the decline Is admitted by Bolshevist leader. 

 

Off the Mark:

            Dear Readers,

Christmas will be quiet again this year, which is perfectly fine by me.  We will be going to my parents’, who live nearby, for some good food and good company.  Christmas Eve should also be quiet.  In the past, we usually entertained large crowds.  However, due to the ongoing pandemic, we are only expecting one or two family members to stop by.  Sounds like a perfect night for a family movie.

Likely due to the holiday season, there were no noteworthy construction defect cases to report on this week.  Be sure to check back in two weeks.

Wishing Happy Holidays and a Happy New Year to all.

Brian
Brian F. Mark

[email protected]

 

Cocaine Bust Lands 30-Days in Jail:

Buffalo Morning Express and
Illustrated Buffalo Express
Buffalo, New York
24 Dec 2021

BUFFALO MAN GETS 30 DAYS
FOR HAVING COCAINE

            Utica, Dec. 23.—David Yablousky, Buffalo old clothes dealer, was given 30 days in the Madison county jail in the federal court here by Judge Frank Cooper for possessing cocaine.

            When he pleaded a few days ago, he told the court of having found several packages of cocaine in old clothing be bought from a woman.  “Finding is keeping,” he said.

 

Boron’s Benchmarks:

Happy Holidays to all!  Unlike my colleague and friend, Agnes, I am not dreaming of a month-long snow day, or even of a White Christmas at this time of year.  I am actually dreaming of a Green Christmas.  Not because I am a Clark Griswold clone desperately in need of a year-end bonus to replenish an advance payment made on next year’s swimming pool installation.  (I actually would never want a swimming pool, for liability reasons.)  I’m dreaming of a Green Christmas simply because it makes travel easier and safer.  Not only that, but once the snow starts piling up in Western New York, it does not typically melt away for months.  When that happens, the once-pretty snow piles turn to not-so-pretty and often-times treacherous piles of solid ice, adding to my liability worries.  I suppose I have litigated too many slip-and-fall cases. 

I am thankful for the case write-up prepared by our very own Hannah Cominsky for this edition of Boron’s Benchmarks.  We offer for your consideration the Supreme Court of Rhode Island’s answer provided to a question certified to it by the 1st Circuit Court of Appeals seeking clarification of the meaning of the phrase “civil action” in Rhode Island’s Rejected Settlement Offer Interest Statute (RIGL, Section 27 7-2.2).  The Rhode Island Supreme Court’s ruling came down on December 20, 2021, in Johnson vs. Johnson, 2021 WL 5996413. 

Have a healthy and happy holiday season, folks.

Eric
Eric T. Boron

[email protected]

 

Harsh Penalty for Abandonment:

The Standard Union
Brooklyn, New York
24 Dec 1921

PRISON FOR ABANDONING
MOTHER OF ELEVEN

"You deserted your wife and your eleven children, and you will get no sympathy from this court,” declared County Judge Bert J. Humphreys in Long Island City yesterday afternoon, when he sentenced Henry P. Binzer, 33 years old, of 74 Zeidler Avenue, Maspeth, to the penitentiary for an indefinite period. Binzer pleaded guilty on Thursday to an indictment charging him with abandonment.

Mrs. Binzer told the court she was married May 19, 1907; and that eleven children were born to them, the eldest being 14 years and the youngest one month. Her husband deserted her and the family in August Iast, she said. A couple of months later she learned that he was in Rochester. Detectives went there and brought him back. A woman with him at the time gave her name as Mrs. Estelle Garrett, of 373 Crescent Street. Mrs. Binzer told Judge Humphreys she understood this woman had visited her husband nineteen times since he wis brought back to Long Island City and locked up.

Binzer pleaded with the court for leniency, but the court did not take cognizance of it.

 

Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

As I watch Jim Carey’s performance in the live action Grinch movie with my kids for the 10th time this year (it’s on the Freeform app), I am reminded of the little things that make the holidays special each and every year. Family, friends, neighbors, colleagues, communities, country-men and -women: enjoy each other’s company and camaraderie. At a time when many may seem alone, nobody truly is. Embrace others. Extend a hand and a heartfelt “hello, how are you?” “Happy Holidays.”

Two bills delivered to the Governor are outlined in today’s Legislative List. The first we wrote about back in June, entitled the “Comprehensive Insurance Disclosure Act,” which is a vast overstep that should be summarily dismissed by the Governor as such. The second is a wolf in sheep’s clothing concerning electronic notices of insurance transactions to insureds. Sounds great, but is it? Finally, we have also written about the final adoption of new regulations regarding risk based capital.

Until next time,

Ryan
Ryan P. Maxwell

[email protected]

 

What’s Yours in Mine and What’s Mine is Mine:

Buffalo Courier
Buffalo, New York
24 Dec 1921

SUSTAINS WIFE’S RIGHT TO
CASH IN HUBBY’S CLOTHES

Malden. Mass., Dec. 23.—Judge Charles M. Bruce in the municipal court today ruled that women are justified in helping themselves to money from their husband's pockets.

"It has been the inalienable right of women from the beginning of time to take from their husband's pockets," he said in finding Alphonse Di Esco guilty of assault on his wife, Lena. Di Esco has testified that his wife was in the habit of taking money from his trousers and that he had pushed her vigorously after the latest incident of the kind.

 

CJ on CVA and USDC(NY):

Hello all,

It is hard to believe that Christmas is here, and I still have yet to get on the slopes. The weather has been fickle here in WNY which means the resorts have had a hard time making snow and keeping it on the mountain. Maybe Santa will bring me some of the fluffy white stuff for Christmas this year, but for now I will just have to tap into my inner Bing Crosby and dream of a White Christmas. For my gift to you this year I provide the following link to my favorite poem “The Shepherd” by Frederik Forsyth as read by Alan Maitland from CBC radio. It’s a story about a pilot looking to get home on Christmas Eve who becomes lost and is guided home by a mysterious shepherd after an electrical failure. This poem always reminds me that, even in our most difficult hours, there is very likely someone there to help guide us home. I hope you and yours have a very happy holiday season and enjoy whatever celebrations that are near and dear to your families.

On the coverage side of thing, I have a case from the Northern District discussing the oft battled over other and excess insurance provisions in liability policies.

See you next year,

CJ
Charles J. Englert, III

[email protected]       

 

Murder by Death:

Times Union
Brooklyn, New York
24 Dec 1921

“BETTER DEAD,” CRIES GLICKSTEIN
SLAYER IN JAIL

Vigil Ordered Over Mrs. Raizen to
Prevent Attempt to Commit Suicide.

Assistant District Attorney Edward W. Cooper of Kings County, who is in charge of the prosecution of the indictment against Mrs. Lillian Raizen for the murder of Dr. Abraham Glickstein, has ordered Warden Harry C. Honeck of the Raymond Street Jail to main a strict vigil over the woman to prevent any possibility of her injuring herself in her cell.

This action was taken, following the receipt of a letter by Warden Honeck from Dr. Charles Stoerzer, one of the visiting physicians at the jail.

Dr. Stoerzer has observed Mrs. Raizen since her incarceration, and in the letter he suggests that she should be transferred to a psychopathic pavilion for her own safety, where she could be kept under surveillance to prevent self-injury.

"Better Off Dead."

The physician makes the suggestion after declaring that Mrs. Raizen is in a marked state of mental depression, manifesting suicidal tendencies.

The physician said at times Mrs. Raizen said she felt she would be "better off dead."

Mrs. Raizen. according to the physician's letter, demonstrated to him the manner in which she could end her own life, but in the letter.

The physician suggests that every precaution should be taken by the jail officials to prevent Mrs. Raizen from Injuring herself, and that, if possible, she should be sent to some place, other than the jail, where continuous surveillance could be maintained.

Editor’s Note:  the complete story of Mrs. Raizen and her eventual murder conviction can be found here. She was convicted of Second Degree Murder, sentenced to 20 years to life and was paroled in 15 years.

 

Dishing Out Serious Injury Threshold:

Dear Readers,

Hope you didn’t miss me too much last issue.  I had an impromptu trip to Florida that was a lot more running around than relaxing. Now, I am back in New York missing the warm weather and running around getting ready for Christmas. I hope everyone is enjoying the holiday season and is able to celebrate it safely with family and friends.

In the Serious Injury Threshold world, we have a case where defendant’s argument as to a gap in treatment was unavailing as plaintiff did not cease all treatment during that time, which precluded defense argument that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

Be well,

            Michael
           Michael J. Dischley

           [email protected]  

 

Lenient Sentencing by Today’s Standards:

The Buffalo Times
Buffalo, New York
24 Dec 1921

Assaulted Pupils,
Janitor is Sent to 2 Years in Prison

NIAGARA FALLS, Ont., Dec. 24.—Leonard King, 44 years old, a janitor in one of the schools here, was sentenced to two years in Burwash prison yesterday on a charge of criminally assaulting two young school girls. The girls, Ruth Donald, seven, and Evelyn Hallan, nine, were pupils at the school. They claimed King took them into the basement and there assaulted them.

 

Bucci on “B”: 

Hello.  We at H&F wish you the happiest of holidays and the best for the new year.  I think I speak for all of us when I say we have enjoyed providing this H&F Coverage Pointers newsletter throughout 2021, and I expect we will continue to try to make sense of coverage decisions for our readers in 2022.  Please let us know if there is an area or topic that you would like to hear more about in the coming year. 

No bah humbug or anything, but I’m not much of a Christmas person.  I hate buying gifts because I’m so bad at it.  I never know what to give or how much to spend.  I’m better at giving to charities this time of year because gifting holidays are a burden for a lot of people, especially this year, or these couple of years.  I literally asked a colleague who sent me a gift (beautiful socks and a jewelry box) how much money one should spend on a gift for a colleague.  Hopefully, she thought I was referring to someone else.  I’m not that fond of New Year’s Eve, either.  I always feel like I should be doing something exciting, but I never have anything exciting to do!  Good thing I had a lot of fun and excitement in my younger years. 

I do like food though, and wrapping gifts, so I’ll wrap everyone’s gifts and stuff my face at the dinner table, leaving only room to breathe and have dessert.  I spend Christmas with my siblings, a promise we made to our mom long ago.  What are you guys doing? 

I hope all of you have great plans and a great time.  There may be some of you though, like me, who will have an empty seat at the table for a very close relative we lost because of Covid this year.  I’m sure I’m not alone.   My heart goes out to us all.

Diane
Diane L. Bucci

[email protected]

 

“I Saw Charlie Burning Santa Claus”:

The Berkshire Eagle
Pittsfield, Massachusetts
24 Dec 1921

BOY PEEPNG ON SANTA CLAUS
SET HOUSE AFIRE

New Brunswick, N.J., Dec. 24. Nine-year-old Charles Craporatto believes, now all the stores he ever heard about the indignation inspired in the breast of Santa Claus by little boys who peep.

Charles suspected last night that Santa Claus had made a pre-Christmas trip to his house and left a good share of his pack in the upstairs closet, struck a match and gazed with large round eyes on a bewildering array of toys.

A half hour later all had vanished in thin smoke. So had a roll of bills, containing nearly $500 with which Charles’ father might have replaced the burned treasures. Firemen saved most of the house.

 

Lee’s Connecticut Chronicles:

            On vacation this week.

Lee
Lee S. Siegel

[email protected]       

 

Sorry, Honey, He’s Alive – Give Back the Life Insurance Proceeds:

New-York Tribune
New York, New York
24 Dec 1921

Live Man’s ‘Widow’ Has
To Return Life Insurance

Testimony Shows Woman Who Collected
$3,000 Married Again, Sure Husband Dead

The Royal Arcanum received judgment for $3,420 in the Supreme Court yesterday in a suit to recover from Mrs. William Edward Lyle $3,000 paid her as insurance money for the supposed death of her husband, who subsequently turned up alive. The award includes interest and costs.

The testimony was that in 1901 Lyle abandoned his wife and went to Mexico, later returning to this country and settling in the West. After he was absent for several years without communicating with his wife she took it for granted he was dead and collected the insurance money. In fact, so sure was Mrs. Lyle that Lyle was dead that four years ago, the. testimony had it, she remarried. Her second husband is Michael Leary, of Richmond Hill, N. Y.

In 1919 the Royal Arcanum received information that Lyle still was alive. Five sisters of Lyle testified their brother visited them in Brooklyn and Connecticut last summer, and one declared she called on him in Los Angeles last year.

 

Rauh’s Ramblings:

            Hi all,

I have no interesting cases to report on this week.  I hope everyone has a wonderful holiday and a happy and healthy new year!

            See you in 2022!

Patty
Patricia A. Rauh

[email protected]

           

Body Types?

The Evening News
Harrisburg, Pennsylvania
24 Dec 1921

Urge Fifteen Names
For Auto Body Types

NEW YORK, Dec. 24.—Drafts of a tentative recommendation for a 'stable and scientific" nomenclature for automobile body types will be submitted to the Society of Automobile Engineers at its meeting here January 10.

The committee's recommendation will include fourteen names, with another to be decided upon later. The fourteen will be descriptive of all standing types and will eliminate such names as "torpedo," "baby landaulet," baby this and baby that. The proposed fourteen are:

Roadster, coupe, phaeton, sedan, berline, limousine, brougham, laudaulet, cabriolet, sedan-landaulet, berline-laudaulet, coupe-landaulet, limousine-landaulet and brougham-Landaulet. The fifteenth name will be descriptive of enclosed, single-compartment bodied-cars with two fixed cross seats, close coupled and allowing the minimum fore-and-aft seating space for four passengers.

Editor’s note:  landaulet, also known as a landaulette, is a car body style, where the rear passengers are covered by a  convertible top. Often the driver is separated from the rear passengers by a division, as in a limousine.

A picture containing grass, outdoor, sky, truck

Description automatically generated

 

Storm’s SIU Examen:

Hi everyone:

Merry Christmas and Happy Holidays.  Five good reads for you this week:

  • After Multiple Attempts to Schedule an EUO on a Property Claim and the Plaintiffs’ Failure to Appear, a Hearsay Statement in an Affidavit that Plaintiffs’ Counsel’s Unidentified Staff Member had Requested an Adjournment was Insufficient to Defeat Summary Judgment. 

  • SUM Issue: If an Insured Reduces His Limits for Underinsured Motorist Coverage, but Adds a Car to the Policy at a Later Date, is the Election of Lower Limits Enforceable? Yes. The Lower Limits Apply.

  • Defense Coverage Owed to Insured Parents in Personal Injury Suit Alleging They Negligently Allowed their Son to Use Their Home for Illicit Drug Activities, Despite a Controlled Substances Exclusion as it did Not Preclude Coverage for All of the Damages Sought by Plaintiffs. 

  • Property Preservation Company Acting on Behalf of Mortgagee in Discarding the Insured’s Personal Property does not Constitute a “Theft”. 

  • Toll on No-Fault 30-Day Pay or Deny Rule Ended When Insured/Assignor Failed to Show for 2nd EUO Scheduled Date, Not the 3rd.

Hey SIU investigators, did you know that retailers (i.e. like jewelry stores) are required to report cash sales of over $10,000, providing notice to the customer?  This is helpful when the legitimacy of the transaction is in question.  Check out the IRS Form 8300 Reference Guide for more information.  The information on the form is intended to help law enforcement combat money laundering, tax evasion, drug dealing and other crimes.

Favorite Christmas movies: Christmas Story, Elf and Grinch (Jim Carrey). 

This week’s encouraging word: “Nothing ever seems too bad, too hard, or too sad when you’ve got a Christmas tree in the living room” ~ Nora Roberts. 

Merry Christmas and Happy Holidays!

Scott
Scott D. Storm

[email protected]

 

Christmas Kindness:

The Brooklyn Daily Eagle
Brooklyn, New York
24 Dec 1921

BANDIT JAIL-BREAKER
PAROLED FOR CHRISTMAS

Leavenworth, Kan., Dec. 24—Eddie Estells, 59, convicted bandit, who has spent more than 20 years in prison and who gained attention in a sensational prison break in which he held off guards with a wooden gun, covered with tinfoil, has been released from the State Penitentiary at Lansing on Christmas parole, it was learned today.

Estells was sentenced to serve a year and then to be hanged. The capital punishment order never was signed and Estells, with Ben Cravens, a notorious Oklahoma bandit, escaped.

 

Heintzman’s Hideout:

By the time you are reading this, I should be in Canada, enjoying my first Christmas at home in two years. Here’s hoping all goes well at the border. Shockingly, I timely finished my shopping, and I’m locked and loaded with presents for my father and little sister. 

I had no New York cases this week, so I guest wrote a Connecticut case for Lee Siegel. In that case, an insurer providing professional liability insurance to its insured investment firm tried and failed to strike the insured’s claims for coverage. 

Nick
Nicholas J. Heintzman

njh[email protected]

 

Christmas Mercy:

The Buffalo Times
Buffalo, New York
24 Dec 1921

CHRISTMAS SPIRIT INVOKED WITH
SUCCESS BY COUNSEL FOR DEFENSE

Making a fervent Christmas plea for mercy, former Assistant District Attorney Bart Shanahan, succeeded in having sentence suspended on Walter Strzyz, 29, of No. 732 Hertel Avenue, charged with having dangerous weapons.

"It is the custom of all Christian nations," Mr. Shanahan began, "to extend mercy to prisoners in this holiday season. Even the Czar of Russia did that. President Harding exercised benevolent Christian charity by pardoning several prisoners. Now, this man is not a criminal and should not be punished."

The proof was that an attempt had been made to attack Walter's wife, so he got a revolver but failed to get a permit.

"I don't want to fall short of being part of a Christian government, so I suppose I'll have to suspend sentence," City Judge Hartzell said. "Nevertheless, I know that Mr. Shanahan always is sincere and is not taking advantage of the time of the year to get his prisoner off."

 

North of the Border: 

"...Better Watch Out, Better not Cry, Santa Claus may be delivering a coverage dispute to an insurer near you..." 

A white Christmas is in the forecast for most Canadian cities this season and many of our offices will be closed between Christmas and New Years. It is a time to slow down and reflect – or catch up! 

Experience shows that the holiday season may turn out to be a gift that keeps on giving as it may generate coverage disputes in the New Year. Not to put a damper on the season's festivities but: 

  1. Just because Mom invites you over for the Christmas turkey and stuffing doesn't mean you are member of her household (and therefore an unnamed insured under her homeowners' policy): Sequeira v. Sequeira, 1995 CanLII 1222 (BC SC).

  2. In fact, even the decision of your 20-something to come home from school for the Christmas holidays can give rise to a coverage dispute: Personal Insurance Company v. Allstate Insurance Company, 2009 CanLII 64827 (ON SC), as to whether the student who was attending school on a scholarship was a dependent of his parents and therefore entitled to accident benefits under their auto policy.

  3. Care must be taken, even while Christmas shopping, as just going to the Mall can generate a coverage dispute: Jakubik v. Liberty Mutual Insurance Company, 2001 ABAB 836 (A claim for a stolen purse, Christmas gifts and the van that housed the purse and gifts was allowed as the insurer was unable to prove firstly, that the insured never actually paid for the van from its former owner and secondly, that the insured was a party to a plan to strip and damage the van, to ensure recovery of the full value for the van via the insurance proceeds.) 

  4. If you do suffer loss or injury over the Christmas break, give notice without delay, because the festive holidays won't excuse a failure to give timely notice under a claims-made policy: Stuart v. Hutchins et al.; American Home Assurance Company et al., third parties, 1998 CanLII 7163 (ON CA).

  5. Even while drinking your eggnog, it is always key to keep priorities in mind. Who will have the duty to defend when the company Christmas Party held at the boss' home gets out of hand? The homeowner's insurer of the residence where it happened or the GL insurer of the business who paid for the party? In keeping with the belief that it is better to give than to receive, the answer is probably both! Doucet v State Farm Fire and Casualty Company, 2017 ONSC 1222 (CanLII).

  6. When is a Christmas tree not a Christmas tree? When it is a riser, splitting the flow of propane from a propane tank farm to outbuildings and living quarters at a work camp: Slocan Forest Products Ltd. v. Trapper Enterprises Ltd. and Daryl H. Zimmerman, 2011 BCCA 351; when it is an assembly of valves, spools, pressure gauges and chokes fitted to the wellhead of a completed well to control production: Canadian Superior Oil Ltd. v. Paddon-Hughes Development Co., 1969 CanLII 716 (AB CA).

  7. Even when the holiday passes, the danger of a Christmas coverage dispute is not over. Did the kids receive a snowmobile under the tree (or, at least in the driveway)? No, while Mom and Dad had bought it at Christmas for the kids to use, they retained ownership, compelling their insurer to defend and indemnify against its negligent use and operation by their children: Cleworth v. Zackariuk, 1987 CanLII 2686 (BC CA).

    Best Wishes and Happy Holidays to all from the Great, mostly White North! 

    Heather
    Heather Sanderson

    [email protected]

     

    “It’s a Wonderful Life” Opens:

    Daily News
    New York, New York
    21 Dec 1921

    James Stewart Back
    In ‘A Wonderful Life’

    By KATE CAMERON

    "It's a Wonderful Life" had a special opening at the Globe Theatre last night for the benefit of the Boys' Club of New York. From today forward, the new Liberty production, sponsored by RKO, will be shown on a continuous schedule. It represents the first film to bear the Liberty trademark, it is Frank Capra’s first production since his return front the war and is James Stewart' first starring venture after his war service.

    Based on a story by Philip Van Doren Stern called "The Greatest Gift," the picture is designed to lift the spirits of its beholders, by first plunging them into misery at the sad plight of its protagonist, George Bailey, and then having his fortunes improve at the end.

    Capra not only produced and directed the picture, but collaborated on the screen play with Frances Goodrich and Albert Hackett. Between them, they have written a modern "Christmas Carol," and while some good, sound dramatic material and several tender passages have been woven into the picture, it is no improvement on the Dickens story.

    The film is too sprawling in extent, too noisy as to background music and voices and much too obvious in the application of its social significance notes. But while it isn't the best picture to come out of Hollywood this year, nor is it Capra's masterpiece, it tells a good story and its conclusion has a heart-warming effect on the audience.

    It gives us joy to welcome James Stewart back, as he was among Hollywood's brightest stars when he left the screen to become a flier in the war. He carries most of the burden of this long picture on his still slender shoulders and for the most part gives an endearing performance of the guy who wished he had never been born, when the going gets too tough, and was permitted to see what his home town would have been like without him.

    The love passages between Stewart and Donna Reed are delightfully done, but Capra permits his rein on Stewart and some of the other actors to slacken now and then, when they bolt all over the screen. Lionel Barrymore's Henry Potter is a veritable "Scrooge." As the richest man in town, he exploits its citizens to satisfy his lust for greed and power.

    Donna Reed gives a charming performance of the girl who loves George Bailey and Thomas Mitchell, Beulah Bondi, Ward Bond, Frank Faylen, Henry Travers and H. B. Warner, to mention only a few of the outstanding members of the cast, are excellent in their supporting roles.

    The picture would have been greatly improved by some judicious editing. It runs too long for its own good.

     

    Headlines from this week’s issue, attached:

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

  • Additional Insured Coverage Required When Named Insured is Identified in Pleading as Being Responsible in Part for Accident.  Privity Required for Coverage to be Implicated (Where Endorsement Called for Privity).  Trade Contract Indemnity Premature

  • Completed Ops Aggregate Applies to Work Put to Its Intended Use

  • Interpleader Action Appropriate to Resolve Competing Claims to Insurance Proceeds but Interpleading Party Not Discharged if there is a Question of How Much is Owed

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

 

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

  • Plaintiff was able to Raise Triable Issue of Fact as to Plaintiff’s Gap in Treatment due to No-Fault Benefits Expiring, Despite Plaintiff having Private Insurance

 

WILEWICZ’S WIDE WORLD of COVERAGE
Agnes A. Wilewicz

[email protected]

  • Fifth Circuit Reverses District Court’s Grant of Summary Judgment in Favor of Insurance Company, Citing a Genuine Dispute of Material Fact as to Whether an Application for Life Insurance Was Amended

 

BARNAS on BAD FAITH
Brian D. Barnas

[email protected]

  • Bad Faith Claim Based on Denial of Claim Dismissed

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

  • Insurer Providing Professional Liability Insurance to Insured Investment Firm tries and Fails to Strike Insured’s Claims for Coverage.

 

OFF the MARK
Brian F. Mark
[email protected]

 

BORON’S BENCHMARKS
Eric T. Boron

[email protected]

  • Certified Question of the 1st Circuit Court of Appeals Answered Concerning Whether Rhode Island’s Rejected Settlement Offer Interest Statute Applies in This Case; The Statutory Term “Civil Action” Held to Refer Only to Settlement Offers Made in Judicial Proceedings; Trial Court’s Grant of Summary Judgment for Insurer Upheld

 

BUCCI on “B”
Diane L. Bucci

[email protected]

  • Nothing this week.  Happy holidays.

 

RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell

[email protected]

  • Bill Delivered to the Governor Would Require Defendant’s Disclosure Of “Complete Information” For Any Insurance Agreement Within Sixty Days Of Answer. Thousands Flee

  • Bill Delivered to the Governor That Would Authorize Electronic Delivery of Insurance Notices With Insured’s Consent

  • Final Adoption of New Risk Based Capital NYCRR Part 77 And Amendment To Financial Statement Filings and Accounting Practices and Procedures Part 83

 

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

[email protected]

  • Excess Insurance Clause Did Not Apply to Third-Party Claims When the Operative Language is Inseverable

     

RAUH’S RAMBLINGS
Patricia A. Rauh

[email protected]

  • Nothing to Report this Week.  See You in 2022!  Happy Holidays!

 

STORM’S SIU EXAMEN
Scott D. Storm

[email protected]

  • After Multiple Attempts to Schedule an EUO on a Property Claim and the Plaintiffs’ Failure to Appear, a Hearsay Statement in an Affidavit that Plaintiffs’ Counsel’s Unidentified Staff Member had Requested an Adjournment was Insufficient to Defeat Summary Judgment

  • SUM Issue: If an Insured Reduces His Limits for Underinsured Motorist Coverage, but Adds a Car to the Policy at a Later Date, is the Election of Lower Limits Enforceable? Yes. The Lower Limits Apply

  • Defense Coverage Owed to Insured Parents in Personal Injury Suit Alleging They Negligently Allowed their Son to Use Their Home for Illicit Drug Activities, Despite a Controlled Substances Exclusion as it did Not Preclude Coverage for All of the Damages Sought by Plaintiffs

  • Property Preservation Company Acting on Behalf of Mortgagee in Discarding the Insured’s Personal Property does not Constitute a “Theft”

  • Toll on No-Fault 30-Day Pay or Deny Rule Ended When Insured/Assignor Failed to Show for 2nd EUO Scheduled Date, Not the 3rd

 

HEINTZMAN’S HIDEOUT
Nicholas J. Heintzman

[email protected]

  • See Lee Seigel’s Column for Nick’s Write-Up.

 

NORTH of the BORDER
Heather Sanderson

[email protected]

  • Is an Accidental Release of Ammonia while Performing Maintenance, a Release of a “Pollutant” Engaging the Total Pollution Exclusion?

 

Merry Christmas, Happy Holidays, Happy New Year.  Stay healthy!

See you in 2022.

Dan

 

 

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

Alice A. Trueman

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]

12/16/21       ACC Construction Corp. v. Merchants Mutual Insurance Co.
Appellate Division, First Department
Additional Insured Coverage Required When Named Insured is Identified in Pleading as Being Responsible in Part for Accident.  Privity Required for Coverage to be Implicated (Where Endorsement Called for Privity).  Trade Contract Indemnity Premature

The complaint in the underlying action alleged that the plaintiff was injured by a defect or dangerous condition at a construction project at property owned by 370 Seventh Avenue, and that various parties, including defendant Premier Electric, Inc., were responsible for the conditions that caused his accident.

Comscore, which leased a portion of the property from 370 Seventh Avenue, had retained plaintiff ACC as general contractor on the construction project, and ACC, in turn, had retained Premier as subcontractor to perform electrical work. The subcontract between ACC and Premier required Premier to contractually indemnify ACC, 370 Seventh Avenue, and Comscore for any claims or losses arising out of or in any way connected with the performance of the work under the subcontract, provided that the bodily injury was caused by any actual or alleged act of Premier or anyone acting on its behalf. The subcontract also required Premier to procure Commercial General Liability (CGL) coverage and to name ACC, 370 Seventh Avenue, and Comscore as additional insureds on that policy. Accordingly, pursuant to the subcontract, Premier procured a CGL policy from Merchants.

Merchants insured Premier. It has a duty to defend ACC as an additional insured because there is a reasonable possibility, based on the allegations in the underlying complaint, that the injury to the underlying plaintiff was caused by the acts or omissions of Premier, to which the policy was issued in connection with its ongoing operation. Furthermore, in light of the Merchants policy language specifically providing that it is primary and noncontributory for any additional insured, ACC, as an additional insured, is entitled to receive primary coverage from Merchants (see Pecker Iron Works of N.Y. v Travelers Ins. Co., 99 NY2d 391, 394 [2003]).

Since 370 Seventh Avenue and Comscore did not have a direct contractual agreement with Premier, they are not entitled to additional insured coverage under the terms of the Merchants policy

Since Premier is not an insurer, its duty to defend its contractual indemnitee is no broader than its duty to indemnify; thus, because there has been no showing as to any party's negligence, any order requiring Merchants to reimburse Premier's indemnification costs, including indemnification of reasonable attorneys' fees incurred by its contractual indemnitees, is premature

12/14/21       Nouveau Elevator Ind, Inc. v. New York Marine & General Ins.
Appellate Division, First Department
Completed Ops Aggregate Applies to Work Put to Its Intended Use

Under the policies issued by NYM to Nouveau, the products-completed operations aggregate limit applies to work that has been completed, which is defined to include "that part of the work done at a job site [that] has been put to its intended use." Because the elevators Nouveau allegedly serviced negligently had been "put to their intended use" after being serviced, under the plain language of the policies, the products-completed operations aggregate limits apply.

12/14/21       Greenway Mews Realty, L.L.C. v. Liberty Ins. Underwriters
Appellate Division, First Department
Interpleader Action Appropriate to Resolve Competing Claims to Insurance Proceeds but Interpleading Party Not Discharged if there is a Question of How Much is Owed

In a prior order, the Court held that LIUI obligations to pay post-judgment interest on a judgment against their insured UAD Group ceased when the insurers made a good faith offer to satisfy the judgment.

Accordingly, I held that that the interpleader actions commenced by LIU was not moot.

Given the yet to be resolved issues regarding the final amount owed by the insurers its insured, it would not yet discharge LIU by its paying certain monies into court.

 

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

Oh, Silent Night…….

DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley

[email protected]

12/14/21       Edwin Velazquez v. City of New York et al
Appellate Division, First Department
Plaintiff was able to Raise Triable Issue of Fact as to Plaintiff’s Gap in Treatment due to No-Fault Benefits Expiring, Despite Plaintiff having Private Insurance

This appeal from an order of the Supreme Court, Bronx County (Mitchell J. Danziger, J.), entered May 22,2020. The order, among other things, denied defendants' motion for summary judgment dismissing the claims of a serious injury involving permanent consequential and significant limitation of use under Insurance Law § 5102(d).

The appellate Court found that, defendants failed to establish, prima facie, that plaintiff's injuries were not caused by the accident. Although defendants submitted plaintiff's emergency room records reflecting minimal treatment and the opinions of a radiologist and an engineer that plaintiff's claimed cervical and lumbar spine injuries were not caused by trauma from the accident, defendants' own orthopedic expert opined that plaintiff's injuries, although resolved, were causally related to the accident. Accordingly, the burden of proof on causation never shifted to the plaintiff.

However, defendants did establish, prima facie, that plaintiff did not sustain a serious injury involving permanent consequential and significant limitation of use by submitting the opinions of their medical expert orthopedist and neurologist, who found no evidence of significant abnormalities on physical examination and concluded that plaintiff's sprains and strains had resolved. Observations of mild reductions in plaintiff's range of motion do not undermine the experts' conclusion that plaintiff did not sustain a serious injury in the accident. Defendants also showed that plaintiff stopped his treatment six months after the accident, although he had private insurance.

In opposition, plaintiff raised an issue of fact as to whether he sustained a serious injury by submitting his treating physician's findings of significant limitations in range of motion in plaintiff's cervical and lumbar spine within two months of the accident and MRI scans from shortly after the accident showing disc herniations and bulges, which support the physician's findings. Plaintiff also raised an issue of fact as to whether his injuries are permanent by submitting his medical records showing that he continued to exhibit significant limitations in range of motion more than three years after the accident. Additionally, plaintiff provided a reasonable explanation for the cessation of treatment, specifically that his no-fault insurance stopped covering his therapy and that he continued to do home exercises, as instructed, to address continuing pain.

Based on the foregoing, the Appellate Court unanimously affirmed the lower Court decision, without costs.

 

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

[email protected]e.com

12/10/2021   Pham v. TransAmerica Premier Life Ins. Co.
United States Court of Appeals, Fifth Circuit
Fifth Circuit Reverses District Court’s Grant of Summary Judgment in Favor of Insurance Company Citing a Genuine Dispute of Material Fact as to Whether an Application for Life Insurance Was Amended

In January 2018, Bich Pham (“Bich”) applied for life insurance coverage of $600,000 from TransAmerica. Bich gave her insurance agent a check to cover the first premium and received a “Conditional Receipt,” which provided temporary coverage as of the “Effective Date,” if Bich met all four “Conditions to Conditional Coverage.” One of the four “Conditions to Conditional Coverage” required that Bich be “insurable at any rating under the Company’s rules for insurance on the plan applied and, in the amount, . . . applied for.” The Conditional Receipt provided that the Effective Date was the later of the date of completing all parts of the application, the date of the last medical examinations required by TransAmerica, or the date requested in the application.

On February 14, 2018, the insurer informed Bich that she could only be insured at the amount of $524,114 and sent Bich’s agent notice of this fact in the form of a “supplemental illustration” and “numeric summary.” On February 26, 2018, Bitch signed the numeric summary and Bich’s agent informed TransAmerica that Bich would accept the lesser coverage amount. On March 8, 2018, TransAmerica notified Bich’s agent that it had approved the application for $524,114 in coverage. Bich was killed the day after, before she received the actual insurance policy. On March 20, 2018, TransAmerica issued the policy, and sent Bich an “Amendment of Application,” which Bich was required to sign to acknowledge the adjusted coverage amount.

In May 2018, Johnny Pham (“Pham”), Bich’s father, filed a claim for benefits under the life insurance policy. His claim was denied, and Pham sued TransAmerica for breach of contract and violations of the Texas Insurance code and Texas Prompt Payment of Claims Act. The insurer moved for summary judgment, and the district court ruled that (1) there was no coverage under the Policy because it was not in effect at the time of Bich’s death, (2) there was no temporary coverage under the Conditional Receipt because “Bich Pham was not insurable in the amount that she previously applied for—$600,000” on February 6, 2018, which the district court determined to be the Effective Date, and (3) Plaintiff’s statutory, extra-contractual claims failed as a matter of law because there was no contractual coverage.

On appeal, the Court stated that, under Texas law, a conditional receipt may create a binding contract for temporary life insurance. Thus, the issue in the case was whether Bich was covered under the Conditional Receipt at the time of her death. The dispute between the parties was whether the Effective Date was February 6, 2018, or February 26, 2018.

According to Plaintiffs, Bich did not complete all parts of the application until February 26, 2018, when she signed the numeric summary and accepted the lower coverage amount, because the signing of the numeric summary constituted an amendment to and a part of the application. The insurer’s position was that the Effective Date of the Conditional Receipt was February 6, 2018, the date that Bich completed the required medical examinations, and thus she was not insurable in the amount of $600,000 she applied for.

Plaintiffs referred to several pieces of evidence suggesting that the parties agreed to amend the application. TransAmerica, to the contrary, raised insufficient arguments to conclusively show that the application was not amended. According to the Court, Plaintiffs presented more than enough evidence to raise a genuine dispute of fact as to whether there was a meeting of the minds to amend the application. Therefore, the Court reversed and remanded for further proceedings.

 

BARNAS on BAD FAITH
Brian D. Barnas

[email protected]

12/14/21       Bergantino v. State Farm Mutual Auto Ins. Co.
Supreme Court of Wyoming
Bad Faith Claim Based on Denial of Claim Dismissed

On May 7, 2016, Mark Harrington negligently ran a stop sign and collided with Mr. Bergantino's vehicle. Mr. Bergantino and Ms. Bergantino, who was a passenger in the vehicle, were injured. Mr. Harrington had liability insurance coverage through USAA with limits of $100,000 per person. Mr. Bergantino's vehicle was insured by State Farm, including $100,000 per person coverage for medical expenses and $100,000 per person coverage for underinsured motor vehicles.

USAA and Mr. Bergantino agreed to settle his claim against Mr. Harrington for policy limits and USAA and Ms. Bergantino agreed to settle her claim for $99,000. State Farm paid the Bergantinos’ medical bills and agreed to waive its rights under the policy to subrogation or reimbursement of the medical payments from the proceeds of their settlements with USAA.  In the meantime, the Bergantinos filed claims with State Farm for UIM benefits. State Farm offered Mr. Bergantino $13,370 in UIM benefits and made no offer to Ms. Bergantino.  The Bergantinos demanded State Farm pay each of them full UIM benefits of $100,000. They eventually filed suit.

In their complaint, the Bergantinos asserted State Farm breached the policy by not paying the claim and acted in bad faith by delaying and denying payment.  State Farm moved for summary judgment, arguing that the Bergatinos were not entitled to UIM coverage because Mr. Harrington’s vehicle was not underinsured and there was no viable bad faith claim.

First, the Supreme Court of Wyoming concluded that the breach of contract claim should be dismissed because there was no underinsured vehicle.  Mr. Harrington’s policy and the Bergantinos’ policy contained the same limits of liability coverage.  Under the circumstances, they were not entitled to UIM coverage.

The court also dismissed the bad faith claim.  In Wyoming, a bad faith claim may be maintained even though there is no coverage for the underlying claim.  An insurer may still be liable for its claim handling even if the claim is covered.  However, all of the Bergantinos’ allegations of bad faith in this case sounded in State Farm’s alleged failure to pay, or delay in paying, UIM benefits.  There were no claims that the process State Farm used when handling the UIM benefits claims were in bad faith.  Accordingly, those claims were dismissed.

 

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

11/29/21       Fieldpoint Private Securities v. Federal Insurance Company
Superior Court of Connecticut, Judicial District of Stamford-Norwalk at Stamford
Insurer Providing Professional Liability Insurance to Insured Investment Firm tries and Fails to Strike Insured’s Claims for Coverage

*This column was guest written by Nick Heintzman.

**A copy of the Court’s decision is not freely available yet. If you are interested in the decision, please contact Nick Heintzman for a copy.

Plaintiff, Fieldpoint Private Securities (“Plaintiff”), an investment advising firm, asserted that they were scammed into believing they had an opportunity to provide management services relating to a multi-billion-dollar trust. In pursuing the opportunity, Plaintiff involved several other parties (collectively referred to as the “Bermuda claimants”). The Bermuda claimants paid Plaintiff money in furtherance of the opportunity. When Plaintiff realized it was scammed, it ceased its involvement in the scheme, but was nevertheless sued by the Bermuda claimants in an action that eventually settled.  After the settlement, Plaintiff submitted an insurance claim to its insurer, defendant Federal Insurance Company (“Defendant”), seeking reimbursement for the funds it paid the Bermuda claimants. Defendant denied coverage, and Plaintiff commenced this litigation. Defendant moved to strike Plaintiff’s complaint.

The insurance policy between Plaintiff and Defendant (“the policy”) provided Plaintiff professional liability insurance. Under the policy, one of the conditions for coverage was that Plaintiff must have satisfied/paid a claim asserted against them by one of their paying clients. Further, Plaintiff, under a written agreement, must have contracted with the client to provide investment services in exchange for “consideration.” Defendant’s basis to strike Plaintiff’s complaint was that Plaintiff failed to plead the existence of said consideration in its complaint.

The Court first noted Connecticut case precedent which provides that when an insured brings an action against an insurer for breach of the insurance contract, the insured’s compliance with the contract’s terms and conditions is presumed unless an insurer affirmatively places such compliance at issue, in which case the insured must prove compliance. National Pub. Co. V. Hartford Fire Ins. Co., 287 Conn. 664, 673-74, 949 A.D.2d 1203, 1210 (2008). Defendant argued that this principle only applies to conditions precedent to making a claim for insurance, such as proper/timely notice.

The Court disagreed. It first noted that regardless of whether an insured’s compliance at issue pertains to a policy condition or a policy exclusion, the insured still need only provide a “somewhat generalized recitation” of compliance. The Court then analyzed four cases cited by Defendant, and it found three of them unpersuasive because those cases were summary judgment decisions. The Court noted that the standard for this motion, a motion to dismiss Plaintiff’s complaint, required that the Court make every possible inference in the Plaintiff’s favor. The fourth case, IberiaBank Corp v. Illinois Union Ins. Co., 953 F.3d 339 (5th Cir. 2020), involved an insurer’s motion to dismiss an insured’s complaint, and its facts were similar to this case’s. However, the Court distinguished it on two grounds: 1) here, unlike in IberiaBank, Plaintiff (the insured) clearly received direct payments from the underlying claimants; and 2) IberiaBank applied Louisiana law, which is Civil-Code-based, as opposed to common-law-based Connecticut law.

The Court acknowledged that in a hypothetical summary judgment motion, it may have had a factual record sufficient to show there was no consideration paid to Plaintiff by the Bermuda claimants, and thus no coverage. But here, in the present motion to dismiss, making all favorable inferences for basis, the Court found no basis to conclude there was no consideration and thus no coverage. Thus, the Court denied Defendant’s motion to strike.

 

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

Likely the result of the holiday season, there were no interesting construction defect cases to report on this edition.  Hopefully, we have better results in the new year.

 

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

[email protected]

12/20/21       Althea Johnson et al. v. Horace Johnson et al.
Supreme Court of Rhode Island
Certified Question of the 1st Circuit Court of Appeals Answered Concerning Whether Rhode Island’s Rejected Settlement Offer Interest Statute Applies in This Case; The Statutory Term “Civil Action” Held to Refer Only to Settlement Offers Made in Judicial Proceedings; Trial Court’s Grant of Summary Judgment for Insurer Upheld

The Supreme Court of Rhode Island was asked to define ‘civil action’ as used in Rhode Island General Laws 1956 § 27-7-2.2 (the “statute”). The section reads:

In any civil action in which the defendant is covered by liability insurance and in which the plaintiff makes a written offer to the defendant’s insurer to settle the action in an amount equal to or less than the coverage limits on the liability policy in force at the time the action accrues, and the offer is rejected by the defendant’s insurer, then the defendant’s insurer shall be liable for all interest due on the judgment entered by the court even if the payment of the judgment and interest totals a sum in excess of the policy coverage limitation. This written offer shall be presumed to have been rejected if the insurer does not respond in writing within a period of thirty (30) days.

After Carlton Johnson was injured as a passenger in Horace Johnson’s car, his counsel sent a letter to Arbella Mutual Insurance Company (“Arbella” or “defendant”) demanding a settlement in the amount of the policy limit for coverage for bodily injuries to passengers on Horace Johnson’s policy. A little over thirty days later, Arbella sent a response accepting the settlement offer. In the following two weeks, Carlton and his mother commenced an action for damages and alleged that Arbella had violated certain provisions of insurance law.

On defendant’s summary judgment motion, plaintiffs argued that § 27-7-2.2 applied to invalidate Arbella’s acceptance of the settlement offer because the correspondence was sent after the statutory thirty-day deadline, making Arbella liable for interest above the policy limit. The District Court disagreed and granted the defendants’ motion, holding that the use of the term ‘civil action’ in the language of the statute contemplated it applying to legal proceeding instituted in court, that is, as formal suit. The District Court found that a valid settlement contract was created and that any further proceedings were unnecessary.

On appeal, plaintiffs argued that the statute’s phrase “civil action” should be interpreted as “the legal right of an injured party to seek relief in a Court of Law,” or to include the time when a cause of action accrues.  Plaintiffs argued that because the legislative intent was to encourage settlements, the plaintiffs the statute had to apply to “pre-suit written offers.”  However, the Supreme Court affirmed the District Court’s holdings, finding that the statute is clear and unambiguous and requires a judicial proceeding to be commenced in order to be applied. The Supreme Court found no merit in the plaintiff’s contentions and confirmed the plain meaning of the statutory language.

 

BUCCI on “B”
Diane L. Bucci

[email protected]

Nothing this Week.  Happy Holidays.

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

 

Legislative List

12/20/21       Comprehensive Insurance Disclosure Act
New York State Legislature
Bill Delivered to the Governor Would Require Defendant’s Disclosure Of “Complete Information” For Any Insurance Agreement Within Sixty Days Of Answer. Thousands Flee

In June 2021, zero-hour legislation was passed by both houses of the New York State Legislature (Bill Nos. A08041 and S07052), which would require that all parties provide notice and proof of the existence and contents of any insurance agreement, including coverage amounts and a laundry list of other information, under which any person or entity may be liable to satisfy part or all of a judgment within sixty days of serving an answer in an action. We wrote about this bill in June here. For your convenience, I excerpted my prior write-up below. This law should be vetoed as a vast overstep to solve a non-existent problem:

06/10/21       Comprehensive Insurance Disclosure Act
New York State Legislature
Proposed Legislation by Both State Legislative Houses Requires Defendant’s Disclosure Of “Complete Information” For Any Insurance Agreement Within Sixty Days Of Answer. Thousands Flee.

Coined, the “Comprehensive Insurance Disclosure Act,” the bill proposes an amendment to the current CPLR 3101(f). That provision, as it currently exists, provides as follows:

(f) A party may obtain discovery of the existence and contents of any insurance agreement under which any person carrying on an insurance business may be liable to satisfy part or all of a judgment which may be entered in the action or to indemnify or reimburse for payments made to satisfy the judgment. Information concerning the insurance agreement is not by reason of disclosure admissible in evidence at trial. For purpose of this subdivision, an application for insurance shall not be treated as part of an insurance agreement.

However, according to the Sponsor Memorandum, the above is insufficient for a number of reasons:

In personal injury cases, disclosure of complete and accurate information about the nature and extent of insurance coverage is often delayed. There is a confusing and often conflicting array of case law regarding what must be disclosed and when. Not only do these delays clog our overburdened courts, but they also force injured New Yorkers to wait for the justice they deserve. This can be solved by simply clarifying the nature, extent, and timeliness of mandated disclosure of insurance policies in statute.

This amendment will reduce the use of delaying tactics by explicitly compelling disclosure of the complete primary, excess, and umbrella policies implicated by the claim, as well as directing disclosure of other claims, contracts, or agreements that may deplete the available coverage, along with current residual limits of policies that have been eroded by other payments. The information is required to be provided within sixty days after a defendant files his or her answer.

Accordingly—well, according to the bill’s sponsors—the following amendment to the language of CPLR 3101(f) is proposed:

  1. Any defendant, third-party defendant, or defendant on a cross-claim or counter-claim shall provide to the plaintiff, third-party plaintiff, plaintiff on counter-claim, and any other party in the action within sixty days after serving an answer pursuant to rule three hundred twenty or section three thousand eleven or three thousand nineteen of this chapter notice and proof of the existence and contents of any insurance agreement under which any person or entity may be liable to satisfy part or all of a judgment that may be entered in the action or to indemnify or reimburse for payments made to satisfy the entry of final judgment. Information and documentation pursuant to this subdivision shall include:

  2. all primary, excess and umbrella policies, contracts or agreements issued by private or publicly traded stock companies, mutual insurance companies, captive insurance entities, risk retention groups, reciprocal insurance exchanges, syndicates, including, but not limited to, Lloyd's Underwriters as defined in section six thousand one hundred sixteen of the insurance law, surplus line insurers and self-insurance programs sold or delivered within the state of New York;

  3. a complete copy of any policy, contract or agreement referred to in subparagraph (i) of this paragraph, including, but not limited to, declarations, insuring agreements, conditions, exclusions, endorsements, and similar provisions;

  4. the contact information, including telephone number and e-mail address, of any person or persons responsible for adjusting the claim made to or against the person or entity described in subparagraph (i) of this paragraph, including third-party administrators and persons within the insuring entity to whom the third-party administrator is required to report;

  5. the amounts available under any policy, contract or agreement to satisfy a judgment described in this subdivision or to reimburse for payments made to satisfy the judgment;

  6. any lawsuits that have reduced or eroded or may reduce or erode such amounts referred to in subparagraph (iv) of this paragraph, including the caption of any such lawsuit, the date the lawsuit was filed, and the identity and contact information of the attorneys for all represented parties therein; and

  7. the amount, if any, of any payment of attorney's fees that have eroded or reduced the face value of the policy, along with the name and address of any attorney who received such payments.

  8. A defendant, third-party defendant, or defendant on a cross-claim or counter-claim required to produce to a plaintiff or third-party plaintiff or plaintiff on a counter-claim all information set forth in paragraph one of this subdivision has an ongoing obligation to make reasonable efforts to ensure that the information remains accurate and complete, and provide updated information to any party to whom this information has been provided within thirty days of receiving information rendering the prior disclosure inaccurate or incomplete in whole or in part. This obligation shall exist during the entire pendency of the litigation and for sixty days after any settlement or entry of final judgment in the case inclusive of all appeals.

  9. For purposes of this subdivision, an application for insurance shall be treated as part of an insurance agreement and shall be disclosed.

  10. Information concerning the insurance agreement is not by reason of disclosure admissible in evidence at trial.

The bill further requires sworn certification by both defendant and its attorney that the information is accurate and that reasonable efforts have been made to ensure that the information remains accurate as per the newly proposed CPLR 3101(f)(2).

Maxwell’s Minute: We round-tabled this bill yesterday—the only other day of its existence until today. The consensus: This is another bill fixing a non-existent problem.

With good reason, the insurance application is not included within the current mandatory disclosures under New York law. Most commercial applications contain important financial information, and this bill would lead to abuse of such information in the name of increased settlement demands, above and beyond insurance policy limits and increased settlement pressure in avoidance of excess verdicts.

This bill appears a clear attempt to bypass defense counsel in pursuit of the carrier (i.e., the claim adjuster) who they must believe will be easier to influence without the filter of experienced defense litigator. The bill robs both the carrier and the insured defendant of the protections afforded by retaining counsel.

Defendants currently provide insurance information as part of initial disclosures, including excess and umbrella coverage; and carriers have an obligation to disclose erosion of limits, whether by judgment, settlement, or defense expenses within limits. None of this is combative, delayed, or the subject of motion practice. And sworn certification of the same is simply a spit in the face of defense counsel for, again, what amounts to unnecessary conjecture contained within the Sponsor Memorandum that standard discovery results in delay tactics and gamesmanship in one direct.

At the very least, the assertions in the Sponsor Affidavit that “delay tactics” and other problems abound should be put to the test over the course of a full legislative session and actual hearings. Provide evidence. This is not the type of bill to introduce and pass in two days.

12/10/21       Electronic Delivery of Property/Casualty Insurance Notices
New York State Legislature
Bill Delivered to the Governor That Would Authorize Electronic Delivery of Insurance Notices With Insured’s Consent

In June 2021, Senate Bill No. S00653-A (same as A00651A) passed both the houses of the New York State Legislature. That bill was recently delivered to the Governor. If signed, the new law would add a new Insurance Law §3457 to permit property/casualty insurers to deliver insurance notices and documents electronically with policyholder consent.

According to the Sponsor Memorandum:

“There has been an increasing trend in society towards digital communication. Insurance companies and consumers have both expressed interest in having the option to send and receive notices electronically. The Department of Financial Services allows the use of electronic communications in some insurance related notices. However, there is significant exception to this allowance. Electronic delivery is not allowed for notices where statute requires the notice to be physically mailed. Such notices include cancellation, discontinuance or other major changes to policy. This legislation would remove these exceptions and allow for all insurance notices to be delivered electronically if the consumer affirmatively consents to delivery by this method. The bill includes safeguards to protect the consumer including options to withdraw consent, notices of necessary software/hardware requirements and requires insurers to provide a clear notice of rights before consent is granted. Insurers are further required to make efforts to deliver by alternate methods in instances where electronic deliver is believed to have failed. By allowing for consumer directed opt-in for paperless delivery, we safeguard customers from missing vital information that may be lost or disregarded in mail delivery. Furthermore, this bill has positive environmental impacts by drastically reducing non-essential physical printing and postage in cases where consumers opt for electronic delivery.”

Under subsection (b), the new law would permit “any notice to a party or any other document required under applicable law in a property/casualty insurance transaction or that is to serve as evidence of property/casualty insurance coverage may be delivered, stored, and presented by electronic means so long as it meets the requirements of article three of the state technology law,” under certain circumstances. Specifically, summarizing subsection (d), each party receiving such electronic delivery of a notice must have

  • “affirmatively consented” to the method of delivery by electronic means in a manner demonstrating that the party will be able to access such notices in the future; and

  • been provided a “clear and conspicuous statement” of

    • the right to withdraw consent, and procedures for doing same;

    • the types of notices to be sent under that method;

    • the right to paper delivery of such a notice; and

    • the hardware/software requirements for access to and retention of such notice.

The proposed law defines “party” as any recipient of any notice or document required as part of a property/casualty insurance transaction, including but not limited to an applicant, an insured, or a policyholder.”

With regard to delivery of a cancellation notice, non-renewal notice or conditional renewal notice delivered by electronic means, subsection (e) provides additional requirements regarding the clear communication of the importance of the communication:

(e) Any electronic mail being sent by an insurer to a party in connection with the delivery of a cancellation notice, non-renewal notice or conditional renewal notice delivered by electronic means shall include in the subject line and body of the communication clear and conspicuous language alerting the receiving party as to the importance of the communication and the type of notice being delivered to such party electronically.

Other pertinent, operative language from what could be a new Insurance Law §3458 provides:

  1. Delivery of a notice or document in accordance with this section shall be considered equivalent to any delivery method required under applicable law, including delivery by first class mail; first class mail, postage prepaid; certified mail; certificate of mail; or certificate of mailing.***

  2. This section does not affect requirements related to content or timing of any notice or document required under applicable law.

  3. If a provision of this chapter or applicable law requiring a notice or document to be provided to a party expressly requires verification or acknowledgment of receipt of the notice or document, the notice or document may be delivered by electronic means only if the method used provides for verification or acknowledgment of receipt.

***

  1. An insurer shall deliver a notice or document by any other delivery method permitted by law other than electronic means if:

  2. the insurer attempts to deliver the notice or document by electronic means and has a reasonable basis for believing that the notice or document has not been received by the party, or

  3. the insurer becomes aware that the electronic mail address provided by the party is no longer valid.***

Maxwell’s Minute: A common theme in insurance coverage litigation under New York’s Insurance Law §3420(d)(2), which imposes draconian penalties following an insurer’s failure to provide prompt notice of a disclaimer to the insured, the injured person any other claimant. There are many pitfalls existing under §3420(d)(2) already. But note that “a property/casualty insurance transaction” is an undefined term under the provisions above. Is an insurance disclaimer “a property/casualty insurance transaction”? Is the injured person or claimant a “party” as defined, and if so, how would one go about obtaining their consent? Although electronic communication makes sense under certain circumstances, I firmly believe that if signed into law, Insurance Law §3458 will result in countless traps for the unwary under §3420. Who wants to test it first? Not me.

 

Regulatory Wrap-Up

12/15/21       Risk-Based Capital Financial Statement Filings and Accounting Practices and Procedures
Department of Financial Services
Final Adoption of New Risk Based Capital NYCRR Part 77 And Amendment To Financial Statement Filings and Accounting Practices and Procedures Part 83

In July of this year, DFS issued a pre-proposed insurance outreach requesting comments on the potential adoption of a new Risk Based Capital part to New York’s Insurance Regulations (11 NYCRR 77) and amendment to the existing Part 83 therein regarding financial statement filings and accounting practices and procedures (we wrote about it here). Those pre-proposed regulations were actually proposed thereafter and on Wednesday, such regulations were finally adopted by the DFS.

Under the new regulation, DFS added a new Part 77 to Regulation 220, which contains the following provisions:

Section 77.2  Exchange traded fund RBC charge.

  1. Until January 1, 2027, the shares of an exchange traded fund shall be treated as bonds for the purpose of a domestic insurer’s RBC report if the exchange traded fund meets the following criteria:

  2. the portfolio of the exchange traded fund consists entirely of investments in bonds;

  3. the exchange traded fund tracks a bond index (i.e., is not actively managed) and makes publicly available no less frequently than monthly a detailed list of its holdings;

  4. the exchange traded fund has a minimum of US $ 1 billion in assets under management;

  5. the exchange traded fund allows in-kind redemptions by its shareholders;

  6. the exchange traded fund is registered pursuant to the Investment Company Act of 1940, 15 U.S.C. §§ 80a-1 – 80a-64;

  7. the exchange traded fund is rated by a nationally recognized statistical rating organization; and

  8. the exchange traded fund is identified as qualifying for bond treatment by the Purposes and Procedures Manual of the NAIC Investment Analysis Office and has a preliminary or final NAIC Standard Valuation Office designation.

  9. A domestic insurer shall apply the applicable RBC charge as set forth in the RBC instructions to any shares of an exchange traded fund that meets the criteria set forth in subdivision (a) of this section.

  10. Nothing in this section shall affect the classification of shares of exchange traded funds as equity for legal purposes, including for the purposes of Insurance Law article 14.

In addition to the newly created Part 77, 11 NYCRR 83 was amended to add §83.3(d), which provides that “[a] foreign insurer shall calculate its risk-based capital consistent with Part 77 of this Title and shall report that risk-based capital in the New York supplement to the annual financial statement.”  The changes include an amendment to 11 NYCRR 83.4(t), which adds the following underlined language:

  1. The guidance prescribed in [subparagraphs] subparagraph 4.a. [and 4.b.] of SSAP No. 26R, “Bonds”, and the third sentence of Footnote 1 of SSAP No. 97, are not adopted.However, shares of an exchange traded fund that meets the criteria set forth in section 77.2(a) of Part 77 of this Title shall be accounted for in accordance with the accounting manual, including with respect to the asset valuation reserve and interest maintenance reserve, with the exception that the book adjusted carrying value of such shares shall be set equal to fair value (and not systematic value).

This regulatory change was not without its critics. According to DFS’ assessment of public comments prior to adoption, “asset managers objected to the regulation’s favorable risk-based capital (“RBC”) treatment of shares of qualifying exchange traded funds (“ETF”), applying only to ETFs that track a bond index,” and instead “requested that favorable RBC treatment be extended to actively managed fixed-income ETFs.” However, DFS was unmoved, indicating in response that “[l]imiting the regulation’s applicability to index-tracking fixed-income ETFs best ensures that the ETF portfolio’s management follows a rules-based approach that approximates a more conservative ‘buy and hold’ type strategy as opposed to active trading.”

Additionally, “asset managers requested that the requirement in Section 77.2(a)(2) of Insurance Regulation 220 that ETFs make available a detailed list of their holdings no less frequently than monthly be amended to require that ETFs make a detailed list of their holdings available daily because daily reporting provides greater transparency, which the asset managers claim will allow ETF investors to better predict the ETF’s performance and investment risks.” However, “DFS concluded that requiring monthly portfolio reporting is sufficient because monthly disclosure is aligned with the administrative and operational practices of index-tracking fixed-income ETFs, which adjust and true up

their portfolios on a monthly basis.”

Other suggestions from asset managers regarding adjusting Section 77.2(a)(3) and (a)(4) to reflect a lower minimum US asset threshold and an exception to rating by a nationally recognized statistical rating organization were rejected in the name of stability and consistency.

Pursuant to the State Administrative Procedure Act, these changes to the New York Insurance Regulations are effective without further publication in the State Register, due to prior filing of the proposed amendment on September 22, 2021.

 

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

 

12/07/21       The Charter Oak Fire Ins. Co. v. Erie Insurance Company
United States District Court, Northern District of New York
Excess Insurance Clause Did Not Apply to Third-Party Claims When the Operative Language is Inseverable

Charter Oak brought this declaratory judgment action seeking a declaration that (1) Defendant Erie Insurance Company (“Erie”) is obligated to defend nonparty M+W U.S., Inc. (“M+W”) in an underlying lawsuit; (2) Erie's coverage obligations to M+W in connection with the underlying action are primary and non-contributory; and (3) Erie is obligated to reimburse Charter Oak for the costs it has already incurred in defending M+W in the underlying action, including its pursuit of a cross-claim for indemnification.

Plaintiff issued a policy providing M+W (a construction group) coverage for accidental bodily injury that took place between the policy period of April 30, 2013, to April 30, 2014. (the “Charter Oak Policy”) The Charter Oak Policy contains an “OTHER INSURANCE” amendment that provides that coverage under it “is excess over any of the other insurance, whether primary, excess, contingent or on any other basis, that is available to the insured when the insured is added as an additional insured under any other policy, including any umbrella or excess policy.” Defendant issued a policy providing Arrow Sheet Metal Works (“Arrow”) coverage for any accidental bodily injury that took place during the policy period of February 28, 2013, to February 28, 2014 (the “Erie Policy”). The Erie Policy names M+W as an additional insured and contains the following endorsements:

A. Section II – Who Is An Insured is amended to include as an additional insured the person(s) or organization(s) shown in the Schedule, but only with respect to liability for “bodily injury”, “property damage” or “personal and advertising injury” caused, in whole or in part, by:

1. Your acts or omissions; or

2. The acts or omissions of those acting on your behalf; in the performance of your ongoing operations for the additional insured(s) at the location(s) designated above.

The Erie Policy further provides the following:

a. Primary Insurance

This insurance is primary except when Paragraph b. below applies.

* * *

b. Excess Insurance

1) This insurance is excess over:

a) Any of the other insurance, whether primary, excess, contingent or on any other basis:

i) That is Fire, Extended Coverage, Builder's Risk, Installation Risk or similar coverage for “your work”.

In October 2013, M+W entered into a “Major Subcontract Agreement” with Arrow (the “Subcontract”) in connection with a construction project in Albany, New York (the “Project”). Pursuant to the Subcontract, Arrow was required to “procure, pay for and thereafter maintain such insurance as will protect against claims for bodily injury or death, or damage to property, which may arise out of operations by Subcontractor or any sub-Subcontractor or by anyone employed by any of them, or by anyone for whose acts any of them may be liable,” and to name M+W as an additional insured. The Subcontract also required Arrow to indemnify, defend, and hold harmless M+W and the owner of the Project from and against any claim arising out of or relating to the performance of Arrow's work by Arrow or those for whom Arrow is responsible under the Subcontract. In February 2014, an employee of an Arrow subcontractor (“Claimant”) was injured while working at the project. Claimant sued various parties including Arrow and M+W alleging his injury was caused by their negligence. M+W filed a cross claim against Arrow seeking indemnification and pursues this claim even after the settlement of Claimant’s suit.

Charter Oak argued that it was entitled to a declaration that Erie has a duty to defend M+W in the Underlying Action because M+W is specifically scheduled as an additional insured under the Erie Policy, and the allegations of the underlying complaint fall within the coverage available under the Erie Policy. Charter Oak further argued that Erie Policy's coverage is primary to the Charter Oak Policy's coverage because none of the conditions listed in the Erie Policy that would render that Policy excess are present here, and that Erie's obligation includes all the costs Charter Oak has incurred in pursuit of M+W's defense, including M+W's cross-claim against Arrow for indemnification. Erie conceded that M+W was listed as an additional insured on the Erie Policy and that it had a duty to defend M+W but argued that both policies are excess coverage and therefore the cost of defense should be split equally or pro rate. Erie also argued that Charter Oak is not entitled to counsel fees for (1) the indemnification cross claim against Arrow, or (2) any defense costs after Charter Oak filed an untimely summary judgment motion.

Erie argued that its coverage must be deemed excess pursuant to the “Excess Insurance” clause reproduced above. Specifically, that the phrase “similar coverage for your work” covers “the entirety of the prime contract” between M+W and Arrow and therefore encompasses Claimant's work for Arrow's subcontractor. Carter Oak countered this argument arguing that the New York Court of Appeals considered the precise language at issue here in Great Northern and held that such language applied “only to first-party property coverage for commercial work, not for a third-party liability policy”. The Court of Appeals in Great Northern, when interpreting a nearly identical excess insurance clause the phrase “your work” could not be severed “from the unambiguous antecedent enumerated coverages”—namely, “fire, extended coverage, builders risk, installation risk or similar coverage”—which were all examples of “first-party property insurance.” The same reasoning applied in this matter, the Charter Oak policy is a third-party liability policy, as Claimant’s personal injury action triggered only the third-party coverage under the Charter Oak Policy. Therefore, the Erie Policy’s excess insurance clause is not triggered, and the Erie Policy is excess.

With regard to Charter Oak’s entitlement to its costs to pursue M+W’s cross claim against Arrow for indemnification, the Court held Charter Oak is entitled to same. As Charter Oak is pursuing a contractual claim against a party other than the contractual indemnitor, such recovery is permissible.

Note: This decision was not reported, and I could not find a publicly available link to include in my column this week. If you would like the full text of the decision, please email me and I’ll be happy to pass it along--CJE

 

RAUH’S RAMBLINGS
Patricia A. Rauh

[email protected]

Nothing to Report this Week.  See You in 2022!  Happy Holidays!

 

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

12/06/21       Refolio, LLC, et al. v. Certain Underwriters of Lloyd’s
Supreme Court, Kings County
After Multiple Attempts to Schedule an EUO on a Property Claim and the Plaintiffs’ Failure to Appear, a Hearsay Statement in an Affidavit that Plaintiffs’ Counsel’s Unidentified Staff Member had Requested an Adjournment was Insufficient to Defeat Summary Judgment

The plaintiffs commenced this action seeking recovery for damage to property in the amount of $700,000 and for loss of rental income in the amount of $80,000. The building was damaged by fire on February 20, 2019. The defendants move for summary judgment on the grounds that the plaintiffs failed to appear for an examination under oath and to provide relevant information.
By letter dated April 9, 2019, defendants requested that plaintiffs appear for an examination under oath on April 30, 2019, and provide certain documents one week prior to the EUO in accordance with their obligations under the policy. On April 29, 2019, defendants’ counsel contacted plaintiffs to inquire if they would be appearing for the EUO. Plaintiffs advised that they had retained counsel and requested an adjournment to allow time to gather the documents requested.  Plaintiffs and defendants agreed to adjourn the EUO to June 6, 2019.

On June 5, 2019, having not heard from plaintiffs' counsel and not having received the requested documents, defendants' counsel contacted plaintiffs' counsel who again requested to adjourn because Plaintiffs had not yet provided him with the requested documents. They agreed to adjourn June 21, 2019.

As of June 20, 2019, defendants had not heard from plaintiffs' counsel and once again contacted him to inquire if the plaintiffs would be appearing for the EUO. An employee of Plaintiffs' counsel advised that he was sick and requested another adjournment stating that she would get back to him about a new date.

On July 3, 2019, having not heard from plaintiffs' counsel, defendants' counsel sent Plaintiffs' counsel an email rescheduling the EUO for August 2, 2019. During a subsequent telephone call on July 19, 2019, he requested yet another adjournment to August 22, 2019, with all the documents to be provided by August 2, 2019.

On August 1, 2019, defendant's counsel wrote to plaintiffs' counsel to remind him that the requested documents were due the following day, but they were not produced.  On August 21, 2019, defendants' counsel attempted to contact plaintiffs' counsel to inquire if plaintiffs would be appearing for the August 22, 2019, EUO. Plaintiffs' counsel did not take or return his call. There was no request to adjourn the August 22, 2019 EUO or notice that the plaintiffs would not be appearing. Plaintiffs failed to appear for the August 22, 2019 EUO and defendants' counsel never received any of the documents.

On or about September 9, 2019, defendants denied coverage due to the failure to appear for the EUO and to provide the requested documents.

In opposition, to the motion plaintiff’s counsel alleged that on August 21, 2019, a staff member from his office spoke to defendants’ counsel who mutually agreed to adjourn the August 22, 2019, EUO to September because he was still waiting for so many documents and reports.  Plaintiff’s counsel failed to identify the staff member who purportedly requested the adjournment and did not annex to his affidavit any documentation of the alleged agreement to adjourn the EUO.

The failure to comply with the provision of an insurance policy requiring the insured to submit to an examination under oath and provide other relevant information is a material breach of the policy, precluding recovery of the policy proceeds. Here, the defendants established their prima facie entitlement summary judgment by submitting admissible proof that before defendants disclaimed coverage, the plaintiffs were given multiple opportunities to appear for an EUO and to produce the requested documents. While plaintiffs may have not been in possession of all the documents that the defendants requested, the record makes clear that they were in possession of some of the documents and still failed to produce them.

The only evidence submitted by the plaintiffs to support their contention that defendants agreed to adjourn the EUO scheduled for August 22, 2019, to sometime in September 2019 is a hearsay statement that some unidentified staff member obtained his consent to adjourn the EUO.  The existence of a factual issue may not be established by the hearsay information of one who had no personal knowledge of the facts. 

12/09/21       Geist v. State Farm Automobile Ins. Co.
United States District Court, Eastern District of Pennsylvania
SUM Issue: If an Insured Reduces His Limits for Underinsured Motorist Coverage, but Adds a Car to the Policy at a Later Date, is the Election of Lower Limits Enforceable? Yes. The Lower Limits Apply

The Court granted State Farm’s motion to dismiss for failure to state a claim pursuant to Fed. R. of Civ. P. 12(b)(6).

On September 16, 2017, Geist was in a car accident while a passenger. She settled a claim against the driver of the car, but that did not provide enough insurance to pay for the damage and injuries she suffered. She then looked to the underinsured motorist ("UIM") coverage of her parents, Iwanskis.

The Iwanskis have one policy with State Farm. It took effect on March 10, 2010. When issued, the policy insured two cars and provided liability coverage of $100,000/$300,000. At the time of the issuance, Mr. Iwanski signed an "Election of Lower Limits of Coverage" and selected lower UIM coverage limits of $50,000/$100,000. On January 3, 2011, Mr. Iwanski signed a document titled "Acknowledgement of Coverage Selection," affirmatively selecting the same UIM coverage limits ($50,000 per person/$100,000 per accident). The Iwanskis and

Ms. Geist do not dispute the selection was valid at that time. On January 8, 2011, the Iwanskis removed a car from the policy. On February 28, 2013, they added a car back to the policy. They did not request a change in UIM coverage limits and renewed the policy every six months until Ms. Geist's accident in 2017. At the time of the accident in 2017, the policy applied to two cars.

During its coverage, State Farm sent the Iwanskis Declarations Pages with "renewal premiums." The Declarations Pages each state "YOUR POLICY CONSISTS OF THIS DECLARATIONS PAGE, THE POLICY BOOKLET . . . AND ANY ENDORSEMENTS THAT APPLY, INCLUDING THOSE ISSUED TO YOU WITH ANY SUBSEQUENT RENEWAL NOTICE." The Declarations Pages reference the policy number: 686 2835-C10-38 with an affixed letter. When State Farm made changes to the policy, the affixed letter increased. For example, iteration 686 2835-C10-38L would become 686 2835-C10-38M.

Section 1731 of Pennsylvania's Motor Vehicle Financial Responsibility Law, 75 Pa.C.S.A. § 1701 et seq. ("MVFRL") requires insurers that provide motor vehicle insurance to offer uninsured ("UM") and UIM coverage. However, section 1734 allows individuals to reduce their UM and UIM coverage.

Sections 1731 and 1734 provide, in relevant part:

(a) Mandatory offering.—No motor vehicle liability insurance policy shall be delivered or issued for delivery in this Commonwealth, with respect to any motor vehicle registered or principally garaged in this Commonwealth, unless [UM or UIM] coverages are offered therein or supplemental thereto in amounts as provided in section 1734 (relating to request for lower limits of coverage). Purchase of [UM or UIM] coverages is optional.  Id. § 1731(a) (emphasis added).

A named insured may request in writing the issuance of coverages under section 1731 (relating to availability, scope and amount of coverage) in amounts equal to or less than the limits of liability for bodily injury.  Id. § 1734.

Section 1731's plain meaning is apparent from its language.  It "mandates that an insurance company cannot issue a policy in the Commonwealth of Pennsylvania unless it provides UM/UIM coverage equal to the bodily injury liability coverage, except as provided in § 1734."  Once it offers the appropriate amount of UM and UIM coverage, section 1734 permits a named insured to "lower her statutorily provided UIM coverage limits by requesting" to do so in writing.  The insurance company's obligation to issue a policy with UM/UIM coverage in an amount equal to the policy's bodily injury liability coverage is not relieved unless it has received such a written request.

In other words, once it has offered the appropriate UM and UIM coverage upon issuance of a policy and received a valid request to reduce it, the insurer's obligations under section 1734 are met, and the reduction is valid.  So long as a change to a pre-existing policy does not require the "delivery or issuance of a policy," otherwise valid section 1734 reductions are not impacted by later changes.  Section 1731 applies only to the delivery or issuance for delivery of a "liability insurance policy, not a change of liability coverage.

There is no dispute the Iwanskis reduced the coverage limits of the State Farm policy. The issue before the Court, therefore, is whether State Farm issued a new policy when they added a car to the policy on February 28, 2013. It did not. It just modified a pre-existing policy. The State Farm Policy itself contemplates changes, including the addition and subtraction of a car. Each Declarations Page, including the one State Farm sent in when the Iwanskis added the car, explains that it and any subsequent renewal notices are part of the same policy.  In addition, when the Iwanskis added the car to the policy's coverage, State Farm sent the same type of Declarations Page it always sent, providing for a "renewal premium." And, when the Iwanskis added a car to the policy, the policy number did not change.

The Pennsylvania Supreme Court's decision in Barnard v. Travelers, 216 A.3d 1045 (Pa. 2019), does not change the Court's analysis. In Barnard, the plaintiff purchased UIM coverage but waived stacking, as Section 1738 of the MVFRL permitted her to do.  Two years later, she increased her UIM coverage, but she did not fill out a new stacking waiver. After a car accident, the plaintiff argued that the insurer was required to get a new stacking waiver when she increased her UIM coverage. The Pennsylvania Supreme Court agreed. 

The Supreme Court's decision in Barnard turned on the language of Section 1738(c), which applies to a "named insured purchasing" UM or UIM coverage. 75 Pa. C.S.A. § 1738(c). In contrast, Section 1734 applies to the "issuance" of coverage. 75 Pa. C.S.A. § 1734. As a matter of statutory construction, the Court presumes that the General Assembly's use of two different words in Sections 1734 and 1738 indicates its intent to have the two statutory sections apply in different circumstances. 

When a named insured increases the amount of UIM and/or UM coverage under a policy—like she did in Barnard—she purchases additional coverage and triggers Section 1738(c). But that purchase of additional coverage does not lead to the "issuance" of a new policy; it just changes the policy already in existence.  It does not trigger Section 1734. The Supreme Court's decision in Barnard drew the same distinction. It noted that cases interpreting Section 1734 did not require a new waiver because Sections 1731 and 1734 refer to the "issuance," rather than the "purchase" of coverage.  And it distinguished those cases (rather than overruling or criticizing them) on that basis.  Ms. Geist seeks to import the requirements of section 1738 into sections 1731 and 1734. But the text requires no such thing. Accordingly, the Court will dismiss her claims.

12/02/21       Kramer, et al. v. Nationwide Prop. and Cas. Ins. Co., et al
Superior Court of Pennsylvania
Defense Coverage Owed to Insured Parents in Personal Injury Suit Alleging They Negligently Allowed their Son to Use Their Home for Illicit Drug Activities, Despite a Controlled Substances Exclusion as it did Not Preclude Coverage for All of the Damages Sought by Plaintiffs

In 2018, the insureds’ son hosted the decedent in the insureds’ home while they were out of town. Early in the morning on September 5, 2018, the decedent was found dead, and a coroner later determined that the cause of death was a drug overdose.  The decedent's mother, Cruz, filed a wrongful death and survival action against the insureds and their son. Cruz alleged that at the time he hosted the decedent, the son was widely known to use and sell controlled substances. Cruz asserted further that the son was negligent in supplying the decedent with the drugs that caused his overdose. Cruz alleged in both the survival and wrongful death claims that the insureds were negligent in allowing Kramer to use their home for such illicit activities. 

The wrongful death count included a demand for damages by the beneficiaries of the decedent's estate, the decedent's parents. The survival action included a demand for recovery of the decedent's damages based on his "sustained pain and suffering prior to his untimely death." 

In contending that it did not have to provide a defense to the insureds, Nationwide relied on coverage exclusion which applies when certain damages arise from the use of controlled substances. It reads:

SECTION II — LIABILITY EXCLUSIONS

1. Coverage E — Personal Liability . . . [does] not apply to bodily injury or property damage:

. . . .

m) resulting from the use, sale, manufacture, delivery, transfer or possession by a person of a controlled substance(s) as defined by Federal Food and Drug Law (21 U.S.C.A. Sections 811 and 812). Controlled substances include but are not limited to cocaine; LSD; marijuana; and all narcotic drugs.

This exclusion 1.m) does not apply to the legitimate use of prescription drugs by a person following orders of a licensed physician.

Section II of the parents' policy defines "bodily injury" for present purposes as:

bodily harm, including resulting care, sickness or disease, loss of services or death. Bodily injury does not include emotional distress, mental anguish, humiliation, mental distress or injury, or any similar injury unless [it is a] direct result of bodily harm.

The insureds filed a declaratory judgment action seeking to compel Nationwide to provide them with a defense in the underlying action.  Both parties filed cross-motions for summary judgment. The trial court granted the insureds' motion finding that Nationwide has a duty to defend reasoning that the controlled substance exclusion did not apply because the parents' alleged liability in the underlying action was rooted in negligence, which was distinct from the type of occurrence contemplated by the exclusion.  The trial court did not err in its determination that Nationwide has a duty to defend. Accordingly, we affirm.

An insurer's duty to defend arises from its obligation to pay out on a claim asserted against the insured if there is a finding of liability for damages. That is, an insurer's duty to defend flows "from a determination that the underlying complaint against an insured triggers coverage. For as long as an insurer is potentially obligated to pay damages flowing from at least one claim in the underlying action, the insurer must provide a defense for all the claims. 

When interpreting an insurance policy's provisions, including the scope of coverage and the duty to defend, a court must determine the intent of the parties as manifested by the language of the policy. If the policy language is clear and unambiguous, then a court must enforce that language.  A policy cannot be interpreted to mean anything other than what it says and disputes over coverage must be resolved only by reference to the provisions of the policy itself.

The proper construction of a policy of insurance is resolved as a matter of law in a declaratory judgment action. 

Nationwide is bound to pay damages within the policy limit if they resulted from the insureds' negligent personal acts or negligence arising out of the ownership, maintenance or use of their personal property. In the wrongful death and survival action filed against the insureds, the basis of the claims is that the parents were negligent in the ownership, maintenance and use of their home by allowing their son to supply the decedent with controlled substances at the residence. This is generally the type of occurrence that would be covered by the parents' policy, triggering Nationwide's duty to defend the claims.

However, the insureds' policy contains an exclusion limiting coverage and the corresponding duty to defend where controlled substances are involved. Section II(1) of the policy excludes personal liability coverage for bodily injury and property damages resulting from:

Use, sale, manufacture, delivery, transfer or possession by a person of a controlled substance(s) as defined by Federal Food and Drug Law (21 U.S.C.A. Sections 811 and 812). Controlled substances include but are not limited to cocaine; LSD; marijuana; and all narcotic drugs.

Nationwide Policy, Section II(1)(m). The policy defines "bodily injury" as "bodily harm, including resulting care, sickness or disease, loss of services or death." Nationwide would have no obligation to pay out for such damages if the insureds are ultimately found liable for them. Correspondingly, Nationwide would then have no duty to defend with respect to those discreet classes of damages.

Significantly, though, the wrongful death claim against the insureds in the underlying action is not limited to bodily injury, as such damages are defined in the policy. The decedent's family is also potentially seeking other types of damages rooted in its "emotional distress, mental distress or injury, or any similar injury," none of which would be the direct result of bodily harm to the decedent's family itself. 

Since these are the types of damages that do not fall under the ambit of the policy's "bodily injury" definition, the policy's controlled substance exclusion would not apply to them. 

Having construed the relevant portions of the subject policy as excluding coverage as to some, but potentially not all, of the damages sought from the insureds, Nationwide would be obligated to pay out on the covered portions of the underlying claims if the parents are ultimately found liable.  This obligation triggers Nationwide's duty to defend in the underlying action against the parents. 

11/12/21       Prusik v. Liberty Mutual Ins. Group, Inc.
NY Appellate Division, Fourth Judicial Department
Property Preservation Company Acting on Behalf of Mortgagee in Discarding the Insured’s Personal Property does not Constitute a “Theft”

Plaintiff owned a home and defaulted on his mortgage with Geddes and vacated the residence. He then filed for bankruptcy.  After commencing a mortgage foreclosure proceeding Geddes secured the property and changed the locks.

Due to the stay arising from plaintiff's bankruptcy filing, Geddes discontinued the foreclosure action and instructed a property maintenance company acting as its agent to inspect, secure and maintain the property, which allegedly had been vandalized several times. The maintenance company cleared out the house by removing debris and rubbish and placed the items into dumpsters.  According to an employee of the maintenance company, there were no items of value in the house when they cleaned it out. Plaintiff alleges, however, that many valuable items of property were removed from his house by the maintenance company, including computers, furniture, clothes, beds and dishes. He commenced this action seeking to recover damages in connection with the loss of such property.

Liberty Mutual disclaimed coverage for the loss on the ground that the property removed and thrown out was not a “theft” for purposes of the policy, and thus not a covered peril. Both parties moved for summary judgment.  The Supreme Court granted plaintiff's motion determining that a theft occurred as a matter of law. Liberty appealed. 

The policy provides coverage for "[t]heft, including attempted theft and loss of property from a known place when it is likely that the property has been stolen." However, "[t]heft" is not defined in the policy. Because that term is undefined in the policy, it should be construed so as to give the term its ordinary and accepted meaning.  Policy provisions must be interpreted according to common speech and consistent with the reasonable expectation of the average insured.

Initially, Liberty Mutual contends, and we agree, that "the average policyholder of ordinary intelligence" would not think that the maintenance company's employees committed theft by removing items from plaintiff's house and placing  them in garbage dumpsters on the front lawn.  Indeed, they did not steal or take  anything.  They simply moved items from one part of plaintiff's property to anotherWe conclude, however, that a triable issue of fact exists whether some unknown person or persons entered the residence before it was cleaned out by the maintenance company and stole the items that plaintiff claims were missing. Liberty Mutual failed to meet its initial burden of eliminating all triable issues of fact with regard to whether a theft occurred.  If Geddes did not remove the personal property from the residence, and it was instead removed by other unknown thieves, Liberty Mutual is still obligated under the policy to cover the theft loss.

We nevertheless agree with Liberty Mutual that, in light of the foregoing, the court erred in granting that part of plaintiff's motion with respect to Liberty Mutual. As discussed above, the actions of the maintenance company's employees do not constitute theft under the policy and, furthermore, plaintiff's submissions on his motion fail to establish as a matter of law that any other person or persons committed theft under the policy. Plaintiff thus failed to meet his initial burden on his motion with respect to Liberty Mutual and we therefore modify the order accordingly.

Finally, we reject Liberty Mutual's further contention that the court should have granted its cross motion insofar as it sought a conditional order of judgment for subrogation. Liberty Mutual's subrogation rights do not accrue until payment of a loss. 

12/10/21       Island Life Chiropractic, PLLC v. 21st century Ins. Co.
Supreme Court, Appellate Term, Second Department
Toll on No-Fault 30-Day Pay or Deny Rule Ended When Insured/Assignor Failed to Show for 2nd EUO Scheduled Date, Not the 3rd

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint on the ground that defendant had timely denied the claims based upon plaintiff's assignor's failure to appear for scheduled examinations under oath. The Civil Court granted defendant's motion.  Modified on appeal. 

At issue are three claims, for $1,314, $620.07 and $620.07. Plaintiff alleges in its complaint that the claim for $1,314 was mailed to defendant on November 26, 2014, and that the two claims for $620.07 were each mailed on February 13, 2015.  Defendant scheduled EUOs of plaintiff's assignor to be held on December 12, 2014, January 22, 2015, and February 17, 2015; that plaintiff's assignor did not appear for any of these scheduled EUOs; that the November 26, 2014, claim was denied on February 24, 2015; and that the February 13, 2015 claims were denied on March 2, 2015. On appeal, plaintiff argues that defendant was required to deny all three claims within 30 days of plaintiff's assignor's failure to appear for the second scheduled EUO, on January 22, 2015, and therefore that defendant is precluded from raising this defense.

Plaintiff correctly argues that defendant, by claiming that it had mailed the denial of the November 26, 2014, claim on February 24, 2015, failed to establish, under the circumstances presented, that it had timely denied that claim. A no-fault claim must be paid or denied "within 30 calendar days after the insurer receives proof of claim" (11 NYCRR 65-3.8 [a] [1]). While it is not disputed on this appeal that defendant tolled its time to pay or deny the November 26, 2014 claim by timely scheduling an EUO of plaintiff's assignor (see 11 NYCRR 65-3.8 [a] [1]), the toll ended when plaintiff's assignor failed to appear at the second EUO on January 22, 2015 (Quality Health Supply Corp. v. Nationwide Ins., 69 Misc 3d 133[A] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2020]). As defendant did not demonstrate that it denied the November 26, 2014, claim within 30 days of the end of the toll, it has not demonstrated that it is not precluded from raising its proffered EUO no-show defense as to that claim, and the branch of defendant's motion seeking summary judgment dismissing the November 26, 2014, claim should have been denied.

However, there is no merit to plaintiff's argument that the branch of defendant's motion seeking summary judgment dismissing the February 13, 2015, claims should have been denied because defendant was similarly required to deny those claims within 30 days of plaintiff's assignor's failure to appear on January 22, 2015. Rather, defendant demonstrated that those claims were properly denied on March 2, 2015, within 30 days of their receipt, based upon the prior nonappearance (see 11 NYCRR § 65-3.8 [a]).

It has been long held that "[t]he failure to comply with the provision of an insurance policy requiring the insured to submit to an examination under oath ... is a material breach of the [no-fault] policy, precluding recovery of the policy proceeds". While this failure has been termed "a breach of a condition precedent to coverage under the no-fault policy" it is more appropriately characterized as a "breach of an existing policy condition". It would be contrary to 11 NYCRR 65-3.8(a)(1), and, in effect, render that subdivision a nullity, if, as plaintiff suggests, a no-show defense were to expire 30 days after the second nonappearance—in this instance, defendant's time to pay or deny the February 13, 2015, claims would have expired well before the 30 days permitted by the regulations. Indeed, under plaintiff's interpretation, an eligible injured person and his or her assignees could simply wait 30 days after failing to appear to submit any new claims, and the insurer would then be prohibited from denying those claims based upon the nonappearance.

To the extent that plaintiff argues that a failure to timely deny any one claim based upon a nonappearance at an EUO or IME once that defense has accrued constitutes a waiver of the right to thereafter assert that defense as to any and all subsequent claims submitted upon the same covered event, that argument is without merit. In other words, defendant's failure to timely deny the November 26, 2014, claim based on the January 22, 2015, non-appearance was not a waiver of defendant's right to timely deny, as it did, the February 13, 2015 claims based upon the same prior nonappearance. Each such claim is treated on an individual basis. We note that, in this respect, EUO and IME nonappearances are treated differently from the failure to provide requested written verification, which is only a proper basis for the denial of claims for which the written verification was specifically requested and cannot, based on the regulations and the case law, be asserted as a basis for a denial of any subsequently submitted claim.

Accordingly, the order is modified by providing that the branch of defendant's motion seeking summary judgment dismissing so much of the complaint as sought to recover upon the claim in the sum of $1,314 submitted on November 26, 2014, is denied.

 

HEINTZMAN’S HIDEOUT
Nicholas J. Heintzman

[email protected]

No cases this time. Check back in two weeks!

 

NORTH of the BORDER
Heather Sanderson

[email protected]

12/20/21       Hemlow Estate v. Co-operators General Insurance Company, 2021 ONCA 908
Ontario Court of Appeal
Is an Accidental Release of Ammonia while Performing Maintenance, a Release of a “Pollutant” Engaging the Total Pollution Exclusion?

The Ontario Court of Appeal released its decision in Hemlow Estate v. Co-operators General Insurance Company, 2021 ONCA 908, on December 20, 2021. This decision emphasizes that Canadian courts have difficulty applying the pollution exclusion to situations other than liability for government mandated cleanup of toxins, contaminants, and other commonly accepted pollutants.  It also serves as a reminder that the pleadings, not the underlying facts, govern the duty to defend.

In July of 2015, Rich Products, headquartered in Buffalo, New York, operated 36 plants with more than 10,000 employees across the globe. One of those plants was and still is in Fort Erie, Ontario, across Lake Erie from Buffalo.  The Fort Erie plant made frozen bakery products.

John Hemlow of Hamilton, Ontario, was a 58-year-old mechanical contractor who was the sole proprietor of a business that analyzed oil and lubricating fluids from the mechanical systems at various industrial and commercial facilities. In July of 2015 he was working under a sub-contract, sampling, and analyzing the refrigeration systems at the Rich’s Fort Erie plant.  As part of his work, Mr. Hemlow opened a valve to a pipe containing pressurized ammonia. Ammonia was used as part of the refrigeration and freezing process. The resulting ammonia exposure killed Mr. Hemlow, sent two others to hospital, and caused significant damage to the Rich plant.

Rich Products sued John Hemlow’s Estate (and the company that sub-contracted him), claiming negligence and breach of contract. 

Since 2011 John Hemlow had insured his sole proprietorship with the Co-operators General Insurance Company (CGIC). Throughout that policy contained a “Total Pollution Exclusion” which read:

This insurance does not apply to:

1)   Pollution Liability

  1. “Bodily Injury” or “property damage” or “personal injury” arising out of the actual, alleged, potential or threatened spill discharge, emission, dispersal, seepage, leakage, migration, release or escape of “pollutants”.

The word “Pollutants” was defined:

“Pollutants” means any solid, liquid, gaseous or thermal irritant or contaminant including smoke, odours, vapour, soot, fumes, acids, alkalis, chemicals and waste.

CGIC denied a duty to defend John Hemlow’s Estate on the basis that “ammonia” is a pollutant, and its release was within the Pollution Liability exclusion, even though the pleadings did not allege the release of a pollutant or describe ammonia as a contaminant.

CGIC filed an application to determine if it had an obligation to defend.  A judge of the Ontario Superior Court heard that application and held, that the pollution exclusion clause is worded to protect the insurer from liability for environmental pollution and the improper disposal or contamination of hazardous waste.  The exclusion ought not to be interpreted to apply to any accidental occurrence that caused any damage to the customer’s property, and which did not lead to environmental pollution as commonly understood.  If CGIC wished to include the emission of any of the enumerated substances, then it ought to say so in clear terms. Accordingly, CGIC had a duty to defend. CGIC appealed.

The Ontario Court of Appeal agreed that CGIC must defend, but came to that conclusion for different reasons. The pleadings alleged negligence while performing a contract and not liability for a release of a pollutant. Accordingly, CGIC must defend.  In closing, the Appeal court agreed it was not necessary to deal with the pollution exclusion but expressed agreement with the trial judge’s approach that the exclusion should be limited to traditional pollution events which fit comfortably with the historical purpose of that exclusion.

Newsletter Sign Up