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Coverage Pointers - Volume XXIII, No. 15

Volume XXIII, No. 15 (No. 609)
Friday, January 7, 2022
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. 2022
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:

Do you have a situation?  We love situations. 

Congrats to the Englerts on the birth of their son, Benjamin.

 

See the source image

We join with you in celebrating Martin Luther King Jr. Day, on January 22.

Comprehensive Insurance Disclosure Act (“CIDA”):

Everyone is talking about it in New York.  Let’s talk about what it is, rather than what it might be.

It’s all about the Comprehensive Insurance Disclosure Act, signed into law on New Year’s Eve.  I thank the many of you who responded to my call for letters to the Governor.  I praise the trade organizations for their organized efforts to try to convince Governor Hochul to veto the bill.  While those attempts were unsuccessful, there are likely to be some changes to the statute that will diminish some of the burdens imposed by the Legislature.

The legislators solved a problem that didn’t exist, and they did it poorly.

We shall see, in the next week or two, what happens.  Once we know, we’ll advise and then, as requested by several already, prepare a training program for compliance.  In the meantime, read Ryan Maxwell’s column below and the summary attached.  That’s what it is.  We will see what it becomes.

I’m on vacation in Scottsdale.  We’ve taken lots of calls on this and if you want to reach me, call 716.445.2258.  Ryan Maxwell, back at the home office, is also available to answer questions.  You can reach him at 716.849.8900.

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.

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.

     

    Peiper on Property and Potpourri:

    Happy New Year to all.  We mark 2022 with a return to normalcy…in the courts at least.  Please take a moment to review the Fourth Department’s decision in Cincinnati v. Acadia reviewed at length in our column.  It is an interesting dispute that comes up from time to time in additional insured cases.  The question at the core of the disagreement is when do AI rights become subsumed in the underlying settlement.  In other words, when is global really global? 

    The safest answer to when global means global is when the underlying settlement papers say it is.  Conversely, if you want to preserve your rights to pursue AI status after a settlement, have those rights incorporated into the settlement agreement as well.  It will save you time, effort, money, and egg on your face by simply addressing the issue upfront during the underlying settlement discussions. 

    The correct answer, no doubt, is that settlement only incorporates those parties to the agreement.  Thus, we think the Fourth Department’s decision is absolutely correct.  The means employed to get to the end, however, give us cause for concern.  You’ll note upon review of the case that Cincinnati characterizes itself as a subrogee of its named insured when it seeks to pursue AI status for that entity from Acadia. We would respectfully agree with that posture. 
    New York law recognizes subrogation as an equitable right to pursue recovery for losses paid due to a tort committed by someone else.  Thus, where a carrier pays a loss that was not the result of its own insured’s negligence, it has the equitable right to sue the wrongdoer.  Here, Acadia did not commit a tort which resulted in Cincinnati issuing payment.  Acadia did not commit a tort which resulted in Cincinnati’s named insured having liability to an injured party.  In short, this is not a subrogation claim.

    What it is, we might respectfully suggest, is a claim of equitable contribution where a paying insurer has an independent right to assert claims of its named insured against an allegedly derelict insurer who should have been providing AI status.  Those claims, however, are utterly independent of the claims the putative AI may have had against any other potential tortfeasor.  By asserting its rights were derivative, apparently in tort, of its named insured, Cincinnati may have opened the door to the res judicata argument raised by Acadia.

    Just food for thought this January morning. 

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

    Steve
    Steven E. Peiper

    [email protected]

     

    Bubble, Bubble, Toil and Trouble:

    Times Union
    Brooklyn, New York
    07 January 1922

    French Wine Cellars Stocked With
    Champagne With No Market for It

    Paris, Jan. 7.—The wine growers of the Marne find themselves face to face with an unparalleled situation—hundreds and thousands of bottles of champagne stocked in their cellars and no market for it.

    The fault lies chiefly with the Parisian clients of the night cafes who have forsaken the costly habit of ordering champagne as the prelude to happy evening.

    Ordinary wine may not add the same exhilaration to a Montmartre party as a bottle of champagne, but it is far more within the reach of the customary client at a time when champagne retails at anywhere from 60 to 100 francs a bottle, according to the brand and the locality in which it is consumed.

    An inferior brand of so-called champagne may be had at from 30 to 40 francs a bottle, but there is almost no market for this, it being noticed that the client who will spend this amount prefers to have the real thing.

    The export of champagne has almost ceased, owing to prohibition in the United States and the prohibitive import tariff levied In England and Germany, so that the wine growers are faced with the lamentable prospect of having to consume their own product if they are to prevent the accumulation in their cellars.

     

    Wilewicz’ Wide-World of Coverage (featuring Evan Gestwick):

    Dear Readers,

    The pages of the calendar keep flying by, as the pandemic enters year infinity. It is very hard to believe that we have been in this mess for over two full years now. In a profession where time is of the essence and time is the commodity in which we operate, it has also lost a bit of its meaning. Nevertheless, I am hopeful for the calendar year of 2022. While the past and present look bleak, the future is on the horizon, and I have a feeling that we might be getting back to some sense of normalcy this year. Here’s hoping anyway.

    Now, this week in the Wide World of Coverage, we have a new guest author, and latest H&F associate-to-be, Evan Gestwick. Evan is currently attending the University at Buffalo School of Law and clerking with us in the meantime. He will be joining us as a newly minted full-time associate in the Fall. In the interim, he has enthusiastically offered to write with us here, so here he is:

    In the case of Arch Specialty Ins. Co. v. M.T. Steel Fabricators, Inc. et al., the New York County Supreme Court considered a series of misrepresentations made by the insured on its application for insurance. Because the insurer showed that it would not have issued the policy had the insured been truthful on its application, the Court voided the policy.

    I clerked over the summer of 2021 with Hurwitz & Fine and liked it so much that I thought I would return for more action in this wintry weather. I am both thrilled and grateful to have accepted a position as an incoming associate attorney with Hurwitz & Fine starting in the Fall of 2022. For now, I am going to enjoy the rest of my time as a law clerk and focus on finishing my final semester on a high note. In my downtime, I will be watching the Buffalo Bills make their fourth playoff run in five years – Go Bills!   ~ Evan

    Until next time, stay warm!

    Agnes
    Agnes A. Wilewicz

    [email protected]

     

    Medicinal Beer Preceded Medicinal Marijuana:

    The Chat
    Brooklyn, New York
    07 January 1922

    CHARACTERIZES BEER ACT AS RIDICULOUS

    Before Federal Justice Edwin L. Garvin in the United States District Court, last week, the Willis-Campbell Act, prohibiting the manufacturing of medicinal beers, was characterized as being ridiculous and a "reduction to absurdity" by former Judge William M. K. Alcott, representing the Piel Brothers Brewery, which received permission to manufacture the medicinal beer before the act was passed.

    Judge Alcott in his argument said: "The only power given Congress by the Eighteenth Amendment was to restrict the use of alcoholic liquors for beverage purposes. The Willis-Campbell Act continues the Volstead Act by restricting the use of whiskey and wine to medicinal purposes, but beer, with a far smaller alcoholic content, is barred. Even the Narcotic Drugs Act allows physicians to prescribe drugs, which are known to be habit-forming. But a reputable physician may not under this legislation, prescribe the less dangerous malt liquors.”

     

    Barnas on Bad Faith:

    Hello again:

    I hope you all had a happy and healthy holiday season.  I think the first day after New Year’s Day has got to be one of the top two or three worst workdays of the year.  It is always difficult to get back into the swing of working coming off the holiday season.  I am back at it now though, ready to review some insurance policies and write some disclaimers.  Onward and upward.  I have a New York trial level court bad faith decision in my column where a claim for consequential damages was dismissed even though the insured prevailed on the breach of contract claim.  Give it a look if you are so inclined.

Brian
Brian D. Barnas

[email protected]

 

Baby Wanted:

Buffalo Courier
Buffalo, New York
07 January 1922

WANTED—To adopt baby one week old. Address Adoption, care Courier.

 

Off the Mark:

Dear Readers,

As expected, Christmas was quiet.  New Year’s was even quieter.  We snacked all day, worked on a puzzle, and watched as many Twilight Zone episodes as possible. It was both enjoyable and relaxing.

Speaking of quiet, the Courts remain inactive on the construction defect front.  I’m sure it will not take long for decisions to resume.

Until next time …

Brian
Brian F. Mark

[email protected]

 

It’s All about Booze in Brooklyn:

Times Union
Brooklyn, New York
07 January 1922

Booze Sewed in Bags, Seized with Two Men

Charged with transporting 162 bottles of liquor, sewed up in bags of six bottles each, Vincent Littow, 33, of 121 First avenue, Manhattan, and Thomas Spinnard, 30, of 1018 Sixtieth street, were arraigned before Magistrate Folwell in the Flatbush Court this morning. They were held in $500 bail each for examination January 17.

Traffic Officer Henry Seward, on post at Fifth and Flatbush avenues, confiscated and auto truck and the liquor. 

 

Boron’s Benchmarks:

Happy New Year!  Here’s hoping 2022 will be an excellent year for you and me, and for all those we work with, and especially for all those we care deeply about.  I’m thinking a championship run by our hometown Buffalo Bills through the upcoming NFL playoffs and on to the Super Bowl would make the first two months of 2022 very excellent indeed.  

Given the past two weeks have included back-to-back long holiday weekends, it is not surprising we cannot find any insurance coverage opinion handed down by any of the high courts of the 49 states not named New York (which is the coverage beat of my Boron’s Benchmarks bi-weekly column) to write up for this issue of Coverage Pointers.  We expect that later in January we will see a resumption of the issuance of such opinions.  Until then, have a healthy and happy next two weeks, folks.

Eric
Eric T. Boron

[email protected]

 

Fire Insurance, Anyone?  If it Burns, We’ll Insure It:

The Buffalo Times
Buffalo, New York
07 January 1922

FIRE INSURANCE

FIRE insurance placed on anything insurable; expert advice given on correct amount of insurance to carry, proper form of policy, etc. Phone Charles V. Lynch, 737 Seneca St.

 

Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

The Buffalo Bills are in the playoffs. That is all. Well, that and “Go Bills”.

The Comprehensive Insurance Disclosure Act has passed, and we are not happy about it, but as they say in billiards, “them’s the breaks.” In this edition of Ryan’s Capital Roundup, we discuss the relevant provisions in detail, summarize what needs to be disclosed when, and provide insight into proposed chapter amendments that would lessen the impact if passed. For convenience, our summary is as follows:

CPLR §3101(f)(1)-(3) and CPLR 3122-b requires disclosure of the following items by insured-defendants on or before March 1, 2022, for all pending actions, or within 60-days of answering for all new actions:

  • all primary, excess and umbrella policies, contracts or agreements including, but not limited to, declarations, insuring agreements, conditions, exclusions, endorsements, and similar provisions—including the insurance application.

  • the amounts available under any policy, contract, or agreement to satisfy a judgment.

  • the caption and date of any lawsuits that have or may reduce or erode these amounts and contact information for the attorney of any represented party therein.

  • the amount, if any, 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.

  • the contact information, including telephone number and e-mail address, of any person or persons responsible for adjusting the claim; and

  • sworn certifications from both the insured and the insured’s counsel indicating that the above disclosures are accurate and complete, and that reasonable efforts have and will be undertaken to ensure that this information remains accurate and complete pursuant to CPLR 3101(f)(2).

CPLR §3101(f)(2) requires that the insured-defendant and defense counsel make “reasonable efforts to ensure that the information remains accurate and complete and provide updated information . . . within thirty days of receiving information rendering the prior disclosure inaccurate or incomplete in whole or in part.” Accordingly, carriers should either expect inquiries regarding the above periodically through litigation, or carriers themselves should report on the above information to defense counsel at regular intervals to reduce legal costs associated with compliance.

The Legislative List also includes a selection of legislative summaries from the great State of California, authored by our friend of the firm, Andrew Downs, of Bullivant Houser Bailey.

Until next time,

Ryan
Ryan P. Maxwell

[email protected]

 

Women Need Not Apply:

Buffalo Evening News
Buffalo, New York
07 January 1922

MEN wanted to learn insurance, be independent. Write N.C. 30, News office.

 

CJ on CVA and USDC(NY):

Hello All,

I hope 2022 finds you well, it certainly started off with a bang for the Englerts. My wife Elizabeth and I welcomed baby number 2 on January 3! Benjamin Daniel was born at 10:39pm, coming it at 20.5 inches and 8lbs 3oz. We’ve just arrived home from the hospital -- mom, baby, and big brother, Charlie, are all adjusting well.

In light of the excitement over the past couple days, I have no column for this issue but will be back next issue.

Until Next Time,

CJ
Charles J. Englert, III

[email protected]
      

 

Erasmus Fight Proves Fatal:

Buffalo Courier
Buffalo, New York
07 January 1922

KNOKOUT FATAL FOR STUDENT
IN FIGHT OF HIGH SCHOOL BOYS

New York, Jan. 6.—Harold Ciseny, fourteen years old, a student at Erasmus Hall high school in Brooklyn, died today from a fracture of the skull received in a fight in the school basement Wednesday.

According to the police, several students including Ciseny gathered to watch another fight which started over a hat. Then, taking sides, he was said to have started another encounter with a classmate, also fourteen years old. Ciseny was dropped by a blow on the jaw and, falling, cut his head.

 

Dishing Out Serious Injury Threshold:

Dear Readers,

Hope everyone had a nice holiday and a Happy New Year with family and friends. While the last year was a tough one, it seemed to have flown by. Hopefully, this year will be a little less hectic, and we’ll have a little more time to enjoy.

In the Serious Injury Threshold world, we have a case where on appeal defendant was able to submit sufficient medical proof to preclude plaintiff from succeeding on three serious injury threshold grounds, including significant limitation of use, permanent consequential limitation of use, and the 90/180-day category. 

Be well,

Michael
Michael J. Dischley

[email protected]
  

 

Now, Here’s Something – An “Arrest Proof” Coat:

New-York Tribune
New York, New York
07 January 1922

Inventor’s Arrest-Proof Coat Nearly a Success

Part Policeman Grabs Unsnaps from Rest,
but Owner Fails to Run Fast Enough

EAST VIEW, N. Y., Jan. 6.--P. E. Hunter, of this place, was sentenced yesterday to serve two months in East View penitentiary for an attempt to escape arrest while in charge of a Goshen patrolman on complaint of larceny.

The patrolman swore that Hunter dashed away from him, leaving half his coat behind. Examination of the coat later revealed that it was made in two sections and hooked together with snaps in an ingenious arrangement. The prisoner said the coat was his own invention.

When Hunter was arraigned in court both halves of the coat were exhibited by the arresting officer. A detailed description of the garment has been forwarded to the New York and other police departments.

 

Bucci on “B” :

Hello my favorite peeps,

I hope all is well and your new year has been a winner so far.  It probably won’t be a winner for long given COVID and the divide between the people with respect to how the US should be governed.  The best we can do is have fun, work hard, and spend time with loved ones.   

Did anybody do anything fun for New Year’s Eve?   I had a nice quiet dinner at home with some friends.   I am still afraid of COVID so I would not go out.  I couldn’t think of anywhere to go anyway.  Like I’ve previously advised, I had enough fun when I was young.  And anyway, who am I kidding?  I couldn’t stay up past midnight anyway. 

Next, we celebrate Martin Luther King, Jr.’s life and legacy.   I will pay tribute to and honor Dr. King, but I will also take advantage of a three-day weekend!  A friend reunion and such, which should be fun, the kind of fun I can handle. 

The Coverage B case this issue was interesting in part because of its broad interpretation of the term “broadcasting” in a media exclusion, which are usually construed narrowly, to hold that Dish was a broadcaster even though it was not considered a broadcaster in the industry.  The court used the plain and ordinary usage of the term to hold that Dish was a broadcaster. 

That’s all for now.  I look forward to providing a response to any questions you may have.     

Diane
Diane L. Bucci

[email protected]

 

Investigator Threatened:

New-York Tribune
New York, New York
07 January 1922

Burns Is “Saved” From Being “Shot Like a Dog”

Lawyer Who Kept Writing to Mention
This Possibility Is Sent to Bellevue

William J. Burns. chief of the Department of Justice's bureau of investigation, is understood to have slept peacefully last night as a result of having one worry, over being "shot down like a dog." taken off his mind.

Judge John C. Knox in the Federal District Court obliged the detective head yesterday by committing his most recent and vituperative threatener to the observation ward in Bellevue Hospital, after the court had read two letters which the prisoner wrote to Mr. Burns on December 21.

The prisoner was Bradford Webster, a lawyer, with offices at 141 Broadway. He was arrested last month for using the mails to ask the chief some unprintable questions but was considered harmless and released. Mr. Burns was not so sure when he read his mail the next morning, however, for it contained two disturbing communications from Webster.

"The. next time any rotter agents from the Department of Justice are sent out to make false arrests," the first of them read, "they will be trailed until they are shot down like dogs, together with those who direct such civil war and treason."

The second asked who was responsible for the corruption in the department and for the names of the "rotters" who had made the "false arrest.”

Mr. Burns turned the letters over to his investigators here, who took Webster into custody again yesterday. Assistant United States District Attorney Maxwell S. Mattuck took the prisoner before Judge Knox and had him committed for observation.

 

Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

Okay, I know you’re busy—I’m busy too. But I bet you missed my seminar on Bad Faith and the Duty to Settle. Look, there’s no reason to be defensive, I’m not accusing you of anything; this is a safe space. So, here’s what you need to do. Reach out to me—send me an email, a text, hit me up on LinkedIn, DM me on Twitter (or is that an Instagram thing?), or do the old-fashioned thing and just give me a call. We’ll set up a time to do the presentation for your organization, and we might even be able to arrange for CE and CLE credit. Free, extremely informative, and continuing education credit—what could be bad?

In other Connecticut news, COVID is hitting us hard—by our standards at least. We’re not nearly close to the 1,000% increase that Florida has seen, but people here are concerned. My gym, for example, which requires all staff and patrons to be fully vaccinated to enter, has gone back to full time masking. Everywhere I go, masks are de rigueur. Interestingly, I spent the Christmas break in Jacksonville, Florida, and the only place I saw a lot of masks was in Whole Foods. Even the pharmacist at CVS was sans mask. That may explain their 1,000% increase in COVID. In any event, I still have not physically set foot in a Connecticut courthouse since the start of the pandemic, and civil jury trials in the federal and state courts are again suspended. It looks like it’s going to be a socially distanced winter. Enjoy!

Keep keeping safe.

Lee
Lee S. Siegel

[email protected]
      

 

Tall Women Need Not Apply:

Buffalo Courier
Buffalo, New York
07 January 1922

YOUNG man, 28, of foreign birth, wishes to meet a working girl or a young widow not taller than 5 feet, 4 inches; object matrimony; triflers save your stamps. Address Box 58, Courier office.

 

Rauh’s Ramblings:

Hi All,

I hope everyone had a great holiday and New Year!  As much as I love the Christmas season, it is always nice to start fresh in January and look forward to spring! We do have some bad weather coming our way today, but we haven’t had too much snow yet this winter, so hopefully it won’t be too bad.

This week, I found a case from the 11th Circuit that involves retired Allstate employees who sued Allstate after they decided to stop paying the premiums on their retirees’ life insurance benefits.  This is an interesting case that discusses ERISA, as well as the time period to bring a breach of fiduciary duty claim.

Have a great rest of the week!

Patty
Patricia A. Rauh

[email protected]

 

Vaccination History:

The Manhattan Mercury
Manhattan, Kansas
07 January 1922

Brief History of Vaccination

Frank G. Pedley, M. D.

The exceeding mildness of smallpox lately has caused many people to be careless of the vaccination of their children. This is a great mistake, since vaccination in childhood is practically never anything but a most benign procedure, and undoubtedly furnishes some if not a complete protection for many years. Certainly, it will protect for at least five years. This short-sighted policy of neglecting vaccination has led to the destruction of one hundred people or more in Kansas City and to the disfiguring of several hundred more. In Kansas we look with fear on the malignant disease in Kansas City, but there is no need whatever to fear it, since vaccination will completely protect.

Edward Jenner introduced the method of vaccination in 1796, but hundreds of years before his time another prophylactic method was extensively practiced. This consisted in actually inoculating smallpox into the body; for it was found that by so causing smallpox the disease was usually milder than when acquired in the natural way. 

In India, the practice of inoculating smallpox in order to produce a mild form of the disease was practiced in very ancient times. The inoculation was performed by a particular tribe of the Brahmins. This tribe sent out small parties of three or four each year a few weeks before the expected return of the disease. Inhabitants of the various villages, knowing the time when these Brahmins would come, prepared themselves for inoculation by undergoing a strict dietary regimen. The inoculation was performed in very much the same way as vaccination now is, but with the material which had been obtained from inoculated smallpox pustules of the year before.

 

Storm’s SIU Examen:

HAPPY NEW YEAR everyone:

Vacationing this week, but I will have several thoughtful and pertinent cases for you to review next edition. 

I hope you have a most excellent 2022!

Talk to you soon,

Scott
Scott D. Storm

[email protected]

 

Anti-Vaxers Existed 100 Years Ago:

The Iola Register
Iola, Kansas
07 January 1922

Vaccination Protects

(Journal American Medical Assn.)

In history of England, Macaulay described smallpox as "the most terrible of all the ministers of death. The havoc of the plague," be continues, "was far more rapid, but the plague visited our shores only once or twice within living memory, and the smallpox was always present, filling the churchyards with corpses, tormenting with constant fears all whom it had not yet stricken, leaving on those lives the hideous traces of its power, turning the babe into a changeling at which the mother shuddered, and making the eyes and cheeks of the betrothed maiden objects of horror to the lover.'

One hundred and twenty-five years have elapsed since the first vaccination was performed by Edward Jenner in 1790. Persons living today, when the great menace that once conquered even America is no longer feared, can scarcely appreciate the true significance of the tribute which Thomas Jefferson paid to Jenner, in these words: “You have erased from the calendar of human afflictions one of its greatest. Yours is the comfortable reflection that mankind can never forget that you have lived; future nations will know by history only that the loathsome smallpox has existed, and by you has been extirpated.

In the light of these comments, it seems almost incredible that the United States Public Health Service should find it possible to report more than 16,000 cases of smallpox in eight states alone in which the histories were furnished in 1920; while from information supplied by only seven states, more 18,000 cases have been reported, with history, during the first six months of the present year. In Minnesota, for example, 8,238 of these smallpox cases were actually reported. The real lesson, however, is to be found in the statistics of vaccination for this formidable array of patients. More than two-thirds of the entire 34,000 afflicted had never been successfully vaccinated. About one-twentieth of them had been vaccinated more than seven years before the attack, and of the remainder the histories were in most cases uncertain with reference to their vaccination status or were not obtained. Only 2 per cent of the patients were actually reported to have been vaccinated within seven years prior to the attack. Again, the lesson to the public is clear and imperative and there is little felt for the consolation of the antivaccination cult, which is doubtless responsible, directly, or indirectly, for some of this unnecessary suffering.

 

Heintzman’s Hideout:

Happy New Year everyone!

I successfully returned home to Canada for the holidays. Although some of my plans to see friends and family were unsurprisingly disrupted by COVID-19, I was just thankful to be back home on familiar soil. I’m hopeful that I’ll get to return home more often in 2022.

One case this week: putative insureds successfully established that they are additional insureds under a policy with Merchants Mutual Insurance, but they failed to establish that they are owed primary and noncontributory coverage under the Merchants’ policy.

Nick
Nicholas J. Heintzman

[email protected]

 

Trying to Find That House:

Arizona Republic
Phoenix, Arizona
07 January 1922

$750 Cash

Dandy new 5 room house, close in, food location, built in features, corner lot. Price, $5,000, balance $50 monthly. Will take good lot as part payment.

 

North of the Border: 

With temperatures in the mid -20C and windchills (what it actually feels like) in the mid -40C, Canadian prairie cities are off to a frigid start in this New Year. While the weather outside is frightful, we can spend time learning how to use the semi-automatic espresso maker that Santa managed to persuade Amazon to deliver on his behalf. We are slowly acquiring the skill to pull espresso and create perfect foam for cappuccinos, but the endeavour has wasted about a pound of coffee beans and produced some terrible tasting espresso!

My column this week is an interesting lower court case on whether an insurer ought to foresee that its insured could suffer a serious mental health condition as a consequence of denying policy proceeds.

Heather
Heather Sanderson

[email protected]

 

Abortion Doctor on the Run (A Continuing Story):

New-York Tribune
New York, New York
07 January 1922

Doctor and Girls Sought

ATLANTIC CITY, Jan. 6.—A nationwide appeal for the capture of Dr. William Bricker Jr., missing since the raid on his sanatorium, in the exclusive Chelsea section, following the leap from a window there of Miss Irene Michaelson, of Philadelphia, was issued to-day by the Atlantic City police.

Three women caught in the raid are at liberty under $1,000 each, but the police are still searching for two girls said to have escaped from the house.

Dr. Bricker was convicted of malpractice recently and is scheduled to be sentenced Tuesday.

Daily News
New York, New York
16 March 1924

DOCTOR STARTS 13 YEARS IN PRISON

Atlantic City, N.J., March 15.—Dr. William H. Bricker Jr. of Philadelphia has been taken to Trenton to serve from thirteen to twenty years on two charges of performing illegal operations. Dr. Bricker was said to have spent $100,000 to save himself from imprisonment. His father is serving from four to six years in the Easton penitentiary for a similar offense.

The Times-Tribune
Scranton, Pennsylvania
02 July 1935

DOCTOR UNDER ARREST

Lawyer Who Kept Writing to Mention
This Possibility Is Sent to Bellevue

Philadelphia, July 2 (INS). Dr. William H. Bricker, Jr., forty-seven, was arrested at his home here today on a charge of performing an illegal operation. He is a son of Dr. William H. Bricker, who escaped in 1919 to South America after being convicted on a similar charge.

The Philadelphia Inquirer
Philadelphia, Pennsylvania
19 November 1939

Doctor Fled U.S. in Vain Attempt to Evade Prison

Dr. William H. Bricker, Sr., retired Philadelphia physician who once spent most of a $200,000 fortune in a vain effort to avoid extradition from Paraguay to face charges of performing an illegal operation here, was found dead yesterday in a rooming house in Spruce St. near 9th.

Dr. Arthur Feibus, of 931 Spruce St., who was called to examine Dr. Bricker when the latter was found slumped over a table, said the 75-year-old physician had died from natural causes. Police of the 12th and Pine St. station started an investigation.

ALMOST PENNILESS

Dr. Bricker is believed to have been almost penniless in recent years and the scene of his death was a far cry from the almost baronial style in which he lived while in South America.

In 1919 he was sentenced to from four to six years' imprisonment in connection with the death of a woman following an illegal operation. The dapper physician who had had frequent clashes with the law prior to his trial, disappeared after an appeal for a new trial was refused.

TRAILED TO ARGENTINE

His trail led to the Argentine, where Dr. Bricker was found living under an assumed name. He fled to Paraguay, where he bought a huge cattle ranch. The physician successfully fought all efforts to extradite him and estimated later that he spent $50,000 in bribes to avoid re-arrest.

Dr. Bricker was finally brought back to this country in 1921 and was placed in the Eastern Penitentiary. Later he was transferred to the Lebanon County Jail when prison officials here termed him a troublemaker. He was released after serving six years.

At the time of his release Dr Bricker said he intended to return to South America "if I can raise the money." His efforts were unsuccessful.

 

Headlines from this week’s issue, attached:

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

  • Long Term Discharge of Chemicals Not “Sudden and Accidental” under Pollution Exclusion

  • No Means “No.”  Driver had No Permission to Drive Company Truck After Hours

  • A Victory for the H&F Team: Hospital Entitled to Primary and Non-Contributory Additional Insured Coverage from Tenant’s Policy for Fall on Sidewalk, where Lease Required Tenant to Provide Coverage for the Use of the Sidewalk and Sidewalk was Necessarily Used to Gain Access to Office in Hospital

  • When Arbitration Agreement Calls for Arbitration Award to Not Have Collateral Estoppel Effect, It Won’t

  • Is Requiring a Certificate of Insurance Indicating Additional Insured Coverage the Same as a Contract Requiring Additional Insured Coverage?  Fourth Department Finds Question of Fact

 

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

  • Prior Counsel who Managed Case through Completion of Discovery Entitled to 75% Share of Legal Fee

  • Settlement of Underlying Claims Does Not Impact DJ Action by Putative Additional Insured, where Settlement Papers are Silent on Coverage Claims

 

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

  • Defendants Properly Submitted Evidence Precluding Plaintiff’s Success in Three Serious Injury Threshold Categories

 

WILEWICZ’S WIDE WORLD of COVERAGE
Agnes A. Wilewicz

[email protected]

  • Misrepresentations on Application, Fraudulent or Not, Can Void Policy

 

BARNAS on BAD FAITH
Brian D. Barnas

[email protected]

  • Attorneys’ Fees not Recoverable as Consequential Damages on Breach of the Implied Covenant of Good Faith and Fair Dealing Claim

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

  • Insureds Allege a General Business Practice, Avoid CUTPA/CUIPA Dismissal

 

OFF the MARK
Brian F. Mark
[email protected]

  • No construction defect decisions to report on this edition

 

BORON’S BENCHMARKS
Eric T. Boron

[email protected]

  • We did not see any insurance coverage opinion handed down by any of the high courts of the 49 states not named New York during the past two weeks.

 

BUCCI on “B”
Diane L. Bucci

[email protected]

  • Media Exclusion  

 

RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell

[email protected]

  • New Law Requires Defendants to Disclose “Complete Information” For Any Insurance Agreement Within Sixty Days of Answer. Thousands Flee

  • Guest Column: Andy Downs of Bullivant Houser Bailey Shares His Insights into New 2022 Insurance Laws to Be Aware of In California

 

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

[email protected]

  • On paternity leave

     

RAUH’S RAMBLINGS
Patricia A. Rauh

[email protected]

  • Allstate did not Violate ERISA, Nor Did it Breach any Fiduciary Duty to its Former Employees When They Decided to Stop Paying Premiums on Life Insurance Benefits

 

STORM’S SIU EXAMEN
Scott D. Storm

[email protected]

  • Vacationing this week

     

HEINTZMAN’S HIDEOUT
Nicholas J. Heintzman

[email protected]

  • Putative Insureds Succeed in Establishing that they are Additional Insureds under policy with Merchants Mutual but Fail in Establishing they are owed Primary and Noncontributory Coverage under the Merchants’ Policy

 

NORTH of the BORDER
Heather Sanderson

[email protected]

  • Canadians are Not Shafts of Wheat Blowing in the Wind:  It is an insurmountable stretch to say that an insurer ought to foresee that an assertion of arson and fraud would cause a person of ordinary fortitude a serious and prolonged mental injury.

 

Best wishes for the New Year.

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
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]

01/06/22       Tonoga, Inc. v. New Hampshire Insurance Company
Appellate Division, Third Department
Long Term Discharge of Chemicals Not “Sudden and Accidental” under Pollution Exclusion

Since 1961, Tonoga plaintiff and/or its predecessors have owned and operated a manufacturing facility located in Rensselaer County where they produce materials coated with polytetrafluoroethylene (“PTFE”) and other chemical compounds. Beginning in 2006, the Environmental Protection Agency (“EPA”) began studying the health effects of exposure to those compounds and establishing standards for allowable levels of the chemical compounds in drinking water.

Plaintiff discontinued its use of PFOA and PFOS as PTFE processing agents sometime in 2013, It was discovered soon thereafter that PFOA and/or PFOS concentrations in the town’s municipal water supply and they were found in landfills as well.  The State DEC designated plaintiff's facility a state Superfund site and declared it to be a significant threat to public health (see ECL 27-1313). Plaintiff, without admitting to liability, fault, or wrongdoing, entered into a consent agreement with DEC in November 2016 that, among other things, required plaintiff to assist in certain remedial measures.

Over the next few years, multiple lawsuits were brought against plaintiff, each generally alleging that it negligently allowed PFOA and/or PFOS to pollute local water supplies, air, and soil, causing the plaintiffs in the underlying actions certain bodily injury and property damage. Granite State Insurance Company from July 12, 1979, through July 12, 1982, and defendant New Hampshire Insurance Company from July 12, 1986, through July 12, 1987, insured the plaintiff and each had “sudden and accidental” pollution exclusions.

The Granite State policy employs the standard "qualified pollution exclusion" clause that appeared in many policies issued between the early 1970s and 1985 (see generally Belt Painting Corp. v TIG Ins. Co., 100 NY2d at 385). The clause broadly excludes from coverage damages "arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water," but excepts "sudden and accidental" discharge, dispersal, release, or escape. The New Hampshire policy, as amended, contains an "absolute" or "total" pollution exclusion clause, excluding from coverage damages "arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants: (a) at or from premises owned, rented or occupied by the named insured; (b) at or from any site or location used by or for the named insured or others for the handling, storage, disposal, processing or treatment of waste; (c) which are at any time transported, handled, stored, treated, disposed of, or processed as waste by or for the named insured or any person or organization for whom the named insured may be legally responsible; or (d) at or from any site or location on which the named insured or any contractors [*4]or subcontractors working directly or indirectly on behalf of the named insured . . . are performing operations.

This policy defines a "[p]ollutant" as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste."

The court found that long-term chemical discharge cannot be “sudden and accidental”, and the carriers had no obligation to defend the insured in the claims.

12/30/21       Progressive Specialty Ins. Co. v. Travelers Ins. Company
Appellate Division, Third Department
No Means “No.”  Driver had No Permission to Drive Company Truck After Hours

On May 25, 2019, Nichols was involved in a motor vehicle accident with vehicles operated by respondents Osmani and Florkiewicz. At the time of the accident, Nichols was the assistant manager of Monroe Muffler Brake, Inc. and was operating a truck owned by Monro. The accident took place outside of regular business hours, and Nichols did not have the express permission of Monro to operate the truck at that time or place, nor did Nichols carry his own policy of auto insurance.

Monro's insurer for the truck, Travelers disclaimed insurance coverage for any claims that would be brought against Nichols, stating that he did not have Monro's permission to operate the truck at the time of the accident, and denied any liability on the part of Monro. Florkiewicz then brought an uninsured motorist claim against Progressive, which then commenced this proceeding to stay any uninsured motorist arbitration, objecting to Travelers' disclaimer of coverage. A

After a framed issue hearing regarding permissive use of the truck, the lower court found that Nichols had implied permissive use of the truck under the presumption of consent set forth in Vehicle and Traffic Law § 388, such presumption had not been rebutted and, therefore, the truck was insured under Monro's policy with Travelers. Travelers appealed and the Third Department reversed.

Under Vehicle and Traffic Law § 388 (1), the negligence of the operator of a motor vehicle may be imputed to the owner of the vehicle who "operated the same with the permission, express or implied, of such owner"

Here, the presumption of permissive use was rebutted when the store manager and, testified that he advised Nichols on more than one occasion of the company's longstanding policy proscribing an employee's personal use of company vehicles, including the truck. Nichols Himself acknowledged to Kio that he was aware and understood this policy and that he did not have permission to operate the truck for personal use or use outside of business hours, and that it was to be used for store business only. As Nichols stated in his written submission to Supreme Court, "I knew I was not supposed to be driving the company truck off company time."

Here, Kio went a step further and took steps to prevent permissive use by reiterating to Nichols that he could not use the truck for personal use, after hours, and, at one point, removing the fuel pump fuse to the truck, which rendered it inoperable for a time. Progressive claimed in opposition to respondents' evidence that Kio's testimony that he had suspected that Nichols may have used the truck outside of business hours and that Nichols likely replaced the fuel pump fuse gives credence to the suspicion of personal use.

However, said contention is mere supposition, at best. In short, Travelers adduced sufficient evidence to demonstrate that Monro, through Kio, did not expressly or impliedly consent to Nichol's after hours and personal use of the truck and thus they overcame the presumption of consent to operate.

12/23/21       Jones Memorial Hospital v. Main Street America Ins. Co.
Appellate Division, Fourth Department
A Victory for the H&F Team: Hospital Entitled to Primary and Non-Contributory Additional Insured Coverage from Tenant’s Policy for Fall on Sidewalk, where Lease Required Tenant to Provide Coverage for the Use of the Sidewalk and Sidewalk was Necessarily Used to Gain Access to Office in Hospital

Jones Memorial Hospital (“Hospital”) leased office space to Dr. Kassas.  The hospital was insured with MLMIC. Kassas had a businessowners policy with Main Street. In June 2015, a woman taking her infant son to a medical appointment with Kassas tripped and fell on an uneven sidewalk or walkway leading to the entrance of his office. She sued Kassas and Hospital.

The Hospital and MLMIC then commenced this action seeking a judgment declaring that the Hospital is entitled to a defense and indemnification from Main Street on a primary and non-contributory basis in the underlying action.

The additional insured endorsement in the Main Street policy issued by. Kassas provided coverage to the "lessor of premises to whom you are obligated by virtue of a written 'Insured Contract' to provide insurance such as afforded by this policy, but only with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to you." The term "insured contract" was defined as, inter alia, "[a] contract for a lease of premises."

Under the lease, premises leased to Dr. Kassas was defined as "an area of approximately 2400 square feet, together with the right to use, in common with other tenants of the buildings in which the Premises is located . . ., the Common Areas." The common areas included, inter alia, "access driveways, walkways, . . . and entranceways." The lease required Dr. Kassas to "maintain insurance protecting and indemnifying the Landlord and the Tenant against any and all claims for injury . . . to persons . . . occurring in or about the Premises and the Common Area."

Main Street was required to provide coverage to the Hospital, but "only with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to" Dr. Kassas.

Kassas did not own the sidewalk, nor did he maintain it. However it was established that Kassas used the sidewalk on which the accident occurred and that the sidewalk was "part of the premises leased to" Dr. Kassas, The sidewalk "was necessarily used for access in and out of [Dr. Kassas' office] and was thus, by implication, 'part of the . . . premises' that [Dr. Kassas] was licensed to use under the parties' In addition, the lease also explicitly included the sidewalk as part of the leased premises, Thus, the Hospital plaintiffs were entitled to a defense and indemnification.

On the issue of primacy of coverage, the "other insurance" clauses in defendant's policy and MLMIC's policy must be examined.  The MLMIC policy issued to the Hospital plaintiffs provided that its coverage was excess "over any other primary insurance available to you covering liability for damages arising out of the premises or operations . . . for which you have been added as an additional insured." Thus, the excess provision in MLMIC's policy applies here, which MLMIC did not dispute.

Main Street argued that a provision in the “other insurance” part of the policy put its policy in an excess position over the MLMIC policy, but that court rejected that argument.  That language provided that that business liability coverage is excess over "[a]ny other insurance that insures for direct physical loss or damage."

That section only applied to property mage, not liability coverage for bodily injury The Main Street policy did not state that its coverage was excess to other primary insurance available to the Hospital plaintiffs, an additional insured. Thus, defendant's policy is primary.

12/23/21       Stang v. Erie Insurance Company
Appellate Division, Fourth Department
When Arbitration Agreement Calls for Arbitration Award to Not Have Collateral Estoppel Effect, It Won’t

Richard N. Stang was operating a car in which is wife Madonna was a passenger.  It was involved in an accident with another motor Plaintiffs subsequently commenced a personal injury action against the driver of the other vehicle (nonparty driver), and the parties in that action agreed to submit to binding arbitration.

Pursuant to the terms of the arbitration agreement, the decision rendered by the arbitrator was to be conclusive "only as to the matters being adjudicated in this Arbitration and only as to the parties to this Arbitration and State Farm Insurance Company, as the insurer of [the nonparty driver]." The agreement was to have "no res judicata, collateral estoppel, carry-over estoppel and/or binding effect as to the same or similar issues in any claim or action for supplementary underinsured motor[ist]'s benefits."

After the arbitrator awarded Richard Stang's $390,000 for past and future pain and suffering, plaintiffs, Stang and State Farm (for the nonparty driver) settled for the upper limit of the State Farm Insurance Company policy, i.e., $250,000.

The Stangs then submitted a claim for supplementary uninsured/underinsured motorist (SUM) benefits to their insurance carrier Erie. Erie denied the claim. Thereafter, plaintiffs commenced the instant action against defendants seeking to recover damages in the amount of the SUM coverage available under the policy, less an offset of the $250,000.

Erie then brought an Article 75 proceeding seeking to limit the amount of the arbitrator's award to $390,000 based on collateral estoppel.  The Fourth Department rejected the argument.

Parties are free to limit the scope and effect of an arbitration agreement by formulating their own 'contractual restrictions on carry-over estoppel effect' " Here, plaintiffs and the nonparty driver, as parties to the prior arbitration, consented to the provision in the arbitration agreement that limited the preclusive effect of the arbitrator's decision. Thus, the prior arbitration decision does not limit the amount of damages that plaintiffs may recover in this action.

12/23/21       Corter-Longwell v. Juliano
Appellate Division, Fourth Department
Is Requiring a Certificate of Insurance Indicating Additional Insured Coverage the Same as a Contract Requiring Additional Insured Coverage?
Fourth Department Finds Question of Fact

Seneca Meadows, Inc. (“Seneca”) operated a landfill to which Pocono) transported trailers of waste pursuant to its written agreement with Seneca's parent company. Corter was killed while in the course of his employment with Seneca when Juliano, employed by a subcontractor, backed a trailer onto landfill equipment on which Corter was present.

Corter’s estate sued Pocono and Pocono sued Seneca. Seneca counterclaimed for contractual indemnification.

Seneca argued that Pocono breached a duty to Seneca as a third-party beneficiary under the agreement to procure specified insurance coverage naming Seneca as an additional insured.

The court found a question of fact as to whether Pocono was obligated to name Seneca as an additional insured on the insurance policies required by the agreement.  The specific insurance requirements did not require coverage to be provided BUT the fourth paragraph in Section 14 of the agreement—i.e., (a) (iv)—provides that Pocono and its subcontractors "shall provide certificates of insurance naming [Seneca's parent company] and Seneca . . . as an [sic] additional insured prior to the performance of any of its obligations under" the agreement.

Pocono argued that the paragraph requiring that Pocono name Seneca as an additional insure is not a requirement to provide additional insured coverage -- arguing that providing a certificate of insurance is not the same as procuring that insurance (since Certificates of Insurance do not create coverage.  In essence, Poconos assert that the reference to certificates of insurance in the agreement is meaningless. We reject that assertion.

The appellate court concluded that the inclusion of such language raises an issue of fact and represents an unresolved ambiguity regarding intent because, "[a]lthough [i]t is well established that a certificate of insurance, by itself, does not confer insurance coverage, such a certificate is evidence of a carrier's intent to provide coverage". In other words, by agreeing to language in the agreement that it would provide certificates of insurance to Seneca's parent company and Seneca naming both of those entities as additional insureds prior to the performance of any obligations under the agreement, Pocono at minimum indicated its intent to have insurance coverage provided to Seneca.

 

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

12/28/21       Evans v. Garcia
Appellate Division, First Department
Prior Counsel who Managed Case through Completion of Discovery Entitled to 75% Share of Legal Fee

This case involves an interesting fee dispute between plaintiff’s counsel.  It appears that initial counsel was replaced after almost all of the substantive legal work was completed, and incoming counsel spent approximately twelve months negotiating a better settlement for plaintiff.  Both firms, of course, had a right to recover for their work on the file.  When they could not agree, the matter set for a hearing which awarded initial counsel 55% of the fee, and incoming counsel 45%. 

Prior counsel was displeased with this result, and sought appeal to the First Department.  Upon reviewing the file, the Appellate Division noted that initial counsel performed all of the pleadings, marshalled medical records, attended the plaintiff’s IME, and oversaw all other obligations of pre-trial practice.  Incoming counsel, on the other hand, attended court conferences post discovery and negotiated a higher offer from the defendant’s insurer.  On the Record, the First Department awarded 75% of the legal fee to the prior/initial counsel.  Hard work trumps higher results, at least in this case.

12/23/21       The Cincinnati Ins. Co. a/s/o 60 LBC v. Acadia Ins. Co.
Appellate Division, Fourth Department
Settlement of Underlying Claims Does Not Impact DJ Action by Putative Additional Insured, where Settlement Papers are Silent on Coverage Claims

This matter has its origins in a slip and fall incident at a premises owned by Cincinnati’s named insured, 60 LBC.  At the time, Acadia’s named insured, Red Cedar, had been retained as the snow plow contractor for the premises.  At some point post loss, Cincinnati/60 LBC tendered the matter to Acadia seeking additional insured coverage.  Acadia denied the tender, and 60 LBC pursued a breach of contract/failure to procure insurance claim directly against Red Cedar.

The underlying matter was ultimately settled at a global mediation wherein Acadia paid $300,000 on behalf of Red Cedar and Cincinnati contributed $50,000 on behalf of 60 LBC.  Upon payment, 60 LBC’s claims against Red Cedar were discontinued and released as per the terms of the settlement.

Thereafter, Cincinnati, purportedly as a subrogee of 60 LBC, commenced an action directly against Acadia which sought to challenge, for the first time, Acadia’s denial.  Although it acknowledged that 60 LBC did qualify as an additional insured, Acadia moved to dismiss the action on the basis of res judicata. 

In reversing the trial court, the Appellate Division noted that Acadia was not a party to the underlying lawsuit or settlement papers.  As such, it could not claim that direct actions asserted against due to its own breach of contract were subsumed by the underlying settlement papers.  The fact that Acadia is not mentioned in any of those settlement papers, nor any potential claim against Acadia mentioned, underscores this point.  60 LBC’s claims, as prosecuted by Cincinnati, are wholly independent, and thus ripe for judicial review. 

 

DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley

[email protected]

12/23/21       Gamblin v. Nam
Appellate Division, Fourth Department
Defendants Properly Submitted Evidence Precluding Plaintiff’s Success in Three Serious Injury Threshold Categories

This appeal and cross appeal from an order of the Supreme Court, Erie County (Donna M. Siwek, J.), entered March 11, 2021. The order granted in part and denied in part the motion of plaintiff for summary judgment and the cross motion of defendants for summary judgment.

Plaintiff commenced this action to recover damages for injuries she sustained when the vehicle in which she was a passenger was struck by a vehicle driven by Mimi Nam (defendant) and owned by Dong H. Nam (collectively, defendants). Specifically, plaintiff alleged in an amended complaint that, as a result of defendant's negligence, the vehicle defendant was driving rear-ended the vehicle in which plaintiff was a passenger, causing plaintiff to sustain serious injuries. Plaintiff moved for summary judgment on the issues of defendant's negligence and whether plaintiff sustained a serious injury within the meaning of Insurance Law § 5102 (d) under the permanent consequential limitation of use, significant limitation of use, and 90/180-day categories, and defendants cross-moved for summary judgment dismissing the amended complaint. Defendants now appeal from an order insofar as it granted plaintiff's motion in part with respect to the issue of negligence and denied the cross motion with respect to that issue. Plaintiff cross-appeals from the same order to the extent that it denied her motion in part with respect to the three abovementioned categories of serious injury and granted the cross motion with respect to the permanent consequential limitation of use category of serious injury.

Foregoing the negligence issues, with regard to the serious injury claims, the Appellate Court concluded that, contrary to the contention of plaintiff on her cross appeal, the court properly denied her motion with respect to the three categories of serious injury in question, and properly granted the cross motion insofar as it sought summary judgment dismissing plaintiff's claim under the permanent consequential limitation of use category. With respect to the significant limitation of use category, " '[w]hether a limitation of use . . . is "significant" . . . relates to medical significance and involves a comparative determination of the degree or qualitative nature of an injury based on the normal function, purpose, and use of the body part' ". The Appellate Court concluded that plaintiff satisfied her initial burden on the motion with respect to that category. Plaintiff submitted an affirmation from an expert who opined that plaintiff sustained cervical and lumbar strains that had not resolved about 10 months after the accident, and also submitted evidence that she had severe muscle spasms, which constitute objective evidence of injury. Plaintiff further submitted "several reports of tests that produced 'designation[s] of . . . numeric percentage[s] of . . . plaintiff's loss of range of motion'”.

In opposition to the motion, however, defendants raised a triable issue of fact with respect to the significant limitation of use category "by submitting an affirmation of a radiologist who opined that there was no objective evidence of a serious injury and no showing of any significant injuries". Further, the radiologist opined that plaintiff has sustained only degenerative changes to her spine that are the result of age, rather than traumatic injuries caused by the accident.

With respect to the permanent consequential limitation of use category, a plaintiff must "submit objective proof of a permanent injury" to establish a qualifying serious injury. Here, the Appellate Court concluded that defendants met their initial burden on the cross motion with respect to that category "by submitting evidence that plaintiff sustained only a temporary cervical strain, rather than any significant injury to h[er] nervous system or spine, as a result of the accident". The Appellate Court further concluded that plaintiff failed to raise a triable question of fact in opposition with respect to that category because the affidavits submitted by plaintiff fail to establish that any of her injuries were permanent.

Finally, to establish a qualifying serious injury with respect to the 90/180-day category, a plaintiff must establish that he or she was unable to "perform substantially all of [his or] her activities of daily living for not less than 90 days during the 180 days immediately following the occurrence of [his or] her injuries", and that he or she "has been curtailed from performing his [or her] usual activities to a great extent rather than some slight curtailment". "A showing that 'plaintiff may have missed more than 90 days of work is not determinative' ".

Here, the Appellate Court concluded that plaintiff did not meet her initial burden on her motion with respect to the 90/180-day category because she submitted conflicting evidence concerning whether she could perform her typical daily activities during the relevant time frame. Specifically, she provided evidence establishing that she had been told not to go to work, as well as contradictory expert reports indicating that she could work. Further, plaintiff submitted her own deposition testimony, in which she testified that she was able to cook and clean after the accident. In light of plaintiff's failure to meet her initial burden on the motion with respect to the 90/180-day category, there is no need for us to consider the sufficiency of defendants' opposition to the motion on that issue.

Accordingly, the order so appealed from is unanimously modified on the law by denying plaintiff's motion in its entirety, and as modified the order is affirmed without costs.

 

WILEWICZ’S WIDE WORLD of COVERAGE (featuring Evan Gestwick)
Agnes A. Wilewicz

[email protected]

12/16/21       Arch Specialty Ins. Co. v. M.T. Steel Fabricators, Inc.
New York State Supreme Court, New York County
Misrepresentations on Application, Fraudulent or Not, Can Void Policy

M.T. Steel Fabricators, Inc. (“M.T. Steel”) was a company engaged in the business of metal fabrication and installation, or so it represented to insurer Arch Specialty Insurance Company (“Arch”) on its application for a CGL policy. Arch issued a CGL policy to M.T. Steel, effective from January 12, 2017, through January 12, 2018, with a premium of $21,261.00. On M.T. Steel’s application to Arch for said policy, M.T. Steel described the nature of its business as “metal fabricator in shop in installation. Railings, fences, stairs, doors, etc. 70% fabrication in shop & 30% installation.” On its application, M.T. disclosed only two hazards: (1) “Metal Erection (Decorative/Artistic),” with an exposure of $27,500; and (2) “Metal Workshop,” with an exposure of $150,000. M.T. Steel also answered in the negative to questions asking whether it contemplated any structural alterations or demolition exposure. However, a few months prior to making this application, M.T. Steel entered into two subcontracts: (1) one to perform steel work on a construction site; and (2) another to remove and dispose of “Q-decking” and steel beams, staircases, and a billboard.

Because of M.T. Steel’s representations on its application to Arch for the CGL policy, the declarations page of the policy described the business as “Metal Goods Fabricator, shop only,” and contained only the two classifications M.T. Steel listed as hazards on the application. The policy also contained an employer’s liability exclusion, which read “MT Steel agrees that: (1) the statements in the policy’s declarations are accurate and complete; (2) those statements are based on representations made by MT to Arch; and (3) Arch issued the policy in reliance on those representations.”

After an employee of M.T. Steel fell to his death at a construction site while cleaning debris from the edge of a concrete slab on the second floor of a building, M.T. Steel made a claim with Arch under this policy. Subsequently, Arch, after becoming aware of the misrepresentations made by M.T. Steel on the application, asked the Court to rescind the policy. The legal standard the insurer must meet in New York is that the insurer must convince the Court that, had the insured been truthful on its application for the policy, it either: (1) would only have issued the policy at a higher premium; or (2) would not have issued the policy at all. Because, on the application for insurance, M.T. Steel failed to allocate any percentage of its work to structural or steel demolition (the very activities in which it was engaged in the two subcontracts), the Court allowed Arch to rescind the policy. In noting that Arch had satisfied this burden, the Court was careful to mention that whether M.T. Steel fraudulently misrepresented the nature of their business was not important. Moral of the Story: the mere fact that a misrepresentation occurred on the application for insurance is enough to allow the insurer to have the policy voided.

 

BARNAS on BAD FAITH
Brian D. Barnas

[email protected]

12/14/21       Hankook Tire America Corp. v. Samsung Fire & Marine Ins.
New York County Supreme Court
Attorneys’ Fees not Recoverable as Consequential Damages on Breach of the Implied Covenant of Good Faith and Fair Dealing Claim

Hankook Tire claims that 5.353 truck and bus radial tires were stolen from a warehouse facility in Rancho Cucamonga, California.  Kann Enterprises was in charge of unloading tires from containers, placing them on storage racks, and loading tires onto delivery trucks.  On February 26, 2015, Hankook learned of an attempted theft of 46 tires by Kann Employees.  The thieves drove off with the tires, but they eventually returned them.  The police concluded that Kann employees were responsible.

The attempted theft prompted Hankook to investigate its inventory, and a full inventory check conducted March 14, 2015, revealed that 5,353 tires were missing since December 14, 2014.  Hankook concluded that the tires were stolen by Kann employees based on the attempted theft and because Kann employees handled all of the loading and unloading of tires at the facility.

Hankook submitted a claim in the amount of $1.35 million to Samsung under a Marine Open Cargo Policy.  The policy provided coverage from January 1, 2015, to January 1, 2016, and it was a renewal of a policy with a coverage period from October 11, 2013, to January 1, 2015.  The policy provided all risk coverage.

Samsung denied the claim.  The claim was denied as not falling within the scope of the insuring agreement because there was no proof the loss was the result of an external cause.  Samsung’s letter explained that its investigation revealed that the loss was the result of deficiencies in Hankook’s internal systems.  Samsung also asserted that 5,353 tires could not have been stolen in a four-month period.  Coverage was also denied based on an infidelity warranty in the policy to the extent that the lost tires was the result of conduct by employees of Hankook.  Additionally, the claim was denied based on lack of proof the tires were actually lost and because there was no proof the loss occurred during the policy period.

Hankook filed a lawsuit seeking damages for breach of contract and breach of the implied covenant of good faith and fair dealing.  The court found in favor of Hankook on the breach of contract claim.  Hankook established that the loss took place between December 2014 and March 2015 during the policy period.  It also proved that the tires were lost, and that the loss of the tires were fortuitous.  This was sufficient to establish coverage under all risk policy, and Samsung could not demonstrate that the loss was not covered.

However, the claim for breach of the implied covenant of good faith and fair dealing was dismissed.  Hankook sought attorneys’ fees it had incurred in litigating the claim and lawsuit as consequential damages as a result of Samsung’s breach of contract.  However, attorneys’ fees incurred in bringing an affirmative action against an insurer to settle rights under a policy are not recoverable as consequential damages.

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

12/27/21       Zeitler v. Nationwide Prop. & Cas. Ins. Co.
United States District Court, District of Connecticut
Insureds Allege a General Business Practice, Avoid CUTPA/CUIPA Dismissal

We turn once again to a topic we cover often in this space—what does it take to adequately plead a general business practice in order to avoid having your CUTPA/CUIPA claims dismissed? A look from the policyholder’s side of things, for a change.

Here, Zeitler and Washburn made a property damage claim under their homeowners policy, after their boiler failed causing “substantial freezing damage.” Nationwide investigated and made a partial payment. The insureds were not satisfied and sued, alleging that Nationwide “intentional[ly] and willful[ly] refus[ed] to fully indemnify the Plaintiffs” and delayed coverage determinations in an attempt to “pressure” them into accepting an undervalued settlement offer. [If you attended my bad faith seminar this week, this is an issue we covered in some length—carriers cannot use their substantial financial power to strong arm insureds into accepting unfair settlements.] The Washburns also asserted that Nationwide refused to timely provide them with a copy of their policy [yes, we covered the need for carriers to act timely in the seminar, as well].

Now, in order to make out a viable claim for statutory bad faith, in Connecticut the insureds needed to assert that Nationwide’s conduct was not a singular act but rather that it occurs with such frequency to be a general business practice. To avoid dismissal, the insureds alleged that Nationwide engages in this conduct “on a national level,” and referenced two Connecticut Insurance Department matters that were found to be “justified” and nine complaints filed throughout the country alleging similar acts.

Nationwide moved to dismiss the bad faith claims but the court found that the insureds had sufficiently plead a general business practice and refused to strike the causes of action. To prevail on a CUIPA claim, a plaintiff must present “enough facts to permit [ ] the reasonable inference that the unfair insurance practice occurred with enough frequency for it to be deemed a general business practice. Kim v. State Farm Fire & Cas. Co., No. 3:15CV00879(VLB), 2015 WL 6675532, at *5 (D. Conn. Oct. 30, 2015). The Connecticut state and district courts have found that an insured can satisfy this obligation by referencing other lawsuits against the carrier, asserting similar conduct.

Here, the court found that the lawsuits referenced in the insureds’ complaint alleged conduct that was “sufficiently similar” to amount to a general business practice—for pleading purposes. The court concluded that, “These two lawsuits allege conduct sufficiently similar to Plaintiffs’ claim to allow the Court to draw a plausible inference that Nationwide engages in unfair delay tactics, fails to provide its insureds with a reasonable explanation for its decisions, and misrepresents policy provisions in homeowners’ insurance policies with such a frequency to constitute a “general business practice” under CUIPA.”

The touchstone for policyholders is that finding and citing complaints alleging bad faith conduct against an insurer is simply insufficient (and lazy)—the cases must involve similar misconduct, the more specific the better. Carriers are sued regularly and often across the country; and, in many jurisdictions, a bad faith cause of action is automatic. With the benefit of electronically searchable dockets in virtually every courthouse in the country, there is rarely an excuse for a policyholder’s lawyer to fail to allege a sustainable CUTPA/CUIPA claim.

 

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

No construction defect decisions to report on this edition.

 

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

[email protected]

We did not see any insurance coverage opinion handed down by any of the high courts of the 49 states not named New York during the past two weeks.

 

BUCCI on “B”
Diane L. Bucci

[email protected]

12/22/21       Dish Network Corp. v. Ace Am. Ins. Co.
United States Court of Appeals, Second Circuit
Media Exclusion  

DISH, a direct television satellite provider, was sued for alleged copyright infringement in separate lawsuits by the four major networks for breach of contract and copyright infringement in connection with DISH's “Hopper” product.  The product allowed users to videotape network shows and play them back without commercials.  The networks sought to enjoin Dish from continuing to market and distribute the product.  Dish sought coverage from Ace for the lawsuits, which was denied by Ace based on a Media Exclusion. 

The policy included Coverage B for personal and advertising injury, defined to include injury arising out of “[i]nfringing upon another's copyright, trade dress or slogan in [an] ‘advertisement.’” Id. at 634.  Coverage B coverage was subject to a Media Exclusion, precluding coverage for liability arising from “‘[p]ersonal and advertising injury’ committed by an insured whose business is ... [a]dvertising, broadcasting, publishing, or telecasting.” Id. at 624.  The court did not examine the usual questions such as whether there was an advertisement, whether it was it published, or broadcast, and the like.  Instead, the decision essentially addressed whether the Media Exclusion applied.  The Media Exclusion excluded coverage for liability arising from “personal and advertising injury” committed by “an insured whose business includes broadcasting.” Id at *5.  Consequently, the focus was whether Dish was in the business of broadcasting.

DISH undertook its own defense upon Ace’s denial and, although Dish was not found to be monetarily liable, it incurred legal fees and other expenses in defending the lawsuits.  Dish, in support of its claim for reimbursement, contended that it was not a broadcasting company for several reasons, including that being in the business of broadcasting applied only to companies whose content is free and Dish charged a fee.  Dish further argued that its business was specifically excluded from the term “broadcasting” under telecommunications, dictionaries, and FCC regulations.  

The court did not disagree but held that those definitions were technical and industry specific.  According to the Second Circuit, New York law is clear that it does not assign a “narrow, technical definition to such terms.  Thus, given the broader interpretation of broadcasting, Dish qualified as a broadcaster within the meaning of the Media Exclusion, defeating coverage for Dish.

 

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

Legislative List

12/31/21       Comprehensive Insurance Disclosure Act
Governor’s Office
New Law Requires Defendants to Disclose “Complete Information” For Any Insurance Agreement Within Sixty Days Of Answer. Thousands Flee

In June 2021, a day prior to the close of the legislative session, both houses of the New York State Legislature saw bills introduced and summarily passed (bill nos. A08041 and S07052), which sought to implement a new “Comprehensive Insurance Disclosure Act” (“CIDA”). CIDA was delivered to the Governor’s Office on December 20, 2021, and on December 31, 2021, Governor Hochul signed CIDA into law (Chapter 832 of Laws of 2021). The passage of CIDA resulted in significant amendments to CPLR §3101(f) and the addition of a new CPLR §3122-b.

The purported goal of the CIDA was to require that all parties provide notice and proof of the existence and contents of any insurance agreement, including coverage amounts, 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. In order to accomplish this goal, the CIDA proposed significant amendments to CPLR §3101(f) and the addition of a new CPLR §3122-b.

According to the Sponsor Memorandum, the following served as justification for passage of this law:

“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, they 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.”

Following passage, CPLR §3101(f) was removed as written, and replaced with several new provisions, including the following required disclosures:

  1. Contents of insurance agreement.

  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

  7. the identity and contact information of the attorneys for all represented parties therein; and

  8. 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.

***

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

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

In addition to the disclosures above, defendants are held to an ongoing obligation to ensure that such disclosures are accurate and complete:

  1. 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.

Outside of the amendments to CPLR §3101(f) outlined above, the newly created CPLR §3122-b requires certification of disclosures under CPLR §3101(f) from both the insured-defendant and the insured-defendant’s counsel:

§ 3122-b. Certification of insurance disclosure. Information provided pursuant to subdivision (f) of section thirty-one hundred one of this article shall be accompanied by a certification by the defendant, third- party defendant, or defendant on a cross-claim or counter-claim and a certification by any attorney appearing for the defendant, third-party defendant, or defendant on a cross-claim or counter-claim, sworn in the form of an affidavit or affirmation where appropriate, stating that the information is accurate and complete, and that reasonable efforts have been undertaken, and in accordance with paragraph two of subdivision (f) of section thirty-one hundred one of this article will be undertaken, to ensure that this information remains accurate and complete.

This law became effective immediately on December 31, 2021, applying to all pending actions and requires that “[a]ny information required by this act that has not previously been provided in pending cases shall be provided within sixty days after such effective date”—i.e., March 1, 2022.

CPLR §3101(f)(1)-(3) and CPLR 3122-b requires disclosure of the following items by insured-defendants on or before March 1, 2022, for all pending actions, or within 60-days of answering for all new actions:

  • all primary, excess and umbrella policies, contracts or agreements including, but not limited to, declarations, insuring agreements, conditions, exclusions, endorsements, and similar provisions—including the insurance application.

  • the amounts available under any policy, contract, or agreement to satisfy a judgment.

  • the caption and date of any lawsuits that have or may reduce or erode these amounts and contact information for the attorney of any represented party therein.

  • the amount, if any, 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.

  • the contact information, including telephone number and e-mail address, of any person or persons responsible for adjusting the claim; and

  • sworn certifications from both the insured and the insured’s counsel indicating that the above disclosures are accurate and complete, and that reasonable efforts have and will be undertaken to ensure that this information remains accurate and complete pursuant to CPLR 3101(f)(2).

CPLR §3101(f)(2) requires that the insured-defendant and defense counsel make “reasonable efforts to ensure that the information remains accurate and complete and provide updated information . . . within thirty days of receiving information rendering the prior disclosure inaccurate or incomplete in whole or in part.” Accordingly, carriers should either expect inquiries regarding the above periodically through litigation, or carriers themselves should report on the above information to defense counsel at regular intervals to reduce legal costs associated with compliance.

Unquestionably, and with good reason, this bill saw vigorous opposition from insurance industry and defense groups prior to its passage. In light of this opposition, the Governor’s approval memorandum advised that the passage of CIDA was based upon a purported agreement between the Legislature and the Governor to certain modifications as to CIDA’s ultimate scope:

“I agree with the intent of the bill and have reached an agreement with the Legislature to ensure that the scope of the insurance coverage information that parties must provide is properly tailored for the intended purpose, which is to insure that parties in a litigation are correctly informed about the limits of potential insurance coverage.

Based on this agreement, I am pleased to sign this bill.”

Unofficial chapter amendments from the Governor’s Office have recently been circulating, with the following supposed modifications suggested:

  • The disclosure date could be extended from 60 to 90 days from the date of answer.

  • An express limitation on disclosure of insurance policies, contracts, or agreements “insofar as such documents relate to the claim being litigated”.

  • The elimination of any required disclosure of the telephone numbers of individuals assigned to adjust the insurance claim at issue.

  • The elimination of any required disclosure of other lawsuits or attorneys involved therein, including attorney’s fees paid, by instead modifying CPLR §3101(f)(1)(iv) to account for any erosion or offset of liability limits when disclosing the available limits of insurance under a policy.

  • The elimination of the open-ended, ongoing obligation under CPLR §3101(f)(2) to make reasonable efforts to ensure accurate and complete insurance disclosure information, by replacing it with express benchmarks for the provision of updated information, including:

    • at the filing of the note of issue;

    • when entering into any formal settlement negotiations conducted or supervised by the court;

    • at a voluntary mediation;

    • when the case is called or trial;

    • and for sixty days after any settlement or entry of final judgment in the case, inclusive of all appeals.

  • The elimination of the required disclosure of an insurance application pursuant to CPLR 3101(f)(3).

  • The express inclusion of limiting language within CPLR 3101(f)(3) indicating that “[d]isclosure of policy limits under this section shall not constitute an admission that an alleged injury or damage is covered by the policy”.

  • Clarifying language within a new CPLR §3101(f)(5) indicating that “The requirements of this subdivision shall not apply to actions brought to recover motor vehicle insurance personal injury protection benefits under Insurance Law Article 51 or Insurance Regulation 68.”

The legislative session opened on January 5 and runs through June 2. There is no reason to believe that the legislature will make swift changes to CIDA, despite any agreement with the Governor. Accordingly, it would appear that, for now, insurance carriers and defense counsel need to be prepared to abide by CIDA as passed on December 31. For pending matters, it is advisable to begin gathering the necessary disclosure information now as opposed to later.

Maxwell’s Minute: We are not happy with this law and have expressed our displeasure numerous times over. It solved a non-existent problem and has likely caused various others in the process. But your legislature and governor have spoken, and we are inclined to deal the hand that was dealt.

01/03/21       New California Insurance Laws for 2022
California Legislature
 

Guest Column: Andy Downs of Bullivant Houser Bailey Shares His Insights Into New 2022 Insurance Laws To Be Aware Of In California

 

WHAT DO THEY HAVE FOR US THIS YEAR?

New California Insurance Laws for 2022

01.03.22 | INSIGHTS

By Andy Downs
Shareholder, San Francisco Office, 415.352.2716

California’s legislature meets every year for approximately nine months (December through August). That gives it ample opportunity to tinker with the statutes applicable to insurance. Most statutes take effect on January 1 of the following year. Some, including one discussed here, do not take effect until July 1. Here are some highlights of what California has given the insurance industry for 2022.

These highlights include changes to the minimum notice for notices of non-renewal and offers of renewal and the criminalization of knowingly false material statements in applying for insurance. Compared to many recent years, 2021 was a relatively quiet year on the property and casualty insurance front.

First, under the new version of California Insurance Code § 678, effective July 1, 2022, the notice period for offers of renewal and notices of non-renewal is subject to the same additional notice periods applicable to documents mail served in lawsuits – five days if mailed inside California, ten days if mailed outside California, and 20 days if mailed from another country. California Code of Civil Procedure § 1013. Because many insurers mail these notices from outside California, that means the 75-day notice of non-renewal period is really 85 days.

Second, while California has always had strong insurer favorable statutes regarding the concealment and misrepresentation of material facts in applying for insurance, there has never been any criminal sanction.  New California Insurance Code § 1871.10 changes that. Now, a knowingly false or fraudulent material statement or material misrepresentation for the purpose of obtaining or amending an insurance policy under any line regulated by the Department of Insurance is a misdemeanor. This means misrepresentations relating to policies providing lines of coverage not regulated by the Department, such as Ocean Marine, are not criminal.

In 2022, the California Legislature will be in session through August 31. Provided it passes a timely budget, the Legislature will be in recess from July 2 to August 1.

Maxwell’s Minute: Thanks to Andy Downs for agreeing to allow us to reprint his summary of these new laws. For anything West Coast, Andy and his team are your best bet.

 

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

[email protected]

 On paternity leave.

 

RAUH’S RAMBLINGS
Patricia A. Rauh

[email protected]

12/28/21       Klaas v. Allstate Ins. Co.
United States Court of Appeals, Eleventh Circuit
Allstate did not Violate ERISA, Nor Did it Breach any Fiduciary Duty to its Former Employees When They Decided to Stop Paying Premiums on Life Insurance Benefits

This case arises out of defendant, Allstate Insurance Company’s (“Allstate”) decision to stop paying premiums on retired employees’ life insurance policies.  For many years, Allstate offered eligible employees life insurance that continued into retirement, and often indicated to employees (orally and in writing) that the retiree life insurance benefits were “paid up” or “for life”.  In 2013, however, Allstate informed former employees who retired after 1990 that it would stop paying the premiums on their life insurance policies at the end of 2015.

Following Allstate’s decision, two putative classes of retired Allstate employees (“Plaintiffs”) sued Allstate alleging that Allstate violated the Employee Retirement Income Security Act of 1974 (“ERISA”) by no longer paying the insurance premiums.  They also alleged that Allstate breached its fiduciary duty by failing to provide full and accurate information about their retiree life insurance.

The district court granted summary judgment to Allstate on all claims and concluded that the benefit plan documents unambiguously gave Allstate the power to terminate the life insurance benefits.  The district court also concluded that the Plaintiffs’ claims for breach of fiduciary duty were time barred.  Plaintiffs appealed this decision arguing that the district court erred in finding that the language in the benefit plan documents were unambiguous and by failing to consider extrinsic evidence.  Plaintiffs also argued that their breach of fiduciary duty claims were not time barred.  The Eleventh Circuit affirmed the district court’s decision.

The Eleventh Circuit determined that Allstate’s actions did not give rise to ERISA claims because the Summary Plan Description (“SPD”) provided to employees clearly stated that the life insurance benefits could be terminated and that it was not necessary to review any extrinsic evidence to make that determination, as the plaintiffs claimed.  The Court quoted various provisions of SPD’s that Allstate had provided its employees over the years, which included language such as: “Allstate reserves the right to change, amend or terminate the Plan or the provisions of the Plan at any time” or “Plan participants or beneficiaries do not have a vested right in any of the Plan’s benefits.”  This language, the Court concluded, unambiguously gave Allstate the right to terminate the retiree life insurance benefits at its discretion.

The Eleventh Circuit also agreed that the Plaintiffs’ breach of fiduciary duty claims are time barred.  In making this determination, the Court explained that the governing statute, 29 U.S.C. 1113 is a “statute of repose, and not a mere statute of limitations” as it “bars any suit that is brought after a specified time since the defendant acted, without regard to any later accrual.”  The Court held that the District Court properly applied the six-year repose period and concluded that any action by Allstate that could give rise to a breach of fiduciary duty claim took place outside of the repose period.

 

STORM’S SIU EXAMEN
Scott D. Storm

[email protected]

Vacationing this week.

 

HEINTZMAN’S HIDEOUT
Nicholas J. Heintzman

[email protected]

01/05/22       East Harlem Council for Human Servs. v. Merchants Mut. Ins.
Supreme Court, New York County
Putative Insureds Succeed in Establishing that they are Additional Insureds under policy with Merchants Mutual but Fail in Establishing they are owed Primary and Noncontributory Coverage under the Merchants’ Policy

East Harlem contracted with nonparty Westerman Construction Company, Inc. (Westerman”) to build a neighborhood health clinic. Westerman subcontracted painting responsibilities to defendant Orlando Decorating Inc. (“Orlando”). An Orlando employee was injured while painting and sued Westerman, East Harlem, and Boriken. Merchants issued primary and umbrella insurance policies to Orlando. Plaintiffs (East Harlem and Boriken) seek reimbursement from Merchants for their defense costs in the underlying action, contending that they qualify as additional insureds on the Orlando-Merchant policy.

The Court first held that Plaintiffs qualified as additional insureds under the Orlando-Merchant policy. A schedule-based additional-insured endorsement in the policy provided that any party shown in the endorsement schedule qualifies as an additional insured with respect to liability for bodily injury “caused, in whole or in party, by acts or omissions of Orlando or those acting on Orlando’s behalf in the performance of Orlando’s ongoing operations for the additional insureds at the insured location.” The policy declarations also listed East Harlem and Boriken as additional insureds.

In opposition, Merchants argued that Boriken was listed on the policy as “Boriken Local Development Corporation,” despite Boriken’s technical name being “Boriken Neighborhood Health Center.” Plaintiffs provided an affidavit and corresponding documents from East Harlem and Boriken attesting that “Boriken Neighborhood Health Center” was not a separate entity but merely the name of the underlying construction project, that it was always East Harlem’s and Boriken’s intent to require all project contractors, like Orlando, to name them as additional insureds on their insurance policies, and that the listing of “Boriken Neighborhood Health Center” on the Merchants primary policy was merely a scrivener’s error.

Merchant next argued that Orlando was not conducting operations “for” East Harlem and Boriken and that therefore the subject bodily injury was not caused by “acts or omissions” of Orlando or its employees. However, the Court held that that those issues were addressed in a related litigation. In the related litigation, the Court held that Westerman’s insurer, Harleysville Worcester Insurance Company (“Harleysville”), was entitled to a defense and reimbursement of defense costs from Merchants on a primary insurance basis. In reaching that decision, the Court considered and flatly rejected the argument that Orlando was not conducting operations for East Harlem and Boriken. Since the argument was already considered, the Court held that issue preclusion barred Merchants from rearguing it.

The Court next denied Plaintiffs’ argument that their coverage under the Merchants policy is primary and non-contributory. In making this argument, Plaintiffs never provided their own insurance policies covering them in the underlying action. Without information regarding Plaintiffs’ own policies, the Court held that it was unable to determine how Plaintiffs’ policies interacted with Plaintiffs’ additional-insured coverage under the Merchants policy or with any additional-insured coverage under the Harleysville-Westerman policy. Thus, the Court could not decide as a matter of law how the insurance coverages interacted with respect to determining primary and non-contributory coverage.

Plaintiff next argued that they are entitled to additional-insured coverage under the umbrella policy issued by Merchants to Orlando, as well as the Merchants’ primary policy. Merchants’ umbrella policy provides that additional insureds under the primary policy “will automatically be an insured” under the umbrella policy. However, the umbrella policy also provides that it is only liable to pay once Merchants under the primary policy became obligated to pay the limit of the underlying insurance policy listed in the policy declarations or a self-insured retention. Since it was unclear what proportions of Plaintiffs’ defense costs were covered by other potentially applicable insurance and whether Merchants’ primary policy’s share of those costs would exceed the primary’s limits, the Court held that it was premature to determine whether the Merchants umbrella policy had any coverage liability to Plaintiffs.

Merchants counterclaimed that Plaintiffs’ incurred defense costs are excessive and unreasonable such that Merchants is exempt from paying those costs. However, the Court held that it lacked enough information to decide this issue as a matter of law.

 

NORTH of the BORDER
Heather Sanderson

[email protected]

01/04/22       Aryan Corporation Ltd. v. Wawanesa Mutual Insurance Company
Alberta Court of Queen’s Bench, J.T. Prowse, Master in Chambers
Canadians are Not Shafts of Wheat Blowing in the Wind: It is an insurmountable stretch to say that an insurer ought to foresee that an assertion of arson and fraud would cause a person of ordinary fortitude a serious and prolonged mental injury.

The Alberta town of Bassano is located on the Canadian Pacific Railway mainline and the Trans-Canada highway, midway between Calgary and Medicine Hat. Originally known as CPR siding 97, the town is named after a Canadian Pacific Railway shareholder, the Marquis de Bassano, who was a native of Bassano, Italy.

In July of 2013, the Midway Motel in Bassano burned. Almost to the ground. Three months before the fire, the Motel had been acquired by the “Aryan Corporation Ltd.” The principal of Aryan was Forhad Uddin.

Wawanesa insured the Motel. Wawanesa’s investigation determined that the fire was caused by arson and that Uddin participated in the arson. Wawanesa also determined that Aryan’s proof of loss exaggerated the damage claims and the income loss.  Wawanesa paid out the claims of the mortgage lenders but maintained a denial of Aryan’s personal claims. Aryan disputed the denial and filed a lawsuit.

Uddin suffered from an anxiety disorder. At some point following the fire he was prescribed Ativan and Seroquel. Two months after Aryan’s action against Wawanesa was filed, he suffered a cardiac arrest and entered a persistent vegetative state. A physician hypothesized that the drugs together with possible sleep apnea led to a hypoxic event that triggered the cardiac arrest. The physician stated in a letter “…this is purely speculative, but we have no better information at hand to help guide a different diagnosis.”

In another lawsuit, Uddin’s litigation representative (and the governments of Alberta and Quebec suing or medical costs being incurred in the care of Uddin) sued Wawanesa and its investigators personally, alleging that the investigators ought to have known that Uddin had a pre-existing anxiety condition; that Wawanesa’s refusal to pay insurance proceeds, would worsen Uddin’s condition to the point where he would come under the care of a psychiatrist and be prescribed medication to try to control his condition; that Uddin suffered a cardiac arrest on April 16, 2014 “caused by a combination of his anxiety, the medication he was taking to combat it, and, his sleep apnea condition”.

Wawanesa filed this application to have this lawsuit dismissed on the basis that the medical condition that caused Uddin to enter a vegetative state was not a foreseeable consequence of a denial of policy proceeds.

Master Prowse of the Alberta Court of Queen’s Bench granted Wawanesa’s request for summary judgment and dismissed Uddin’s injury claim, stating that “…In seems to me an insurmountable stretch to say that Wawanesa should have foreseen that its assertion of arson and fraud would have caused a person of ordinary fortitude a serious and prolonged mental injury, nor do I see how trial (viva voce) evidence would assist in making this determination.”

This decision may be appealed de novo to a Judge of the Alberta Court of Queen’s Bench, meaning that the Judge hearing the appeal can admit additional evidence that is relevant and material. We will see if this decision is appealed.  In the meantime, let it be known that Canada is more than elbow room, respected banks, terrific photos of aquamarine lakes and soaring peaks – Canadians are made of stern stuff.

 

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