Coverage Pointers - Volume XXIII, No. 17

Volume XXIII, No. 17 (No. 611)
Friday, February 4, 2022
A Biweekly Electronic Newsletter


As a public service, Hurwitz & Fine, P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York and Connecticut appellate courts and Canadian appellate courts.  The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers.  

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at [email protected] or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.


Dear Coverage Pointers Subscribers:

See the source image

Do you have a situation?  Everyone seems to have one these days. Have no fear, we LOVE situations. As a reminder, the actual ISSUE of Coverage Pointers is attached (as always), although we know folks often read this cover note and forget to read the real good stuff attached.  The newsletter is worth reading.  For us, it’s worth writing, for you, we hope, it’s worth reading!

Happy Presidents’ Day (coming up).  This year, for the first time in a decade, I’ll forego my annual list of completed presidential biographies but would welcome any good ones that you can suggest that I read.  Last year’s list can be found here.  I am currently reading a book by Irwin F. Gellman, Campaign of the Century, about the 1960 Kennedy-Nixon election.  From my perspective, Gellman is an apologist for Nixon, but the election was surely one for the ages.

If you want a peek at our lovely, snowy, beachfront view in Southern Ontario, happy to offer one.

For those most interested in CIDA, the Comprehensive Insurance Disclosure Act, I have been posting daily updates to those who follow me in that media platform.  About 50 of you have asked for daily updates, and I have been providing them by separate communications.   If you want more frequent updates, send me an email and let me know.


Timetable and Strategy:

As of this moment, the statute, as signed into law on December 31, is in effect.  That statute requires broad production in all pending cases, but nothing need be produced until March 1.  We fully anticipate the amendments to be adopted by then and if so, the statute will not apply to cases that were pending on December 31, 2021.  It will only apply to cases sued thereafter and production in those cases will be delayed until 90 days after counsel answers the pleading.

I know that many are concerned about the retroactivity provisions, which are currently in effect and would require initial disclosures on pending cases by March 1.  We still have every reason to believe that the amendments will pass and be signed by the Governor (who called for those amendments when she signed CIDA into effect on December 31).  Accordingly, we are still recommending to our clients to not panic about the applicability of the statute to cases pending on December 31.  We still have every reason to believe that the amendments will be signed into law and the statute will apply only prospectively, to lawsuits filed after December 31.

For those who are new to all this:

Original summary of law that became effective 12/31/21: 

Amendments that have passed Senate and awaiting Assembly approval will change the statute as follows:

  1. Disclosures of policies or declarations pages within 90 days after answer is filed. If Dec page is accepted, defendant can still request policies.

  2. Disclosure of contact information for person adjusting the claim, but only name and email address. No need, anymore, for TPAs to disclose the name of the person to whom they are reporting.

  3. Total limits available under the policy after considering erosion.

  4. The amendments eliminate disclosure of lawsuits and contacts for those lawsuits that may erode the policy.

  5. Eliminates attorney fee disclosure.

  6. Disclosures at the filing of the note of issue, entering negotiations, or mediation.

  7. Applications for insurance no longer to be disclosed.

  8. Dual certifications still required.

  9. Only apply to actions commenced after effective date, no long would apply to pending cases.

I promise you this, as soon as the amendments are passed and signed into law, we will be prepared to provide training modules on compliance, to those who need or want it.

Do you have a situation?  We love situations. 


Need a mediator?:

Hey coverage lawyers.  Hey claims professionals. Have you and a friend, adversary, or lawyer for whom who have respect reached a stalemate on a coverage dispute?  Look, we know each other.  We know that.  We don’t want to litigate every coverage disagreement.  Why?   Because the position we oppose today may be the one we advocate tomorrow.  Face it.  We all understand that.

Let me help mediate your disagreement to see if there is some mutual agreement, we can reach that will not box us into a corner. Reach to me.  I will be pleased to mediate your dispute.

My partners, Mike Perley and Ann Evanko, are also available to help resolve other challenges.

You don’t want adverse precedent that will bite you next time you might have a slightly different view on coverage issues. You don’t want to spend tens of thousands of dollars to litigate a coverage issue before a motion judge or appellate justice that know as much about insurance coverage as you do about nuclear physics.  For those in the Western District of New York, I am certified by the Court and on the WDNY Mediation Panel as are Mike and Ann

Try mediation.

My good friend, Jean Lawler, a wonderful mediator from Los Angeles, and I, recently published a piece on how good mediators prepare for the process


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.



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

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

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

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

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

Medical & Nursing Home Liability Pointers.  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.


Imprisoned for Hugging – 100 Years Ago:

Buffalo Morning Express and Illustrated Buffalo Express
Buffalo, New York
04 February 1922

Fail to fasten hugging charge.

The charge of assault was not sustained against John Declerva, 45 years old, of No. 13 Ormond place, who, on Wednesday night is alleged to have attempted to hug Hazel Mosely of No. 806 Elk Street in the kitchen of her home, when he asked for a drink of water. Declerva said he was drunk and does not remember what happened. He was fined $10 on that charge but went to the penitentiary because he lacked the cash.


Peiper on Property and Potpourri:

We mark the beginning of February, as I do every year with my birthday on the 2nd.  As consistent as I get another year older, it appears that the groundhog is just as consistent in seeing his shadow.  Six more weeks of Winter is forecast for us in the Northeast.  Same as it ever was. 

As we do every year, we also mark this issue by looking forward to the start of MLB Spring Training.  With baseball close, we must be close to warmer weather, right?  Well, this year my research tells me that the Orioles are the only team scheduled to open their Florida facility on February 15th.  The rest of the MLB (and that assumes the O’s are still in the MLB), however, remain locked in a labor dispute that may push back the season.  Here's hoping it doesn’t push back the better weather.

As for the week’s column, take a moment to review the decision involving Aspen.  In it, the First Department finds a question of fact under a usual set of circumstances.  The Court’s decision underscores how difficult it can be to obtain summary judgment on the application of an exclusion where there is any rational basis to dispute the disclaimer. 

That’s it for now.  See you, and the Orioles, in two weeks.

Steven E. Peiper

[email protected]


Abe’s Birthday:

The Kingston Daily Freeman
Kingston, New York
04 February 1922


As we celebrate the anniversary of the birth of a martyred president, let us consider his good traits of character and wisdom.

He advised young men to economize and save.

An account with the National Ulster County Bank will be the right incentive for success.

4% Paid in our Special Interest Department.


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

It’s that time of year again – in just a couple of weeks we will be reporting from the 30th Annual ABA TIPS Insurance Coverage Litigation Committee Mid-Year Program in Phoenix. Registration and this year’s brochure can be found HERE.  After a long hiatus, this year’s presentations will be in-person at the Arizona Biltmore. Excellent educational and wonderful networking opportunities abound, as always. If you are interested in attending, or just want more information, drop me a line.

In the meantime, this week in the Wide World of Coverage, once more we have Evan Gestwick reporting on the latest from our own Second Circuit:

Well, my winter break has come to a conclusion, as my very last semester of law school started this morning. As much as I have enjoyed my time in law school, I very much look forward to joining Hurwitz & Fine in a full-time capacity come September. Until then, I will be working part time while going to school and keeping a (wishful) eye out for springtime.

This week, we consider whether a property insurance policy provides a business with coverage for losses incurred by the shutdowns due to the COVID-19 pandemic. Because the Policy’s business income and extra expense coverage required the insured to have suspended business operations due to “direct physical loss of or damage to property” at the Premises, the question became whether COVID-19, together with the governmental shutdowns and restrictions, constituted a “direct physical loss of or damage to” property. In answering that it does not, the Second Circuit Court of Appeals reasoned that the mere risk that the virus may cause human infection was not a “risk of direct physical loss,” and that instead, the virus itself must inflict actual physical loss of or damage to the insured property. ~ Evan

See you all again in two weeks! Until then,

Agnes (and Evan)
Agnes A. Wilewicz

[email protected]


Legal Holidays – a Century Ago – in Kansas:

The Topeka State Journal
Topeka, Kansas
04 February 1922


Lincoln’s Birthday, February 12, Is First Under State’s Statutes—Only Four Others, Washington’s February 22; Memorial, May 30; Labor, in September, and Columbus, October 12.


Barnas on Bad Faith:

Hello again:

The premature ending to the Bills’ season has me contemplating the remaining winter months ahead.  It does not look like Syracuse basketball, or the Sabres will ease my sports pain in the coming months, and the MLB lockout has me worried about the fate of spring training and the start of baseball season.  I guess it is time to dust off the golf clubs, head for the indoor golf simulators, and dream of warmer days and rounds of golf ahead.

I have a brief write up in my column on the New Jersey bad faith law that was signed by Governor Murphy a couple weeks ago.  The important thing to keep in mind is that it only applies to claims for UM and UIM benefits. 

Brian D. Barnas

[email protected]


Ford Buys Lincoln – Only a Century Ago:

The Buffalo Enquirer
Buffalo, New York
04 February 1922

Ford Buys Lincoln Plant for $8,000,000, Slashes Car Price

(By the United Press.)

Detroit, Feb. 4. The greatest slash in automobile prices ever announced was made here today by the Lincoln-Automobile company immediately after it had been purchased at bankruptcy sale for $8,000,000 by Henry Ford.

Prices on all models were slashed, varying from $800 to $1,200.

Announcement of the cut was made by Henry M. Leland, president of the concern, who will be retained in charge under Ford's ownership.

Detroit, Feb. 4. Henry Ford today purchased the Lincoln Motor Co. for $8,000,000.

Ford announced that he would buy the company because of his friendship for the Lelands and keep that family in direct charge of the management of the company.


Off the Mark (featuring Kyle A. Ruffner):

Dear Readers,

I mentioned snow last edition.  That was a mistake (which I am making again, I know).  My back and various seldom-used muscles are paying the price for that error.  Most of us at the office got about a foot and a half last weekend.  While the snow was light and fluffy, it was a lot for those of us in the Metro NYC area who do not own a snowblower.  As I sit here writing this, it is Groundhog Day, one of my favorite holidays, mostly because it is so ridiculous (even more so than Valentine’s Day).  The local marmots yielded mixed results – Malverne Mel and Punxsutawney Phil predicted six more weeks of winter, but Holtsville Hal and Staten Island Chuck predicted an early spring.  What have we learned from this?  Absolutely nothing, which is why I love Groundhogs Day.

Kyle Ruffner continues to assist with another case summary for “Off the Mark.”  This edition brings you a construction defect case from the United States District Court for the Northern District of Illinois, Eastern Division.  In Ohio Sec. Ins. Co. v. Power Clean, the Court examined the carrier’s duty to defend where the construction defects damaged something other than the project, finding a duty to defend.

Until next time …

Brian (and Kyle)
Brian F. Mark

[email protected]


“Marry me. Marry me.”  “I can’t, I’m penniless.”  “So what?  The Czar of Russia was Nicholas”:

The Buffalo Enquirer
Buffalo, New York
04 February 1922


Mary L. Blackman of Corning Sues for Alleged Breach of Promise to Marry.

(Special Telegram to The Enquirer.)

Corning, Feb. 4. Because of the failure of Norman Hurd to marry her during the summer of 1921, after he had asked her to marry him and she had consented, Mary L. Blackman has brought a suit In supreme court to recover $10,000 damages for breach of promise to marry.

Miss Blackman's complaint says that Hurd proposed in April, 1921, and they agreed they were to be married during the following summer. More recently, she asserts, Hurd has refused to marry her or to set a date for the wedding.


Fleming’s Finest:

Hello Coverage Pointers Subscribers:

Happy February! Love is in the air, but so are irritants and contaminants.

My heart feels like it’s going to explode – just like the stickwater tank in Omega Protein, Inc. v. Evanston Insurance Company. Check out the Mississippi Supreme Court case in the column below to hear about the ambiguous pollution exclusion at play in that case. There was an explosion at a facility caused by the ignition of explosive gases within the tank when welding and grinding work was ongoing, but since the pollution exclusion was ambiguous, the exclusion was construed against the insurer. Stickwater is a liquid composed of water, fish oil, and fish solids. The more you know!

Stay warm!

Katherine A. Fleming

[email protected]


Lynching Still a “Thing” a Century Ago:

Buffalo Evening News
Buffalo, New York
04 February 1922


Mary L. Blackman of Corning Sues for
Alleged Breach of Promise to Marry.

MALVERN, Ark., Feb. 4. Harry Harrison, negro, aged about 30, was taken from the sheriff of Hot Springs County and two deputies at the door of a train here shortly before midnight last night by a party of about 200 masked men and riddled with bullets within a few yards of the railway station.

The negro has been accused of frightening girls and women for some time, his offense culminating yesterday when he appeared half clothed before an automobile filled with school girls. He was arrested and placed in jail. Threats of lynching caused the officers to decide to take the negro to Arkadelphia for safe keeping, and they had just boarded the train when they were overpowered by the mob.


Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

Life: It’ll get up and go and be gone. Take your time when you can and hold on tight. And never forget that it’ll hit you square when you least expect. So work time in, always.

This week, I have two entries in our Legislative List. The first is an update on the status of the chapter amendments to the Comprehensive Insurance Disclosure Act. They have passed the Senate and currently await a vote in the Assembly. Additionally, chapter amendments have passed both houses to clarify certain conditions for insurance policies issued to insureds by request for policy terms of less than one-year.

Until next time,

Ryan P. Maxwell

[email protected]


Lincoln, Lincoln, I’ve Been Thinkin’:

The Chat
Brooklyn, New York
04 February 1922

Lincoln’s Appeal for Loyalty to Law

"Let every American, every lover of liberty, every well wisher of posterity, swear by the blood of the Revolution never to violate in the least particular the laws of our country, or to tolerate their violation by others. As the patriots of '76 did to the Declaration of independence, so to the support of the Constitution and the laws let every American pledge his life, his property and his sacred honor. Let everyone remember that he who violates the laws of the land tramples on the blood of the fathers and tears in sunder the charter of his own and his children's liberty.

“Let reverence for the laws be breathed by every American mother to the lisping babe that prattles on her lap; let it be taught in schools, in seminaries, and in colleges; let It be written in primers, spelling books and in almanacs; let it be preached from the pulpits, proclaimed In legislative halls and enforced in courts of justice, and, in short, let it become the political religion of the nation."—From address to Young Men’s Lyceum of Springfield, Ill., January 27. 1837, when Lincoln was 27 years old.


CJ on CVA and USDC(NY):

Hello all,

While I do not officially return from paternity leave until Monday, February 7th, I could not let another issue of Coverage Pointers go by without saying hello. Both Charlie and Ben are adjusting well; however, my wife and I are learning that adding an additional little one comes with a steep learning curve.

This week I have for you a reminder that, even though a party may have a future claim against another, unless that claim will certainly become a reality, a court will not entertain it.

Until Next Time,

Charles J. Englert, III


Huge Verdicts Rock the City:

The Buffalo Commercial
Buffalo, New York
04 February 1922


Two verdicts for the plaintiffs in damage suits were returned by juries in supreme court late yesterday.

In Justice George E. Pierce’s part of supreme court, a jury awarded William E. Lindlow as special administrator for the estate of Mrs. Timothy of Lakeview Avenue. $3,266 for the death of the woman, who was killed by a Kaiser Coal company truck while leading her husband, an adjudged incompetent, across the street at Elmwood avenue and Virginia street on March 19th, 1921.

Before Justice Pooley a jury rendered a verdict of $11,023 with about $600 interest for the Wabash Fuel company of Buffalo against Clarke Shipston, a retail coal dealer of Niagara Falls.


Dishing Out Serious Injury Threshold:

Dear Readers,

You blink and January is already over. Hope everyone had a good start to the New Year.

In the Serious Injury Threshold world, we have two cases that both pertain to expert witnesses. The first, pertains to a defendant expert failing to account for the absence of plaintiff’s spine pain prior to the subject accident and the expert opining that the pain “might” be unrelated to the accident. The second, pertains to plaintiff’s expert failing to explain why plaintiff’s pre-existing conditions were ruled out as to causation of plaintiff’s injury.

Be well,

Michael J. Dischley


What is America?

Democrat and Chronicle
Rochester, New York
04 February 1922


New York, Feb. 3—Expressing conviction that school children are not learning the truth about United States history, Alvin Owsley, of Indianapolis, national director of the Americanization committee of the American Legion, appeared as a witness to-day, at the investigation conducted by Commissioner of Accounts Hirschfield into history studied in public schools.

The country is at the cross-roads between half-Americanism and un-Americanism, and the time has come to mould the true spirit of Americanism,” said Mr. Owslet, “the place to begin is with the children.”

Charles Grant Miller, of Staten Island, named six different histories which he termed pro-British. Some of them he said belittled heroic characters, inspiring incidents and vital principles.

The witness quoted passages praising Benedict Arnold and asserting “Congress had treated him unfairly.” He inquired whether the Commissioner thought it a true picture of the Continental Congress to say, as did the historian, that “it was a scene of petty bickerings and scheming among selfish, unworthy, short-sighted, narrow-minded, office-seeking and office-trading plotters.

William Pickens of the National Association for the advancement of Colored People said that histories had omitted references to the achievements of the black race and the part played by the negro in the up-building of America.

Many witnesses disapproved of school histories now in use. Mrs. John Jerome Rooney, member of a school district board, said her son had called her attention to a reference in his text book to “the so-called War of 1812.” In another book the line “in the perilous fight,” in the National Anthem had been changed to “about the clouds of the fight,” she said.


Bucci on “B”: 

Hello everyone,

What’s new?  There were two Coverage B cases in my column this week.  Hurray.  Both decisions are substantially correct, but the North Carolina Farm Bureau case was painful to read.  The claimant was sexually assaulted as a nine-year-old until she was thirteen.  Her abuser videotaped her and posted the video on the internet.  The claim was for Invasion of Privacy, but it was denied in part because the lawyer drafting the underlying complaint stated that the invasion was conducted by publication with knowledge of falsity.  The court grabbed onto the knowledge of falsity allegation and denied coverage, although under the circumstances, the court would have denied coverage on other grounds if necessary.  

Anyway, that’s the law.  Much as I love coverage defense, some of these cases are hard to read.  I am not generally part of the Child Victims Act cases handled here at H&F (very well-handled I might add) so I don’t have to read this type of claim to often.  But I am sure I would diligently protect my client as a professional.  But I hate that this poor young girl being assaulted as a nine-year-old, whose life will never be the same, was unable to be compensated for her mental and physical injuries. I know that it would be ridiculous to cover intentional sexual molestation, but I’m a softy.  Okay, I’m off my soapbox now, but would love to hear your thoughts.

On other fronts, I’m planning to virtually attend the ICLC’s meeting in February.  This is my usual conference haunt in part because of the sunshine during the area’s coldest month.    It’s a very good program, and I encourage everyone to attend in person, but you know…that is not a sure thing anymore. 

Speaking of cold, I am just delighted that January is behind us and since February is a short month, we will be turning the corner to spring in the not-so-distant future.   I always wonder why I’m delighted by such things.  Winter turns to spring every single year and yet I’m always surprised and pleased when it happens. 

I hope you are all doing well, and that you and yours are safe and sound. 

Diane L. Bucci


Color Comics to Reach the Masses ...:

Democrat and Chronicle
Rochester, New York
04 February 1922


Much Satisfaction Expected to Follow Announcement That Favorite Cartoons are to be Included in a New Section.

A four-page Colored Comic Section will be added to the regular Sunday issue of the Democrat and Chronicle, starting Sunday. The old favorite cartoon characters have been retained and will continue to spread smiles and chuckles, as usual, among their readers and followers everywhere. The characters selected to appear each week in this new section are The Gumps, Harold Teen, Gasoline Alley and Uncle Wiggily. Uncle Wiggily is the only newcomer to Rochester readers and was selected especially because of his extraordinary appeal to the younger folks. The others need no introduction, their popularity is well established, and it is believed it will not be long before Uncle Wiggily is firmly intrenched in the good graces of all.


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

Well, it’s cold, really cold, again. This is the coldest winter I’ve experienced in my time in Connecticut. Successive days of “real feel” temperatures in the negative numbers, high winds, and a heating bill that’s 100% higher year-over-year! One of my best friends recently moved to Tampa Bay, but not to play quarterback. Her daily pictures in front of swaying palm trees and sandy beaches are really stretching the depths of our friendship.

In any event, I’m off to play real lawyer over the next few weeks. We’re going to do a real live, in person, coverage trial in front of a jury. Not something we say all that often, and certainly not something that’s happened much since the pandemic. Wish me luck.

In other news, the Connecticut Supremes took up the issue of who gets to decide how many new roofing tiles an insured can have: the courts or appraisal panels. Read my column in Coverage Pointers for the answer.

Keep keeping safe,

Lee S. Siegel

[email protected]       


Steal a Paper, Get the Slammer:

The Buffalo Times
Buffalo, New York
04 February 1922

Newspaper Thief Gets 30 Days in Pen

City Court Judge Hager is a friend of the newspaper boys along Main Street. He does not approve the idea of a stronger and taller youth stealing newspapers away from a dally toiler, who has just enough papers for his customers. John Gray, 19 years old, claiming Chicago as his home, will not steal newspapers for 30 days.

Gray was arraigned on the complaint of Edward Snyder, a newsboy, who charged Gray with stealing 20 newspapers. After a severe lecture. Gray was sent to the penitentiary.


Rauh’s Ramblings:

Hi all,

I can’t believe it is already February.  It feels like January went by in the blink of an eye! It is a snowy morning here in Buffalo today and it sounds like it will stay this way for the next 24 hours or so.  I am very much looking forward to warmer temperatures and sunny days!

I searched high and low this week for an interesting life insurance and/or ERISA case but came up with nothing.  Hopefully I can find something to report on in two weeks.  I wish you all an enjoyable week and weekend – stay warm!

Patricia A. Rauh


Dentists Seek Run of the House:

The Buffalo Times
Buffalo, New York
04 February 1922

Didn’t Like Fit, Lashes Dentist

NEW YORK, Feb. 4.—Unsatisfactory dental work that cost $150, and discourtesy suffered when she complained, were reasons Mrs. Bernadina Corley gave in a Brooklyn police court today when arraigned charged with having lashed Dr. Austin B. Colgan with a dog whip. He Is assistant to Dr. Thomas J. Davis, for whom the woman said the whipping was intended.

Dr. Davis was out when Mrs. Corley went to his office and in an argument with Dr. Colgan she was accused of having struck him repeatedly in the presence of several other patients. The whip was taken from her and she left the office, but returned an hour later, Dr. Cogan testified, when she broke the glass in the door on finding her entrance barred. Her hand was cut and had to be stitched by an ambulance surgeon. Her husband, who was said to be an official of the Brooklyn Rapid Transit Company, accompanied her to court. She was paroled to appear in court again Monday.


Storm’s SIU Examen:

Hi everyone:

Only two interesting cases for you this week (busy week): 

  • Unhappy with an appraisal, insureds sue the insurer’s appraiser whose motion to dismiss is granted seeking dismissal of the negligence, intentional misconduct, and third-party beneficiary claims but denied as to a tortious interference with contract claim.

  • Question of fact whether exclusion in a commercial property policy for "theft by any person to whom you entrust the property for any purpose" applied to damage caused by tenant.

This week’s encouraging word: “Success is not final, failure is not fatal: it is the courage to continue that counts.”  ~ Winston Churchill

I hope you have an awesome two weeks until the next edition. 

Scott D. Storm

[email protected]


A Thought of Israel, 26 Years Before it Happened:

The Buffalo Enquirer
Buffalo, New York
04 February 1922


Right to Levy on Province for Troops, Full Power to Control Concessions, Among Provisions of Agreement to be reported League.

(By the United Press)

London, Feb. 4.—Foundations for a Jewish nation in Palestine were laid in the British mandate made public today.

The terms of the mandate, which is subject to approval by the council of the League of Nations, on February 22, provide:

British right to levy upon Palestine for support of troops.

Establishment of a Jewish advisory council to facilitate immigration and makes Palestine a Jewish state.

No discrimination against nationals of any country.

Practically full power to the British to control all concessions to foreigners.

Mandate Approved by King

No-prejudice against non-Jewish. English, Arabic and Hebrew the official languages.

The mandate has been approved by the King and now awaits only action by the league council.

Much interest was aroused here in foreign and commercial circles by the provisions regarding concessions. Of these articles 18 was regarded as the most important.

The mandatory must see that there is no discrimination against nationals of any states, members of the league of nations, incorporated under their laws, the article read, as compared with those of the mandatory or any foreign state, in matters of taxation, commerce, navigation, exercise of industries or professions or treatment of navigation or aircraft matters.


Heintzman’s Hideout:

Dear Readers:

The cold and snowy winter weather is giving me a chance to power through some reading. Since November, I’ve finished Homer’s Iliad and Odyssey, and I’ve started the plays of Sophocles. Looks like I’ll have several more months of cold to keep me reading.

Two cases this week, both of which deal with COVID-19. In the first, an insured fails to get coverage for damage imposed by COVID-19 shutdowns, as the insured is unable to show that it suffered “direct physical loss.” In the second, an insurer successfully dismisses an insured’s complaint where the insured failed to establish that it suffered a financial hardship as a result of COVID-19.


Nicholas J. Heintzman


And at the Same Time, Armenian Women Sold as Fodder:

The Buffalo Enquirer
Buffalo, New York
04 February 1922


Harotian Selvin, who brought seven attractive Armenian maidens to San Francisco to be sold as “brides” to wealthy Armenian fruit growers in California. The complaint of Arkott Kinosian, wealthy Armenian farmer of Fresno, to the San Francisco district attorney, brought to light the practice of selling Armenian girls as brides. The authorities are investigating.


North of the Border: 

The last few days, my just-at-sunrise walks with the dog have been under clear, beautiful skies. The rising sun reflects a golden hue on the tree branches. It is truly spectacular. However. There is always a ‘however’. It has been about -30C.  That will end. In a couple of months, it will warm up. Maybe.

My column this week discusses an interesting Ontario Court of Appeal decision that was released on Friday that focuses on a duty to defend application with a twist, set against the backdrop of gamers allegedly hacking Pokémon Go.

Heather Sanderson

[email protected]


Tag Days:

The New York Times
New York, New York
04 February 1922


Pennsylvania Speakers Also Say Benefit Shows Endanger Girls.

ALLENTOWN, Pa., Feb. 3.—Some influences which were held to lead to looser standards in modern society were condemned by women speakers here today at an open forum of the Eastern District Conference of the State Federation of Pennsylvania Women.

Raising money by “tag days” and public benefit entertainments was condemned on the ground that both practices put young girls in danger. Other speakers urged club women to exert all their influence against smoking among women, immodest dress and immodest dancing. Enthusiastic applause greeted the speakers.

Mrs. H. H. Coston of Scranton severely condemned some of the practices that have become prevalent under the sanction of charity.


Headlines from this week’s issue, attached:

Dan D. Kohane
[email protected]

  • As Tenant Had Obligation to Maintain Sidewalk, Fall on Sidewalk Arose out of Maintenance of Sidewalk, Establishing Additional Insured Coverage

  • Insurer Sanctioned for Discovery Violations


Steven E. Peiper

[email protected]

  • Where Motive of Loss was Unresolved Between Vandalism or Theft, a Question of Fact Persisted on Application of Theft Exclusion

  • Loss Payee Under Insurance Policy had an Equitable Obligation to Provide Proceeds to the Party Bearing the Actual Loss of Property


Michael J. Dischley

  • Defense Expert Failed to Account for Absence of Pain in Plaintiff’s Spine Prior to the Accident

  • Plaintiff Expert Failed to Explain why Preexisting Conditions were Ruled Out and Provided Only Conclusory Assertions that Injuries were Caused or Aggravated by the Subject Accident


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

[email protected]

  • Insured’s Claim Under Property Insurance Policy for Business Losses Arising out of COVID-19 Restrictions Properly Denied Because Such Was Not a “Direct Physical Loss” As Required Under The Policy


Brian D. Barnas

[email protected]

  • New Jersey Passes Bad Faith Law for UM and UIM Coverage


Lee S. Siegel

[email protected]

  • How Many Roofing Shingles?


OFF the MARK (featuring Kyle A. Ruffner)
Brian F. Mark

[email protected]

  • U.S. District Court Finds Duty to Defend where Underlying Claims Asserted Damage to Property Other than the Project Itself


BUCCI on “B”
Diane L. Bucci

  • Is Stealing the Plaintiff’s Truck Design Trade Dress Infringement?

  • Sexual molestation is not Covered Under Invasion of Privacy Offense  


Ryan P. Maxwell

[email protected]

  • Long Awaited Chapter Amendments Pass Senate, Progress Through Assembly

  • Chapter Amendments Clarify Permitted Issuance of a Policy Term of Less Than One Year, Where Requested By An Insured


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

  • The Court Will Not Entertain Claims Based On the Happening of Uncertain Future Events


Patricia A. Rauh

  • No noteworthy life insurance and/or ERISA cases this week.  Check back next time!


Scott D. Storm

[email protected]

  • Unhappy With an Appraisal, Insureds Sue the Insurer’s Appraiser Whose Motion to Dismiss is Granted Seeking Dismissal of the Negligence, Intentional Misconduct, and Third-Party Beneficiary Claims but Denied as to a Tortious Interference with Contract Claim

  • Question of Fact Whether Exclusion in a Commercial Property Policy for "Theft by any Person to Whom You Entrust the Property for Any Purpose" Applied to Damage Caused by Tenant

Nicholas J. Heintzman

  • Insured Fails to get Coverage for Damage Imposed by COVID-19 Shutdowns, as Insured is Unable to Show that it Suffered Direct Physical Loss

  • Insurer Successfully Dismisses Insured’s Complaint where Insured Failed to Establish that it Suffered a Financial Hardship as a result of COVID-19.


Katherine A. Fleming

[email protected]

  • Coverage for Injuries Sustained from an Explosion at a Plant Based on Ambiguous Pollution Exclusion


Heather Sanderson

[email protected]

  • A Liability Insurer may not Rely Upon Extrinsic Evidence that is Central to the Material Facts in the Underlying Action to Prove a Material Misrepresentation Nullifying an Otherwise Covered Obligation to Defend that Action


Please be careful out there.  Mask up.  Socially Distant.  STAY HEALTHY.  This plague has hit too many people I know and too many people who know.



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.

Dan D. Kohane

[email protected]

Agnes A. Wilewicz

[email protected]

Patricia A. Rauh

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
Ryan P. Maxwell
Charles J. Englert
Patricia A. Rauh
Nicholas J. Heintzman
Diane F. Bosse
Joel R. Appelbaum
Kyle A. Ruffner (Admission Pending)
Katherine A. Fleming (Admission Pending)

Steven E. Peiper, Team Leader
[email protected]

Michael F. Perley
Scott D. Storm
Brian D. Barnas

Dan D. Kohane
[email protected]

Alice A. Trueman


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

Bucci on “B”

Ryan’s Capital Roundup

CJ on CVA and USDC(NY)

Rauh’s Ramblings
Storm’s SIU Examen

Heintzman’s Hideout

Fleming’s Finest

North of the Border


Dan D. Kohane
[email protected]


02/03/21       Wesco Insurance Company v. Rutgers Casualty Insurance Co. Appellate Division, First Department
As Tenant Had Obligation to Maintain Sidewalk, Fall on Sidewalk Arose out of Maintenance of Sidewalk, Establishing Additional Insured Coverage

Given that Rutgers’ insured had an express duty to maintain the sidewalk outside its leased premises, and to indemnify the landlord, Wesco’s insured, in connection with that duty, it can be inferred that the underlying alleged accident on that sidewalk "arose out of" the maintenance of the sidewalk.  Additional insured coverage established, even without discovery completed.

Editor’s Note – Perhaps a little harsh.  Just become someone fell on a sidewalk doesn’t mean, necessarily, that the accident arose out of poor sidewalk maintenance.

01/25/22       Hankook Tire America Corp v. Samsung Fire & Marine Ins. Co.
Appellate Division, First Department
Insurer Sanctioned for Discovery Violations

Insurer (and other unnamed defendants) failed to comply with numerous court orders and to rectify problems in producing documents. Therefore, the motion court providently exercised its discretion in precluding them from offering evidence as stated above and awarding plaintiff 50% of its claimed attorneys' fees and costs.  The motion for sanctions was not premature, as discovery remained outstanding despite multiple court orders, including the seventh status conference order, in which the court noted that the motion for sanctions remained pending. Nor is the order unclear and overbroad; it specifically addresses delayed evidence, including documents withheld as privileged for which defendants failed to seek a protective order and further bars defendants from offering this evidence in connection with an affirmative defense.


Steven E. Peiper
[email protected]

01/27/22       Tenth Ave., LLC v. Aspen Am. Ins. Co.
Appellate Division, First Department
Where Motive of Loss was Unresolved Between Vandalism or Theft, a Question of Fact Persisted on Application of Theft Exclusion

Plaintiff sustained loss to certain property that was included at a rental property it owned.  Upon receipt, Aspen denied and disclaimed coverage on the basis of an exclusion which removed coverage for “theft by any person to whom you [plaintiff] entrust the property.”  Aspen reasoned that the missing property was entrusted to the tenant and stolen by said tenant during the course of eviction proceedings.

In opposition, however, plaintiff raised the fact that the property sustained damage to railings and fixtures.  Thus, the loss was not occasioned due to theft, but rather vandalism which was a covered peril.  The court agreed that a question of fact existed and denied Aspen’s application for summary judgment. 

In addition, the Court also raised a more fundamental issue was to whether the property was still actually “entrusted” to the tenant due to the ongoing enforcement of eviction proceedings.  Recall, the exclusion required the property to have been entrusted at the time of the loss. 

01/27/22       Grocery Delivery E-Services USA, Inc. v. Flynn
Appellate Division, First Department
Loss Payee Under Insurance Policy had an Equitable Obligation to Provide Proceeds to the Party Bearing the Actual Loss of Property

Plaintiff was party to an agreement with nonparty, Mariner, that provided plaintiff with salmon for distribution.  In November of 2018, Mariner informed plaintiff that 32,000 units of salmon were contaminated with listeria, and thus had to be destroyed. As a result, plaintiff sustained a loss of $500,000. 

As part of the agreement, Mariner agreed to procure product recall insurance, and name plaintiff as an additional insured thereunder.  While Mariner procured the policy, it appears that plaintiff was never named as an additional insured thereon.    Nevertheless, defendant submitted a claim for the destroyed salmon and received payment from the carrier.

The problem started when Mariner kept the insurance money, and then when bankrupt.  Plaintiff, then, started this action seeking to recover the loss directly from defendant who was a principal in the bankrupt Mariner business concern.  Plaintiff alleges that defendant converted the money to his own use, and that plaintiff, rather than defendant, had a specific right to that very identifiable source of money. Interestingly, plaintiff’s claim is not premised on a contractual right, but rather an equitable lien it alleges it possess over any insurance recovery. 

In denying defendant’s motion to dismiss, the Court noted that Mariner had an obligation to turn over the payment to the plaintiff, as the party bearing the loss, and defendant had an obligation not to interfere with that transfer.  Because plaintiff alleges that defendant took the insurance funds and comingled it with his own accounts, defendant now may well bear personal liability for the funds. 


Michael J. Dischley

01/28/22       John P. Gaughan v. Censeo Health LLC
Appellate Division, Fourth Department
Defense Expert Failed to Account for Absence of Pain in Plaintiff’s Spine Prior to the Accident

In an appeal from an order of the Supreme Court, Erie County (Joseph R. Glownia, J.), entered November 19, 2020. The order granted the motion of plaintiff for partial summary judgment on the issue of liability.

On appeal from an order granting plaintiff's motion for partial summary judgment on liability, defendants contend that Supreme Court erred in granting the motion because plaintiff failed to meet his initial burden of establishing that he sustained a serious injury proximately caused by the subject motor vehicle accident (see generally Insurance Law § 5102 [d]) and, in any event, defendants raised an issue of fact in that regard. The Appellate Court rejected that contention and found that plaintiff met his initial burden of establishing that he sustained a serious injury under the permanent consequential limitation of use and significant limitation of use categories by submitting the affidavit of his expert, who provided evidence that the range of motion of plaintiff's spine was limited up to 50% when compared to a normal range of motion and that those limitations were permanent. In addition, the expert opined that the injuries to plaintiff's spine were caused by the motor vehicle accident inasmuch as a review of plaintiff's medical records revealed that plaintiff had made no similar complaints of pain regarding his spine prior to the accident.

In opposition, the Appellate Court found that defendants failed to raise an issue of fact through the affidavit of their expert physician, who found similar limitations to plaintiff's range of motion. Although the defense expert attributed plaintiff's injuries to age-related degeneration, the expert failed to account for the absence of pain in plaintiff's spine prior to the accident. Thus, the expert's opinion "was conclusory and therefore 'insufficient to establish that plaintiff's pain might be . . . unrelated to the accident' ".

As such, the Order so appealed from was unanimously affirmed without costs.

01/27/22       John P. Gaughan v. Censeo Health LLC
Appellate Division, First Department
Plaintiff Expert Failed to Explain why Preexisting Conditions were Ruled Out and Provided Only Conclusory Assertions that Injuries were Caused or Aggravated by the Subject Accident

On appeal from a Order, Supreme Court, Bronx County (Mary Ann Brigantti, J.), entered April 16, 2021, which, to the extent appealed from as limited by the briefs, granted defendants' motion for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the significant limitation of use or 90/180-day categories of Insurance Law § 5102(d).

Plaintiff alleges that he sustained injuries to his cervical spine, lumbar spine, and right shoulder in a motor vehicle accident that occurred in December 2016, as well as aggravation of preexisting degenerative conditions in those body parts. Defendants demonstrated prima facie that plaintiff did not sustain a causally related serious injury to those body parts by submitting evidence, including the affirmed reports of an orthopedic surgeon and neurologist, finding normal to near-normal range of motion in his cervical spine, lumbar spine, and bilateral shoulders. In addition, defendants submitted evidence that plaintiff had been treated for injuries to his neck, back, and shoulder following a motor vehicle accident in January 2014, and that MRIs taken after that accident showed that he had disc bulges in his lumbar and cervical spine and supraspinatus tendinosis in his left shoulder, thus shifting the burden to plaintiff to address the issue of causation. Defendants also relied on plaintiff's bill of particulars and deposition testimony to show that he returned to work as a maintenance worker within a few weeks of the accident which defeats his claim based on the 90/180-day category.

In opposition, the Appellate Court found that plaintiff failed to raise a triable issue of fact, as his medical experts failed to explain why the pre-existing conditions in plaintiff's spine and left shoulder were ruled out as the cause of his alleged limitations and they provided only conclusory assertions that his injuries were caused or aggravated by the subject accident. Since plaintiff acknowledged sustaining injuries to his neck and back in the prior accident and the 2014 MRIs showed pre-existing findings in his spine and left shoulder, "it was incumbent upon plaintiff to present proof addressing the asserted lack of causation". Since plaintiff failed to raise a triable issue of fact as to causation, his 90/180-day claim fails as well.

As such, the Order so appealed from was unanimously affirmed without costs.


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

[email protected]

01/28/22        Master Gorino’s Tae Kwon Do v. Philadelphia Indem. Ins. Co.
United States Court of Appeals, Second Circuit
Insured’s Claim Under Property Insurance Policy for Business Losses Arising out of COVID-19 Restrictions Properly Denied Because Such Was Not a “Direct Physical Loss” As Required Under the Policy

This case supplements the growing consensus that business interruption and the like flowing from governmental shutdowns due to the COVID-19 pandemic are not covered under a property insurance policy. Here, Master Gorino’s Tae Kwon Do (“Master Gorino’s”) made a claim with its commercial property insurer, Philadelphia Indemnity Insurance Company (“Philadelphia”). Master Gorino’s argued that the governmental shutdowns due to COVID-19 entitled it to coverage for lost business income, extra expenses incurred, and civil authority coverage.

As conditions precedent to attaining coverage for lost business income and extra expenses incurred as a result of suspended business operations, the Policy required Master Gorino’s to have been forced to suspend operations due to “direct physical loss of or damage to” the premises. To attain coverage for “civil authority,” the Policy required there to be “direct physical loss of or damage to” other property in the vicinity of the premises.

Master Gorino’s argument was, essentially, that the COVID-19 virus is “everywhere,” including throughout the premises. In an effort to sustain its claim for civil authority coverage, it also claimed that the virus was also present at another property within one mile of its own premises. In holding that these bald allegations were not enough to entitle Master Gorino’s to coverage under the policy, the Second Circuit reasoned that the term “direct physical loss” is not satisfied where, as here, there is no physical damage to the property. Stated differently, claims of this nature cannot be based on loss of possession or access to the premises alone; rather, there must be some form of physical damage.

Master Gorino’s further alleged that Philadelphia was in violation of New York’s deceptive trade practices act on the ground that it had represented to the public that policies that did not contain a virus exclusion provided more coverage than policies that did contain a virus exclusion. According to Master Gorino’s, Philadelphia subsequently refused to distinguish between those two types of policies once the pandemic hit. However, to recover for deceptive acts or practices under New York’s General Business Law, the plaintiff must prove that they were damaged thereby—a burden that Master Gorino’s failed to meet.


Brian D. Barnas

[email protected]

01/18/22       New Jersey Insurance Fair Conduct Act
New Jersey Passes Bad Faith Law for UM and UIM Coverage

On January 18, 2022, New Jersey Governor Phil Murphy signed the New Jersey Insurance Fair Conduct Act into law.  The Act takes effect immediately, and it establishes a private cause of action for claimants who are injured in a motor vehicle accident and are entitled to UM or UIM coverage.

The private cause of action created by the Act permits a claimant who was “unreasonably denied a claim for coverage or payment of benefits, or who experiences an unreasonable delay for coverage or payment of benefits” under a UM or UIM policy to file a civil action.  Such an action may be filed for: (1) an unreasonable delay or unreasonable denial of a claim for payment of benefits under an insurance policy; or (2) any violation of the New Jersey Unfair Claims Settlement Practices Act (P.L.1947, 39 c.379).  The Unfair Claims Settlement Practices Act contains prohibited practices, such as failing to acknowledge and act promptly on claim communications, failing to have and follow reasonable standards for the prompt investigation of claims, failing to pay claims without a reasonable investigation, and attempting to settle a claim for less than the amount a reasonable amount.

To prove a private cause of action under the Act, a claimant is not required to prove that the insurer’s actions were of such a frequency as to constitute a general business practice. 

Certain damages are available to the claimant if a violation is established, including actual damage caused by the violation, including trial verdicts up to three times the amount of coverage, pre and post judgment interest, attorneys’ fees, and litigation expenses.


Lee S. Siegel

[email protected]

01/11/22       Klass v. Liberty Mut. Ins. Co.
[Link is to oral argument, opinion only available on Westlaw, at this time]
Supreme Court of Connecticut
How Many Roofing Shingles?

The Connecticut Supreme Court took up the issue of when appraisal is appropriate in a first party property damage claim. The underlying dispute was a common one: the wind damaged the homeowner’s roof shingles, the carrier acknowledged a covered loss, and then they fought over how much of the roof needed to be replaced. Liberty offered to replace the rear slope of the roof where the missing shingles were located. The homeowner’s contractor provided an estimate for replacement of the entire roof.

When Liberty balked, the homeowner demanded appraisal. Liberty claimed that this was a coverage dispute and appraisal was inappropriate. The Court framed the issue: “The principal issue in this case is whether a dispute as to the extent of an insurer's replacement obligation under the matching statute [General Statutes § 38a-316e (a)] is a question properly relegated to the appraisal arbitral process or a question of coverage to be resolved by the court in the first instance before appraisal may proceed.”

The policy provided that a dispute as to “amount of loss” was to be resolved by a panel comprised of a disinterested appraiser selected by each party and an umpire selected by those appraisers, effectively an arbitration panel. Liberty argued that the dispute regarding the matching of the front and rear roof slopes was a question of coverage rather than an issue for appraisal. The homeowner argued in turn that the dispute involved the amount of loss not an entitlement to coverage.

The Supreme Court sided (pun intended) with the homeowner, finding that the scope of an insurer's replacement obligation under the matching statute is a question of the amount of loss to be resolved by the appraisal panel. The Supreme Court labored over the meaning of the statute, extra-textual evidence, legislative history, and case law from our neighbor to the west (that’s New York for the geographically challenged), among others, ultimately concluding that the number of shingles to be replaced is a question for an appraisal panel and not a question of contract interpretation for the courts.


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

01/24/22       Ohio Sec. Ins. Co. v. Power Clean
United States District Court for the Northern District of Illinois, Eastern Division
U.S. District Court Finds Duty to Defend where Underlying Claims Asserted Damage to Property Other than the Project Itself

This insurance coverage dispute arose from an underlying suit against Power Clean, Inc. (“Power Clean”) related to the cleaning and sealing of a sidewalk.

In the underlying lawsuit, Plote Construction Inc. (“Plote”) alleged that Power Clean breached a contract to clean and seal sidewalks by providing defective sealant materials and failing to properly apply sealant to the sidewalk.  As a result, Power Clean allegedly caused damage to the preexisting sidewalk and Plote was forced to hire another contractor to remove the sealer and reseal the sidewalk.

At the time of the project, Power Clean was insured under a CGL policy issued by Ohio Security Insurance Company (“Ohio”).  The Ohio policy provided that Ohio had the right and a duty to defend Power Clean against any suit arising from “property damage”.  Property damage is only covered under the Ohio policy if caused by an “occurrence”, or accident.  Under Illinois law, in the context of defective construction or maintenance suits, where the underlying suit alleges damage to the construction project itself, because of a defect, there is no coverage.  However, when the complaint alleges that a construction defect damaged something other than the project, or damaged materials not furnished by the insured, coverage exists.

Ohio sought a declaratory judgment that it had no duty to defend or indemnify its insured, Power Clean, in relation to the underlying action.  Power Clean counterclaimed for a declaration that Ohio owed it those duties.

The Court determined that Plote’s complaint alleged that Power Clean caused damage to something beyond its scope of work, not just to the construction project itself. The underlying complaint alleged that Power Clean agreed to clean and seal sidewalks and that Power Clean breached the contract by providing defective materials.  Most importantly, the complaint alleged that Power Clean caused damage to the preexisting sidewalk, meaning the construction defects damaged something other than the project. Therefore, the Court held that the underlying suit alleged an “occurrence” and triggered Ohio’s duty to defend.  Accordingly, with regard to the duty to defend, Power Clean’s summary judgment motion was granted and Ohio’s motion for judgment on the pleadings was denied.


BUCCI on “B”
Diane L. Bucci

[email protected]

01/31/22       Aluminum Trailer Co. v. Westchester Fire Ins. Co.
Seventh Circuit Court of Appeals
Is Stealing the Plaintiff’s Truck Design Trade Dress Infringement?

Insured, Aluminum Trailer Company (“ATC”), was sued by Sidi Spaces, LLC d/b/a BizBox (“BizBox”) alleging that ATC manufactured and sold a knock-off trailer using BizBox's design.  Westchester denied coverage for the claim on the grounds that BizBox did not allege an infringement of trade dress in the insured’s advertisement.  In the suit that followed, ATC argued that the complaint did plausibly state a claim for advertising injury.  

The policy covered “sums that the insured becomes legally obligated to pay as damages because of ‘personal and advertising injury, which in this case involved an injury arising out of “[i]nfringing upon another's ... trade dress ... in your ‘advertisement.’”

BizBox discovered this knock off product when ATC sold a trailer to one of BizBox’s customers, undercutting BizBox’s price.  The product had a logo with the Insured’s name. 

Pointing to BizBox's complaint in the underlying litigation, ATC argued copying the trucks could be a trade dress infringement and the logo could plausibly be an advertisement.  

The court disagreed, upholding the trial court’s finding that there were no allegations in the complaint to support a claim for trade dress infringement and asserted were breach of contract and tortious interference with existing and prospective contract relations.  Relying on National Union Fire Insurance Co. of Pittsburgh, Pennsylvania v. Mead Johnson & Co. LLC, the court held that advertising injury coverage was never triggered. 

In Mead Johnson, the insured was sued for consumer fraud, and argued that claims against it for consumer fraud should be deemed product disparagement claims because the consumer fraud traced back to the disparagement of a product.  The court disagreed, holding that the allegations were not of disparagement but instead consumer fraud, which is not a covered offense.  

As in National Union, the court here held that claims for breach of contract or tortious interference did not constitute claims of trade dress infringement.

02/01/22       North Carolina Farm Bureau Mutual Insurance Company, Inc. v. Caron Kerby, et al
Court of Appeals of North Carolina
Sexual molestation is not Covered Under Invasion of Privacy Offense  

Young Arlene attended Caron Kerby’s daycare center.  Robert, Caron’s brother, owned all or owned part of the property/daycare and lived on the property as well.   

Arlene’s mother, Cindy, learned that Caron’s brother, Robert Kerby, had been sexually assaulting Arlene for years while at daycare and/or in his attached living space.  Subsequently, Robert was charged with numerous sex crimes and pled guilty to some of them.

Arlene and Cindy brought suit against the Caron, Robert and the daycare facility, arguing that the center should have known of Robert’s pedophiliac tendencies and had Caron warned Cindy, Arlene would never have been molested.  However, perhaps to counter the position that the acts were intentional, Arlene and Cindy alleged that Robert had a disease, pedophilia, that was an uncontrollable condition and mental illness that rendered him incapable of and/or impaired his abilities to resist prurient impulses, sexual urges, or behaviors involving sexual activity with a prepubescent child or children. Arlene and Cindy

The court upheld the trial court’s dismissal of the negligence count because the complaint did not allege an accident or occurrence as necessary to trigger coverage.  Under Coverage A, the occurrence analysis, according to the court, has been held to be an act unintended and unexpected by the Insured, which the court held was not pled by the claimants.   It held that North Carolina Farm Bureau Mutual, did not have a duty to defend or indemnify the Caron entities or its proprietors, Robert, and Caron under Coverage A because sexual assault was not an occurrence. 

Allegedly, Robert also videotaped Arlene and published it on the internet. Under Coverage B, the Plaintiffs pled two causes of action for invasion of privacy, one for offensive intrusion and the other for appropriation of name and likeness.  Invasion of privacy is an offense generally covered under Coverage B offense of “oral or written publication, in any manner, of material that violates a person’s right of privacy. 

Under the offensive intrusion count, there was no question that Arlene’s claims satisfied the right to privacy offense.   However, Arlene and Cindy alleged that that the videotaping and publication were intentional or with reckless indifference and with knowledge of its falsity.  You can see where this is going.  Those allegations triggered the knowledge of falsity exclusions in Coverage B, as did the appropriation count.  In the end, the court held that the insurer was not obligated to defend a claim of intention violations of privacy in a sexual assault case.  Because the insurer did not have an obligation to defend, it could have no duty to indemnify because the duty to defend is broader than the duty to indemnify.


Ryan P. Maxwell
[email protected]

Legislative List
02/01/22       Update on CIDA Chapter Amendments
New York State Legislature
Long Awaited Chapter Amendments Pass Senate, Progress Through Assembly

TO RECAP: On December 31, 2021, the new “Comprehensive Insurance Disclosure Act” (“CIDA”) set New York’s defense bar and insurance industry ablaze, after it was signed into law by New York Governor, Kathy Hochul. (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. In a previous column, I wrote about CIDA extensively as the law exists today (here), and we have also produced a helpful summary of the necessary disclosures (here).

Governor Hochul signed the bill after an agreement was reached to amend the law following significant pushback on its passage. Those long-awaited chapter amendments were recently introduced, providing some concrete insight into what the final version of CIDA may look like in the near future.

The bill passed the Senate last week (Bill No. S7882), one vote short of being unanimous. The Assembly Judiciary Committee, by a vote of 21-0, reported the amendments out of Committee on February 1, 2022 (Bill No. A8852). Although the bill was not voted upon yesterday, a session day has been scheduled for today and we will monitor any progress.

For convenience, the language from these proposed chapter amendments is available here. Once again, here is our summary of the provisions for you:

  • Dual certifications would still be required from both defense counsel and the insured-defendant.

  • The disclosure requirement would only apply to lawsuits files after 12/31/21 effective date, and not retroactively to pending cases.

  • Disclosures of policies or declarations pages would be required within 90 days after answer is filed, rather than 60 days. Declarations pages may suffice if agreed to by plaintiff, but plaintiff would have option to later request the policies.

  • Disclosure would no longer require the application to be included.

  • Disclosure of contact information for person adjusting the claim would still be required, but only name and email address.

  • TPAs would no longer be required to disclose the name of the person to whom they are reporting.

  • Disclosure would require provision of the total limits available under the policy after accounting for erosion/offsets.

  • The amendments eliminate disclosure of lawsuits that may erode the policy and attorney contact information from such lawsuits.

  • The amendments would eliminate attorney fee disclosure that may have eroded the policy limits.

  • Instead of a broad “ongoing obligation” to ensure disclosures remain accurate and complete, defendants must make reasonable efforts at the time of the filing of the note of issue, entering into negotiations, or mediation to ensure that information is accurate and complete.

  • PIP lawsuits would be expressly excluded.


01/25/22       Bill Permitting Policy Term of Less Than One Year
New York State Legislature
Chapter Amendments Clarify Permitted Issuance of a Policy Term of Less Than One Year where Requested by an Insured

Both the Assembly and Senate passed chapter amendments to Chapter 679 of the Laws of 2021 (Bill Nos. A08698 and S7768) that would permit a policy term of less than one year where an insured requests such a policy from an insurer offering such a policy.

According to the Sponsor Memorandum,

“The purpose of this bill is to make clarifying changes to Chapter 679 of the Laws of 2021 to allow for liability insurance policies of less than one year, provided that the insurer also offers the insured the option of purchasing a policy with a term of one year and adheres to other requirements to ensure that such policy is actuarially sound and that the insured is appropriately notified.”

In justifying this change to Ins. Law §3426,

“Insurance Law Section 3426 was enacted in the 1986 to address a crisis in the commercial liability insurance market. All types of businesses and public entities were having difficulty finding affordable liability insurance.


Section 3426(d) (2) prohibits insurers from issuing a policy with a term of Less than one year. While this requirement was well intended 34 years ago, today it is hurting small businesses by denying them the ability to obtain coverage that meets their unique and changing needs. Many small businesses operate in a very different manner today and do not want or need a one-year policy. The nature of work is changing and in today's "gig" economy, all different types of businesses engage in part-time, temporary, or freelance work, so they do not need continuous coverage for a whole year. They need insurance for when they are engaged in a job, which may be for few days, a few weeks, or even a few hours. Unfortunately, businesses cannot get this type of ‘on-demand’ insurance for shorter terms in New York. New York is the only state that prohibits short-term insurance policies. This means businesses will either forgo obtaining insurance or will have to pay more for insurance they don't need.”


The text of these chapter amendments adds language to the new Ins. Law §3426(E) as passed this past year which clarifies that although an insurer may offer a liability insurance policy with a term of less than one year, such an insurer must also offer the insured the option of purchasing a policy with a term of one year, the policy is written on an occurrence basis, and the policy must be written on a defense cost outside limits basis.

These chapter amendments also provide a number of other specifications and conditions:

  • that the insurer may extend the policy provided:

    • that the coverage remains in effect at the same terms and conditions.

    • the rate accords with the rates filed with DFS at the policy's inception; and

    • the policy extension does not result in the policy period exceeding 11 months in total;

  • the policy has no annual aggregate liability limit but may have aggregate limits for the term of the policy;

  • the policy does not provide medical malpractice coverage or liability insurance as required by Articles 6, 8, or 44-B of the Vehicle and Traffic Law or under any other financial responsibility law, or public entity insurance;

  • the policy provides for a term of at least one month;

  • the policy does not contain a clause limiting the timely filing of a claim;

  • the policy provides for a return of premium on a pro-rata basis if the insured cancels or otherwise terminates the policy before the policy's expiration; and

  • the insurer provides a written disclosure to the insured that explains that a policy so issued may be more expensive than a policy with a term of one year.


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


01/10/22       Prime Property & Casualty Insurance Inc. v. Elantra Logistics Inc., et al
United States District Court, Eastern District of New York
The Court Will Not Entertain Claims Based on the Happening of Uncertain Future Events

Plaintiff seeks declaratory judgment declaratory judgment against multiple parties connected to the accident, including TQ Logistics, Penske Truck Leasing, and Raymond Roemer, as well as additional unnamed insurers, to declare its rights and obligations under its own insurance policy. TQ Logistics, Penske Truck Leasing, and Raymond Roemer (the “Tractor Defendants”) moved to dismiss the complaint for lack of subject matter jurisdiction. The subject accident involved three vehicles; a Freightliner Box Truck operated by Jose Calderon, registered to JSG Transport, LLC, and leased to Elantra Logistics, Inc., a 2009 Toyota Sienna van driven by and registered to Jenchi Ku whose passenger was Pai Ling Chen, and the 2014 Freightliner tractor operated by Raymond Roemer, registered to Penske Truck Leasing Co., to which TQ Logistics “provided trucking services”. At the time, the plaintiff provided commercial motor vehicle insurance for Elantra. On July 7, 2020, the claim administrator for one of the Tractor defendants, TQ Logistics, issued a subrogation demand to the plaintiff, advising that it considered the plaintiff’s insured, Elantra, liable, plaintiff denied this claim. On October 7, 2020, Ku, sued two of the Tractor defendants―Raymond Roemer and Penske Truck Leasing―as well Jose Calderon and JSG Transport in New York Supreme Court on December 30, 2020, Ku, Roemer, and Penske agreed to a stipulation of discontinuance, and Ku filed an amended complaint that raised claims only against Jose Calderon and JSG Transport. On February 5, 2021, the plaintiff filed this action, seeking declaratory judgment against the named defendants, as well as additional unnamed insurers whose policies “may” cover the accident. The Tractor defendants made attempts to educate plaintiff that they were not interested parties and requested that the claims against them be withdrawn, plaintiff agreed to withdraw the claims only if the Tractor Defendants agreed to be bound by any judgment entered in the case. The Tractor Defendants did not agree to that request.

The Tractor Defendants argued that there is no case or controversy between them and the plaintiff because they are not party to Ku’s personal injury suit―they were dismissed from the action before the plaintiff filed its declaratory action. They do not claim an injury in connection with the accident or have any reason “to participate in this action or be forced to be bound by its results.” The plaintiff acknowledged that the defendants are not part of the lawsuit that forms the basis for this action but maintained that the possibility of future litigation establishes subject matter jurisdiction. The plaintiff argued that the defendants were named in the police report, that one of the defendants’ claim administrators issued a subrogation demand, that the dismissal of the underlying lawsuit was without prejudice, and that other parties involved in the accident may yet sue the defendants or seek contribution.

The Court agreed with the Tractor Defendants, while acknowledging that insurance coverage litigation “often involves an insurer seeking a coverage declaration based on some future, contingent event,” the court must consider whether a contingency is particularly likely to occurred for subject matter jurisdiction to exist in a declaratory judgment action. Scottsdale Ins. Co. v. Jian Li Structure, Inc., No. 18- CV-1744, 2020 WL 5622201, at *5 (E.D.N.Y. Aug. 28, 2020). The Court held that, because the Tractor Defendants are not parties to the underlying litigation, and that there is no particular likelihood that the plaintiff will have a justiciable claim against them, the claims against them in this action must be dismissed. The Court further held that while it may exhibit its own discretion to entertain this matter doing so would not serve a useful purpose in clarifying or settling legal issues involved in the action.


Patricia A. Rauh

No noteworthy life insurance and/or ERISA cases this week.  Check back next time!


Scott D. Storm

[email protected]

01/12/22       DeAngelis v. Encompass Home and Auto Ins. Co.
U.S. District Court, Eastern District of Pennsylvania
Unhappy With an Appraisal, Insureds Sue the Insurer’s Appraiser Whose Motion to Dismiss is Granted Seeking Dismissal of the Negligence, Intentional Misconduct, and Third-Party Beneficiary Claims but Denied as to a Tortious Interference with Contract Claim

The plaintiff’s home was damaged in a windstorm.  The dispute over the amount of damages was submitted to appraisal.  The Plaintiffs, dissatisfied with the result, initiated this action against their insurer Encompass and the appraiser it appointed, Hoffman, alleging that "Hoffman refused to properly appraise the claim in an unbiased and neutral manner" pursuant to the terms and conditions of the Policy.  The Complaint asserts claims against Encompass for breach of contract and bad faith pursuant to 42 Pa. Cons. Stat. Ann § 8371, and four claims against Hoffman.

Hoffman filed this Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6).  The court granted to motion dismissing all of the causes of action except tortious interference with a contract finding that it was too early in the proceeding to dismiss this cause of action. 

Legal Standard:

When considering a motion to dismiss pursuant to Rule 12(b)(6), we typically "consider only the complaint, exhibits attached to the complaint, and matters of public record."  We take the factual allegations of the complaint as true and draw all reasonable inferences in favor of the plaintiffs.  The complaint must contain "sufficient factual matter to show that the claim is facially plausible, thus enabling the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."  In the end, we will grant a motion to dismiss brought pursuant to Rule 12(b)(6) if the factual allegations in the complaint are not sufficient "to raise a right to relief above the speculative level." 

Negligence:  Count III asserts a negligence claim, alleging that Hoffman breached a duty to maintain impartiality during the appraisal process "by improperly accepting direction from Encompass as to the scope and limits of the appraisal."  Hoffman argues that he has no duty to Plaintiffs that could give rise to a negligence claim.

In Pennsylvania, the elements of a negligence claim are: 1) a duty owed to the plaintiff by the defendant; 2) a breach of that duty; 3) a causal connection between the breach and the resulting injury; and 4) actual loss or damages. 

The Pennsylvania Supreme Court has not addressed the question of whether an appraiser hired by an insurer owes a duty of care to the insured.  The court looked to decisions of other state supreme courts finding that the majority of state supreme courts had concluded that an insured cannot bring a negligence claim against an independent insurance adjuster because an independent insurance adjuster owes the insured no duty of care.

Courts have offered "two rationales" for the absence of such a duty. First, courts note that insureds may recover for an adjuster's torts by bringing breach of contract and bad faith claims against their insurers, and that imposing a duty on the appraiser as well "would allow for potential double recovery from both insurer and adjuster for the same conduct." Second, "imposing a duty on the adjuster to the insured could create an irreconcilable conflict between such duty and the adjuster's contractual duty to follow the instruction of its client, the insurer."  Both rationales are consistent with existing Pennsylvania law, which permits insureds to sue their insurers for the actions of their insurers' agents and recognizes that "independent insurance adjusters owe a duty of performance to their principals, the insurance companies".

The court concluded that Plaintiffs cannot state a negligence claim upon which relief can be granted against Hoffman. Pennsylvania would not recognize a duty owed to an insured by the insurance company's adjuster or appraiser. This conclusion is particularly appropriate in the instant case, where it appears that Hoffman was Encompass's chosen appraiser pursuant to the Appraisal Provision in the Policy; Plaintiffs were permitted to choose their own competing appraiser; and, if the two appraisers disagreed, they were to submit their differences to a jointly chosen umpire. Under these circumstances, it seems plain that the initial appraisers that Plaintiffs and Encompass chose under this provision only owed a duty to the party who selected them. Indeed, to conclude otherwise would open the door to permitting both Plaintiffs and Encompass to sue the other's chosen appraiser in tort rather than proceed with the contractual agreement to have a jointly chosen umpire resolve any disagreement between the appraisers.  Pennsylvania law does not recognize a duty owed by an insurer's independent appraiser to the insured.

Intentional Misconduct:  Count IV asserts an "intentional misconduct" claim, alleging that Hoffman "breached the covenant of good faith and fair dealing" by intentionally and recklessly "depriving Plaintiffs of benefits owed to them under the Policy" by taking direction from Encompass throughout the appraisal process.  In his Motion, Hoffman construes this claim as an attempt to assert a common law bad faith claim, but Plaintiffs specifically disavow that the claim in this Count is either a bad faith claim or a breach of contract claim. Rather, Plaintiffs assert that they "do not allege a contractual agreement between Hoffman and Plaintiffs" and that their claim in Count IV "sounds only in the intentional misconduct of Hoffman and not a breach of contract or bad faith claim."  We are at a loss as to what claim Plaintiffs are attempting to pursue when they assert a breach of the covenant of good faith and fair dealing, which is a contractual claim under Pennsylvania law, but then expressly deny that their claim is contractual. Under Pennsylvania law, a breach of the covenant of good faith is a breach of contract action.  Plaintiffs cite no legal authority for their purported non-contractual intentional misconduct claim based on a breach of the duty of good faith and fair dealing. We are unable to discern a cognizable claim and grant Hoffman's Motion on Count IV.

Tortious Interference with Contract:  Count V of the Complaint asserts a claim of tortious interference with contract alleging that Hoffman interfered with Plaintiffs' contract with Encompass by failing to act as an independent and unbiased appraiser.  Hoffman has moved to dismiss this claim, arguing that Plaintiffs have failed to allege facts that support the essential elements of a tortious interference claim.

To state a claim for tortious interference with contract under Pennsylvania law, a plaintiff must allege:

(1) the existence of a contractual, or prospective contractual relation between the complainant and a third party;

(2) purposeful action on the part of the defendant, specifically intended to harm the existing relation, or to prevent a prospective relation from occurring;

(3) the absence of privilege or justification on the part of the defendant; and

(4) the occasioning of actual legal damage as a result of the defendant's conduct.

Plaintiffs allege that, in accordance with the terms and conditions of the Policy, Hoffman was supposed to be acting as an independent and unbiased appraiser.  Instead, Hoffman fail to maintain impartiality, improperly accepted direction from Encompass and unnecessarily limited the scope of the appraisal, thereby interfering with the fulfillment of the terms of the Policy.

Hoffman argues that these allegations are insufficient to plausibly allege both that he acted purposefully to harm the relationship between Plaintiffs and Encompass, and that he acted in the absence of privilege or justification.  Hoffman relies on a case which concluded that "the simple act of a claims adjuster investigating and opining upon an insurance claim at the request of an insurance company cannot, without further well-pleaded facts rise to the level of tortious interference with a contract."  Such "conduct does not entail purposeful action on the part of the defendant, specifically intended to harm the existing relation, undertaken in the absence of privilege or justification."

Plaintiffs argue that unlike the case Hoffman relies on, the Complaint in the instant case does not allege that Hoffman merely investigated and opined upon Plaintiffs' insurance claim and reached an incorrect result.  Rather, as noted above, the Complaint alleges that Hoffman had an obligation, pursuant to the Appraisal Provision in the Policy, to act as a "disinterested" appraiser and he instead accepted direction from Encompass and was partial to results that favored Encompass, "refusing to properly appraise the claim in an unbiased and neutral manner."  The Complaint also alleges that Hoffman acted "willfully and unjustifiably" insofar as he restricted the rights of Plaintiffs by taking direction from Encompass throughout the appraisal process."

Under these circumstances, although the Complaint is short on details, we believe the allegations are sufficient to state a cognizable claim for tortious interference at this early stage of the proceedings. We therefore deny Hoffman's Motion insofar as it seeks dismissal of the tortious interference with contract claim in Count V.

Third-Party Beneficiary:  Count VI asserts a "third party beneficiary" claim against Hoffman, alleging that Plaintiffs are third-party beneficiaries to a contract between Hoffman and Encompass and that Hoffman breached his duty under that contract to provide an impartial appraisal.

Under Pennsylvania law, a party becomes a third-party beneficiary to a contract if both parties to the contract express an intention to benefit the third party in the contract itself. Where there is no express intention to benefit a third party, the third party may nevertheless be an implied third-party beneficiary where (1) the circumstances are so compelling that recognition of the beneficiary's right is appropriate to effectuate the intention of the parties, and (2) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance. 

The Complaint includes no factual allegations that give rise to a reasonable inference that Encompass and Hoffman, in contracting for Hoffman to provide an appraisal, intended for Plaintiffs to be the beneficiary of that agreement. Indeed, the Complaint does not allege—and Plaintiffs do not argue—that there was an express intention to benefit them, and Plaintiffs only argue that they "would have benefited from" Hoffman's performance of a fair appraisal, without arguing that Hoffman and Encompass actually intended them to benefit from Hoffman's appraisal.  Finally, there is simply no compelling reason to deem Plaintiffs to be intended third-party beneficiaries of the alleged contract between Encompass and Hoffman, when Plaintiffs can bring (and indeed, have brought) a breach of contract action against Encompass for any denial of coverage based on a flawed or partial appraisal. For all of these reasons, we grant Hoffman's Motion insofar as it seeks dismissal of the third-party beneficiary claim in Count VI of the Complaint.

01/27/22       Tenth Ave., LLC, v. Aspen Am. Ins. Co.
Appellate Division, First Department
Question of Fact Whether Exclusion in a Commercial Property Policy for "Theft by any Person to Whom You Entrust the Property for Any Purpose" Applied to Damage Caused by Tenant

Denied defendant's motion for summary judgment.  Defendant provided a commercial property insurance policy to plaintiff which excluded coverage for "theft by any person to whom you entrust the property for any purpose." Plaintiff suffered losses as a result of conduct by its tenant, to whom the property had been entrusted. However, defendant failed to establish that plaintiff's loss resulted entirely from theft by plaintiff's tenant, and therefore could be subject to the policy exclusion.  The documentary evidence and testimony relied upon by defendant, which described damage and destruction of plaintiff's property as well as the severing of items such as railings and fixtures prior to the removal of property, raises issues of fact as to whether any of the losses resulted from vandalism, which defendant concedes would be a covered loss.  Moreover, there is also a question of fact as to whether the property was still entrusted to the plaintiff's tenant at the time of the damage to the property since a judgment of eviction against him had already been entered at that time.


Nicholas J. Heintzman

01/27/22       Rainbow USA Inc. v. Zurich AM. Ins. Co.
Supreme Court, Kings County
Insured Fails to get Coverage for Damage Imposed by COVID-19 Shutdowns, as Insured is Unable to Show that it Suffered Direct Physical Loss

Plaintiff Rainbow USA Inc., a woman’s apparel retailer, purchased insurance coverage from Defendant Zurich American Insurance Company. Plaintiff filed an insured claim with the Defendant and commenced this declaratory judgment action which sought coverage for damages resulting from government-imposed covid-19 shutdowns more than five million dollars. The policy in question provided insurance for losses suffered due to business interruption “as a result of direct physical loss or damage to the insured caused by a peril not otherwise excluded,” and the policy also insured for “all risk of direct physical loss, damage, or destruction to property described herein occurring during the term of insurance, except as hereinafter excluded.” Defendant moved to dismiss the lawsuit on the grounds that Plaintiff did not suffer any “direct physical loss” necessary to trigger business interruption coverage.

The Plaintiff argued that the “direct physical loss, damage, or destruction to property” requirement is an ambiguous phrase such that it was unclear whether the words ‘direct’ and ‘physical’ modified the terms ‘loss’ or ‘damage’ or ‘destruction’ or whether coverage could include ‘damage’ even without any ‘physical loss.’ However, the Court held that ‘direct physical loss’ applied in addition to ‘damage’ and ‘destruction’ as well. Therefore, the policy also required physical damage or physical destruction.

Plaintiff next argued that even if the policy required physical damage or physical destruction, Plaintiff sufficiently plead that such physical damage or physical destruction occurred, as Plaintiff’s complaint alleged that damage from COVID-19 “both surfaces found within the insureds and surrounding premises as well as in the breathable air circulating within the insureds and surrounding premises.” However, Plaintiff’s complaint failed to allege that the virus itself caused any physical damage. The Court distinguished Plaintiff’s complaint from the complaint in JDS Construction Group LLC v. Continental Casualty Insurance Company, (Case Number 2020 CH 5678 [Circuit Court of Cook County, Chancery Division, Illinois 2021]). In JDS, the court denied an insurer’s motion to dismiss an insured’s complaint. That complaint alleged that the COVID-19 virus may have caused physical damage since the virus droplets could “land on, attach, and adhere to surfaces and objects.” In that sense, COVID-19 structurally changes the property and its surface “by becoming a part of that surface,” and it “rendered a previously safe, inert surface unsafe.” Since that complaint contained this detailed language, there was enough for the court to determine that there was a possible claim for direct physical damage. But Plaintiff’s complaint here, by comparison, failed to present any allegation that the virus itself caused any physical damage. Finally, the Court surveyed New York caselaw, where it found “unanimity that without any direct physical loss (to the insured property itself) there could be no claims for business interruption insurance due to government shutdowns in the wake of COVID-19.” Thus, the Court dismiss Plaintiff’s complaint.

11/10/21       450 Grand Avenue Realty LLC v. Technology Insurance Company, Inc.
Supreme Court, New York County
Insurer Successfully Dismisses Insured’s Complaint where Insured Failed to Establish that it Suffered a Financial Hardship as a result of COVID-19

Defendant, Technology Insurance Company, insured a premises owned by Plaintiff in Brooklyn, NY. The policy term was March 8, 2020 – March 8, 2021, and it insured Plaintiff against the risk of loss by fire. On June 11, 2020, Plaintiff’s premises suffered fire loss and damage. Defendant denied Plaintiff’s claim under the policy on June 17, 2020. Plaintiff commenced this action and sought coverage for the loss under the policy. Defendant moved, pre-answer, to dismiss the complaint.

Defendant denied coverage because on March 24, 2020, Defendant issued notice of cancellation of the policy, effective April 26, 2020. Plaintiff alleged that the cancellation was invalid because, under New York Executive Order No. 202.13, a moratorium was imposed on insurers cancelling property/casualty policies for sixty days for policy holders facing financial hardship, caused by the COVID-19 pandemic, and rendered unable to pay insurance premiums. Defendant argued that its cancellation was valid, regardless of the moratorium, because the basis for its cancellation was due to hazardous conditions on Plaintiff’s premises and the policy was cancelled before the moratorium. Plaintiff argued that the question of whether it suffered financial hardship such that the moratorium applied to its insurance policy should be addressed during discovery. Since the documentary evidence here conclusively established that Defendant cancelled the policy solely because of the hazardous condition on Plaintiff’s premises, the Court granted Defendant’s motion.


Katherine A. Fleming

[email protected]

01/20/22       Omega Protein, Inc. v. Evanston Insurance Company
Supreme Court of Mississippi
Coverage for Injuries Sustained from an Explosion at a Plant Based on Ambiguous Pollution Exclusion

This case involved an explosion at the Omega Protein Plant in Moss Point, Mississippi that killed one man and seriously injured several others. Omega had a master service contract with Accu-fab and Construction, Inc. to perform welding and other fabrication work at the Moss Point facility. Under the contract, Acc-fab was required to have commercial general liability insurance that named Omega as an additional insured. Accu-fab purchased a $1 million primary policy issued by Colony Insurance Company and, on top of that, a $5 million excess policy issued by Evanston Insurance Company. Accu-fab was to perform work on a large metal storage tank used for the temporary storage of stickwater, a liquid composed of water, fish oil, and fish solids. The explosion occurred when the workers were welding and grinding on the stickwater tank. The explosion was caused by the ignition of explosive gases inside the stickwater tank.  Both Colony and Evanston declined coverage based on substantially similar pollution exclusions in their policies. Multiple lawsuits were filed against Omega. Colony filed a declaratory judgment action, seeking a declaration that it did not cover bodily injuries from the Moss Point facility explosion. Evanston intervened seeking a declaration of no coverage for the same injuries. After Colony settled one of the underlying personal injury cases for the $1 million limit under its policy, Omega looked to Evanston for coverage. The trial court granted Evanston’s motion for summary judgment, finding the pollution exclusion in the insurance contract barred coverage. Omega appealed.

The Evanston pollution exclusion in the case read, in relevant part:

This policy shall not apply:

1. To “Ultimate Net Loss”:

a. arising out of or contributed to in any way by the actual, alleged or threatened discharge, dispersal, release, migration, escape, or seepage of pollutants. . .. As used in this exclusion, pollutants mean any solid, liquid, gaseous, or thermal irritant or contaminant including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. Waste includes material, to be recycled, reconditioned, reclaimed, or disposed of.

Limitations or exclusions on coverage must be construed in favor of the insured and against the insurer, and ambiguous language in a contract must be resolved in favor of the non-drafting party. Ambiguities exist when a policy be logically be interpreted in two or more ways and one of those ways would provide for coverage. The question under Mississippi law is what a reasonable person in the insured’s position would have understood the terms to mean.

The definition of “pollutants” under the policy included “irritant or contaminant,” but the pollution exclusion did not define “irritant or contaminant.” The stickwater in the tank produced methanethiol, hydrogen sulfide, and methane–all three of which are extremely flammable and are produced by the decomposition of organic matter. Although the CDC describes hydrogen sulfide and methanethiol as irritants, Omega argued they couldn’t be pollutants or irritants because they are found naturally and were properly contained within the tank, not contacting, contaminating, or irritating anything. Evanston argued the gasses emitted from the tank fit within the pollution exclusion language. A substance can be an irritant or contaminant by its very nature, no matter how or where it contained, even if it is not in contact with anything. On the other hand, a substance is not necessarily an irritant or contaminant unless it comes into contact with something and is irritating or contaminating it. The court used the example of crude oil sitting inside a tanker but not in contact with anything. Since reasonable minds could differ as to the interpretation of the pollution exclusion, it was ambiguous and had to be construed in favor of coverage.


Heather Sanderson

[email protected]

01/28/22       IT Haven Inc. v. Certain Underwriters at Lloyd’s, London, 2022 ONCA 71
The Ontario Court of Appeal
A Liability Insurer may not Rely Upon Extrinsic Evidence that is Central to the Material Facts in the Underlying Action to Prove a Material Misrepresentation Nullifying an Otherwise Covered Obligation to Defend that Action

Through the portal of a duty to defend application under a Tech E&O policy, this appeal dives into the world of mobile device gaming and the hugely popular Pokémon Go app.  For some, Pokémon Go needs no introduction. For others, a little background is in order.

Pokémon Go and its Brethren[1]

Pokémon Go is a 2016 augmented reality (AR) mobile game for iOS and Android devices that was developed and published by Niantic in collaboration with Nintendo and The Pokémon Company. Players download the app to their mobile devices that have GPS locate capability. The game uses the player’s actual surroundings to locate, capture, train, and battle virtual creatures, called Pokémon, all of which appear as if they are in the player's real-world location. The game is free-to-play; it uses a “freemium business model” combined with local advertising and supports in-app purchases for additional in-game items.

Pokémon Go was one of the most used and profitable mobile apps in 2016, having been downloaded more than 500 million times worldwide by the end of the year. It is credited with popularizing location-based, AR technology.  By May 2018, the game had over 147 million monthly active users and over a billion global downloads by early 2019. By 2020, the game had grossed more than US$6 billion in revenue. 

Niantic released two other, similar, AR based games:  Harry Potter Wizards Unite and Ingress. Both are based on the same business model.

Global ++

Soon after Pokémon Go was released and after the other two games were released, third party app stores began releasing cheat versions of the games.  One of them, called PokeGo++, developed by an entity called Global ++, allowed users to virtually teleport and walk anywhere in the world, using a virtual stick to move the player around without them having to leave their couches. To help find Pokémon, these players, or users, called spoofers, would use websites, such as Pokedex 100, to get the coordinates of the Pokémon and see their stats, instead of having to wander around their neighbourhood for hours on end.  In May 2019, PokeGo++ began charging users a monthly fee of US$5 at first, but it quickly increased to US$10. 

Global ++ ignored Niantic’s efforts to have these spoof apps taken down. Niantic then sued Global ++ and those behind it, including IT Haven Inc. and its principal, Ryan Hunt (aka ELLIOTROBOT), in the United States District Court, Northern District of California. 

Niantic claimed that Global ++ is an association of hackers that sold subscriptions for derivative, unauthorized versions of Niantic's Pokeman GO, Ingress and Harry Potter Wizards Unite games. Niantic further alleged that Hunt is the leader of the Global ++ hackers. The action claimed injunctive relief and damages, largely premised upon copyright violations.

Lloyds’ Denies a Defence to IT Haven Inc. and its Principal, Ryan Hunt

IT Haven Inc., incorporated September 1, 2016, and Ryan Hunt, the principal of IT Haven, are based in Ontario. On September 2, 2016, they applied for claims-made Tech E&O Liability coverage through a Lloyds’ MGA, Commercial Lines Premier Canada. In that application, they said that IT Haven:

  • was engaged in custom software development (10% of its services) and as computer consultants (25% of its services);

  • received 100% of its revenue in Canada;

  • did not provide services to the electronic games industry;

  • always used written contracts with its clients;

  • had not incorporated any software or product designed by others into its designs; and had written procedures to safeguard against the infringement of copyright or trademarks of others.

On the basis of the proposal, Lloyds’ issued claims-made Tech E&O Liability coverage for 12 months covering intellectual property infringement (amongst other things). The policy was renewed in September 2017 and September 2018.

IT Haven and Hunt tendered the California action to Lloyds and requested a defence. Lloyds stated that IT Haven Inc. and Ryan Hunt made various misrepresentations and provided wrong answers to questions in their application for the coverage. In view of those issues, Lloyds stated that it did not have an obligation to defend the California action.

IT Haven and Hunt filed this application to compel a defence.

In response to the denial and in support of their application for a defence, Hunt and IT Haven claim that the Global++ software was “generic”; it did not incorporate software designed by others, was designed exclusively for use on certain Apple iOS devices and was simply an “accessory”, which allowed a user to modify the GPS signal on their mobile device. Hunt claimed in an affidavit that “[t]here were hundreds of applications or industries that could potentially take advantage of the spoofing features offered by Global++.

The Trial Judgment

The judge that heard the duty to defend application followed the pleading rule and determined that the allegations mandate a defence. The Court refused to consider the extrinsic evidence of misrepresentation offered by Lloyds and ordered Lloyds to defend.

The Appeal

The Ontario Court of Appeal agreed with the application judge that Niantic’s claim falls within the Policy as it is a claim for the violation of Niantic’s copyright, committed in the performance of the “Insured’s Professional business”, which included the development and design of software.  However, the matter did not end there.

The core of Lloyds’ case was that the insureds had invalidated the coverage that was available to them on the face of the policy. The decision whether to suspend the Lloyds’ duty to defend the underlying action against its insured, pending the determination of the question of an alleged breach of condition of the policy, must be informed by certain considerations which, in turn, depend on the facts of each case. Relevant factors are whether the breach of condition or misrepresentation is contested and whether it is in serious dispute; whether it can it be dealt with summarily and expeditiously; whether there is a possibility of relief from forfeiture; whether there is a serious basis for estoppel;  the status of the underlying action and whether the trial of the breach of the condition could generate inconsistent findings of fact; and finally, the financial position of the insured all must be taken into account.

Lloyds argued that the extrinsic evidence of the alleged misrepresentation could be considered by the Court as it was peripheral to the issues in the California action. The Court of Appeal disagreed. Whether Hunt and IT Haven were involved in the electronic gaming industry in the US, and violated Niantic’s copyright while doing so, is the central issue in Niantic’s lawsuit. IT Haven and Hunt contend that their product was “agnostic” to its use in one industry or another and that they did not violate Niantic’s intellectual property.  Determining whether IT Haven made misrepresentations about its business or failed to correct its representations at the time of renewal, would therefore require a determination of some of the very issues at play in the Niantic action.

In this case, the insureds hotly contested the facts underpinning Lloyds’ argument. If this coverage action was allowed to proceed, it could result in inconsistent findings between the Ontario and California courts; it is unlikely that the California action would be held in abeyance while the coverage dispute unfolds.  There was no evidence as to IT Haven’s and Hunt’s financial position and therefore their ability to both appoint and instruct counsel in California and to repay the defence costs incurred by Lloyds if Lloyds proves the misrepresentation. In the absence of that information, the appeal was denied, and Lloyds was ordered to defend IT Haven and Hunt in the California action.  The door was left open for Lloyds to return to the Ontario Courts to prove its allegations of misrepresentation at the close of the underlying case.

Internet information indicates that Niantic, Global ++, IT Haven and Hunt have settled the underlying dispute. Part two to this dispute may be in the offing.


[1]              The section is premised upon multiple internet sites discussing the lawsuit between Niantic and Global ++ as well as Wikipedia.


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