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Coverage Pointers - Volume XXIII, No. 2

Volume XXIII, No. 2 (No. 594)
Friday, July 9, 2021
A Biweekly Electronic Newsletter

 

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

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

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

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

 

Dear Coverage Pointers Subscribers:

Do you have a situation?  We love situations. 

This issue carries the usual array of interesting cases, and insights from our editorial staff.  I offer an interesting case on the obligations to defend under an additional insured clause.  I’d draw your attention to the cover letters and the headlines a the bottom of this mail that identify the cases summarized in the attached issue of Coverage Pointers.

The Toronto Blue Jays have been playing their home games in Buffalo and my wife, Chris, and I have attended five or six of them.  Absolutely a blast.  A few baseball-related stories below, among our case summaries, including the origin of the “Texas Leaguer”.

Just released, the Syracuse Law Review Annual Survey of New York Law.  Once again, Ryan Maxwell and I have had the honor of being asked to scribe the Insurance Law chapter.  Reach out to Ryan ([email protected]) or to me, for a reprint.

 

 

National Foundation for Judicial Excellence:

Today, Friday, I am in Chicago attending the NFJE judicial symposium.  I have been involved with the NFJE for many years and I complete my term as Board Chair this evening.  If you don’t know about the NFJE, it is a 501(c)(3) organization, set up by the defense bar, to provide training and education to state court appellate judges.  The National Foundation for Judicial Excellence supports a strong, independent, responsive judiciary by providing officers of the courts with educational programs and other tools that enable them to perform at their highest level.  To read about this year’s Symposium, click here.  To contribute to this worthy endeavor, click here.  The NFJE is designed to counter-balance out the training provided to judges by the plaintiffs’ bar, through the Roscoe Pound Institute which was created by the American Association for Justice (formerly the American Trial Lawyers Association).

 

Too Late to Add – How Do We Know When Lawyers Have Reached an Agreement – in the Universe of Email:

In the Matter of Philadelphia Ins. Indem. Co. v Kendall, decided today, NY's First Department holds that an attorney hitting send on an email, intending to relay a settlement offer or acceptance, is sufficient alone to bind the parties.
The First Department has “jettison[ed] the requirement that a party or a lawyer retype their name in an email to show subscription,” recognizing that such “a needless formality [] does not reflect how law is commonly practiced today.”
When law meets the twenty-first century…

We now hold that this distinction between prepopulated and retyped signatures in emails reflects a needless formality that does not reflect how law is commonly practiced today. It is not the signoff that indicates whether the parties intended to reach a settlement via email, but rather the fact that the email was sent. Since 1999, New York State has joined other states in allowing, in most contexts, parties to accept electronic signatures in place of "wet ink" signatures. Section 304(2) of New York's Electronic Signatures and Records Act (ESRA) provides: "unless specifically provided otherwise by law, an electronic signature may be used by a person in lieu of a signature affixed by hand. The use of an electronic signature shall have the same validity and effect as the use of a signature affixed by hand." Moreover, the statutory definition of what constitutes an "electronic signature" is extremely broad under the ESRA, and includes any electronic sound, symbol, or process, attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the record" (State Technology Law § 302[a]). We find that if an attorney hits "send" with the intent of relaying a settlement offer or acceptance, and their email account is identified in some way as their own, then it is unnecessary for them to type their own signature. This rule avoids unnecessary delay caused by burden-shifting "swearing contests over whether an individual typed their name or it was generated automatically by their email account" (Princeton Indus. Prods., Inc. v Precision Metals Corp., 120 F Supp 3d 812, 820 [ND Ill 2015]).

 

Educational Opportunities, Past and Future:

I hope some of you had the opportunity to participate in our PLRB Claim Conference program on Thursday.  We had well over 350 in attendance discussing the differences and interrelationship between additional insured coverage and trade contract indemnity.  Fun stuff.

As to other upcoming CLEs, I was asked by the New York State Bar Association Committee on Continuing Legal Education to provide a program which we entitled:

 

What Every Trial Lawyer Needs To Know About Liability Insurance
August 18, 2021
12:00 noon – 1:15 PM EST

 

WhatEveryTrialLawyerNeedsToKnowAboutLiabilityIns_675

A trial lawyer, whether representing an injured party or a party charged with negligence, is regularly confronted with liability insurance coverage questions. Often, they arise when the lawyer or client receives and must evaluate an insurer-crafted coverage position letter, a partial or complete disclaimer or a “reservation of rights letter”. The attorney may also need to identify the proper insurer or insurers, in order to give appropriate notice and protect insurance assets.  This presentation is designed to provide a practical and empowering approach to liability insurance coverage issues, useful and appropriate for the trial lawyer.

Interested?  You need not be a lawyer to attend and CLE credit is awarded.  Click here for more information.

 

New York Coverage Protocol Training:

Another very popular program is one designed to remind, refresh or instruct claims professionals who handle New York insureds, claims and policies, on the special nuances (and traps) that are part of the New York coverage experience.  Does your staff need it? Here’s the way to find out.  Ask your staff these questions:

  1. Are you sending out reservation of rights letter in NY claims? 
  2. Do you know the “30-day” rule?
  3. Are you certain you know who gets copies of coverage position letters in New York?
  4. If the insured fails to respond to 10 letters seeking cooperation, can you successfully deny coverage for lack of cooperation?
  5. If the insured gives you notice of an accident, five years after it occurred, in violation of notice obligations in the policy, is that enough to sustain a late notice disclaimer?

If the answer to question “1” was “yes” or the answer to any of the remaining questions were “no”, sign up for NY Protocol training.

 

Newsletters:      

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

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

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

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

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

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

     

    ruMIRNAtions:

    I hope you all had a great Independence Day and are enjoying the heat. I am not. ☹ For someone who was born in a tropical country, I don’t do well when the thermostat heads north of 80 degrees. I always feel like I’m on the verge of heat stroke.

    Well, this is it—the first of two main times this year that employers are directing employees back to the office. Many companies have asked employees to transition from remote work back to in-person/in-office after the July 4th holiday; the other time is after Labor Day. Unfortunately, many workers are dreading the return of “face time” in the office. Regardless of the reason, employers must be cognizant of the fact that there has been a seismic shift in how people work and where they can work from.

    In this edition of Coverage Pointers, I discuss how inequity may exist in office-based employment and ways that we can make our workplaces more welcoming for all.

    Mirna
    Mirna M. Santiago

    [email protected]

 

Ghost Arrested:

 

Courier-Post
Camden, New Jersey
09 Jul 1921

Woman in Nightgown Abroad
in Cemetery at Night is Arrested

            A “ghost” seen walking among the tombstones in Harleigh Cemetery early today terrorized passersby, who notified the police.

            Policeman Norris Ellis and John Sheeran were detailed to make an investigation.

            Arriving at the cemetery, they found a woman in bar feet, with her hair down her back, and wearing a nightgown.  She had been inspecting the tombstones. 

            At police headquarters, she gave her name as Mary Hannah Stouse, 50 years old.  She said she lived in Berlin Cemetery. 

            Police believe the woman is demented. 

 

Peiper on Property and Potpourri:

It is not a sport, it’s a “pastime,” so sayeth our resident baseball hater, David Adams. 

It is an interesting observation and putting aside our preconceived bias for the grand old game, he might have a point.  With this in the back of my head, I walked down Main Street from our offices last Thursday night with my 11-year-old son.  He had long advised us that he had no interest in playing baseball as it was waaaay too boring. He also has little interest in golf saying, “all you do is stand around, hit a ball, and then stand around some more.” 

Readers of this space know, of course, he (not unlike most boys) is an action junky.  The constant motion of ice hockey, soccer and skiing is far more of an interest to him. Nevertheless, it was a beautiful night and we had nothing else better to do.  Thanks to a 6-run bottom of the first (including a grand slam) and a long homerun in the bottom of the second, interest remained fairly high for the first several innings.  His resolve began to waiver in the middle innings with more than one request about what inning we were in.  You’d have thought the giant scoreboard would have answered that question, but I am all too familiar with my son’s inability to answer the most basic questions through the power of personal observation. 

I explained to him that baseball, unlike almost any other sport, has no clock.  There is no time to run out.  There is no urgency to its pace.  That, in and of itself, is the beauty of the game.  It is a sport, no doubt.  Seeing a ball hurdle through the air for over 400 feet resolves that issue.  But it is also a pastime and being at the ballpark is a nostalgic revisit to those days where there was no time limit, no deadline, no rush.  No wonder 12-year-old me loved Don Mattingly so much.   

For 3 ½ hours last Thursday, my perpetually moving son recognized, if not began to appreciate, the gift of a baseball game.  He still will not sign up to play, but who knows, maybe we’ll be trying fishing next. 

Not much going on this week in our column.  We do review a fairly frivolous legal malpractice claim which was summarily booted by the Appellate Division. 

See you next time.

Steve
Steven E. Peiper

[email protected]

 

Lynching was Still a “Thing” a Hundred Years Ago:

Buffalo Courier
Buffalo, New York
09 Jul 1921

36 LYNCHINGS IN
U.S. DURING 1921

            Tuskegee, Ala., July 8.—There were thirty-six lynchings in the United States during the first six months of his year, twenty-four more than the number recorded during the same period in 1920, according to a report issued today by the department of records and research of Tuskegee institute.  Lynchings during the first half of this year included two white men and thirty-four negroes, two of the latter being women, the report said.  Eleven of those put to death were charged with rape. 

 

Wilewicz’ Wide-World of Coverage:

Dear Readers,

As promised in the last edition, I write to you, dearest readers, with the latest update on the crazy feline Lola. When we rescued her, she was the smallest, scarediest, most feral-seeming cat at our local SPCA. She would not let us near her, she hid at the back of her cage, and when the handler took her out, she ran into a corner. When we tried to pet her, she scratched each of us in turn. But, she had the biggest eyes, disproportionate to her little body. She looked like an anime cat. So, we took her home. Then, she promptly hid under the couch for two weeks. It was fairly anticlimactic for my kid to experience in bringing home her first pet (besides the dozens of fish we tried to keep alive over the years). These days, after years of forcibly cuddling her and thousands of bites and scratches later, she rules the house, often beats up the dog just for walking by, but she does allow us to hug her for short periods of time and she often sleeps on my daughter’s face at night.

Now, this week in the Wide World of Coverage, we bring you one of the most recent Covid-19 decisions, this time out of the Eighth Circuit Court of Appeals. In the attached edition, you will find fellow columnist Ryan Maxwell’s write up, a full version of which was featured in Law360. In short, as has been the case for most of the decisions involving insureds seeking coverage for alleged Covid-19 losses, the word “physical” was the determining factor. A “loss”, for coverage purposes, is a physical loss or physical damage to something. Impairment of function or decrease in value are not physical, and while Covid-19 has been annoying and inhibiting in many ways, it does not constitute physical alteration of property or even physical contamination. Thus it is not sufficient to trigger coverage as a matter of law.

Until next time,

Agnes
Agnes A. Wilewicz

[email protected]

 

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

 

The Galveston Daily News
Galveston, Texas
09 Jul 1921

ANNULMENT, THEN DIVORCE,
ANOTHER WEDDING; ALL’S WELL

Special to The News.

            Houston, Tex., July 8.—Suit for annulment of the marriage to her second husband in order that she might divorce her first was filed by a Houston woman in eightieth district court here today. She stated that some time ago she heard that her first husband had been killed in a railroad wreck in California.  She then married her second husband.  Recently she learned that her first husband was alive and had been seen.  She is asking that her second marriage be annulled in order that she may divorce her first husband and then remarry her present husband. 

 

Barnas on Bad Faith:

Hello again:

We are only two weeks away from DRI’s Insurance Coverage and Claims Institute at Swissôtel Chicago in Chicago, Illinois.  It is going to be a great program and a great opportunity to get out and see friends and colleagues in person again.  As an added benefit, approximately 50% of attendees are industry representatives, so it should be a great mix of people in attendance.  I encourage everyone to attend.  Chicago is one of my favorite places in the country!  If you have any questions about the program, please do not hesitate to get ahold of me.

I have an excellent decision from the Middle District of Florida in my column this week.  The court there rejects a bad faith setup attempt by plaintiff’s attorney and provides some interesting commentary about Florida bad faith law.  Check it out if you are so inclined.

That’s all for now. 

Brian
Brian D. Barnas

[email protected]

 

“Dead Husband in the Corner Pocket”:

 

The Logan Republican
Logan, Utah
09 Jul 1921

WIFE MURDERS MATE
WHO WANTS THE POOL TABLE?

            LOS ANGELES, Calif., July 8.—Mrs. Lulu Lee Johnston, 25 years old was arrested today on the charge of murdering her husband near their home in a suburb as the result of a quarrel which grew out of Johnston’s plan to install a pool table in the basement of their home.

            “He tried to turn our home into a bootlegger’s hangout and laughed at my pleas to keep the home sacred for our baby,” the police say Mrs. Johnston told them.

            “He listened, shrugged his shoulders, laughed and turned away when I fired a shot to teach him a lesson and make him think I committed suicide.  It made me furious.  Then I shot him.”

            Johnston was sitting in an automobile when he was shot.  In the automobile the policy say they found 12 bottles of bonded whiskey and an automatic pistol.

 

Off the Mark:

Dear Readers,

School is out and the kids have been enjoying summer vacation.  Two weeks ago I took the kids on another camping trip in the Westy, this time right here on Long Island.  Unfortunately, it was very hot and humid, which made sleeping a bit uncomfortable.  We also encountered a lot of ticks.  Despite the humidity and the dangerous bugs, we had a great time.  The best part was that we were only 45 minutes from home.  Not spending hours in traffic was a huge plus.

This edition of “Off the Mark” brings you a recent construction defect decision from the United States District Court for the Middle District of Georgia, Macon Division.  In Great West Cas. Co. v. Diversified Transp. Servs., LLC, the Court examined an insured’s notice to its carrier, finding that same was untimely.  Notably, Georgia does not require an insurer to demonstrate that it was prejudiced by an insured’s failure to provide timely notice.

Until next time …

Brian
Brian F. Mark

[email protected]

 

The Texas Leaguer:

Press and Sun-Bulletin
Binghamton, New York
09 Jul 1921

Former Binghamton and Great Bend Player
Figures in “Texas League” Story

            Most every fan knows a "Texas leaguer" when he sees it drop safely just back of the infield and out of reach of the outfielders, but few know the history of the expression.

            According to J. Doak Roberts, president of the Texas League, and a man of a lifetime's experience in professional baseball, the expression originated in the early nineties when a disgusted Syracuse pitcher gave vent to "Good Lord! Another of these Texas Leaguers!" when "Scrappy" Bill Joyce, third in a row of three Texas League gradates, dropped a short safety back of the Syracuse infield.

            The story antedates even the veteran Roberts, but this is his version of it: 

            "Emmet Rogers, former Binghamton and Great Bend player, 'Scrappy' Bill Joyce and Arthur Sunday, three famous players well remembered by all of the old-timers, were members of the 1889 team of the Houston Club, managed by John McCloskey. They were the first Texas Leaguers ever sold to higher company, netting the sum of $400 as a total purchase price.

            "The trio were finished stars, past masters in the art of bunting and placing hits. The story goes that in their first game in bigger company they faced O'Brien of Syracuse. Rogers placed a hit over the infield and the Syracuse defense moved in, expecting Sunday to bunt. Instead, Sunday chip-shooted the ball and it dropped just out of the reach of the shortstop who could not get it back in time.

            "Joyce, too, was expected to bunt, but he followed in Sunday's wake, dropping another short hit back of third, scoring Rogers.

            "It was then that O'Brien voiced his disgust and coined a new term for baseball.

 

Boron’s Benchmarks:

            On hiatus this week.

Eric
Eric T. Boron

[email protected]

 

Where Art Thou Romeo:

 

The Buffalo Times
Buffalo, New York
09 Jul 1921

Guard Wayward Girls Home
From Early Morning Romeo

            A revolver in the hands of a cool-headed woman said “No man’s land,” to a young man who attempted to enter the Ingleside Home of Wayward Girls, early this morning. 

            Mrs. Marian Aberdeen, superintendent of the institution, was awakened shortly after 2 o’clock by a noise outside a window of her room.  She seized a revolver from a bureau drawer and investigated.

            Crouching in the shadow of the building on a fire escape was a man who later gave the name of Charles Ohlenschlager, 27 years old, No. 273 Purdy Street.

            Mrs. Aberdeen ordered the would-be intruder to throw up his hands as she brought the gun into range of his body.  She then screamed for the police. 

            Lieut. George McDonald of the cold Spring station responded and climbed up the fire escape.  Scores of nightie-clad girls ran into Mrs. Aberdeen’s room to ascertain the trouble. 

            Ohlenschlager’s Romeo escapade was ended by Lieut. McDonald, who took him to the hoosegow, where he is locked up on a charge of second degree burglary. 

 

Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

The Blue Jays in Buffalo are the partial realization of a dream that was a long-time coming. When Sahlen Field (then Pilot Field, or affectionately known for eternity by those in the “know” as “North AmeriCare Park”) was constructed in 1988 by the City of Buffalo, it was designed and built with the hopes to earn a Major League expansion franchise to play within its friendly confines. Bob Rich Jr., of local Rich Products Corporation fame, sought approval from Major League Baseball’s expansion committee between 1988 and 1994. Unfortunately, approval was never given.

If you have the time and enjoy the rich history that America’s Favorite Pastime has to offer, take a dive today as I have through the “Sahlen Field” Wikipedia page. Although we may not get to keep the Jays, the City has and will continue to create memories at the old ballpark downtown. My personal favorite (aside from catching games with my wife and son this year), was producing from the radio studio of AM 1520 WWKB a near perfect game by knuckleballer R.A. Dickey in 2010. A review of the box score fails to do it justice, as outside of a leadoff single by Fernando Perez in the 1st, Dickey retired 27 batters in a row on the way to a 4-0 victory. There is nothing quite like listening to a minor league baseball game (broadcast by now Blue Jay play-by-play man, Ben Wagner) where outside of the players and coaches on the field, those involved in the radio broadcast may be the only people on the planet understanding how impeccable that moment was.

The Yankees had a triple-play in Buffalo this year, so I guess there is that as well…if you like that sort of thing (admittedly, I’ve been a Jays fan from birth).

This issue, I share new guidance from DFS on protecting regulated entities from ransomware attacks. Also, DFS announced a recent Consent Order against an insurer for failing to abide by Regulation 150’s prohibition on the use of educational attainment and employment status information in rating.

Until next time,

Ryan
Ryan P. Maxwell

[email protected]

 

The Babe!:

Green Bay Press-Gazette
Green Bay, Wisconsin
09 Jul 1921

RUTHERMOMETER

Babe Ruth is still standing at 31 in the home run wallop table.  Not since Tuesday has the King of Swat come through with a circuit biff.  Yesterday at Chicago, the Sox walloped the Yanks 4 to 1 and Bambino got a pair of singles off Kerr in three trips to plate. 

 

CJ on CVA and USDC(NY):

Hello all,

I hope that everyone had a happy and safe Fourth of July weekend, and that your Tuesday back in the office was not too bad. I spent the weekend enjoying as much time outside as possible before a string of thunderstorms came through the area. Our dog spent most of his weekend curled up at the top of our basement stairs due to the pervasive fireworks all around our neighborhood. My wife, an ER nurse, was working the past two days and reported that she (unsurprisingly) saw a few blast-related injuries.

Sadly, there were no fireworks in the Federal District Courts of New York recently. It appears that the courts are on a bit of a summer hiatus as I have no new insurance decisions to report. On the CVA, and related, front big news has come out of the Boy Scouts of America bankruptcy. A tentative settlement agreement has been reached between the Scouts, its local councils, and approximately 60,000 claimants. I report on this and share some thoughts about what is next. Notably, many claimants’ attorneys have indicated that the next step is to go after the insurers directly.

See you in two weeks,

CJ
Charles J. Englert, III

[email protected]
       

 

Baby Care – 100 Years Ago:

Buffalo Evening News
Buffalo, New York
09 Jul 1921

DR. FRONCZAK ISSUES
RULES FOR BABY’S CARE

            Health Commissioner Fronczak has issued these rules for care of the baby in hot weather:

            Keep baby out of the sun and out of crowds; a light breeze will not harm.  Keep as quiet as possible.

            Allow to lie on a hard mattress, not among pillows or in a lap.

            The diet need not be reduced, but adhere strictly to the proper food.

            Baby will probably restrict its own diet somewhat.  Give a little cool boiled water to drink.  All milk should be brought to a boil during the summer months.

            Frequent cool sponging helps.  In case of prickly heat, sponge with half alcohol and water, then use zinc stearate powder.  Do this several times a day.

            In case of illness, stop food and call doctor at once. 

 

Dishing Out Serious Injury Threshold:

Dear Readers,

Welcome back everyone, after the long weekend and an enjoyable Independence Day. Thankfully, the weather down here held up for the most part, and we were able to enjoy the fireworks and some time on the water.  Hopefully, everyone was able to have an Independence Day filled with family, friends, and gratitude.

In the Serious Injury Threshold world, we have one case worthy of reporting, and it is an interesting one dealing with an improper jury charge as it pertains to the exacerbation of a preexisting injury. In Law v. Dillon the Appellate Court found that the Supreme Court’s denial of the plaintiff’s request for a jury charge regarding the exacerbation of a preexisting injury was improper.

            Be well,
            Michael
           Michael J. Dischley

           [email protected]  

 

The White Sox Scandal:

 

Leader-Telegram
Eau Claire, Wisconsin
09 Jul 1921

STATE TO DEMAND MAXIMUM
PENALTY FOR BALL PLAYERS

Indicate Policy Toward Indicted Men
In Questioning Prospective Jurors.

            CHICAGO, July 8.—the state announced during examination of prospective jurors today in the baseball trial that it would demand the maximum penalty of a $2,000 fine and five years’ imprisonment for each man found guilty.  The statement was made by the state’s attorney to a venireman who had been asked if he would impose the maximum penalty if the men were found guilty.  The man was not permitted to answer, Judge Friend sustaining the defense’s objection to the question.

 

Only Four Jurors Sworn.

            No progress was made in selecting jurors today, court adjourning until Monday with only the four jurors worn in.  No jurors even were tentatively selected.

            Attorney Henry Berger of the defense, tonight asked the state to prepare subpoenas for Detroit and Chicago American league players and announced that he would also call in a number of Cincinnati players to prove the Sox played their best in the 1919 world series.

            “We will call in so many baseball players to testify for these indicated men that it may be necessary to postpone some of the big league games because several teams may be broken up for a day or two, says Mr. Berger.

 

Bucci on “B”: 

Hello everyone,

There was only one Coverage B case to bring you this issue.  It is an Ohio federal district court decision that distinguishes the Ohio Supreme Court holding that slander, libel, defamation, and the like are not recognized by implication in Ohio.  I happen to have looked at many cases addressing the implied cause of action for such claims recently in connection with an article I am working on for the Brief, a TIPS publication.  The TIPS ICLC section is going forward with its February conference in Arizona just like the old days…you know, pre-Covid when we could attend as many in-person conferences as time allowed.  ICLC puts on a great conference, and I hope to see you there. 

I try very hard not to be political in the present environment, but I just have to say:

BLACK LIVES MATTER

 

Diane
Diane L. Bucci

[email protected]

 

Insurance Ad -- A Century Ago:

Dunkirk Evening Observer
Dunkirk, New York
09 Jul 1921

WE ALWAYS DELIVER THE GOODS

promptly when your home or property has burned down and you come to us for the money to indemnify you for your loss when you are insured in this agency.  If you are not insured don’t tempt fate by neglecting it longer because the fire fiend always seeks the place that has no insurance on it.  Let us write you a policy now.

 

KAISER & STARR
425 Central Ave. Dunkirk, N.Y.

 

Lee’s Connecticut Chronicles:

It was a busy, hot and sticky couple of weeks. My daughter returned to college for the summer semester in Manhattan – she's a performance major, so Daddy is never retiring, please keep sending cases! Spent a wonderfully hot weekend in Manhattan, mostly shopping for forgotten items that would surely have been half the price if purchased in Hartford. Used the downstate proximity to spend most of the work week at our Long Island office. Someone turned my office into the copy room. My fault, I guess, since I hadn’t been there since February 2020. The copier apparently has acquired squatter’s rights.

Until next time, be smart and keep keeping safe.

Lee
Lee S. Siegel

[email protected]
       

 

It Took Until Ike Was President, before they Built the St. Lawrence Seaway:

New-York Tribune
New York, New York
09 Jul 1921

Great Lakes-St. Lawrence
Canal Is Recommended

$252,728,200 Project Is Submitted
To International Joint Commission

            DETROIT, July 8.—Reporting favorably on the feasibility of the proposed Great Lakes-St. Lawrence waterways and estimating the initial cost of the undertaking at $252,728,2000, Colonel W. P. Wooten, United States Army engineer, and W. A. Bowden, chief engineer for Canada, have submitted their report to the International Joint Commission at Washington.

            The estimated cost is based on a channel depth of twenty-five feet, with provision in the permanent improvements for increasing it to thirty feet, if desirable, at an additional cost of $17,986,180.

            Maintenance would cost $2,562,000 a year, the engineers estimate.

            The program recommended provides for a series of nine locks, for thirty-three miles of canals, forty and one-half miles of lake channel, and 108 miles of river channel.

            The recommendations provide for a power plant with 1,464,00 horsepower through a great dam at Long Sault Rapids, near Ogdensburg, N.Y., this being about 40 per cent of the potential power in the St. Lawrence River, according to the engineers. 

 

Rauh’s Ramblings:

Dear Readers:

I hope everyone had an enjoyable 4th of July weekend! Even though it is a shortened work week because of the holiday, it is still extremely busy over here and there is lots of work to be done.  On Thursday, I will be heading to Middletown, Connecticut, for a few days to visit with family, so it will be nice to have a little break, although I don’t know how relaxing it will be to drive for six hours in a car with a three-year-old!

This week, I found a case from U.S. District Court, New Jersey, wherein the Court analyzes the several factors used in considering whether to grant a motion to sever.  In this case, the plaintiff insurance company brought a motion to sever a bad faith claim from the other coverage claims.

Take Care!

Patty
Patricia A. Rauh

[email protected]
       

 

Oh, That’s Where They Put the Jewels?:

New-York Tribune
New York, New York
09 Jul 1921

$25,000 Lost Gems
Found Under Mattress

Discovery at Atlantic City’s Ritz-Carlton
Ends the Police Search in Three Cities

            ATLANTIC CITY, July 8.—Jewelry valued at $25,000, for which Mrs. Thomas Lewis, of Wilkes-Barre, Pa., had the police of three cities searching, was found to-day under a mattress in a room at the Ritz-Carlton Hotel here which Mrs. Lewis occupied during the Fourth of July holidays.

            She did not miss the jewelry, which consisted of a string of pearls and several diamond rings, until she reached her home in Wiles-Barre, and remembered only that she had put it in a chamois bag before leaving the hotel.  Believing that train thieves had got it, she informed the Wilkes-Barre police, who set the police of Philadelphia and Atlantic City to work also.

            Although a cursory examination of Mrs. Lewis’s room at the hotel, which was made as soon as news of the supposed theft was received, failed to reveal the jewelry, a more careful search which was made to-day resulted in the discovery of the chamois bad and its contents. 

 

Storm’s SIU Examen:

Hi everyone:

In this edition of The Examen, we will examine one case deciding:  

In a suit to recover for alleged breach of contract and “bad faith” pertaining to an underinsured motorists claim, issues involving privilege, including attorney-client communications, work product, reserving and claim file materials. 

I am honored to have my article published in SIU Today! "Remote Virtual EUOs -- No Need For Bathroom Breaks Anymore! (Remotely Conducted v. In-Person EUOs - Which Are More Effective?)". I hope you find it informative and a little humorous. EUOs sure are a strange animal!  You may read it on our firm’s blog or at the publisher’s website

This week’s encouraging word, continuing with our baseball theme due to the MLB being in Buffalo: “Every day is a new opportunity. You can build on yesterday’s success or put its failures behind and start over again. That’s the way life is, with a new game every day, and that’s the way baseball is.”  ~ Bob Feller

If you and I are not yet friends on LinkedIn, please send me a connection request. 

I look forward to speaking with you regarding any challenging coverage issues you are evaluating.  Call me anytime at (716) 220-1478.  Talk to you soon! 

Scott
Scott D. Storm

[email protected]

 

Beach Burger:

The Buffalo Commercial
Buffalo, New York
09 Jul 1921

HAMBURGITES WANT CHANCE
TO USE THEIR PARK

Suggest That Buffalo Have
Beach Resort of Its Own

ARE NOT SELFISH

But Feel That Resident of Hamburg
Should Have First Call

 

            The Congestion at Hamburg township beach on Lake Erie caused by the recent inflow of automobilists from Buffalo and other places other than Hamburg is only further proof that Buffalo should establish a public beach at some point along the lake where suitable property can be bought.

            This is the opinion of Horace F. Hunt, commissioner of charities and correction, a resident of Hamburg. Mr. Hunt said that the longer the city waits to acquire such a site the farther from the city it will have to go and the higher the cost will be.

            Yesterday the town board of Hamburg decided that  it was time to take action to retain for the villagers the use of their park on the lake front which has been monopolized this season by swarms of strangers from Buffalo and elsewhere. Hereafter motorists from other places than Hamburg must pay 50 cents parking privilege and the bathing charge will be double for outsiders.

 

Heintzman’s Hideout:

Dear Readers:

The past long weekend was filled with relaxation, fun, and one disastrous failure: my attempt at tanning. I have pale skin, and, unless I work outside in the summer like I did when I was younger, tanning is a struggle. This past Saturday, I was determined to get a tan and headed to Woodlawn Beach (just outside Buffalo and on Lake Erie) to accomplish exactly that. I shrewdly (or so I thought) applied just the right amount of sunscreen to facilitate tanning without burning. I had a great time at the beach, and, after a couple hours, I left with no sign of a burn. Unfortunately, the next morning I arose with an incredibly patchy sunburn all over my chest, and, as I write this, it shows no signs of fading. Alas.

I like to think my lawyering skills are better than my tanning abilities. 

Just one case this week:  a Queens County Court parses the interplay between two timeliness requirements regarding denial of claims and scheduling of EUOs.

Nick
Nicholas J. Heintzman

[email protected]

 

Where Does Perfection Take You?

Schoolgirl of Perfect Figure is Discovered
The Marion (Ohio) Star
July 9, 1921

Miss Izora May Hankins, of Vienna, Illinois, who has just graduated from the Vienna High School at the head of her class.  She has the unique and uncommon record of never having been absent from school, never reported late and never having a bad mark.  She started school at the age of six years and is now seventeen.

Editor’s Note:  I wondered what would become of the perfect girl so I traced her life, the best I could.  She dropped “Izora” and used “May” for her adult life.  She married a dentist, Dr. Charles Miller at the age of 47 in 1951 and her husband died four years later of a heart attack in their home. At the age of 55.  May worked for the Illinois Department of Public Aid and died at the age of 93, leaving no children  behind.  I guess the message is, be perfect in school and have no children and you can live a good long time.

 

North of the Border: 

“The interminable heat wave that impacted Western Canada has passed and the inevitable wild fires have started in British Columbia. However, thanks to the lifting of the majority of the COVID restrictions in Alberta on July 1, it is no longer illegal to have a family dinner or dine indoors at an eatery. Normalcy is returning in stages.”

Heather
Heather Sanderson

[email protected]

 

Headlines from this week’s issue, attached:

KOHANE’S COVERAGE CORNER
Dan D. Kohane

[email protected]

  • Duty to Defend Additional Insured Dependent on Allegations in Complaint and Trade Contract Assessing Maintenance Responsibilities

 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

  • Conclusory Allegations of Legal Malpractice are Insufficient to Avoid Motion to Dismiss

     

    DISHING OUT SERIOUS INJURY THRESHOLD
    Michael J. Dischley

    [email protected]

  • Court Erred in Failing to Provide Jury with Jury Charge Regarding Exacerbation of a Preexisting Injury

     

    WILEWICZ’S WIDE WORLD OF COVERAGE
    Agnes A. Wilewicz

    [email protected]

  • Eighth Circuit Holds that There is No Coverage for Alleged Covid-19 Business Interruption Claims Since There is No Physical Damage or Loss

     

    BARNAS ON BAD FAITH
    Brian D. Barnas

    [email protected]

  • Court Rejects Attempted Bad Faith Setup

     

    LEE’S CONNECTICUT CHRONICLES
    Lee S. Siegel

    [email protected]

  • Check back next time for more from the Nutmeg State.

    BUCCI ON “B”

Diane L. Bucci
[email protected]

  • District Court Adopts Defamation by Implication Despite High Court’s Holding to the Contrary

     

    OFF THE MARK
    Brian F. Mark
    [email protected]

  • U.S. District Court Finds Insured’s Notice to be Untimely

     

    BORON’S BENCHMARKS
    Eric T. Boron

    [email protected]

  • On hiatus this week.

     

RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell

[email protected]

  • DFS Penalizes Insurer For Non-Compliance With Regulations Prohibiting Use of Education Level and Occupation Status As Rating Factors

  • DFS Guidance Identifies Key Cybersecurity Measures to Reduce Risk of Ransomware Attacks

     

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

    [email protected]

  • Unable to Come to a Global Settlement, the Boy Scouts Settle Approximately 60,000 Claims With Claimant Attorneys and Local Councils

 

RAUH’S RAMBLINGS
Patricia A. Rauh

[email protected]

  • The Factors Considered in a Motion to Sever Weigh in Favor of Granting AIG’s Application to Sever the Bad Faith Claim and Stay Bad Faith Discovery

 

ruMIRNAtions
Mirna. M. Santiago

[email protected]

  • D&I Issues in Return-to-Office Policies

 

STORM’S SIU EXAMEN
Scott D. Storm

[email protected]

  • In a Suit to Recover for Alleged Breach of Contract and “Bad Faith” Pertaining to a Claim for Underinsured Motorist Coverage, the Court Provided a Nice Review of the Law and Decided Issues of Privilege Including Attorney-Client Communications, Work Product, Reserving and Claim File Materials

 

HEINTZMAN’S HIDEOUT
Nicholas J. Heintzman

[email protected]

  • Queens County Court Parses the Interplay Between Two Timeliness Requirements Regarding Denial of Claims and Scheduling of EUOs

 

NORTH OF THE BORDER
Heather Sanderson

[email protected]

  • Ontario: A Trial Judgment on the Meaning of “Civil Action”

 

 

Love hearing from you.

Dan

 

 

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

In addition, Dan D. Kohane is a Foreign Legal Consultant, Permit No. 000241, issued by the Law Society of Upper Canada, and authorized to provide legal advice in the Province of Ontario on matters of New York State and federal law.


NEWSLETTER EDITOR
Dan D. Kohane

[email protected]

ASSOCIATE EDITOR
Agnes A. Wilewicz

[email protected]

ASSISTANT EDITOR
Patricia A. Rauh

[email protected]

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

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

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Diane L. Bucci

Mirna Martinez Santiago

Scott D. Storm

Thomas Casella

Brian D. Barnas

Eric T. Boron

Ryan P. Maxwell

Charles J. Englert

Patricia A. Rauh

Nicholas J. Heintzman

Diane F. Bosse

Joel R. Appelbaum

 

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

Michael F. Perley

Scott D. Storm

Eric T. Boron

Brian D. Barnas
 

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

APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]
 

Mirna Martinez Santiago

Diane F. Bosse
 

Topical Index
 

Kohane’s Coverage Corner

Peiper on Property and Potpourri
Dishing out Serious Injury Threshold

Wilewicz’s Wide World of Coverage

Barnas on Bad Faith

Lee’s Connecticut Chronicles

Off the Mark

Boron’s Benchmarks

Bucci on “B”

Ryan’s Capital Roundup

CJ on CVA and USDC(NY)

Rauh’s Ramblings

ruMIRNAtions

Storm’s SIU Examen

Heintzman’s Hideout

North of the Border

 

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

 

07/01/21       The City of New York v. Travelers Property Casualty Company Appellate Division, First Department

Duty to Defend Additional Insured Dependent on Allegations in Complaint and Trade Contract Assessing Maintenance Responsibilities
In the underlying personal injury complaint, the plaintiff claims he was injured by a branch falling from a tree in Central Park and that her injuries were proximately caused by the negligent acts and/or omissions on the part of the City, its agencies and the Central Park Conservancy, Inc. (CPC), and/or its contractors, subcontractors, and agents in the maintenance and inspection of the tree. CPC and the City entered into a written agreement which obligated CPC to maintain Central Park.

Pursuant to that agreement, CPC entered into a tree-service subcontract with nonparty Bartlett. As required by this subcontract, Bartlett obtained a general CGL policy from Travelers naming CPC and the City as additional insureds.

The policy provided coverage to CPC and the City for any liability arising out of Bartlett's operations under its contract with CPC, except that a "person or organization does not qualify as an additional insured with respect to independent acts or omissions of such person or organization." The tree-service subcontract shows that Bartlett assumed full supervision and control over the maintenance of the trees, including the tree in question. The allegations in the underlying complaint, supported by the tree-service subcontract and business records memorializing Bartlett's work on the park's trees before the accident, demonstrate that there is a reasonable possibility that the City will recover under the policy's additional insured provision, which affords coverage premised on the City's vicarious liability for the acts or omissions of the named insured, Bartlett.

Travelers is required to defend the City in the action.

That the City might ultimately be found liable solely for its own independent negligent acts and/or omissions, which would not be covered under the additional insured provision, does not negate defendant's duty to defend it.

Editor’s Note – the First Department continues in an expansive approach to additional insured coverage.

 

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

06/30/21       Denisco v. Uysal
Appellate Division, Second Department
Conclusory Allegations of Legal Malpractice are Insufficient to Avoid Motion to Dismiss

This action has its nexus in a disputed workplace incident that allegedly occurred on July 30, 2015.  Plaintiff reported that he hit his head on a sprinkler, and as a result, fell from a ladder sustaining injuries.  In August of 2015, plaintiff retained defendant to serve as his legal counsel in connection with his workers’ compensation claim. 

We are advised that plaintiff’s claim was denied when the workers’ compensation carrier adduced evidence at the hearing that plaintiff’s injuries actually stemmed from his decision to jump from a moving car later that same day.  As such, where the injuries were unrelated to performance of work for his employer, his claims were denied. 

Undeterred, plaintiff commenced this action seeking recovery for the alleged malpractice of defendant.  Plaintiff’s complaint asserted that had more evidence been introduced at the workers’ compensation hearing of the incident at work, his case would have been favorably decided.  Defendant moved to dismiss and for sanctions. In reversing the trial court, the Appellate Division noted that plaintiff needed to plead three distinct elements to establish a valid malpractice claim.  The elements are that counsel failed to exercise ordinary care, skill and diligence, that such failure was the proximate cause of the damage and but for the negligence the claimant would have been successful.  Here, plaintiff merely suggests that had more information been provided at the workers’ compensation hearing, the outcome would have been different.  There was no proof provided, however, that any such proof either existed or would have altered the workers’ compensation judge’s decision.  As such, the pleading was unduly speculative and conclusory.

 

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

06/30/21       Linda Law v. Maura A. Dillon
Appellate Division, Second Department
Court Erred in Failing to Provide Jury with Jury Charge Regarding Exacerbation of a Preexisting Injury

In an action to recover damages for personal injuries, the plaintiff appeals from a judgment of the Supreme Court, Nassau County, entered December 11, 2017. The judgment, upon a jury verdict finding that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident, is in favor of the defendants and against the plaintiff dismissing the complaint.

On January 11, 2016, a vehicle operated by the plaintiff collided with a vehicle operated by the defendant Maura A. Dillon and owned by the defendant Donna M. Dillon. The plaintiff commenced this action to recover damages for personal injuries that she allegedly sustained in the accident. At the pre-charge conference, the plaintiff requested a charge regarding the exacerbation of a preexisting injury pursuant to PJI 2:282. The Supreme Court denied the plaintiff's request. At the conclusion of trial, the jury found that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. The plaintiff appeals.

The Appellate Court found that the Supreme Court improperly denied the plaintiff's request to charge the jury regarding the exacerbation of a preexisting injury. Contrary to the defendants' contention, the plaintiff properly pleaded in her bill of particulars and supplemental bills of particulars that the accident aggravated preexisting injuries to her. Moreover, there was a sufficient factual basis supporting this charge.

In light of the above, the Supreme Court judgment is reversed, on the law, with costs, the complaint is reinstated, and the matter is remitted to the Supreme Court, Nassau County, for a new trial on the issue of damages.

 

WILEWICZ’S WIDE WORLD of COVERAGE
Agnes A. Wilewicz

[email protected]

 

07/02/21       The Cincinnati Insurance Company v. Restaurant Law Center
United States Court of Appeals, Eighth Circuit
Eighth Circuit Holds that There is No Coverage for Alleged Covid-19 Business Interruption Claims Since There is No Physical Damage or Loss

On Friday, July 2, 2021, the Eighth Circuit Court of Appeals rendered a decision in Oral Surgeons, P.C. v. The Cincinnati Insurance Company, Case No. 20-3211 (8th Cir. July 2, 2021), upholding the decision of the trial court from the United States District Court for the Southern District of Iowa.  Finding for Cincinnati, the Eighth Circuit held that a “loss” defined as “accidental physical loss or accidental physical damage” requires “some physicality to the loss or damage of property—e.g., a physical alteration, physical contamination, or physical destruction.” Accordingly, in order to trigger business interruption coverage under Cincinnati’s policy there was an “unambiguous requirement that the loss or damage be physical in nature,” which Oral Surgeons failed to plead, let alone prove.

Unmistakably, the Eighth Circuit’s decision hinged upon the word “physical” and a reluctance to rewrite the policy’s grant of coverage. Standing upon Eighth Circuit precedent, including Pentair, Inc. v. Am. Guar. & Liab. Ins. Co., 400 F.3d 613, 616 (8th Cir. 2005), the court notes that it has previously found that “direct physical loss or damage” has not occurred merely because “property cannot be used for its intended purpose.” Permitting a mere “impairment of function and value . . . caused by government regulation” to constitute “direct physical loss to insured property” would impermissibly “render the word ‘physical’ meaningless.” (quoting Source Food Tech., Inc. v. U.S. Fid. & Guar. Co., 465 F.3d 834 (8th Cir. 2006)).

Here, since Oral Surgeons failed to allege physical alteration of property or even physical contamination, there was no “physical loss” suffered. Rather, the complaint merely asserted “that Oral Surgeons suspended non-emergency procedures due to the COVID-19 pandemic and the related government-imposed restrictions”—insufficient to trigger coverage as a matter of law.

Finding support for the above in the policy’s definition of “period of restoration,” the Eighth Circuit indicates that “[p]roperty that has suffered physical loss or physical damage requires restoration,” and Cincinnati’s Policy only “provides coverage until property ‘should be repaired, rebuilt or replaced’ or until business resumes elsewhere,” which “assumes physical alteration of the property, not mere loss of use.”

Moreover, and with the potential for wide-ranging impact upon COVID-19 business interruption litigation and appeals nationally, we note that the Eighth Circuit held true to fundamental principles of insurance policy construction. Although the virus exclusion was not at issue in this case, this decision exemplifies that an insured must first establish a covered cause of loss prior to the analysis of any exclusionary language. Where there is no “physical loss,” there is no coverage.

n.b. Many thanks to our own Ryan Maxwell for this excellent write-up!

 

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

 

06/24/21       Ilias v. USAA General Indemnity Co.
United States District Court, Middle District of Florida
Court Rejects Attempted Bad Faith Setup

On July 29, 2017, USAA's insured, Scott Dunbar, was driving on a divided highway in Pasco County, Florida. Dunbar lost control of his van and struck an SUV traveling in the center southbound lane.  After hitting the SUV, Dunbar's van veered toward the median, went airborne over the median, and landed directly on top of the front end of Ilias's Honda Pilot.  As a result of the crash, Ilias suffered a torn aorta and broke several bones.  Ilias was airlifted from the crash site to the hospital and placed in the intensive care unit (ICU), where he remained for 10 days before spending another three weeks in the hospital and a rehab facility.  Others in the wreck were injured also.

Dunbar was insured under an auto policy with USAA with limits of $10,000 per person and $20,000 per accident.  USAA provided the policy to Ilias’ counsel upon request.  It also received the police report on August 14, 2017, which indicated that Dunbar was solely at fault for the incident and described Ilias’ injuries as catastrophic. USAA tendered the policy limits within 48 days of the accident.  Ilias’ attorney did not respond to the tender and denied receiving the required statutory insurance information disclosure required by Florida law.  A personal injury action was commenced in Florida state court.

After learning of the lawsuit, Ilias’ attorney confirmed she was declining the tender offer.  She advised that she had to depose Dunbar to verify he had no other insurance coverage.  The case proceeded to trial and a jury found Dunbar liable.  A final judgment was entered in the amount of $5,230,559.44.  Ilias then sued Florida in state court, alleging that it acted in bad faith in handling Ilias’ claim.  The case was removed.

The court concluded that no reasonable jury could find USAA acted in bad faith.  USAA acted diligently in trying to settle the claim.  USAA responded to requests from Ilias’ attorney with almost all information requested, responded to communications promptly, and tendered the policy limits once the extent of the injuries was confirmed.  Even assuming USAA failed to mail the required statutory insurance form, this was evidence of negligence and a need to augment its claims practices at most and not bad faith.

The court also concluded that USAA was not the cause of the excess verdict.  The court concluded that Ilias’ attorney’s actions suggested a bad faith setup.  Ilias’ attorney never gave any outward indication she was interested in accepting the policy limits or settling at all and never discussed settlement with Ilias.  The court noted that Florida common law of third party bad faith encourages costly lawsuits in cases with catastrophic injuries with low coverage.  However, the court found the contention that a $10,000 tender issue caused a $5 million-plus jury verdict and would have prevented it had USAA acted slightly differently was not plausible.

 

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

Check this space next time. It must be too hot for the courts to even contemplate insurance.

 

BUCCI on “B”
Diane L. Bucci

[email protected]

 

07/01/21       AIX Specialty Insurance Company V. Big Limo, Inc.
Southern District of Ohio
District Court Adopts Defamation by Implication Despite High Court’s Holding to the Contrary

Big Limo was sued by two models whose photographs it used on its Facebook page to promote “Pinup and Pints,” a nightclub.  They alleged that the impermissible use caused damage to their reputations.  One model’s claim was subject to the prior publication exclusion and was dispensed with promptly.   The other  sought relief under common law invasion of privacy by appropriation, the Lanham Act, and violations of Ohio’s trade practices act.  

AIX argued that the claim boiled down to a claim for “right of publicity” which it argued was an intellectual property right excluded by the Intellectual Property Exclusion.  The claimant relied upon the exception to the Exclusion for infringement, in your ‘advertisement’, of copyright, trade dress or slogan.”  She argued that her photographs constituted trade dress or slogan.  AIX argued, and the court agreed, that the concept of trade dress does not apply to people but instead to products.  A slogan, held the court, is a brief attention getting phrase used in advertising.  The court held that the photograph was not a phrase and therefore could not constitute a slogan.

The court then considered whether the facts pled could support any cause of action not expressly asserted.  The claimant argued that she stated an implied claim for defamation, relying on AIX Specialty Ins. Co. v. Dginguerian, which also involved the impermissible use of models’ photographs.

AIX’s first argument that the model could not have meant to plead a claim for defamation because the statute of limitations had run on that claim.  The court noted that a statute of limitations defense belongs to the insured.  Moreover, defense coverage does not turn on whether the statute had run but instead on the facts pled.  In other words, the potential success of the claim against the insured is simply not a factor. 

AIX next argued that the court should not find implied defamation because same was not recognized in Ohio. Following the history of the decisions rejecting a cause for implied defamation/libel/ slander, the court focused on the decision in Krems v. Univ. Hosp. of Cleveland, where the court explained that Ohio does not recognize implied defamation because it follows the “innocent construction” rule, which requires that statements that are capable of both a defamatory and non-defamatory meaning be given their innocent meaning.

The AIX court distinguished Krems, holding that the innocent construction rule was not at issue because there was no non-defamatory meaning. The court recognized a potential claim for defamation by implication despite Ohio decisions rejecting its application. 

 

OFF the MARK
Brian F. Mark
[email protected]

06/09/21       Great West Cas. Co. v. Diversified Transp. Servs., LLC
United States District Court, Middle District of Georgia
U.S. District Court Finds Insured’s Notice to be Untimely

This declaratory-judgment action arises out of an underlying construction defect action related to the repair of a leaky pond.  The underlying plaintiff, Michael Shae Helton (“Helton”), hired Diversified Transportation Services, LLC (“Diversified”) to repair his leaky pond.  Following the purported repair work, the pond would still not hold water.  Thereafter, Helton notified Diversified of the defective repair.  Helton then sued Diversified in Magistrate Court for breach of contract, negligent construction, and negligent repair.  Diversified did not notify its insurance carrier, Great West Casualty Company (“Great West”), of Helton’s claim or suit.

The Magistrate Judge ruled in favor of Diversified on all claims.  Helton then appealed to the state court.  Again, Diversified did not notify Great West of the state court action.  Diversified retained counsel after the case was appealed and counsel finally notified Great West.  However, Diversified’s notice was fifteen months after litigation began and over a year after the case had been appealed to state court.

Great West's policy has the standard provisions obligating insureds to give prompt notice of claims and lawsuits that might be covered by the policy.  The policy requires that Diversified provide notice of any "occurrence or offense which may result in a claim" and defines "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions.

Great West argued that the notice requirements in its policy are "valid conditions precedent under Georgia law" and that Diversified's delay in giving notice was unreasonable as a matter of law.  As such, Great West asserted that it was not obligated to defend or indemnify Diversified in the underlying matter.

The Court acknowledged that under Georgia law, policy requirements that an insured give appropriate notice of occurrences and suits arising from occurrences are conditions precedent to coverage.  When an insured unreasonably fails to satisfy these types of notice requirements, the insurer is not obligated to provide a defense or coverage.  Notably, there is no requirement that an insurer show that it was prejudiced by an insured's failure to provide timely notice.

As it was unclear what the pre-suit notice from Helton to Diversified stated, which could have only been a contract claim that would not be covered under the Great West policy, the Court held that Great West did not establish that Diversified failed to provide notice of an “occurrence” before Helton filed suit.

However, the Court did find that Great West established that Diversified failed to give timely notice once Helton filed suit.  The Court pointed out that Helton’s Magistrate Court complaint undisputedly alleged occurrences that might be covered by the policy, triggering Diversified’s obligation to give notice.  Diversified offered no excuses for its failure to give notice once it received Helton’s lawsuit.  Although Diversified argued that Great West had not been prejudice by the late notice, such an argument was rejected by the Court as Georgia does not require an insurer to demonstrate prejudice due to the untimely notice.

As it was undisputed that Diversified did not notify Great West of the lawsuit or the occurrence it alleged until fifteen months after the lawsuit was filed, as was required by the policy, the Court held that Great West had no duty to defend or indemnify its insured relative to the underlying action.

 

BORON’S BENCHMARKS
Eric T. Boron
[email protected]

On hiatus this week.

 

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

07/07/21       Insurance Company Fined $500,000.00 For Compliance Failures
Department of Financial Services
DFS Penalizes Insurer For Non-Compliance With Regulations Prohibiting Use of Education Level and Occupation Status As Rating Factors

On Wednesday, DFS announced a Consent Order in which a New York domestic insurer agreed to pay $500,000 in penalties following its non-compliance with New York State Insurance Regulation 150, which prohibits insurers from using an individual’s occupational status or educational level in setting rates.

Regulation 150 (11 NYCRR § 154) generally prohibits the use of attained education level and/or occupational status as a factor in initial tier placement, as well as requires insurers that had previously used those factors in initial tier placement to amend their multi-tier rating programs and tier movement rules to the satisfaction of the superintendent for policies going forward. Underlying the prohibition above, DFS advised in its press release that the goal is avoiding unfair discrimination:

“The use of education and occupation in determining insurance rates can penalize drivers without college degrees or who work in low-wage jobs or industries. The result is that drivers with higher education and income pay less for auto insurance with no evidence that they are better drivers.”

The carrier made a rate filing with DFS in an attempt to bring its multi-tier program into compliance with Regulation 150. Despite DFS’ disapproval of this rate filing made by the carrier, the carrier proceeded to implement its new program without DFS’ approval, in a knowing departure from its obligations under Insurance Law § 2314. When DFS determined that the carrier’s new program was insufficient in remedying the carrier’s prior use of those factors, the carrier continued with the new program in violation of Insurance Law § 2303.

Additionally, by failing to comply with the reporting requirements of Article 6 of the New York Vehicle and Traffic Law, DFS found that the carrier violated Insurance Law § 317.

 

06/30/21       New Guidance on Ransomware Prevention
Department of Financial Services
DFS Guidance Identifies Key Cybersecurity Measures to Reduce Risk of Ransomware Attacks

Last week Wednesday, DFS announced that it was implementing new guidance on the prevention of ransomware attacks by regulated entities.

According to DFS’ press release on the topic:

“Ransomware incidents have increased in frequency, scope, and sophistication. The reported rate of ransomware attacks increased 300% in 2020. Larger extortion payments have financed the development more effective hacking and ransomware tools and added more hackers to their ranks.”

By examining ransomware incidents involving regulated entities in the past year and a half, DFS observed the patterns involved, where “hackers enter a victim’s network, obtain administrator privileges once inside, and then use those elevated privileges to deploy ransomware, avoid security controls, steal data, and disable backups.

DFS’ guidance urges regulated entities to implement measures such as:

  • Train Employees in Cybersecurity Awareness and Anti-Phishing;

  • Implement a Vulnerability and Patch Management Program;

  • Use Multi-Factor Authentication and Strong Passwords;

  • Employ Privileged Access Management to Safeguard Credentials for Privileged Accounts;

  • Use Monitoring and Response to Detect and Contain Intruders;

  • Segregate and Test Backups to Ensure that Critical Systems Can Be Restored in the Face of an Attack; and

  • Have a Ransomware Specific Incident Response Plan that is Tested by Senior Leadership

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

07/01/21       Boy Scouts of America Tentatively Settle 60,000 Child Sexual Abuse Claims

Unable to Come to a Global Settlement, the Boy Scouts Settle Approximately 60,000 Claims With Claimant Attorneys and Local Councils

The Guardian reported that the Boy Scouts of America (BSA) has come to a tentative agreement to settle some 60,000 sexual abuse claims. Totaling $850 Million, the BSA is contributing $250 million and about 250 local councils are contributing $650 million. Notably, the settlement does not include any contribution from insurers. The BSA acknowledged that, currently, the difference of opinion between attorneys representing victims and those representing insurers is too wide for a true global settlement to be reached. Should the settlement be approved, a trust will be set up and a channeling injunction will be issued. For all intents and purposes, the BSA and its local councils will no longer be liable for current and future claims of sexual abuse. 

This settlement does not cure the issues surrounding potential insurance coverage for the tens of thousands of claims. In an interview with PBS, claimant attorney Kenneth Rothweiler speaking about the settlement said, “[t]he plan always was to get a settlement with the BSA National and then the locals and then move on to the insurers. [T]here's billions of potential dollars that could come from the insurance companies, also from chartering organizations…” Chartering organizations may include churches, schools, fire departments, or other community organizations that sponsored a BSA troop.

The rights to coverage under the BSA and local council insurance policies will be assigned to the trust set up by the bankruptcy court. It is very clear from most news outlets reporting of this tentative settlement that the claimant’s attorneys will be going after any possible insurance coverage. What this means for the insurers is that there is very likely going to be thousands of direct claims and hundreds of direct lawsuits seeking additional compensation for abuse alleged to have occurred because of the negligence of the BSA and its local councils. What makes this challenging for insurers is that (from the reports we have reviewed) it appears part of the settlement agreement requires the BSA and local councils to accept responsibility for the alleged abuse. This could create issues with coverage as the agreement may be framed to indicate that the BSA or its local councils knew the abuse was occurring, failed to prevent the abuse, and hired or retained abusive counselors or employees, and expected the abuse. We will be monitoring this closely and report on any new or notable updates as the insurance coverage issues continue to develop. 

 

RAUH’S RAMBLINGS
Patricia A. Rauh

[email protected]

06/29/21       AIG Specialty Ins. Co. v. Thermo Fisher Scientific, Inc., et al
United States District Court, District of New Jersey
The Factors Considered in a Motion to Sever Weigh in Favor of Granting AIG’s Application to Sever the Bad Faith Claim and Stay Bad Faith Discovery

This matter involves a coverage dispute wherein plaintiff (“AIG”) disputes defendants’ (Thermo Fisher and Fisher Scientific Company, LLC, collectively “Thermo Fisher”) claim that it is entitled to insurance coverage under an AIG policy to address contamination of groundwater in the Westmoreland Well Field (the “Well Field”), which supplies drinking water to the residents of Fair Lawn, New Jersey.  Thermo Fisher has a facility located near the Well Field (the “Facility”), which has been the subject of environmental investigations and remediations for decades.  Pursuant to a Consent Order with the EPA, Thermo Fisher agreed to undertake remediation and upgrade Fair Lawn’s water treatment plan.  The cost to complete this work was approximately $19.5 million.

AIG sought to disclaim coverage for the remediation costs pursuant to an insurance policy issued to Thermo Fisher (the “Policy”).  Thermo Fisher submitted a notice of claim to AIG for the remediation costs on February 1, 2016, as the Facility is insured property under Endorsement No. 1 of the Policy.  AIG disputed coverage in its amended complaint by alleging that: (1) Thermo Fisher failed to provide notice of the pollution condition and claims “as soon as possible”; (2) Thermo Fisher failed to disclose the pollution conditions in their insurance application with AIG; (3) Thermo Fisher failed to cooperate with AIG in the investigation and defense of any claims against them; and (4) Thermo Fisher assumed obligations or made payments without AIG’s consent.  In its amended complaint, AIG sought a declaration that it had no duty to indemnity Thermo Fisher for any remediation costs and any associated third-party claims.  AIG also sought a judgment for rescission of the Policy.

Thermo Fisher brought a first amended counterclaim against AIG, asserting breach of contract, breach of the implied covenant of good faith and fair dealing; declaratory relief; and equitable estoppel.  Thermo Fisher also alleged that AIG committed bad faith by: (a) unreasonably delaying its investigation, evaluation, and processing of the claim; (b) failing to reimburse Thermo Fisher for the covered loss while simultaneously failing to deny coverage; (c) wrongfully misinterpreting an “Other Insurance” provision in the Policy endorsement as a basis for delaying indemnification of Thermo Fisher’s claims; (d) surreptitiously withdrawing acceptance of coverage; (e) initiating this lawsuit without providing an opportunity for Thermo Fisher to respond; and (f) misrepresenting Thermo Fisher’s disclosures to AIG during the Policy underwriting process as a basis to rescind the Policy.

AIG then applied to the Court to have Thermo Fisher’s counterclaim for bad faith severed from the remaining coverage issues.  According to AIG, the bad faith claim is different from the contract-based and declaratory-relief claims, and that the bad faith claim would require different witnesses and documents.  AIG added that severing and staying the bad faith claim is not only in furtherance of judicial economy, but also the “prevailing practice” in federal and state courts.

Thermo Fisher opposed AIG’s application to sever the bad faith counterclaim.  Thermo Fished argued that the similarity between the bad faith claim and coverage claims necessitates that the claims are not severed, and that AIG’s coverage defenses “largely implicate” the same witnesses and documents “likely to be relevant to the bad faith counterclaim”.

In deciding whether the grant AIG’s application, the Court stated that it considers the following factors: (1) whether the issues sought to be tried separately are significantly different from one another; (2) whether the separable issues require the testimony of different witnesses and different documentary proof; (3) whether the party opposing the severance will be prejudiced if it is granted; and (4) whether the party requesting severance will be prejudiced if not granted.

The Court ruled that in analyzing the severance factors, they weigh in favor of severing the bad faith claim and staying any bad faith discovery.  The Court stated that “[G]enerally, coverage disputes concerning the enforcement of policy terms according to their plain meaning are distinguishable from bad faith liability [which is] focused on the conduct of the insurer in its review and processing of a claim under an existing policy.”  In other words, the fact allegations supporting the bad faith claim differ from the fact allegations supporting the coverage claims.  The Court further agreed with AIG that the coverage claims and bad faith claim will likely involve different witnesses and documents.  Whereas the coverage claims will be examined by reviewing the Policy itself, the bad faith claim will depend on documents and communications related to AIG’s claims conduct.  Additionally, permitting the parties to engage in bad faith discovery while simultaneously engaging in discovery for the coverage claims may be “rendered needless” and potentially wasteful if AIG were to prevail on its coverage position.  Therefore, the Court granted AIG’s application to sever the bad faith claim and stay bad faith discovery.

 

ruMIRNAtions
Mirna M. Santiago
[email protected]

For many people, this time of transition back to physical office space is a sign that things are returning to “normal” after the pandemic. For others, it is a stressful time filled with anxiety about the Covid-19 variants. And for many BIPoC, it is the end of the respite from the unconscious biases and microaggressions that pollute many workplaces. Other groups, like parents, may be weighing the need for being employed versus the need to care for their children.

Don’t believe me?

Empirical studies show that while women in general continue to experience persistent pay/wage gaps as compared to men, women of color—and Black women, in particular—are the least compensated and least promoted of all groups. https://www.pbs.org/newshour/economy/report-black-women-less-likely-to-be-promoted-supported-by-their-managers This is likely driven by the intersectionality of being Black and a woman, while still being one of only a few people of color in any position of power. Women of color tend to experience microaggressions but receive no support from leadership when or if they make any complaints about mistreatment. Further, their judgment tends to be questioned more extensively, thus leading to a lack or slowdown of promotions. Id.

In addition, because of the increased cost of housing due to gentrification and the stagnation of wages (e.g., the federal minimum wage has not increased one cent since 2009), BIPoC communities have been pushed farther and farther away from City centers—where the jobs are—making commutes hellish and transportation costs prohibitive. https://www.brookings.edu/wp-content/uploads/2016/07/srvy_jobsproximity.pdf. Telework alleviated some of these ills.

Therefore, it is no surprise that BIPoC are actually NOT looking forward to returning to the office. “As offices around the country prepare to reopen, … employees of color … say they are hesitant to return to work environments in which they were regularly excluded, ignored, misunderstood, or undermined by the colleagues around them before the pandemic.” https://www.buzzfeednews.com/article/venessawong/workers-returning-office-racism

Parents are also another “affinity” group that is struggling with returning physically to the office. Indeed, many people are choosing to quit their jobs rather than go back to the old work structure. https://www.bloomberg.com/news/articles/2021-06-01/return-to-office-employees-are-quitting-instead-of-giving-up-work-from-home

So what can leaders do within their organizations to ease all employees, and particularly, employees of color and employees with diverse needs, back to the physical work place?

For one, employers need to understand the difference between “equality” and “equity.” For a lot of parents, for instance, getting childcare has been difficult; a lot of independent day care centers went out of business during the pandemic and schools were closed. It may take longer for parents to make the necessary arrangements for their children in order to be physically present in the office every day. https://www.cnn.com/2021/05/19/economy/parents-office-return-child-care/index.html

Now may also be a good time to make sure that your company’s “commitment to racial equity” in light of the protests last year is not just performative. Issuing beautiful statements for Black History Month, Juneteeth, Pride, etc., while your employees cower at home, scared of returning to an office environment rife with microaggressions and biases is not the look. https://fortune.com/2020/06/19/performative-allyship-working-while-black-white-allies-corporate-diversity-racism/

One great way to kickstart equity in your organization is to take a look at your employee handbook and policies to make sure that there is, in fact, equity and that there is no disparate impact for certain employees.  For example, do you have a flex work policy that accounts for the fact that parents may need to drop off/pick up children during traditional work hours? https://www.forbes.com/sites/forbeshumanresourcescouncil/2021/05/04/as-we-return-to-work-four-ways-your-company-can-better-support-parents/?sh=be0e00a2cbb3

Are there stop gaps for performance evaluations (e.g., bottom up reviews, multiple layers of feedback, etc.), so that everyone, but in particular, women and BIPoC, are getting accurate and fair evaluations and opportunities to advance? “In a well-publicized résumé study by the economists Marianne Bertrand and Sendhil Mullainathan, applicants with White-sounding names (such as Emily Walsh) received, on average, 50% more callbacks for interviews than equally qualified applicants with Black-sounding names (such as Lakisha Washington). The researchers estimated that just being White conferred the same benefit as an additional eight years of work experience—a dramatic head start over equally qualified Black candidates.” EIGHT YEARS—simply by being white. So can we honestly say that such a bias does not bleed over into employment conditions, evaluations and promotions? No, we cannot. https://hbr.org/2020/09/how-to-promote-racial-equity-in-the-workplace

The good thing is that studies have also shown that being aware of potential bias is an excellent way to interrupt them. There is hope for us yet. Please keep that in mind when asking employees to return to the office.

 

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

05/27/21       Nidia Solano-Sanchez v. State Farm Mut. Auto Ins. Co.
United States District Court, Eastern District of Pennsylvania
In a Suit to Recover for Alleged Breach of Contract and “Bad Faith” Pertaining to a Claim for Underinsured Motorist Coverage, the Court Provided a Nice Review of the Law and Decided Issues of Privilege Including Attorney-Client Communications, Work Product, Reserving and Claim File Materials

Plaintiff made a motion to compel discovery related to the depositions of Defendant's claims adjuster and corporate designee. Defendant submitted unredacted versions of disputed documents listed in its privilege log for in camera review.  The Court granted in part and denied in part Plaintiff's requests.

Plaintiff filed the lawsuit asserting claims for declaratory judgment, breach of contract, and bad faith against State Farm arising from her claim for underinsured motorist ("UIM") benefits. Plaintiff issued notices of deposition to Defendant's claims adjuster and corporate designee and requested that Defendant produce a number of documents.

Defendant objected entirely to the deposition of a corporate designee on the grounds that it is "unnecessary, harassing, and not proportional to the needs and issues in this matter." Defendant also objected specifically to the scope of certain matters for examination on the basis that they sought information protected from discovery. The documents objected to included:

•    State Farm internal file notes regarding communications with legal counsel; UIM strategy and evaluation; and claim handling.

•    Amount of reserves and legal expenses on the UIM and Medical Payment claims.

•    State Farm Evaluation Report for Plaintiff's UIM claim.

•    State Farm internal emails regarding receipt of this lawsuit, and assignment to legal counsel.

•    ISO Claim Search report.

•    Asset report regarding the tortfeasor for consent to settle/waiver of UIM subrogation purposes.
 

Reserve Information:

Defendant had redacted all of the information in the claims file related to reserves, maintaining that such information is "confidential, mental impression, and not relevant."  District Courts within the Third Circuit are split on the question of whether reserves are discoverable in bad faith cases. The prevailing view is that reserves may be discoverable in a bad faith action when the claim relates to the insurer's failure to settle or where there is a discrepancy regarding the value of the claim. In contrast, when the bad faith claim is based on a denial of coverage and does not involve the value of the claim or the estimation of liability, the reserve information requested is neither relevant nor reasonably calculated to lead to the discovery of admissible evidence.

Here, Plaintiff's claim for bad faith involved Defendant's failure to settle the claim because of a discrepancy regarding the value of the claim rather than an outright denial of coverage. Thus, the reserve information was relevant and had to be produced. To the extent that Defendant's reserve for Plaintiff's claim is much larger than the amount it had offered Plaintiff in settlement, a jury might reasonably infer, in the absence of some plausible explanation by the Defendant, that Defendant was disregarding its obligation to deal reasonably with its insured. 

Defendant also argued that the reserve information is protected by the work-product doctrine as it falls under "mental impressions."  Mental impressions and opinions of the party and its agents are not protected by the work product doctrine unless they are prepared for an attorney in preparation for possible litigation.  Additionally, work product prepared in the ordinary course of business is not immune from discovery. Defendant did not argue that its reserves were prepared in anticipation of litigation or other than in the normal course of business. Accordingly, Defendant was directed to produce unredacted versions of its documents discussing reserve information regarding Plaintiff's claim.

 

State Farm Internal Emails Regarding Receipt of this Lawsuit and Assignment to Legal Counsel:

Defendant's privilege log indicates that these documents were withheld on the grounds that the information is "work product, mental impression, confidential, and post litigation." After in camera review, the Court found that the documents have been appropriately withheld. These documents, dated after the lawsuit was filed, were protected by both attorney-client privilege and the work-product doctrine as the communications were made with the purpose of seeking legal advice and discuss litigation strategy. Thus, Defendant was not required to produce these documents.

 

ISO Claim Search Report:

The ISO Claims Search Database is a nationwide database utilized by insurance companies to track claims history and detect fraud. Defendant withheld the report on Plaintiff's claims history on the basis that it is not relevant. For discovery purposes, relevance is broadly and liberally construed. Information need not be admissible in evidence to be discoverable. This Court found that this information is relevant to Plaintiff's bad faith claim to the extent that it is a factor Defendant considered in evaluating Plaintiff's UIM Claim.

 

Asset Report for Consent to Settle/Waiver of UIM Subrogation Purposes:

Defendant withheld the asset report of the tortfeasor in the motor vehicle accident underlying this lawsuit on the grounds that it is not relevant and is confidential. The Court agreed that the asset report is not relevant and need not be produced.

"Relevant evidence" means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Fed. R. Evid. 401. The asset report was generated the same day Plaintiff received consent to settle with the tortfeasor’s insurer. The Court found that the asset report had no relevancy to the claims Plaintiff asserts arising from Defendant's failure to settle her claim for UIM benefits.

 

State Farm Evaluation Report for Plaintiff's UIM claim:

Defendant withheld its evaluation report for Plaintiff's UIM claim on the following bases, "work product, mental impression, attorney-client, confidential, and post litigation."  These documents consisted of not only the final evaluation of Plaintiff's claim prepared by claims personnel, but also a detailed history of all updates made by claims adjusters to the report beginning on the date Plaintiff settled with the tortfeasor.

Attorney-Client Privilege:

Defendant claimed that these documents are protected by the attorney-client privilege.  The privilege bars discovery of confidential communications made between attorneys and clients for the purpose of obtaining or providing legal assistance to the client. The privilege does not apply to the disclosure of the underlying facts by those who communicated with the attorney.  Protection of the attorney-client privilege extends only to communications and not to facts. The evaluation report contained no communications between Defendant and its counsel. Rather, the report contained a series of notations regarding the claim by the claims adjuster. Thus, the attorney-client privilege was inapplicable.

Work-Product Doctrine:

Fed. R. Civ. P. 26(b)(3) protects "documents and tangible things" from discovery that are prepared in anticipation of litigation or for trial by or for another party or its representative. A document is prepared in anticipation of litigation when in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation. In contrast, materials prepared in the ordinary course of business are not protected.  The burden of demonstrating that a document is protected as work-product rests with the party asserting the doctrine.

Because insurance companies are required to evaluate claims made by their insureds in the ordinary course of their business, discovery disputes involving an insurance company's claims file often present problems for the parties.  An insurance company cannot reasonably argue that the entirety of its claims files are accumulated in anticipation of litigation when it has a duty to investigate, evaluate and make a decision with respect to claims made by its insureds.  Nevertheless, a mere claim of bad faith is not enough to shatter the work-product privilege.  At some point in its investigation an insurance company's activity shifts from mere claims evaluation to an anticipation of litigation.

Thus, to determine whether Defendant properly invoked the work-product doctrine, a Court must first establish when Defendant reasonably anticipated litigation. The party asserting work product protection must demonstrate that it subjectively anticipated litigation, and that the anticipation was objectively reasonable.  A party's anticipation of litigation is objectively reasonable if there existed an identifiable specific claim or impending litigation when the materials were prepared. 

A defendant insurer reasonably anticipates litigation when it was apparent that the plaintiffs demand far exceeds the insurer's valuation of the claim. However, a defendant could not have reasonably anticipated litigation when it was still collecting information from the plaintiff to continue its review of the claim prior to determining the demand for payment in the amount of the policy limit was not warranted.  The Court concluded that Defendant reasonably anticipated litigation with Plaintiff regarding her underinsured motorist claim on the date it decided that the Defendant had determined Plaintiff's demand for payment in the amount of the policy limit exceeded its expected offer for settlement.

 

State Farm Internal File Notes Regarding Communications with Legal Counsel; UIM Strategy and Evaluation; Claim Handling:

Defendant redacted all of this information on the grounds that such information is "work product, attorney-client, confidential, mental impression, not relevant, and post litigation." Having reviewed these documents, the Court said that they appear to be an account of all updates made on the handling of Plaintiff's claim by the claims adjuster. In accordance with the analysis above, any entries made prior to the date Defendant had determined Plaintiff's demand for payment in the amount of the policy limit exceeded its expected offer for settlement were discoverable.  Notably, the claims adjuster's summary of a statement under oath had to be produced. Any redactions made due to the attorney-client privilege were appropriately redacted as they are summaries of communications between the claims adjuster and counsel.

 

Deposition of the corporate designee:  

Plaintiff's notice of deposition of the corporate designee, described the matter for examination as:

"The thoughts, analysis, evaluation(s), rationale(s), investigation, actions, research, review, and reasoning of the handling adjuster's supervisor at Defendant insurance company who personally participated in the decision to offer $6,000 on or about October 25, 2019, to resolve Plaintiff's claim. (The term "participated" as used in this paragraph includes, without limitation, reviewed any documents, analyzed and/or discussed the matter with anyone, approved the offer of compromise or provided any information or input whatsoever into the decision).”

Defendant objected to this line of questioning contending that this information is protected by the work-product doctrine arguing that information regarding its claim evaluation and strategy is protected from discovery as it was prepared "in anticipation of litigation/after litigation was filed." It also objected maintaining that its communications with its legal counsel are clearly and unequivocally protected by the attorney-client privilege.

As already discussed, the Court said that the attorney-client privilege bars discovery of confidential communications made by the client during the course of representation, although it does not apply to the "disclosure of the underlying facts by those who communicated with the attorney.”  Therefore, Plaintiff was not permitted to ask the deponent about specific communications she had with counsel related to this matter for examination but was permitted to inquire as to the factual basis for the decision not to offer Plaintiff her policy limits.

In regard to the work-product doctrine, the Court already observed that Fed. R. of Civ. P. 26(b)(3) protects "documents and tangible things" from discovery that are prepared in anticipation of litigation or for trial by or for another party or its representative.  The work-product protection also extends to intangible work product.  Thus, Plaintiff's counsel had to limit any questions under this matter for examination to before a specific date decided by the Court. 

 

HEINTZMAN’S HIDEOUT
Nicholas J. Heintzman
[email protected]

06/24/21       New York Core Chiropractic, P.C. v. Ameriprise Ins. Co.

Civil Court of the City of New York, Queens County

Queens County Court Parses the Interplay Between Two Timeliness Requirements Regarding Denial of Claims and Scheduling of EUOs

Plaintiff, New York Core Chiropractic, P.C. (“Plaintiff”), sued Defendant, Ameriprise Insurance Company (“Ameriprise”), to recover unpaid first party No-Fault benefits for medical services it provided to its assignor. Plaintiff repeatedly failed to attend scheduled EUOs, so Ameriprise moved for summary judgment.

At issue was the interplay between two timeliness requirements imposed on insurers attempting to deny No-Fault benefit claims: 1) insurers must pay or deny No-Fault benefit claims “within 30 calendar days after receipt of proof of claim”; scheduling letters requesting EUO’s have a tolling effect on the 30 calendar days requirement, if said scheduling letters are also brought within the initial 30 day period; and 2) within 10 business days of receipt of P’s claims, insurer must send prescribed verification forms it requires prior to payment of initial claim, and additional verification forms must be requested within 15 business days of receipt of prescribed verification.

The Court first held that the EUO scheduling letter constituted an additional verification request, subject to the 15-business day requirement, and, that Ameriprise was 2 days late in meeting this requirement. The Court next held that despite Ameriprise’s lateness, its scheduling letters still had a tolling effect on the 30-calendar-day deny/pay requirement because it sent the scheduling letter to Plaintiff within the initial 30 calendar days of receipt of proof of plaintiff’s claim. Finally, the Court held that the effect of Ameriprise’s 2-day lateness was merely that it had 28 days to bring the EUO scheduling letter – not the typical 30.

 

NORTH OF THE BORDER
Heather Sanderson
SANDERSON LAW
Legal Counsel

[email protected]

 

Ontario:
A Trial Judgment on the Meaning of “Civil Action”

One of the tenets of CGL coverage is the provision of a defence to civil proceedings. A second tenet is that the costs of that defence is in addition to the policy limits.

Insurers use different words to describe the civil proceedings that they will defend. Some say they defend ‘suits’; some say they defend ‘civil actions’.

What is “a civil action” exactly?

That was the issue in The Corporation of the City of Belleville v. Gore Mutual Insurance Company, 2021 ONSC 3854, which was heard via zoom in December. The decision of the Ontario Superior Court was released June1, 2021, and can be found here.

Belleville, Ontario, is a city of some 50,000 located on the shore of Lake Ontario in the corridor between Toronto and Ottawa. Starting in the late 1800s, communities throughout North America produced coal gas as fuel for heating and lighting. The coal gas was produced by heating coal and other ingredients in large brick ovens, collecting and filtering the coal gas and then storing the coal gas in tanks. A by-product of the manufacture of coal gas was coal tar. Coal tar was sold as a product and excess coal tar was disposed of as waste.

There was a coal gas plant in Belleville. The coal gas plant operated within the City of Belleville from approximately 1854 to 1947.  With the emergence of natural gas and electrical utilities becoming economically viable alternatives, the gas manufacturing plants in Ontario were phased out largely by the late 1950's. The Belleville plant was similarly phased out in the 1950’s.

Environmental investigations have been conducted at the site of the former coal gas plant. The Ontario Ministry of the Environment and Climate Change (“MOECC”) issued a Director’s Order on August 31, 2015, directed against the former and current owners and occupiers of the land ordering them to eradicate contaminants (coal tar, PAHs, VOCs and PHC) that were discharged over 93 years. One of the ‘orderees’ was the City of Belleville which was required to:

(a)    Retain a Qualified Person as defined in the order;

(b)    Submit a work plan prepared by a “Qualified Person” regarding:  abatement of discharge, reducing adverse effects and notifying people and entities affected by the discharge of contaminants;

(c)    Consult with such people and entities; and

(d)    Submit interim and final reports with respect to the work.

Belleville appealed the Director’s Order and is seeking relief at the Ontario Environmental Review Tribunal (“ERT”).

Belleville reported the matter to the insurers that had issued CGL policies to Belleville during the time of its ownership and occupancy of the land upon which the coal gas plant stood. Belleville requested a defence to the Director’s Order and funding of the appeal.

Each of these insurers had issued policies that defended against covered “civil actions”. Each of the insurers denied any liability to pay defence costs on the basis that the Director’s Order was not a ‘civil action’. A motion was brought to determine if the denial was correct.

Belleville relied upon American case law that favoured a broad definition of ‘civil action’. Following an analysis of those cases, the Ontario court concluded that “…it cannot be said that there is a consistent, authoritative approach in the United States regarding whether environmental regulatory proceedings are civil actions within the meaning of insurance liability policies…” accordingly, “… the American jurisprudence is not useful or relevant to the issue before the Court because of the divergent views taken in the American cases.” Furthermore, the court pointed out that the Ontario Court of Appeal endorsed the trial judgment in Brockton which held that the costs of civil actions are covered but the costs incurred in response to regulatory and investigative authorities are not. [Brockton (Municipality) v. Frank Cowan Co., [2000] O.J. No. 4455 (S.C.), at para. 78, varied in part on other grounds (2002), 57 O.R. (3d) 447 (C.A.).]. Brockton must be followed. Accordingly, Belleville’s claim for defence costs was denied.

This judgment does not comment upon whether the result would have been the same if the insurers had agreed to defend “suits” or “claims”. An appeal is under active consideration.

My good friend and fellow Canadian Defence Lawyer member, Tom Donnelly, acted for one of the successful insurers in this case.
 

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