Coverage Pointers - Volume XXIII, No. 20

Volume XXIII, No. 20 (No. 615)
Friday, March 18, 2022
A Biweekly Electronic Newsletter

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

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

© Hurwitz & Fine, P. C. 2022
All rights reserved

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

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

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

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


Dear Coverage Pointers Subscribers:

Do you have a situation?  Everyone seems to have one these days.  Have no fear, we LOVE situations.  As always, while we know you enjoy our stirring cover letter and history tidbits from 100 year ago, contained in this letter, you’re missing something if you don’t read the attached issue of CP.

I am back from Palm Desert, California and the Winter Meeting of the Federation of Defense & Corporate Counsel.  It was a pleasure to be in warmer weather.  I was honored to receive FDCC’s Lifetime Achievement Award but believe, deep in my heart of hearts, that I am too young to receive it.  I thank my many friends at the FDCC for this extraordinary moment in my professional life.

Spring is around the corner, and we’ll be back, very soon, at the Land of the Blue Martinis, where you can see the snow has melted but Lake Erie will remain iced for a few more weeks.  The Canadian government just dissolved the COVID testing requirements, in place for two years, so I won’t need to take a PCR test every time I enter the country.


Comprehensive Insurance Disclosure Act Training Now Available:

We have already conduced five virtual training programs for insurers (one more on Friday), to Teach the responsibilities and requirements of the newly enacted and amended CIDA statute.  Each training session takes approximately 30-40 minutes, including time for Q&A.  Contact us to schedule:



Hope to see you in San Antonio.



Description automatically generated

Contractual Indemnity & Additional Insureds Liability
State Approved CE Credits: DE FL NC OK TX

Tuesday, April 05 — 10:30 - 12:00
Wednesday, April 06 — 3:30 - 5:00

Dan Kohane, JD, Senior Partner, Hurwitz & Fine, P.C., Buffalo, NY
John Hanlon, AIC, SCLA, Complex Claims Unit Manager, Selective Insurance Group, Branchville, NJ

  • Distinguish between an insurer's obligations to those who qualify as additional insureds and those who benefit from contractual indemnity obligations
  • Evaluate how tenders of defense and indemnity should be made under both policy and trade agreement
  • Describe the protocols to consider when tenders are received under both insurance policy and contracts
  • Identify the relevant factors when sending or receiving tenders


Need a mediator?:

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

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

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

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

Try mediation.

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


Training, Training and More Training:

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



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

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

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

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

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

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


Peiper on Property and Potpourri:

Today marks one of those great days on the American sports calendar; the intersection of the Opening Round of the NCAA Tournament with St. Patrick’s Day.  If ever, ever, there was a day to sneak out of work a few minutes early, today is the day.  Best of luck on your respective brackets. At press time, I’m already in last place at the highly competitive, highly prestigious Hurwitz & Fine pool.  It’s not how you start, though, but how you finish. Watch this space for updates.  (p.s. someone named Siegel is also in last place currently). 

With no UB Bulls in the men’s field this year, I am a bit of a free agent.  Really, I’m just looking for a story to make it more interesting to watch.  As some of you may know, my wife is an Assistant Athletic Director at UB and in that capacity has gotten to know quite a few faces that are involved with the tournament.  Alabama is led by Nate Oates who, prior to going to Tuscaloosa, brought the Bulls to unprecedent heights and prestige.  Nate is a great basketball coach, and a great guy to boot.  We’ll root for the Tide as long as they’re alive.

UB has also seen their share successful AD’s pass through, as well.  We’ll have a rooting interest for Michigan (Ward Manuel), Tennessee (Danny White) and Auburn (Allen Greene) as former alums of Upstate’s Blue and White. 

As for me, I have a closer connection with USC.  The Trojans are currently coached by fellow Greyhound and hometown legend, Andy Enfield.  I had the very formative life experience of playing four straight years of high school basketball for Andy’s late father, Bill, and recall those memories fondly.  We’re not sure if it was Andy’s great shooting that impacted his dad’s openness to a “3-happy” offense years before it was cool, or if was Bill who impacted Andy’s open, fun style of basketball.  Either way, having a green light to shoot a three at almost anytime made for some fun basketball.

As for the women’s side of things, a special shout out to UB who qualified for the tournament for the fourth time in six seasons.  They’re a 13 seed who will take on the Lady Volunteers in Knoxville on Saturday afternoon. 

No legal news to discuss, but we’ll try harder next time.  See you in two weeks. 

Steven E. Peiper

[email protected]


Lynching Still Common a Century Ago:

The Standard Union
Brooklyn, New York
18 March 1922


WRIGHTSVILLE, Ga., March 18. —A mob early to-day stormed the jail at Kite, Georgia, overpowered the jailer and captured Jim Drisdom, a negro prisoner, according to reports. Drisdom is charged with pouring gasoline over a young white woman and setting her on fire Tuesday, when she refused his demand for money.


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

Springing forward, friends! Though, I have to say, I am really, really not a fan of daylight savings time each Spring. I’m already not a morning person by nature but losing an hour of sleep and having to essentially get up an extra hour early takes me a very long time to get used to each year. I think that it’s not so much the getting up early part, but the fact that I’m a night owl and it takes a long time for me to fall asleep. Not only am I going to bed now well past midnight but getting up while it's still semi-dark is just painful. I dislike daylight savings time so much, that I don’t bother to change a number of the clocks in my house in protest. So, they’re only correct six months out of the year. You get used to it.

Now, this week in the Wide World, again we have Evan guest-writing about the latest from the Second Circuit Court of Appeals. This time, we have a COVID-19 business loss claim (they still keep coming down, but the courts move slowly!). In Deer Mountain v. Union Insurance, the Court held, as expected, that direct physical loss to property is required in order for coverage to be triggered. This is in line with all of the rest of the cases that have come down on this point. Just because a business was shuttered temporarily, if it did not suffer a direct physical loss, it will not be entitled to coverage.

Onward and upward! And until next time,

Agnes (and Evan)
Agnes A. Wilewicz

[email protected]


Dead Lawyer Saved by Fire Department:

Daily News
New York, New York
18 March 1922

Firemen Save Man, But Find
He’s Been Dead Several Days

Firemen risked their lives yesterday to rescue a man who had been dead several days in a rooming house on 15 East Ninetieth Street. He was identified as Eugene F. Barard, a retired lawyer.

The blaze damaged the apartment of Mrs. M. F. Maes, on the third floor, to the extent of about $6,000.

Barard was taken by the firemen of Truck 15 from his room on the fourth floor, above the fire. It was though that he had been accidentally killed in his room by illuminating gas.

The fire was but a few feet from the mansion of Andrew Carnegie on Fifth Avenue.


Barnas on Bad Faith:

​Hello again:

I am finally finding some reasons to enjoy my favorite sports teams again.  Baseball is back, and the Blue Jays are making some nice moves to improve the team.  The Sabres had a couple nice wins over the Golden Knights and rival Maple Leafs, and we welcomed former captain, Jack Eichel, back to town with a chorus of boos.  Meanwhile, NFL free agency has opened, and the Bills have made some prudent additions to hopefully offset a couple of departing free agents.  If only I had Syracuse in March Madness starting tomorrow, things would really be looking bright.

Meanwhile, we are less than one week from DRI’s 2022 Insurance Coverage and Claims Institute, taking place March 21-23, 2022.  If you haven’t registered yet, now is the time!  Hear from experts about how you can place your practice at the forefront of the future of insurance coverage, and delve into hot topics like cybersecurity, firm management in a post-COVID world, and more.  Plus, expand your book of business while enjoying the city of Houston during networking events, dine-arounds, and more.  I personally am looking forward to the projected high temperatures between 66 and 74 degrees!  View registration information here, and if you are in Houston make sure you say hello.

Brian D. Barnas

[email protected]


Soak Your Brain with Booze, Three Years for Murdering Your Wife:

Daily News
New York, New York
18 March 1922

Man With Wet Brain Soaked
Three Years for Shooting Wife

William Drew, a prosperous baker of Paterson, was suffering from an "alcoholic wet brain" when he pursued his wife through her home and shot her three times with a revolver last July, according to Dr. Thomas A. Clay, health officer of Paterson, N. J., who testified at his trial in Paterson yesterday on a charge of atrocious assault with intent to kill.

Drew was sentenced to serve from one and a half to three years in State's prison. He is still suffering from an unhealed fracture of the jaw received when he jumped from the third floor of his wife's home to the yard beneath after the shooting.


Off the Mark (featuring Kyle A. Ruffner):

            Dear Readers,

While I am not a big fan of losing the hour of sleep that comes with daylight saving time, the silver lining is that it is still light out after work.  With the warmer weather and the longer days, it’s starting to feel like spring.  My kids have already started talking about bike rides and after dinner walks to get Italian ices or ice cream.  After sitting around the house all winter, it will be good to get some fresh air and exercise.

Here's Kyle with two interesting construction defect cases.  The first case, Pa. Nat’l Mut. Cas. Ins. Co. v. River City Roofing, LLC, is from the District Court for the Eastern District of Virginia, Richmond Division.  The second case, Westfield Ins. Co. v. Zaremba Builders II LLC, is from the District Court for the Northern District of Illinois, Eastern Division.  Both courts found no duty to defend.

Although unlikely to last very long, it’s nice to have some warmer weather ahead the next few days.  I should have a pretty fun weekend ahead - I celebrated my 26th birthday last week and I was lucky enough to get tickets to March Madness, one of my favorite sporting events of the year, for the first-round games in Buffalo on Thursday night.  I am also looking forward to some St. Patrick’s Day festivities this weekend along with celebrating my brother’s birthday (which also falls on St. Patrick’s Day – lucky him!). ~ Kyle

Until next time …

Brian (and Kyle)
Brian F. Mark

[email protected]


Radio Column Introduced in Buffalo Evening News, 100 Years Ago:

Buffalo Evening News
Buffalo, New York
18 March 1922


BUFFALO and Western New York are becoming thickly dotted with receiving stations for radio telephone messages. Interest in the old "wireless" which used the telegraph code of dots and dashes, was as nothing compared with the interest in hearing speeches, messages, music and news out of the mysterious ether.

This interest is sure to develop mightily in the near future, with the licensing of broadcasting stations here. Stores, not only electrical supply houses, but even department stores, report brisk demand for apparatus.

The Buffalo EVENING NEWS believes this remarkable development of public interest is sufficient warrant for daily publication of news and instruction concerning the radio telephone. Amateurs also are invited to write in, and to ask our help in solving their problems. Address Radio Editor.


Fleming’s Finest:

Hi CP subscribers:

Florals? For Spring? Groundbreaking. We are emerging from the cold winter, and the pastels and florals are out in full force. This week, I pre-ordered a “butter lamb” cake. I am told the butter lamb, whipped butter in lamb form, is an important part of Easter in Western New York. A local ice cream place makes giant butter lamb ice cream cakes, and these coveted cakes sell out every year. Looking forward to living large in April with my regular and giant butter lambs.

This week, I can offer you a case from the Vermont Supreme Court involving choice of law and loss-allocation. In an interlocutory appeal, the issue before the court was whether Vermont or Georgia law applied to a coverage dispute between the claimant and the insurer. Since Georgia law was unsettled on the issue, the court concluded there was no conflict with Vermont law and applied Vermont law.

Happy Spring!

Katherine A. Fleming

[email protected]


How To Reduce Insurance Costs – A Century Ago – Hasn’t Changed Much:

Vancouver Daily World
Vancouver, British Columbia, Canada
18 March 1922


What Might Happen if Owner
Would Take More Precautions

NEW YORK, March 18.—When the motoring public shows a concerted movement toward greater care in driving, then will automobile insurance premiums come down.

That was the message, smacking of advice from A. B. Roome, New York insurance expert who has been investigating methods tending to reduce auto insurance rates.

Until that “minimum of carelessness” in driving is attained, Roome says, lower rates will have to be achieved by other means. Such are:

  1. Making the motorist stand a fixed portion of the loss.

  2. Requiring a bill of sale with each purchase.

  3. Registration for the life of the car.

  4. Vigorous and prompt enforcement of traffic and theft laws.

  5. Installation of approved theft devices.

“The most promising means we have found to lower insurance rates is making the assured a co-insurer of the loss. This increases the care taken by the owner.

“On the co-insurance basis the reduction in premiums is about 75 percent, where theft, fire and collision insurance also are taken out. On theft insurance alone the reduction is 20 per cent.

“Theft devices are useful only in that they delay the get-away. There are 75 such devices which have been approved by the Underwriters’ laboratories in Chicago and for use of which a reduction of 15 per cent is made in the premiums.

“But after all, the quickest reduction in rates would come with the elimination of carelessness on the part of the car owner.”


Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

March Madness is upon us! I have always had a fondness for watching tournament basketball and this year is no different. The brackets are in, the games are on, and expectations are above. Now, I haven’t watched a single NCAA Div. I basketball game all season—but I like to go in fresh and unjaded by the past. Tournament ball is its own animal.

In my column this week, I have a brief write-up regarding a bill passed by the Senate that could relax exam requirements for independent insurance adjusters in New York.

Until next time,

Ryan P. Maxwell

[email protected]


More Crime, More Insurance Companies:

Pittsburgh Daily Post
Pittsburgh, Pennsylvania
18 March 1922


Some Companies Are Forced to Increase Rates.


Insurance companies in the Pittsburgh district are doing a land-office business in consequence of the prevalent wave of burglaries, holdups and other forms of thievery here. Several Insurance representatives declare, however, that from the standpoint of the insurance industry, the present incoming business represents a loss rather than a profit, because they are paying out more money than they have received in the way of premiums.


CJ on CVA and USDC(NY):

Hello all,

It’s the most wonderful time of the year, March Madness. The yearly ritual of watching some of the best basketball players in the country battle it out on the court always intrigues me. I find that this tournament is much more inspiring to watch than any professional championship. Not only is there exceptional basketball being played, there are always personal stories, tear-jerking tales, and interesting anecdotes that accompany each team. I love watching the drama unfold and the stories play out.

While we have seen more activity in the initiation of coverage cases surrounding the CVA, these are still very much in their infancy with no decisions to report. This edition brings us back to the basics. Our unfortunate plaintiff had a costly sum of goods go up in flames, even more unfortunate is the fact that our plaintiff failed to schedule the warehouse as an “approved location” on the operative insurance policy. The court here held that, even if warehouses share a name, it is the address that matters.

Until Next Time,

Charles J. Englert, III


... The More Things Stay the Same … Soviets Increase Terrorism Against Political Opponents – A Century Ago:

The New York Times
New York, New York
18 March 1922


British Laborites Hear Soviet
Will Start Treason Trials.

Copyright, 1922, by The New York Times Company. Special Cable to THE NEW YORK TIMES.

LONDON, March 17.—Telegrams have been received by Arthur Henderson on behalf of the Labor Party here saying that the Russian Soviet Government is about to renew the policy of terrorism against political opponents.

It is stated in these messages originating from the Russian delegation of the Labor Party, that leaders of the Social Revolutionary Party who have been in prison for three years are to be tried for treason on March 20. It is declared that under cover of this trial the communists intend to conceal the settling of accounts with their political enemies, “possibly of murder.”

Henderson has telegraphed to the communist leaders expressing alarm and strongly urging that no injury be done to political prisoners. He had suggested that the trial should be adjourned pending a meeting of international delegates to be held shortly in Berlin.


Dishing Out Serious Injury Threshold:

Dear Readers,

Happy St. Patrick’s Day! Hopefully, everyone can enjoy the warmer weather and the longer daylight hours to go out and have a drink.

In the Serious Injury Threshold world, we don’t have any cases since the last issue that touch on any substantive Serious Injury Threshold Issues. Be on the lookout for next issue!

Be well,

           Michael J. Dischley

           [email protected] 


Lenin Reported Near Death (although he lived until January 1924):

Times Herald
Olean, New York
18 March 1922


American in Russia says Soviet leader’s
brain affected, can’t live long

Riga, March 18.—Fred Keyes, a horse breeder of Elyria, Ohio, who has just arrived here from Russia revealed today he had heard in Moscow that Nicolai Lenin is suffering from a general break down which has affected his brain. Physicians who are attending Lenin have expressed the fear that the Soviet chieftain will not live long, according to Keyes.


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

As our readers know, H&F’s home base is solidly entrenched in Buffalo, but along with our partner, Diane, I support the vanguard of expansion in the wilds of Connecticut. But every once in a while, COVID permitting, I journey home to make a general nuisance of myself. Well, hang the mission accomplished banner. A week of lunch meetings, dinner meetings, meeting meetings, and, of course, bowling. Even with the broad adoption of Zoom and Teams, there’s nothing better than meeting up with your friends and colleagues and spending time with them face-to-face. COVID isolation, I hope, has taught us all about the power of personal connection.

Speaking of COVID, this edition we report on a pair of Connecticut COVID-19 business income decisions continuing to follow the overwhelming national trend holding that these claims—no matter how cleverly spun by the policyholder bar—are just not covered loss under almost every iteration of property policies.

While the masks are off, COVID is peaking again in Europe. It won’t be long until it’s back on our shores. So, keep keeping safe—and go Hoosiers!

Lee S. Siegel

[email protected]       


Hucksters Dispute Solved:

Buffalo Morning Express and Illustrated Buffalo Express
Buffalo, New York
18 March 1922


Sentence was suspended yesterday upon Robert Goldberg of No. 62 Mortimer Street, better known as Ruby Goldberg, when tried before Judge Standart tor assaulting Morris Snyder of No. 182 Hickory Street.

Snyder and Louis Goldberg, a brother of the defendant, were partners in the huckster business. They were in the rear room of a saloon on March 8th dividing the proceeds of the day and got into an argument about a refund to a customer. Snyder would not consent to paying half of the loss, so Robert entered the conference.

"That's what you get for having such a partner," he shouted to his brother.
“You're no brother of mine if you-continue to be his partner."

Snyder called Ruby Goldberg a vile name and Goldberg struck him.

Editor’s Note:  I checked.  A “huckster” is defined as a person who sells small items, either door-to-door or from a stall or small store.


Rauh’s Ramblings:

Hi everyone:

Nice weather has finally come to Buffalo!  While I may be getting ahead of myself, I turned off my heat and opened some windows.  I know the mild temperatures won’t last, so I am taking advantage of the fresh air while I can!  We took my son to the park last night and he was so excited to be able to play outside again.  Days like these can be such a tease when we know they won’t last!

This week, I found a case from the Fifth Circuit, involving a disabled employee who brought suit against his long-term disability carrier after they denied his continuing benefits following the determination that Plaintiff could perform sedentary work.  The Plaintiff claimed that the carrier did not conduct a thorough investigation and was only seeking ways to deny the claim rather than fairly evaluating it.  Take a look at my case summary for the Fifth Circuit’s ruling!

Until next time,

Patricia A. Rauh

[email protected]


Help Wanted?

Brooklyn Life
Brooklyn, New York
18 March 1922




Distributors Driggs Motor Cars.
The Sane Car of Economy.
241-243 Fulton Street
Brooklyn, N.Y.


Storm’s SIU Examen:

Hi everyone:

I had the honor of speaking last week at the Insurance Fraud Management Conference in Orlando, “Identifying and Evaluating Drug Inspired Claims”.  If this sounds like a topic of interest to you and your claims professionals, please let us know. 

“Your smile is your logo, your personality is your business card, how you leave others feeling after an experience with you becomes your trademark”. ~ Jay Danzie.

I hope you have an awesome two weeks until we write again!

Scott D. Storm

[email protected]


Some Things Never Change:

Buffalo Morning Express and Illustrated Buffalo Express
Buffalo, New York
18 March 1922


Paris, March 17 (A. P.)—George Chitcherin, the Russian soviet minister of foreign affairs, complains in a long radio dispatch sent to Premier Poincare that the situation of the soviet government is being misrepresented in the press of Western Europe, and that their alleged calumnies evidently are being inspired by the bourgeoise government. The dispatch adds it is feared in Moscow that the Russian representatives at the Genoa economic conference will find themselves confronted with decisions regarding Russia which already have been taken at conferences of the experts from which Russia was excluded.

M. Chitcherin declares it is possible for Russia to enter into normal relations with bourgeois countries, provided it is treated on an equal footing with them.


North of the Border: 

I am writing this on March 15, 2022 – the “Ides of March’ – the day some 2,060 years ago that Julius Caesar was assassinated by Roman senators in Pompey.  According to Greek historian Plutarch, a seer really did warn Caesar that he would be at the very least injured by the Ides of March.  Caesar did not heed the warning.  On the day of his death, he saw the oracle and joked that he had made it to the Ides of March, to which the seer responded the day had not yet ended.  The phrase wait-for-the-other-shoe-to-drop comes to mind.

Last week, I had the pleasure of attending the Federation of Defence and Corporate Counsel (FDCC) winter meeting in Palm Springs, CA. That was the first time I set foot in the United States is just over two years. One of the highlights of that week was watching Dan Kohane receive the FDCC Lifetime Achievement Award. This honour is bestowed on a member who is "above and beyond" in their career, in the Federation, and in their community.  It only fitting that this award went to Dan. The loud standing ovation that he received when the award was announced said it all. Bravo Dan. Bravo.

My column this week discusses a case applying a new statutory tort for the distribution of intimate images – the first of its kind and unlikely to be the last.

Heather Sanderson

[email protected]


Headlines from this week’s issue, attached:

Dan D. Kohane

[email protected]

Steven E. Peiper

[email protected]

Michael J. Dischley
[email protected]

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

[email protected]

Brian D. Barnas

[email protected]

Lee S. Siegel

[email protected]

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

Ryan P. Maxwell

[email protected]

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

Patricia A. Rauh

[email protected]

Scott D. Storm

[email protected]

Katherine A. Fleming

[email protected]

Heather Sanderson
Sanderson Law
Alberta, Canada

[email protected]

That’s all for this week.  See you soon.


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

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

Dan D. Kohane

[email protected]

Agnes A. Wilewicz

[email protected]

Patricia A. Rauh

[email protected]

Dan D. Kohane, Chair
[email protected]

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

Michael F. Perley
Agnieszka A. Wilewicz
Lee S. Siegel
Brian F. Mark
Diane L. Bucci
Scott D. Storm
Thomas Casella
Brian D. Barnas
Ryan P. Maxwell
Charles J. Englert
Patricia A. Rauh
Diane F. Bosse
Joel R. Appelbaum
Kyle A. Ruffner
Katherine A. Fleming (Admission Pending)


Steven E. Peiper, Team Leader
[email protected]

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


Dan D. Kohane
[email protected]

Alice A. Trueman


Jody E. Briandi, Team Leader
[email protected]

Diane F. Bosse

Topical Index
Kohane’s Coverage Corner

Peiper on Property and Potpourri
Dishing Out Serious Injury Threshold
Wilewicz’s Wide World of Coverage

Barnas on Bad Faith

Lee’s Connecticut Chronicles

Off the Mark

Ryan’s Capital Roundup

CJ on CVA and USDC(NY)

Rauh’s Ramblings
Storm’s SIU Examen

Fleming’s Finest

North of the Border


Dan D. Kohane
[email protected]

03/17/22       Merchants Mutual Ins. Co. v Dunham Piping & Heating Corp.
Appellate Division, First Department
Successful Determination of Default in Lack of Cooperation and Policy Coverage Case, a Win for the Good Guys.

Another appellate victory by our Brian Barnas. A St. Patty’s Day win, at that.

Merchants brought a declaratory judgment action against Dunham, a company sued in a Labor Law case, seeking a determination that Dunham was not an insured under the Merchants policy and that Dunham failed to cooperate with it in its investigation of the claim.  Dunham defaulted and Merchants, through Barnas, filed a motion for default judgment which included affidavits of regularity demonstrating service and an affidavit from Merchants justifying the lack of cooperation and lack of coverage.

The motion court failed to grant the default, but the First Department modified the order to grant the default and Merchants won its coverage determination.

03/15/22       Rivera v. Columbia Hicks Associates LLC
Appellate Division, First Department
When Party Pays a Judgment, It is Still Entitled to Proceed with Its Indemnity Claims Against Others

Hicks having been granted conditional summary judgment on its contractual indemnification claim against SDS and Greco at an earlier stage of this action, the law of the case doctrine bars SDS and Greco from seeking to dismiss the claim.

While Hicks funded its share of the settlement using proceeds from its own insurance carrier, the procurement of insurance by Hicks to pay the costs of its defense and liability "does not diminish the separate and distinct obligation of [SDS], its contractual indemnitor".

03/11/22       Morales v. Arrowood Indemnity Company
Appellate Division, Fourth Department
Almost All Claims Against Workers Compensation Carrier for Delaying Benefits, Including Breach of Contract, Negligence and Bad Faith Dismissed

Plaintiff’s lawsuit against Arrowood alleged, generally, that the Workers Compensation (“WC”) insurer delayed in making WC payments after Joseph Morales (“decedent”) was injured on two separate occasions while employed by Strategic Minerals (“employer”).

The appellate court dismissed the claims against two claims adjusters, as they were acting in the course of their employment and not subject to personal liability.

It also dismissed ten causes of action as being barred by the exclusive remedy of WC, the workers comp carrier standing in the shoes of its insured, the employer. Even the claims that the carrier intentionally delayed the claims cannot stand as there was no claim that there was a deliberate act to harm the employee.

The bad faith claims are also dismissed because there is "no separate cause of action in tort for an insurer's bad faith failure to perform its [contractual] obligations" under an insurance policy. In addition, plaintiff failed to allege or demonstrate "the creation of a relationship or duty between herself [or decedent] and [Arrowood] separate from this contractual obligation; therefore, no independent tort claim lies".

The plaintiffs claim of deceptive business practices under General Business Law §349 were dismissed as well, there being no allegation that this was anything other than a private contract dispute.  The fraud claims were dismissed as well, as there was no specificity of fraudulent conduct alleged.

The only claim that remained was that the decedent was injured due the denial of back surgery.

03/08/22       Wesco Insurance Company v.  Hi-Rise Steel Inc
Appellate Division, First Department
Properly Authenticated Policy Established that Party Seeking Coverage was Not an Insured.  Thus, Failure to Disclaim Promptly on Cooperation Did Not Create Coverage

Sainplice was the underlying plaintiff. Wesco moved to dismiss a claim by Hi-Rise Steel Inc. seeking a defense under a Wesco policy.

Sainplice's contended that the affidavit submitted by Wesco was not properly notarized by a notary public's stamped or printed signature had no merit. The key requisite of a signature is intent; thus, printed, and typewritten signatures have been upheld as valid.

Sainplice's challenge to the authenticity of the policy is likewise meritless. A party may properly authenticate evidence through any person claiming personal knowledge, including its agent. Thus, the affidavit of the vice president of Wesco's general managing agent sufficiently authenticated the Wesco policy, as he averred that he was fully familiar with the facts and circumstances provided in his affidavit and through his review of the records maintained in the ordinary course of the managing agent's business.

Wesco was not estopped from denying coverage based on its disclaimer for failure to comply with the policy's cooperation clause. Defendants were not named insureds and thus coverage, which did not otherwise exist, could not have been created by estoppel .  Neither Hi-Rise Steel nor Tuizer qualified as insureds under the Wesco policy, which identified only Hi-Rise Supply Corp. and HR Steel Inc. as named insureds.


Steven E. Peiper
[email protected]

03/08/22       Brown v. Shurgard Stor. Ctrs. LLC
Appellate Division, First Department
Breach of Duty to Procure Provides Full Damages Recovery Where Party Seeking Coverage was Self-Insured

The dispute arises out a slip and fall incident at a premises owned by defendant Shurgard.  Shurgard sought summary judgment by demonstrating that it was an out-of-possession landlord who only retained a right of entry.  Where, as here, the defendant was able to show that there was not a design defect on the property, but rather the dangerous condition was caused by snow and ice accumulating during a storm, it established its right to summary judgment.

In addition to the out-of-possession question, Shurgard also sought damages due to its lessee’s failure to procure insurance. The court noted that the lease required that a policy be provided, and it was clear that no such status was secured prior to the incident.  Because Shurgard was self-insured, it was entitled to full recovery of all costs expended in defending the case brought by Ms. Brown.


Michael J. Dischley

[email protected]

No cases to report this issue.      


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

[email protected]

03/01/22       Deer Mountain Inn LLC v. Union Ins. Co.
United States Court of Appeals, Second Circuit
Business Losses from COVID-19 Not Covered Unless Direct Physical Loss to Goods is Shown

Like many businesses, Deer Mountain Inn LLC (“Deer Mountain”) suffered loss of business revenue as a result of the COVID-19 pandemic and resulting governmental shutdowns. In an effort to recoup some of this lost revenue, Deer Mountain made a first party claim with its business insurer, Union Insurance Company. The issue taken up by the Second Circuit was whether there had to be a direct physical loss or damage to the property in order for the policy to be implicated, or whether the pandemic and resulting shutdown was enough.

In holding that, for the policy to be implicated, Deer Mountain must have suffered a direct physical loss to its property, the Second Circuit referred to a case from last year that explored an identical issue under strikingly similar policy language. In 10012 Holdings, Inc. V. Sentinel Ins. Co., 21 F.4th 216, 222 (2d Cir. 2021), the Second Circuit stated, “[U]nder New York law, the terms ‘direct physical loss’ and ‘physical damage’ do not extend to a mere loss of use of a premises, where there is no physical damage to the premises. Those terms instead require actual physical loss of or damage to the insured’s property.” There, the insured was refused coverage because its only loss was access to its storefront due to the governmental shutdowns; because the insured suffered no direct, physical loss to its goods, its business policy was not implicated.

This case merely adds to a long (and growing) line of case law standing for this exact proposition: for a business to recoup any of its losses under its business insurance policy, it is not enough to show loss of foot traffic due to the COVID-19 shutdowns; rather, the insured must show that it suffered direct, physical damage to its goods.


Brian D. Barnas

[email protected]

03/16/22       Williams v. State Farm Florida Insurance Company
District Court of Appeal of Florida, Second District
Invocation of Appraisal Process and Payment of Appraisal Award Did Not Cure Alleged Bad Faith Claim

Williams owned a home insured by State Farm. In July 2009, lightning struck Williams' home and caused significant property damage throughout. Williams filed a claim.  State Farm acknowledged coverage, determined the amount of loss, and made several payments over a span of eight years. In 2017, Williams disputed the amount of loss and State Farm invoked the appraisal provision. On May 4, 2018, while the appraisal process was still ongoing, Williams filed the statutorily required CRN, providing State Farm with notice of his intent to pursue a bad faith claim.  The appraisal award, which set the amount of the loss at $504,913.11, was ultimately issued on December 18, 2018. On February 15, 2019, State Farm paid the full remaining amount due.

Williams filed a first party bad faith action against State Farm.  In Florida, a condition precedent to a statutory bad faith action is providing the insurer with a CRN, which puts it on notice of the claimed violation.  Once the CRN is filed, the insurer has sixty days to either pay the damages resulting from such violation or correct the circumstances giving rise to the violation.  The statute does not modify or create an exception where the insurer invokes appraisal or fails to pay damages because a condition precedent to payment under the policy has not been fulfilled.

State Farm's response to Williams' CRN was not dependent on the ultimate determination of the amount of loss in accordance with the appraisal process.  As such, the court held that State Farm’s invocation of the appraisal process and payment of the appraisal award after the cure period did not, as a matter of law, cure the alleged bad faith claim.


Lee S. Siegel

[email protected]

03/01/22       Dr. Jeffrey Milton, DDS, Inc. v. Hartford Cas. Ins. Co.
United States District Court, District of Connecticut
Virus Exclusion Precludes Coverage for COVID BI Claim

In what has become a bit of dog-bites-man news, yet another trial court finds that there is no coverage for a COVID-19 business income claim. Here, the insured is a pediatric dentistry practice, located in Ohio, but sued The Hartford on its home turf in Connecticut. The court, applying Connecticut law, found that the virus exclusion precludes coverage. [Finding no conflict between Ohio and Connecticut law, the court applied the law of the forum state.]

The insured argued that it suffered a compensable loss as a result of the State of Ohio’s orders precluding non-emergent procedures. Alleging “[o]n information and belief, persons who were pre-symptomatic or asymptomatic and unknowingly carrying the coronavirus, including but not limited to employees, customers, and other business visitors, were present at insured property on various dates during 2020.” As a result, the insured claimed that it suffered a direct physical loss of or damage to its property because it was required to: 1) structurally alter and dimmish its functional property, 2) was denied the use of its property, 3) was required to make alterations; and 4) suspended its operations during the period of restoration.

The trial court would have none of it. Starting with the virus exclusion, the court pointed out that the overwhelming majority of courts, including those in Ohio and Connecticut, have found the exclusion to be clear and unambiguous. As a result, the policy excludes coverage for any loss or damage caused directly or indirectly by a virus. The insured argued that because The Hartford had not adopted the ISO 2006 virus exclusion, which includes communicable diseases, that the policy should be interpreted to include coverage for viruses impacting human health. The court, applying the plain and ordinary language of the exclusion, soundly rejected the insured’s wildly creative argument.

Paraphrasing a December 2021 COVID-19 BI decision, the court wrote that: “There can be no serious dispute that plaintiff's claimed losses were “caused directly or indirectly” by the COVID-19 virus…”

Although expunging any potential for coverage under the virus exclusion, in dicta the court confirmed that COVID-19 claims such as these do not cause direct physical loss or damage, as a matter of law. “This Court joins the growing number that have concluded that losses caused by the mere presence of COVID-19 are not “direct physical loss or damage” to the insured's property.” The court entirely rejected plaintiff’s assertions in its pleading that COVID structurally altered the surfaces of covered property or that they respiratory droplets remained in the air rendering the premises unsafe. The court, looking at other Ohio, Connecticut, and Second Circuit decisions, found that the law does not recognize the presence of COVID or the reconfiguring of space as property damage.

The court found controlling the Connecticut Supreme Court decision in Capstone Bldg. Corp. v. Am. Motorists Ins. Co., 67 A.3d 961 (Conn. 2013). There, the Court found that elevated CO2 levels was not physical damage. “The escape of carbon monoxide, without more, is not property damage.” Id.

The trial court went on to reject the remainder of the insured’s arguments, finding them all to be without merit.

[On March 3, 2022, a different Connecticut district court also granted an insured’s motion to dismiss COVID-19 BI claims. See ENT and Allergy Associates, LLC v. Continental Cas. Co. There, the trial court rejected these Connecticut medical practices’ argument that the actual presence of COVID-19 caused direct physical damage to their premises by denying use of the covered premises. The court systematically dispensed with every coverage theory propounded, finding that there was no direct physical damage or loss to insured property. The court especially rejected the insureds’ loss of use theory. “This theory fails, however, because plaintiffs do not assert any physical loss of, or damage to, property. Indeed, the Second Circuit recently rejected such a theory when applying New York law.” Citing 10012 Holdings, Inc. v. Sentinel Ins. Co., Ltd., 21 F.4th 216 (2d Cir. 2021),]


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

03/03/22       Pa. Nat’l Mut. Cas. Ins. Co. v. River City Roofing, LLC
United States District Court for the Eastern District of Virginia, Richmond Division
U.S. District Court Finds No Duty to Defend Where Underlying Claims did not Constitute an Occurrence and Were Otherwise Excluded from Coverage

This declaratory-judgment action arises out of an underlying construction defect action related to the construction of apartments.  In the underlying state court case, Branch Builds, Inc. (“Branch”) filed suit against River City Roofing, LLC (“River City”) and Shockoe Valley View Genesis (“Genesis”), subcontractors of Branch.  River City had agreed to cover roofing and all siding for the apartment complex and Genesis was in charge of construction.  The parties entered a contract in which River City warranted its materials and work, agreed to indemnify Branch, and make Branch an additional insured under its Commercial General Liability policy.

Genesis alleged the roof and siding were not supplied in accordance with industry standards, which allegedly caused water intrusion and property damage.  Branch repaired and compensated Genesis for damage and subsequently filed the action against River City to cover the expenses.  Pennsylvania National Mutual Casualty Insurance Company (“Penn National”), who insured River City under a commercial general liability policy, filed a complaint seeking a declaratory judgment action that it had no duty to defend River City in the underlying action or pay any amount for which River City is found liable.

The Court explained that courts in this District refrain from determining an insurance company’s duty to defend until after the state court makes a decision, so its review was constrained to whether the plaintiff has a duty to defend River City.  Additionally, Virginia courts adhere by the Eight Corners Rule, limiting the scope of review to the four corners of the complaint and policy, which excludes any extrinsic evidence.  Therefore, the Court did not consider evidence that the policies were cancelled prior to the manifestation of property damage, as this was not alleged in the underlying complaint.

Penn National alleged that River City’s allegedly faulty work was not covered because the damage arose from River city’s own work, the materials were defective, and the contractual liability exclusion applied.  According to the Court, the policy applies only to property damage that was caused by an occurrence that takes place in the coverage territory and excludes “property damage to your work arising out of it or any party of it.” The underlying complaint alleges that the roof and siding were not constructed in accordance with plans and industry standards. The alleged damage was entirely River City’s own work or arose from its own work, including the alleged water intrusion and damage that occurred due to the faulty roofing.  The Court held that the alleged damage due to faulty work and materials was not an occurrence.

Further, the exclusions for “your work,” “impaired property” and “contractual liability” operated to exclude coverage.  The “impaired property” exclusion included property other than “your work” that cannot be used because it incorporates your work that is thought to be defective or inadequate.  The Court held this exclusion and the “your work” exclusion applied here, as Branch alleged that the work by River City was defective, and the defective work caused damage to the roof itself and other parts of the property.  In addition, the “contractual liability” exclusion, which excludes property damage the insured is obligated to pay by reason of the assumption of liability in a contract or agreement, excluded coverage under the policy.  The Court held that although Genesis alleged the work was done negligently, all the claims against River City stem from the breach of a contractual duty.  Therefore, since every allegation Branch alleged against River City was excluded by one of the policy exclusions, the Court held that Penn National had no duty to defend River City in the underlying action.

03/02/22       Westfield Ins. Co. v. Zaremba Builders II LLC
United States District Court for the Northern District of Illinois, Eastern Division
U.S. District Court Finds No Duty to Defend as the Damages Fell Within the Scope of the Project

This insurance coverage dispute arose out of an underlying construction defect action related to the construction of a home.  In the underlying state court case, Zaremba Builders II LLC (“Zaremba”) contracted to build a house for the Vrdolyak Trust.  Zaremba agreed to supervise the construction of a single-family residence and provide labor materials, and other costs for the project.  The contract required Zaremba to perform the work in a workmanlike manner in strict accordance with its terms and provided that Zaremba was responsible for providing and installing appliances and cabinets.  

The underlying Vrdolyak Complaint set forth numerous alleged problems with the project, including the existence of painting defects, improper installation of the shower, and damage to the bathroom, which led to the presence of mold and rendered the master shower unusable.  Vrdolyak also alleges that Zaremba damaged property other than the house itself, such as the dryer and kitchen cabinets.  

In response, Westfield Insurance Company (“Westfield”) filed a declaratory judgment action seeking a declaration it owes no duty to defend or indemnify Zaremba.

As courts have consistently noted, CGL policies are intended to protect the insured from liability for injury or damage to the persons or property of other, they are not intended to pay the costs associated with repairing or replacing the insured’s defective work and product, which are purely economic losses.  Under the policy, Westfield is only required to pay the sums that Zaremba is obligated to pay because of property damage caused by an occurrence, defined as an accident.  Courts have determined that damage to a construction project as a result of a defect does not constitute an accident because it is the natural and ordinary consequence of faulty construction.  For coverage to apply, the alleged damage that occurred in the course of a construction project must be property outside the scope of the contracted-for project, such as where the defect or alleged negligence damaged something other than the project.  In contrast, coverage does not apply where the suit alleges damage to the construction project itself.

Courts distinguish between cases where the alleged damage falls under the scope of the project, resulting in no coverage, and cases where the work damages property outside the scope of the project, resulting in coverage.  Even if negligent conduct is alleged, the conduct must result in property damage outside the scope of the project.  In this case, the Court held that the underlying complaint alleged only damage to the structure of the home itself, which was within the scope of the contract.  Therefore, the Court held that this did not qualify as property damage under the insurance policy and the complaint failed to allege damage “potentially within the coverage provisions of the policy” and thus did not trigger Westfield’s duty to defend.

Zaremba also contended that the claims were covered under the policy’s additional Products-Completed-Operations coverage, as the problems caused by the mold occurred after the house was put to its intended use.  However, the Court explained that this coverage does not mean that once the project is complete, any damage to the project itself is covered.  This coverage protects against the possibility that the goods, products, or work of the insured, once relinquished or completed, will cause bodily injury or damage to property other than the product or completed work itself.  Since the complaint alleged only damage to the completed work itself, the house, this coverage did not apply.  Since all claims in the complaint consisted of pure economic injuries not covered under a CGL policy, the Court held that the insurer had no duty to defend or indemnify under the policy.


Ryan P. Maxwell
[email protected]

03/15/22       Bill Could Remove Licensing Exam For Certain IAs
New York State Senate
Senate Delivers Passed Bill to Assembly That Would Eliminate Independent Adjuster’s Licensing Exam Where Such IA is Nationally or State Certified

On Tuesday, the Senate passed (for the second time) a bill (S03579A) that would amend N.Y. INS. Law § 2108(f)(1) to remove the exam requirement for an independent adjuster that holds “a  claims  certification  issued  by a national or  state-based claims association with a certification program that consists of at least  forty hours of pre-exam coursework, a proctored exam of sufficient length to  adequately  determine the competency of the individual, and twenty-four hours of continuing  education required for  certification renewals on a biennial basis, subject to the approval of the superintendent.

The bill was delivered to the Assembly and referred to the Insurance Committee. The bill previously passed the Senate in March 2021 but died in the Assembly.


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

03/14/22       Ezrasons, Inc. v. The Travelers Indemnity Co.
United States District Court, Southern District of New York
When Interpreting Policy Provisions, the Plain and Ordinary Language of the Policy is the Only Acceptable Interpretation

Plaintiff brought this action seeking damages related to losses it incurred as a result of a fire in North Carolina warehouse, alleging that defendant breached the Travelers Cargo Elite Policy at issue. The Policy issued by Defendant insures against loss to plaintiff’s goods, plaintiff also paid an additional premium to protect against loss to goods in warehouse and processing facilities. Defendant added Endorsement No. 25 (the “Endorsement”) to the Policy. Section 5 of the Endorsement extends coverage to “goods and/or merchandise while temporarily detained in warehouse and/or processing locations” in the United States and Canada. Section 12 of the Endorsement states that defendant’s liability under the Endorsement “shall not exceed the Limit of Insurance specified in the schedule of Approved Locations included in this endorsement or subsequent amendments.” Section 13, entitled “Approved Locations/Deductibles/Sublimits,” includes a table listing “CHAMAD WAREHOUSE INC.” at “371 Branch Street Marion, NC 28752” in the “Location” column.

Under a heading entitled “Unnamed Domestic Locations,” Section 13 further provides: “If the Assured shall store any goods and/or merchandise in any public warehouse or processing center not listed above while this coverage is in force, this insurance shall automatically attach for an amount to exceeding $250,000 any one location subject to a deductible of $5,000 per occurrence.” The fire giving rise to this action destroyed more than $600,000 worth of plaintiff’s goods stored at a warehouse owned by Chamad Wearhouse, Inc., but this was not the location listed in the “Approved Locations” of the Endorsement. Defendant argues that Chamad owns and operates three warehouse buildings located at 56 Branch Street (formerly numbered as 371 Branch Street), 160 Branch Street, and 1386 Virginia Road, and that the fire took place at the 1386 Virginia Road warehouse. Plaintiff asserts that the address for all three Chamad warehouses is 56 Branch Street (formerly numbered as 371 Branch Street), which represents a single 19.03-acre parcel of land on which all three warehouses sit.

The court, in deciding the motion and cross-motion for summary judgment fell back onto the tried-and-true principles of contract interpretation and attempted to determine the parties’ intent from the language of the contract itself. The court, knowing it could not read meaning into the policy that was not there, held that the Endorsement’s section 13 clearly only listed two approved locations, neither of which were the locations at which the fire occurred. Further, the court held that, as the Policy profiles a separate sub-limit for losses occurring at “any public warehouse or processing center not listed” it was clear that the higher limit of liability only applied to the listed approved locations. Plaintiff unsuccessfully argued that the Chamad Warehouse listed incorporated all warehouses owned by Chamad Warehouse, Inc., as it does not give fair meaning to all of the language in the Endorsement.


Patricia A. Rauh

[email protected]

03/15/22       Long v. Dearborn National Life Ins. Co.
United States Court of Appeals, Fifth Circuit
Long—Term Disability Carrier Did Not Breach the Policy with its Insured and Without a Valid Breach of Contract Claim, a Breach of the Duty of Good Faith and Fair Dealing Claim Cannot be Sustained

Steven Long (“Plaintiff”) was employed as a registered nurse at the University of Texas Medical Branch – Galveston (“UTMB”).  UTMB offered group long-term disability insurance as part of an employee’s benefit plan, in which Plaintiff participated.  The long-term disability insurance was through Dearborn National Life Insurance Company (“Defendant”).

On May 2, 2016, Plaintiff stopped working due to a disability while covered under the long-term disability policy (the “Policy”).  Plaintiff’s disability was caused by a combination of degenerative disc disease, lower back injuries, and a history of intensive spinal fusion surgery.  Plaintiff filed an application for long-term disability benefits under the Policy on September 8, 2016, which Defendant approved and paid the Plaintiff monthly benefits in the gross amount of $4,263.55.  Plaintiff received benefits from July 31, 2016, through July 30, 2018.

The Policy defines Total Disability for long-term disability benefits as follows:

Total Disability or Totally Disabled means that during the first 24 consecutive months of benefit payments due to Sickness or Injury:

After the LTD Monthly Benefit has been paid for 24 consecutive months, Total Disability or Totally Disabled means that due to Injury or Sickness:

On December 10, 2018, Defendant terminated Plaintiff’s long-term disability benefits (the “Initial Denial”) on the grounds that Plaintiff had not submitted sufficient medical evidence to show his inability to perform sedentary work.  Moreover, Defendant had determined that Plaintiff could perform full-time work as a nurse consultant, nurse case manager, or telephonic nurse.

Plaintiff challenged the Initial Denial by filing an appeal and providing Defendant with written notice that it was in violation of its contractual and statutory duties.  Plaintiff alleged that Defendant disregarded the results of the functional capacity evaluation he had undergone and also disregarded the medical notes and opinions of Plaintiff’s treating doctors.  Plaintiff further argued that even though Defendant had the right under the Policy to have the Plaintiff examined by a physician of Defendant’s choosing, it did not do so and instead chose to rely on file reviewing consultants, whose opinions differed from Plaintiff’s doctors.  Defendant upheld its Initial Denial.

Plaintiff brought suit against Defendant alleging (1) breach of contract; (2) breach of the duty of good faith and fair dealing; (3) violations of the Texas Insurance Code; (4) violations of the Texas Deceptive Trade Practices-Consumer Protection Act (“DTPA”); and (5) fraud.

The District Court granted Defendant’s motion to dismiss, concluding that Plaintiff had “pleaded vague conclusions and statutory language.  He has pleaded no facts of how [Defendant] breached the Policy.  He must give more than his disagreement with [Defendant’s] conclusions.”  Plaintiff appealed this ruling to the U.S. Court of Appeals for the Fifth Circuit.

The Fifth Circuit examined Plaintiff’s Complaint and the allegations made therein and concluded that the conclusory nature of the allegations was not facially plausible and did not establish a breach of contract claim.  More specifically, Plaintiff failed to identify any specific Policy provisions that Defendant allegedly breached, and he also failed to show that his performance under the Policy was sufficient.  Further, the Court said that the mere fact that Defendant could consult their own medical expert or perform its own evaluation of the Plaintiff does not mean that Defendant breached the Policy by choosing not to, as the Plaintiff alleged.

In regard to Plaintiff’s allegation that Defendant breached its duty of good faith and fair dealing under the Texas Insurance Code, the Fifth Circuit ruled that the Plaintiff’s allegations in the Complaint could not sustain that cause of action. Plaintiff alleged that Defendant conducted an unreasonable and incomplete investigation and sought to find ways to deny the claim rather than fairly evaluating it. The Court stated that under Texas law, a cause of action for the breach of the duty of good faith and fair dealing exists when the insurer has no reasonable basis for denying or delaying payment of a claim, or when the insurer fails to determine or delays in determining whether there is any reasonable basis for denial.

The Court ruled that the Defendant has no duty to the Plaintiff outside of the Policy itself.  In other words, absent a breach of the Policy in this case, there can be no violation of the Defendant’s duty to act in good faith and deal fairly with the insured.

Finally, Plaintiff’s claim for violations of the DTPA also fail, as it was merely a conclusory allegation devoid of any facts.  Therefore, the Court affirmed the District Court’s judgment, dismissing the claims against Defendant.


Scott D. Storm

[email protected]

02/15/22       MDRN Intelligence Living Wolfhome v. Hartford Financial  
Supreme Court, New York County
First Party Insurer Granted Summary Judgment Due to Insured’s Manager’s Failure to Answer Material Questions at Her Examination Under Oath, Refusal to Produce One of its Principals and Failure to Produce Requested Documents

MDRN Intelligence alleges six causes of action: declaratory judgment; breach of contract; breach of the implied covenant of good faith and fair dealing; "tortious" breach of the implied covenant of good faith and fair dealing; bad faith; and unfair trade practices in violation of General Business Law § 349. Defendants granted summary judgment dismissing the complaint.

Plaintiff has a Business Owner's Policy with Twin City (Hartford is the parent company).  The policy provides that that it would be void in the event of any fraud by plaintiff, or if plaintiff intentionally concealed or misrepresented a material fact concerning the policy, plaintiff's property, plaintiff's interest therein, or any claims under the policy. Further, in the event of loss or damage, plaintiff was required to give Twin City inventories of damaged and undamaged property, allow Twin City to inspect and take samples of the damaged property, permit Twin City to question plaintiff under oath at such times as may be reasonably required about any matter related to this insurance or plaintiff’s claim, and generally cooperate with Twin City in the investigation or settlement of the claim.

On 1/7/20, plaintiff reported a loss due to water damaging fabric and materials in excess of $250,000. In the course of its investigation, Twin City discovered that one of plaintiff's principals, Elizabeth Jones, had previously worked at another company, WDH London, Inc., in which capacity she had made a similar claim for water damage. Upon reviewing the file for the claim, Twin City believed that plaintiff might have been attempting to resubmit portions of the prior claim, which had already been paid by WDH London's insurer. Twin City then retained counsel to conduct an examination under oath of plaintiff's manager, Warren Kay, and reserved the right to take one of Ms. Jones. Kay's EUO took place on 6/15/20. When counsel began to inquire of Kay regarding the prior claim made by WDH London, Kay's counsel asked to adjourn for the day. Counsel continued to engage in discussions regarding documents related to the prior claim, and whether the damaged property from that claim had been given up for salvage or not. On 7/14/20, Kay's counsel asserted that plaintiff would not sit for any further examinations or provide any further documents regarding the prior claim, as plaintiff's position was that it was either irrelevant or had already been completely settled and was not being resubmitted to Twin City. Despite continued discussions thereafter, plaintiff refused to complete Kay's EUO, schedule Jones' EUO, provide any of the documents requested related to the prior claim, or provide a signed copy of Kay's EUO transcript. Accordingly, Twin City denied coverage to plaintiff. The instant litigation followed.

Defendants essentially make two arguments. First, that the action must be dismissed in its entirety because of plaintiff's failure to cooperate with Twin City's investigation of plaintiff's claim. Failing that, they argue that plaintiff's commercial tort and statutory claims are legally insufficient, and that plaintiff is not entitled to punitive damages.

An insured has a duty to cooperate in an insurance investigation by its insurer. In fact, typically, an insurer may disclaim coverage where an insured deliberately fails to cooperate with its insurer as required by an insurance policy. In order to establish breach of a cooperation clause, the insurer must show that the insured engaged in an unreasonable and willful pattern of refusing to answer material and relevant questions or to supply material and relevant documents. 

The burden of proving lack of cooperation is a heavy one and rests on the insurer. A distinction may be drawn, however, between a court's natural reluctance to see an accident victim deprived of his source of payment because a liability carrier claims that its assured has failed to cooperate, and an indemnity carrier denying payment to its insured because the insured has failed to cooperate in investigating a claim.  To meet its burden, an insurer must prove: (1) that it acted diligently in seeking to bring about the insured's cooperation, (2) that its efforts were reasonably calculated to obtain the insured's cooperation, and (3) that the insured's attitude demonstrated willful and avowed obstruction".

Here, Twin City diligently sought documents and testimony from plaintiff that were relevant to its investigation of plaintiff's claim. As Twin City's submissions reflect, Twin City's counsel engaged in substantial and detailed correspondence with plaintiff's counsel as to what information, documents, and testimony it was seeking, and why it believed them to be relevant. Moreover, plaintiff was repeatedly put on notice that its failure to comply with Twin City's requests would result in Twin City declining coverage. In response, not only did plaintiff continue to refuse to comply, but plaintiff in fact notified Twin City that it would be retaining litigation counsel to commence an action on the policy. Such action can only be interpreted as willful and avowed obstruction.

In opposition, plaintiff does not raise a triable issue of fact. Plaintiff's position is that it fully cooperated with Twin City's reasonable and good faith demands and that the inquiry into the prior claim is a meritless fishing expedition. Specifically, plaintiff provides an invoice and claim inventory regarding the damaged inventory, a copy of a salvage agreement purporting to dispose of all of the damaged material from the prior claim, and a comparison of the fabrics claimed as damaged on the prior claim and those claimed as part of the instant claim. Jones and Kay also submitted affidavits, in which they aver that there is no overlap between the prior claim and the instant claim.  Tellingly, however, Jones also states that Kay was not employed by WHD London, the prior claimant, and that Jones possessed the only recollection of the events surrounding it between the two of them. Indeed, as Twin City's submissions set forth, notwithstanding plaintiff's independent position that the prior claim was irrelevant and that it need not cooperate with Twin City further in that respect, the documentation Twin Cities had received was inconclusive of the question, and that Kay had stated during his examination that there were several other matters which only Jones would have knowledge of, necessitating her EUO.

The right to examine under the cooperation clause of [an] insurance policy ... is much broader than the right of discovery under the CPLR. Even assuming that plaintiff is correct regarding the relevance and/or applicability of the prior claim to this claim, plaintiff provides no explanation for its refusal to produce Jones for an EUO in light of the other matters about which Kay testified that only Jones would have knowledge of.  Plaintiff's independent judgment that the information sought was irrelevant or improper is insufficient excuse; an insured has been held to be in breach of the duty to cooperate even where such failure to cooperate has been on advice of counsel. The cases cited by plaintiff are not to the contrary; none of them address the duty to cooperate pursuant to a cooperation clause.

03/03/22       Moravia Motorcycle, Inc. v. Allstate Insurance Company
United States District Court, Western District of Pennsylvania
In an Action Against an Insurer for 1st-Party Physical Damage Coverage to a Motor Home, Court Dismisses Negligence and Bad Faith Claims Without Prejudice and UTPCPL Claim With Prejudice

Plaintiffs bring this action against Allstate seeking benefits under a policy for damage to their motor home. In addition to a breach of contract claim (Count II), Plaintiffs have also alleged claims of negligence (Count I), bad faith in violation of 42 Pa. C.S. § 8371 (Count III) and violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. §§ 201-1 to 201-9.3 ("UTPCPL") (Count IV). Allstate filed a partial motion to dismiss of Plaintiffs' claims of negligence, bad faith, and violation of the UTPCPL.  Allstate's motion was granted without prejudice with respect to Counts I and III and with prejudice as to Count IV.

Plaintiffs own a 2008 Coachman motor home which they winterized as instructed by the owner's manual. During the month of April 2020, multiple storms passed through the area, causing a tree branch to fall on top of the motor home, which damaged its roof and seal. Because of the damage to the seal, rainwater and other moisture was able to penetrate the motor home, causing severe damage to the interior and Plaintiffs' property located inside.

Plaintiffs allege that they were advised that the policy would provide coverage for this kind of loss. Allstate refused to provide coverage. Plaintiffs seek the policy limits of $100,000, plus damages for bad faith and treble damages under the UTPCPL.

In Count I, Plaintiffs allege that Allstate was negligent in misrepresenting the status of the policy, failing to fully advise them of the coverage, failing to train its agents about coverage under the policy and failing to inform its agents as to the proper manner by which policyholders should be advised about the scope and extent of insurance coverage. Allstate seeks dismissal of this claim under the gist of the action doctrine.

The general governing principle which can be derived from our prior cases is that our Court has consistently regarded the nature of the duty alleged to have been breached, as established by the underlying averments supporting the claim in a plaintiff's complaint, to be the critical determinative factor in whether the claim is truly one in tort, or for breach of contract. In this regard, the substance of the allegations comprising a claim in a plaintiff's complaint are of paramount importance, and, thus, the mere labeling by the plaintiff of a claim as being in tort, e.g., for negligence, is not controlling. If the facts of a particular claim establish that the duty breached, is one created by the parties by the terms of their contract—i.e., a specific promise to do something that a party would not ordinarily have been obligated to do but for the existence of the contract—then the claim is to be viewed as one for breach of contract. If, however, the facts establish that the claim involves the defendant's violation of a broader social duty owed to all individuals, which is imposed by the law of torts and, hence, exists regardless of the contract, then it must be regarded as a tort.

The mere existence of a contract between two parties does not, ipso facto, classify a claim by a contracting party for injury or loss suffered as the result of actions of the other party in performing the contract as one for breach of contract.  Here, Allstate argues that its only duties to Plaintiffs, and their corresponding entitlement to benefits, were created by the policy, not by the larger social policies embodied in the law of torts. It contends that in the absence of any insurance policy, there would be no relationship between the parties and, therefore, no duty to pay benefits.

Plaintiffs contend that Allstate owed them a duty to inspect the motor home in a workmanlike manner and that Allstate's failure to do so led to additional damages (electrical issues, decay of the interior walls and mold) and the complete loss of the motor home.  As Allstate notes, however, these allegations are not in the Complaint and Plaintiffs provide no basis for the contention that it owed them a duty to inspect the motor home in a workmanlike manner.  The Court agrees that as pleaded, Plaintiffs' negligence claim is barred by the gist of the action doctrine.

Plaintiffs have requested leave to amend their negligence claim. A request to amend should be freely granted when justice so requires. Fed. R. Civ. P. 15(a).  Allstate has not demonstrated, nor can the Court conclude, that it would be futile to allow Plaintiffs to amend their negligence claim. Therefore, with respect to Count I, the motion to dismiss will be granted without prejudice and with leave to amend.

In Count III, Plaintiffs allege that Allstate engaged in bad faith conduct in violation of 42 Pa. C.S. § 8371. Allstate argues that merely alleging that an insurer wrongfully denied benefits is insufficient to state a bad faith claim. The Court agrees.  Pennsylvania's bad faith statute provides that:

In an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions:

(1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%.

(2) Award punitive damages against the insurer.

(3) Assess court costs and attorney fees against the insurer.

To prove bad faith, a plaintiff must show by clear and convincing evidence that the insurer: (1) did not have a reasonable basis for denying benefits under the policy and (2) knew or recklessly disregarded its lack of a reasonable basis in denying the claim.  Bad faith claims are fact specific and depend on the conduct of the insurer vis à vis the insured. Mere negligence or bad judgment is not bad faith. 

As Allstate argues, a bad faith claim must "describe the who, what, where when and how the alleged bad faith conduct occurred."  Plaintiffs have not met this standard. Rather, they merely allege that Allstate failed to review its file appropriately, wrongfully denied payment that it knew was owed, required Plaintiffs to incur costs and legal fees in obtaining what is rightfully theirs, and failed to use due care in handling the claim. These allegations are insufficient to support a claim of bad faith.

Plaintiffs have requested leave to amend. As the Court cannot conclude that amendment would be futile, Allstate's motion to dismiss will be granted without prejudice and with leave to amend.

Plaintiffs allege in Count IV that Allstate's actions violated the UTPCPL. The UTPCPL prohibits "unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." 73 Pa. C.S. § 201-3. This includes certain categories of conduct identified in § 201-2 as well as "any other fraudulent or deceptive conduct which creates a likelihood of confusion or misunderstanding." 73 Pa. C.S. § 201-2(4)(xxi).

Allstate contends that if a cause of action may be asserted under the UTPCPL at all, it must be based on misfeasance, not the mere failure to pay a claim, which is nonfeasance. Plaintiffs counter that they have pleaded misfeasance, specifically, Allstate's failure to conduct a proper inspection of the motor home, which led to additional damages.

In Pennsylvania, only malfeasance, the improper performance of a contractual obligation, raises a cause of action under the UTPCPL and an insurer's mere refusal to pay a claim which constitutes nonfeasance, the failure to perform a contractual duty, is not actionable.  As this Court recently held, the UTPCPL applies to conduct surrounding the insurer's pre-formation conduct, while the bad-faith statute applies to "post-contract formation conduct. 

Plaintiffs' allegations relate to Allstate's handling of the claim, not the purchase of the policy or other pre-formation conduct. Thus, their proposed amendment which would allege that Allstate committed misfeasance while inspecting the motor home after the accident would not cure the deficiencies of this claim.  Therefore, Allstate's motion to dismiss Count IV will be granted with prejudice because it would be futile to allow amendment.

02/28/22       Integrative Medical Wellness v. Hereford Insurance Company
Civil Court of the City of New York, Richmond County
Medical Provider’s Suit Dismissed as Prepayment for Compliance with a Verification Request is Not Proper and Does Not Function as a Method of Ceasing the Tolling of the Statutory 30-day Pay or Deny Requirement That a Verification Request Permits; Neither do Radiology Rules Require Prepayment

Plaintiff commenced this action to recover assigned no-fault benefits for medical treatment provided to assignor on 3/10/20 resulting from a motor vehicle accident that occurred on 11/22/19. The Defendant received two bills from Plaintiff totaling $2,052.80 on 3/26/20: $410.57 and $1,642.23. On 4/21/20 and 5/29/20, Defendant sent verification requests to Plaintiff for both bills requesting MRI film/CD of the cervical spine, lumbar spine, thoracic spine, pelvis, and all documentation including radiographical images showing any fractures or dislocations of the pelvic ring. On 7/7/20, 8/6/20, and 8/20/20, Plaintiff responded to said verification for both bills. In the 7/7/20 response,

Plaintiff states "Pursuant to Radiology Ground Rule 8, a copy of the MRI Film/CD/or Electronic Media will be provided upon the receipt of $5.00, made payable to Lenox Hill Radiology, P.C. This payment must be accompanied by the Patient Name, Date of Service, CPT code performed, body part description, claim number and the file number (preceded by the letters BSBG as indicated on the letter of representation that accompanied the submission of the bill). Failure to provide this information may result in an inability to identify the proper patient, date of service, claim number, and body part tested." Notably, the 8/6/20 and 8/20/20 responses make the check payable to "Integrative Medical Wellness P.C.". On 7/21/20, Defendant responded with a Missing/Incomplete Verification letter notifying Plaintiff that the claim is delayed pending receipt of the requested MRI Film. Defendants follow up requests do not address the request for pre-compliance monetary compensation. Neither side disputes if the remaining requested documents were received by Defendant.

Defendant now moves for summary judgment based upon Plaintiff's failure to respond to multiple verification requests. Plaintiff opposes the motion on the ground that it responded to the verification requests, and cross moves for summary judgment based upon Defendant’s failure to timely pay or deny the claim.  Defendant's motion for summary judgment is granted.

The issue for the Court to decide is whether there is any issue of fact as to the outstanding verification and whether a request for $5.00 for the outstanding MRI films ceases the toll on the statutory 30-day requirement for the defendant. 

No-fault benefits are overdue if not paid within 30 calendar days after the insurer receives proof of claim, which shall include verification of all the relevant information requested pursuant to § 65-3.5. 11 NYCRR § 65-3.8(a)(1). Within 30 days after proof of claim is received, the insurer shall either pay or deny the claim in whole or in part. 11 NYCRR § 65-3.8(c).  This period may be extended by a timely demand by the insurance company for further verification of a claim. Within 10 business days after receiving a completed application for no fault benefits, the insurer shall request verification of information from the claimant. 11 NYCRR § 65-3.5(a). After receiving one or more of the completed verification forms, any additional verification required by the insurer to establish proof of the claim shall be requested within 15 business days of the receipt of the prescribed verification forms. 11 NYCRR 65-3.5(b). The insurer is entitled to receive all items necessary to verify the claim directly from the parties from whom such verification was requested. 11 NYCRR § 65-3.5(c). If the demanded verification is not received within 30 days, the insurance company must issue a follow-up letter within 10 days of the insured's failure to respond. 11 NYCRR § 65-3.6(b).

A claim shall not be denied until all demanded verification is provided. 11 NYCRR § 65-3.8(b)(3). Verification requests that are sent after the 10 or 15-day requirement but within the 30-day requirement are still valid and the insurer is still entitled to the verification. However, the 30-day time limit to pay or deny the claim is reduced accordingly. 11 NYCRR § 65-3.8(1). 

In support if its motion, Defendant submitted the affidavit of Tony Singh who is employed by Hereford as a No-Fault Supervisor.  Mr. Singh detailed the practices and procedures of the processing, handling, and mailing procedures of Hereford. He discussed the steps taken in receiving bills and correspondence from medical providers seeking payment from Defendant and processing the claim. Through Mr. Singh's affidavit and the supporting documents included in Defendant's motion, it is clear that the Defendant properly and timely mailed its notice of verification requests and follow ups. Accordingly, the time in which the Defendant would otherwise be required to deny or pay said claim was tolled.

Plaintiff argues that Defendant's 30-day time limit was not tolled because it had complied with the verification requests and simply was requesting the $5 fee in accordance with Radiology Rule 8 in order to provide said records. Rule 8 states in pertinent part:

Films or other recorded images shall be preserved for at least six years...They shall be made available to the attending physician, insurance carrier, or self-insured employer...When a carrier or self-insured requests x-rays, MRI's or other recorded images and satisfactory reproductions including electronic media are furnished in lieu of original films, a fee of $5.00 may be charged for the first sheet of duplicating film or for reproduction on a an electronic media regardless of the number of imagers contained on the media, and $3.00 for each additional sheet of film or electronic media...such copies should accompany the bill submitted for the particular imaging procedure.

The no fault regulations do not expressly require defendant to reimburse plaintiff in advance of receiving the MRI films. The no-fault regulations are silent as to when the provider must receive payment of these reproduction costs. Thus, the insurer's duty to pay the reproduction costs appears independent from the insurer's right to demand verification.  Prepayment for compliance with a verification request is not proper and does not function as a method of ceasing the tolling of time that a verification request permits.

There is no argument from Plaintiff that the documents deemed outstanding are not in their control. Furthermore, Plaintiff does not give a reasonable justification for noncompliance. Plaintiff argues only that Defendant failed to address the request for $5.00 as they state is required by the Radiology rules. The rules do not state that an insurer is required to pay the fee prior to receiving any requested documents. Instead, they only set out the schedule for which a medical provider may charge. Plaintiff did not object to the verification request for the MRI film. Accordingly, the toll continues, and Plaintiff's action is premature.  Based on the foregoing, Defendant's motion for Summary Judgment is granted in its entirety.


Katherine A. Fleming

[email protected]

03/04/22       In re Ambassador Ins. Co.
Supreme Court of Vermont
Vermont Law Applied In Coverage Dispute Regarding Loss-Allocation Where Georgia Law Was Unsettled On The Issue

Bestwall Gypsum Company produced and sold products containing asbestos. Georgia Pacific Corporation (“GP”) acquired Bestwall Gypsum Company and assumed its liabilities. GP continued to sell products containing asbestos until 1977, and it moved its HQ to Georgia in 1982. From 1965 to 1986, GP maintained commercial general liability insurance (CGL) through various insurers, and the insurance program had multiple layers of primary and excess coverage in several of those years. During part of this period, Ambassador Insurance Company (“Ambassador”) was one insurer who covered GP. Ambassador was incorporated in Vermont. In 1983, GP entered into the excess liability policy at issue, and the policy was issued and delivered in Georgia. GP’s losses needed to exhaust the $100 million that GP had in underlying coverage to trigger Ambassador’s excess coverage. The policy stated that Ambassador’s coverage followed that of the underlying policies, and at least one underlying policy limited coverage to bodily injury “which occurs during the policy period.” Although the policy was written to be effective from April 1, 1983, to April 1, 1984, GP cancelled the policy on May 15, 1983, after it decided to replace its entire insurance program. Ultimately, the policy was in effect for forty-four days. In 1987, the Vermont superior court ordered Ambassador into liquidation. Since the early 1980s, GP has faced many lawsuits across the country alleging personal injury and death resulting from exposure to GP’s asbestos-containing products. GP has incurred approximately $2.9 billion in losses. GP’s insurers have covered approximately $850 million of GP’s losses. In 2017, GP was restructured, and Bestwall LLC (Bestwall) acquired its asbestos liabilities.

Bestwall filed a claim for coverage under the Ambassador policy, and the liquidator denied the claim. Bestwall appealed that denial to the Vermont superior court. In accordance with the liquidation order, the court appointed a special master to hear the claim. The special master concluded that Vermont law applied since there was no conflict with unsettled Georgia law. In an interlocutory appeal to the Vermont Supreme Court, Bestwall argued that choice-of-law principles supported applying of Georgia law and urged the court to predict that the Supreme Court of Georgia would reject pro-rata allocation and instead adopt all-sums allocation under the terms of this policy.

When loss results from “environmental contamination that is continuous or progressively deteriorating through successive policy periods,” such as exposure to asbestos that manifests as bodily injury at a later time, many courts apply a “continuous-trigger” theory to determine whether the exposure triggers coverage. Under a “continuous-trigger” theory, exposure that occurred during the policy period triggers coverage, regardless of when the damage was discovered. This means that the Ambassador policy potentially covered all claims made against Bestwall for injury from asbestos exposure first occurring before or during the time that the policy was effective, April 1 to May 15, 1983, but not manifested until the policy was in effect or later.

There are two general approaches to loss-allocation. Under all-sums allocation, also known as joint-and-several liability, all triggered policies are responsible for the entire loss and must provide coverage up to the policy limit, so long as the occurrence took place in part during the policy period. Under pro-rata or time-on-the-risk allocation, courts allocate a portion of the loss to each insurer based on the proportion of time that the insurer covered the risk relative to the total time of triggered coverage.

If the all-sums approach applied here, Ambassador could be liable to pay out the policy limit of $10 million. Under Vermont law, a court would apply the pro-rata approach to allocate Bestwall’s loss under the Ambassador policy based on the forty-four-day period that the policy was in place. Despite Bestwall’s $2.9 billion in losses, the policy was in place for such a brief period of time that Bestwall contended that the allocated loss would not trigger Ambassador’s policy.

Since Bestwall did not point to clearly established law determining how Georgia courts allocate loss in the same or similar circumstances, Bestwall did not show with reasonable certainty that Georgia courts would reject pro-rata allocation and instead apply all-sums allocation. As a result, there was no conflict with Vermont law, and Vermont law applied.


Heather Sanderson

[email protected]

03/02/22       Roque v. Peters and The City of Brandon
The Manitoba Court of Queen’s Bench
The First Canadian Civil Case to Test the Provincial Intimate Images Protection Acts that Exist in Various Provinces was Issued in Manitoba on March 2, 2022. This Type of Legislation is One of Several Tools that Protect Privacy Rights in Canada and is Likely to Spur Duty to Defend Debates Under Personal Lines, General Liability, and Cyber Coverages

The Intimate Images Protection Act became law in Manitoba in January 2020. Similar legislation has been enacted in Nova Scotia, Prince Edward Island, Newfoundland, Labrador, and Alberta. Enacted to stop cyber bullying, these Acts create the tort of non-consensual distribution of intimate images, and outline remedies available to the court hearing the resulting civil claim.

On March 2, 2022, the superior trial court in Manitoba issued one of the first Canadian cases under this type of legislation. This legislation is likely to generate ‘duty to defend’ debates as the legislation is tried and tested. Have a read as to how this case unfolded.

Background Facts

It all started innocently enough.

In the spring of 2015 Brittany Roque was toying with idea of becoming a police officer. She signed up for a ride along program offered by the City of Brandon Police Service. Roque was paired with Ryan Friesen, a Brandon police officer. That ride along sparked a three-month, intimate relationship. During that time, Roque texted Friesen several intimate images of herself. Friesen forwarded the texts to his Hotmail Account then deleted the texts.

However (there is always a ‘however’), at the time Friesen met Roque, Friesen was in a seven-year relationship with Teri-Lyn Peters. Peters and Friesen had been co-habiting for the last two of those seven years. From the beginning of their relationship onwards, Peters knew that Friesen had relationships with other women. Peters was deeply suspicious of any woman that Friesen was in contact with.

Although Brandon, with a population of 51,000, is Manitoba’s second largest City, it is difficult to stay ‘hidden’. One of Peters’ friends saw Friesen and Roque together on the ride along. Peters asked Friesen about Roque. Friesen dismissed the thought that anything was going on between stating that Roque is in another relationship.

In January of 2017 Friesen deleted Roque’s images from his Hotmail account but did not ‘empty the trash’. By then, it was two years since Friesen’s relationship with Roque had ended.

Around the time that Friesen put Roque’s photos in ‘the trash,’ the relationship between Peters and Friesen began to crumble. Peters requested that Friesen change the password to his Hotmail Account to one which she already knew so that she could access it for evidence of infidelity. Peters checked the trash, found Roque’s images and about 100 images of about 12 other women. Peters forwarded all of the images to her work email address and her own personal email account. Peters confronted Friesen who packed his bags and moved out.

In the meantime, shortly after the fateful ride along with Friesen, Roque began a police studies program at a local college and in May 2016 applied to the Brandon Police Service (BPS) to be a police officer. Friesen was aware of Roque’s application and, when they were still on speaking terms, told Peters about Roque’s application. Peters found a photo of a clothed Roque that Friesen had. A few months later, Peters was at the Brandon Wal-Mart and recognized Roque from the photo. She introduced herself to Roque as she wanted Roque to know that Friesen had a family and, as she described it, “to mark my territory.”

Around the same time that Peters and Roque saw each other at Wal-Mart, Peters contacted Officer Randy Lewis, the Deputy Chief of Operations at BPS to provide some information about an officer candidate. Lewis and Peters met at Peters’ residence; Lewis viewed 21 photos of Roque, two in the nude, others in various stages of undress, and downloaded all 21 photos onto his own portable USB. Lewis took the drive with him when he left. Over the next few days, Lewis viewed the photos while consulting with a psychologist as to Roque’s fitness to join the BPS.

After Peters met with Officer Lewis, Peters initiated an email exchange with Roque, who had begun a romantic relationship with another BPS officer. The text messages revealed that Peters had the photos that Roque had sent to Friesen; asked Roque of it was fun ripping a family apart; and asked if Roque’s current BPS boyfriend knew about Roque’s relationship with Friesen.  A month later, Peters messaged Roque’s boyfriend and told him about Roque’s relationship with Friesen. Peters also messaged Roque telling her that the BPS Chief of Police and deputy chiefs had viewed the photos, along with Roque’s BPS boyfriend. Peters said that this is the consequence of sending the photos to Friesen in the first place.

Peters then proceeded to distribute the images of the other women she found in the trash on Friesen’s Hotmail account.

‘Hell hath no fury like a woman scorned’ is an idiom that is adapted from a line in William Congreve’s play, The Mourning Bride written in 1697. The line from which it came is ‘Heaven has no rage like love to hatred turned, nor hell a fury like a woman scorned.”  Peters proved that what was true in 1697 is also true in 2017.

The BPS refused Roque’s application to join the BPS stating that the relationship with Friesen and the existence of the images had not been disclosed in her questionnaire to join the BPS. Her application was refused. The BPS permanently destroyed Roque’s images.

Roque became a police officer with the Police Service with Rivers, a small centre outside of Brandon.

The Lawsuit

Roque initiated a civil lawsuit claiming compensatory general damages against Peters under Manitoba’s Intimate Image Protection Act, C.C.S.M. c. I87 (the “IIPA”) and the violation of her privacy under The Privacy Act, C.C.S.M. c. P125 the “PA”). She also pled the common law tort of intrusion upon seclusion, equitable claims for breach of confidence and ad hoc fiduciary duty. Peters defended and third partied the City of Brandon.

The Judgment

The trial judge stated that central to the case is the ability to control images of one’s body. The IIPA creates a statutory cause of action for the non-consensual distribution of an intimate image (a defined term) taken with a reasonable expectation of privacy and distributed with the same expectation.  There is a public interest defence to that cause of action. The Manitoba Privacy Act also creates a statutory cause of action: “A person who substantially, unreasonably, and without claim of right, violates the privacy of another person, commits a tort against that other person.”

Claim Against Peters

Peters defended stating there was public interest in disclosing the images to the BPS. The fact that the images existed is information that the BPS needed to have, as they need to determine if an officer candidate could be opened to blackmail or coercion. The trial judge agreed. The issue is whether the BPS actually needed to possess the photos.

Officer Lewis testified that it was not an option to simply hear a description of the images from Peters because there was no way to gauge her credibility in describing them. Further, Lewis testified that the content of the images needed to be viewed in a controlled setting so that there could be an accurate analysis of what the images entailed. The trial judge agreed that Officer Lewis need to verify the images existed and what they depicted but held that does not mean that the BPS needed to possess the actual photos: “There is no rational explanation for why any of the Images needed to be provided to BPS in order to fully consider and assess her application.”

Perhaps what the Court meant but did not say is that Officer Lewis had to verify the existence of the photos while he was with Peters. I ask, having verified them, was there a need to possess them?

The Court held that there was no public interest in possessing the photos.   Peters mounted a similar defence to the statutory cause of action under the Privacy Act, which the Court dismissed.

Roque’s application to the BPS contained a very generous consent. The BPS was authorized to make inquiries of anyone and ask them “…to furnish any information, opinions, reports, records, or copies which may be requested by the Brandon Police Service, or any other representatives hired by the city in connection with the undersigned’s application for employment with the City of Brandon.”  In this context, the statutory torts were premised upon nonconsensual distribution of the photos.  The Court held:  “[i]t is difficult to conceive how even the most robust interpretation of the Form furnishes consent, express or implied, to the provision of intimate and private images.  No reasonable person signing the Form or receiving the Form would conclude that it does … I do not find that Roque consented in any way to the provision of the images to BPS.”

Finally, did Roque have an expectation of privacy when the photos were shared? Roque testified that she could not recall if she specifically obtained Friesen’s assurance that the images would not be shared. However, she testified that as they were being sent, he had assured her that he was deleting them because he did not want his partner to see them.  The Court held that the statutory causes of action do not “…impose a positive duty on the part of a plaintiff to take steps to protect the confidential or private nature of images in order to seek redress. To require otherwise would be to blame and shame the victim of the tortfeasor and create a possible barrier to relief …I accept as a proposition that intimate and private images shared between two individuals are necessarily confidential. It should not be assumed by the recipient of such images that same are free to be disseminated in the absence of a specific, verbalized prohibition. Rather, the assumption should be that the images are not to be shared unless explicit consent to do so is provided.” 

Finally, the Court found that Peters intended to harm Roque. In summary, the Court held that “find that Peters was keen to “out” the women that she recognized, including Roque, and cause embarrassment and humiliation. I find that Peters acted with malice.” On this basis, Peters was liable for both of the statutory, intentional torts defined by the IIPA and the Manitoba Privacy Act.

The Court discussed whether Roque had also proved entitlement to damages under the common law torts as relief under those torts is available in addition to the statutory torts. The decision contains an interesting discussion of those torts. The Court held that:

In addition, there was a significant discussion of the level of damages to be awarded to Roque. One of the factors was the number of shared intimate images. General damages were set at $45,000 and in view of the finding of malice, aggravated damages of $15,000 were awarded.

Further there was a mandatory injunction issued enjoining Peters to destroy all copies of Roque’s photos in her possession.

Peters’ Claim Against the City of Brandon

Peters argued that the City of Brandon was a joint tortfeasor and if she is liable to Roque, then so is Brandon. The Court agreed with Peters “…I find that there was a common design; namely, the provision of the images to BPS for their review given Roque’s pending application to be a police officer. This was not a situation where the Images were dropped off at BPS in an envelope marked “confidential”.”  The Court held that Officer Lewis was liable for both statutory causes of action as he “…received, viewed, and used the Images without Roque’s consent…[and thereby]…substantially, and unreasonably violated her privacy.”  As such, Officer Lewis and therefore Brandon, was held jointly and severally liable with Peters for the award of general damages.  Vicarious liability was imposed without discussion.

In view of the absence of malice on the part of Officer Lewis, there was no basis to hold Brandon liable for the award of aggravated damages.

Insurance Coverage?

Would Peters be entitled to a defence to Roque’s claim under a homeowners’ or tenants’ policy if that policy contained an occurrence-based personal liability rider that extended to liability that does not arise solely from the ownership and use of the premises insured? Unlikely. The relief claimed arose solely from the commission of intentional torts. As negligence is not an alternative ground for relief, it would be difficult to foresee a basis to credibly argue that Peters is entitled to a defence from her insurer. The same argument applies to the duty to indemnify: Liability for general damage arose solely due to the commission of intentional torts, nullifying any obligation to indemnify.

If the City of Brandon held a CGL and a form of cyber / privacy coverage and Officer Lewis had been personally named as a defendant, would those policies extend a defence? Again, the answer is “unlikely.” Liability would only ensue if Officer Lewis were a joint tortfeasor with Peters. Peters is only liable upon proof of the commission of an intentional tort. Allegations of the joint commission of an intentional tort would nullify the obligation to defend Officer Lewis.

As for the City of Brandon, the allegations would be analogous to vicarious liability for failure to supervise. Similar to vicarious liability for sexual harassment, there is the possibility that the City could place itself within the coverage mandating a defence, however, that defence would likely be offered by the cyber / privacy insurer, depending upon the coverage available under that form where there are allegations of bodily injury.

This type of claim for invasion of privacy rights is likely to grow in frequency and severity. To date, most of the reported judgments in the growing body of Canadian privacy law are related to revenge porn and similar domestic situations. The intricacy and inter-relatedness of the online world will generate other types of privacy claims which in turn will generate interesting and difficult discussions of the right to an insured defence.

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  • Medical Provider’s Suit Dismissed as Prepayment for Compliance with a Verification Request is Not Proper and Does Not Function as a Method of Ceasing the Tolling of the Statutory 30-day Pay or Deny Requirement That a Verification Request Permits; Neither do Radiology Rules Require Prepayment
  • Vermont Law Applied In Coverage Dispute Regarding Loss-Allocation Where Georgia Law Was Unsettled On The Issue
  • The First Canadian Civil Case to Test the Provincial Intimate Images Protection Acts that Exist in Various Provinces was Issued in Manitoba on March 2, 2022. This Type of Legislation is One of Several Tools that Protect Privacy Rights in Canada and is Likely to Spur Duty to Defend Debates Under Personal Lines, General Liability, and Cyber Coverages
  1. You are continuously unable to perform the Material and Substantial Duties of Your Regular Occupation, and

  2. Your Disability Earnings, if any, are less than 20% of Your pre-disability Indexed Monthly Earnings.

  3. You are continuously unable to engage in any Gainful Occupation, and

  4. Your Disability Earnings, if any, are less than 20% of Your pre-disability Indexed Monthly Earnings.

  • Roque did not have a cause of action for intrusion upon seclusion as this is a case of wrongful distribution; Roque would have had a cause of action for public disclosure of private facts had it been pled.

  • This was not a case of breach of confidence as the defendant was Peters, not Friesen.

  • Peters and Roque did not have a relationship of any kind at the time the images were distributed that would support relief based on a breach an ad hoc fiduciary duty.

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