Coverage Pointers - Volume XXIII, No. 23

Volume XXIII, No. 23 (No. 618)
Friday, April 29, 2022
A Biweekly Electronic Newsletter

Hurwitz & Fine, P.C.
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Buffalo, New York 14202
Phone: 716-849-8900
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As a public service, Hurwitz & Fine, P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York and Connecticut appellate courts and Canadian appellate courts.  The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers.  

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

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

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

 

 Dear Coverage Pointers Subscribers:                  

Do you have a situation?  We LOVE situations.  I also love the magnolias outside my city house, the sure sign of warming weather.  There were out two months ago in Greenville, SC.  Ahh well.

As a reminder, the actual issue of Coverage Pointers is attached to this cover letter.

Just Saying:
I need to say this, so there is no question about our role here.  We try to call cases down the middle.  We don’t always like the results, we don’t always like the reasoning.  We write about our wins and our losses and our clients’ wins and losses.  We try to be fair, but there are times when you may have a different take on a decision.  Maybe you do, because you were the lawyer or the carrier, who was involved in the case.  Maybe you know something from behind the scenes that was not in the decision.  Maybe you simply disagree with our analysis or commentary.  We apologize if you disagree with us and even more so if we get it wrong.  After 23 years of publication and 618 issues and many thousands of case summaries, we may indeed miss a point or take a tact differently than you.

If you want to write a “counterpoint” to a review, or have a different perspective on a case, feel free to write to us.  If you want us to publish your take on a case, we’ll do so. This is not a science; it is an art form.

Anyway:
Winter ended yesterday, with an inch of snow on the ground.  Summer starts tomorrow as my cottage opens tomorrow.  Just back from the land of good red wine, Napa California, where I attended the Association of Defense Trial Attorneys annual meeting.  It’s so good to break bread with friends.

For those of you who have signed up for the risk transfer programs being offered in April and May, you have received, or will receive, a Zoom invitation.  See you there.

A special thanks to my good friend Andy Downs from Bullivant Houser in California for his review of a case in that statue enforcing a statutory prohibition of liability coverage for willful acts.

There’s a lot of great stuff in this week’s issue, the most significant of which is in Steve’s column, the First Department prohibiting the deposition of an underwriter in a NY coverage case. There’s a real interesting case in my column on the battle between auto and CGL coverage in the loading and unloading space. You’ll also find the dismissal of an E&O claim against an attorney brought by a third-party administrator, a case on earth movement coverage, a Second Circuit case on COVID coverage, a decision on Child Victim’s coverage in Connecticut, and a really interesting on allowing the consideration of hearsay in Canada (and sanctions to defence counsel for unacceptable conduct.

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

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.

Training, Training and More Training:

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

Newsletters:      

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

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

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

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

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

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

   

Peiper on Property and Potpourri:
 

We review an interesting “earth movement” case in the column this week.  This particular version of the exclusion provided that coverage was extinguished regardless of whether the damage was caused by natural movement or man-made activities.  It is a good reminder that the language of the exclusion matters. 

If written to be broad, Courts will generally interpret policy language broadly.  If, however, the exclusion is not explicitly, intentionally, broad in its drafting, no amount of creative lawyering will expand its reach.  In policies, as in contracts, we start with the language of the agreement and stay closely tethered thereto. 

We also review the latest in the evolving precedent on legal malpractice claims brought against defense counsel.  In the case reviewed by the First Department, the carrier’s retained TPA prosecuted the legal malpractice case against panel counsel.  The claim argued that untimely expert disclosures resulted in a higher settlement and increased defense costs.  The problem for the TPA, of course, was that it did not actually have an obligation to pay the loss.  Without any direct damages, and without any direct privity between itself and defense counsel, the legal malpractice claim failed. 

On a personal note, I am about to embark on the 10^th season with Hurwitz & Fine’s much talked about (but rarely feared) softball team.  I’ve been at the Firm quite a bit longer, but I had a few years of hiatus while serving as my son’s soccer coach.  I played for the first time in quite a while last year and labored through an assortment of muscle strains and shots to my fragile ego.   I am advised that my spot is secured on the team for another season, but the manager has hinted that I may be moving to a corner infield spot as my range is not quite what it used to be.  I think that is a subtle message that I am old, or out of shape, or both. 

I didn’t need the reminder. 

That’s it for now.  Check this space in coming weeks for team updates. 

Steve
Steven E. Peiper
[email protected]

Love Theft – Who Knew?

The Brooklyn Daily Eagle
Brooklyn, New York
29 April 1922

BROOKLYN MATRON
CHARGES LOVE THEFT

Mrs. B. W. Ellis Sues N. J. Wife
For $20,000 Balm.

Rutherford, N. J., April 29—Mrs. Ethel Saunders, 30, of 56 Vreeland ave., Rutherford, has been served through the office of Sheriff Joseph Kinzley of Hackensack, with papers in a suit for $20,000 damages, brought by Mrs. B. W. Ellis, 229 St. John’s p., Brooklyn, who charges her with the alienation of the affections of her husband, Charles B. Ellis.

Mrs. Ellis charges that Mrs. Saunders “did wrongfully, maliciously entice, instigate and persuade” Mr. Ellis to desert her and cause a separation between them.  The papers state that the alleged infatuation begin on Jan. 1, 1919.

Mrs. Ellis has already instituted suite in Special Sessions Court, New York, for a separation from her husband and has made application for alimony for herself and three daughters pending the outcome of her action.

The only comment made by Mrs. Saunders when served with the papers in the allegation suit was:

“I am glad somebody thinks I am worth $20,000.”

 

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

Just when we were starting to think that maybe the pandemic is easing or ending, we are reminded that COVID probably is never going to go away. As we enter the third year of this emotional rollercoaster, we just have to remain vigilant and understand we are in this for the long haul. To that end, once again we have cases coming down from our own Second Circuit about coverage implications relative to COVID-19. Here’s Evan again:

Hello, readers! It has certainly been a while … while Agnes has been living it on vacation, I have been soaking up the last few weeks of my law school journey. I am set to walk the stage two weeks from this Saturday (depending when you’re reading this, of course). Aside from planning out graduation parties and (gulp) getting ready to study for the bar exam, I am starting to think that Mother Nature and I are simply no longer friends. This Buffalo weather is really getting ridiculous.

This week, we consider whether the general trend that there must be some sort of physical loss to property before COVID shutdowns can trigger coverage applies to other provisions—namely, the “civil authority provision” and the “business income” provision. In BR Restaurant Corp. v. Nationwide Mut. Ins. Co., the Second Circuit held that it does. ~Evan

Until next time,

Agnes (and Evan)
Agnes A. Wilewicz
[email protected]

How Things Have Changed:

 

The Brooklyn Daily Eagle
Brooklyn, New York
29 April 1922

STATE’S INFANT MORTALITY
RATE HITS LOWEST MARK

Albany, N.  Y., April 29—The death rate of children under 1 year of age for New York State in 1921 was only 75 for every 1,000 babies born alive, the State Health Department reported today. This is the lowest infant mortality record ever reached in the State and represents a decline of 50 percent in the last seventeen years.

Editor’s Note: Today’s infant mortality rate is 5.8 for every 100 babies born.

 

Barnas on Bad Faith:

Hello again:

It does not seem like we are already one-third of the way through the year, but that is what the calendar says.  It is hard to get a feel for the time of year up here given how the weather has been.  On Sunday, I enjoyed a round of golf in 80-degree weather.  This morning, there was snow accumulation on my Jeep and in my yard.  Hopefully we start to get some nice spring weather more consistently soon.

We are coming up to one of the best weekends in sports: the first Saturday in May.  Traditionally the home of the Kentucky Derby, this weekend also almost always features playoff basketball and hockey as well as regular season baseball.  Every once in a while, you get a big fight on the first Saturday in May as well.  This year, F1 is joining the party with a grand prix in Miami.  I, like many people, got into F1 during the pandemic by watching Drive to Survive on Netflix.  I would never describe myself as a huge racing fan, but I have enjoyed getting into the sport through the series, and now find myself tuning in for most of the races and the quails.  I had previously selected Haas as my team, and they appear to be on the upswing this year.  Hopefully we see a double points finish for the home team on American soil next weekend.

In my column this week I have an appellate court case from Washington where the court considered a matter of first impression: whether noneconomic damages are available under Revised Code of Washington 48.30.015, a provision of the Insurance Fair Conduct Act.  The court, in a detailed decision that considered the legislative history of the statute, concluded that they were.  Give it a read if you are so inclined.

Brian
Brian D. Barnas
[email protected]

Grand Jury to Investigate KKK:

Buffalo Morning Express and Illustrated Buffalo Express
Buffalo, New York
29 April 1922

LOS ANGELES
GRAND JURY TO
PROBE K. K. K.

Will be empaneled today;
court cites present
emergency.

By EDWARD DOHERTY
Special to The Buffalo Express

Los Angeles, Cal. April 28,—Judge Frank R. Willis announced tonight that a grand jury will be empaneled tomorrow by the Los Angeles county court to investigate activities of the Ku Klux Klan. He said the present emergency was the only reason for calling the jury.

The Ku Klux Klan that has overridden Bakersfield, Kern county, for months, flogging, tarring men, chasing them out of town, was put on the defensive today.  District Attorney J.  R. Dorsey arrested three klansmen. He went before the grand jury with sheafs of documents linking other members with various outrages, he said.

The grand jury has been in session to investigate the most recent of the klan activities in that terror stricken community, the beating of John A. Pyles, a private detective, who had been engaged in investigating the invisible empire.

But with evidence obtained by Dorsey from District Attorney Thomas Lee Woolwine of Los Angeles, the grand jury widened the scope of its inquiry to embrace all the outrages that have been committed by the night riders, some of which, it is said, have not been reported to officials.

“We have the evidence now,” said Pyles today. “We can go ahead. The reign of terror is over,. Law and order has come into the oil fields.” The beating of Pyles was the crowning offense committed in this district by the hooded raiders, and incidentally it was charged that the klansmen pray before they torture.

 

Off the Mark (featuring Kyle A. Ruffner):

Dear Readers,

Every time I mention nice weather, it gets cold.  When we left for Disney, the temperature was 70 degrees.  The temps were in the 90s in Florida, yet when we returned, it was 50 degrees and windy.  It was a bit of a shock to the body.  I still eagerly await spring.  Speaking of Disney, the family trip to Disney went extremely well.  Despite the long lines, the crazy cost of everything ($9 for a slice of not-so-great pizza), and the hot and humid weather, a good time was had by all.  I think my parents really enjoyed seeing all the grandchildren experience the magic of Disney.  I hope so anyway.

Despite an exhaustive search, we did not find any interesting construction defect decisions to report on this edition.  Be sure to check back in two weeks.

Here's a brief update from Kyle:

Only a few days away from May and I am unfortunately writing this while watching snow fall outside my window… hopefully this is finally Winter’s last gasp, but I won’t get my hopes up. Definitely excited about golf and softball season coming up around the corner. Staying busy but still enjoying a bit of downtime and watching a lot of NBA playoffs in the meantime! ~Kyle

Until next time …

Brian (and Kyle)
Brian F. Mark
[email protected]

 

What Would The Union Say, Now?

Buffalo Morning Express and Illustrated Buffalo Express
Buffalo, New York
29 April 1922

NEW YORK COPS
TAUGHT HOW TO
BRUSH THEIR TEETH

New York, April 28  (A. P.).—Commissioner Enright of the police department issued a 40-page booklet this afternoon to induce the cops of New York to brush their teeth every day.

The pamphlet is filled with cartoons and photos showing what a toothbrush looks alike. Dental floss, paste and powder are also illustrated. The location “armed to the teeth” was, of course, inevitable.  Under a cartoon thus headed were these words:

“The toothbrush and paste are as necessary for your protection as the night stick and gun.”

Eighteen halftone photographs showed in detail how to wield the brush in tackling various teeth, and cartoons warned against the danger of everybody in the family using a brush in common.

 

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

Another busy couple of weeks have flown by. We had a beautiful weekend with lots of sun, so I saw the cherry blossom trees at Delaware Park and went to my first baseball game. There were so many fly balls at this minor league game that it was really more tragic if you didn’t catch one.

This week, I am pleased to offer you a case from a state near and dear to my heart. In this case, the Massachusetts Supreme Judicial Court agreed with the superior court’s conclusion that the insurance policies of three restaurants that suffered reductions in revenues during the COVID-19 pandemic and the resulting government restrictions on public gatherings did not unambiguously cover the restaurants’ losses as there was no direct physical loss or damage resulting from the COVID-19 virus.

Enjoy,

Kate
Katherine A. Fleming
[email protected]

 

Instead of Plate, Ballplayer Steal Watches:

The Buffalo Enquirer
Buffalo, New York
29 April 1922

FIANCEE ASKS LENIENCY
FOR THIEVISH BASEBALL
PLAYER SHE’S TO WED

Probation for one year, sentence suspended on six months in the pen and a fine of $100 was the sentence imposed by Judge Lamson today on John Ruszanowski, 21 years old, No. 241 Homestead Avenue, Depew, ball player on a Lancaster team, who ran away with two of his team mates’ watches.

Ruszanowski pleaded guilty and for a chance to make good, as he expected to get married in a few weeks. His fiancé also appeared in his behalf and asked for clemency. The man as has had several convictions for larceny.

 

Ryan’s Capital Roundup:

Today is my eldest son’s birthday and we got him exactly what he wanted for his birthday. The look on his face will be worth every penny. The look on our faces periodically for the next few years, maybe not. But we won’t talk about the latter. It’s his day and we’ll let him have it and then some. And knowing him, he’ll take some more after that. That’s okay though, because we’ll contain him eventually (I hope).

This week, we have an entry into our Legislative List regarding the potential extension of multiple rating programs to commercial lines insurers—a privilege only held by personal lines insurers since 2011—which will remove the costly need of commercial lines carriers to form a subsidiary or affiliate company to allow for similar segmentation of the market and pricing options.

Ryan
Ryan P. Maxwell
[email protected]

 

Russians Living Longer, 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
29 April 1922

MORALITY ON DECLINE
IN RUSSIA

Soviet Has Adopted American
Policy of Open Warfare
Against Vice-Moscow a Clean City.

(By Edwin W. Hullinger, United Press Staff Correspondent)

Moscow, April 2 (By Mail)—Immorality is on the decline in Russia, according to statements by Nicolas Semashko, commissioner of public health, in an interview with the United Press.

The soviet administration has introduced the American policy of open warfare against vice. Segregated districts were abolished, houses of prostitution were closed, and the famous yellow tickets, issued by the Czar’s officials to unmoral women as indication that the possessor had fulfilled all the requirements of the law, were annulled. Women of easy morals were obliged to go to work.

Arrests succeeded in driving vice under cover, even more effectively than in the United States, but owing to living conditions and the general demoralization of life caused by the Revolution, immorality could hardly be said to be on the decrease.

Child immorality rose to alarming proportions following establishment of co-educational schools. As society adjusted itself to the new conditions, however, and the Soviet campaign against vice tightened, the first wave of licentiousness began to subside, Semashko said.

 

CJ on CVA and USDC(NY):

Hello all,

As I’m sure you’ve read about in many cover notes today, the weather in WNY has been quite wacky. It was 80 degrees and sunny on Sunday but snowing on Wednesday! Let’s hope that this is just the last of winter clearing out before a bright spring and warm summer.

This edition I bring for your review a case from the Southern District. Here we see the non oft used tactic of a motion for judgment on the pleadings made by the insurer to prove that an attorney had prior knowledge of facts that may anticipate a malpractice claim when said attorney failed to answer a lawsuit on behalf of a client and subsequently failed to successfully oppose a motion for default judgment.

Until Next Time,

   CJ
Charles J. Englert, III     

 

How Insurance Works:

The Buffalo Enquirer
Buffalo, New York
29 April 1922

HOW INSURANCE WORKS

Yesterday we pointed out that term insurance is the cheapest of all.  For Instance, let us say that at the age 25 one could buy-a term insurance policy for five years at around $8 a year for each $1,000. Now, an ordinary life policy would cost perhaps twice as much, about $16 a year, at 25 years of age.

The insurance company figures that from 25 to 30 years of age that $8 premium will play for all the death losses that will be suffered in that $16 a year for an ordinary life policy, period. Now the company that charges spends $8 of that money, so to speak, to pay off the losses from 25 to 30 years of age. The other $8 is laid away at interest to take care of the much-longer losses that are bound to occur later on in life.

We may find that a five-year term policy at age 55 costs $22 a $1,000. In other words, the company figures that a $22 premium in that five-year period will take care of the losses. But the man, starting in at 25 with his ordinary life policy is paying only $16 a year at age of 55. The company is now drawing on Its reserve fund that it built up out of that extra money that was paid in early in life. The farther along one goes, the more it must draw on this fund.

This extra money that is laid away is the reserved on the policy. A man carrying an ordinary life insurance policy and suddenly deciding to throw it up and makes no more payments has some extra money to his account, which the insurance company has laid away at interest to take care of all those in his group in later life. In the early days people were deceived about this extra money, because some companies refused to give it up in case the insurance was dropped.

Insurance companies, today, however, fix a cash surrender value on their policies after the first two or three years. In other words, you get this money back if you give up the insurance. Some companies instead of simply give one so much paid-up insurance. One doesn't lose out altogether even if forced, to discontinue the insurance.

 

Dishing Out Serious Injury Threshold:

Dear Readers,

I hope everyone had an enjoyable holiday and was able to spend time with friends and family. Now that the weather is getting nicer, I’m looking forward to spending time outside, even if that time will be spent doing more yardwork. 

I selected one decision for this issue. This Appellate Division, Second Department, matter pertaining to defendant’s expert being unable to allege that the plaintiff’s injury was not caused by the subject accident. As such, the defendant’s burden never shifted to plaintiff to explain causation and/or any gap in treatment. 

Enjoy,

Michael
Michael J. Dischley
[email protected]  

 

I Hate When That Happens:

El Paso Herald
El Paso, Texas
29 April 1922

‘DEAD’ HUSBAND INTERRUPTS
A HONEYMOON

Paris, France, April 29—A woman’s attempt to punish her daughter in law for marrying again after her husband’s death in the war, has just been exposed here.

An elderly woman in Touraine informed the ministry of war that she had recognized her son in one of six photographs published by the newspapers of insane soldiers, former prisoners of war in Germany returned after the armistice in a complete state of amnesia, unaware of their identity.

The wife of the missing soldier having long ago given up her husband as dead, had just been married a second time and in the midst of her new honeymoon she was instructed to come to Paris and identify her first husband.

 

Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

Thursday night is one of my favorite events of the year—no, it’s not Christmas in April, unless you are an NFL franchise. I’m talking, of course, about the annual Player Selection Meeting, better known as the football draft. I’m what you might endearingly call a Draftnik. I remember cutting school (with my parents’ permission, so I guess it wasn’t really cutting), staying home to watch the 12-round, all in one day, draft on ESPN. The late great Joel Buchsbaum and the then very young Mel Kiper, Jr. – the original draftniks, along with Chris Berman, would sit at what reminded me of the Thanksgiving kiddie table, in Radio City Music Hall reporting, debating, and arguing over the draft picks. Fast forward forty years and now you have a glossy, over-produced, over-covered, and over-hyped primetime gala, red carpet style event. It’s come a long way from its humble beginnings. This year, the New York teams (meaning the Giants and the Jets because, well, let’s be real), own four of the top ten picks. By the time you read this, we’ll know what they did with them, but for now the air is pregnant with possibility. The NFL Draft, like spring itself, promises renewal and delivers unbridled optimism.

Oh, and in this edition, we cover a couple of Connecticut trial court decisions. Something to do with insurance, I think. I have to go, Kiper and McShay have differing grades on the offensive tackles the Giants might draft. This is big news.

Keep keeping safe.

Lee
Lee S. Siegel
[email protected]       

 

The Bible Talks, Nobody Walks:

Pine Bluff Daily Graphic
Pine Bluff, Arkansas
29 April 1922

Bryan Propounds Five
Questions On Evolution

Morgantown, W. Va., April 28—Five new questions propounded by William Jennings Bryan are playing a part in the decision of Dr. R. C. Sprangler, professor of botany at West Virginia University, as to whether or not he will accept a check for $100 from Mr. Bryan which the professor claimed as his reward for answering certain questions on evolution put by the former secretary of state in a recent address here. Dr. Sprangler said he would refuse to answer the five questions which follow:

“Are you willing to put in writing and sign a statement declaring that you believe you are descendant of an ape?”

“Do you believe in miracles as reported in the old and new testaments?”

Do you believe in supernatural as recorded in the old and new testaments?”

Do you believe in the Virgin birth of Christ as reported in the gospel?”

“Do you believe that Christ appeared to his disciples after his resurrection as recorded in the concluding verses of the last chapter of Matthew, and made his claim to power—all power in Heaven and in earth: sent his followers out to make disciples of all nations and promised to be with them always, even unto the end of the world?”

 

Rauh’s Ramblings:

            Happy Thursday!

We experienced two days of summer-like weather on Sunday and Monday of this week, and then it was back to near freezing temperatures and even snow yesterday!  I hope it warms up a little this weekend because my son has his first T-ball practice on Saturday afternoon.  He is very excited to wear a baseball glove, but doesn’t understand why he can’t wear a glove on both hands. 

I don’t have any cases to report on this week, but I will report back in two weeks with a notable case or two. 

Enjoy the weekend!

Patty
Patricia A. Rauh
[email protected]

           

Running Down a Police Officer, Not the Best Idea:

New York Herald
New York, New York
29 April 1922

WOMAN WHO RAN DOWN
POLICEMAN CONVICTED

Guilty of Speeding, Though Acquitted of Assault Before

Mrs. Loretta C. Thompson of 2117 East Fourteenth street, Brooklyn, was convicted in the Brooklyn Traffic Court yesterday of speeding and operating a motor car without a license.

The conviction was based upon virtually the same facts upon which Mrs. Thompson was acquitted of the charge of assault in the Court of Special Sessions recently. She ran down Thomas F. Dunn, motorcycle policeman, last December, breaking his leg.

Magistrate McCloskey withheld sentence until Tuesday when he will have before him a probation officer’s report on the defendant. Policeman Dunn, who still carries a cane, will bring a civil suit against Mrs. Thompson for damages, it was said.

 

Storm’s SIU Examen:

Travelling for my first-born’s college graduation.  Double the cases for you next time. 

Scott
Scott D. Storm
[email protected]

 

Sock It To Me:

The New York Times
New York, New York
29 April 1922

Lady Astor in a Shoe Store
Spends $188, Gets 9 Pairs

Special to The New York Times

BALTIMORE, Md., April 28—Before Lady Astor left Baltimore for Washington she did some shopping. She was hurrying up Charles Street when she passed a shop window. A pair of brown suede pumps—the new kind with  the box heel and elastic side—caught her eye. She entered and here is what her ladyship bought for $188:

One pair of brown suede pumps, box heels, elastic sides, $10; one pair of black suede pumps, box heels, elastic sides, $10; two pairs of patent leather pumps, baby French heels, $26; two pairs of cut steel pump buckles, $56; one pair of beige suede pumps, cut-out side, $17; one pair of patent leather pumps, single strap round toe, $15; one pair of silver cloth pumps, high French heels, $20; one pair of black velvet sandals, high heels, $13; one pair of patent leather and gray cloth dress pumps, $13; two pairs of silk hose to match the beige pumps, $8; total $188.

She tried them all on and then slipped a slender foot into her 4 ½ C’s and hurried out.

 

North of the Border: 

My youngest daughter completed a two-year paralegal diploma. We are holding a party in her honour tomorrow.  Life’s milestiones require celebration. Finally, we can do that.

My column this week discusses the ramifications of an unprincipled defence to an insurance claim as well as the circumstances under which evidence obtained in another country is admissible in a Canadian court.
 

Heather
Heather A. Sanderson
[email protected]

 

Russia Barred from US Courts – in 1922:

Buffalo Morning Express and Illustrated Buffalo Express
Buffalo, New York
29 April 1922

RUSSIA IS BARRED FROM
SUING IN UNITED STATES

New York, April 28 (A.P.).—The appellate division of the supreme court today upheld a decision of the lower branch holding that the federated socialist soviet republic of Russia has no right to bring suit in the courts of the United States.

The decision was rendered in the case of Jacques Roberto Cibrario, who was sued by the soviet government for $1,000,000 alleged to have been entrusted to him for investment in movie film, and motion picture projectors.

 

Headlines from this week’s issue, attached:

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

• Where Appellate Court Never Reached Question of “Grave Injury”, State Insurance Fund is Not Precluded from Relitigating Question

• Significant California Decision Enforcing Statutory Prohibition on Liability Coverage for Willful Act

• Sexual Abuse Claims Excluded Under “Sexual Abuse and Sexual Misconduct Exclusion”

• No Deposition of Underwriters in DJ Action Where Policy Language Clear

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

• Earth Movement Exclusion Applies to Both Natural and Man-Made Disturbances
• Lack of Discernable Damage Results in Dismissal of Lawsuit
• TPA’s Attempted Legal Malpractice Claim Dismissed Due to Lack of Standing

 

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

• Defendant Expert Unable to Allege Injury Not Caused by Subject Accident as such Burden Never Shifted Regarding Causation and/or Gap in Treatment

 

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

• Insured Must Have Suffered Direct Physical Loss or Damage to Property for Coverage to be Warranted Due to COVID-19 Restrictions

 

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

• The Term “Actual Damage” as Used in RCW 48.30.015 Includes Noneconomic Damages

 

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

• Anti-Assignment Provision Does Not Preclude Post-Loss Transfer of Rights
• No Obligation to Defend Molestation Claims

 

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

• No interesting construction defect cases to report on.  Check back in two weeks.

 

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

• Bill Delivered To Governor Would Allow Insurers to Make Available Multiple Rating Programs For Commercial Insurance Within the Same Company  

 

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

• Withholding Knowledge of an Attorney’s Failure to Properly Respond to a Lawsuit Constitutes Withholding Facts that may Anticipate a Claim

 

RAUH’S RAMBLINGS
Patricia A. Rauh
[email protected]

• No cases to report this week – see you in two weeks!

 

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

• Travelling for my first-born’s college graduation.  Double the cases for you next time. 

 

FLEMING’S FINEST
Katherine A. Fleming
[email protected]

• “All-Risk” Business Insurance Policies Excluded COVID-19 Related Business Losses as Not Direct Physical Loss Or Damage Resulting From The COVID-19 Virus

 

NORTH of the BORDER
Heather A. Sanderson
[email protected]

• Hearsay Evidence from Witnesses Who Live Out of the Jurisdiction and are not Compellable can be Admissible in a Summary Judgment Application on an Insurance Claim if there is Evidence that the Hearsay is Reliable. Hardball Defence Litigation Tactics and the Lack of a Principled Defence Rooted in Admissible Evidence Resulted in an Award of Interest at Commercial Rates and Enhanced Costs Payable by the Defence.

 

Stay healthy, keep writing and thanks for sticking with us.

Dan

 

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

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

NEWSLETTER EDITOR
Dan D. Kohane
[email protected]

ASSOCIATE EDITOR
Agnes A. Wilewicz
[email protected]

ASSISTANT EDITOR
Patricia A. Rauh
[email protected]

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

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

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

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

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

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

Alice A. Trueman

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

Diane F. Bosse
 

Topical Index
Kohane’s Coverage Corner

Peiper on Property and Potpourri
Dishing Out Serious Injury Threshold
Wilewicz’s Wide World of Coverage
Barnas on Bad Faith
Lee’s Connecticut Chronicles
Off the Mark
Ryan’s Capital Roundup
CJ on CVA and USDC(NY)
Rauh’s Ramblings
Storm’s SIU Examen
Fleming’s Finest
North of the Border

 

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

04/28/22       Tishman Construction Corp. v.  Zurich American Ins. Co.
Appellate Division, First Department
Interesting Decision – Not Every Act of “Loading or Unloading” a Vehicle is “Use of a Vehicle” under an Auto Policy
The underlying case was brought by Rodriguez, who was employed by Port Morris, the stone and tile subcontractor on a construction project owned by Riverside. Tishman was the construction manager. Five Star Electric was the electrical subcontractor. The underlying complaint alleges that Riverside and Tishman were negligent and violated Labor Law §§ 200 and 241(6). Insurance Company of the State of Pennsylvania, (“ICSOP”) provided Riverside and Tishman a defense.

Here is how the accident happened:

Rodriguez was allegedly injured when he fell into a hole while at the premises to make a delivery. He testified at his deposition that he had backed the truck he was driving into the building's interior loading dock where it was offloaded. Hanging down in front of the building entrance through which he had backed the truck were wind flaps and a plastic sheet or curtain that were about 10 to 30 feet away from the front of the truck parked at the loading dock. The wind flaps/curtain had to be raised from the outside of the building for the truck to enter and exit. After the truck had been offloaded and materials he was taking back had been reloaded onto the truck, he walked from the loading dock to make sure the driveway was clear to exit and raise the curtain. He had not yet checked the rear of the truck to make sure nothing was loose before departing. A plate covering a hole in the ground outside the building shifted and he fell in. He further testified that while there were "normal" artificial light conditions inside the building, it was still dark outside, with only "minimal" lighting.

As part of an OCIP, ICSOP issued to Riverside a commercial general liability (CGL) policy. The policy contained an "Auto" exclusion. Port Morris's subcontract additionally required it to obtain a commercial automobile insurance policy naming Riverside and Tishman as additional insureds "on a primary and non-contributory basis". Pursuant to its subcontract, Port Morris obtained a commercial automobile insurance policy from Old Republic General Insurance Company (Old Republic) that provided third-party coverage for bodily injury "caused by an 'accident' and resulting from the ownership, maintenance, or use of a covered 'auto'".

Five Star's subcontract required it to obtain a CGL policy providing coverage for itself, Tishman, and Riverside on a primary basis. It apparently was not covered under the OCIP, but instead obtained a CGL policy from Zurich.

Riverside and Tishman commenced this action against Old Republic, Zurich, Port Morris, and Five Star seeking declarations, inter alia, that Riverside and Tishman are additional insureds under the Old Republic and Zurich policies, and that Old Republic and Zurich are obligated to defend and indemnify them and to provide primary coverage to them in the underlying action.

The primary issue on this appeal is whether Richard Rodriguez was injured as a result of the "use" of an automobile, within the meaning of a commercial automobile liability policy issued by Old Republic and the automobile use exclusion in the CGL policy issued by ICSOP. We conclude that the answer to this question is no.

While "use" of an automobile includes loading and unloading , an accident does not arise from the "use" of an automobile merely because it occurs during the loading or unloading process, but rather "must be the result of some act or omission related to the use of the vehicle" .

The court rejected the contention that the process of unloading was not completed here because Rodriguez was injured while checking to ensure a clear exit path, raising the wind flap/curtain to exit, or ensuring that there was nothing loose at the back of the truck. Even if Rodriguez's accident occurred during loading or unloading of the truck, it did not arise out of the "use" of the truck or its loading or unloading, because the injury was caused by a defective premises condition, rather than any act or omission related to the use of the. Accordingly, Old Republic is not required to defend or indemnify plaintiffs in the underlying action, and Zurich is not entitled to a declaration that it has no duty to defend plaintiffs in the underlying action.

04/28/22       Pruss v. AmTrust North America Inc.
Appellate Division, First Department
Mistakes Happen, Even in Settlement Negotiations.  Conveying Insurer’s Settlement Authority Mistakenly Provided is Not Actionable.
Claim against counsel and the claims professional damages, for offering an amount mistakenly authorized by the claim professional are dismissed by the Appellate Division. An agent for a disclosed principal "will not be personally bound unless there is clear and explicit evidence of the agent's intention to substitute or superadd his personal liability for, or to, that of his principal. That did not occur here, where defendants conveyed the settlement offer to plaintiffs and the court in accordance with the instructions of their principal, defendant AmTrust North America, Inc. (AmTrust). Defendants' statements that AmTrust had conferred them with authority to settle the case for $5 million were accurate, even if the validity of AmTrust's underlying statements was not.

The complaint alleges — without citing any specific statute, court rule, or agreement — that the plaintiff’s lawyer was entitled to recover his one-third contingency fee from defendants in addition to the additional costs and legal fees he incurred in connection with prosecuting this action. There is no basis for this recovery. Regardless, it is also uncontested that plaintiffs have fully recovered the $5 million settlement from various sources at this point in the litigation fund, from which Klein has collected his contingency fee.

04/26/22       Home Depot U.S.A., Inc., as Assignee v. State of New York
Appellate Division, First Department
Where Appellate Court Never Reached Question of “Grave Injury,” State Insurance Fund is Not Precluded from Relitigating Question

Home Depot seeks coverage under an Employer's Liability Policy issued by the New York State Insurance Fund (SIF) to its assignee, Bryan's Home Improvement Corporation (Bryan's). The Employer's Liability Policy at issue provides coverage for "all sums you [Bryan's] must pay as damages [to a third-party] because of injury to your employees . . . where recovery is permitted by law." Pursuant to Workers' Compensation Law ("WCL") § 11, recovery in a third-party indemnification action against an employer is only "permitted by law" where there is a judgment for common-law indemnification based on the existence of a statutorily defined "grave injury."

In the underlying personal injury action commenced in a federal district court, Bryan's employee sued Home Depot, which commenced a third-party action against Bryan's, seeking both common-law and contractual indemnification. While the federal district court found Home Depot liable for damages in the underlying personal injury action, it also granted Home Depot summary judgment on its claims for common-law indemnification, based upon the finding of grave injury suffered by the injured plaintiff, and contractual indemnification against Bryan's.

However, the Second Circuit affirmed only on the contractual indemnification claim, stating "[b]ecause we conclude that [Bryan's] is liable to Home Depot on a theory of contractual indemnity, we need not address the district court's findings that [the injured plaintiff] suffered a 'grave injury' as a matter of law." Ultimately, Home Depot and Bryan's resolved the third-party indemnification action by Bryan's assigning to Home Depot its claims against SIF on its Employers' Liability Policy.

Home Depot's argued that SIF was collaterally estopped from raising the issue of grave injury in this coverage action under the Employer Liability Policy. Under New York law.  However, collateral estoppel does not prevent relitigation of a ruling that was an alternative basis for a trial level decision, where an appellate court affirmed the decision without addressing that ruling  Bryan's failure to appeal from the post-judgment award of attorneys' fees in the federal action did not mean that SIF was collaterally estopped from denying coverage under its employers' liability policy, as Bryan's had assigned its rights to Home Depot prior to that.

Since the SIF Employers' Liability Policy does not provide coverage for common-law indemnification absent a finding of "grave injury" (Workers' Compensation Law § 11), until that issue is resolved, there is no coverage here

04/19/22       Certain Underwriters v. Conagra Grocery Products
Significant California Decision Enforcing Statutory Prohibition on Liability Coverage for Willful Act
California Court of Appeal

Andrew Downs from Bullivant Houser, has written a superb review of this decision, which is linked from his article.  Thanks, Andy.

04/22/22       Madison Square Boys & Girls Club, Inc. v. Atlantic Specialty Ins. Co.
Appellate Division, First Department
Sexual Abuse Claims Excluded Under “Sexual Abuse and Sexual Misconduct Exclusion”

In the underlying action, former members of plaintiff Madison Square Boys and Girls Club, Inc. (MSBGC) allege that Reginald Archibald and Nicholas Antonucci, respectively, a former volunteer and a former coach for MSBGC, sexually abused them as children. The complaint asserts that MSBGC had a duty to exercise the degree of care that a prudent parent would in supervising those with access to children while in MSBGC's custody, and that MSBGC breached that duty by failing to supervise Antonucci and Archibald, despite having notice of their propensity to engage in such conduct.

Atlantic issued MSBGC a claims-made insurance policy that was in effect at the time the underlying action was commenced. The Atlantic policy covers "Loss from any Third Party Claim" made during the policy period "for a Third Party Wrongful Act," which is defined to include sexual harassment, "including unwelcome sexual advances, requests for sexual favors or other conduct of a sexual nature, against a Third Party; provided, that 'Third Party Wrongful Act' shall not include any form of intentional sexual harassment, and shall include non-intentional or negligent sexual harassment or sexual harassment imputed through the doctrine of vicarious liability. 

Endorsement No. 13 in the Atlantic policy contains a sexual misconduct and child abuse exclusion, which states that no coverage will be available for any loss for any claim "based upon, arising out of, directly or indirectly resulting from, in consequence of, or in any way involving any actual or alleged Sexual Misconduct . . . or child abuse or neglect."

Atlantic has no obligation to defend or indemnify MSBGC in the underlying action because the claims made in the underlying action are not covered under the Atlantic policy.  MSBGC's argument that the claims made in the underlying action are covered under the Atlantic policy because the allegations of sexual abuse by Antonucci and Archibald describe conduct that is non-intentional is without basis as the allegations clearly describe conduct that is intentional nature.  Sexual harassment, like sexual abuse, is intentional.

There is also no basis for MSBGC's argument that the claims made in the underlying action are covered under the Atlantic policy based on the allegations that MSBGC is vicariously liable for sexual harassment because that is not one of the claims being asserted in the underlying complaint. The claims being asserted against MSBGC in the underlying complaint are for negligent supervision and emotional distress, which provide grounds for direct, not vicarious, liability against MSBGC 

The sexual abuse exclusion contained in Endorsement No. 13 in the Atlantic policy bars coverage for loss from any claim arising out of, or in any way involving, sexual misconduct and child abuse. The underlying complaint's negligent supervision claim necessarily arises out of sexual misconduct as it is based on the allegations that the failure to supervise led to the sexual abuse of MSBGC's members when they were children.

The court correctly determined that the excess insurers have no obligation to defend or indemnify plaintiff in the underlying action since their policies incorporated the terms and conditions of the Atlantic policy.

04/22/22       Allied World Ins. Co. v. National Union Fire Ins. Co.
Appellate Division, First Department
No Deposition of Underwriters in DJ Action Where Policy Language Clear

Based on the applicable policy language, and discovery already allowed by Supreme Court, the court providently declined to grant the motion to compel the sought depositions of defendant's underwriting executives. The policy language was unambiguous and the other discovery sought by plaintiff was available through other sources, including the deposition of defendant's claims handling professional. The Supreme Court had, in prior orders, denied plaintiff's motion to compel production of the underwriting files. The plaintiff may not circumvent those orders by requesting the same information in the form of statements 

Editor’s Note:  Excellent decision.  Underwriter deposition are being sought in many cases where the testimony will add nothing to the equation.

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

Property

04/21/22       3502 Partners, LLC v. Great Am. Ins. Co. of NY
Appellate Division, First Department
Earth Movement Exclusion Applies to Both Natural and Man-Made Disturbances

Plaintiff sustained damage to its property because of excavation work at an adjacent property.  After investigating the loss, Great American elected to deny the claim based on the “earth movement” exclusion found within the policy. That provision precluded coverage in relevant part for “earth sinking…rising or shifting…”  Importantly, the policy also provided that the exclusion applied regardless of whether the “earth movement” was caused by “an act of nature, man-made or is otherwise caused.” 

Given the clear allegations of earth movement in the Complaint, and the plain language of the policy, the trial court granted Great American’s motion for summary judgment.  In affirming that decision on appeal, the Appellate Division rejected plaintiff’s argument that the exclusion was not applicable because the Complaint did not assert the words “earth movement.”  The Complaint did, however, allege excavation which is an act of earth movement that is man-made, and, accordingly the exclusion was held to be applicable.  Plaintiff also alleged that the damages were caused by vibrations of the excavation equipment, but the First Department noted that there were no allegations of damage caused by vibrations.  The only damage claimed was resultant from earth movement, and thus the exclusion applied to bar coverage.

Potpourri

04/26/22       Fischer v. Centene Corp.
Appellate Division, First Department
Lack of Discernable Damage Results in Dismissal of Lawsuit

Plaintiff commenced this action asserting damages which were caused by Centene’s decision to cancel plaintiff’s health insurance due to an underpaid premium.   The facts of the claim, however, show that the coverage was reinstated, and that plaintiff had no claims during the time his policy would have been ineffective. 

Where, as here, plaintiff cannot demonstrate any damage as a result of Centene’s purported error, there is no basis for his lawsuit.

Peiper’s Point – First year torts flashback… “Duty, Breach of Duty, Proximate Cause, Damages.”  You need all four to successfully plead a lawsuit.   

04/19/22       Innovative Risk Mgt., Inc. v. Morris Duffy Alonso & Faley
Appellate Division, First Department
TPA’s Attempted Legal Malpractice Claim Dismissed Due to Lack of Standing

Plaintiff was a third-party administrator for claims arising under a policy of insurance issued by non-party Arch Insurance Company.  Plaintiff alleged that its retained defense counsel failed to timely serve expert disclosure in an underlying litigation.  As a result, plaintiff asserted that it was forced to pay more in defense costs and in the amount necessary to effectuate settlement with the injured party. This action was commenced sounding in legal malpractice, breach of fiduciary duty and breach of contract.

With regard to the legal malpractice claim, the Appellate Division held that plaintiff was not an assignee of Arch’s potential claims against defendant.  Further, the court noted that plaintiff, acting alone, did not have standing to pursue a claim against defense counsel because there was no “attorney-client relationship,” nor were they in “near privity” with defendant.  In this same vein, plaintiff’s arguments that they were entitled to recovery under equitable subrogation principles was misplaced because there was no evidence that plaintiff, as the third-party administrator, was under any contractual obligation to pay the settlement.

Finally, the claims for breach of fiduciary duty and breach of contract were duplicative of the legal malpractice claim and dismissed accordingly. 

 

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

04/20/22       Emmanuella Fernando v. New York City Transit Authority, et al
Appellate Division, Second Department
Defendant Expert Unable to Allege Injury Not Caused by Subject Accident as such Burden Never Shifted Regarding Causation and/or Gap in Treatment

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Katherine A. Levine, J.), dated January 10, 2020. The order granted the motion of the defendant/third-party plaintiffs for summary judgment dismissing the complaint and the separate motion of the third-party defendant for summary judgment, in effect, dismissing the complaint, on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

The plaintiff commenced this action to recover damages for personal injuries she allegedly sustained in a motor vehicle accident on September 8, 2015. The defendants third-party plaintiffs moved for summary judgment dismissing the complaint and the third-party defendant separately moved, in effect, for summary judgment dismissing the complaint, on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. In an order dated January 10, 2020, inter alia, the Supreme Court granted those motions, and the plaintiff appeals.

The Appellate Court found that movants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. Competent medical evidence was submitted establishing, prima facie, that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine did not constitute serious injuries under either the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d). In opposition, however, the plaintiff raised a triable issue of fact as to whether she sustained serious injuries to the cervical and lumbar regions of her spine under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d).

Since the defendant/third-party plaintiffs' expert did not opine as to the cause of the alleged injuries to the cervical and lumbar regions of the plaintiff's spine, the movants failed to establish, prima facie, that those alleged injuries were not caused by the accident. Thus, the burden did not shift to the plaintiff to raise a triable issue of fact regarding causation or to explain any gap in treatment.

Accordingly, the Appellate Court found that the Supreme Court should have denied the motions for summary judgment dismissing the complaint.

 

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

04/08/22        BR Restaurant Corp. v. Nationwide Mut. Ins. Co.
United States Court of Appeals, Second Circuit
Insured Must Have Suffered Direct Physical Loss or Damage to Property for Coverage to be Warranted Due to COVID-19 Restrictions

In this case, BR Restaurant made a claim against its policy of insurance with Nationwide Mutual due to business losses it suffered as a result of government-ordered shutdowns due to the COVID-19 pandemic. Nationwide denied its claims on the ground that the insured failed to show direct physical loss to its property, and the insured sued for breach of contract.

The Court considered the propriety of Nationwide’s denial of coverage under two policy provisions: (1) the “Civil Authority” provision; and (2) the “Business Income” provision. The former covers losses of business income that stem from civil authority action that “prohibits access to the [insured]’s premises due to direct physical loss of or damage to property . . . .” while the latter covers actual loss of business income caused by “the necessary suspension of [the business’] operations during the period of restoration,” where the suspension “must be caused by direct physical loss of or damage to property at the described premises.” [Emphasis Added]. Specifically, the question on appeal was whether the governmental shutdowns, by themselves, were enough to trigger coverage under either of these policy provisions.

Answering that the shutdowns, without more (i.e., without proof of direct, physical loss to a piece of the property) was insufficient to trigger coverage under either of these policy provisions, the Second Circuit reasoned that the terms “direct physical loss” and “physical damage” do not extend to mere “loss of use” if there is no physical damage or other loss to the property. Thus, because BR Restaurant failed to show that their property was physically damaged in some way, the Second Circuit held that coverage was precluded under the above provisions, which do not extend to mere “loss of use.”

 

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

04/19/22       Beasley v. GEICO General Insurance Company
Court of Appeals of Washington, Division Two
The Term “Actual Damage” as used in RCW 48.30.015 Includes Noneconomic Damages

This case involved a dispute over the meaning of the term “actual damages” as used in Revised Code of Washington (“RCW”) 48.30.015, a provision of the Insurance Fair Conduct Act (“IFCA”)  The statute provides that any first party claimant to a policy of insurance who is unreasonably denied a claim for coverage or payment of benefits by an insurer may bring an action in the superior court of this state to recover the actual damages sustained, together with the costs of the action, including reasonable attorneys’ fees and litigation costs.  The statute also provides that the superior court may, after finding that an insurer has acted unreasonably in denying a claim for coverage or payment of benefits, increase the total award of damages to an amount not to exceed three times the actual damages.  The court, in a matter of first impression, held that noneconomic damages are available under the statute.

The case arose from a dispute over UIM benefits between Geico and its insured Beasley.  Beasley was injured in a motor vehicle accident caused by a driver who had policy limits of $25,000.  Geico insured the driver of the car Beasley was a passenger in.  Beasley demanded that Geico pay the $100,000 UIM policy limits to settle. Geico offered only $10,000, which was rejected by Beasley.  Beasley asked Geico to pay the $10,000 as an undisputed UIM amount.  Geico did not do so.

Beasley sued Geico alleging that it violated RCW 48.30.015, breached the duty of good faith, breached its fiduciary duty, violated the Consumer Protection Act^, acted negligently, and breached the insurance contract.  The case went to trial.  After Beasley presented his case-in-chief, GEICO moved to prevent him from arguing that he was entitled to noneconomic damages under the IFCA claim or from presenting any jury instructions to that effect.  The trial court concluded, based on a federal court case, that the IFCA claim did not include noneconomic damages because the claim sounded in negligence rather than intentional tort, and granted GEICO's motion. Based on this ruling, the trial court refused to provide the jury with Beasley's proposed instruction on damages under IFCA that included noneconomic damages.

The trial court also concluded, as a matter of law, that GEICO violated IFCA based on its failure to pay the undisputed UIM benefits.  The jury found that Beasley’s IFCA-related damages were $84,000.  The jury further found that Beasley had proved his insurance bad faith claim and awarded $400,000 in noneconomic damages.  In post-trial motion practice, the court agreed to treble the IFCA-related damages, but it declined to treble Beasley’s noneconomic damages.  Beasley appealed the ruling that IFCA does not include noneconomic damages.

The court agreed with Beasley and held that the term actual damages as used in the statute included noneconomic damages.  The court determined that the meaning of the phrase actual damages was ambiguous, and it resorted to the legislative history to determine the legislative intent.  The legislative history of IFCA demonstrated that the act was intended to protect insureds and provide additional remedies, “actual damages” includes noneconomic damages and the trial court erred by refusing to so instruct the jury.

However, the court held that merely tripling Beasley’s bad faith noneconomic damages were not the appropriate remedy.  While some of the bad faith and IFCA claims could overlap, the elements and proof required to prove a IFCA claim, and a bad faith claim differ.  Because the claims may differ, the damages could also differ.  And because the damages under each category of claim are not necessarily the same, the court cannot presume that the bad faith damages the jury awarded also were caused by the IFCA violations.  However, the court noted that while not all bad faith conduct constitutes an IFCA violation, under the facts of this case, Geico’s IFCA violations also constituted bad faith.  Any IFCA noneconomic damages necessarily would have been included in the $400,000 the jury awarded in bad faith damages.  Accordingly, the case was remanded for a new trial on the issue of IFCA noneconomic damages only.

Finally, the court conclude that Beasley was not automatically entitled to treble damages.  Treble damages are permissive, not mandatory, under IFCA.  The trial court will in its discretion decide whether to increase the amount of actual damages.  Even if it does increase the damages, Beasley would not be entitled to recover the full amount, because part of the award was included in the $400,000 in bad faith damages.  Beasley would only be entitled to recover the increased amount the trial court awards.

 

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

04/08/22       Rising Star Roofing, LLC v. Liberty Mutual Ins. Co.
Superior Court of Connecticut
Anti-Assignment Provision Does Not Preclude Post-Loss Transfer of Rights

William Lee’s house, insured by Liberty, was severely damaged by wind and rain. Lee hired Rising Star to make the necessary repairs, which it completed. Liberty, while acknowledging coverage, paid for only a portion of the repairs. Lee assigned his contractual rights to Rising Star, which sued Liberty for breach of contract.

Liberty opposed the lawsuit, arguing that Rising Star lacked standing because the policy’s standard anti-assignment provision did not permit the homeowner to transfer his rights to the contractor. The court found that the overwhelming weight of authority allows an assignment under these circumstances. “Connecticut follows the clear majority rule that such provisions do not bar assignment of an insured's claim after the loss that is the subject of the claim has occurred…The plaintiff has adequately alleged its standing to pursue this action and the defendant's argument that the assignment is invalid under the terms of the policy is inconsistent with applicable law.”

04/27/22       Boulanger v. Hartford Ins. Co. of the Southeast
Superior Court of Connecticut
No Obligation to Defend Molestation Claims

A minor child alleged that her foster father, David Boulanger, sexually abused her; and that her foster mother, Mary Boulanger, inter alia, negligently left her alone with her foster father. The Boulangers had a homeowner's insurance policy with The Hartford and tendered their defense to the carrier. The carrier denied, relying on the policy’s exclusion for actions “arising from” sexual molestation, regardless of the cause. The trial court agreed that no defense was owed.

The Hartford moved for a finding of no coverage. The policy states that coverage for personal liability and medical payments to others, “do[es] not apply to the following: ... ‘Bodily injury’ or ‘property damage’ arising out of sexual molestation, corporal punishment or physical or mental abuse ....” The carrier argued that the arising out of language not only precluded coverage for the alleged abuser but also for the various negligence allegations against Mary. The “arising out of sexual molestation,” Hartford argued, applied to the entire subject matter and not just the personal acts of an insured. The homeowners countered that the policy was ambiguous because it does not specify whether it applies to personal acts or all claims involving sexual molestation.

The court agreed with The Hartford. “A physical abuse exemption in an insurance policy ‘precludes coverage for an entire class of risks arising out of specified conduct and does not turn on the intent of the insured,’” the court wrote (internal citations omitted). Because the alleged damages arise out of the precluded conduct, the policy’s exclusion encompasses the subject matter and not just the person or actor.

[Ed. Note: The decision is presently only available on Westlaw.]

 

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

No interesting construction defect cases to report on.  Check back in two weeks.

 

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

Legislative List 04/27/22       Multiple Rating Programs Within Commercial Lines Insurer
New York State Legislature
Bill Delivered to Governor Would Allow Insurers to Make Available Multiple Rating Programs for Commercial Insurance Within the Same Company  

Yesterday, a bill (Assembly Bill No. A08306) was delivered to the Governor that, if passed, would permit insurers to make available multiple rating programs for commercial insurance within the same company. Specifically, if signed, Insurance Law §2352 would be amended to include commercial lines insurance, where it currently only permits multiple rating plans for personal lines insurers.

Per the Sponsor Memorandum:

“In 2011, legislation was enacted to authorize insurers to make available multiple rating programs within the same company for personal lines insurance. Prior to the enactment of this law, if an insurance company wished to have more than one rating plan for personal lines insurance, they would be required to establish a separate subsidiary or affiliate company for the primary purpose of offering a new rating plan. Obviously, this was a cumbersome and expensive process which added unnecessary costs to personal lines insurance. Accordingly, legislation was enacted to authorize multiple rating plans for personal lines insurance and remove these unnecessary burdens and costs associated with offering multiple rating plans for personal lines insurance.

The same rationale applies for commercial lines policies and this legislation would similarly allow insurers to make available multiple rating plans for commercial lines without having to form a subsidiary or affiliate company. To remain competitive, insurance companies, both commercial and personal lines companies, need to be able to continually develop new rating plans that introduce different rating elements that allow them to better segment and price business. This bill allows insurers on the commercial lines side to adopt these innovations in the most efficient and cost-effective way possible by authorizing the establishment of an additional rating plan within the same insurance company.”

New rating plans would still be subject to prior approval of the Department of Financial Services and available only to new business customers once approved.

 

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

04/25/22       North River Insurance Company v. Max D. Leifer and Law Offices of Max D. Leifer, P.C.
United States District Court, Southern District of New York
Withholding Knowledge of an Attorney’s Failure to Properly Respond to a Lawsuit Constitutes Withholding Facts that may Anticipate a Claim

Plaintiff brought this declaratory judgment action seeking an order that it has no duty to o defend or indemnify Defendants pursuant to the policy’s prior knowledge exclusion; or, in the alternative, for rescission of the malpractice policy for failure to disclose material information related to the risk to insure. Plaintiff filed a motion for judgment on the pleadings seeking the requested relief.

Defendant Max Leifer was retained to defend Andy Lee in a lawsuit (the “Original Action”). Mr. Leifer never answered the Original Lawsuit on behalf of Mr. Lee, and the original plaintiff filed for, and was granted default judgment. Even though Defendants filed an opposition to the motion for default judgment in the Original Action, the default was still granted as the judge in the Original Action held that the opposition to the motion for a default judgment was “without merit” because it failed to demonstrate a reasonable excuse for failing to answer or to advance a potentially meritorious defense to the case, among other deficiencies. About a year and a half after that decision Defendants applied for professional liability insurance from Plaintiff. When completing the application, Defendants represented that they had no reasonable basis to believe that there was “an act or omission in their rendering of services [that] might become the basis of a claim,” and plaintiff issued a legal malpractice policy based upon those representations for the period from October 20, 2019, to October 20, 2020. On October 7, 2020, Defendants reported to NRIC that they had received a letter from an attorney on behalf of Mr. Lee asserting that he had a potential malpractice claim against Defendants; in November 2020, Mr. Lee filed suit alleging malpractice. Initially Plaintiff agreed to defend the Defendants in the malpractice suit, but upon finding that Defendants had prior knowledge of facts that Defendants could reasonably have expected to give rise to a claim, advised that the defense would be withdrawn and initiated this action.

In order to succeed on a motion for judgment on the pleadings Plaintiff must prove that the facts, as allege, trigger the legal malpractice policy’s prior knowledge exclusion applies. In deciding this motion, the Court considered the subjective knowledge of the insured and then the objective understanding of a reasonable attorney with that knowledge.

To satisfy the subjective prong, the Plaintiff must prove only that the Defendants knew the facts underlying the eventual malpractice claim. Here, it was without question that Defendant’s knew they failed to answer the Original Action, and that the Motion for Default Judgment in the Original Action was granted.

The court also held that the objective prong was met. The objective prong asks whether a “reasonable attorney in possession of the [ ] [relevant] facts would have a basis to anticipate . . . such facts to be the basis of a claim.” Plaintiff argued that that because failure to file an answer is prima facie evidence of negligence a reasonable attorney would have known that there was possible exposure to liability, and that Defendants’ failure to adequately respond to the motion for default judgment is additional evidence of negligence. The Defendants’ argued that Mr. Lee was a sophisticated client, directing the litigation strategy and therefore, their liability for malpractice is absolved. As the Defendant’s only introduced the “sophisticated client” theory in opposition to the instant motion, the court ignored this and instead relied on Defendant’s answer in this action, asserting that Defendants’ did not answer the Original Action based on their professional judgment.

Based on the facts presented the court found that Defendants: (1) had subjective knowledge of the facts surrounding the underlying proceeding; and (2) a reasonable attorney would know that a claim might arise from those facts. Accordingly, as a matter of law, the prior-knowledge exclusion clause applies.

 

RAUH’S RAMBLINGS
Patricia A. Rauh
[email protected]

No cases to report this week – see you in two weeks!

 

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

Travelling for my first-born’s college graduation.  Double the cases for you next time. 

 

FLEMING’S FINEST
Katherine A. Fleming
[email protected]

04/21/22       Verveine Corp. v. Strathmore Ins. Co.
Massachusetts Supreme Judicial Court
“All-Risk” Business Insurance Policies Excluded COVID-19 Related Business Losses as Not Direct Physical Loss Or Damage Resulting From The COVID-19 Virus

The plaintiffs were three Massachusetts companies that operate restaurants in Boston and Cambridge (restaurants): Verveine Corporation, which operates Coppa in Boston (Coppa); 1704 Washington LLC, which operates Toro in Boston (Toro); and JKFOODGROUP LLC, which operates Little Donkey in Cambridge (Little Donkey). All three have common ownership and management. The restaurants engaged defendant Commercial Insurance Agency, Inc. (Commercial) to advise them on their insurance needs and to procure the necessary insurance policies for their businesses. For many years, Commercial arranged for the plaintiffs to purchase coverage from defendant Strathmore Insurance Company (Strathmore), a wholly owned subsidiary of Greater New York Mutual Insurance Company.

When the pandemic began, the restaurants were covered by two Strathmore property and liability policies -- one covering both Toro and Coppa and the other covering Little Donkey. Commercial represented to the plaintiffs that the coverage under the policies was the same, but Little Donkey's policy contained an exclusion for "loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease," which was not contained in the policy covering Coppa and Toro. The addition of the virus exclusion to the Little Donkey policy did not result in a premium reduction.

In spring 2020, to slow the spread of the virus, State and local authorities began issuing "stay-at-home" orders and other restrictions on businesses and public activities. On March 15, 2020, Governor Charles D. Baker issued an emergency order prohibiting in-person dining at all restaurants and bars. However, as "COVID-19 Essential Services," restaurants were exempt from the order shutting down all nonessential businesses, and were allowed, and even encouraged, to remain open to offer takeout and delivery services, provided they complied with social distancing requirements. Toro and Coppa complied with the order, resulting in a steep decline in their revenues from the loss of in-person dining services. Because of its location, Little Donkey's management determined that it was not feasible to remain open only for takeout and delivery, and therefore the restaurant suspended operations completely, although its kitchen was used to prepare meals for frontline workers. In June 2020, the stay-at-home orders were amended to allow limited in-person dining at reduced capacities. The restaurants were able to resume these operations but continued to lose revenue from the restrictions.

The restaurants filed a claim for lost business income with Strathmore. Strathmore denied the claims under both policies, citing the lack of any "physical loss of or damage to" the properties and the virus exclusion to Little Donkey's policy. The restaurants' insurance policies defined "Covered Causes of Loss" as "Risks of Direct Physical Loss," subject to certain exclusions and limitations. In the context of the restaurants' property coverage forms, "direct physical loss of or damage to Covered Property" characterizes what effects the covered causes must have on the property to trigger coverage, not the causes themselves. The SJC found no reasonable interpretation of direct physical loss of or damage to property supported the plaintiffs' claims for losses not caused by physical damage even though the virus is physical. The SJC concluded that "direct physical loss of or damage to" property requires some "distinct, demonstrable, physical alteration of the property." Although caused, in some sense, by the physical properties of the virus, the suspension of business at the restaurants was not in any way attributable to a direct physical effect on the plaintiffs' property that can be described as loss or damage. As demonstrated by the restaurants' continuing ability to provide takeout and other services, there were not physical effects on the property itself. It is only these effects that would trigger coverage under either the property or the business interruption coverage forms. Even accepting the plaintiffs' premise that the suspension of their business was caused by the "presence" of the virus on surfaces and in the air at the restaurants (as opposed to the danger that the virus would be introduced to the restaurants or spread directly from person to person if indoor dining were allowed), mere "presence" did not amount to loss or damage to the property.

Regarding the virus exclusion, the absence of an express exclusion does not create coverage. That the Little Donkey policy contained an exclusion for "loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease" could not create coverage in Coppa and Toro's policy that did not otherwise exist under that policy's plain language. As a result, there was no coverage for any of the COVID-19 related business losses.

NORTH of the BORDER
Heather A. Sanderson
[email protected]

04/14/22       Barry v. Industrial Alliance Insurance and Financial Services Inc (IAF),
2022 ABQB 265
Hearsay Evidence from Witnesses Who Live Out of the Jurisdiction and are not Compellable can be Admissible in a Summary Judgment Application on an Insurance Claim if there is Evidence that the Hearsay is Reliable. Hardball Defence Litigation Tactics and the Lack of a Principled Defence Rooted in Admissible Evidence Resulted in an Award of Interest at Commercial Rates and Enhanced Costs Payable by the Defence.

From time to time, we read a reported case where we cringe at the tactics employed by the defence. Maybe the court’s judgment does not report all the facts; maybe we just don’t know the whole story. Based upon what is reported in this case rendered by the Alberta Court of Queen’s Bench on April 14, 2022, we have to agree with the trial judge that the argument relied upon by the defence to oppose this summary judgment application is, … the type of argument that discredits lawyers and insurance companies alike.”

Mr. Barry was born and raised in a small land locked West African country called Burkina Faso, a former French colony. Ms. Musah is from the neighbouring country of Ghana, a former British Colony. They met when Mr. Barry moved to Ghana to learn English so that he could pursue job opportunities in North America. Mr. Barry left Ghana in 2005 and began work as a scaffolder in the construction industry in Calgary, Alberta. Mr. Barry and Ms. Musah stayed in touch. Mr. Barry returned to Ghana in 2007 and they became engaged. Shortly thereafter, Ms. Musah became pregnant and went to live with Mr. Barry’s family in Burkina Faso. Mr. Barry returned to Calgary to work. In 2009, Mr. Barry and Ms. Musah married, and a second child was born.

Mr. Barry returned to Calgary and bought a life insurance policy in 2009. He named his mother the beneficiary, as his wife and two children were living with his mother and father. Mr. Barry told his mother that the policy was to support his family in the event that he died.

By 2012, Mr. Barry had saved enough money to move Ms. Musah and their children to Calgary. Sometime after Ms. Musah arrived in Calgary, the couple’s third child was born.  Mr. Barry returned to Burkina Faso in January 2015 because his father passed away. Mr. Barry intended to return to Canada in March 2015, but he was required to remain in Burkina Faso to settle his father’s estate, which took longer than expected. To support himself and his family, he began work in Burkina Faso in artisanal gold mining. On September 28, 2015, Mr. Barry was killed when the pit in which he was working collapsed on him. His body was not recovered pit; presumably, it was too dangerous to do so. Instead, the pit was filled in.

A police report of the fatal accident was prepared. A death questionnaire was completed by Mr. Barry’s mother and submitted to the life insurance company. The life insurance company hired a third-party investigator/adjuster to verify the death. The investigating company, for reasons that are not explained, stated that there is no evidence of Mr. Barry’s death. The life insurance company denied the death claim and declared that the policy was void for non-payment – there were no payments made after Mr. Barry died – the policy was paid up on the alleged date of death.  Mr. Barry’s mother transferred all rights under the policy to her daughter-in-law in Calgary.

The insurance company took the position that as no death occurred, the assignment of rights had no validity as the policy was void for non-payment; and there was no evidence of death. Yes, they made that argument.

Ms. Musah retained counsel in Burkina Faso who used a court process called sommation interpellative or, in English, an interpellative summons. An interpellative summons is a process by which a bailiff of the local court addresses questions to a witness. If the witness answers the questions, the witness signs the interpellative summons and, in turn, the bailiff stamps and signs it.

There is no direct analogue to the interpellative summons in Canadian law, though it bears some resemblance to a declaration or commission evidence. What is important is that it is a formal legal process for obtaining witness statements in Burkina Faso.  Through this process, witness evidence of Mr. Barry’s death was gathered. Against this evidence was the insurance company’s investigative / adjuster report.  Of course, all of this evidence is hearsay.

Ms. Musah applied for summary judgment.  The insurance company’s position was that Ms. Musah’s evidence was hearsay and not sufficient to meet the threshold for summary judgment. But, on the other hand, A representative of the insurance company did not provide an affidavit swearing to belief in the contents of the investigative report, nor did it identify its authors.

The trial judge on the summary judgment application held that the insurance company’s investigative report was inadmissible hearsay, as there was no evidence of the sources used to produce the report and, therefore, there was no evidence that the report was reliable.   A defendant in a summary judgment application must ‘put its best foot forward’ to thwart the plaintiff’s case. That did not happen here. When the report was declared inadmissible, the insurance company had no evidence that Mr. Barry was alive.

Ms. Musah’s interpellative summons was admitted into evidence pursuant to the Alberta Evidence Act. It was not necessary to consider whether the interpellative summons meet the necessity and reliability criteria of the principled approach to the admission of hearsay. Nevertheless, the court noted that both the necessity and reliability criteria were met. The necessity requirement was met because the witnesses were in Burkina Faso and could not be compelled to testify in Alberta. The threshold reliability requirement was met because the statements were taken by a court official pursuant to a formal legal process. Procedural reliability was also satisfied because the identities of the witnesses were disclosed. That meant that the insurance company could have sought out the individuals in Burkina Faso and issued their own interpellative summons. On the basis of admitted, hearsay evidence, which was declared to be reliable, the trial judge found that on the balance of probabilities, Mr. Barry died in Burkina Faso on September 28, 2015, meaning that the policy proceeds are payable.

The trial judge allowed interest on the policy proceeds withheld but rather than making an award at the statutory rate, interest was set at the prime lending rate of the Royal Bank of Canada plus two percent. The rationale was that this interest award was part compensation on the investment income that Ms. Musah would have earned if the claim had been paid when it was presented. The trial judge then awarded court costs against the insurance company stating:

Enhanced costs are not justified just because an insurance contract is one of utmost good faith. The British Columbia Court of Appeal in West Van Holdings Ltd. v Economical Mutual Insurance Company, 2019 BCCA 110 at para 105 explained in the context of insurance in personal injury actions that there is no justification for enhanced costs absent litigation misconduct.

     Just as the nature of insurance contracts alone does not justify enhanced costs, neither can the Court turn a blind eye to the asymmetry in power and resources between litigants. The present litigation pits one of Canada’s largest insurers against a 34-year-old widow and mother of three who emigrated to Canada only 10 years ago and her mother-in-law who resides in Burkina Faso, one of the poorest countries in the world. Nothing about IAF’s conduct … [the insurance company’s conduct ]…of this litigation indicates that it was interested in answering the question at its heart – whether Mr. Barry was deceased. IAF, knowing well the asymmetry of power and resources between the parties, used all the tactical and procedural tools available to it to gain leverage on the Plaintiffs. IAF’s hardball tactics would be questionable in litigation between evenly matched adversaries; its conduct is not tolerable when there is a gross asymmetry of power and resources between the litigants. When viewed in the context of the asymmetry between the litigants, IAF’s hardball tactics constitute litigation misconduct that justifies an enhanced award of costs.

      I award the Plaintiffs costs of this action in the amount of 75% of the amount of actual costs incurred. In the event that the Plaintiffs have entered into a contingency fee arrangement for this litigation, the same 75% indemnity applies. This represents a half-way point between the high end of partial indemnity costs set out in McAllister and the full indemnity award of solicitor-client costs described in Tiger Calcium. This award strikes a balance between penalizing IAF for its conduct of the litigation and the principle that even successful litigants should bear some of the costs of litigation.

Principled defences can meet empathetic cases. This was not a principled defence.