Coverage Pointers - Volume XXIII, No. 24

Volume XXIII, No. 24 (No. 620)
Friday, May 13, 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

www.hurwitzfine.com
© 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. This week’s issue of Coverage Pointers is attached.

Speaking of situations, you may not realize that we have a vibrant Connecticut coverage practice as well.

Happy summer.  I am sitting on the porch, at the Land of Blue Martinis in Fort Erie, Ontario, gazing at Lake Erie and loving every moment of a 79-degree day. In Western New York, we live for these days.

 

Promotions, Within
Brian D. Barnas, Anastasia M. McCarthy and Brian M. Webb Advance from Associates to Members:

 

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Attorneys Brian D. Barnas, Anastasia M. McCarthy and Brian M. Webb (pictured in order above) have advanced from associates to members. Each one of these lawyers have continued to not only excel in the practice of law, but demonstrate their exemplary professional skills, firm citizenship, and commitment to clients.

I spend a good deal of time here speaking about New York.  I want to look a little further east today and talk about our practice in Connecticut.

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Hurwitz & Fine may have its roots in New York State, but we also have a robust Connecticut insurance coverage practice as well. Focusing on complex insurance coverage and defense matters, we are able to assist both existing and new clients in the Nutmeg State and throughout New England. Since the on-boarding of our Connecticut partner, Lee Siegel, [email protected], we have been successfully assisting carriers navigate coverage, defense and bad faith matters. In fact, in this edition we proudly report out on our recent summary judgment victory in an extremely contentious breach of contract and bad faith case.  Just as we are proud of our New York practice, we feel the same way about our work in Connecticut. You need help over there?  Let us know.

 

Growth, Growth, Growth:

And our firm continues to add splendid lawyers to provide superb legal services.

We are delighted to report on the addition of three new and talented lawyers to our great legal staff, Steve Sorrels, Elizabeth Midgley and Thomas Narducci.

Stephen M. Sorrels joins Hurwitz & Fine as a member and practices in the areas of medical malpractice, nursing home litigation, products liability, transportation negligence and premises liability.

Elizabeth M. Midgley joins Hurwitz & Fine as a member in the firm’s litigation department. She is a trial attorney and works primarily in the areas of medical malpractice and the defense of skilled nursing, long term care, and assisted living facilities. She is also experienced in handling premises liability, product liability and transportation negligence cases.

Thomas A. Narducci is an associate in the firm’s Melville office. He focuses his practice in premises liability, automotive liability, labor law, and general liability insurance defense.

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If you are an experienced coverage lawyer, anywhere in the country, and are looking to join a vibrant, lively, cutting-edge practice, we want to talk with you.  Obviously, we would give preference to lawyers with New York or Connecticut experience and our firm is committed to diversity and inclusion.  We don’t just talk the talk, but we walk the walk. 

Reach out to me, confidentially.  My office and cell numbers are below, and if you don’t feel comfortable calling during business hours, reach out to me on my cell in the evening.

In this issue of CP, we have a very interesting First Department case denying additional insured coverage to a landlord under a tenant’s policy in a sidewalk trip-and-fall.  There have been all kinds of opinions on this topic going in different directions but this one is a good read.  That’s the 3650 White Plains case decided on Tuesday, and you’ll find it in my column.  Scott Storm, our most prolific editor, offers six recent and eclectic decisions in his SIU Examen column. 

In Steve’s potpourri column, you’ll see a Diocese of Brooklyn case, summarized by our Jesse Siegel, an associate in our Melville, Long Island office.  It discusses whether the Child Victims Act applies to out-of-state abuse.

 

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:

It has been a slow couple of weeks in the courts. If history repeats, we’ll get an uptick over the next six weeks before decisions really slow to a trickle.  Here’s hoping.  

In contrast to that, though, life at the office has been transformative.  On May 2nd we were delighted to extend promotions to Member (our version of partner) to three of our most deserving colleges.  Anastasia McCarthy and Brian Webb are now litigation focused partners.  You may have seen Anastasia’s remarkable work over the past few years as she has become a trusted voice in CVA-related litigation.  Brian’s focus has been in the transportation negligence space, and he, too, is developing quite a reputation as a skilled advocate for our clients. 

In addition to Anastasia and Brian Webb, the coverage lawyers in the office welcome one of CP’s own, Brian Barnas, to advancement.  I have worked closely with Brian since his first day at our office, and firsthand have seen his growth as a legal counselor.  More than simply handling cases, Brian understands the business of insurance and, resultingly, understands that practical solutions are not always, entirely, found on the pages of legal brief.  If you have worked with Brian, please do congratulate him on this milestone.  If not, look for a reason to work with him. You’ll be impressed and glad that you did.

We’ve also welcomed Steve Sorrels and Liz Midgley to our offices over the past few weeks.  Both of whom, have sterling reputations in the medical malpractice/nursing home field.  They bring depth and skill to one of our focused practice groups, and we look forward to working with them in the months and years to come. 

That’s it for this week. Lawyer league softball returns t-o-n-i-g-h-t.  Here’s hoping for no scraped knees, nor bruised egos, at this time tomorrow. 

See you in two weeks.

Steve
Steven E. Peiper

[email protected]

 

Gas Prices Rising (to 30 Cents a Gallon), 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
13 May 1922

PRICE OF GAS TO INCREASE
5 CENTS GALLON, REPORT

(By the United Press)

Washington, May 13—Further increases in gasoline prices will be made effective soon in all parts of the country, it was learned at the interior department today.

The increases may total four or five cents per gallon by the middle of June, it was stated. This is in addition to increases made during the past six weeks, ranging from four to six cents on the gallon.

The Standard Oil company will lead the way in the next price boost, according to reliable information.

Practically every oil concern of importance is pledged to increase prices for the summer and fall months, it is understood here. A “gentlemen’s agreement” is said to exist for raising the price to 30 cents a gallon during the next two weeks and to exceed that figure thereafter.

Attorney General Daughtery has promised to make a thorough investigation on his return from the weekend trip with President Harding.

 

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

This week, we will prominently feature Evan Gestwick, in his final appearance here for this fiscal year. He’s off now to study for the most important test of his life – the Bar Exam. Good luck Evan, we’ll see you back here in September!

Hi there, CP readers! Evan Gestwick back again for another edition of Coverage Pointers. The weather is warming up here in Buffalo, the sun is shining, and my golf clubs are calling my name. Sadly, for them (and for me), they likely won’t be getting much of my attention this summer, as I will be studying to take the New York Bar Exam, which is administered in late July. Speaking of that, this will be my final CP for now as I head into the summer to begin my bar preparations—but don’t be too sad, as I will be returning to Hurwitz & Fine’s Buffalo office this September as an Associate Attorney (pending admission) in the insurance coverage department!

Speaking of the bar, this week we come to you with a case involving the more fun type of bar—the kind with beer and chicken wings! Except in this case, the fun came to a screeching halt when a patron was assaulted by a bar employee. The employee allegedly attacked the patron from behind, causing the patron to suffer bodily injury. The policy excluded bodily injury caused to patrons, among others, caused by assault, battery, or physical altercations, whether or not arising out of the insured’s acts or omissions. The insured tried to save face by arguing that, aside from the assault and battery, which was clearly an excluded cause of loss, another cause of loss was negligence, as alleged in the underlying action. However, the policy was clear in that it excluded bodily injury arising out of assault, battery, or physical altercation whether or not caused by or involving the insured, its employees, or the insured’s failure to supervise its employees.

That’s all for now. See you in September!

Indeed, Evan, we will see you then. Meanwhile, I’ll be back next time with more from our Circuit Courts around the country. Stay tuned!

Until then,

Agnes
Agnes A. Wilewicz

[email protected]

 

Kentucky Derby Runs in Mid-May:

The Brooklyn Daily Eagle
Brooklyn, New York
13 May 1922

CROWD OF 70,000 TO SEE
THE KENTUCKY DERBY

(By the Associated Press)

Louisville, May 13—The more than 70,000 persons who will witness the running here this afternoon of the forty-eighth renewal of the Kentucky Derby awoke today to find the sky cloudless and the early sunshine giving promise of summer heat. A lightning-fast track is assured, barring a sudden and unforeseen change in weather conditions. The exact minute of the start of the classic cannot be determined, but the barrier will be snapped between 5 and 5:15 o’clock. It generally is agreed, the Derby being the fifth race on the card.

Editor’s Note:  Morvich (April 23, 1919 – January 26, 1946) won that race, the 48th Derby running.  Morvich was an American Thoroughbred who was the first California-bred racehorse to win the Kentucky Derby.

 

Barnas on Bad Faith:

Hello again:

So many of these notes over the years have been authored from various airport terminals, courthouses, and car parks around New York State and beyond.  One of the many things that has changed about the practice of law since COVID is the lack of in-person appearances, especially in New York City.  However, tomorrow I am back in the air, and I will be making my first appearances in New York City since March 4, 2020.  If you had told me that day that I would not be back to New York City for a case for over two years, I do not know what I would have thought.  I am looking forward to getting back into the air and back into the courtroom.  Hopefully, I remember where I am going.

In addition to being excited to be back in the courtroom, I am very excited about the new attorneys we have joining our H&F family: Liz, Stephen, and Tom.  We are very happy to have them, and they have already hit the ground running.  Warm congratulations also to my friends, Brian Webb and Anastasia McCarthy, on being promoted to Members at the Firm.  Brian and Anastasia are extremely talented lawyers, even better people, and are incredibly deserving of their promotion.  It is an exciting time for our law firm.

In my column this week, I have what I found to be a troubling decision from the Oklahoma Supreme Court.  The court found that the plaintiff was entitled to UM coverage when he was involved in a motorcycle accident, despite the fact he had elected not to purchase UM coverage under his motorcycle policy.  The court then goes on to reverse the decision of the court below dismissing the bad faith claim against Progressive, even though the court acknowledged that there was a reasonable dispute over the application of the law to the plaintiff’s claim.  The court elected instead to reinstate the bad faith claim and allow discovery based on apparently little more than the plaintiff’s conjecture that Progressive may have denied the claim in bad faith.  Seems like the trial court got it right with respect to the bad faith claim to me, and multiple dissenting opinions would have so held.

Brian
Brian D. Barnas

[email protected]

 

ADR Can Ease Trial Calendars – Judges Announce 100 Years Ago:

New York Herald
New York, New York
13 May 1922

NEW COURT TO GIVE
QUICK, CHEAP TRIALS
BY SIMPLE JUSTICE

Civil Disputes to Be Lifted
From Congested and
Tardy Tribunals

JUDGES INDORSE PLAN

Experts to Decide Disputes
On Behalf of Arbitration
Society

M. MILLIN IS PRESIDENT

Lawyers and Merchants Join
To Provide Substitute for
Wasteful Suits

Arbitration of every kind of civil dispute except divorce cases is to be undertaken at once by a unique tribunal organized yesterday by judges, lawyers and merchants at a luncheon at the Lawyers Club.

The Arbitration Society of America, as it is called, will aim first to cut legal red tape and delays and court congestion. It will provide fair and speedy decisions on an economical basis. It will be legal but nontechnical court for litigants who agree to abide by its decisions.

Work to Be Self-Supporting

The society is incorporated under the membership law, which provides that none of its officials or governors can receive payment for their services. The necessary expenses until it is self-supporting will come from donations of prominent men.

 

Off the Mark (featuring Kyle A. Ruffner):

          Dear Readers,

The weather finally seems to be changing for the better.  I recently fired up the old VW camper and took the kids camping locally.  It was a quick shakedown trip, and all went smoothly.  The kids had fun, other than being a little cold at night.  In their defense, it did get down to about 40 degrees.  My wife enjoyed the peace and quiet at home.  I’ll get her to come along one of these days.

Here's Kyle with another interesting construction defect case.  In Cincinnati Specialty Underwriters Ins. Co. v. Best Way Homes, Inc., the Supreme Court of New Hampshire found no duty to defend or indemnify an underlying bodily injury claim due to the insured’s failure to comply with the conditions of an exclusionary provision.

No exciting updates for this past week. I am looking forward to my golf league and, of course, softball season starting up this week, although I imagine my skills will be a bit rusty in both regards. I hope everyone enjoys the nice weather as well as this week’s case involving CGL exclusionary provisions for independent contractors and subcontractors.

Until next time …      

Brian (and Kyle)
Brian F. Mark

[email protected]

 

Stop Drinking, or Else:

Times Herald
Olean, New York
13 May 1922

ORDERED TO ABSTAIN
FROM DRINKING WHISKEY
FOR PERIOD OF YEAR

Tom Palinestes, 51 years old, of this city pleaded guilty to a charge of disorderly conduct when arraigned in police court this morning before Judge Keating. Besides being given a suspended sentence of 6 months Palinestes was ordered to take the pledge to abstain from drinking whiskey for a period of one year.       

He was arrested late yesterday by Officer Grandusky on a warrant sworn out against him by his wife who police say claimed that her husband had severely beaten her. Judge Keating told the prisoner that if he was arrested again on the same charge before the expiration of his pledge he would be sent to jail for a year.

 

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

It has been wonderful taking advantage of the sunshine and warmer weather by getting outdoors. I went for a long trail run last weekend, and firm softball season kicked off this week! Looks like I need to get my hands on a glove ASAP.

This week, I can offer you a case from the New Hampshire Supreme Court. Live free or die. The case considered whether present tense language in an exclusionary provision created a temporal limitation on acts or omissions giving rise to damage. A few years after a subcontractor built a deck with an attached staircase, the staircase separated from the deck while someone was on it, causing them to fall and sustain injuries. Even though the exclusionary provision used the present tense, it still applied to negligent acts prior to the policy period that resulted in damage during the policy period.

Enjoy,

Kate
Katherine A. Fleming

[email protected]

 

Who Died First?

Democrat and Chronicle
Rochester, New York
13 May 1922

Judge Decides Child Died
Same Time as Parents

New York, May 12—The question of an additional second in the life of a child, affecting legacies, was settled today by Surrogate Wingate in Brooklyn, who decided that Marie Hellawell, six years old, died at the same moment as her parents, when their automobile was struck by a train near Binghamton on August 5, 1920

Mrs. Elizabeth Walsh, the child’s aunt, brought suit, contending that the child survived her parents, Mr. and Mrs. Robert G. Hellawell. Had this contention been upheld, the child would have inherited the estates of her mother and father, and this inheritance would have been divided equally among her parents’ relatives.

 

Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

This past Monday was officially declared “X Day” and boy was it joyous. For those wondering, “what is X Day?”, let me posit that there is one day a year where the weather turns for the better, for what many wish could be forever, to the pure enjoyment of the populace. X Day, although its exact timing remains mysterious, is much anticipated on its approach, well received upon its arrival, and well-remembered for months thereafter. Here is to enjoying X Day plus 3, plus 4 and beyond, in pursuit of next year’s X Day.

This issue, we have an update regarding legislation recently signed into law that permits the extension of multiple rating programs to commercial lines insurers—a privilege only held by personal lines insurers since 2011—which removes 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.

Until next time,

Ryan
Ryan P. Maxwell

[email protected]

 

Speeding Husband Chases Eloping Wife:

The Buffalo Enquirer
Buffalo, New York
13 May 1922

MAN VIOLATES
SPEED LAWS IN
CHASING WIFE

(Special Telegram to The Enquirer.)

Batavia, May 13—The fact that Frank Williams was pursuing an eloping wife, did not soften the heart of City Judge Ballard, who imposed a fine of $25 on Williams of Scranton, Pa., who was arrested by Motorcycle Officer James for speeding at the rate of 36 miles an hour through the city.

Williams was accompanied by a woman who refused to give her name, but who claimed that her husband was the other party in the elopement.

 

Dishing Out Serious Injury Threshold:

Dear Readers,

I hope everyone had an enjoyable Mother’s Day and was able to spend time with 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, First Department, matter pertaining to Plaintiff’s counsel failing to submit any admissible evidence of injury to any of the claimed body parts sufficient to rebut the opinion of Defendant’s orthopedist.

Enjoy,

Michael
Michael J. Dischley

[email protected]  

 

Russia Problems – a Century Ago:

The New York Times
New York, New York
13 May 1922

New Proposals for Russia Follow Lines
Said to Have Been Favored by Washington

Genoa, May 12— It is reported in Genoa that four days ago, when it was uncertain how the conference would turn out, an American proposal was presented to the leaders of the conference, including Lloyd George, asking in the event of failure to make a general agreement with Russia there be created an international commission to superintended credits to Russia and investments in Russia and that there be a hard and fast agreement among the powers, including the United States, not to make separate treaties with Russia.

This report is denied by the British Prime Minister and by Ambassador Child, who says he submitted no such proposal from Washington.

The purpose of any such action would be to protect American oil and other interests in the scramble for separate agreements with the Soviets following failure of the Genoa conference. However, if the English proposition for investigation by a commission of experts, during which inquiry there would be no separate treaties, is adopted it would in a measure meet the desire expressed in the alleged communication.

In both the British and French plans for a commission a place for an American representative would be made. A French suggestion is that the head of the commission be named by the Chief Justice of the United States Supreme Court.

 

Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

Spring has sprung in Connecticut, otherwise known as the time of year, that I try to avoid rubbing my eyes out of my head. Shots, drugs, drops—nothing has ever worked for me (other than steroids, but that’s whole other mess of problems). So, while everyone is out hiking, gardening, boating, and enjoying the weather, I’ll be in my protective air-conditioned bubble, waiting for the start of summer. It won’t be a long wait; spring usually only lasts about a week here anyway.

This edition we report on two interesting trial level Connecticut cases. In the first, the Superior Court deals with whether a Connecticut homeowner is entitled to actual notice of its carrier’s notice of non-renewal, or does an unclaimed certified mailing suffice. In an oft-covered topic in this space (UM/UIM), a Superior Court identifies a clear divide in Connecticut law as to whether a UM carrier can be responsible for the proportionate share of negligence of an unidentified motorist. Please read on for details.

Keep keeping safe.

Lee
Lee S. Siegel

[email protected]      

 

Par for the Course – a Century Ago

 

The Buffalo Enquirer
Buffalo, New York
13 May 1922

GOLF AND DIVORCE

Golf is now judicially recognized as a home breaker.

Detroit reports that Helen Bourne Joy Lee has bene granted a divorce from Howard B. Lee, three-time amateur golf champion of Michigan. Mrs. Lee alleged that her husband was a “golf maniac.” If there were other allegations the news account by wire fails to mention them.

It is quite true that golf infatuation sometimes reaches the degree of lunacy. It may not justify putting the victim in an asylum but here it is recognized as a reason for severing the marriage tie.

There are two kinds of golf lunatics— those who can play the game and those who can’t. Mr. Lee, three-time amateur champion of his state, cannot be listed with the worse of the two.

 

Rauh’s Ramblings:

Hi all!

I hope you are also able to enjoy the sunshine and warm weather like we are here in Buffalo!  It feels so good to be able to open all the windows and let fresh air in the house.  I especially love being able to sleep with the window open and feel the breeze come through.  I hope the warm weather lasts so that I can start planting flowers, which is the best part of this time of year!  I usually wait until Memorial Day weekend to do that though, so I still have a couple more weeks to go.

This week, I summarized a case decided yesterday by the Eighth Circuit involving another ERISA breach of fiduciary duty claim brought against an insurance carrier.

I hope everyone has a great weekend!  See you in two weeks!

Patty
Patricia A. Rauh

[email protected]

 

A Chilly Verdict:

         

New York Herald
New York, New York
13 May 1922

TENANT GETS $250 FOR COLD

Joseph Gropper, an insurance agent of 618 Prospect Avenue, The Bronx, who sued the Milan Estate, Inc., for $5,000 damages, alleging that he had caught cold because the company had not properly heated his apartment, yesterday received an award of $250 from a jury in the Supreme Court, The Bronx.

 

Storm’s SIU Examen:

Hi everyone:

After taking off for an edition of Coverage Pointers to attend my daughter’s graduation out of town, as promised, I’m back with several cases to share:

  • < >

    Communications otherwise protected by the attorney-client privilege, or the attorney work product privilege are not protected if they relate to client communications in furtherance of contemplated or ongoing criminal or fraudulent conduct.
     

  • An arbitrator's award directing payment in excess of the policy limit of the no-fault Insurance coverage exceeds the arbitrator's power and constitutes grounds for vacatur of the award. A defense that the coverage limits of the policy have been exhausted may be asserted by an insurer despite its failure to issue a denial of the claim within the 30-day period.
     

  • Question of fact in 1st-party property case whether plaintiff was residing in the subject property at the time of the fire (whether it constituted a “Residence Premises”).
     

  • Business pursuits exclusion in homeowners policy precluded defense and indemnity coverage to spa owner’s wife for claims that she should have prevented her husband's employee from sexually assaulting customers.
     

  • Question of fact whether coverage for damages was precluded by the policy exclusion for "theft by any person to whom you entrust the property for any purpose" or whether the damages were caused by a covered vandalism.
     

This week I attended the New York State Chapter of Special Investigation Units (NYSSIU) Spring Conference in Saratoga, New York.  Awesome seeing faces again in-person after the long pandemic hiatus.  It’s an excellent organization – if you do not yet attend, you should consider it.  

This week’s encouraging word: “Good leaders must first become good servants”.  ~ Robert Greenleaf

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

Scott
Scott D. Storm

[email protected]

 

Christian Coverage?

The Standard Union
Brooklyn, New York
13 May 1922

HELP WANTED—FEMALE

TYPIST, experienced in insurance policy writing; permanent position; Christian firm; Oliver machine. If not an Oliver operator, a few hours practice in our office will make you one. Call 319 Broadway, N. Y. Ask for Miss Carlson.

 

North of the Border: 

I am writing to you from Chicago where I am attending the American College of Coverage Counsel Annual Meeting, which is taking place in person for the first time since 2019.  It seems that the world is coming back to life. Wonderful to be in Chicago in fine weather, a far cry from the snow and cold that we are still experiencing in Calgary.

My column this week is another lesson on how not to adjust a claim.  The penalty was a rarely imposed award of punitive damages, now payable by Canada’s first online insurer. Enjoy.

Heather
Heather A. Sanderson

[email protected]

 

Headlines from this week’s issue, attached:

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

  • Under Georgia Law, Executing a General Release of a Motor Vehicle Tortfeasor Forfeits a Claimant’s Rights to Secure Underinsured Motorists Benefits

  • Tenant’s Carrier has Not Obligation to Provide Additional Insured Coverage to Landlord for Structural Problems with Sidewalk
     

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

  • Child Victims Act Does Not Revive Time-barred Causes of Action Brought by Survivors of Childhood Abuse for Nonresident Plaintiffs when Alleged Acts of Abuse Occurred Outside New York
     

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

  • Plaintiff Counsel Failed to Submit any Admissible Evidence of Injury to any of the Claimed Body Parts to Rebut the Opinion of Defendant’s Orthopedist

 

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

[email protected]

  • No Coverage for Bodily Injury Arising from Assault Where Negligence is not a Separate Cause of Loss

 

BARNAS on BAD FAITH
Brian D. Barnas

[email protected]

  • Insured Entitled to Conduct Discovery on Bad Faith Claim Despite Reasonable Dispute Over Coverage

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

  • Actual Notice of Non-Renewal Not Required

  • Addressing Split in Authority, Court Holds that Apportionment Complaint Against UM Carrier for Alleged Negligence of Unidentified Driver Stands

 

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

  • Supreme Court Finds No Duty to Defend or Indemnify Where Insured Failed to Comply with Conditions of Exclusionary Provision

 

RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell

[email protected]

  • Governor Signs Bill Allowing Insurers to Set Multiple Rating Programs for Commercial Insurance Within the Same Company  

 

RAUH’S RAMBLINGS
Patricia A. Rauh

[email protected]

  • Reliance Breached its Fiduciary Duty Under ERISA by Collecting Premiums from Decedent Before Coverage was Actually Approved and in Effect

 

STORM’S SIU EXAMEN
Scott D. Storm

[email protected]

  • < >

    Communications Otherwise Protected by the Attorney-Client Privilege or the Attorney Work Product Privilege are Not Protected if they Relate to Client Communications in Furtherance of Contemplated or Ongoing Criminal or Fraudulent Conduct.
     

  • An Arbitrator's Award Directing Payment in Excess of the Policy Limit of the No-Fault Insurance Coverage Exceeds the Arbitrator's Power and Constitutes Grounds for Vacatur of the Award. A Defense that the Coverage Limits of the Policy Have Been Exhausted May be Asserted by an Insurer Despite its Failure to Issue a Denial of the Claim Within the 30—Day Period.
     

  • Question of Fact in 1st-Party Property Case Whether Plaintiff was Residing in the Subject Property at the Time of the Fire (Whether it Constituted a “Residence Premises”).
     

  • Business Pursuits Exclusion in Homeowners Policy Precluded Defense and Indemnity Coverage to Spa Owner’s Wife for Claims that She Should have Prevented Her Husband's Employee from Sexually Assaulting Customers.
     

  • Question of Fact Whether Coverage for Damages was Precluded by the Policy Exclusion for "Theft by Any Person to Whom you Entrust the Property for Any Purpose" or Whether the Damages were Caused by a Covered Vandalism.

 

FLEMING’S FINEST
Katherine A. Fleming

[email protected]

  • Present Tense Language in Exclusionary Provision Did Not Create Temporal Limitation on Acts or Omissions Giving Rise to Damage

 

NORTH of the BORDER
Heather A. Sanderson

[email protected]

  • Insurers Must Investigate Claims Fairly and Promptly, Concluding Claims in a Reasonable Period of Time.  Hardball Adjusting Tactics such as Withholding Payment on Admitted Claims Pending Investigation of a Suspected Fraud Claim will Attract Punitive Damages

 

All for now. Stay healthy.

 

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

Rauh’s Ramblings

Storm’s SIU Examen

Fleming’s Finest

North of the Border

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

05/11/22       Imbriale v. Travelers Commercial Insurance Company
Appellate Division, Second Department.
Under Georgia Law, Executing a General Release of a Motor Vehicle Tortfeasor Forfeits a Claimant’s Rights to Secure Underinsured Motorists Benefits

On December 1, 2013, Imbriale was injured when a vehicle in which she was a passenger was involved in an accident in Suffolk County with a vehicle owned by nonparty Edwich Jasmin and operated by Prince Jasmin (“Jasmins”). In 2014, Imbriale sued the Jasmins. Thereafter. the Jasmins' insurer, GEICO, tendered the policy limits, $25,000, to settle the plaintiff's claims, and the plaintiff executed a general release of her claims against the Jasmins.

In 2016, the plaintiff commenced this action against the Traveler to recover damages for breach of an automobile insurance policy issued to her in Georgia, alleging that the defendant breached the policy by failing to make payment on her claim under an uninsured motorists (hereinafter UM) endorsement to the policy in connection with the subject accident. Travelers moved to dismiss complaint, contending, among other things, that the plaintiff was not entitled to recover UM benefits because she executed the general release.

Georgia law applied to this action., Under Georgia law, a claimant who settles with a tortfeasor must execute a limited release to preserve the claimant's pending claim for UM benefits against his or her insurer, and a claimant who executes a general release of the tortfeasor cannot recover UM benefits

 

05/10/22       3650 White Plains Corp. et al. v. Mama G. African Kitchen Inc. Appellate Division, First Department
Tenant’s Carrier has Not Obligation to Provide Additional Insured Coverage to Landlord for Structural Problems with Sidewalk

3650 White Plains (“owner”) owns a commercial building located at 3650 White Plains Road, Bronx, New York, and leases the corner retail space to defendant Mama G. (“tenant”) pursuant to a lease agreement. Seneca issued a commercial general liability policy to owner, that provided coverage for the premises with respect to liability for bodily injury. Utica First issued a policy to the tenant. That provided similar coverage for the leased premises. A policy endorsement identified the owner, White Plains as an additional insured with respect to liability for bodily injury.

On July 30, 2019, the underlying plaintiffs commenced a personal injury action against the tenant and the owner. It was claimed that the infant was injured when he tripped and fell on the sidewalk because of a dangerous, hazardous, defective condition. The bill of particulars specified that the infant "was caused to trip and fall due to a defective, raised, cracked sidewalk located at the premises."

The owner and its carrier, Seneca, then commenced this declaratory judgment action seeking a declaration that the tenant’s carrier, Utica First has a duty to defend White Plains in the underlying personal injury action

Plaintiffs have not established that there is a reasonable possibility that coverage for White Plains, under the Utica First policy, is implicated by the underlying personal injury action. To avoid its duty to defend, an insurer must show, "as a matter of law, that there is no possible factual or legal basis on which the insurer might eventually be held to be obligated to indemnify the insured under any provision of the insurance policy".

Here, the policy endorsement titled "Additional Insureds — Lessor of Premises" identified White Plains as an additional insured with respect to liability for bodily injury: "a. for which "you" [the tenant is legally liable; and b. caused, [*2]in whole or in part, by "your" acts or omissions or the acts or omissions of those acting on "your" behalf in connection with that part of the premises . . ." The Court of Appeals has held that when an endorsement providing additional insured coverage, as here, "is restricted to liability for any bodily injury caused . . . by the acts or omissions of the named insured, the coverage applies to injury proximately caused by the named insured".  In Burlington, the Court of Appeals explained, is "intended to provide coverage for an additional insured's vicarious or contributory negligence, and to prevent coverage for the additional insured's sole negligence".

In this case, the underlying complaint does not implicate the tenant’s acts or omissions as the proximate cause of the underlying plaintiff's injuries. The lease did not shift responsibility for repair of such structurally defective sidewalk from the landlord to the tenant. Section 16 of the lease does limit the tenant's duty with regard to the sidewalk, namely to "maintain in good condition, and keep clean and free from dirt, rubbish, litter, snow, ice and other obstructions or encumbrances, the sidewalk and gutter of the Leased Premises at its own cost and expense." Such section does not require the tenant to make structural repairs to the sidewalk.

 

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

05/04/22       S.H. v. Diocese of Brooklyn
Appellate Division, Second Department
Child Victims Act Does Not Revive Time-barred Causes of Action Brought by Survivors of Childhood Abuse for Nonresident Plaintiffs when Alleged Acts of Abuse Occurred Outside New York

In this case of first impression, the plaintiff, a Florida resident, alleges that from approximately fall 1983 through spring 1984, when he was 14-15 years old, while serving as an altar boy in Sanford, Florida within the Diocese of Orlando, he was sexually abused on multiple occasions by Father William Authenrieth, who had been ordained by the defendant, the Diocese of Brooklyn, in 1962. The plaintiff alleges that, after he was ordained, Father Authenrieth was initially assigned to a church in Brooklyn, but in October 1973 he was transferred by the defendant to the Diocese of Orlando after the defendant became aware of his "sexual misconduct with children." 

The complaint in this case, brought pursuant to CPLR 214-g, known as the "revival statute," enacted as part of New York's Child Victims Act, alleged the Diocese of Brooklyn knew or should have known that Father Authenrieth posed a foreseeable danger to children, in that he would commit acts of child sexual abuse, and that the defendant breached its duty to warn the Diocese of Orlando.  Prior to joining issue, the defendant moved pursuant to CPLR 3211(a) to dismiss the complaint as time barred.  The court found that CPLR 214-g did not apply to the plaintiff's time-barred claims, so as to revive them, inasmuch as the alleged sexual abuse did not occur in New York. The court also determined that CPLR 202, New York's borrowing statute, was controlling as to the determination of the timeliness of this action, and that pursuant thereto the action was time-barred based on Florida's shorter limitations period.   Plaintiff appealed.

The Second Department engaged in a lengthy analysis of the legislative history of the statute, as well as its wording and intent.  The Second Department found that the legislative history supported a finding that the legislature intended that the CVA provide relief to New York residents alone.   Furthermore, the Court reasoned that CPLR 214-g did not apply extraterritorially, or out of state.  The Court also discussed the interplay between the revival statute and CPLR 202, or New York’s “Borrowing Statute.”  The borrowing statute indicated that when a nonresident sues on a cause of action accruing outside New York, the cause of action must be timely under the limitation periods of both New York and the jurisdiction where the cause of action accrued.  Under the applicable Florida statute of limitations, the plaintiff's action would be time-barred.   Since the plaintiff's action would be time-barred in Florida, it would also be time-barred in New York.  Furthermore, the Court noted that CPLR 214-g does not preclude the application of CPLR 202.  The Court found CPLR 202 to be a “comparative statute”, and that CPLR 214-g was not intended to override CPLR 202.  Ultimately, the legislative intent of New York’s Child Victims Act was to extend New York’s restrictive statutes of limitations.

As such, the Court upheld the lower court’s decision dismissing plaintiff’s complaint.

Editor’s Note:  We thank our own Jesse L. Siegel, an associate in our Melville office, [email protected] for preparing this excellent summary.  Feel free to reach out to him with any questions.

 

DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley

[email protected]

04/20/22        Aceve v. Grayline New York Tours, Inc., et al
Appellate Division, First Department
Plaintiff Counsel Failed to Submit any Admissible Evidence of Injury to any of the Claimed Body Parts to Rebut the Opinion of Defendant’s Orthopedist

In an action to recover damages for personal injuries, the plaintiff appeals from an order of Supreme Court Bronx County (Ben R. Barbato, J.), entered July 27, 2020, which denied plaintiff's motion for summary judgment on the issue of liability and granted defendants Grayline New York Tours, Inc. and Dennis Olivero's (collectively, Grayline) motion for summary judgment dismissing the complaint based on plaintiff's inability to demonstrate that he sustained a serious injury within the meaning of Insurance Law § 5102(d). As well as an Order, same court (Mary Ann Brigantti, J.), entered August 13, 2020, which granted defendants Reading Transportation Corp. and Frankelis Ramirez's (collectively, Reading Transportation) motion for summary judgment dismissing the complaint as against them, unanimously affirmed, without costs.

The Appellate Court found that Grayline demonstrated prima facie that plaintiff did not sustain a serious injury to his cervical spine or lumbar spine by relying on the report of their orthopedic surgeon who reviewed the MRI films of those body parts and found that they showed only mild preexisting degenerative changes to the discs, not causally related to the accident. The Appellate Court also found that Grayline satisfied their burden based on the opinion of their orthopedic surgeon and neurologist that plaintiff had a normal neurological examination with no objective evidence of any injury or disability causally related to the accident. As to plaintiff's claimed injuries to his elbows, wrists and hands, Grayline's orthopedist found, based on his examination and plaintiff's own medical records, that plaintiff did not sustain a serious injury to those body parts causally related to the accident.

In opposition, the Appellate Court found that plaintiff failed to raise an issue of fact, as he did not submit any admissible objective evidence of injury to any of the claimed body parts to rebut the opinion of defendant's orthopedist. Plaintiff's MRI reports do not become admissible merely because defendants' experts reviewed them, and plaintiff cannot rely on the affirmed report of his physician to "bootstrap" the missing MRI reports into evidence. The report of plaintiff's physician set forth the results of a recent examination but did not provide the results of any examination conducted within the months after the accident or explain plaintiff's lack of any treatment for four years, rendering his opinion as to causation of plaintiff's current limitations in range of motion speculative.

Plaintiff failed to raise an issue of fact as to the 90/180-day claim in the absence of a causal connection between his claimed conditions and the subject accident and of any medical determination that he could not work during the relevant period.

Reading Transportation were also entitled to summary judgment, because "if [a] plaintiff cannot meet the threshold for serious injury against one defendant, [he or] she cannot meet it against the other".

Accordingly, the Appellate Court found that the Supreme Court properly granted defendants motions.

 

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

[email protected]

05/10/22       Great Lakes Insurance SE v. Michael L. Andrews
United States District Court, Eighth Circuit Court of Appeals
No Coverage for Bodily Injury Arising from Assault Where Negligence is not a Separate Cause of Loss

In this case, our Sister Circuit analyzed whether there can be coverage under a general liability policy for bodily injury arising out of an assault and battery if negligence is an “independent cause” of the injury.

A bar fight occurred between a patron and an employee of the bar in the bar’s parking lot. There was a verbal altercation that turned physical when the employee allegedly attacked the patron from behind, causing the patron to suffer bodily injury. The patron sued the bar on a negligence theory, alleging that the employee placed the patron in “imminent apprehension of harm and fear of physical injury” and that the bar knew or should have known of the employee’s propensity for violence and was therefore negligent in its hiring of him. In the underlying action, the jury returned a verdict in favor of the patron against the bar and its parent company, finding that the bar failed to provide safe travel, or failed to protect the patrons, or failed to provide adequate security. The jury returned a separate verdict against the bar for negligent hiring, retaining, or supervision of the employee.

The bar was insured under a general liability policy by Great Lakes Insurance, who disclaimed coverage for the underlying verdict. In its disclaimer, Great Lakes relied on a policy exclusion, which provided that bodily injury arising from an assault, battery, or physical altercation would be excluded, regardless of whether it was caused by, instigated by, or involved the insured, employees of the insured, the insured’s patron, or others. The same exclusion also provided that the exclusion would apply even if the bodily injury arose out of the insured’s failure to supervise its employees or to keep its premises safe.

As a general matter, where an underlying negligence claim arises out of an assault or battery, this exclusion bars coverage even for the negligence claim. Here, the Court cited a Missouri case in which it was held that the hiring of a person with known vicious propensities (constituting negligent hiring) that resulted in an individual being assaulted and battered was excluded under a similar policy exclusion.

The insured attempted to keep the possibility of coverage alive by first arguing that the underlying lawsuit arose out of a negligence claim. The Eighth Circuit found this argument unavailing, since it matters not how the lawsuit arose, but rather, how the bodily injury itself arose. The Court also noted that the policy excludes bodily injury arising from assault and/or battery, regardless of whether that arises out of the insured’s acts or omissions, including negligent hiring, training, or supervision—thus, even if the insured’s argument was valid, it would still fail.

The insured then argued that the negligence on the part of the bar should count as a separate (covered) cause of loss under the policy, under what is known as the “concurrent proximate cause rule.” This is legalese for the simple idea that where an injury might have more than one cause, and one cause is excluded under the policy while another cause is not, the bodily injury might still be covered by the policy if the cause of loss that is covered is “truly independent and distinct from” the excluded cause of loss. Under this policy, the bodily injury would be covered if negligent hiring, training, and supervision by the insured over its employees was a covered cause of loss—but it was not. Therefore, this argument also failed, and Great Lakes’ disclaimer of coverage was deemed appropriate by the Eighth Circuit Court of Appeals.

 

BARNAS on BAD FAITH
Brian D. Barnas

[email protected]

05/03/22       Coates v. Progressive Direct Insurance Company
Supreme Court of Oklahoma
Insured Entitled to Conduct Discovery on Bad Faith Claim Despite Reasonable Dispute Over Coverage

Coates was riding a motorcycle when he was injured in a collision with a vehicle driven by Toney.  Coates was insured by Progressive.  Coates did not purchase additional UM coverage through the motorcycle policy with Progressive.  Coates also had an auto policy for his truck with UM coverage of $25,000 per person and $50,000 per accident.

Coates submitted UM claims to Progressive under both policies.  The parties agreed that there was no UM coverage under the motorcycle policy.  Progressive rejected the UM claim under the auto policy because the motorcycle was not specifically included in that policy. 

Coates filed suit for breach of contract and breach of the duty of good faith and fair dealing.  Coates soon after filed a motion for partial summary judgment regarding his entitlement to UM benefits from Progressive. Progressive filed a motion for summary judgment on both Coates' breach of contract and good faith claims. Coates asked the trial court for more time to respond to Progressive's motion to conduct further discovery.  The court granted Coates’ partial motion for summary judgment, denied Coates’ motion for more time, and granted Progressive’s motion for summary judgment on the issue of good faith and fair dealing.

The Supreme Court of Oklahoma affirmed the partial summary judgment in Coates’ favor on UM coverage.  First, the court noted that UM coverage in Oklahoma is for persons and not specific vehicles.  The coverage follows the person.  The court rejected Progressive’s argument that the policy exclusion for “bodily injury sustained by any person while using or occupying: (b) a motor vehicle that is owned by or available for the regular use of you” applied.  The court explained that this exclusion followed the vehicle, not the person.  The court’s explanation stated as follows: “Coates would be entitled to benefits from his UM coverage had he been hit by an underinsured motorist while walking, parked in a parking lot, or sitting on his porch. To find that Coates' UM coverage would apply in those circumstances, but not when he was riding his motorcycle, defies logic, common sense, and the law of Oklahoma. Insofar as Exclusion 1(b) prevents Coates from receiving the benefits he paid for, it violates Oklahoma public policy.”

The Supreme Court of Oklahoma then reversed the ruling of the trial court that held Coates’ could not conduct further discovery and that granted Progressive’s motion on the good faith claim.  While the court rejected Coates’ argument that the law was clearly on his side and that Progressive ignored the clearly applicable law when making a decision on his claim, it concluded that the court below abused its discretion in denying Coates a reasonable amount of time to conduct discovery to support his argument Progressive acted in bad faith.  Coates argued that, had he had the opportunity for discovery, he might have found evidence that Progressive's particular conduct toward Coates was deliberately made in bad faith.  Thus, without expressing an opinion on whether Progressive acted in bad faith, the court found that the trial court had abused its discretion and reversed the decisions granting Progressive's motion for summary judgment and denying Coates additional time to respond to that motion.

Two dissenting opinions were authored.  Judge Winchester dissented in part and would have held that Progressive did not act in bad faith as a matter of law at the time it denied Coates’ claim because there was a legitimate dispute about whether coverage was available under the policy.  Judge Kane dissented from the majority’s decision in its entirety.  Judge Kane would have held that Coates was not entitled to UM coverage because the auto policy did not identify the motorcycle and Coates had elected not to purchase UM coverage under the motorcycle policy.

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

05/03/22       Deer v. National General Ins. Co.
Superior Court of Connecticut (Hartford Complex Docket)
Actual Notice of Non-Renewal Not Required

A Connecticut trial court granted National General and Century-National insurance companies summary judgment, finding that they properly non-renewed an insured’s homeowners coverage and, accordingly, there was no coverage available for a fire loss. Significantly, the Superior Court confirmed that there is no actual notice obligation under either Connecticut’s non-renewal statute or the standard Connecticut HO endorsement. See Lee Deer et al. v. National General Insurance Company et al., Docket No. X07-HHD-CV20-6135938-S (Conn. Sup. Ct. May 3, 2022) (Judge Noble). The decision can be read here.

Century-National issued a homeowners policy to Keleen Deer (the “Policy”). As the Policy was new business, Century-National commissioned an inspection that revealed that an exterior wall was missing its siding. Century-National decided that this was an unacceptable underwriting hazard and that it would not renew the Policy unless the siding was installed. Despite providing notice of the siding issue to the insured’s agent, Century-National received no confirmation of repair and on April 19, 2020, issued a notice of non-renewal for the expiring Policy. The Notice of Non-Renewal was timely sent to Ms. Deer, by certified mail, appropriately identifying the basis for the non-renewal, and advising that the Policy would non-renew upon expiration on June 27, 2020, unless notice of repairs was provided. Century-National received no further communications until July 15, 2020, when an accidental fire destroyed the house.

Deer disputed receiving notice of the required repairs from either the agent or the carrier, arguing that the non-renewal was ineffective absent actual notice. The USPS certified mail log showed that the non-renewal notice was delivered to the insured’s address, but that no authorized recipient was available, and a notice was left for Ms. Deer. Two subsequent reminders were left at the Deer home, but the Notice of Non-Renewal was ultimately marked "unclaimed." The USPS returned the letter to Century-National.

The insured claimed that the mail log proved that she has not received the notice and that the Policy may only be non-renewed if she received actual notice. Century-National argued that the notice of non-renewal was valid because actual notice is not required under Connecticut law or the Policy.

The Policy’s standard Connecticut non-renewal endorsement provides:

We (Century-National) may elect not to renew this policy and may do so by letting you know in writing at least 60 days before the expiration date of this policy. The written notice, stating the reasons for non-renewal, may be delivered to you, or mailed to you at your mailing address, shown in the Declarations, by registered mail, certified mail or United States Postal Service certificate of mailing.

Deer argued that the provision’s “letting you know” language requires actual notice of non-renewal—that sending an unclaimed certified letter was inadequate.

The trial court rejected Deer’s contention, noting that the non-renewal provision provides that Century-National may let an insured know of the non-renewal by one of several, options, including “delivery to them, mail at their mailing address by registered, certified mail or United States Postal Service certificate of mailing.” When read in context, the phrase “letting you know” may only reasonably be interpreted to mean that Century-National would advise Ms. Deer of a non-renewal by one of several means. Despite the contention that actual notice was required, “[d]elivery, the only certain method of ensuring actual notice, is one of several means by which the notice of non-renewal may be made.”

The court also found that both the policy language and Century-National’s execution of its non-renewal comported with Connecticut General Statute §38a-323 which provides, in part:

(a)(1) no insurer shall refuse to renew any policy... unless such insurer or its agent sends, by registered or certified mail or by mail evidenced by certificate of mailing, or delivers to the named insured, at the address shown in the policy, at least sixty days' advance notice of its intention not to renew.

Finding the statutory language plain and unambiguous, the court held that, “it is the sending of, inter alia, the certified mail that satisfies the statute. No proof of receipt is required.” After sending notice of non-renewal, “[t]he statute mandates no requirement that . . . an insurer must thereafter confirm actual receipt, otherwise the mailing options would be redundant with the delivery option. Such a construct renders the word ‘delivers’ superfluous and unreasonable.”

The court went on, “Connecticut courts have repeatedly found that the sending of notice by certified mail satisfies an insurer’s obligations to its insured” under Conn. Gen. Stat. §38a-343(a), absent proof of actual receipt (governing non-renewal and cancellation of an auto policy). A rule requiring actual receipt of certified mail may “set a dangerous precedent” that could permit abuse by an intended recipient, who could simply avoid accepting delivery until after the statutory period has lapsed.

 

05/05/22        Alston v. Gilmore [This opinion is not yet available]
Superior Court of Connecticut (New Haven)
Addressing Split in Authority, Court Holds that Apportionment Complaint Against UM Carrier for Alleged Negligence of Unidentified Driver Stands

Alston was a passenger in a car struck when Gilmore made a left turn out of a parking lot. Gilmore claimed that his vision was obstructed by an illegally parked but unidentified car. When Alston sued for her injuries, Gilmore claimed that USAA (Alston’s UIM carrier) was responsible for the negligence of the unidentified vehicle. USAA moved to strike the defendant’s “apportionment complaint.” Connecticut law allows a defendant in a civil action to serve a pleading on a non-party who may be liable for a proportionate share of the plaintiff's damages. This is known as the Connecticut Apportionment Statute. Conn. Gen. Stat. §52-102b.

USAA claimed that Connecticut law does not permit apportionment against a UIM carrier for an unidentified driver and, that in any event, there is no privity between USAA and the defendant. Gilmore countered that a claim for UIM benefits is a hybrid claim sounding in both contract and tort and argued that Connecticut law allows a defendant to bring a claim in apportionment against an uninsured motorist insurer for the conduct of an unidentified motorist.

The trial court recognized two competing lines of Connecticut precedent – one allowing and one disallowing apportionment against the uninsured motorist insurer whom apportionment is sought for the negligent conduct of an unidentified motorist. Superior Court decisions discussing this split of authority refer to the “majority view,” which disallows apportionment complaints against uninsured motorist carriers for the purportedly negligent conduct of an unidentified driver, and the “minority view,” which permits such claims. Oddly, the court noted that there are 13 decisions adopting the majority view and (now) 13 decisions adopting the minority view.

Judge Pierson adopted the ‘minority’ view, holding that it follows the plain reading of the apportionment statute. The court wrote that, “In this case, USAA is “not a party to the action,” and, as an uninsured motorist insurer standing in the shoes of the unidentified operator, it “is or may be liable pursuant to [§ 52-572h] for a proportionate share of the plaintiff's damages” in negligence….” The court reasoned that since the UM/UIM statutes and regulations incorporate the negligence law of liability and damages involving joint tortfeasors claims, that this was the correct result required by Supreme Court precedent, citing Collins v. Colonial Penn Ins. Co., 257 Conn. 718, 741, 778 A.2d 899 (2001). n Collins, the court held that apportionment against an underinsured motorist carrier, as surrogate for an unidentified hit-and-run driver, was appropriate under § 52-572h.

The court concluded that, “Thus, both the plain language of and policy underlying §§ 52-102b and 52-572h support the conclusion that USAA may be brought into this case for purposes of apportionment, based on the conduct of the unidentified motor vehicle operator, for whom USAA stands as a surrogate.”

[Ed. Note: With such an even divide among the Superior Courts, the Court of Appeals and/or the Supreme Court need to take up this issue in order to provide guidance to the trial courts and insurers.]

 

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

04/27/22       Cincinnati Specialty Underwriters Ins. Co. v. Best Way Homes, Inc.
Supreme Court of New Hampshire
Supreme Court Finds No Duty to Defend or Indemnify Where Insured Failed to Comply with Conditions of Exclusionary Provision

This insurance coverage dispute arises out of an underlying personal injury action related to negligent construction of a deck and staircase.  

Best Way Homes, Inc. (“Best Way”) entered a contract with a homeowner to perform renovations, including constructing a deck with a staircase.  Best Way subcontracted construction of the deck and staircase to Bob Wood Construction, which was completed in 2012.  The homeowner hired Russell Blodgett for plumbing services in 2017 and Blodgett was injured when the staircase separated from the deck, causing him to fall.  Blodgett filed suit against the homeowner for negligence, as well as against Best Way for negligent failure to inspect and for negligent hiring.

Best Way was the named insured under the Cincinnati Specialty Underwriters Insurance Company (“Cincinnati”) policy at the time of Blodgett’s injury, but was not at the time of construction.  The Best Way policy contained an exclusionary provision, which provided that as a condition for coverage, the insured must obtain a formal written contract with indemnity language, with all independent contractors and subcontractors in force at the time of injury and obtain additional insured coverage from all independent contractors and subcontractors.  The policy further provided that the insurance will not apply to any loss for liability or damages arising out of operations performed for the insured by an independent contractor or subcontractors unless all policy conditions have been met.  Cincinnati filed a petition for a declaratory judgment that it had no duty to defend or indemnify Best Way with respect to Blodgett’s negligence claims, arguing coverage was precluded by the policy’s exclusionary provisions. The trial court granted Cincinnati’s motion for summary judgment, holding Best Way failed to comply with the policy conditions and all claims arose out of the subcontractor work, as there would be no damages but for the alleged negligence of the subcontractor.  Therefore, the claims were subject to the policy’s exclusionary provision. 

On appeal, Blodgett argued the exclusionary provision does not apply to negligent acts that occurred before the policy’s effective date.  Blodgett asserted that the exclusionary language only applies to damages that occur as a result of subcontractor’s work performed during the coverage period.  The Court distinguished between claims-made policies and occurrence policies, explaining that under occurrence policies, the policy in effect at the time bodily injury or property damage covers all claims based on an event occurring during the policy period.  The policy in this case was indisputably an occurrence policy, which covered bodily injury or property damages that occurred during the policy period.  The Court held that the language in the exclusionary provision did not have any temporal reference, so the policy language did not mean the exclusionary provision was limited to injuries resulting from the subcontractor’s work performed during the coverage period.  Rather, it indicated that the insured must meet the conditions precedent at the time it seeks coverage in order for the policy to cover the damages.

Blodgett also argued that the exclusionary provision does not apply due to the phrase “arising out of” because the claims are based on Best Way’s independent actions and omissions, not the work performed by the subcontractor.  The Court disagreed, as the physical injuries arose from the subcontractor’s allegedly negligent construction of the staircase and, as the trial court held, there would be no claim against Best Way but for the alleged negligence of the subcontractor.  Therefore, the Court held that all claims against Best Way arose out of the work of the subcontractor and that the exclusionary provision precluded coverage.  The court also rejected Blodgett’s argument that Cincinnati was not prejudiced by Best Way’s failure to comply with the exclusionary provision.  The Court held that while under certain circumstances an insurer cannot deny coverage based on the insured’s failure to provide timely notice, unless the late notice was prejudicial, this rule is not applied outside the context of notice.  Accordingly, the court affirmed the trial court’s order granting summary judgment in favor of Cincinnati.

 

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

Legislative List

05/09/22       Multiple Rating Programs Within Commercial Lines Insurer
New York Governor’s Office
Governor Signs Bill Allowing Insurers to Set Multiple Rating Programs for Commercial Insurance Within the Same Company  

On Monday, Governor Hochul signed into law a bill that permits insurers to make available multiple rating programs for commercial insurance within the same company. Under Chapter 194 of the Laws of 2022, Insurance Law §2352 has been amended to include commercial lines insurance, where it previously only permitted multiple rating plans for personal lines insurers.

We wrote about this bill last issue, before it was signed. As we indicated previously, and 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.”

Under this latest amendment to Insurance Lase §2352, new rating plans are still subject to prior approval of the Department of Financial Services and available only to new business customers once approved.

 

RAUH’S RAMBLINGS
Patricia A. Rauh

[email protected]

05/11/22       Skelton v. Reliance Standard Life Ins. Co. et al.
U.S. Court of Appeals, Eighth Circuit
Reliance Breached its Fiduciary Duty Under ERISA by Collecting Premiums from Decedent Before Coverage was Actually Approved and in Effect

Plaintiff is the spouse of his deceased wife, Beth Skelton (“Skelton”), a corporate group sales manager at Davidson Hotels LLC (“Davidson”).  Davidson operated a welfare benefits plan (the “Plan”) that offered dental, health, life and long-term disability benefits for employees.  The Plan gave Davidson “discretionary authority to interpret the Plan”, and the ability to determine eligibility for coverage and eligibility for claims.

Davidson entered a policy contract (the “Policy”) with Reliance Standard Life Insurance Company (“Reliance”) to provide life insurance for the Plan.  Reliance served as the claims review fiduciary with respect to the Policy and the Plan.  The Policy granted Reliance “final and binding” discretionary authority to interpret the Plan and determine eligibility for benefits.

When Skelton started working at Davidson in April 2013, she was automatically enrolled in a $100,000 basic life insurance policy under the Plan, but she did not select supplemental insurance.  When Plaintiff regained custody of his son (Skelton’s stepson), Skelton asked Davidson’s HR department if changing custody of her stepson qualified as a life event that allowed her to elect supplemental life insurance.  The HR department said it did qualify, so Skelton applied for the maximum supplemental life insurance available - $238,000 for herself.  In response, Reliance and Davidson sent Skelton a document stating that she was required to provide proof of good health and evidence of insurability (the “EOI”).  The parties dispute whether Skelton ever completed and returned the EOI.  Skelton did receive a “Benefit Verification” document listing her as having supplemental term life insurance.

In February 2014, Skelton went on medical leave and began receiving disability benefits.  Davidson notified her that she was required to pay premiums to maintain her benefits while on disability, so she paid the premiums from February through May 2014.  In July 2014, Davidson informed Skelton that she was past due on her premiums for May 24, 2014, through July 20, 2014.

In March 2015, Reliance sent Skelton a notice that she might be eligible to have the premiums waived based on her disability.  She applied for and received a waiver of her premiums, retroactive to March 1, 2014.  On December 6, 2015, Skelton died, and Plaintiff contacted both Davidson and Reliance about her supplemental life insurance.  On March 28, 2016, Davidson replied that Skelton’s supplemental life insurance had been in a pending status ever since she first applied because there was no record that she ever completed and returned the EOI form.  Davidson acknowledged that they had incorrectly charged premiums that should not have been charged until coverage was actually approved by Reliance, so they issued a check to Plaintiff in the amount of $133.12, which represented the “maximum amount” of premiums that could have been incorrectly charged to Skelton between February and August 2014.

Plaintiff sued Davidson, Reliance, and other parties and alleged violations of ERISA in regard to the mishandling of Skelton’s supplemental life insurance enrollment.  Davidson entered into a settlement agreement with Plaintiff, paying him $250,000.  Plaintiff and Reliance then filed cross-motions for summary judgment.  The district court denied Reliance’s motion and granted Plaintiff’s, finding that Reliance breached its fiduciary duty to ensure its system of administration did not allow it to collect premiums until coverage was actually effective.  Reliance appealed to the Eighth Circuit.

Reliance argued that it did not have a fiduciary duty relevant to this dispute because Davidson collected the premiums before forwarding them, but the Eighth Circuit disagreed with this argument.  Under ERISA, an entity “is a fiduciary with respect to a plan” if it “has any discretionary authority or discretionary responsibility in the administration of such plan.”  The Policy designated Reliance as the “claims review fiduciary” with “final and binding” discretionary authority to interpret the Plan and the insurance policy and to determine eligibility for benefits.  Further, Reliance had exclusive discretion to determine eligibility for supplemental life insurance when an employee sought it more than 31 days after first becoming eligible, as Reliance contends Skelton did.  The “Important Team Member Instructions” document received by Skelton previously also confirmed Reliance’s exclusive discretion – and status as a fiduciary – by stating that her coverage would not be effective until her application was “approved by [Reliance’s] Medical Underwriting Department.

The Eighth Circuit concluded that Reliance did have a fiduciary role as the entity that determined eligibility and conducted enrollment, and that it breached its fiduciary duties of prudence and loyalty by failing to maintain an effective enrollment system.

 

STORM’S SIU EXAMEN
Scott D. Storm

[email protected]

04/06/22       Albanese v. Mountain Valley Indemnity Co., et al
Supreme Court, New York County
1st-Party Property Claim Dismissed Due to the Plaintiff’s Breach of the Policy Condition Requiring Her to Submit a Sworn Statement in Proof of Loss Form.  Conducting an EUO Does Not Constitute a Waiver of the Proof of Loss Condition

First-party property insurance dispute in which the Plaintiff alleges Mountain Valley breached the insurance policy.  Mountain Valley moved to dismiss the complaint pursuant to CPLR R. 3211(a)(1) (a defense founded on documentary evidence), that the Plaintiff failed to provide a signed Sworn Statement in Proof of Loss in response to its request. 

Such motion may be appropriately granted only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law. A paper qualifies as documentary evidence if it is unambiguous; of undisputed authenticity; and its contents are essentially undeniable.

Here, the documentary evidence on which Mountain Valley relies meets those criteria.  Plaintiff's failure to submit a Sworn Statement in Proof of Loss is an absolute defense to liability under the policy. Section 3407 of the Insurance Law allows property insurers to include in their policies a provision requiring an insured to submit a Sworn Statement in Proof of Loss within sixty days of the insurer's written demand. The policy here contains such a provision. 

When an insurer provides its insured written notice that it desires a proof of loss, and provides a suitable form for such proof, failure of the insured to file proof of loss within 60 days after receipt of such notice is an absolute defense to an action on the policy, absent waiver of the requirement by the insurer or conduct on its part estopping its assertion of the defense.  The fact that Mountain Valley investigated plaintiff's claim, including conducting an examination under oath of plaintiff, does not constitute a waiver of the Condition of Coverage requiring plaintiff to return a signed Sworn Statement in Proof of Loss.  Defendant's detailed examination of plaintiff's books and records did not absolve plaintiff from responsibility to comply with the policy requirements as to written proofs of loss and sworn examination when demanded. The obligation of plaintiff to permit examination of its books and records by defendant is independent of its other obligations under the policy and Insurance Law.

At no time does Plaintiff refute the import of the documentary evidence submitted by Mountain Valley; nor does she deny that she did not return a signed Sworn Statement in Proof of Loss.  Accordingly, the motion by Mountain Valley to dismiss the complaint is granted.

 

05/04/22       New York Tile Wholesale Corp. v. Herrick Feinstein, LLP
Appellate Division, Second Department
Communications Otherwise Protected by the Attorney-Client Privilege or the Attorney Work Product Privilege are Not Protected if they Relate to Client Communications in Furtherance of Contemplated or Ongoing Criminal or Fraudulent Conduct

Plaintiff sued Fatato due to an alleged breach of a lease agreement.  The plaintiff then commenced this action to recover damages for a violation of Judiciary Law § 487 against the defendant Herrick Feinstein, LLP, the law firm that represented Fatato in the action against it, alleging that Herrick colluded with its client to falsify documents in that action.

During discovery, Herrick objected to certain demands by the plaintiff on the ground that the documents sought were protected by the attorney-client and/or work product privileges. The plaintiff moved pursuant to CPLR R. 3124 to compel the production of the objected to documents, arguing that documents which might otherwise be privileged were discoverable under the crime-fraud exception. In the alternative, the plaintiff sought an in camera review of the documents in question.

Communications that otherwise would be protected by the attorney-client privilege or the attorney work product privilege are not protected if they relate to client communications in furtherance of contemplated or ongoing criminal or fraudulent conduct.  A party seeking to invoke the crime-fraud exception must demonstrate that there is a factual basis for a showing of probable cause to believe that a fraud or crime has been committed and that the communications in question were in furtherance of the fraud or crime. 

A lesser evidentiary showing is needed to trigger in camera review than is required ultimately to overcome the privilege. To permit in camera review of the documents to analyze whether the communications were used in furtherance of such wrongful activity, there need only be a showing of a factual basis adequate to support a good faith belief by a reasonable person that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies.
 

04/19/22       Allstate Fire & Casualty Ins. Co. v. Branch Medical, P.C.
Appellate Division, First Department
An Arbitrator's Award Directing Payment in Excess of the Policy Limit of the No-Fault Insurance Coverage Exceeds the Arbitrator's Power and Constitutes Grounds for Vacatur of the Award. A defense that the Coverage Limits of the Policy Have Been Exhausted May be Asserted by an Insurer Despite its Failure to Issue a Denial of the Claim Within the 30—Day Period

Civil Court properly vacated the master arbitrator's award and denied respondent's (Branch Medical’s) cross motion to confirm the award. When an insurer has paid the full monetary limits set forth in the policy, its duties under the contract of insurance cease. An arbitrator's award directing payment in excess of the monetary limit of a no-fault insurance policy exceeds the arbitrator's power and constitutes grounds for vacatur of the award. A defense that the coverage limits of the policy have been exhausted may be asserted by an insurer despite its failure to issue a denial of the claim within the 30—day period.

Petitioner's submissions were sufficient to establish that the policy had been exhausted by payments of no-fault benefits to other health care providers and lost wages to the assignor before petitioner was obligated to pay the claim at issue here.  The evidence includes the testimony of petitioner's claims adjustor, coupled with the policy declaration page showing a $50,000 policy limit for PIP coverage and a $25,000 limit for Optional Basic Economic Loss coverage, a payment ledger listing in chronological order the dates the claims by various providers were received and paid, and a ledger showing the dates and amounts of lost earnings reimbursed to the assignor.

Contrary to respondent's contention, petitioner was not precluded by 11 NYCRR 65-3.15 from paying other legitimate claims subsequent to the denial of respondent's disputed claims.  Adopting respondent's position, which would require petitioner to delay payment on uncontested claims pending resolution of respondent's disputed claims runs counter to the no-fault regulatory scheme, which is designed to promote prompt payment of legitimate claims. 

03/28/22       Pierre v. Universal Property & Casualty Ins. Co.
United States District Court, Eastern District of Pennsylvania
Question of Fact in 1st-Party Property Case Whether Plaintiff was Residing in the Subject Property at the Time of the Fire (Whether it Constituted a “Residence Premises”)

Factual issue exists whether the plaintiff was "residing" at the insured home when a fire occurred. The policy provides insurance coverage to the "residence premises" which means, in part, "[t]he one-family dwelling where you reside…".

In her deposition plaintiff alleged she was paying the insurance premium, paid for the utilities but "sometimes" her daughter paid, paid for the internet and cable, she had furniture and clothes at the insured property, received mail there, had a television in "her room," and she was there within a week before the fire. She also stated that she was "always there" and "both houses are my residence."

On the other hand, plaintiff "moved out" of the insured property months before the fire. When asked if she was living at the insured property at the time of the fire she replied, "No. I was living at my house," referring to a different property that she called her "primary residence." Her daughter, son, six grandchildren, and nephew were living at the insured property at the time of the fire. She also had furniture, a television, internet, and was receiving mail at the other property. Lastly, she stated that the insured property was a "family home, and the other property is another home."

Summary judgment standard:

Summary judgment is proper when there is no genuine dispute of material fact, and the movant is entitled to a judgment as a matter of law. A dispute as to a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. On a motion for summary judgment, the court must consider the underlying facts and all reasonable inferences therefrom in the light most favorable to the party opposing the motion. If the movant carries its initial burden of showing the basis of its motion, the burden shifts to the non-moving party to go beyond the pleadings and point to specific facts showing that a genuine issue exists for trial. In other words, the non-moving party "must present more than just bare assertions, conclusory allegations or suspicions to show the existence of a genuine issue. Summary judgment must be granted against a non-moving party who fails to sufficiently establish the existence of an essential element of its case on which it bears the burden of proof at trial.

Analysis:

Under Pennsylvania law, interpretation of an insurance contract regarding the existence or non-existence of coverage is generally performed by the court. The Court is to give effect to plain and unambiguous language of an insurance agreement. Contractual language is ambiguous if it is reasonably susceptible of different constructions and capable of being understood in more than one sense. If the language of the insurance agreement is ambiguous, the policy should be construed in favor of the insured and against the insurer, the drafter of the agreement.

Plaintiff claims that the agreement's lack of "words of refinement" renders the term "reside" ambiguous. Plaintiff does not offer a definition, she does not plead that she was confused in any way, and her claim of ambiguity runs contrary to ample case law. Nothing is ambiguous about the provision or term that plaintiff must be "residing" at the insured property at the time of a loss to receive insurance coverage. Pennsylvania courts have rejected such claims of ambiguity and have defined the term.

The term residence refers to one's "factual place of abode evidenced by a person's physical presence in a particular place." To reside "requires, at a minimum, some measure of permanency or habitual repetition." Factors such as "where a person sleeps, takes meals, receives mail, and stores personal possessions" should be considered. Given that this issue is one of physical fact, the insured's intentions are "irrelevant" and their "own identification of the place she calls ‘home' or ‘residence' is not determinative" (citation omitted -- "when a person actually lives in one location, and sporadically visits, or keeps certain personal items at, another location, it is the location where he lives that is his residence") (citation omitted -- approving an insured having "dual residency").

This record contains substantial conflicting evidence as to whether plaintiff was residing at the insured property at the time of the fire. She admitted that she "moved out" before the fire and was "primarily" residing at a different home. She said the insured property was a "family home" where her daughter, son, grandchildren, and nephew lived, and she was "always" there. She had furniture, a television, internet, and received mail at both properties. She was paying the insurance premium for the insured property. Her and her daughter shared paying utilities at the insured property. And she still had her "own room" at the insured property.

While insurance coverage issues are typically issues for the Court; Rule 56 and case law dictate that defendants are not entitled to judgment as a matter of law. Taking all reasonable inferences in plaintiff's favor, the Court finds that a reasonable jury could find for either party as to whether plaintiff was residing at the insured property. Plaintiff paid for the insurance, utilities, had television, furniture and clothes, had her "own room," and was "always" at the insured property. This evidence is sufficient for plaintiff's claim to survive defendant's summary judgment, and whether plaintiff was residing at the insured property is a question or the jury to decide in this case.

04/04/22       State Farm Fire and Casualty Co. v. Ruffenach, et al  
United States District Court, Eastern District of Pennsylvania
Business Pursuits Exclusion in Homeowners Policy Precluded Defense and Indemnity Coverage to Spa Owner’s Wife for Claims that She Should have Prevented Her Husband's Employee from Sexually Assaulting Customers

Five Jane Does sued a spa owner and his wife in state court after the spa owner's employee allegedly sexually assaulted the five women. The Jane Does are suing the spa owner's wife for allegedly knowing of the masseur's sexual abuse both in the spa and other businesses but not stopping him. The spa owner and his wife purchased a homeowners insurance policy agreeing their insurer need not defend or indemnify them for damages arising out of business pursuits of “any insured”. The homeowners' insurer now asks the court to declare it has no duty to defend or indemnify the spa owner or his wife in the ongoing Jane Doe lawsuits. The spa owner's wife argues she is not involved with her husband's business pursuit—the spa—but is nevertheless being sued for negligence, which is a covered claim under her homeowners' insurance policy. She wants her insurer to continue paying her costs of defense and indemnify her should she be found liable.

The court granted the insurer's motion for declaratory judgment finding the spa owner and his wife agreed to a business pursuits exclusion to coverage. The parties agreed the insurer need not cover damages arising from any insured's business pursuit. Jane Does' claims arise from, at the minimum, the spa owner's continuous and profit-motivated spa business.

The business pursuits exclusion excludes coverage for bodily injury "arising out of business pursuits of any insured." Pennsylvania courts interpret exclusions using the phrase "any insured" to bar coverage to all insureds under homeowners policies arising out of any insured's excluded conduct.  The business pursuits exclusion excludes coverage because the Underlying Lawsuits allege bodily injury arising from the husband’s business pursuit.

The Court of Appeals instructs a "business pursuit" requires two elements: (1) "continuity, or customary engagement in the activity," and (2) "profit motive," "shown by such activity as a means of livelihood, a means of earning a living, procuring subsistence or profit, commercial transactions or engagements."

The underlying bodily injury must also "arise out of" the business pursuit. This means the injury "is causally connected to the business of the insured."  "’But for' causation, i.e., a cause and result relationship," satisfies the "arising out of" requirement.

The court held that the insurer need not defend the insured homeowner because the insurer's business pursuits exclusion allows it to decline coverage.

01/27/22       Tenth Avenue, LLC v. Aspen American Ins. Co.
Appellate Division, First Department
Question of Fact Whether Coverage for Damages was Precluded by the Policy Exclusion for "Theft by Any Person to Whom you Entrust the Property for Any Purpose" or Whether the Damages were Caused by a Covered Vandalism

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

 

FLEMING’S FINEST
Katherine A. Fleming

[email protected]

04/27/22       Cincinnati Specialty Underwriters Ins. v. Best Way Homes
Supreme Court of New Hampshire
Present Tense Language in Exclusionary Provision Did Not Create Temporal Limitation on Acts or Omissions Giving Rise to Damage

Cincinnati Specialty Underwriters Insurance Company (CSU)’s insured, defendant Best Way Homes, Inc. (Best Way), was a general contractor. In May 2012, Best Way entered into a contract with a homeowner to perform renovations at his residence. The project included constructing a deck with an attached staircase. Pursuant to an oral agreement, Best Way subcontracted the construction of the deck and staircase to Bob Wood Construction, which completed the project in 2012.

In 2017, the homeowner hired Blodgett to perform plumbing services at the property. Blodgett was injured when the staircase separated from the deck as he was descending it, causing him to fall and suffer injuries. In April 2020, Blodgett sued the homeowner for negligence and Best Way for negligent failure to inspect, warn, and remove hazards in addition to a separate claim against Best Way for negligent hiring and supervision. At the time of the injury, but not at the time of construction, Best Way was the named insured under the CSU policy, which was in effect from June 29, 2016, to June 29, 2017. The CSU policy covered bodily injuries caused by an “occurrence” that happened during the policy period. The policy also contained an exclusionary provision that included three clear and unambiguous conditions precedent to coverage, each of which required a formal written contract with the subcontractor.

CSU sought a declaration that it had no duty or obligation to defend or indemnify Best Way with respect to Blodgett’s negligence claims. CSU also moved for summary judgment, arguing that Best Way did not obtain a formal written contract from the subcontractor and thus did not satisfy the conditions precedent to coverage set forth in the exclusionary provision. CSU argued that, as a matter of law, the claims against Best Way were excluded from coverage by the unambiguous terms of the exclusionary provision. In response, Blodgett and Best Way argued, among other things, that CSU was not entitled to summary judgment because: (1) the claims asserted against Best Way for negligent supervision and hiring did not arise out of the work of the subcontractor and thus were not precluded from coverage by the exclusionary provision; and (2) CSU suffered no prejudice as a result of Best Way’s failure to obtain a written contract with the subcontractor.

The trial court granted CSU’s motion for summary judgment. The court found that the terms of the policy’s exclusionary provision were “clear and unambiguous”, and that Best Way failed to comply with those terms. The court further found that “all claims in the underlying action” arose out of the subcontractor’s work and, therefore, were subject to the policy’s exclusionary provision. The court reasoned that “there would be no damages under the negligence claims alleged against Best Way absent the alleged negligence of the subcontractor.” With respect to the prejudice argument, the court determined that “New Hampshire does not require a showing of prejudice outside of the late notice context.” The court concluded that, because CSU did not allege untimely notice of the claims, CSU was not required to prove that Best Way’s failure to comply with the terms of the exclusionary provision prejudiced CSU. As a result, the court determined that the policy’s exclusionary provision precluded coverage for Blodgett’s injuries.

On appeal, Blodgett did not dispute that Best Way failed to satisfy the requirements for coverage in the policy’s exclusionary provision. Instead, Blodgett argued that based on the plain meaning of the provision, it did not apply to negligent acts that occurred before the policy’s effective date. In the alternative, Blodgett argued the language was ambiguous. The Court interpreted the present tense language in the exclusionary provision as having “no temporal reference” and meaning simply that CSU needed to have satisfied the preconditions to coverage in order for coverage to apply to the claim. The present tense language did not limit the provision to injuries resulting from the subcontractor’s work performed during the policy’s coverage period. Rather, it merely indicated that the insured needed to meet the conditions precedent at the time it sought coverage in order for the policy to cover the damages. The Court concluded all claims against Best Way arose out of the work of the subcontractor and the exclusionary provision precluded coverage in the underlying litigation. Additionally, CSU was not required to show that Best Way’s failure to execute a written contract was prejudicial.

 

NORTH of the BORDER
Heather A. Sanderson

[email protected]

05/03/22       Lambright v. Sonnet Insurance Company, 2022 BCSC 709
British Columbia Supreme Court (trial level)
Insurers Must Investigate Claims Fairly and Promptly, Concluding Claims in a Reasonable Period of Time.  Hardball Adjusting Tactics such as Withholding Payment on Admitted Claims Pending Investigation of a Suspected Fraud Claim Will Attract Punitive Damages

Closely following the alignment of the Canadian National Railway, Highway 16 winds east and west through northern British Columbia from Prince Rupert on the coast to Prince George in the interior.  That highway, also known as the Highway of Tears (but that is another story), unites small, resource-based communities carved out of bush and rock. One of those communities is Terrace, B.C.

On the east side of the Skeena River from Terrace is the unincorporated settlement of approximately 4,500 people called Thornhill where on May 23, 2019, ten Thornhill firefighters and five Terrace firefighters were called to a fire.  Heavy smoke was coming from the rear of a double wide mobile home.  They fought the fire defensively, protecting neighbouring properties and, basically, let it burn. When the fire was extinguished, the building and its contents were gone.

That Thornhill home was owned by Judy Green who had died about a month before the fire. Her daughter and executrix, Cindy Lambright, and her small dog had moved to Thornhill from Vancouver before Judy died and were living at the Thornhill property at the time of the fire. Both were away when the fire broke out.  Cindy’s move to Thornhill coincided with her new career venture as an insurance adjuster. Cindy now works with Coast Claims Service.

Cindy’s mother had insured her home and contents with Sonnet Insurance Company, affiliated with Economical Insurance Company. Started in 2016, Sonnet was Canada’s first fully online personal lines insurance company. Bots process applications, providing quotes within minutes. Policies issue in a similar time frame.  Cindy reported the fire, and an Economical adjuster began the adjustment process. Ms. Green’s policy seemed to have sufficient limits.

The claim for the loss of the building was agreed upon. Sonnet rejected the contents claim, requesting additional documentation to support it. Cindy submitted five, separate, sworn proofs of loss between April 24, 2020, and January 5, 2022. The final proof detailed a claim of about $185,000.  In response to each, Sonnet asked for more documentation. Cindy replied on each occasion stating that she had supplied all the documentation that she had to support the loss. Further documentation either never existed or was destroyed in the fire.  Cindy asked what documentation would satisfy Sonnet. Sonnet did not supply an answer.  Sonnet never accused Cindy of fraud, but it seems from the judgment at the Court of Appeal that Sonnet believed that this was a case of fraud. 

Approximately two weeks before the fire, Cindy swore an affidavit in support of her application for a grant of probate in relation to Judy’s estate. The affidavit attached a “Statement of Assets, Liabilities and Distribution” in which she listed the value of the estate’s furniture at $1,000 and of its jewellery at $1,000. In addition, on August 20, 2019 (that is, nearly three months after the fire), Cindy swore a “Statement of Affairs” in support of a consumer proposal that she made to her creditors under the federal Bankruptcy and Insolvency Act, in which she listed her own household furniture as having a value of $200 and her clothing, of $1,000.

Under the British Columbia Insurance Act, Sonnet had 60 days from receipt of the proof of loss to accept or reject the proof. Courts grant insurers leeway on that deadline in appropriate cases. But here, Sonnet did not pay the claim and did not reject it.  For two years Sonnet continued to say that it was investigating the claim by requesting additional documents.

Cindy filed a civil claim against Sonnet and thereafter proceeded to apply for summary judgment.  Sonnet argued that summary trial was inappropriate due to credibility issues. The Court rejected that argument. The Court held that Sonnet has a right to investigate the claim but must do so in a reasonable period of time. The trial judge held that Sonnet cannot avoid its obligation to accept or reject the proof of loss by purporting to investigate indefinitely, particularly where no further investigative steps are contemplated.  In short, it failed to conclude the investigation in a timely manner.  Sonnet was held liable for the contents claim.  But, in addition to its almost rote requests for additional documents and receiving Cindy’s consistent answer that they did not exist, Sonnet decided to increase the pressure on Cindy and stop funding the cost to repair and replace the insured building – a claim that it had admitted. Sonnet subsequently relented and continued the payment. The Court found that withholding payment of an agreed upon claim attracted a punitive damage award of $30,000.00.

We will see if Sonnet appeals.  In the meantime, this case stands as a lesson that insurers must investigate claims fairly and promptly – a lesson that Cindy will be hard pressed to ignore in her adjusting career.

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