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Coverage Pointers - Volume XXIII, No. 6

Volume XXIII, No. 6 (No. 598)
Friday, September 3, 2021
A Biweekly Electronic Newsletter  

 

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

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

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

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

 

Dear Coverage Pointers Subscribers:

Do you have a situation?  We love situations. 

A brief report from Crescent Dreams, the Land of the Blue Martinis.  We are delighted to be back in Canada for five days a week.  Working remotely is as easy from Ontario as it is from the confines of my home office, where I worked for an extended period of time.  I’m back in the states Tuesday through Thursday because I teach Insurance Law on Tuesday and Thursday mornings, at the Buffalo Law School.  I am easily reached on my cell at 716-445-2258.

Had the unique pleasure of arguing an appeal at the Second Circuit Court of Appeals in NYC last week.  Everyone is the courtroom was required to show a COVID vaccine card and wear a mask, including the three judge panel.  Strange arguing an appeal in a mask.  Interesting risk transfer question, my favorite,

The courts remain quiet as they summer recesses are just ending and the new terms just beginning.  Decision will start flowing by month’s end.

Registration for the FDCC Insurance Industry Institute, scheduled for November 3-5 at the Sheraton Times Square will be opening soon.  Watch for it at the FDCC website, www.thefederation.org.  I’ll be presenting on New York Coverage protocols and it’s an all start cast of speakers and topics.  We are hoping that the Delta variant doesn’t interfere with yet another live program.

Likewise, December 9 - December 10, 2021 in New York  City, the DRI 2021 Insurance Coverage and Practice Symposium

DRI’s Insurance Coverage and Practice Symposium is the foremost educational event for insurance executives, claims professionals, and outside counsel who specialize in insurance coverage.  This year’s symposium will once again offer an unparalleled opportunity to engage with a distinguished faculty of industry leaders, experts, and coverage lawyers on emerging issues, recent court rulings, national trends, and the future of insurance coverage law.  In addition, the symposium will provide exceptional networking events and an opportunity to experience the wonder of New York City during the holiday season!

Register by November 8 to receive the early registration rate: $995 for DRI members and $1,195 for non-members. If your membership recently lapsed, please renew your membership prior to registering to ensure you receive your discounted member rate.  www.dri.org

 

Newsletters:      

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

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

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

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

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

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

 

ruMIRNAtions:

This is it, y’all. Fall is here. This is not a drill. I am knee-deep in school supplies and crispy new school clothes for the kid as I write. I hope your summer has been a good one—it is now officially over.

While the rest of us were enjoying the summer, the Department of Financial Services was hard at work studying disparities in mortgage lending for same-sex couples versus opposite-sex couples. Turns out that if you are a part of a same-sex couple, you run the risk of being denied a mortgage altogether or—if the bank deigns to give you a loan—you will be paying more interest for the same loan.

A few Coverage Pointers ago, I spoke about the difference between “disparate impact” and “disparate treatment”. In particular, I wrote about the fact that, under the Constitution and under the laws of the United States, no one is to be treated differently on the basis of any protected classification (race, gender, creed, sexual orientation, etc.), but that the existing laws—which are seemingly neutral—may impact different people differently. Mortgage lending is apparently one such area where there is a disparate impact based on sexual orientation.

In this Coverage Pointers, I discuss what the Department of Financial Services is doing to address some of the inequities in lending based on sexual orientation.

Have a happy Labor Day!
Mirna
Mirna M. Santiago

[email protected]

 

The Dangers of a Family Nip:

The Buffalo Times
Buffalo, New York
03 Sep 1921

Woman Dies of Poisonous Bite
of Son-in-Law

Special to the Buffalo TIMES.

          KENOSHA, Wis., Sept. 3.—A mother-in-law’s interference in a family quarrel ended in the death here of Mrs. Lucia Andreucci, 56, from blood poisoning which developed from a bite on the little finger of her right hand inflicted by her son-in-law, Joseph Angelotti, several weeks ago.

          Coroner Parker started an investigation and learned that June 30th the mother-in-law, interfering in a family quarrel, placed her hand over her son-in-law’s mouth.  Enraged, he bit her.  Angelotti may be taken into custody.

 

Peiper on Property and Potpourri:

After a couple of lean issues, we return to the fold this week with an interesting decision out of the Fourth Department.  In the Land O’ Lakes case reviewed below, the Appellate Division tackles the issue of whether an insured has standing to pursue a claim against a tortfeasor when it has been made whole by payment of insurance proceeds.  Surely, the carrier has a subrogation right.  And, likewise, the carrier can sue in the insured’s name to pursue its recovery.  But what about an insured suing on behalf of another, independent, co-insured.  Read on to find out.

With that we close out another summer of Coverage Pointers.   I know summer doesn’t really begin end until September 22nd, but kids actually returning to school, fans actually returning to football stadiums, and the ever-ubiquitous return of pumpkin flavored e-v-e-r-y-t-h-i-n-g means the calendar, in this case, is just wrong.  

Today also marks my son’s 12th birthday.  That means that exactly twelve years ago, I left the hospital to race home to get my column out.  I only reviewed one case that day, a Second Department decision on whether acceptance of undisputed payments precluded the insured from seeking additional monies in the future.  It did not, and still does not, by the way.

That’s it for now.  See you in two weeks. 

-sp
Steve
Steven E. Peiper

[email protected]

 

Fat Shaming, 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
03 Sep 1921

300 POUND GIRL AND $500 IN CRAP GAME,
SAY POLICE; ARREST 18

          One woman and seventeen men were grabbed in a raid in the dance hall of William Michell, No. 117 Clinton Street, early today.  They were locked up on charges of common gambling.  Police say they were all much concerned about a big crap game that was in progress in a back room at the head of the rear flight of stairs in the building when Detectives Bart O’Leary and Charles Edwards and Patrolman Kless, going through the dance hall heard the hum of excited conversation and kicked in a door to take a look at the game.

          The woman is a heavyweight, tipping the scales at 300 pounds, according to the police.  She gave her name as Ethel Lewis, her age as 26, and her address as No. 56 Vine street.

          Police say about $500 was involved in the game.  They took possession of a dozen pairs of dice.  All of the participants in the game were colored.

 

Wilewicz’ Wide-World of Coverage:

Dear Readers,

This summer just flew by, faster than any season that I can recall. It was filled with adventures to say the least (I bought a house!) and new hobbies. To that end, I’m thrilled to report that the latest development in our household is that we have all taken up golf. Earlier this summer, as part of the Firm’s women’s initiative, a number of us here at the office attended a series of lessons. It was both a bonding experience, and a professionally valuable one. The sport can be intimidating for the uninitiated, but given the large role that it plays in the legal and business fields, it can also be an invaluable networking skill. The lessons were fun and inspiring.

Indeed, they were so inspiring that my daughter wanted to try herself, has now taken up the sport, and within weeks she made the varsity golf team! She goes to a private lesson once a week, and has become so obsessed with it that, rain or shine, we are at the range every day that there isn’t a lesson or team practice. Given the fact that my daughter wants to be a lawyer (no surprise there), it may prove valuable for her as well. Thus far, she’s proven a natural and it may be the start of something.

Until next time … fore!

Agnes
Agnes A. Wilewicz

[email protected]

 

The Erie County Fair is Still a Hit:

Buffalo Morning Express
Buffalo, New York
03 Sep 1921

ERIE COUNTY FAIR ATTRACTS
RECORD BREAKING CROWDS

Annual exhibit will close today
with best racing program of the week.

PICK CHAMPION HORSES

Genevieve Bell and Rosy win
harness honors and Larkspur heads
the saddle class.

          The Erie County fair at Hamburg, which all this week had attracted thousands, will end today.  There was another record-breaking attendance at the fairgrounds yesterday, nearly 20,000, perhaps, being there.  All of the exhibits will remain until this evening.  The beat day’s racing programme of the entire week is scheduled for this afternoon, beginning at 2.30 o’clock

          The horse show which closed yesterday was the best that has been held on the grounds since it became a feature of the county fair.  Horsemen familiar with the shows given in connection with county fairs expressed the opinion that this week’s was the best of any county in the state.  The large crowds that surrounded the show ring and the applause given to the winners of the various events furnished ample evidence of its popularity.  It is the intention of the directors of the fair to make the horse show better every year.

 

Barnas on Bad Faith:

Hello again:

Discovery is always a big issue in bad faith cases, and I have a case focused on discovery in my column this week.  The insurer retained counsel to help it evaluate its potential bad faith exposure in an underlying personal injury action.  However, it appears that bad faith counsel became heavily involved in the underlying action, including making settlement offers, attending motion hearings, providing legal research, and assisting with witness preparation.  In the subsequent bad faith suit, the plaintiffs sought discovery from bad faith counsel, but the lower court quashed the subpoena based on attorney-client privilege grounds.  The appellate court reversed, concluding that the attorney’s files and testimony were subject to disclosure to the extent he acted as de-facto defense counsel in the underlying action and to the extent the information as otherwise not privileged.

That’s all for now.  Enjoy the holiday weekend.

Brian
Brian D. Barnas

[email protected]

 

Just Came Across this One – Nothing to do with 100 Years Ago Stories – It’s an Article about the First FDCC Conference (then called the Federation of Insurance Counsel):

The Philadelphia Inquirer
Philadelphia, Pennsylvania
30 Aug 1937

Lawyers to Meet

          ATLANTIC CITY, N.J, Aug. 29. – The Federation of Insurance Counsel, a group of 150 leading lawyers for some 30 major companies, will hold its first annual convention here tomorrow and Tuesday.

          The program will consist of analyses of legal problems encountered by insurance men in accident cases.

 

Off the Mark:

On vacation.  Check back in two weeks.

Brian
Brian F. Mark

[email protected]

 

Her Son’s Life Insurance Policy Makes her the Richest Woman in Poland (Value -- $900 US)

New Castle Herald
New Castle, Pennsylvania
03 Sep 1921

POLISH MOTHER MADE
RICH BY VET’S DEMISE

CON’S WAR RISK INSURANCE MAKES
PEASANT MOTHER EXTREMELY WEALTHY

Philadelphia, Sept. 3.—An old peasant woman was made the richest woman in her village by a letter from the War Risk Insurance Bureau of the American government.  The incident is told by a member of the Friends’ Relief Mission in Poland who writes:

“We were just driving into the town of Hrubieszow in the war-ravaged district of Poland when a peasant woman, clad in rags and bare-footed, came up to the wagon and presented a letter which she could not read.  It proved to be from the War Rish Insurance Bureau at Washington, stating that her son had died in the American army and that his insurance would come to her for 20 years, at the rate of $25 a month.  Already there was $900 waiting for her, which would be sent shortly by check.

Rich Beyond Dreams

“The woman’s face was shadowed as she heard of her son’s death but it brightened with amazement when she heard of the money.  The son had not been heard from for three years and his death had been taken for granted.  She had other children and they had all been living in a dugout, with no wood for building a house and no implements to farm with and only a diet of rye and potatoes.

“The $900 in American money makes, at the present rate of exchange, over 1,500,000 Polish marks and would make her the richest woman in the village and probably the country.”

 

Boron’s Benchmarks:

Each month of the year offers its own unique characteristics and delights.  With the turn of the month, I for one now look forward to the cooler, drier air that September, especially late September, usually brings to Western New York.  Hiking weather.  Apple picking weather.  Football weather.  Especially football weather.  Go Bills!

For this edition of Boron’s Benchmarks, the Coverage Pointers beat monitoring and reporting on insurance coverage decisions of the high courts of the 49 states not named New York, I offer for your consideration a Supreme Court of California opinion issued August 30, 2021, reversing the decision of its state court of appeal and remanding the case back down for proceedings consistent with Supreme Court’s opinion.  The issue decided by the lengthy opinion of the Supreme Court of California is whether January 1, 2013, statutory provisions enacted by the state Legislature amending the California Insurance Code, and designed to shield consumers from losing life insurance coverage because of a missed premium payment, should apply only to policies issued or delivered after January 1, 2013, or, should also apply to policies already in effect on January 1, 2013.  Check out the case, McHugh vs. Protective Life Insurance Company, in Coverage Pointers, and then go hike, pick apples, watch football, watch more football, and enjoy all that September has to offer us.  

Have a healthy and happy next two weeks, folks.

Eric
Eric T. Boron

[email protected]

 

The Dangers of the Car – 100 Years Ago:

Times Herald
Olean, New York
03 Sep 1921

ONE IN SEVENTY.

          Autos kill 12,000 Americans a year and injure 1,500,000, says the Insurance Press.  That makes your chances of being killed by a motorcar one in 8750.  It’s one to seventy that you’ll be run down and injured.

          Most of these accidents occur in crowded cities.  Two causes—carelessness and congestion.

          Carelessness can be lessened—but not ended.

          To relieve congestion and make motoring fool-proof, future cities will have to provide subways or overhead roads for autos.  The ground-level street will belong to pedestrians.

 

Ryan’s Capital Roundup:

Ah, parenthood. My kids have been sick, daisy chained one after the other, for the better part of the past two weeks. Nothing like “working” from home during that span.

Short column this week. With incoming Governor Kathy Hochul, there is a new sheriff in town heading New York’s Department of Financial Services with ties to the Obama administration.

Until next time,

Ryan
Ryan P. Maxwell

[email protected]

 

That’s a Lot of Scotch, Even Under Today’s Standards:

The Buffalo Times
Buffalo, New York
03 Sep 1921

Loses Sixty Quarts Of
Good Old Scotch

Sixty quarts of Scotch whiskey were reported stolen from his cellar by A.P. Newton, or No. 71 Victoria Avenue, today.

According to Newton, the hootch was cached in two old suitcases in his cellar, and it was apparently easy for the thieves to carry away.  They also took along a bottle of peach brandy and a bottle of Irish sloe gin.

 

CJ on CVA and USDC(NY):

Hello all,

It is hard to believe that two weeks has already gone by, and that we are already in September. For many reasons this summer, and really the whole year, has been somewhat of a blur, and I do not know if I have been able to take the time to appreciate all of the great things that have happened over the past eight months. Hopefully with fall approaching and the weather cooling down I will be able to take some time to reflect on the past year and all of the wonderful things that have happened.

In coverage news, the courts seem to still be on a summer break. But I do have one Southern District COVID-19 business interruption case to report. On the CVA side, I know our office is still working through the multitude of claims we have been assisting our clients with since the close of the “look back” period, and I expect that many of my colleagues working in this area are in a similar position. I’m sure there will be plenty of CVA related coverage decisions to report on in future issues.

See you in two weeks,

CJ
Charles J. Englert, III

[email protected]      

 

Curiosity Killed the Marriage – or Perhaps it was her Husband:

The Buffalo Times
Buffalo, New York
03 Sep 1921

Wife’s Curiosity Leads Her Into Divorce Suit

NEW ORLEANS, Sept. 3—Mrs. Margaret B. Speakman had long been curious as to what really happened in divorce proceedings.  So she organized a little party of friends and went to court to see and hear what was going on.  To her amazement she found proceeding a case in which her husband was co-respondent.  The same day she applied for a divorce and won it without any evidence other than the record of the case to which she had listened.

 

Dishing Out Serious Injury Threshold:

Dear Readers,

Happy September everyone. I hope everyone has some plans to enjoy the last bit of summer weather going into Labor Day weekend.

In the Serious Injury Threshold world, there has been a slowdown in cases being decided in these summer months. However, in Jeffrey v. Queen City Foods, LLC the Court granted plaintiff’s motion and denied defendant’s cross-motion as defendant’s biomedical expert was not qualified to opine as to causation as they were not also a medical doctor.

Be well,

Michael
Michael J. Dischley

[email protected]  

 

A Yankee Winning Streak 100 Years Ago:

Buffalo Morning Express
Buffalo, New York
03 Sep 1921

GOOD HURLING BY HOYT
BEAT WASHINGTON

          New York, Sept. 2—Splendid pitching by Hoyt enabled New York to defeat Washington today, 9 to 3.  It was the fifth successive over the Nationals.  Two of Washington’s four hits came in the first inning when errors were responsible for two of the three runs scored.

          Ruth, Meusel and Peckinpaugh hit home runs.  Ruth’s 49th homer, which scored Peckinpaugh also, cleared the right roof field.  Meusel, the next batter hit his eighteenth of the season.

 

Bucci on “B”: 

Hello readers:

How did everybody fare with Ida this week?  It hit the tri-state area as well as New England last night…somehow I ended up in both.  I live in the State of Connecticut, which is a tri-state area state, and most nutmeggers believe Connecticut is part of New England.  All I know, is the storm was crazy last night but most certainly other states were hit harder.  Poor New Orleans.  I have a friend in Metairie, Louisiana, a suburb of New Orleans…no power…terrible flooding, etc.  Is it me, or has there been a lot of rain this summer?  More than usual? 

I brought you three cases today.  Two are lower court decisions, but I thought they were interesting.  I hope they trigger your curiosity enough to read the decisions, because I try to stay neutral in Coverage Pointers, most of the time.  But I found the court analyses in both cases to be a stretch.  Thoughts?

Diane
Diane L. Bucci

[email protected]

 

Pop Quiz – 100 Years Ago: (Note, in particular, question “7”):

Poughkeepsie Eagle-News
Poughkeepsie, New York
03 Sep 1921

New Questions (Answers below)

  1. What does the Latin word “sine” mean?

  2. Who was Henrik Ibsen?

  3. Where is Monte Carlo, and for what is it famous?

  4. What is the papacy?

  5. What is an invoice?

  6. What city is the capital of Italy and what is its population?

  7. What is a swastika?

  8. Is a widgeon a fish or a bird?

  9. Who was king of Judea at the time of the birth of Christ?

  10. Who was the Roman god of wine?

 

Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

I’m coming to you live from the Huntington Hilton this edition – trapped on Long Island due to the flood waters from the remnants of Hurricane Ida. I would have really liked to have escaped to New York City this morning, but maybe by the afternoon the roads and rails will be passable. So, two weeks ago I got clobbered by Hurricane Henri at home in Connecticut and last night I took my life in my hands trying to get back to the hotel after meeting friends in Lido Beach. And, in the week in between, the heat and humidity in Buffalo tried to kill me. Someone is sending me a message, and I think I need to listen up.

In this week’s edition, we look at the duty to defend, asking the question when is negligence not negligence?  Hint: you can’t cherry pick and isolate a single act from a continuum of intentional acts. Read on for more details.

Keep being safe and stay out of the way of hurricanes.

Lee
Lee S. Siegel

[email protected]      

 

Quiz Answers:

Poughkeepsie Eagle-News
Poughkeepsie, New York
06 Sep 1921

Answers to Saturday’s KWIZ

  1. “Sine” is a Latin preposition meaning “without.”

  2. Henrik Ibsen was a Norwegian poet and dramatist, 1828-1906.

  3. Monte Carlo is a town in the principality of Moraco, on the Mediterranean, famous as a gambling resort.

  4. The papacy is the Roman Catholic Church government, of which the Pope is the head.

  5. An invoice is a list sent to a purchaser containing the items purchased.

  6. Rome is the capital of Italy and has a population of 591,000

  7. A swastika is a primitive symbol, which has recently been revived as a good-luck charm.

  8. A widgeon is a river-duck with short bill and wedge-shaped tail.

  9. Herod was King of Judea at the time of the birth of Christ.

  10. Bacchus was the Roman god of wine.

 

Rauh’s Ramblings:

Hi All,

It has been a busy week at work, as well as at home.  I am in the middle of a DIY kitchen renovation which I have wanted to do for a very long time and finally decided to go for it.  My kitchen may have been considered “stylish” back in the 1970’s (think lots of wood paneling!), but it definitely isn’t anymore.  I am hoping to have this project done by the end of the week (fingers crossed).  In the meantime, I have enjoyed watching the transformation – it looks so much brighter and open than it did before, so I am happy about that.

This week, I have a life insurance case from the U.S. District Court for the District of Arizona in which the court interprets Florida law in connection with multiple claims made by policyholder plaintiff, including breach of contract, fraud, negligence, etc.  Read on for more details!

Until Next Time,

Patty
Patricia A. Rauh

[email protected]     

 

Judge Kenesaw M. Landis (two-timing):

The Evening World
New York, New York
03 Sep 1921

UNWORTHY OF A JUDGE

          KENESAW M. LANDIS, Federal Judge and National Commissioner of Baseball, got no more than was coming to him in the resolution adopted by the American Bar Association, in convention at Cincinnati:

          “That the conduct of Kenesaw M. Landis in engaging in private enjoyment and accepting private emolument while holding the position of a Federal Judge and receiving a salary from the Federal Government meets without unqualified condemnation as conduct unworthy of the office of a Judge, derogatory to the dignity of the bench and undermining public confidence in the independence of the judiciary.”

          It may be true that Americans have not the awe and reverence of Englishmen for the bench.  Nevertheless, the average American has not had to be a Judge or lawyer to feel shocked at the spectacle of a man getting $7,500 a year as a Federal Judge and at the same time collecting a salary of $42,500 for his service as a super-umpire of baseball.

          Friends of Judge Landis are indignant that the Bar Association passed its resolution without according him a proper hearing.

          How could a hundred hearings alter the plain unseemly fact?

Editor’s Note:  Landis was both a federal judge and the baseball commissioner.  This, from Wiki:

Criticism of Landis having both the judicial and baseball positions began almost as soon as his baseball appointment was announced in November 1920. On February 2, 1921, lame duck Congressman Benjamin F. Welty (Democrat-Ohio) offered a resolution calling for Landis's impeachment. On February 11, Attorney General A. Mitchell Palmer opined that there was no legal impediment to Landis holding both jobs.  On February 14, the House Judiciary Committee voted 24–1 to investigate Landis. Reed Landis later stated, "[n]one of the other congressmen wanted Father impeached but they did want him to come down and defend himself because they knew what a show it would be.”

Although Welty's departure from office on March 4, 1921, began a lull in criticism of Landis, in April, the judge made a controversial decision in the case of Francis J. Carey, a 19-year-old bank teller, who had pleaded guilty to embezzling $96,500. Carey, the sole support of his widowed mother and unmarried sisters, gained Landis's sympathy. He accused the bank of underpaying Carey, and sent the youth home with his mother. Two members of the Senate objected to Landis's actions, and the New York Post compared Carey with Les Misérables's Jean Valjean, noting "[b]etween a loaf of bread [Valjean was incarcerated for stealing one] and $96,500 there is a difference.”  A bill barring outside employment by federal judges had been introduced by Landis's foes, but had expired with the end of the congressional session in March; his opponents tried again in July, and the bill failed in the Senate on a tie vote. On September 1, 1921, the American Bar Association, a trade group of lawyers, passed a resolution of censure against Landis,

By the end of 1921, the controversy was dying down, and Landis felt that he could resign without looking pressured. On February 18, 1922, he announced his resignation as judge effective March 1, stating, "There are not enough hours in the day for all these activities". In his final case, he fined two theatre owners for evading the federal amusement tax. One owner had refused to make restitution before sentencing; he was fined $5,000. The owner who had tried to make his shortfall good was fined one cent,

 

Storm’s SIU Examen:

Hi everyone:

Five interesting cases for you this week:

  • Alleged product manufacturer’s motion for summary judgment on product identification grounds dismissed in subrogation action.

  • When medical service provider failed to appear for the requested EUO, insurer had the right to deny all claims retroactively to the date of loss, regardless of whether the denials were timely issued. 

  • In continuing its investigation for one year beyond the expiration of the one-year contractual suit limitation condition without a reservation of rights, a question of fact existed whether the insurer lulled the insured into a false belief that the condition would not be enforced. 

  • Summary judgment for no-fault insurer where service provider failed to appear for EUO 4 times.  The fact that one of the EUO transcripts recorded an incorrect time was an obvious error and insignificant to raise a triable issue of fact.

This week’s encouraging word -- “Opportunity is missed by most people because it is dressed in overalls and looks like work.” ~ Thomas Edison

If we are not yet friends on LinkedIn, connect with me!

Talk to you in two weeks,

Scott
Scott D. Storm

[email protected]

 

Back to School Sale:

Star-Gazette
Elmira, New York
03 Sep 1921

TAKE YOUR CHILDREN TO
Rorick’s

Sunday or Labor Day For One More Picnic
Before School Starts.

Dancing Every Evening
—And—
Labor Day Afternoon

 

Heintzman’s Hideout:

All,

These past few weeks I’ve taken to reading at Buffalo’s lovely Outer Harbor. I’ve been on a Stephen King phase. I just finished Pet Sematary [sic.], which is ostensibly a spooky story about a graveyard that brings pets (and more) back from the dead, but it is more concerned with addressing how us humans deal with grief and the length we’ll go to avoid it. Now I’m reading The Stand, a story about the struggle for survival in a world decimated by, yes, a pandemic. I started reading this one in February 2020 and put it down for obvious reasons. 

Two cases this week. The Civil Court of the City of New York makes short work of a Plaintiff’s halfhearted attempt to justify its failure to appear for an EUO, and the Supreme Court of Suffolk County denies a declaratory judgment action for two medical offices seeking coverage for COVID-19 related losses.

Nick
Nicholas J. Heintzman

[email protected]

 

Another Sale, and What a Price?

The Topeka Daily Capital
Topeka, Kansas
03 Sep 2021

School Starts Tuesday

Have the Boy Ready

Bring Him Here Today

Boys’
All Wool Suits
2 Pairs Pants
$6.45

DIMENT & KLEIN
CLOTHING CO.
CLOTHES THAT FIT
602 Kansas Avenue

 

North of the Border: 

Cooler weather and rain substantially calmed the wildfires in British Columbia. With the highways no longer threatened, we loaded our new hybrid Jeep and drove to the west coast of Vancouver Island for a week of R&R. The first holiday since “the before times.” We found the Pacific Ocean and a little bit of heaven. Blue sky, surf, sand and sunshine. Hiking and kayaking. Kayaking and hiking. Followed by excellent seafood cooked to perfection. It all ends on Sunday when we trek back to our lives.

No new coverage decisions were released north of the border in the last two weeks.  We will see what the courts are up to at next issue.

Cheers.

Heather
Heather Sanderson

[email protected]

 

Headlines from this week’s issue, attached:

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

  • Life Insurance Proceeds Go to Siblings, Not Girlfriend, when Girlfriend’s Complaint is Stricken for Failing to Participate in Discovery

  • Since the Petitioner Identified the Owner and Insurer of the Vehicle, He Claimed Injured Him, He Cannot Proceed with an Uninsured Motorist Proceeding against MVAIC until He Exhausts that Claim

     

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

  • Plaintiff’s Attempts to Subrogate Losses of Another Does Not Present an Adequate “Injury in Fact”

 

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

  • Defendant’s Reliance on Biomechanical Expert as to Causation was Misplaced as Biomechanical Expert must also be Medical Doctor in Order to Opine as to Causation

     

WILEWICZ’S WIDE WORLD OF COVERAGE
Agnes A. Wilewicz

[email protected]

  • Out on the golf course.

 

BARNAS ON BAD FAITH
Brian D. Barnas

[email protected]

  • Bad Faith Plaintiffs Could Obtain Discovery and Depose Monitoring Counsel for the Insurer Regarding his Involvement in the Underlying Action

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

  • No Coverage For “Negligent” Assault and Battery

     

BUCCI ON “B”
Diane L. Bucci
[email protected]

  • Distribution of Material in Violation of Statutes Exclusion Precludes Cover for FDCPA Liability

  • A Trademark Can Constitute a Slogan

  • Noise is Not an Oral or Written Publication

     

OFF THE MARK
Brian F. Mark
[email protected]

  • On vacation.  Check back in two weeks.

     

BORON’S BENCHMARKS
Eric T. Boron

[email protected]

  • Reversal of State Court of Appeal; Insurer Termination of Lapsed Life Insurance Policy Ineffective Because Insurer Failed to Comply with Newly Codified Statutory Consumer Protections Against Termination

     

RYAN’S CAPITAL ROUNDUP
Ryan P. Maxwell

[email protected]

  • Pending Senate Approval, Former Economic Advisor to President Obama Will Become New York’s Top Financial Regulator

     

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

[email protected]

  • Coverage Under a Policy’s Business Income and Extra Expense and Civil Authority Coverages Requires Physical Loss to the Insured’s Property

     

RAUH’S RAMBLINGS
Patricia A. Rauh

[email protected]

  • Defendant is Not Vicariously Liable for Representations Made by Non-Party Insurance Broker; Defendant Did Not Breach the Contract; Fraud Claims Time-Barred Under Florida Statute

 

ruMIRNAtions
Mirna. M. Santiago

[email protected]

  • What the Department of Financial Services is doing to address some of the inequities in lending based on sexual orientation.

     

STORM’S SIU EXAMEN
Scott D. Storm

[email protected]

  • Alleged Product Manufacturer’s Motion for Summary Judgment on Product Identification Grounds Dismissed in Subrogation Action

  • When Medical Service Provider Failed to Appear for the Requested EUO, Insurer had the Right to Deny all Claims Retroactively to the Date of Loss, Regardless of Whether the Denials were Timely Issued

  • In Continuing its Investigation for One Year Beyond the Expiration of the One-Year Contractual Suit Limitation Condition Without a Reservation of Rights, a Question of Fact Existed Whether the Insurer Lulled the Insured into a False Belief that the Condition Would not be Enforced

  • 3rd Circuit Ruled that Three District Courts Erred in Weighing Factors Relevant to the Exercise of Discretion under the Declaratory Judgment Act and Returning the Diversity Cases Back to State Court.  The 3rd Circuit Remanded the Decisions for Renewed Consideration of all Relevant Reifer Factors

  • Summary Judgment for No-Fault Insurer where Service Provider Failed to Appear for EUO 4 Times.  The Fact that One of the EUO Transcripts Recorded an Incorrect Time was an Obvious Error and Insignificant to Raise a Triable Issue of Fact

     

HEINTZMAN’S HIDEOUT
Nicholas J. Heintzman

[email protected]

  • Court Holds that Plaintiff’s Untimely Letter Objecting to Defendant’s Proposed EUOs did not Justify Plaintiff’s Failure to Appear for said EUOs

     

NORTH OF THE BORDER
Heather Sanderson

[email protected]

  • No decisions for this issue.

 

 

That’s all we have for this issue.

To our Canadian friends, a happy Labour Day and to our US subscribers, Happy Labor Day.  Enjoy the weekend.

Hug your family and friends.  Too many people are suffering, here, there and everywhere.

Dan

 

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

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


NEWSLETTER EDITOR
Dan D. Kohane

[email protected]

ASSOCIATE EDITOR
Agnes A. Wilewicz

[email protected]

ASSISTANT EDITOR
Patricia A. Rauh

[email protected]

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

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

Michael F. Perley
Agnieszka A. Wilewicz
Lee S. Siegel
Brian F. Mark
Diane L. Bucci
Mirna Martinez Santiago
Scott D. Storm
Thomas Casella
Brian D. Barnas
Eric T. Boron
Ryan P. Maxwell
Charles J. Englert
Patricia A. Rauh
Nicholas J. Heintzman
Diane F. Bosse
Joel R. Appelbaum

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

Michael F. Perley
Scott D. Storm
Eric T. Boron
Brian D. Barnas

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

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

Mirna Martinez Santiago
Diane F. Bosse

 

Topical Index

Kohane’s Coverage Corner

Peiper on Property and Potpourri
Dishing out Serious Injury Threshold

Wilewicz’s Wide World of Coverage

Barnas on Bad Faith

Lee’s Connecticut Chronicles

Off the Mark

Boron’s Benchmarks

Bucci on “B”

Ryan’s Capital Roundup

CJ on CVA and USDC(NY)

Rauh’s Ramblings

ruMIRNAtions

Storm’s SIU Examen

Heintzman’s Hideout

North of the Border

 

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

09/01/21       Kuang v. MetLife
Appellate Division, Second Department
Life Insurance Proceeds Go to Siblings, Not Girlfriend, when Girlfriend’s Complaint is Stricken for Failing to Participate in Discovery

In 2004, Yang (“decedent”) obtained a life insurance policy from Metropolitan Life Insurance Company (hereinafter Metropolitan). The decedent designated his then-girlfriend, Kuang as a 50% beneficiary, and his siblings, the “Yangs” 25% beneficiary.

During the decedent's lifetime, Metropolitan received forms purportedly signed by the decedent, changing the beneficiary designation solely to the Kuang and giving her ownership of the policy. Before he died, the decedent sent an affidavit to Metropolitan, attesting that he never authorized any modifications to his policy, and he also testified under oath that he did not authorize the changes to the policy and his intent was that the Yangs receive the entire proceeds of the policy.

After the decedent's death, Kuang, the girlfriend, commenced this action against Metropolitan to recover the proceeds of the policy. Metropolitan interposed counterclaims against the plaintiff and the Yangs, who were named as additional counterclaim defendants. The Yangs asserted "cross claims" against the Kuang, alleging that she had fraudulently changed the policy's beneficiary and owner to herself, and sought, inter alia, a judgment declaring that they are entitled to the full proceeds of the decedent's life insurance policy and that the plaintiff had no rights to the policy or proceeds, and directing payment of the full policy proceeds to them.

The plaintiff failed to answer the cross claims, and the Supreme Court subsequently granted the Yangs' motion for leave to enter a default judgment against the plaintiff on their cross claims.

Discovery in the action could not proceed because of the plaintiff's willful and contumacious conduct in trying to frustrate the discovery process. As a result of the plaintiff's conduct, the Supreme Court, granted that branch of the Yangs' motion which was to strike the complaint to the extent of precluding the plaintiff from offering testimony at trial. On a prior appeal, this Court modified the order entered July 13, 2016, by granting that branch of the Yangs' motion which was to strike the plaintiff's complaint in its entirely.

The Yangs then moved to have the proceeds of the subject policy, which were on deposit with the Supreme Court, distributed to them. That was granted and Kuang appealed.

Since her complaint had been stricken, Kuang, the girlfriend, cannot proceed with the appeal.

 

08/26/21       Graves v. MVAIC
Appellate Division, Fourth Department
Since the Petitioner Identified the Owner and Insurer of the Vehicle, He Claimed Injured Him, He Cannot Proceed with an Uninsured Motorist Proceeding against MVAIC until He Exhausts that Claim

Graves alleged he was the victim of a hit-and-run accident and sought to proceed with an action against the Motor Vehicle Accident Indemnification Corporation (MVAIC).  MVAIC opposed the application arguing that Graves

failed to meet his burden of demonstrating that "the accident was one in which the identity of the owner and operator was unknown or not readily ascertainable through reasonable efforts"

In support of his application, Graves submitted photographs of the white van that he believed to have run over his foot, one of which clearly depicts the license plate number, as well as correspondence from MVAIC and respondent State Farm Insurance Company identifying the owner and presumed operator of the van by name and policy number. Having done so, he has to exhaust his remedies against the other driver before filing a claim with MVAIC.  Only if such an action ultimately fails due to lack of proof of the identity of the owner or operator may the court grant leave to proceed with an action against MVAIC.

 

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

08/26/21       CHS, Inc. v. Land O’Lakes Purina Feed, LLC
Appellate Division, Fourth Department
Plaintiff’s Attempts to Subrogate Losses of Another Does Not Present an Adequate “Injury in Fact”

CHS is the owner of a certain warehouse which was damaged by a fire loss.  Part of its claim included loss of bulk fertilizer it stored at the warehouse.  In addition, plaintiff’s warehouse also provided storage for additional quantities of fertilizer owned by Mosaic.  Plaintiff moved to amend its Complaint to add Mosaic as an additional plaintiff, and defendant cross-moved for summary judgment.  Defendant argued that plaintiff had no standing to add Mosaic, or sue for its own losses, because each claim had been paid by plaintiff’s insurer. 

Although plaintiff withdrew its motion to compel, the trial court still denied the motion based upon the admissibility of evidence defendant submitted in support of its motion.  On appeal, the Appellate Division reversed by noting that the trial court should not have commented on admissibility of evidence where no claim objection was raised by the opposing party. 

Turning to the merits, the Court noted that a party does not have standing to pursue a claim where they have suffered no “injury in fact.” Here, plaintiff could not establish that it suffered any loss with respect to Mosaic’s destroyed fertilizer.  It had no direct ownership interest, and any losses it may have paid to Mosaic were reimbursed by its own insurer.

The court noted that plaintiff could have obtained a subrogation receipt from Mosaic which might have provided a basis for standing.  Likewise, principals of equitable subrogation were also inapplicable because, although plaintiff could sue in its own name to recover for its insurer, it could not bring the claims of another on behalf of its mutual insurer. 

 

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

08/26/21       Robert Jeffery v. Queen City Foods, LLC
Appellate Division, Fourth Department
Defendant’s Reliance on Biomechanical Expert as to Causation was Misplaced as Biomechanical Expert must also be Medical Doctor in Order to Opine as to Causation

This appeal was from an order of the Supreme Court, Erie County (Joseph R. Glownia, J.), entered July 31, 2020, which granted the motion of plaintiff for summary judgment on the issues of negligence, proximate cause and serious injury and denied the cross motion of defendants for summary judgment. The Defendant appeals from the judgment.

Plaintiff commenced this action seeking damages for injuries that he sustained when the vehicle he was operating was rear-ended by a vehicle operated by defendant Maria Farinacci, an employee of defendant Queen City Foods, LLC. Plaintiff alleged, inter alia, that he sustained a serious injury to his shoulder under the permanent consequential limitation of use and significant limitation of use categories set forth in Insurance Law § 5102 (d). Plaintiff thereafter moved for partial summary judgment on the issues of negligence, proximate cause, and serious injury, and defendants cross-moved for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury. Defendants appeal from an order that granted plaintiff's motion and denied defendants' cross motion.

Initially, the appellate Court noted that, inasmuch as defendants do not challenge that part of the order granting plaintiff's motion with respect to the issue of negligence, they have abandoned any contention with respect thereto.

With regard to the lower Court decision, the Appellate Court noted that even though Supreme Court granted plaintiff's motion with respect to the issue of serious injury, it failed to specify under which category of serious injury plaintiff is entitled to recover. This case involved a competing summary judgment motion and cross motion, and the court chose not to write. This is an unacceptable practice. To maximize effective appellate review, we must remind our colleagues in the trial courts to provide their reasoning instead of simply issuing orders.

With respect to the merits, the appellate Court concluded that, contrary to defendants' contention, the court properly denied the cross motion and granted the motion with respect to the issues of serious injury and proximate cause. It was noted that the defendants do not contest that plaintiff established as a matter of law that he sustained a serious injury to his shoulder under the categories of permanent consequential limitation of use and significant limitation of use. Instead, defendants contend only that the alleged shoulder injury was not caused by the accident. To support that argument, defendants relied exclusively on the expert opinion of a biomechanical expert. It is well settled, however, that biomechanical experts are not qualified to render opinions regarding injury causation. As such, defendant’s reliance on a biomedical expert is misplaced as case law can only identify causation when the biomechanical expert is also a medical doctor. Putting aside the opinion of plaintiff's biomechanical expert, as we must, there is no conflict between the remaining physicians that the accident caused the shoulder injury.

As such, the Appellate Court Order was unanimously affirmed without costs.

 

WILEWICZ’S WIDE WORLD of COVERAGE
Agnes A. Wilewicz

[email protected]

Out on the golf course.

 

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

08/31/21       State ex rel. Kilroy Was Here, LLC v. Moriarty
Missouri Court of Appeals, Eastern District
Bad Faith Plaintiffs Could Obtain Discovery and Depose Monitoring Counsel for the Insurer Regarding his Involvement in the Underlying Action

On April 28, 2012, a large tent installed by Kilroy for its bar patrons near Busch Stadium came unmoored during a storm killing one and severely injuring seven others.  The victims filed a petition for damages alleging Kilroy was negligent in the setup and maintenance of the tent.  The victims offered to settle all claims against Kilroy and its insurer, Starr, for $720,100.  Two days later, Kilroy demanded that Starr settle the claims for the amount of the demand, which was within the $1 million policy limits.  Kilroy advised Starr that failure to due so would expose Starr to liability for bad faith failure to settle.

Starr retained an attorney, Keith Phoenix, to advise Starr with respect to its potential bad faith liability.  Starr, through Phoenix, rejected the settlement demand and made a counter-offer of $250,000.  No settlement was ultimately reached, although Phoenix made multiple attempts to settle the case during the course of the litigation.  Phoenix also became involved in the factual and legal issues in the underlying action.  Phoenix was referred to as monitoring counsel, and he conducted legal research, reviewed motion papers, and was involved in discussions regarding trial preparation and submissions.

The case was tried by a jury in St. Louis.  On March 14, 2016, a verdict was rendered against Kilroy for $5.2 million.  The verdict was subsequently reduced to $3.4 million.  Kilroy assigned its bad faith claim against Starr to the underlying plaintiffs in exchange for an agreement not to execute the judgment against Kilroy’s assets.

During the subsequent bad faith action, the plaintiffs sought Phoenix’s entire file related to the Kilroy litigation and sought to take his deposition.  Starr objected and moved to quash the subpoena based on lack of relevance and the attorney-client privilege.

The court concluded that the documents and testimony sought may be discoverable to the extent: (1) Phoenix acted outside the scope of his representation of Starr which was purportedly to assess Starr's exposure for its alleged bad faith refusal to settle; (2) Phoenix acted as de facto co-counsel in Kilroy's defense to the underlying wrongful death and personal injury suit; (3) Phoenix participated in claims adjustment activities or acted as a claims adjuster; and (4) that any other exception to the attorney-client privilege applies such as communications made in the presence of a third party.

The court observed that Phoenix appeared to imbed himself as co-counsel in Kilroy’s defense of the underlying lawsuit.  Phoenix extended settlement offers, attended motion hearings, provided legal research and local rule information to lead counsel, participated in witness preparation, reviewed motions prior to filing, negotiated settlement with opposing counsel, and reviewed jury instructions. While Phoenix was retained as bad faith counsel for Starr, he also acted with Starr's knowledge and favor in Kilroy's legal defense.

The court also observed that, while Phoenix was participating as de facto co-counsel of Kilroy, his undivided loyalty belonged to Starr.  To the extent Phoenix was acting as Kilroy's lawyer, Kilroy should be entitled to the file generated in that connection because the client's files belong to the client, not to the attorney representing the client.  Moreover, Kilroy was entitled to know what Phoenix did on Kilroy's behalf and why.

The case was remanded for document discovery and deposition testimony consistent with the court’s opinion.

 

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

08/24/21       Lift-Up, Inc. v. Colony Ins. Co.
Appellate Court of Connecticut
No Coverage For “Negligent” Assault and Battery

Where injuries arise out of acts constituting an intentional assault and battery, contorted allegations of negligence cannot create a duty to defend. Restating established precedent, the Appellate Court found that when determining the duty to defend, it will not unreasonably distort the meaning of the language of the complaint in order to trigger coverage.

Dennis Kinman, who is confined to a motorized wheelchair, bought a modified van from Lift-Up, which is owned by Bruce Kutner. Kinman was dissatisfied with the work and returned to van numerous times for repairs. On December 3, 2016, Kinman, together with his wife Amy, went to Lift-Up to retrieve the van. While they were there, Kinman and Kutner had an argument that turned physical when Kutner slapped Kinman’s baseball cap from his head. When Kutner saw that Amy was recording the altercation on her cell phone, he grabbed the phone from her and threatened in crude terms to break it. Kinman moved his wheelchair toward Kutner to retrieve the cell phone. As Kinman moved toward Kutner, Kutner grabbed Kinman's arm and the wheelchair, causing Kinman to fall and sustain serious injuries.

The Kinmans sued Lift-Up. Count one of the Complaint, which purported to assert a negligence claim against Lift-Up, alleged that Kinman attempted to pick up the vehicle at least five times between October 16 and December 3, 2016. Each time Kinman drove the vehicle, he discovered that several modifications had not been completed properly and that the vehicle was not safe for him to operate. When Kinman returned the vehicle to Lift-Up, Kutner “often became enraged with [Kinman] and threatened to cancel the modification contract.” On December 3, 2016, the Kinmans attempted to pick up the vehicle. Shortly after they arrived, “a verbal argument between [Kutner] and [Kinman] began .... [Kutner] ... escalated the verbal dispute into a physical one by slapping [Kinman's] baseball cap off his head. [Amy] Kinman was recording the altercation with her [cell] phone and ... [Kutner] grabbed the cell phone away from her and threatened to ‘break this fucking thing right now.’” Kinman “attempted to retrieve [Amy’s] cell phone ... and ... moved his wheelchair in [Kutner's] direction,” and “[Kutner] ... grabb[ed] Kinman] and his wheelchair and mov[ed] it to the side.” In “moving or pushing [Kinman] and his wheelchair,” Kutner caused Kinman to fall from his wheelchair and sustain bodily injuries.

While the suit was pending, Kutner executed an affidavit in the related criminal proceeding, attesting that he did not expect or intend to harm Kinman when he diverted the path of Kinman's wheelchair. Colony at first issued a reservation of rights but ultimately denied a defense and indemnity, claiming that the complaint alleged injuries arising from an excluded assault and battery and that the injuries did not result from garage operations. Kutner settled with the Kinmans for $850,000 in compensatory damages and $175,000 in exemplary damages. Kutner agreed to pay the exemplary damages and assigned his company’s rights under the Colony policy to the Kinmans to go after the compensatory damage stipulated judgment.

The trial court found for Colony, holding that Kutner's conduct was “clearly aggressive and uncontrolled behavior [that] sounds more in intentional conduct than negligence. The starting point of ‘slapping the baseball cap off [Kinman's] head’ is, at best, an attempted assault if Kutner only struck the cap, and at worst, an assault and battery by the definitions in the ... policy ....” Applying the policy language to the facts of the operative complaint in the personal injury action, the court found that, notwithstanding the titles assigned to counts one and two (i.e. negligence), each count alleged facts amounting to an assault, a battery, or an assault and battery, and were therefore barred under the policy's unambiguous exclusions provision.

On appeal, the Kinmans claimed that the trial court erred in holding that the policy's exclusions provision pertaining to an assault or battery apply to their claims and that there was no coverage under the policy because Kinman's injuries were not caused by an “accident” that resulted from “garage operations.” They argue that the operative complaint in the personal injury action alleged that Kinman's injuries arose solely out of a business dispute between the parties and were the result of an “accident.” They argue that the court erroneously failed to focus exclusively on the very specific and discrete acts that were alleged to be the proximate cause of Kinman's injuries, i.e., Kutner's allegedly unintentional and “careless” use of force in diverting Kinman's wheelchair as it moved toward him.

The Court of Appeals was unpersuaded. “We conclude that the Kinmans’ claim falls within the policy's exclusion for bodily injuries arising out of an assault or battery. We agree with the trial court that Kutner's “slapping the baseball cap off [Kinman's] head is, at best, an attempted assault if Kutner only struck the cap, and at worst, an assault and battery by the definitions in the ... policy ....” Kutner, the court went on to conclude, also committed an assault, battery and/or assault and battery when he intentionally grabbed Amy Kinman's cell phone from her and threatened in crude terms to break it. Those acts constituted “actual harmful or offensive contact” and “verbal abuse” between Kutner and Amy Kinman. Significantly, the injuries arose out of those acts, even if the court accepted the Kinmans’ claim that the complaint must be read to allege that (a) Kutner did not intend to harm Kinman when he engaged in the discrete act of grabbing Kinman and his wheelchair and that the discrete acts that proximately caused Kinman's injuries were unintentional and do not meet the elements of a common-law negligent assault or battery under Connecticut law.

In reaching this conclusion, the Court gave broad meaning to the common insurance phrase “arising out of”. The Court held that the injuries need not be the proximate cause of an assault or battery but instead it is sufficient to show only that the accident or injury ‘was connected with,’ ‘had its origins in,’ ‘grew out of,’ ‘flowed from,’ or ‘was incident to” the assault or battery. “While the Kinmans claim that Kutner acted negligently when he grabbed Kinman and the wheelchair and that those negligent acts proximately caused Kinman's injuries, those acts and Kinman's injuries nevertheless arose out of Kutner's instigating intentional acts of slapping the baseball cap off Kinman's head and grabbing Amy Kinman's cell phone and threatening to break it. Kinman's injuries, therefore, “grew out of,” “flowed from,” “had [their] *875 origins in” and “[were] connected with” Kutner's intentional acts; (internal quotation marks omitted) id.; which by themselves, constituted an “[a]ssault,” “[b]attery” or “[a]ssault and [b]attery” within the meaning of the policy. In this respect, the intentional conduct was “tied inextricably by the language of the complaint to assault and battery.”

The Court of Appeals was also dismissive of the Kinmans’ reliance on Kutner’s affidavit. “The essential conduct described in each of the documents [affidavit, claim file, and others extrinsic evidence] is similar to that alleged in the complaint.”

 

BUCCI on “B”
Diane L. Bucci

[email protected]

08/25/21       Rodenburg LLP v. Certain Underwriters at Lloyd's of London
Eighth Circuit
Distribution of Material in Violation of Statutes Exclusion Precludes Cover for FDCPA Liability

Rodenburg, a law firm specializing in debt collection, sought to enforce a judgment against one Charlene Williams, who had previously advised Rodenburg that he was pursuing the wrong person.  This did not stop Rodenburg from pursuing remedies against her.  In the end, Rodenburg had the right name, but the wrong Charlene Williams.  In the lawsuit that followed, Williams alleged that Rodenburg:

Communicat[ed] to Williams's employer about the debt, garnish[ed] her wages without legal authority, and willfully continuing to collect the debt after having been told about its potential mistake…Williams also alleged that Rodenburg had converted her wages and that its actions caused her to suffer emotional distress, humiliation, and temporary interference with the use and enjoyment of her property.

Id. at *1.

According to the court, the personal and advertising offenses of defamation, malicious prosecution, and publication of information in violation of privacy were pled, and were arguably the result of an occurrence, apparently a requirement in this case.  Consequently, the insured carried its burden of establishing personal and advertising injury sufficient to trigger the duty to defend.   

Having so held, the court examined the policy’s Violation of Statutes Exclusion, which precluded coverage for:

8. Distribution of Material in Violation of Statutes

Any liability arising directly or indirectly out of any action or omission that violates or is alleged to violate:

(a) The Telephone Consumer Protection Act (TCPA), ... ;

(b) The CAN-SPAM Act of 2003, ... ; or

(c) Any statute, ordinance or regulation, other than the TCPA or CAN-SPAM Act of 2003, that prohibits or limits the sending, transmitting, communicating or distribution of material or information.

This exclusion, under the catchall in §8 (c), defeated all potentiality of coverage. The court held it was clear and unambiguous, and applied to FDCPA liability.  The Insured argued that even if FDCPA liability was excluded, not all of the allegations fit within the FDCPA. It argued that the insurer could not show that a violation of the FDCPA caused Rodenburg to invade [Williams's] privacy, defame her, or maliciously prosecute her.

The court disagreed, finding that the exclusion was broad and covered, “[a]ny liability arising directly or indirectly out of any action or omission that violates or is alleged to violate” the FDCPA. The court also broadly construed the arising out of language to find it included “originating from,’ or ‘growing out of,’ or ‘flowing from.’ ” The court held that Williams’ complaint did not allege any covered claims that did not originally arise out of violations of the FDCPA.  Id. at *4-5.  The covered offenses of defamation, malicious prosecution and invasion of privacy arose out of the same conduct as that which violated the FDCPA. 

 

08/17/21       AAA Cabinets & Millworks, Inc. v. AMCO Insurance Company
E.D. Wash. Aug. 17, 2021
A Trademark Can Constitute a Slogan

Insureds AAA Cabinets & Millworks Inc. and Timothy Stewart (collectively the “Insureds”) were sued by Kitchen Cabinet Manufacturers Association (“KCMA”), a non-profit quality certification association.   KCMA alleged that the Insured used the KCMA's federally registered certification mark to indicate that the product met certain standards.  The Insureds had rights to use the certification mark through 2006, when the licensing agreement expired. KCMA alleged that the Insureds impermissibly used the mark after 2006 on cabinets made for a particular project, and to advertise and win bids for future projects. 

After Amco denied coverage, the Insureds alleged that the following offenses applied to the KCMA claims:

d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services;...

f. The use of another's advertising idea in your “advertisement”; or

g. Infringing upon another's copyright, trade dress, or slogan in your “advertisement”.

The Policy defines “advertisement” as: “a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters.”

KCMA alleged that the Insureds obtained business by misrepresenting that their cabinets were KCMA certified.  The court found that the underlying complaint alleged in numerous ways that the Insureds were using the mark in advertising, which was directed to specific market segments for the purpose of winning future business. The court also found the requisite connection between the injury and damage based on the use of the mark to earn business, based on allegations that KCMA’s allegations of loss of goodwill and reputation. 

The Insured alleged that the use of the mark, which allegedly caused loss of reputation, constituted product disparagement. Amco argued that the allegations, to the contrary, alleged that the Insureds sought to benefit from using the KCMA marks.  Stated the court:

A claim for product disparagement must allege: (1) a false statement; (2) that impugns the quality or integrity of the plaintiff's goods or services; and (3) special damages in the form of lost profits from the loss of specific sales to a specifically identified purchaser that would have occurred but for that purchaser hearing the false statement and declining to engage in that purchase. (citations omitted).

Without addressing whether KCMA stated a claim for disparagement in the absence of a derogatory statement, the court instead relied on the breadth of the duty to defend, finding that it was possible that KCMA stated a claim for disparagement.

The Insureds also argued that KCMA stated a claim for misappropriation of advertising ideas.  The court agreed that this was at least plausible in part because KCMA knew its mark functioned as an incentive to future customers when used in advertising. 

Finally, the Insureds alleged that KCMA alleged slogan infringement, with the court noting that a slogan is defined as a  “brief attention-getting phrase used in advertising or promotion, or a phrase used repeatedly, as in a promotion.” Id. (citing Hudson Ins. Co. v. Colony Ins. Co., 624 F.3d 1264 (9th Cir. 2010) (applying California law)).  Relying on Hudson, the court held that because the mark was a short attention-grabbing phrase used to promote brand loyalty, it was potentially a slogan.

This led the court to the offense exception for infringement, in your advertisement, of copyright, trade dress or slogan.  Having held that the trademark could constitute a slogan, the court held that it was used in the Insureds’ advertising.  Consequently, there was a duty to defend under this exception. 

Amco also argued that the exclusion for injury arising out of a failure of goods to conform to a statement of quality defeated coverage.  Because the KCMA plaintiff did not inspect the cabinets to determine whether they in fact failed to conform to KCMA standards, this exclusion did not defeat the duty to defend.

Finally Amco argued that the knowledge of falsity exclusions precluded coverage.  The court acknowledged that KCMA’s allegations were of the intentional nature.  Nevertheless, according to the court, if Amco had investigated, it may have uncovered facts that triggered the duty to defend.  In fact, according to the court, the settlement between the Insureds and KCMA stipulated that the Insureds actions were based on mistake. 

Amco also alleged the breach of contract exclusion precluded coverage.  The court first noted that KCMA did not allege a breach of contract.  Moreover, even if the claims constituted one for breach of contract, the found that because the issue was disputed in the underlying action, Amco had a duty to defend until it obtained a declaratory judgment releasing it from it from the duty to defend. 

 

08/24/21       Liberty Corp. Cap. Ltd., v. Palmetto Bluff Shooting Club, LLC, et al
D.S.C.
Noise is Not an Oral or Written Publication

The coverage question in this matter was whether the insurer was obligated to defend Palmetto in an underlying action brought by residents of a Palmetto Bluff residential community.  The residents complained that the operation of a shooting club in the community was a nuisance, nuisance per se.  They also alleged that Palmetto negligently misrepresented facts, and were grossly negligent.

The residents alleged that they purchased their properties on the Bluff with the expectation and understanding of acquiring quiet use and enjoyment of a peaceful, yet uniquely upscale, community.  Later, the Shooting Club began operations and allegedly ruined the quiet use and enjoyment of their respective residences.  They claim the “incessant noise and disturbance from the firing rounds is easily heard from their respective properties, constituted noise disturbance and noise pollution.  They also allege diminution in the value of their residences. 

The court considered whether the noise was the wrongful eviction but found that it was not because the noise had to be committed on behalf of the owner, and Palmetto did not own the Shooting Club.

It also considered whether the noise was oral or written publication, in any manner, of material that violates a person's right of privacy.  However, the court noted that the residents relied upon the initial advertisements of the community as its oral or written publication, but they did not cause the injury.  Also, noise was not in itself an oral or written publication that violated the residents’ right to privacy.

Please reach out if you would like a copy of the decision.

 

OFF the MARK
Brian F. Mark
[email protected]

On vacation.  Check back in two weeks.

 

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

08/30/21       McHugh vs. Protective Life Insurance Company
Supreme Court of California  
Reversal of State Court of Appeal; Insurer Termination of Lapsed Life Insurance Policy Ineffective Because Insurer Failed to Comply with Newly Codified Statutory Consumer Protections Against Termination

Background: In March 2005, Chase Life Insurance Company, predecessor in interest to defendant Protective Life Insurance Company (“Protective Life”), issued a $1 million term life insurance policy to William McHugh. The policy named McHugh's daughter as the designated beneficiary and the daughter’s mother and McHugh's successor in interest as a contingent beneficiary. The policy was for a 60-year term, and it set out a schedule of annual premiums to keep the policy in force. For the first 10 years of the policy, the insurance policy set the annual premium at $310; after that, the premium steadily increased each year. The policy included a provision for a 31-day grace period before the policy could be terminated for the failure to pay the premium. McHugh paid all the yearly premiums through January 2012. That meant his policy was, by its terms, “in force” until February 9, 2013, 31 days after the January 9, 2013 due date for that year's payment. On December 20, 2012, Protective Life sent McHugh a letter reminding him of the January 9 deadline and that nonpayment by February 9 would cause his policy to lapse or terminate. McHugh failed to pay the premium by the due date. Protective Life sent him a second letter on January 29, which stated that it had not received his premium payment for the year and warned that his policy would lapse if he did not make the payment by February 9, the end of the grace period. McHugh again failed to make the payment, and the policy lapsed. On February 18, Protective Life sent McHugh a letter informing him the grace period had expired, but that he could reinstate the policy if it received his payment by March 12, during his lifetime. McHugh did not pay, and Protective Life formally terminated his policy. At some point close to when Protective Life sent its last letter, McHugh suffered a serious fall that left him disabled, caused him continuing physical pain, and required surgery. McHugh passed away in June 2013.  The contingent beneficiary contacted Protective Life to inquire about the status of McHugh's policy and whether a claim could be made. Protective Life advised that the policy had been terminated. Thereafter, the daughter and the daughter’s mother (“plaintiffs”) sued Protective Life for breach of contract and breach of the implied covenant of good faith and fair dealing. Plaintiffs argued that California Insurance Code  sections 10113.71 and 10113.72, which came into effect on January 1, 2013, applied to policies issued before this effective date, and that Protective Life failed to comply with the statutes’ requirements before it terminated McHugh's policy.  At a jury trial, the jury found for Protective Life, based upon the following jury verdict determinations: (1) Protective Life and McHugh entered into an insurance contract; (2) McHugh failed to do all, or substantially all, of what the contract required him to do, but he was excused from doing so; (3) all conditions required for Protective Life's performance occurred and were not excused; (4) Protective Life did something the contract prohibited; but (5) plaintiffs were not harmed by Protective Life's failure.

Plaintiffs appealed, arguing, among other things, that the trial court erred by declining to decide as a matter of law whether Protective Life had complied with Insurance Code sections 10113.71 and 10113.72, and instead permitting the jury to decide that issue. (McHugh v. Protective Life Ins. (2019) 40 Cal.App.5th 1166, 1171, fn. 4, 253 Cal.Rptr.3d 780 (McHugh).)  Protective Life’s appeal further requested the Court of Appeal affirm the judgment on the additional ground that Insurance Code sections 10113.71 and 10113.72 do not apply retroactively to McHugh's policy, and that the trial court had erred as a matter of law when it ruled otherwise in denying the directed verdict motion. (McHugh, at pp. 1170–1171, 253 Cal.Rptr.3d 780.) The Court of Appeal affirmed the judgment in favor of Protective Life on this additional ground. (Id. at p. 1171, 253 Cal.Rptr.3d 780.)

Analysis: The California Supreme Court begins its analysis of the appeal by “surveying the mechanics of life insurance and the broad legal framework governing such policies”.  (Dear reader, if this is all you got to read of the opinion, it would likely lead most of you to correctly guess that the Supreme Court of California was going to thereafter take a number of pages of opinion to explain why it was overruling the Court of Appeal...and you’d be right.)  The in-depth analysis set forth by the California Supreme Court of the history of the treatment of the policy lapse issue by both the courts in California and the state legislature reflects, I think, Supreme Court’s implicit recognition that policy lapse notice cases had been on the rise in California state and federal courts since the state Legislature amended the Insurance Code in 2013, and a number of federal court cases concerning this issue had been stayed, pending the ruling by the Supreme Court of California in this McHugh vs. Protective Life Insurance Company case.

Held: The California Supreme Court concluded that sections 10113.71 and 10113.72 apply to all life insurance policies in force when these two sections went into effect, regardless of when the policies were originally issued. Per Supreme Court, this interpretation fits the provisions’ language, legislative history, and uniform notice scheme, and it protects, according to Supreme Court‘s reasoning, policy owners — including elderly, hospitalized, or incapacitated ones who may be particularly vulnerable to missing a premium payment — from losing coverage, consistent with the provisions’ purpose. As viewed by Supreme Court, this interpretation does not depend on extending deference to the California Department of Insurance staff correspondence or electronic instructions, neither of which represent the agency's official interpretation of sections 10113.71 and 10113.72 nor otherwise reflect the agency's “carefully considered, long-standing, and consistent interpretive viewpoint on the sections”. Accordingly, Supreme Court’s decision reverses the decision of the Court of Appeals, and the case is remanded for further proceedings consistent with Supreme Court’s opinion.

Takeaway: Insurers must be aware of and understand how amendments made by a state’s legislature can impact insurance coverage issues.  Reliance by insurers upon experienced coverage counsel to provide counsel and guidance should be standard operating procedure.  As always, the coverage attorneys at Hurwitz & Fine stand ready to provide such counsel and guidance...whenever you have a “situation”.  

 

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

Regulatory Wrap-Up
08/31/21      
Adrienne Harris Named DFS Superintendent
Department of Financial Services
Pending Senate Approval, Former Economic Advisor to President Obama Will Become New York’s Top Financial Regulator

On Tuesday, Governor Hochul announced that Adrienne Harris has been nominated to lead the New York State Department of Financial Services as its next Superintendent. If confirmed by the Senate, Ms. Harris, who served as a top economic advisor to President Obama, will oversee the banking and insurance industries during New York’s recovery from the COVID-19 pandemic.

Ms. Harris has some impressive credentials, summarized as follows in DFS’ press release:

“Ms. Harris began her career as an Associate at Sullivan and Cromwell LLP in New York City representing a number of U.S. and non-U.S. based corporations in various forms of litigation and regulatory matters, before accepting a position at the United States Department of the Treasury under President Obama. While at the Treasury Department, Ms. Harris served as a Senior Advisor to both Acting Deputy Secretary and Under Secretary for Domestic Finance, Mary Miller, and Deputy Secretary, Sarah Bloom Raskin. As Senior Advisor, Ms. Harris focused on a number of financial policy issue areas which were, and continue to be, critical to the advancement of the national economy. This work ranged from helping jumpstart national financial reform efforts to finding ways to advance fintech, identifying solutions to the student loan crisis, analyzing the nexus between foreign investment and national security, and working to promote financial intelligence and health in communities throughout the country.

Following her time at the Treasury Department, Ms. Harris then joined The White House, where she was appointed as Special Assistant to the President for Economic Policy, as part of the National Economic Council. In this role, Ms. Harris managed the financial services portfolio, which included developing and executing strategies for financial reform and the implementation of Dodd-Frank, while also continuing to advance fintech initiatives, consumer protections for the American public, cybersecurity and housing finance reform priorities.

Since leaving the White House in January 2017, Ms. Harris went on to serve as General Counsel and Chief Business Officer, and presently as Advisor at States Title, Inc. (now DOMA), which provides title insurance and settlement services in a number of state throughout the nation. Ms. Harris also currently serves as a Professor and Faculty Co-Director at the Gerald R. Ford School of Public Policy's Center on Finance, Law and Policy at the University of Michigan, as well as a Senior Advisor at the Brunswick Group in Washington D.C. where she advises multinational corporations on mergers and acquisitions, stakeholder communications and management, future-proofing and policy intelligence.”

 

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

08/31/21       Gammon and Associates Inc. v. National Fire Insurance Company of Hartford
United States District Court, Southern District of New York
Coverage Under a Policy’s Business Income and Extra Expense and Civil Authority Coverages Requires Physical Loss to the Insured’s Property

Plaintiff brought this action against defendant seeking declaratory relief pursuant to 28 U.S.C. § 2201(a), alleging that the losses it sustained because of the COVID-19 pandemic are covered under the Business Income, Extra Expense and Civil Authority policy provisions issued to plaintiff by defendant. Defendant moved to dismiss plaintiff’s complaint arguing that plaintiff failed to plausibly plead that it is entitled to coverage under those provisions.

Plaintiff operates a marketing agency with offices in New York, New York and Burbank, California. Defendant issued a CNA Connect Policy to plaintiff for the period of November 10, 2019 to November 10, 2020 (the “Policy”). The policy provided property coverage as set forth in the Businessowners Special Property Coverage Form (Form SB-146801-I) with its declarations, endorsements, and exclusions. The Business Income and Extra Expense coverage provides in relevant part:

b. We will pay for the actual loss of Business Income you sustain due to the necessary "suspension" of your "operations" during the "period of restoration." The "suspension" must be caused by direct physical loss of or damage to property at the described premises. The loss or damage must be caused by or result from a Covered Cause of Loss.

* * * *

a. Extra Expense means reasonable and necessary expenses you incur during the "period of restoration" that you would not have incurred if there had been no direct physical loss of or damage to property caused by or resulting from a Covered Cause of Loss.

b. We will pay Extra Expense (other than the expense to repair or replace property) to:

  1. Avoid or minimize the "suspension" of business and to continue "operations" at the described premises or at replacement premises or temporary locations, including relocation expenses and costs to equip and operate the replacement premises or temporary locations; or

  2. Minimize the "suspension" of business if you cannot continue "operations."

    The Civil Authority coverage under the Policy provided:

    1. When the Declarations show that you have coverage for Business Income and Extra Expense, you may extend that insurance to apply to the actual loss of Business Income you sustain and reasonable and necessary Extra Expense you incur caused by action of civil authority that prohibits access to the described premises. The civil authority action must be due to direct physical loss of or damage to property at locations, other than described premises, caused by or resulting from a Covered Cause of Loss.

    Plaintiff alleged that Plaintiff alleges that "as a result of COVID-19" and the various executive orders from the governors of both New York and California, it "completely ceased operations and closed its [offices] on March 17, 2020.” Plaintiff asserted that as a result of closing its offices, it incurred a "substantial loss of business income and additional expenses."

    “To survive a motion to dismiss for failure to state a claim a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Ail. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

    Plaintiff argued that it was entitled to Business Income and Extra Expense coverage because COVID-19 "intruded upon the properties" and "caused direct physical loss of and/or damage to the covered premises." The only basis plaintiff could provide for this conclusion was that its offices are In high density buildings, and therefore COVID-19 must be present within them. The court viewed these conclusions as speculative at best. The court went on to opine, that even if plaintiff could prove COVID-19 was present in its offices, to trigger the Business Income and Extra Expense coverage, Plaintiff must suffer a "direct physical loss of or damage to property at the described premises. The court then cited various New York decisions which conclude that direct physical loss means physical damage to property and not merely loss of use.

    Plaintiff then argued that the Civil Authority coverage was triggered but could not sway the court to agree. The court held that a plain reading of the policy at issue clearly required that the civil orders baring plaintiff from entering its property be the result of actual physical damage to property. Accordingly, defendant’s motion to dismiss was granted.

     

RAUH’S RAMBLINGS
Patricia A. Rauh

[email protected]

08/18/21       Austin et al v. Transamerica Life Insurance Company
U.S. District Court, District of Arizona
Defendant is Not Vicariously Liable for Representations Made by Non-Party Insurance Broker; Defendant Did Not Breach the Contract; Fraud Claims Time-Barred Under Florida Statute

On August 1, 2001, plaintiff, Margaret Austin (“Plaintiff”), received a letter from insurance broker Thomas Kaplan (“Mr. Kaplan”) informing her that she was approved to purchase various life insurance policies.  He stated that Transamerica Life Insurance Company (“Defendant”) offered the best program at the most competitive premium, with a death benefit of $300,000 and an ongoing annual premium of $5,000.  The first page of Defendant’s policy stated that the policy is for “adjustable life insurance” and the benefits, values, and interest rates are on a variable basis.

On October 18, 2018, Plaintiff received a letter from Defendant explaining that her annual premium between ages 92 and 100 would be $31,298.  Plaintiff Austin brought claims against the Defendant for breach of contract, declaratory relief, breach of good faith and fair dealing, negligent misrepresentation, fraudulent misrepresentation, fraud by concealment, fraud by omission, and common law fraud based upon a projected increase in premiums.  Plaintiff’s complaint relied solely on the conduct and representations of the insurance broker, Mr. Kaplan.  The Defendant argued that the complaint should be dismissed because Mr. Kaplan was not an agent of the Defendant so the Defendant cannot be vicariously liable for his actions.

The Court reasoned that as a general principle, an insurance broker is an agent of the insured, not the insurer.  However, Florida law (which this Court interpreted in this case), provides that an insurer may be held accountable for the actions of those whom is cloaks with ‘apparent agency’.  Florida Court employ a three prong test to determine the existence of apparent agency: first, whether there was a representation by the principal; second, whether a third-party relied on the representation; and third, whether the third party changed position in reliance upon the representation and suffered detriment.  Further, evidence of agency may be demonstrated if the insurer furnishes an insurance agent or insurance agency with any blank forms, applications, stationary, or other supplies used to solicit, negotiate, or effect insurance contracts.

The Court ruled that the Defendant is not vicariously liable for Mr. Kaplan’s representations.  First, Mr. Kaplan acted as Plaintiff’s broker at the time of contracting because he had informed her that several life insurance carriers had approved her.  Second, the letterhead on that correspondence listed the company that Mr. Kaplan worked for, “Bernstein, Kaplan & Krauss LLC”, and not the name of the Defendant.

In regard to the breach of contract and declaratory relief claims, the Court stated that under Florida law, “when interpreting a contract, a court should give effect to the plain and ordinary meaning of its terms.”  Here, the Plaintiff failed to allege that the policy made a guarantee of $5,000 annual premiums until the insured’s death.  In fact, the policy explicitly stated that the fixed required premiums were only set for the first five years.  The policy also stated that the maximum rate charged annually would more than quadruple for ages 93 to 100 in order to sustain the policy.  Accordingly, the Court found that the Plaintiff had failed to identify any contractual provisions stating that the annual premiums would never increase – instead, the terms of the policy were clear that the premiums would be variable.  Also, in regard to the breach of contract claim, the Court agreed with the Defendant that the claim is not ripe – the plaintiff is still alive and the Defendant has not denied any claim, so there has not been any breach.

In regard to the breach of the implied duty of good faith and fair dealing claim, the Court held that Plaintiff had failed to effectively dispute the Defendant’s arguments and therefore conceded the bad faith claim was not viable.  Under Florida law, the implied covenant of good faith and fair dealing is part of every contract.  However, breach of the implied covenant of good faith and fair dealing cannot be maintained in the absence of breach of an express contract provision.  As noted above, the Court found that the express terms of the policy dictated that the contract’s premiums are adjustable and at no point were they described as fixed annual premiums.  The administration of the contract’s express terms cannot, as a matter of law, result in bad faith.

Finally, in regard to the negligent misrepresentation, fraudulent misrepresentation, fraud by concealment, fraud by omission, and common law fraud claims, the Court found that all the fraud claims were time-barred pursuant to Florida’s “fraud statute of repose.”  Pursuant to this statute, fraud claims must begin within 12 years after the date of the commission of the alleged fraud, regardless of the date the fraud was or should have been discovered.  Here, all the fraud claims stem from the alleged false representations made by Mr. Kaplan on or before August 1, 2001, but the complaint in this action was not filed until 18 years later, on March 26, 2019.

 

ruMIRNAtions
Mirna M. Santiago
[email protected]

New York’s Fair Lending Law (Executive Law Section 296-a) prohibits discrimination in the granting, withholding, extending or renewing or the fixing of the rates, terms or conditions of any form of credit on the basis of sexual orientation. Risk-based factors may be considered, albeit they may not be based on protected classifications.

In recent years (2016, 2017 and 2018), the Department of Financial Services conducted an analysis and found significant disparities in approvals and denials and the terms of credit between same-sex and opposite-sex couples in mortgage lending. Of note, same-sex couples were denied mortgage loans at higher rates than opposite-sex couples. In addition, when approved, same-sex couples received 9-17 points higher average annual percentage rates than opposite-sex couples. https://www.dfs.ny.gov/industry_guidance/industry_letters/il20210831_preventing_sexual_orientation_discrimination

To help remedy some of these inequities, the Department provides the following guidance to lenders:

  1. Vest the Board of Directors and senior management with responsibility for developing a fair lending plan and ensuring that the Mortgage Lender’s practices comply with the plan’s provisions.
  2. Monitor implementation of the fair lending plan and adherence to the plan’s policies and procedures, continually addressing application and underwriting processes as well as pricing policies.
  3. Implement a training program for new hires, current employees and management. At least semi-annually, provide lending personnel updates on fair lending issues. Compliance personnel should administer and conduct the training program, and participants should certify that they understand and commit to upholding the principles of fair lending laws and the policies and procedures contained in the fair lending plan.
  4. Ensure automatic and timely review by a higher-level supervisor of all rejected or withdrawn applications for loans from same-sex pairs who indicated that they would live together in the mortgaged property.
  5. Extend, in writing, the principles of the fair lending plan to the Mortgage Lender’s refinancing and collection practices.
  6. Periodically review and update the fair lending compliance program and fair lending plan, including periodic review by senior management, to ensure that they remain current.
     

With respect to compliance, mortgage lenders should:

  1. Update policies and procedures to address sexual orientation anti-discrimination efforts.
  2. Utilize rate sheets and exception logs to document applications from same-sex pairs who indicated that they would live together in the mortgaged property that are denied for any reason other than a failure to meet the institution’s written underwriting standards. Likewise, document approved loans for which same-sex pair applicants who indicated that they would live together in the mortgaged property receive credit terms less favorable than the applicable rate sheets would otherwise determine.
  3. Monitor loan portfolio for compliance with fair lending policies and procedures. Depending on the size and complexity of the lender, this may require conducting regular statistical and regression analyses of loan data. As part of this analysis, the Mortgage Lender should consider identifying those loan applications from, and loans made to, same-sex pairs who indicated that they would live together in the mortgaged property, and distinguishing such applications and loans from those applications from, and loans made to, same-sex pairs who do not consist of two individuals who indicated that they would live together in the mortgaged property (such as loans involving a co-signer not intending to occupy the mortgage property, or individuals planning to use the property as an investment rather than as a personal residence).
  4. Regularly assess marketing and advertising strategies to ensure compliance with the principles and provisions of fair lending laws and the fair lending plan, especially in relation to discrimination on the basis of sexual orientation.
  5. Investigate and attempt to identify the causes of any unexplained disparities in underwriting and pricing between same-sex and opposite-sex pairs who indicated that they would live together in the mortgaged property.

Id.

In sum. Lenders will be tasked with undertaking a proactive approach to recognizing and rectifying inequities in their business. Failure to do so may result in greater oversight by the Department. I also wonder whether this could give rise to suits by same-sex couples. Stay tuned for more developments in this area.

 

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

08/18/21       State Farm Fire & Casualty Co., a/s/o Donald Himlin v. Twin Star Home
United States District Court, E.D. Pennsylvania
Alleged Product Manufacturer’s Motion for Summary Judgment on Product Identification Grounds Dismissed in Subrogation Action

State Farm brought this product liability suit against Twin Star alleging a defective electric stove heater designed manufactured and sold by Twin Star that caused a fire at Himlin's home. Twin Star moved for summary judgment on product identification grounds which was denied.

Himlin purchased the heater at a garage sale and did not retain the box or owner's manual.  After the fire Himlin performed a Google image search and identified the heater as a DuraFlame unit. 

Plaintiff's expert concluded that the heater was very similar to a DuraFlame DFS-450-2, manufactured by Twin Star based upon the back plate, the blower and heater assembly, and the overtemperature devices which all matched.  Defendant's expert concluded that it was not a DuraFlame product alleging that the heater did not bear an aluminum DuraFlame emblem; and contained different electrical components and wiring than an exemplar DuraFlame unit. 

State Farm brings claims for negligence, strict liability, and breach of warranty. Central to all three claims is product identification. A plaintiff must establish, as a threshold matter, that his or her injuries were caused by a product of the particular manufacturer or supplier. 

Twin Star requests summary judgment because Plaintiff has failed to adequately identify the product at issue as having been manufactured by Twin Star.  However, State Farm maintained that it has marshaled a host of colorable evidence showing the subject heater to be in many ways similar to a DuraFlame product manufactured by Defendant. 

Despite the absence of "airtight" proof concerning product identification, there was more than colorable evidence linking defendant.  While not conclusive, this evidence was enough to raise a significant question of fact and preclude the entry of summary judgment.  Himlin identified his heater as a DuraFlame unit in written discovery. And his expert identified several similarities between the subject heater and a DuraFlame.  At its core, this case presented a battle of the experts which typically precludes the granting of a motion for summary judgment. Twin Star may disagree with Himlin's expert and is certainly entitled to challenge the quality of Himlin's evidence. But any issues of credibility and weight of the evidence are properly reserved for the trier of fact.  A reasonable jury could find that Twin Star manufactured the subject heater.

 

05/11/21       Unitrin Advantage Ins. Co. v. Dowd, M.D.
Appellate Division of the Supreme Court of New York, First Department
When Medical Service Provider Failed to Appear for the Requested EUO, Insurer had the Right to Deny all Claims Retroactively to the Date of Loss, Regardless of Whether the Denials were Timely Issued

1st Dept. reversed the decision of the lower court which had granted the defendant's motion for summary judgment on his claim for no-fault insurance benefits, granting plaintiff's cross motion.  Unitrin had sent defendant a timely request for an examination under oath with respect to a claim for benefits for shoulder surgery performed by defendant on a passenger in a vehicle involved in an accident.  Defendant failed to appear and plaintiff denied all claims for benefits made by defendant.  The Court held that the failure to appear for an EUO that was requested in a timely fashion by the insurer is a breach of a condition precedent to coverage, voiding coverage on all claims retroactively to the date of loss, regardless of whether the denials were timely issued. The coverage defense applies to any claim and is not determined on a bill-by-bill basis. 

 

08/12/21       Davis v. Safeco Ins. Co. of Ill.  
United States District Court, E.D. Pennsylvania
In Continuing its Investigation for One Year Beyond the Expiration of the One-Year Contractual Suit Limitation Condition Without a Reservation of Rights, a Question of Fact Existed Whether the Insurer Lulled the Insured into a False Belief that the Condition Would not be Enforced

The Court granted Safeco’s motion to dismiss Plaintiffs' bad faith claims but denied its motion as to its contractual suit limitations defense finding a question of fact.

Plaintiffs commenced this breach of contract and bad faith action alleging mishandling of their property damage claim caused by a toilet malfunction.  Plaintiffs alleged Safeco failed to pay all available benefits under the policy. They also claimed that through Safeco's investigation procedures and communication practices, they engaged in conduct that induced Plaintiffs not to file suit within the one-year time limit set forth in the policy, and that in doing so, they acted in bad faith. Defendant counters that they paid all benefits owed under the policy, arguing that the plaintiffs cannot establish clear and convincing evidence that it adjusted their water damage claim with bad faith, and that Plaintiffs failed to bring suit within the one-year from date of loss policy requirement.

In regard to “bad faith”, to survive summary judgment, Plaintiffs needed to illustrate through clear and convincing evidence that the insurer had no reasonable basis to deny policy benefits, and that the insurer knew or recklessly disregarded the lack of reasonable basis for denial. The Court agreed with Safeco that the Plaintiff failed to meet the necessary burden to establish bad faith in adjustment of the claim. 

Safeco inspected the loss and made payments on the dwelling damage and personal items it determined to be related to the loss. Later, when Plaintiffs submitted other estimates, Safeco reviewed those estimates to determine if payment was warranted and that the scope of those estimates was in line with its own damage observations. When there were concerns on scope and pricing, Safeco asked for re-inspections and negotiated with Plaintiffs. Plaintiffs failed to present sufficient evidence of unreasonableness in their claim processing. While claim negotiations were ongoing at the time suit was initiated, and reimbursement or denial of depreciation costs may have eventually taken place, the mere existence of continuing investigation and negotiation rather than an arbitrary and immediate denial implies reasonableness on the part of Defendant.  Accordingly, summary judgment was granted as to the bad faith claims.

In regard to the one-year contractual suit limitation condition, courts have consistently held that contractual one-year suit limitations in insurance policies are valid and enforceable.  However, these suit limitations are not enforceable when an insurer explicitly waives this defense, or its actions induce the insured to delay filing a suit. Waiver is the voluntary and intentional abandonment or relinquishment of a known right. An insurer will be estopped from raising the suit limitation defense if there is clear and convincing evidence that the insurer induced the insured to justifiably, and detrimentally, rely on the insurer's words or conduct indicating a decision not to invoke the defense. 

Here, the damage occurred on May 25, 2017, and Plaintiffs did not institute suit until nearly two years later, on May 9, 2019. Defendant's investigation of Plaintiffs' claim continued virtually until the date the suit was instituted—continuing to negotiate the resolution of Plaintiffs' claim through May, 2019. At no point did Defendant inform Plaintiffs that it would cease negotiations because time had expired, or that the window was closing on their ability to initiate suit despite the ongoing investigation.  Defendant's failure to provide notice to Plaintiffs about their intent to rely on the suit limitations condition (i.e., it did not issue a reservation of rights) despite the ongoing claim investigation estops them from using the defense now. The insurer did not expressly waive enforcement of the suit limitation period clause, but in continuing its investigation beyond the time period reasonably conveyed to the insured that the limitation clause would not be strictly enforced. 

 

08/18/21       Dianoia’s Eatery, LLC v. Motorist Mutual Ins. Co.
United States Court of Appeals, Third Circuit
3rd Circuit Ruled that Three District Courts Erred in Weighing Factors Relevant to the Exercise of Discretion under the Declaratory Judgment Act and Returning the Diversity Cases Back to State Court.  The 3rd Circuit Remanded the Decisions for Renewed Consideration of all Relevant Reifer Factors

Three district courts declined to exercise jurisdiction under the Declaratory Judgment Act over COVID-19 related 1st-party property losses remanding the suits back to state court because each determined that one or more of the factors enumerated in Reifer outweighed the absence of parallel state proceedings. The 3rd Circuit concluded that the District Courts erred in weighing factors relevant to the exercise of discretion under the DJA, and therefore vacated the removal orders and remanded for renewed consideration of all relevant factors.

The three Restaurants in consolidated appeals each brought its own action in state court seeking a declaration that its respective insurer was obligated to provide coverage for COVID-19-related losses. Each insurer removed its case to federal court invoking diversity jurisdiction. Then each District Court exercised its discretion under the Declaratory Judgment Act, 28 U.S.C. §§ 2201-02, to abstain from hearing the case and ordered the matter be remanded to state court.

The 3rd Circuit concluded that the District Courts erred in weighing factors relevant to the exercise of discretion under the DJA, and therefore vacated the removal orders and remanded for renewed consideration of all relevant factors.

The DJA provides that "[i]n a case of actual controversy within its jurisdiction,     . . . any court of the United States, . . . may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The Supreme Court has long held that the DJA's use of the word "may" confers unique and substantial discretion upon district courts to decide whether to exercise jurisdiction in declaratory judgment actions.  A district court may abstain from hearing a declaratory judgment action that is properly within the court's subject matter jurisdiction.

However, a district court's discretion under the DJA is not absolute. Over the years, the Court of Appeals has articulated several factors that district courts should consider when exercising discretion under the DJA.  In the most comprehensive discussion of these factors, Reifer, the Court began by noting that the existence or non-existence of pending parallel state proceedings to the declaratory judgment action, while not dispositive, is a factor that “militates significantly" in favor of either declining or exercising jurisdiction, respectively. Eight factors have been enumerated that a district court should consider "to the extent they are relevant":

(1) the likelihood that a federal court declaration will resolve the uncertainty of obligation which gave rise to the controversy;

(2) the convenience of the parties;

(3) the public interest in settlement of the uncertainty of obligation;

(4) the availability and relative convenience of other remedies;

(5) a general policy of restraint when the same issues are pending in a state court;

(6) avoidance of duplicative litigation;

(7) prevention of the use of the declaratory action as a method of procedural fencing or as a means to provide another forum in a race for res judicata; and

(8) (in the insurance context), an inherent conflict of interest between an insurer's duty to defend in a state court and its attempt to characterize that suit in federal court as falling within the scope of a policy exclusion.

The eight Reifer factors are not exhaustive.  In the insurance context, when applicable state law is uncertain or undetermined, district courts should be particularly reluctant to exercise DJA jurisdiction.  The fact that district courts are limited to predicting—rather than establishing—state law requires serious consideration and is especially important in insurance coverage cases.  Yet, there can be no per se dismissal of insurance declaratory judgment actions, in part because federal and state courts are equally capable of applying settled state law to a difficult set of facts.

All three district courts declined to exercise jurisdiction under the DJA because each determined that one or more of the factors enumerated in Reifer outweighed the absence of parallel state proceedings.

The insurers raised two arguments. First, that the District Courts did not have discretion under the DJA to decline to exercise jurisdiction because the restaurants' complaints were for legal relief that is merely "masquerading" as declaratory relief. Second, that the District Courts erred by declining to exercise jurisdiction.

The 3rd Circuit agreed with the restaurants that the DJA applies and that the District Courts did have discretion to abstain. However, it ultimately concluded that each of the District Courts either misinterpreted some of the non-exhaustive factors that the 3rd Circuit has stated should be considered, did not squarely address the alleged novelty of state law issues, or did not create a record sufficient to permit thoughtful abuse of discretion review. As such, it vacated the orders on appeal and remanded for renewed consideration under the DJA and the Reifer factors. 

 

07/28/21       FJL medical Services PC, A/A/O Roland McTaggart v. Nationwide Ins.
Civil Court of the City of New York, Kings County
Summary Judgment for No-Fault Insurer where Service Provider Failed to Appear for EUO 4 Times.  The Fact that One of the EUO Transcripts Recorded an Incorrect Time was an Obvious Error and Insignificant to Raise a Triable Issue of Fact

A moving defendant seeking summary judgment to dismiss the complaint based upon failure to appear for an Examination Under Oath with respect to a no-fault claim must show timely mailing of the EUO scheduling letters and that the assignee, in fact, failed to appear (see 11 NYCRR. 65-1.1).  Nationwide did so here, establishing that it scheduled plaintiff's EUO four times, plaintiff failing to appear each time.

The Court said that Plaintiff repeatedly sent letters to counsel for Nationwide stating that it needed two additional months to appear for the EUO, while requesting an explanation regarding the basis of the EUO and impermissibly demanding a $3,500.00 appearance fee per claimant to appear.   Each of the aforementioned letters were sent within days or weeks of the respective scheduled EUOs although each EUO request provided nearly two months' notice as per plaintiff's request to accommodate plaintiff's claim that it had a busy calendar. Plaintiff failed to submit an affidavit of an individual with personal knowledge to establish its unavailability on any of the dates the EUO was noticed for or an affidavit attesting to any date it provided defendant that plaintiff would be available to appear.

If an EUO is requested as additional verification an insurer must schedule it within a reasonable time frame and as "expeditiously as possible."  Plaintiff frustrated the intent of the no fault regulation by attempting to delay the claim over a period of nine months.  Although Nationwide attempted to accommodate plaintiff by noticing the EUO four times at plaintiff's request, plaintiff nonetheless failed to appear for any of the noticed EUOs.

Plaintiff argued based on Quality Health Supply Corp. v. Nationwide Ins., 69 Misc. 3d 133(A) (App Term, 2nd Dept, 2020) that a denial issued more than 30 days after the second of three EUO no shows, despite the scheduling of subsequent EUOs, is untimely. However, in Quality Health, the record before the Court failed to establish that there were any objections to the EUO request and/or requests seeking an adjournment or postponement of the EUO.  This Court therefore found the case distinguishable from Quality Health because Nationwide demonstrated that plaintiff requested it to notice the EUO additional times, and that Nationwide in good faith was attempting to accommodate plaintiff's request by rescheduling the EUOs.

Plaintiff's contention that defendant is unable to establish one of the no-shows because the transcript states an incorrect time, lacks merit. The Court finds that the EUO was noticed for the correct time and the affidavit in support of the motion stated the correct time. This was an obvious error in the transcript. Further, the responding correspondence from The Rybak Firm, PLLC, confirmed that plaintiff would "be unavailable to appear for the requested EUO”. The Court found the error in the transcript is insignificant to raise a triable issue of fact.

 

HEINTZMAN’S HIDEOUT
Nicholas J. Heintzman

[email protected]

08/16/21       Park Ave. Chiropractic & Health Care PC v. Maya Assur. Co.
Civil Court of the City of New York, Bronx County
Court Holds that Plaintiff’s Untimely Letter Objecting to Defendant’s Proposed EUOs did not Justify Plaintiff’s Failure to Appear for said EUOs

Plaintiff, a medical service provider that was an assignee of no-fault benefits, sought payment from Defendant, an insurance company, for medical services rendered to the assignor of the benefits. Defendant moved for summary judgment alleging that Plaintiff failed to appear for two scheduled examinations under oaths (“EUO”). Plaintiff countered that because it provided Defendant with a written objection to the first scheduled EUO, it did not have to appear at either examination.

The Court held that to succeed on a summary judgment motion based on a party’s failure to appear for an EUO, an insurance carrier first must establish that it properly mailed EUO notices. Mailing can be proved through either 1) proof of actual mailing or 2) proof of a standard office practice/procedure designed to ensure that items are properly addressed. Here, Defendant established proof of actual mailing through an affidavit from its attorney which stated that he personally reviewed the EUO notice letters and sent them for mail. Plaintiff contends that it submitted a letter the day after the first scheduled EUO which requested that Defendant justify the need for the EUO. The Court held that Plaintiff’s objection letter was untimely and failed to afford Defendant an opportunity either to reschedule the event to a more convenient date or time, or to make the location more convenient. Thus, the court held that this objection had no effect and granted summary judgment for Defendant on the grounds that Plaintiff had no valid justification for missing the EUOs.

 

08/25/21       Island Gastroenterology Consultants, PC v General Cas. Co. of Wis.
Supreme Court, Suffolk County
Court Dismisses Declaratory Judgment Action brought by two Medical Offices Seeking Coverage for COVID-19 Related Losses

Plaintiffs owned two different medical offices and obtained business owners’ insurance policies from Defendant. COVID-19 related shutdown orders prevented Plaintiffs from operating their medical offices from March 23, 2020, through May 26, 2020, which cost Plaintiffs substantial loss of business income. Before filing a claim with Defendant for coverage, Plaintiffs commenced a declaratory judgment action seeking coverage under the business owners’ insurance policies.

The policies covered, inter alia, direct physical loss of or damage to the covered offices caused by risks of direct physical loss. The policy also provided coverage for losses of business income due to the necessary suspension of operations caused by direct physical loss or damage to the covered offices.

Citing case precedent, the Court held that coverage for physical damage to the covered offices did not extend to loss of use of the property due to COVID-19 related government orders because there was no actual physical damage to the building.

The policies also provided coverage for loss of business income caused by the actions of civil authority that prohibit access to the covered offices due to direct physical loss or damage to property other than the covered offices. Since the government orders did not actually cause physical loss or damage to the property, this coverage did not apply.

Finally, both policies contained a “virus exclusion” which denied coverage for loss or damage resulting from any “virus, bacterium or other micro-organism that induces or is capable of inducing physical distress, illness or disease.” The Court held that this exclusion was applicable and denied all coverage.

 

NORTH OF THE BORDER
Heather Sanderson

[email protected]

 

Nothing this week from the Canadian courts.

 

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