Volume XXIII, No. 26 (No. 621)
Friday, June 10, 2022
A Biweekly Electronic Newsletter

Hurwitz Fine P.C.
The Liberty Building

424 Main Street, Suite 1300
Buffalo, New York 14202
Phone: 716-849-8900
Fax: 716-855-0874

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

www.hurwitzfine.com

© Hurwitz Fine P.C. 2022
All rights reserved

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

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

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

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

Dear Coverage Pointers Subscribers:

Do you have a situation?  Bring them on as we LOVE situations.  Welcome to issue 26, the very last issue, in Volume XXIII.  Our next issue begins our 24th year of continual, bi-weekly publication of (one of) your favorite newsletters.

We proudly announce the 45th anniversary of our firm this June!  Thanks to all of our supportive and loyal clients, it’s been a wonderful journey—you have been an integral part of our growth and success.  On this momentous occasion, all of us at the firm offer our appreciation for choosing us as your attorneys and look forward to serving your future legal needs.

You may notice that we have a new look and a new, streamlined name, Hurwitz Fine:  https://www.hurwitzfine.com/blog/hurwitz-fine-marks-45-years-of-client-service-with-new-branding

 

Our new logomark combines the first initial of each component of the firm’s name into an interlocked HF unit to represent the synergy of the firm’s diverse group of attorneys and their singular focus on achieving successful client outcomes. Its color, a patina-like hue, underscores our history, and pays homage to the Lady Liberty statues that serve as beacons atop the Liberty Office Building in downtown Buffalo, where we first opened our doors in 1977 and are still headquartered today.  The one-word tagline, Proven., communicates the hard work and hard-won solutions and victories on behalf of our clients, while serving as an inspiration for navigating future matters, and a reassurance to both longstanding and new clients.

We are excited by this evolution of our brand, our continued growth and commitment to our clients!

 

Grieving Families Act:

You all received the news, last Friday, of the New York State legislature’s final passage of the amendments to the wrongful death act statute.  The legislation has not yet been sent to the Governor for consideration.  Rumors we hear are concerns over the retroactivity of the statute to pending cases.  We will keep you advised.

 

Welcome New Subcribers:

From the four Risk Transfer continuing education programs John Trimble and I have conducted over the past few weeks, we welcome a number of new CP subscribers.  Past issues can be found (23 years’ worth) on our website, www.hurwitzfine.com .

 

Must Read Decision:

Question:  How does a workers compensation/employer’s liability carrier resolve the issue of “grave injury” if the employer’s defense counsel refuses, because of conflict, to make the motion to dismiss the claim?

Answer: From First Department:  allow the WC/EL carrier to intervene in the underlying lawsuit.

Now that’s a first. See Moises-Ortiz v. FDB Acquisition LLC, a June 9, 2022 decision discussed in my column.

 

New Columnist:

Kyle Ruffner takes over Construction Defect reporting duties from Brian Mark (Brian is working on two other newsletters).  So “Off the Mark” is now replaced by Kyle’s Construction Column.  Welcome Kyle.

 

Expert Witness and Mediation Services:

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

 

Need a mediator?

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

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

 

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

 

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

Try mediation.

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

 

Training, Training and More Training:

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

 

Newsletters:      

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

 

• Employment & Business Pointers aims to provide our clients and subscribers with timely information and practical, business-oriented solutions to the latest employment and general business law developments.  Contact Joseph S. Brown  [email protected] to subscribe.
   
• Premises Pointers:  This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!).  Please drop a note to Jody Briandi at [email protected] to be added to the mailing list.
   
• Labor Law Pointers:  Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at [email protected] to subscribe.
   
• Products Liability Pointers:  Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving.  Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up-to-date with the latest developments and trends, and providing useful practice tips and litigation strategies.  This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies.  Contact Brian F. Mark at [email protected] to subscribe.
   
• Medical & Nursing Home Liability Pointers.  Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Chris Potenza at [email protected] to subscribe.

 

Peiper on Property and Potpourri:

Unfortunately, another light week in the courts brings us little to discuss.  We do review an interesting “special employee/alter-ego” case from the Second Department in this week’s column that is worth a read.  The concept of “alter-ego” is often overlooked, and judging by how often it is reported in decisions, it is even less likely to be litigated.  That said, there are a number of businesses out there that, on paper, may appear different, but, in practice, are operated by the same person/people, serve the same purpose and operate indistinguishably from one another. 

Creating a solid “alter-ego” argument can open the door to an otherwise unavailable workers’ compensation defense, or, in the right instance, trigger additional coverage under the other entity’s CGL policy. While difficult to prove, the concept should not be summarily discarded.  Good lawyers find creative solutions and alter-ego type arguments can lead to creative solutions.

I note that my colleague below is beginning to recognize the contributions of your author on the softball diamond, so I will leave the updates to him this week.  Compliments and adulation remained welcomed, however.  

See you in two weeks.

Steve
Steven E. Peiper
[email protected]

 

Odd Civil Cases – 100 Years Ago:

Hartford Courant
Hartford, Connecticut
10 Jun 1922

PECULIAR CASES OF
ACCIDENT PAYMENTS

Local Company Pays Loss
Due to Hot Water Bottle

 

            To cure a cold, Mr. W., a brush salesman, took a metal hot water bottle to bed with him. The bottle was so hot that it burned his leg. The burn became infected, and gangrene set in. The indemnity policy he has with the Connecticut General paid him $112 for the five weeks of his disability.
 

Indemnity for Tooth

Mr. G., a tailor, had to have an abscessed tooth removed. While the dentist was probing the abscess in an effort to drain it, he accidentally severed an artery in Mr. G’s cheek. The loss of blood so weakened him that he was confined to his bed for over a week. Fortunately, he was protected against loss caused by illness by a Connecticut General disability policy. No doubt the check for $40 he received from the Connecticut General helped reimburse him for the loss of valuable time.
 

Flower Poisoner

Mr. D., an insurance salesman was working in his flower garden, trimming rose bushes and other shrubbery. The next morning his hands and face were swollen, poisoned by the flowers and shrubbery. The accident policy he carried with the Connecticut General paid him $21 for the few days he was unable to go about his work.

 

Wilewicz’ Wide-World of Coverage:

With so much going on in the world these days, it’s almost easy to forget that COVID-19 is still around and continuing to be litigated. While the cogs of justice move slowly, it remains striking that decisions on its basic legal implications (particularly in coverage) remain debated.

To that end, this week in the Wide World we bring you one hot off the presses and out of our own Second Circuit, holding a familiar refrain. This week, it’s Farmington Village v. Cincinnati Insurance, a decision scant with facts, but rightfully so. The issue is very straight forward: does there need to be physical injury to tangible property in order to trigger coverage under a CGL policy? In short, and for the 278th time, yes. Typically, a loss or damage under a CGL policy is defined as some iteration of “physical loss”. Physical means … physical. The argument here was that COVID “causes physical loss or physical damage to its property by way of its transmissibility through physical particles in the air and on surfaces” – however that does not tangibly alter or impact the physical property. As such, the argument, once again fails.

Until next time!

Agnes
Agnes A. Wilewicz
[email protected]

 

Auto Insurance is Good for You – 100 Years Ago:

Hartford Courant
Hartford, Connecticut
10 Jun 1922
 

Get The Full Enjoyment
Out Of Your Auto—

 

            By taking out a policy, NOW, covering Liability, Collision, Property Damage, Fire, Theft, etc. Without this protection you are in danger every minute–in danger of losing large amounts for damage claims and repairs

 

Insure NOW BEFORE Anything Happens

 

T.D. Faulkner Co.

 

INSURANCE OF EVERY DESCRIPTION

Hartford Aetna Bank Building. Tel. Charter 98 or 99

 

Barnas on Bad Faith:

Hello again:

We are four weeks into the softball season and the Hurwitz Fine team has been playing some good ball of late.  We have won three in a row to move to a 3-1 record on the young campaign.  The team is getting a nice blend of production from veterans and rookies, including big contributions from Peiper on Property and new columnist, Kyle Ruffner, whose inaugural Kyle’s Construction Column can be checked out below.  Yours truly has had only a tepid start to the season, going 6 for 10 at the plate with only one extra base hit, but I like to tell myself that my contributions to the team culture cannot simply be measured by stats alone.  Hopefully by the time you read this issue we are celebrating a fourth consecutive win at the bar on Thursday night.

I have two New York cases in my column this week, one from the Second Department and one from the Second Circuit.  The Second Department’s decision is a particularly good one.  The court dismissed a bad faith claim seeking extracontractual damages in a lawsuit seeking SUM coverage.  The court does a very nice job going over the applicable bad faith standard and reaches the right conclusion.  This is certainly one you will want to hang onto for use in future motion practice.  We also have an interesting decision from the Second Circuit on GEICO’s partial premium refund program during the pandemic.  Plaintiffs mounted several challenges to the program, including arguments that GEICO breached the implied covenant of good faith and fair dealing and violated the New York General Business law.  The Second Circuit disagreed, and it dismissed the putative class action. 

Brian
Brian D. Barnas
[email protected]

 

A Hair Raising Problem – 100 Years Ago:

The Evening World
New York, New York
10 Jun 1922
 

SCREAM OF NURSE,
ATTACKED IN NIGHT,
AROUSES HOSPITAL
 

Woman Tried to Cut Off Her
Hair, She Charges, but Fled
When She Awoke
 

SHE ALLEGES JEALOUSY
 

Victim Says Others Sought to
Oust Her Because She Is
Too Attractive

            The Brownsville East New York Hospital was thrown into a turmoil at 2 o’clock this morning by the wild screams of Miss Josephine Reilly, supervisor of nurses. She declared she had been attacked in her room and an attempt made to cut off her hair.

            Nurses, internes, and attendants turned out and searched high and low for a man with a pair of shears but discovered no stranger. If an attack had been made, it was declared, it was by some one in the building.

            Miss Reilly, who was across the seas as a war nurse, is blonde, more than passingly attractive and has the reputation of being a capable young woman.

            “It was no man who attacked me,” she said. “It was a woman and I know who it was. About 2 o’clock this morning I was awakened by something cold on my face. I awoke to find a pair of shears on my face, and they clicked as I jumped up and screamed.”

            “The woman ran and got away from me. When I retire, I put my hair up in two braids and it was the evident intention of my assailant to clip the braids while I slept. She cut only a few strands.”

 

Kyle's Construction Column:

Dear Readers,

I am excited to be a new contributor to Coverage Pointers! I am an associate attorney in Hurwitz Fine’s insurance coverage practice group. I graduated from University at Buffalo School of Law in 2021, where I was a member of the Buffalo Law Review and Civil Rights and Transparency Clinic, and I was admitted to practice in New York in February 2021. I am a big sports fan (especially of the Buffalo Bills!), and I enjoy running, golfing, and playing softball.

My family had a nice weekend away in Saratoga this past week for my cousin’s wedding. We stayed in a lake house for the long weekend, I got to play a round of golf on Friday morning, and spent some time exploring Saratoga and hanging out by the lake (the wedding was pretty fun too). Unfortunately, we weren’t able to watch any horse races at this time of year, but I still made a brief stop at the casino right next to the track. I missed playing softball while I was away, excited to be back and, hopefully, we can keep things on track this week with another win.

Unfortunately, no interesting construction cases to report on this week. Until next time.

Kyle
Kyle A. Ruffner
[email protected]

 

Shocking Death  – 100 Years Ago:

The Evening World
New York, New York
10 Jun 1922
 

LIGHTNING BOLT,
13TH IN 13 YEARS,
KILLS BOY OF 13
 

Horseheads Churchyard
Has Its Annual Electrical
Visitation

            ELMIRA, June 10.  Lightning striking for the thirteenth time in as many years on the old colored church property in Horseheads, just north of this city, late yesterday afternoon claimed its first victim. Newton Edgar, in his thirteenth year, was instantly killed while playing baseball on the plot where the church once stood.

            Although it was raining, several boys were playing baseball. Newton had singled and was standing on a stone, used for first base when a bolt of lightning struck the left side of his head, burning his face, shoulder, and body. His companions were not injured.

 

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

It’s been a busy few weeks! I ran the Buffalo half recently and gave the green light for my law review article to be published after quite a saga. More importantly, our softball team is on a winning streak! We face off against our rivals this week. Stay tuned.

This week, I can offer you a case from the Mississippi Supreme Court. The question was whether the plaintiff could recover damages from her employer under the uninsured motorist statute, Mississippi Code Section 83-11-101(1) (Supp. 2021). The Mississippi Supreme Court previously held that employees are not legally entitled to recover from their employers and thus could not make a claim under uninsured motorist coverages. The Supreme Court rejected the plaintiff’s arguments and declined to overrule its precedent.

Catch you later,

Kate
Katherine A. Fleming
[email protected]

 

Racism – 100 Years Ago:

Buffalo Morning Express and
Illustrated Buffalo Express
Buffalo, New York
10 Jun 1922

NO BAN ON NEGROES

Tulsa denies report that hotels
must oust blacks

            Tulsa, OK., June 9 ( A. P.).—No order will be issued by the Tulsa police department prohibiting negroes or any other race from being employed in hotels and rooming houses, according to a statement issued today by H. W. Kiskaddon, police commissioner and Reese Morgan, chief of police.

            The statement declared that an ordinance is being written and signed to prohibit employment in hotels of undesirable persons of any race and color will not constitute the basis of discrimination. Records as to integrity and morality alone will govern the selection of suitable hotel employees, the statement said.

            The statement was issued after it had been reported that hotel proprietors had been ordered to discharge all negro employees.

Editor’s note – all this occurred about one year after the Black Wall Street massacre in that same city.

 

Ryan’s Capital Roundup:

Allergy season is upon us and, if you’ve ever spent a child’s outdoor birthday alone in the sunroom, you’re not alone. When pollen count is on the rise, oh how the mightiest of Maxwell’s fall. It hits me (and you?) like a ton of bricks, and I am out of commission for a few days. I don’t even want to look outside at the moment. At least today, it’s raining and not perfect outdoor adventure weather. Tomorrow is another day.

But today, in our Legislative List, we have a brief look at two pieces of legislation bearing on the coverage world. The first is the Grieving Families Act, which has serious implications for wrongful death claims and damages in New York. Hurwitz Fine’s Chris Potenza and Alice Trueman have provided an in-depth analysis of what the landscape looks like today and what will change should the Governor sign this bill into law. The second is a brief look at supplemental spousal liability insurance, which under recently passed bills that could become law, would create an opt-out for this coverage that has been an opt-in since 2002.

Ryan
Ryan P. Maxwell
[email protected]

 

Lincoln Memorial Dedicated – 100 Years Ago:

The New York Age
New York, New York
10 Jun 1922

LINCOLN MEMORIAL IS
DEDICATED TO PEOPLE

Magnificent Monument Erected
To Great Commoner
on Potomac’s Shores

DR. MOTON A SPEAKER

Head of Tuskegee, Pres. Harding and
Chief Justice Taft, Are Only
Speakers–Thousands at Ceremony

(Special to the New York Age)

            Washington, D. C.—When the magnificent Lincoln Memorial, erected upon the banks of the Potomac here in Washington, after twenty years of effort by the Lincoln Memorial Commission, headed by a former President, the present Chief Justice, William H. Taft, the only speakers on the momentous occasion were President Warren Gamaliel Harding, former President Taft and Dr. Robert Russa Moton, president of Tuskegee Institute, Alabama.

Editor’s Note:  the monument was dedicated on May 30, 1922.

 

Dishing Out Serious Injury Threshold:

Dear Readers,

The weather on Long Island has been wonderful. We were able to get the boat in the water and had a few nice days out on the water so far. Looking forward to more nice weather and relaxing weekends on the boat this summer.

I selected two decisions for this issue. These both pertain to plaintiffs being unable to defeat a defendant motion for summary judgment. The first due to plaintiff only submitting unaffirmed and uncertified medical records. The second due to plaintiff’s expert failing to address defendant expert findings that injuries were degenerative in nature.

Enjoy,

           Michael
           Michael J. Dischley
           [email protected]  

 

Wife Checks Out  – 100 Years Ago:

Buffalo Morning Express and
Illustrated Buffalo Express
Buffalo, New York
10 Jun 1922

22 FLEES 50
WITH 23, PAIR
LAND IN JAIL

Woman deserts physician husband
and writes some checks

CHARGED WITH FORGERY

Companion, Elmira man, accused
of receiving stolen
goods.

            Twenty-two and pretty, Mrs. Nettle Bently tired of life in Galeton, Pa., where her husband, Dr. J. Bently, is the town’s leading physician.

            So last week Mrs. Bently left Galeton and went to Elmira. There she met Murl C. Bullock, 23. She wrote a check, signing her husband’s name, it is alleged, and the pair bought an automobile, making a down payment of $100 and started out, as she told police, last night, to see the world.

            The sightseeing trip ended yesterday when Detective Sergeant Frank McCarthy arrested Bullock and Mrs. Bently at the Cheltenham hotel, where they were registered as Mr. and Mrs. J. L. Murphy.

            Mrs. Bently told the police that she had found life in Galeton too monotonous.

            “He was our family physician, and I knew him since I was a little girl and when he asked me to marry him I did so,” she told detectives of her husband.

 

Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

It’s been a quiet couple of weeks in the firm’s Connecticut outpost. Lots and lots of new cases, for which we are always very thankful for your trust and confidence. But mainly it’s been a lot of parenting to semi-independent college kids home for the summer, boy-friending (I made that word up, I’m pretty sure), some boating, beaching, and sunning. I’m looking forward to a visit to the mothership, as the HF world descends on the home office in Buffalo next week. It’s always nice to spend time and reunite with my colleagues.

In this edition of Coverage Pointers, a first for the Connecticut Chronicles Column—a triumvirate of decisions to report, as the Connecticut courts were busy clearing their dockets for summer. In one case, a state Superior Court judge reminds us of the oft-forgot lesson that the duty to defend is indivisible. Something worth remembering as we engage in carrier vs. carrier in-fighting.

Keep keeping safe,

Lee
Lee S. Siegel
[email protected]

 

Baseball in the News – 100 Years Ago:

The Brooklyn Daily Eagle
Brooklyn, New York
10 Jun 1922

Browns and Yankees
Start Big Series Today

            Babe Ruth and Bob Meusel both registered their fifth home run of the season—Ruth’s a record wallop over the White Sox centerfield fence—but these husky clouts couldn’t stop the rout of the Yankees in the last game of their Chicago series. Four hurlers—Jones, Hoyt, Bush and Murray—were pounded by Gleason’s men for enough runs in the seventh and eighth to win easily, 10 to 6. Courtney was hit hard in the closing innings by the New Yorkers but not hard enough.

            Dave Danforth fanned eight Red Sox and St. Louis, by winning 8—1 from Boston, reduced the Yankees’ lead, starting a series today with the champions two and a half games from the top, George Sisler had a perfect day at bat with four hits.

            Alexander and the Cubs tamed the Giants, 4 to 3, but it required sterling support and a bit of luck to subdue the McGraw men, who outhit their rivals. Frisch had a great day at bat with four hits and also fielded spectacularly.

            The Boston Braves, who have acquired a regular habit of trouncing pennant contenders, outplayed Pittsburg behind Oeschger’s good twirling, while Fournier’s home run with one on helped the Cardinals trim Philadelphia.

            The Athletics emerged from their slump, mauled three Detroit pitchers and won, 10 to 3.

 

Rauh’s Ramblings:

Hello everyone!

It is a gray and rainy day today in Buffalo, but I am hoping we stay dry for the next few days because my 4-year-old’s first t-ball game is this Saturday!  After several practices over the past month, the players (including my son) have yet to distinguish first base from third base, and the fact that you don’t pick up the base and run with it.  That being said – Saturday’s game should definitely be entertaining!

I found an interesting case this week from the Sixth Circuit.  The case involves a decedent who died in a car accident while driving recklessly.  When the decedent’s mother attempted to collect the accidental death benefits from decedent’s life insurance policy, the insurer denied her claim on the grounds that the crime exclusion under the policy applies.  The Court’s opinion is an interesting analysis of what is a “crime” and what is the general public’s understanding of what acts constitute a crime.  Notably, the Court also cites to a Robert Frost poem in its analysis, which was interesting.  Read my full summary to find out how the Court decided this one!

I hope everyone has an enjoyable weekend!

Patty
Patricia A. Rauh
[email protected]

 

More Civil Strife – 100 Years Ago:

Buffalo Courier
Buffalo, New York
10 Jun 1922

WAVE OF SLUG AND
SLAM CASES ‘MOST
SWAMPS JUDICIARY

City Court Hears Eleven
Charges Involving Use of
Fists or Weapons.

            Eleven cases of assault were heard in city court yesterday. Both Chief Judge Woltz and Associate Judge Patrick J. Keeler spent several hours in the hearing of testimony and the distribution of justice and sentences.

            Two alleged principals in assault cases waived examination and were held for the grand jury.

            Joseph Moskal, No. 306 Sweet Avenue, was arraigned on a charge of assault, second degree. It is charged that on April 1, Moskal became involved in a controversy with Joseph Kapturowski, of No. 312 Sweet Avenue. It is stated that Moskal was hurling verbal jibes at some passing girls. Kapturowski interposed his objections, and according to the complaint, Moskal and three companions leaped from the wagon where they were sitting and shoved Kapturowski around. In the melee, Kapturowski tripped and fell, breaking a leg. Moskal was held for the grand jury. Simon Peter, No. 444 North Division Street, faced the court on a charge of assault, second degree. He is accused of striking Louis Ropphel, No. 44 Sears Street, on the head with the butt end of a revolver, on May 30. Peter protested his innocence. He, too, was bound over for the grand jury’s action.

           

Storm’s SIU Examen:

Hi everyone:

Three PIP cases and one property case for you this week:

• No-fault coverage precluded as insurers submitted proof to demonstrate the collision was a staged accident;
   
• Evidence of staged accident included dash-cam footage from the other vehicle;
   
• In RICO action against medical providers, court: grants insurer’s motion staying/enjoying all pending and future no-fault insurance collection arbitrations pending disposition of the declaratory judgment claim; declines to stay pending no-fault insurance collection lawsuits in state court; and enjoins defendants from commencing any new no-fault insurance collection lawsuits against plaintiffs. The court declines to require plaintiffs to post a bond;
   
• Property constituted a “Residence Premises” as the plaintiff had constant, habitual, daily contact with it completing renovations for the purpose of moving into it on a full-time basis.  An insured may have more than one residence. 
   

Hey, just in case no one told you today:  you’re doing awesome, you have people who believe in you, you got this, and you are enough. 

We appreciate every opportunity we receive to work with you.  Thank you!

Have a nice two weeks!

Scott
Scott D. Storm
[email protected]

 

Royal Flush – 100 Years Ago:

Buffalo Courier
Buffalo, New York
10 Jun 1922

POSSESSOR OF STOLEN CHECKS
FREED; WON ‘EM IN CARD GAME

            Edward Finsterbach, twenty-two years old, No. 199 Indian Church Road, tried yesterday in county court on a charge of first degree criminally receiving stolen property in connection with his having two checks stolen from J. Leker, No. 314 Adams Street, May 3, was found not guilty. The evidence showed that Leker was on his way to the funeral of a friend when his pocked was picked of $42 and six checks.

            The next day Finsterbac was arrested, and two checks found in his possession. Through his lawyer, Thomas McKenna, he proved he obtained the checks from Edward Wunderlich in a poker game. Patrolman Mendel of the Fillmore Avenue station testified that Wunderlich who cannot be located by the police, was a pickpocket.

            Bret Thorne, assistant district attorney, who prosecuted the case, said that Finsterbach’s brother Elmer is under indictment on the charge of pocket picking.

 

North of the Border: 

I’m very pleased to announce the early arrival of a new member of our family – a grandson – everyone is doing well despite the surprise. I am revelling in the vast potential and hope that he brings into our world … as Rod Stewart sings in Forever Young, “May the good Lord be with you down every road you roam … And may you grow to be proud, dignified and true. And do unto others as you'd have done to you. Be courageous and be brave. And in my heart, you'll always stay … Forever young.”

In this week’s column I discuss an interesting Canadian auto liability insurance coverage case that arises from an attempted vehicular suicide. It offers insight into Canadian auto insurance and has implications for the coverage of claims brought about by the insured’s criminal act where the insured intended the loss or damage that occurred.

Heather
Heather A. Sanderson
[email protected]

 

Who Still has an Auto Robe?  It was a thing 100 Years Ago:

Buffalo Courier
Buffalo, New York
10 Jun 1922

AUTO ROBE THIEF
LECTURED, FINED

            Wallace Schmidt, seventeen years old, of No. 84 Florida street was arraigned before Judge Woltz in city court yesterday. The charge was that he stole five automobile robes from five different cars. Schmidt’s excuse was that he planned to go camping this summer and would need a number of heavy blankets. The penalty meted out was a $100 fine and probation for one year.

 

Headlines from this week’s issue, attached:

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

• Must Read and Consider -- Employers’ Liability Insurer Successfully Intervenes in Underlying Labor Law Action to Argue Lack of Grave Injury and Wins
• Carrier Fails to Establish that Claim Arose from Assault and Battery, were Outside of a Undefined Classification Endorsement or that Policy Ought to be Rescinded
• Policy Provided BOTH a Per Location Limit and an Overall Aggregate both by Construing Plain Language and Reviewing Extrinsic Evidence
• Where Husband and Wife are both Named Insureds, Cancellation Letter Sent to Only One of Them Does Not Properly Cancel Policy
• Neither No Fault nor Liability Coverage for Staged Accident

 

PEIPER on PROPERTY (and POTPOURRI)

Steven E. Peiper
[email protected]

• Different Bank Accounts and Corporate Purpose Defeats “Alter-Ego” Defense

DISHING OUT SERIOUS INJURY THRESHOLD

Michael J. Dischley
[email protected]

• Plaintiff Failed to Raise a Triable Issue of Fact as Plaintiff Submitted only Unaffirmed and Uncertified Medical Records
• Plaintiff Expert Failed to Address Defendant Expert Findings that Injuries were Degenerative in Nature
   

WILEWICZ’S WIDE WORLD of COVERAGE

Agnes A. Wilewicz
[email protected]

• Second Circuit Again holds that in a COVID-19 Alleged Property Damage Case, Physical Injury to Tangible Property is Required to Trigger General Liability Property Coverage
   

BARNAS on BAD FAITH

Brian D. Barnas
[email protected]

• Insured Failed to State Claim for Bad Faith Punitive Damages
• GEICO Did Not Act in Bad Faith By Not Further Adjusting Insurance Rates During COVID-19 Pandemic

 

LEE’S CONNECTICUT CHRONICLES

Lee S. Siegel
[email protected]

• Appellate Court Narrows Informed Consent Exception to Reduced UIM Limits
• Pleading of Adverse Coverage Verdicts Still Insufficient to Avoid Dismissal of CUIPA Counts
• The Duty to Defend is Indivisible
   

KYLE'S CONSTRUCTION COLUMN

Kyle A. Ruffner
[email protected]

• Unfortunately, no interesting construction cases to report on this week.
   

RYAN’S CAPITAL ROUNDUP

Ryan P. Maxwell
[email protected]

• Bill Awaits Delivery to the Governor that Would Fundamentally Change Wrongful Death Litigation and Damages in New York State
• Bill Awaits Delivery to the Governor that Would Amend Supplemental Spousal Immunity Insurance From An Opt-In to an Opt-Out
   

RAUH’S RAMBLINGS

Patricia A. Rauh
[email protected]

• Reckless Driving does Constitute a Crime and therefore Invokes the Crime Exclusion Under the Policy and as a Result, Plaintiff is not Entitled to Accidental Beath Benefits

STORM’S SIU EXAMEN

Scott D. Storm
[email protected]

• No-Fault Coverage Precluded as Insurers Submitted Proof to Demonstrate the Collision was a Staged Accident
• Evidence of Staged Accident Included Dash-Cam Footage from the Other Vehicle
• In RICO Action Against Medical Providers, Court: Grants Insurer’s Motion Staying/Enjoying all Pending and Future No-Fault Insurance Collection Arbitrations Pending Disposition of the Declaratory Judgment Claim; Declines to Stay Pending No-Fault Insurance Collection Lawsuits in State Court; and Enjoins Defendants from Commencing Any New No-Fault Insurance Collection Lawsuits Against Plaintiffs. The Court Declines to Require Plaintiffs to Post a Bond
• Property Constituted a “Residence Premises” as the Plaintiff had Constant, Habitual, Daily Contact with it Completing Renovations for the Purpose of Moving into it on a Full-Time Basis.  An Insured May have More than One Residence. 
   

FLEMING’S FINEST

Katherine A. Fleming
[email protected]

• Mississippi Supreme Court Considers Whether an Employee, Injured by Her Employer in an Automobile Accident, May Recover Under Her Own Uninsured Motorist Policy
   

NORTH of the BORDER

Heather A. Sanderson
[email protected]

• A Property or Liability Insurer May Rely on the Public Policy Provision Contained in the Insurance Acts of the Common Law Canadian Provinces in Order to Deny Liability to Indemnify an Insured Against Loss or Damage Caused by that Insured’s Criminal Act Where that Insured Intended to Bring About that Loss or Damage. However, Innocent Co-Insureds Would be Entitled to Full Indemnity
• Supreme Court of Canada Refuses Leave to Appeal from the Ontario Court of Appeal which Held that an Accidental Release of Ammonia while Performing Maintenance, is Not a Release of a “Pollutant” Engaging a CGL’s Total Pollution Exclusion

 

NEWSLETTER EDITOR

Dan D. Kohane
[email protected]
 

ASSOCIATE EDITOR

Agnes A. Wilewicz
[email protected]
 

ASSISTANT EDITOR

Patricia A. Rauh
[email protected]
 

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM

Dan D. Kohane, Chair
[email protected]

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

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Diane L. Bucci

Scott D. Storm

Thomas Casella

Brian D. Barnas

Ryan P. Maxwell

Patricia A. Rauh

Diane F. Bosse

Joel R. Appelbaum

Kyle A. Ruffner

Katherine A. Fleming
 

FIRE, FIRST PARTY AND SUBROGATION TEAM

Steven E. Peiper, Team Leader
[email protected]
 

Michael F. Perley

Scott D. Storm

Brian D. Barnas

 

NO-FAULT/UM/SUM TEAM
Dan D. Kohane

[email protected]
 

Alice A. Trueman
 

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

Diane F. Bosse
 

Topical Index

Kohane’s Coverage Corner

Peiper on Property and Potpourri

Dishing Out Serious Injury Threshold

Wilewicz’s Wide World of Coverage

Barnas on Bad Faith

Lee’s Connecticut Chronicles

Kyle’s Construction Column

Ryan’s Capital Roundup

Rauh’s Ramblings

Storm’s SIU Examen

Fleming’s Finest

North of the Border

 

KOHANE’S COVERAGE CORNER

Dan D. Kohane
[email protected]

 

06/09/22         Moises-Ortiz v. FDB Acquisition LLC
Appellate Division, First Department
Must Read and Consider -- Employers’ Liability Insurer Successfully Intervenes in Underlying Labor Law Action to Argue Lack of Grave Injury and Wins

In one of the interesting decisions of the year, an employer’s liability carrier, Arch, successfully moved to intervene in a Labor Law case to argue that the plaintiff did not suffer a “grave injury” and thus a common law claim for contribution cannot be maintained against the insured employer (the “owner and GC”).  The owner and GC then bring a third party complaint against RNC alleging both contractual and common law claims.  Under Section 11 of the Workers Compensation Law, the common law claims can only be maintained against the employer if the plaintiff suffered a “grave injury”.

Arch provided employers liability and workers compensation coverage and had to defend the common law claims because a “grave injury” was alleged.  Arch did not believe the plaintiff suffered a “grave injury” but defense counsel for the employer, RNC, would not make the motion to dismiss the common law claims because it would remove from its client, the unlimited employers liability coverage and therefore would not be in the client’s best interest to make that motion

So Arch, through separate counsel, makes a motion to intervene on its own behalf, seeking to dismiss the common law claims on the ground that the plaintiff did not suffer a “grave injury”  It claimed that it had a right to intervene because it had a direct interest in the outcome of the matter and that defense counsel could not adequately represent its interests.  In the alternative, it asked the court for permissive intervention.

RNC’s counsel opposed the motion, alleging the application was premature.  In a one sentence decision, the court granted the motion to intervene and refused to dismiss the case. On appeal, the First Department granted the motion to dismiss but did not discuss the propriety of intervention.

Arch, the insurer of plaintiff's employer, successfully intervened in a Labor Law case for the purpose of arguing that the plaintiff did not sustain a “grave injury”.  Arch submitted a neuropsychologist's medical report, which found that plaintiff exaggerated his cognitive and psychological symptoms and could return to work on a full-time basis and defendants failed to raise an issue of fact, as "evidence that plaintiff suffered from brain conditions, including headaches and post-concussion syndrome.

Editor’s note:  Clever move by Arch.  Defense counsel is precluded from making the motion because it removes unlimited coverage that would protect the interests of the client.  So, Arch moved.

 

06/07/22         Rutgers Casualty Ins. Co. v. USA Veterans Construction Corp.
Appellate Division, First Department
Carrier Fails to Establish that Claim Arose from Assault and Battery, were Outside of an Undefined Classification Endorsement or that Policy Ought to be Rescinded

Rutgers Casualty Insurance Company (Rutgers) commenced this action seeking, among other thing, a declaratory judgment as to whether defendant USA is entitled to coverage under its umbrella, general liability policy with Rutgers, for an incident in the underlying action where the plaintiff was struck by a lull forklift being operated by USA while engaging in light gauge metal framing. Rutgers alleged, that to the extent the underlying claims arose from assault and battery they were excluded, and USA was not engaged in "Carpentry & Drywall" work at the time of the incident, as contemplated by the policy.
 

Rutgers also seeks to rescind the umbrella policy for the period in question and a subsequent umbrella policy as void ab initio, alleging that USA misrepresented the nature of its work and the number of employees in its insurance policy application.
 

Rutgers failed to establish that it was not obligated to defend or indemnify USA on the ground that the work that gave rise to the underlying action exceeded the classifications of work covered by its general liability policy; the relevant classification was undefined, and discovery is necessary to ascertain its scope and meaning.
 

Rutgers also failed to establish prima facie that the assault and battery exclusion was applicable.  While the exclusion, by its plain language, applied to claims based on assault and battery, the underlying claim was based on negligence, and there are no allegations of assault.
 

Rutgers failed to establish prima facie that recission of the umbrella policies was warranted, as it did not demonstrate that USA made material misrepresentations on its insurance applications, which would render the policies void ab initio.

 

06/07/22         RD Unico, Inc. v. Starr Indemnity & Liability Company
Appellate Division, First Department
Policy Provided BOTH a Per Location Limit and an Overall Aggregate both by Construing Plain Language and Reviewing Extrinsic Evidence

The only reasonable way to construe the policy language of the Starr policy is that it contains a $5 million per location limit and a $5 million overall aggregate limit of liability.  Reading the Starr policy as plaintiffs contend it should be read — that the $5 million aggregate applied on a per-location basis — would produce a windfall of approximately half a billion dollars, which would not be a reasonable construction.
 

Even assuming the policy is ambiguous, Starr's extrinsic evidence — namely, the Acord applications — established that the overall aggregate of the Starr policy did not apply on a per-location basis, but rather, was capped at $5 million

 

06/01/22         Garcia v. Shah
Appellate Division, Second Department
Where Husband and Wife are both Named Insureds, Cancellation Letter Sent to Only One of Them Does Not Properly Cancel Policy

On December 22, 2017, Garcia, allegedly was injured as a result of a trip-and-fall at the home or Mr. and Mrs. Shah and sued them.
 

The Shahs tendered the defense of the lawsuit to Occidental Fire & Casualty Company of North Carolina (“Occidental”).  Occidental denied coverage on the ground that it had canceled the policy prior to the accident because of non-payment of premium. The Shas sued Occidental in a third-party action.
 

Occidental moved to dismissed offering the purported notice of cancellation of insurance directed to the Shahs, a copy of an envelope addressed only to Darshan Shah in which the purported notice of cancellation of insurance allegedly was mailed, and a certificate of mailing allegedly showing that SageSure Insurance Managers, which allegedly performs insurance related services for Occidental, mailed the purported notice of cancellation to Darshan Shah on October 11, 2017. The Shahs opposed the motion, and cross-moved for summary judgment on the third-party complaint, including the third-party cause of action for an award of attorneys' fees incurred in connection with the third-party action.
 

The lower court denied Occidental’s motion and granted the Shahs, and declaring, inter alia, that the main action is covered by the terms of the insurance policy, and that Occidental is obligated to defend and indemnify the Shahs in the main action.
 

The court also awarded the Shahs attorneys' fees and set the matter down for a hearing on the amount of reasonable attorneys' and awarded, without opposition, $16,437.
 

The initial burden of demonstrating a valid cancellation of an insurance policy is on the insurance company which disclaims coverage. Where, as here, a policy has been in effect for at least 60 days, cancellation is permitted only upon specified grounds listed in Insurance Law § 3425(c)(2), which includes "nonpayment of premium, provided, however, that a notice of cancellation on this ground shall inform the insured of the amount due" (id. § 3425[c][2][A]). "Proof of mailing of a notice of cancellation . . . to the named insured at the address shown in the policy, shall be sufficient proof of the giving of" an insurance policy cancellation notice, and the reasons given therefor (id. § 3425[h][1]). Pursuant to Insurance Law § 3425(h)(2), "[n]o notice of cancellation . . . that fails to include a provision required by this section shall be an effective notice for purposes of this section." "Insurance notice requirements are strictly construed, and any ambiguities are to be interpreted in favor of the insured"
 

Here, Occidental's documentary submissions failed to conclusively establish that it validly canceled the insurance policy before the accident, as these submissions did not show that Occidental mailed the purported notice of cancellation to both Darshan Shah and Ranjana Shah, both of whom are named insureds on the policy Nor did Occidental's documentary submissions establish that the Shahs were precluded from commencing the third-party action for a judgment declaring that they are entitled to a defense and indemnification in the main action before a final resolution in the main action.
 

Therefore, Occidental's submissions did not utterly refute the Shahs' allegations or conclusively establish a defense as a matter of law.
 

Furthermore, the evidentiary material submitted by Occidental did not, as a matter of law, resolve the parties' factual disputes such that it could be said that the allegations in the third-party complaint were not facts at all.
 

Further, the Supreme Court properly granted that branch of the Shahs' cross motion which was for summary judgment declaring that Occidental had a duty to indemnify the Shahs in the main action. Contrary to Occidental's contention, that branch of the Shahs' cross motion was not premature, as Occidental failed to demonstrate that further discovery might lead to relevant evidence or that facts essential to justify opposition to the motion were exclusively within the knowledge and control of the Shahs.
 

So, the court found that the Shahs proved the cancellation was ineffective and therefore, they were entitled to defense and indemnity but NOT the cost of prosecuting the coverage lawsuit.

 

05/31/22         State Farm Fire v. Axial Chiropractic, P.C.
Appellate Division, First Department
Neither No Fault nor Liability Coverage for Staged Accident

This declaratory judgment action concerns claims for no-fault insurance benefits made in connection with an automobile accident that occurred on October 25, 2018. State Farm sought a declaration of noncoverage because the accident was not a covered event, as it was intentional or staged, plaintiff submitted sufficient evidence warranting entry of a default judgment. the claim representative's affidavit and the additional evidence submitted, including an affidavit of the driver of the other car involved in the accident and dash-cam footage from that car, adequately set forth the factual basis for plaintiff's belief that the crash was not a covered event. These submissions were sufficient to determine that a viable declaratory judgment cause of action of non-coverage exists and, by failing to answer, the defaulting defendants are deemed to have admitted the factual allegations in the complaint.  State Farm was also entitled to a default judgment on its fifth cause of action seeking a declaration that it is not obligated to defend defendants Tason Cohen, Tatiana Richards, and Richardeer Mordaunt in connection with any claims arising out of the October 25, 2018, collision.
 

Concerning a separate cause of action, State Farm  established that defendants Cohen, Hinds, and McNeil, who assigned claims for no-fault benefits to the defendant’s medical service providers, and defendant Richards, the owner of the vehicle, failed to appear for properly noticed examinations under oath. Their failure to appear was a breach of a condition precedent to coverage and voids the policy ab initio. 

 

PEIPER on PROPERTY (and POTPOURRI)

Steven E. Peiper
[email protected]

06/01/22         Mauro v. Zorn Realties, Inc.
Appellate Division, Second Department
Different Bank Accounts and Corporate Purpose Defeats “Alter-Ego” Defense

Plaintiff sustained bodily injury when he fell while in the course of his employment with Zorn Poultry Farms.  After receiving workers’ compensation benefits from Zorn Poultry, plaintiff commenced the instant action against Zorn Realties who, it is alleged, owned the property. 
 

In opposition, counsel argued that Zorn Poultry and Zorn Realties were “alter-egos” of each other.  As such, it was argued that both entities were entitled to the exclusivity protections of Workers’ Compensation Law § 11.  In assessing Zorn’s position, the Appellate Division recognized that alter-egos are, in fact, entitled to Section 11 protection. However, to establish alter-ego status the movant must demonstrate that the two entities operated as a single integrated entity.  Mere close proximal relationship is insufficient.  Rather, the movant must establish that one entity controls the day-to-day operations of the other entity.   
 

Zorn was able to show that the two entities share an address and an insurance policy.  However, Zorn was unable to show that they shared identical officers or owners.  Further, proof submitted by plaintiff show that the entities served entirely different purposes, had different bank accounts, filed separate tax returns and had separate workers’ compensation policies. On this Record, the court ruled that Zorn failed to meet its burden of proof. 
 

Zorn also argued that plaintiff was a special employee of Zorn Realties, and thus the protections of Section 11 were nevertheless available.  In assessing the position, the Court noted that several factors impact a “special employee” analysis.  Chief among those factors considered are “who has the right to control the employee’s work, who is responsible for the payment of wage and the furnishing of equipment, who has the right to discharge the employee and whether the work being performed was in furtherance of the special employer’s or the general employer’s business.

Because Zorn Realties was unable to demonstrate that it “controlled and directed the manner, details and ultimate result” of plaintiff’s work, its “special employee” defense failed.  The fact that plaintiff, himself, did not know he was working for Zorn Realties at the time of the incident only further complicated the attempted defense.   

 

DISHING OUT SERIOUS INJURY THRESHOLD

Michael J. Dischley
[email protected]

06/07/22        Isis Nicole Natera v. Veloz Livery Rentals Inc.
Appellate Division, First Department
Plaintiff Failed to Raise a Triable Issue of Fact as Plaintiff Submitted only Unaffirmed and Uncertified Medical Records

Order, Supreme Court, Bronx County (Veronica G. Hummel, J.), entered December 21, 2021, which, to the extent appealed from as limited by the briefs, denied defendant Moussa Bagayoko's motion for summary judgment dismissing the serious injury claim of significant limitation of use of the right knee (Insurance Law § 5102[d]) as against him, unanimously reversed, on the law, without costs, and the motion granted, and, upon a search of the record, defendants Veloz Livery Rentals Inc. and Soufiane Benounssi's motion for summary judgment granted.
 

Initially, the Appellate Division found that defendants established prima facie that plaintiff did not sustain a serious injury to her right knee by presenting the report of an orthopedic surgeon who found no range of motion limitations or other qualitative or quantitative evidence of limitations in plaintiff's right knee. Defendant also presented plaintiff's records from the hospital where she was treated after the subject accident. These records showed that she complained only of neck and lower back pain, and that the attending physician who examined her reported no evidence of trauma to her lower extremities, including her knee, and no right knee limitations. They also presented the affirmed reports of a radiologist who found a "[n]ormal knee" with no evidence of traumatic injury in MRI images and an orthopedic surgeon who opined that intra-operative photograph from arthroscopic surgery on that knee showed no evidence of trauma and no need for surgery.
 

In opposition, plaintiff failed to raise an issue of fact, as she submitted only unaffirmed and uncertified medical records. As an alternative holding, we find plaintiff's medical records contain no objective evidence of qualitative or quantitative limitations in her right knee contemporaneous with the accident. While plaintiff underwent surgery to her right knee, there is no objective evidence plaintiff sustained a traumatic injury to her knee causally related to the accident.
 

Although Bagayoko's codefendants did not file a notice of appeal, we grant their motion for summary judgment dismissing the complaint as against them, because "if plaintiff cannot meet the threshold for serious injury against one defendant, she cannot meet it against the other[s]".
 

Accordingly, the Appellate Division reversed the Supreme Court decision and granted the defendants' motion for summary judgment dismissing the complaint.

 

06/01/22         Tamilia Amirova v. JND Trans, Inc.
Appellate Division, Second Department
Plaintiff Expert Failed to Address Defendant Expert Findings that Injuries were Degenerative in Nature

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Carl J. Landicino, J.), dated December 6, 2019. The order granted the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.
 

The plaintiff commenced this action to recover damages for personal injuries that she allegedly sustained in a motor vehicle accident that occurred on December 27, 2017. The defendants moved for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. In an order dated December 6, 2019, the Supreme Court granted the defendants' motion, and the plaintiff appeals.
 

Initially, the Appellate Division found that the defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. The defendants submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine and the plaintiff's left shoulder were degenerative in nature and not caused by the accident.
 

In opposition, the Appellate Division found that plaintiff failed to raise a triable issue of fact. The plaintiff's expert failed to address the findings of the defendant's radiologist that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine and the plaintiff's left shoulder were degenerative in nature.
 

Accordingly, the Supreme Court properly granted the defendants' motion for summary judgment dismissing the complaint.

 

WILEWICZ’S WIDE WORLD of COVERAGE

Agnes A. Wilewicz
[email protected]

06/08/22        Farmington Village Dental v. Cincinnati Insurance Company
United States Circuit Court, Second Circuit
Second Circuit Again holds that in a COVID-19 Alleged Property Damage Case, Physical Injury to Tangible Property is Required to Trigger General Liability Property Coverage

Farmington Village Dental brought an action against its carrier Cincinnati Insurance Company (“Cincinnati”) for breach of contract, breach of the covenant of good faith and fair dealing, and deceptive business practices under Connecticut law. It did so based upon Cincinnati’s allegedly improper denial of insurance coverage for certain business losses resulting from COVID-19 and related government restrictions.
 

At the appellate level, the Court addressed whether Farmington Village had experienced a “direct ‘loss’” within the meaning of its all-risk insurance policy with Cincinnati when COVID-19-related executive orders issued by the Governor of Connecticut forced Farmington Village to suspend or reduce business at its dental practice (the insured premises).
 

Under the policy, “‘[l]oss’ means accidental physical loss or accidental physical damage.” Farmington Village contested the application of this language under the law, saying that the district court made a “sweeping conclusion of law” that, under Connecticut law, “losses due to a property’s inoperability without any physical loss or damage to the property itself are not recoverable with this type of property insurance coverage.” Farmington Village argues that the case upon which the district court primarily relied—Capstone Bldg. Am. Motorists Ins.—did not extend so far, and accordingly does not foreclose its argument that “accidental physical loss or accidental physical damage” does not require physical damage to property, thereby making COVID-19’s impacts on Farmington Village’s dental practice—loss of income and inability to use the property as intended—a covered “direct ‘loss.’”
 

The Second Circuit, however, held that: “Regardless of how far Capstone extends, it provides a sound basis to predict how the Connecticut Supreme Court would resolve the issue here. To be sure, under Connecticut law, ‘whether an insured party makes a viable claim for property damage is a highly fact-dependent determination in each case.’ But Capstone makes clear that under certain policy definitions, the alleged loss of use of property will be insufficient for a plaintiff to obtain coverage if the plaintiff has failed to allege physical damage. In Capstone, the Connecticut Supreme Court concluded that under the plain language of the applicable general liability policy, the escape of carbon monoxide did not, without more, constitute a ‘physical injury to tangible property’ because it caused no ‘physical, tangible alteration to any property. Here, as in Capstone, the policy language unambiguously requires that loss or damage be physical; accordingly, Farmington Village’s deprivation of the use and benefits of its property is not enough to trigger coverage. Further, Farmington Village’s allegations that SARS-CoV-2 causes physical loss or physical damage to its property by way of its transmissibility through physical particles in the air and on surfaces fail to allege how the presence of those virus-transmitting particles tangibly alter or impact the property.”

 

BARNAS on BAD FAITH

Brian D. Barnas
[email protected]

06/01/22         Schlusselberg v. New York Central Mutual Fire Ins. Co.
Appellate Division, Second Department
Insured Failed to State Claim for Bad Faith Punitive Damages

The plaintiff was injured when she was struck by a vehicle while in a crosswalk.  She had an automobile insurance policy with New York Central Mutual (“NYCM”) and made an underinsured motorist claim.  After the driver of the vehicle’s insurer offered the full policy amount of $25,000, NYCM consented to the settlement.  The plaintiff subsequently commenced this action against NYCM seeking to recover her remaining policy limit of $225,000 as well as punitive damages based on bad faith.  New York Central moved to dismiss the bad faith punitive damages claim.
 

Damages for breach of contract are ordinarily limited to the contract damages necessary to redress the private wrong.  In contrast, punitive damages are available in the limited circumstances where it is necessary to deter conduct that could be considered gross, morally reprehensible, and of such wanton dishonestly as to imply a criminal difference to civil obligations.  The elements required to state a claim for punitive damages when the claim arises from a breach of contract are: (1) the defendant's conduct must be actionable as an independent tort; (2) the tortious conduct must be egregious in nature; (3) the egregious conduct must be directed to the plaintiff; and (4) it must be part of a pattern directed at the public generally.
 

Plaintiff here failed to allege an actionable independent tort.  There is no tort in New York for bad faith refusal to comply with an insurance contract.  While an insurer may  be held liable for damages for bad faith refusal of a settlement offer, the plaintiff failed to state such a cause of action.  The facts alleged by plaintiff did not fit into any cognizable theory of bad faith refusal to settle.  An insurer has a good faith duty in defending and settling claims on behalf of the insured, but here there was no claim against the plaintiff.  It was plaintiff’s claim against NYCM.  Plaintiff also failed to allege any facts that NYCM’s conduct constituted a gross disregard of her interests.
 

Even if the plaintiff had stated a cause of action for the independent tort of bad faith refusal to settle, she failed to allege any facts that satisfied the other elements for punitive damages.  Plaintiff merely alleged that she did not receive the amount of compensation of which she believed she was entitled.  This was a simple private contractual dispute between an insurer and its insured with no greater implication.

 

05/24/22         Grossman v. GEICO
United States Court of Appeals, Second Circuit
GEICO Did Not Act in Bad Faith By Not Further Adjusting Insurance Rates During COVID-19 Pandemic

Plaintiffs commenced a putative class action against GEICO on behalf of New Yorkers who had purchased auto insurance policies from GEICO after March 1, 2020.  Plaintiffs claimed that the COVID-19 stay-at-home orders caused a dramatic reduction in driving and driving-related accidents, which resulted in a “windfall” of profits for auto insurance companies like GEICO.  GEICO instituted a giveback program in April 2020 that provided a 15% premium reduction on new or renewed policies.  Plaintiffs contended this credit was inadequate, that GEICO’s advertising about the program was misleading, and that GEICO charged unconscionably high rates.  They asserted claims for breach of the covenant of good faith and fair dealing, unjust enrichment, and violations of the New York General Business Law.
 

The Second Circuit affirmed the dismissal by the district court.  First, the filed rate doctrine bared the claims.  The rates GEICO charged were approved by the New York Department of Financial Services.  Under the filed rate doctrine, a rate that is approved by a governing regulatory agency is per se reasonable and unassailable in a judicial proceeding brought by a ratepayer.  Since the DFS had approved the rates, the plaintiffs’ claims were barred by the doctrine’s non-justiciability principle.
 

Even if the plaintiffs’ claims were not barred, the Second Circuit found that they had failed to state a cause of action.  Plaintiffs argued that GEICO breached the covenant of good faith and fair dealing by failing to use its contractual discretion to adjust insurance rates as described in the policy.  The policy provided that GEICO may adjust the premium during the policy term if any of the information provided by the policyholder on which the premium is based is incorrect, incomplete, or changed.  GEICO had no duty to act because the plaintiffs did not allege, they corrected, added to, or otherwise changed any information.  Changes by the global pandemic were not the type of change of information covered by the provision.
 

Plaintiffs’ unjust enrichment claim was also dismissed.  Unjust enrichment and breach of contract may be pleaded in the alternative, but only in certain limited circumstances.  Here, there was no dispute that there was a valid and enforceable insurance contract that addressed the subject matter of the lawsuit.  Accordingly, Plaintiffs could not state a claim for unjust enrichment.
 

Plaintiffs’ claims for unfair business practices and false advertising under GBL §§ 349 and 350 were also dismissed.  Plaintiffs claimed that GEICO misleadingly advertised the giveback program on its website, and that GEICO had suggested it would return all profits it made during the pandemic.  However, the plaintiffs did not allege that they reviewed GEICO’s advertisements on its website or had ever even visited the website.  Thus, the plaintiffs could not show that the allegedly misleading advertisement caused their claimed injury as required to state a claim.

 

LEE’S CONNECTICUT CHRONICLES

Lee S. Siegel
[email protected]

06/07/22        Russbach v. Yanez-Ventura
Appellate Court of Connecticut
Appellate Court Narrows Informed Consent Exception to Reduced UIM Limits

A carrier’s failure to comply with the notice requirements of Connecticut’s UIM statute resulted in the court applying limits of $1 million, instead of $100,000. The Appellate Court, in a fact dependent opinion, reversed the trial court and applied the policy’s liability limit to the UIM coverage, rejecting the argument that an exception to Connecticut General Statutes § 38a-336(a)(2) applied.
 

Russbach was injured in a motor vehicle collision with Yanez-Ventura while driving a loaner car provided by West Shore Motors. Yanez-Ventura was wholly at fault but was uninsured. Wesco Insurance Company afforded commercial garage liability coverage to West Shore with limits of $1 million. At issue on appeal was whether West Shore effectively rejected the liability limits under the controlling Connecticut statute when it opted instead for only $100,000 in UM/UIM coverage. The appellate court found that it did not.
 

The uncontested evidence was that West Shore was a small used car dealer that rarely gave loaner cars and that its principal was not knowledgeable about insurance. The principal testified that he relied on his broker and that he wanted the lowest amount of UM/UIM coverage possible (which would have been $40,000 under Connecticut law).
 

The trial court, citing the credibility of the principal’s testimony, found that “the dealership “knowingly made an informed decision to reduce the [uninsured motorist] coverage to $100,000 from the $1,000,000 bodily injury liability coverage and that the ... coverage was properly reduced to $100,000.” While the Superior Court found that the waiver form “did not contain a statement of premium costs,” the court concluded that such noncompliance with the statutory requirements of § 38a-336(a)(2) was excused because the policy was for a commercial garage.
 

The Appellate Court determined that the trial court overly applied a narrow exception to the informed consent requirement and reversed. Under the Connecticut uninsured motorist statute, each auto policy is required to afford UM/UIM coverage equal to the liability limits. CGS §38a-336(a)(2). A request for lower limits will not be effective “unless any named insured has signed an informed consent form that shall contain: (A) an explanation of uninsured and underinsured motorist insurance approved by the commissioner; (B) a list of uninsured and underinsured motorist coverage options available from the insurer; and (C) the premium cost for each of the coverage options available from the insurer ....” Id. (emphasis added).
 

The Connecticut courts have considered the efficacy of a waiver, concluding that where the insured is a sophisticated, large commercial fleet owner, with internal risk managers that an exception to the informed consent requirement was appropriate. See e.g., Frantz v. United States Fleet Leasing, Inc., 245 Conn. 727, 714 A.2d 1222 (1998)(“we do not believe that a company that, like Fleet Leasing, is covered under a commercial fleet policy, falls within the class of consumers that the legislature sought to protect”); see also McDonald v. National Union Fire Ins. Co. of Pittsburgh, PA, 79 Conn. App. 800, 801–802, 831 A.2d 310, cert. denied, 266 Conn. 929, 837 A.2d 802 (2003)(holding that companies like the named insured, Cumberland Farms, have “departments that specialize in legal and insurance matters” whose “personnel ... were fully aware of the relative cost of uninsured motorist coverage and the implications of their decision”).
 

The Appellate Court, analyzing the precedent, found that there is only a limited exception and not the “sweeping exception” advocated by Wesco. “The holdings in those cases were fact-specific and predicated on a number of factors that distinguished the commercial entities in question from the typical purchaser of insurance. In each case, the insurance policy (1) involved a large commercial entity that had “departments that specialize in legal and insurance matters”; (2) was procured by insurance specialists who “were fully aware of the relative cost of uninsured motorist coverage”; and (3) covered a massive fleet of automobiles used to conduct large-scale commercial activities.” (internal citations omitted).
 

In finding that the exception was not applicable, the court noted that the insured was a local auto repair business, lacking in any insurance sophistication or knowledge. The purpose of the statute, the court went on, is to provide consumers with information to make an informed decision, Therefore, applying the exceptions identified would not satisfy the broad remedial intent of the statute.
 

Additionally, the appellate court affirmed that the Wesco policy did not contain conversion coverage, therefore the plaintiff’s more than $200,000 in worker’s compensation benefits would be a set off. Whether an insured purchased such coverage is a question of historical fact and not policy construction, generally, noted the court. As there was no evidence of an intent to purchase the conversion coverage, the trial court had correctly found for the carrier.
 

[Ed. Note: Generally, Connecticut is an off set to limits state, meaning that any other available insurance or even workers compensation benefits reduce the amount of the available UM/UIM coverage. But Connecticut permits an insured to purchase conversion coverage, making the policy an off set to damages. Conversion coverage allows for the payment of up to the entire UM/UIM limit, regardless, for example, of the other driver’s liability insurance.]
 

06/07/22        Hale v. Harleysville Preferred Ins. Co.
Superior Court of Connecticut, Hartford
Pleading of Adverse Coverage Verdicts Still Insufficient to Avoid Dismissal of CUIPA Counts

Following the prior dismissal of the insured’s CUTPA/CUIPA causes of action, Hale fared no better the second time around. Hale sued Harleysville for failure to fully pay a covered loss and for violation of the Connecticut statutory bad faith framework. In order to make out a viable cause of action, an insured must allege facts demonstrating that the carrier’s conduct was a general business practice. In dismissing the first complaint, Judge Sheridan chided the practice of many policy holders of merely pleading the existence of other lawsuits making allegations of CUIPA violations. Such pleadings are insufficient to satisfy the pleading requirement set forth in by the Supreme Court in Lees v. Middlesex Insurance Co., 229 Conn. 842, 850, 643 A.2d 1281 (1994).
 

In the second amended complaint, the insured tried to overcome the pleading defect by alleging verdicts against Harleysville “for failing to pay the plaintiff's claim.” In none of the matters, however, did Hale allege that the verdicts reflected an adjudication that the carrier had violated CUIPA. While writing that there is no requirement that a plaintiff prove that a carrier has been adjudged in violation of the act, the pleading still must allege facts supporting the necessary allegation that the defendant has committed unfair insurance practices with such frequency as to indicate a general business practice.
 

Once again dismissing the CUTPA/CUIPA claims, the court wrote “Having chosen to rely entirely on prior verdicts to demonstrate a general business practice of violating CUIPA, the plaintiff must allege that those verdicts reflect prior instances of unfair insurance practices. His second amended complaint fails to do so. In addition to his insufficient reference to verdicts against the defendant, the complaint alleges only facts relating to his own claim. As the plaintiff acknowledges, alleging “improper conduct in the handling of a single insurance claim, without any evidence of misconduct ... in the processing of any other claim, does not rise to the level of a general business practice.”
 

06/06/22        National Casualty Co. v. Amica Mut. Ins. Co.
Superior Court of Connecticut, Hartford
The Duty to Defend is Indivisible

While attending a Memorial Day racing event at Lime Rock Park, Adkins was struck by a vehicle operated by Violette, an employee of Lime Rock driving his personal auto. Adkins sued Viollete for negligent operation of the motor vehicle and Lime Rock for premises liability. The event sponsor, WC Vision, was also impleaded by Viollete, claiming that it had exclusive control over the event.
 

NCC insured Lime Rock, while Amica insured Adkins. NCC maintained that Amica had a duty to defend Lime Rock on all counts because the action arose out of the use of Violette's personal vehicle, insured by Arnica. While Amica accepted coverage of Lime Rock on the vicarious liability claim against Lime Rock, it disclaimed any duty to defend Lime Rock on the direct negligence premises liability claim. NCC sued Amica for reimbursement of defense expenses it incurred in defending the premises liability cause of action. Meanwhile, no one defended WC Vision, which claimed that Lime Rock contracted to procure insurance coverage on its behalf.
 

NCC issued a $1 million CGL policy to Lime Rock and $1 million auto policy to Lime Rock. Amica issued a $250,000 personal auto policy to Viollete together with a $1 million PUP. 
 

NCC defended Lime Rock under the commercial auto policy but denied coverage under the CGL policy based on the motor vehicle liability exclusion. NCC further argued that its policy was excess to the Amica policies and also for that reason denied WC Vision’s tender. NCC tendered the suit to Amica for defense. Amica, not contesting its duty to defend Violette, asserted that there was a potential conflict between Lime Rock and Violette, claiming that separate counsel retained by NCC should defend the premises liability count. Amica disclaimed the premises liability count under both policies because any liability imposed would be outside the policies’ grant of coverage for liability imposed because of an auto accident. Amica, however, also disclaimed WC Vision’s tender, arguing that the allegations in the impleader involve its own direct negligence and not vicarious responsibility for Violette.

Got that?
 

Amica’s Duty to Defend
 

The court sided with Amica—sort of. You have to read on for it to make sense. While Amica acknowledged its duty to defend Lime Rock under the personal auto policy’s omnibus clause, it correctly owed no duty to Lime Rock under the premises liability cause of action. Lime Rock, the court reasoned, was not an insured for purposes of that cause of action. “The determinative question is whether Lime Rock's potential liability under count four is “with respect to legal responsibility for [Violette's] acts or omissions,” not whether the underlying plaintiffs’ injuries occurred “because of an auto accident.””
 

Finding favor with the extraterritorial decisions relied on by Amica, the court found that an additional insured under an auto policy is covered only to the extent that its liability is vicarious for the acts of the insured. Whether the accident arose from the use of an auto, or because of accident, is irrelevant. Lime Rock’s liability in the premises liability count, the court concluded, is not vicarious.
 

Ultimately, however, the court found that the duty to defend is indivisible. “Although the court concludes that count four does not itself trigger Amica’s duty to defend, the court agrees with National Casualty's alternative argument that Amica had a duty to defend Lime Rock on count four simply by virtue of its obligation to do so triggered by count three. The duty to defend is indivisible – if only one claim in a complaint containing multiple claims against an insured is potentially covered, the insurer must defend the entire action.”
 

NCC’s Duty to Defend
 

NCC’s reliance on the CGL’s motor vehicle liability exclusion, the court wrote, was misplaced as the policy contained a motor sport endorsement. As a result, NCC owed Lime Rock a defense to the premises liability cause of action under the CGL policy. NCC also had an indivisible duty to defend the premises liability count under the commercial auto policy, for the reasons set forth as to Amica. Moreover, NCC, the court held, owed a defense to WC Vision. Violette's third party claim against WC Vision is based exclusively on allegations of negligence on the part of WC Vision. The operative allegations against WC Vision concerned its failure to adopt proper safety measures, failure to properly hire, train and supervise personnel, and failure to properly supervise activities occurring during the event. The third-party complaint does not seek to hold WC Vision legally responsible for Violette's acts and omissions. Consequently, like Lime Rock, WC Vision is not an insured under the Arnica PAP and Arnica had no duty to defend WC Vision.
 

Ultimately, while the court concluded that both NCC and Amica owed a duty to defend the whole, and Amica did not, further proceedings are necessary to determine what if anything Amica is required to reimburse to NCC under an equitable contribution theory. The court declined to engage in a priority of coverage analysis, finding it unnecessary.

 

KYLE'S CONSTRUCTION COLUMN

Kyle A. Ruffner
[email protected] 

Unfortunately, no interesting construction cases to report on this week.

 

RYAN’S CAPITAL ROUNDUP

Ryan P. Maxwell
[email protected]

Legislative List

06/02/22         Grieving Families Act Passes Both Houses
New York Legislature
Bill Awaits Delivery to the Governor that Would Fundamentally Change Wrongful Death Litigation and Damages in New York State
 

The Grieving Families Act that we have heard an awful lot about recently has passed both New York legislative houses. This legislation would fundamentally change both the scope of damages available for wrongful death and the persons eligible to collect such damages, which include damages associated with grief experienced following the death, and has a certain flavor of retroactivity that raises solvency concerns for carriers who collected premiums during a drastically different legal landscape. Our very own Chris Potenza and Alice Trueman wrote about the ramifications of this legislation recently in an article that has been published by NYSBA and others. You can find that article here.
 

You’ve been warned.

06/01/22         Supplemental Spousal Liability Insurance
New York Legislature
Bill Awaits Delivery to the Governor that Would Amend Supplemental Spousal Immunity Insurance From An Opt-In to an Opt-Out
 

Last week, a bill passed both houses of the New York State Legislature that requires that insurance companies provide motorists with supplemental spousal liability insurance coverage equal to bodily injury liability coverage, unless the insured specifically rejects such coverage in writing. Essentially this bill creates an opt-out where such coverage previously required an opt-in.

Originally, Insurance Law § 3420(g) generally barred coverage under a liability policy for claims brought by a spouse against the other spouse unless the policy expressly provides coverage for such claims, in the name of fraud prevention. That changed in 2002, when Insurance Law §3420(g) was amended to provide, in pertinent part:

“(g) No policy or contract shall be deemed to insure against any liability of an insured because of death of or injuries to his or her spouse or because of injury to, or destruction of property of his or her spouse unless express provision relating specifically thereto is included in the policy as provided in paragraphs one and two of this subsection. This exclusion shall apply only where the injured spouse, to be entitled to recover, must prove the culpable conduct of the insured spouse.”

The 2002 amendment required an insurer to provide such coverage to an insured under a motor vehicle policy where the insured requests the coverage and further required the insurer to provide notice to the insured of the availability of the coverage.

Where the current Insurance Law §3420(g) created an “opt-in” for those insureds who wanted additional coverage (at additional premium), the new bill that has passed both legislative houses and awaits delivery to the governor would turn supplemental spousal liability insurance into an “opt-out,” meaning all policies would be required to provide this coverage (at additional premium) until an insured affirmatively elects not to pay for such coverage.

This coverage only applies where “the injured spouse, to be entitled to recover, must prove the culpable conduct of the insured spouse.”

Maxwell’s Minute: I’ll note that in justifying the bill, its sponsor suggests that under the current law “Few drivers are aware of the value of supplemental spousal liability insurance and insurance companies rarely promote this form of insurance coverage.” However, the latter is false because insurers are literally required to notify insureds of this coverage under the current version of §3420(g) (just look through your auto policy), and the former is not surprising, given the number of insureds that actually read their insurance policy and its notifications. Still, they will certainly recognize their premium increase, especially those that are being charged out of wedlock.

Not to be lost, but this coverage is beneficial if you are married, so if you have not yet opted in, you should consider doing so. Ask your broker about it today.

RAUH’S RAMBLINGS

Patricia A. Rauh
[email protected]

06/03/22         Fulkerson v. Unum Life Ins. Co. of America
U.S. Court of Appeals, Sixth Circuit
Reckless Driving does Constitute a Crime and therefore Invokes the Crime Exclusion Under the Policy and as a Result, Plaintiff is not Entitled to Accidental Beath Benefits
 

Daniel Tymoc (the “Decedent”) died in a car accident while driving between 80 and 100 miles per hour, well above the 60 mile per hour speed limit.  In an apparent attempt to avoid colliding with another vehicle, he veered to the right, which caused his vehicle to drive off the road, strike multiple trees, and flip over several times.  Decedent died at the scene of the accident.
 

Through his employer, the Decedent was covered by a Unum life insurance policy (the “Policy”) that provided both basic life insurance coverage and an additional accidental death benefit.  Decedent’s mother, Judy Fulkerson (the “Plaintiff”), sought to recover benefits as the policy’s beneficiary.  Defendant, Unum, approved the $100,000 payment of group life insurance benefits.  However, Unum refused to pay the $100,000 in accidental death benefits on the basis that the Decedent’s conduct at the time of the accident – speeding and reckless driving (conduct which the Plaintiff did not dispute) – caused his death, thereby triggering the Policy’s crime exclusion.
 

Plaintiff brought this action under ERISA, seeking to recover the accidental death benefit and arguing that the crime exclusion under the Policy is ambiguous and should be interpreted in favor of the beneficiary.  The District Court ruled that Plaintiff was entitled to the accidental death benefit and Unum appealed.
 

In considering the appeal, the Court pointed out that if either reckless driving or speeding triggers the policy’s crime exclusion, then the Plaintiff would not be entitled to the accidental death benefits.  The Policy’s crime exclusion excludes accidental death benefits for “any accidental losses caused by, contributed to by, or resulting from…an attempt to commit or commission of a crime.”  Therefore, the question at issue in this case is whether “reckless driving” or “speeding” a crime pursuant to the terms of the Policy.
 

The Policy did not define what constitutes a crime, so the Court looked at the plan meaning as defined in several different dictionaries, and determined that a crime is an “illegal act for which someone can be punished by the government.”
 

The Court acknowledged that under Ohio law – where the accident took place – reckless driving is considered a misdemeanor offense.  Additionally, the Court pointed out that reckless driving is also a crime in 48 states and is generally understood by the public to constitute a crime.  The Court found that the Decedent’s reckless driving did indeed invoke the Policy’s crime exclusion and as such, there was no coverage for Plaintiff under the Policy’s accidental death provision.

 

STORM’S SIU EXAMEN

Scott D. Storm
[email protected]

05/05/22        Liberty Mutual Ins. Co., et al. v. Martin, et al      
Supreme Court, New York County
No-Fault Coverage Precluded as Insurers Submitted Proof to Demonstrate the Collision was a Staged Accident
 

Declaratory judgment action granting a default judgment against the defendants, as assignees of the individual defendants, declaring the insurers are not obligated to pay no-fault benefits as to they submitted proof to demonstrate, prima facie, that they properly denied coverage on the basis that the alleged collision was likely staged or intentional and that no-fault coverage was thereby vitiated. This evidence includes factual proof that:

(a) the individual defendants and another passenger in the subject vehicle not named as a defendant, each of whom testified at examinations under oath contradicted each other as to several material facts regarding the collision.

(b) the driver of the other vehicle involved in the collision testified that he felt the individual defendants had driven into his vehicle on purpose;

(c) defendant Martin was involved in four prior losses which were investigated as suspected staged collisions and which involved similar, if not identical, facts;

(d) as was the case in each of defendant Martin's prior claims, the individual defendants' claims involved a new policy with loss alleged shortly after inception; and

(d) no injuries were reported at the scene of the collision.
 

05/31/22        State Farm Fire and Cas. Co. v. Axial Chiropractic, P.C., et al
Appellate Division of the Supreme Court of New York, First Department.
Evidence of Staged Accident Included Dash-Cam Footage from the Other Vehicle

Insurer submitted sufficient evidence warranting entry of a default judgment that the accident was not a covered event, that it was intentional or staged.  The evidence included a claim representative's affidavit and an affidavit of the driver of the other car involved in the accident with dash-cam footage from that car, which adequately set forth the factual basis for plaintiff's belief that the crash was not a covered event.

In addition, certain co-defendants who assigned claims for no-fault benefits to medical service providers failed to appear for properly noticed examinations under oath. Their failure to appear was a breach of a condition precedent to coverage and voids the policy ab initio.
 

05/19/22        State Farm Mutual Automobile Ins. Co. v. Metro Pain Specialists PC
United States District Court, E.D. New York.
In RICO Action Against Medical Providers, Court: Grants Insurer’s Motion Staying/Enjoying all Pending and Future No-Fault Insurance Collection Arbitrations Pending Disposition of the Declaratory Judgment Claim; Declines to Stay Pending No-Fault Insurance Collection Lawsuits in State Court; and Enjoins Defendants from Commencing Any New No-Fault Insurance Collection Lawsuits Against Plaintiffs. The Court Declines to Require Plaintiffs to Post a Bond

Action against sixty-three Defendants alleging they wrongfully obtained no-fault insurance reimbursements for medically unnecessary healthcare services in violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1962(c)-(d) ("RICO") and are liable for common law fraud, aiding and abetting fraud, and unjust enrichment, seeking damages and a declaratory judgment.

Plaintiffs moved to: (1) stay, until resolution of litigation, all arbitrations pending before the American Arbitration Association ("AAA") and all lawsuits pending in New York state courts between Defendants and Plaintiffs seeking "no-fault insurance benefits for services or supplies provided by Defendants to Metro Pain or Tri-Borough patients"; and (2) enjoin Defendants, until resolution of litigation, from commencing any new arbitrations or New York state court proceedings against Plaintiffs seeking the same. 

The Court grants State Farm’s motion staying all no-fault insurance collection arbitrations pending before the AAA and enjoins Defendants from commencing any further no-fault insurance collection arbitrations, pending the disposition of the declaratory judgment claim. The Court declines to stay pending no-fault insurance collection lawsuits in state court against Plaintiffs but enjoins Defendants from commencing any new no-fault insurance collection lawsuits against Plaintiffs, pending the disposition of Plaintiffs' declaratory judgment claim. The Court declines to require Plaintiffs to post a bond.

The Federal Arbitration Act does not apply to Plaintiffs' no-fault insurance policies and the Court exercises jurisdiction over the request for a preliminary injunction of no-fault insurance arbitration proceedings. 

The Court finds that the in-aid-of-jurisdiction and expressly authorized exceptions to the Anti-Injunction Act do not apply to Plaintiffs' request for a preliminary injunction of pending no-fault insurance state court proceedings.  The Court therefore denies Plaintiffs' motion to stay all no-fault insurance collection proceedings pending in state court and considers only Plaintiffs' motion to stay all pending arbitrations and to enjoin future arbitrations and future state court proceedings.

A party seeking a preliminary injunction "must establish (1) that it is likely to succeed on the merits, (2) that it is likely to suffer irreparable harm if the injunction is not granted, (3) that the balance of the equities tips in its favor, and (4) that the injunction serves the public interest."  The Court finds that because there are serious questions going to the merits of the case, Plaintiffs would suffer irreparable harm absent a stay, the balance of hardships tip decidedly in Plaintiffs' favor, and there is no indication of public harm as a result of a stay, the Court grants Plaintiffs' motion to stay all pending arbitrations and to enjoin all future arbitrations and state court proceedings.

Defendants argue that Plaintiffs should be required to post bond because Defendants have shown "substantial likelihood of harm if the Court grants the relief sought in Plaintiffs' motion," and Plaintiffs "could easily afford to post a bond".  Because Plaintiffs have established a likelihood of harm, a stay is unlikely to prejudice Defendants, and Defendants may readily collect damages from Plaintiffs, the Court declines to require Plaintiffs to post a bond. 
 

05/27/22        Isenberg v. State Farm Fire and Cas. Co.
United States District Court, W.D. Pennsylvania
Property Constituted a “Residence Premises” as the Plaintiff had Constant, Habitual, Daily Contact with it Completing Renovations for the Purpose of Moving into it on a Full-Time Basis.  An Insured May have More than One Residence
 

The policy was issued to Plaintiff in 2018 when she purchased the property and began to conduct renovations.  At that time, she was living in an apartment with her two daughters, ages 3 and 11, in which she continued to rent during the time period that she owned and insured the Property, while she engaged in “unexpected and extensive” renovations. On May 13, 2020, a fire destroyed the Property. 

Defendant rescinded the policy based on its belief that Plaintiff was not using the Property as a residence, implicitly arguing that a person may only have one "residence." Plaintiff counters that although she maintained a residence at the Apartment, her almost daily contact with the Property — which was located just over two miles from the Apartment — to conduct manual labor to rehabilitate the premises in order to make it habitable for herself and her family, combined with the fact that she ate some meals there, stored numerous personal possessions there, and slept there from time to time, all support her claim that the Property was also her residence — albeit a second residence.

Pursuant to Pennsylvania law, "Residence" refers to a factual place of abode evidenced by a person's physical presence in a particular place.  The term requires, at the minimum, some measure of permanency or habitual repetition. Also, since resident status is a question of physical fact, intention is not a relevant consideration.

When inquiring into residency, courts look at objective indicators such as where an individual sleeps, takes her meals, receives mail, and stores personal possessions.  When a person actually lives in one location, and sporadically visits, or keeps certain personal items at, another location, it is the location where he lives that is his residence," not the location he sporadically visits. 

Although Plaintiff testified that from 2018, until the fire in May of 2020, she did not "live" or "reside" at the Property, she did spend numerous nights at the Property.  She explained that she worked nights and was present at the Property "every single day" — or at least three to four days per week — working on the house to make it habitable.  Although the water had not yet been turned on at the Property, the electricity was working and had been used by the Plaintiff. The Property was filled with Plaintiff's personal belongings — including cookware, flatware, china, most of her furniture, electronics, the children's toys, two televisions, family picture albums, and the like.

However, the Apartment also held some of Plaintiff's personal possessions — notably her bed and one television set. As noted above, Plaintiff maintained a deep freezer at the Property, as well as a microwave, to (presumably) enable her to make meals on the premises. Plaintiff expressed, "We had almost everything down there [at the Property] except for the essentials like our bed. We had a TV at the [A]partment and stuff. But everything was down at the other house [the Property]."

Plaintiff’s pay stubs reflect the Property's address, and not that of the Apartment. She used her Apartment address for her income tax returns from 2018 and 2019, but notably, each year's tax return was for income generated in the previous year. Although Plaintiff signed a lease for the Apartment for a term beginning on March 1, 2020, and ending on April 30, 2021, she explained that she "was planning on moving in [the Property] at the end of July [of 2020]."

Given that the case law suggests that residency requires "some measure of permanency or habitual repetition", this Court finds that the undisputed facts support a finding that Plaintiff resided at the Property. Plaintiff exhibited a "measure of permanency" as well as "habitual repetition" by indicating (with no evidence presented to the contrary) that she was present at the Property on an almost daily basis to perform work on the Property.  Considering the objective indicators set forth in the case law, such as where Plaintiff took her meals, slept (on occasion), and the location of her own possessions as well as her daughters' personal possessions, the facts present in this case support a finding that Plaintiff resided at the Property. Case law also suggests that residency is a question of physical fact, and that the policyholder's intention is not a relevant consideration, and it is clear from the record that Plaintiff was physically present at the Property almost daily. To put it succinctly, most of Plaintiff's waking hours each day were spent at the Property. Plaintiff exhibited the "touchstone of residency — regular physical presence" at the Property. Plaintiff, had constant, habitual, daily contact with the insured premises for the express purpose of completing renovations at the Property so the insured's family could move into the Property on a full-time basis.

Plaintiff was not "sporadically" visiting the Property and appears to have been keeping the majority of her personal possessions — including toys and furniture at the Property — while retaining a minimal amount of her belongings at the Apartment. She ate some meals at the Property and slept on occasion at the Property, despite the fact that the water had not yet been turned on, while spending most days working on the Property to complete the house.

This Court also notes that Pennsylvania courts have agreed or at least assumed that a person is not limited to one residence. It is certainly possible that one can have only one domicile, which as a person's principal establishment, implies a certain unique status. Residence though has always been regarded as something more fluid and less permanent than a domicile, and there is no reason to believe one cannot have a sufficient physical presence at more than one place to establish a residence.

The Court finds that Plaintiff had regular and habitual ties to the Property such that the Property should be considered one of Plaintiff's residences under the terms of the homeowner's insurance policy issued by Defendant. Because Pennsylvania law recognizes that Pennsylvania citizens may have more than one residence, and because, here, dual residency exists, the Court finds that Defendant's insurance policy provides coverage to the residence named on its declarations page.

FLEMING’S FINEST

Katherine A. Fleming
[email protected]

05/12/22        Bufkin v. Geico Ins. Agency, Inc.
Supreme Court of Mississippi
Mississippi Supreme Court Considers Whether an Employee, Injured by Her Employer in an Automobile Accident, May Recover Under Her Own Uninsured Motorist Policy

Crystal Bufkin was injured in automobile accident on October 27, 2017. The vehicle was operated by the owner/operator of her employer, and Bufkin was riding as a passenger. Bufkin’s employer was responsible for the accident. Both Bufkin and the owner/operator were acting within the scope of their employment, and thus the negligent driver—Bufkin’s employer—was immune from suit under the Mississippi Workers’ Compensation Law. Bufkin filed a workers’ compensation claim and received benefits. She and her husband subsequently filed suit against her employer and GEICO Insurance Agency, the Bufkins’ uninsured motorist carrier. The employer was dismissed under the exclusive remedy provisions of the Mississippi Workers’ Compensation Act. GEICO then filed a motion to dismiss under Mississippi Rule of Civil Procedure 12(b) (6), contending that no uninsured motorist coverage existed because Bufkin was not “legally entitled to recover” damages from the tortfeasor, i.e., her employer, who was immune. The motion was granted, and Bufkin appealed.

The Court previously held that employees are not legally entitled to recover from their employers and thus cannot make a claim under uninsured motorist coverages. Medders v. U.S. Fid. & Guar. Co., 623 So. 2d 979, 989 (Miss. 1993). Thus, an employee cannot recover under uninsured motorist coverage that tracks the statute and limits coverage to those damages which the employee would be “legally entitled to recover[.]” Id. The reasoning behind the rule lies in the exclusivity of the workers’ compensation remedy. Bufkin acknowledged that precedent precluded her claim, but she argued Medders, and its progeny were wrongly decided because the uninsured motorist law should be liberally construed in her favor. In Wachtler v. State Farm Mut. Auto. Ins. Co., 835 So. 2d 23 (Miss. 2003), the Court applied the same rationale to hold that uninsured motorist insurance is not required to cover damages inflicted by a tortfeasor whose sovereign immunity has not been waived under the Mississippi Tort Claims Act.

On appeal, Bufkin argued that the Court’s decisions in Medders and Wachtler no longer represented the majority view among courts nationally. While the Court considered the policy argument advanced by Bufkin, the Legislature had amended the uninsured motorist law twice with the apparent intent of legislatively abrogating Wachtler by expressly extending uninsured motorist coverage to cases where the tortfeasor’s immunity results from sovereign immunity. The Legislature could have extended coverage to all forms of immunity, but it did not. Accordingly, the Court declined to overrule Medders and Wachtler.

 

NORTH of the BORDER

Heather A. Sanderson
[email protected]

04/28/22        Cooperators General Insurance Company et al. v. Martin et al
2022 NBCA 15
New Brunswick Court of Appeal
A Property or Liability Insurer May Rely on the Public Policy Provision Contained in the Insurance Acts of the Common Law Canadian Provinces in Order to Deny Liability to Indemnify an Insured Against Loss or Damage Caused by that Insured’s Criminal Act Where that Insured Intended to Bring About that Loss or Damage. However, Innocent Co-Insureds Would be Entitled to Full Indemnity
 

The New Brunswick Court of Appeal recently held that a statutory provision rendering a claim for indemnity under an insurance policy unenforceable where the loss or damage was caused by the insured’s criminal act, where there was intent to bring about that loss or damage, is a basis to deny a claim for damages under a standard auto policy for amounts in excess of the statutory minimum levels of coverage.
 

On December 1, 2014, 53-year-old Pierrette Landry, who at the time lived on the Acadian Peninsula in New Brunswick, drank to the point of intoxication, then, got behind the wheel of her car, and, at highway speed, crossed the centre line of a New Brunswick highway, colliding with two oncoming cars. Ms. Landry survived the impact.  Two women, Bernadette Martin and Jacqueline Blanchard, were in one of the vehicles hit by the Landry vehicle. Donald Rose was driving the other vehicle. All three in those opposing vehicles were injured.
 

Landry was charged and plead guilty to impaired driving causing bodily harm. She admitted at her sentencing hearing that she deliberately caused the collision. She further admitted that she intended to commit suicide by driving into the oncoming vehicles.
 

In addition, Landry admitted to civil liability for the collision when she was examined for discovery in the civil actions commenced against her by the three who were injured in the collision, but professed not to remember the circumstances that caused her to cross the centre line. Landry died less than two weeks after her examination for discovery.
 

The selfishness of Landry’s suicide attempt defies comprehension.  Unfortunately, it is not uncommon. In most cases of vehicular suicide, the collision is with a train, or a semi-trailer, and the perpetrator dies. The death virtually eliminates the evidence of intention. In this case, the perpetrator did not die, and, she did not hid her intent from authorities.
 

At the time of this collision, Pembridge Insurance Company, part of the Allstate Group, insured Landry’s vehicle under a New Brunswick standard auto policy that had third party liability limits of $1 million.  Landry was the named insured. Initially, Pembridge extended a defence to the three separate civil actions that were filed against Landry.  However, after the actions were underway, and before Landry died, Pembridge advised Landry that Pembridge was denying coverage in view of evidence that the injuries were the result of her deliberate intent to breach the criminal law. Pembridge’s denial relied on Section 2 of the Insurance Act of New Brunswick. That section exists in similar form in the Insurance Acts of all Canadian, common-law provinces and reads:
 

2. Public policy rule
Unless the contract otherwise provides, a violation of any criminal or other law in force in the Province or elsewhere does not, ipso facto, render unenforceable a claim for indemnity under a contract of insurance except where the violation is committed by the insured, or by another person with the consent of the insured, with intent to bring about loss or damage; but in the case of a contract of life insurance this section applies only to disability insurance undertaken as part of the contract. (emphasis added)
 

The New Brunswick Insurance Act (and other Canadian, common-law, tort-based jurisdictions) stipulates that an insurer that denies coverage under an auto policy will be added as a party to any action by an injured third party against the named insured, enabling the insurer to contest both liability of the insured and quantum of the claim, but in no event will the liability of the insurer exceed the minimum insurance limits that exist in New Brunswick. In New Brunswick, as in the other tort-based, common-law, Canadian provinces, the minimum auto insurance limits are $200,000.  If Pembridge was correct in its position, the pool of insurance funds available to the three claimants plummeted from $1 million to $200,000. Of course, the Landry Estate had no assets.
 

Each of the claimants notified their uninsured/underinsured insurers. Co-operators General Insurance Company (CGIC) was called upon to respond to Martin’s claims. 
 

CGIC argued that the third-party liability portion of the standard auto policy comes into play as soon as injury arises out of the use and operation of a motor vehicle, regardless of whether there was an "accident" or "intentional act". It argued that to avoid coverage, Pembridge has the onus of establishing an exclusion to the coverage. CGIC submitted that even if there was an exclusion relating to intentional acts, which there isn't, Pembridge would have to prove that the late Ms. Landry intended to injure the claimants, a proposition for which there is no evidence.  Further, CGIC further submits that s. 2 of the Act is not an exclusion but rather a provision to assist in the interpretation of an exclusion, if one exists, meaning that Pembridge must first establish the existence of an exclusion in the policy prior to resorting to Section 2. Unifund, on for the Rose claim, adopted CGIC’s argument. 
 

Pembridge did not deny or contest that the third-party liability coverage is meant to benefit injured persons. It conceded that there is no exclusion, in the Policy, for criminal or intentional acts. In fact, Pembridge conceded that nowhere in the Policy is there an exclusion upon which they rely. It took the position that the Insurance Act allows Pembridge to avail itself of, as against any claimant, of any defence that exists against its own insured but only for the coverage that is excess to the minimum limits.  Pembridge argued that Section 2 of the Insurance Act, being a public policy rule, limits Pembridge’s liability to compensate the claimants to $200,000.
 

Martin brought an action for a declaration that the available limits of the Pembridge policy stand at $1 million. CGIC and, Unifund, intervened in that application. Economical, on for Blanchard, did not participate.
 

In reply to the action, Pembridge obtained Affidavit evidence of Landry confessing her intent to deliberately collide with other vehicles in order to kill herself from the on-scene paramedic, treating nurses and a psychiatrist who treated her post collision.  How did Pembridge obtain these affidavits? The duty of confidentiality owed by a doctor to a patient is, after a patient dies, within the management of both the deceased's executor or his or her heirs. It may be waived by either. I can only think that Pembridge obtained that waiver.
 

The trial judge held that CGIC was conflating the fortuity principle with the principle that insureds cannot benefit from their own, deliberate, criminal acts which is the public policy rule under Section 2. There was ample evidence that Landry deliberately drove into the oncoming cars for purposes of ending her life. The trial court stated “In the circumstances of this case, Ms. Landry admitted causing the collision in an attempt to take her own life. Causing the motor vehicle collision is exactly what she set out to do and the loss and damage that flowed from what she set out to do cannot be said to be unexpected or unusual.” She therefore found there was no need for Pembridge to provide further proof its insured intended to "bring about loss or damage" to third parties. In view of these findings, the trial judge permitted Pembridge to rely upon Section 2 to limit its liability to the claimants to the minimum insurance limits of New Brunswick which are $200,000.00.
 

CGIC appealed to the New Brunswick Court of Appeal. CGIC argued that Pembridge has the right to avail itself of Section 2 to deny indemnity to its own insured. However, that defence is not available to Pembridge with respect to third-party claims above the $200,000 minimum statutory limit.  The Court of Appeal rejected that argument and wholly agreed with the trial judge, permitting Pembridge to rely upon Section 2 to limit its liability to the claimants to $200,000. The Court of Appeal held that the third-party limits of the standard auto policy are not designed to protect the public. They protect the use and operation of the insured vehicle. However, the uninsured/underinsured coverage does protect the named insured from the risk that they are injured by those who carry coverage less than their own. The Court of Appeal did not find, but implied, that CGIC, Unifund, and, for that matter, Economical, who was operating in the background, all of whom carried limits of $1 million, were obligated to fund the difference between the claimants’ pro rata share under the Pembridge policy, and, their own policy limits.
 

Although this is an auto insurance case, it has implications for the coverage available under general liability policies where the bodily injury or property damage in issue arises from the insured’s criminal act. This Appeal level case is ample support for the proposition that regardless of the vagaries of intentional act exclusions, the public policy rule that insureds should not benefit from their criminal act applies.  Of course, the innocent co-insured rules will protect other insureds under the same policy.
 

06/02/22         Co-operators General Insurance Company v. Estate of John Hemlow
2022 CanLII 45844 (SCC)
Supreme Court of Canada
Supreme Court of Canada Refuses Leave to Appeal from the Ontario Court of Appeal which Held that an Accidental Release of Ammonia while Performing Maintenance, is Not a Release of a “Pollutant” Engaging a CGL’s Total Pollution Exclusion

On June 2, 2022, the Supreme Court of Canada refused leave to appeal from the decision of the Ontario Court of Appeal in Hemlow Estate v. Co-operators General Insurance Company, 2021 ONCA 908, previously reported in this newsletter.
 

In that case the Estate of the insured tendered an action to a CGL insurer requesting a defence to a civil action for property damage and bodily injury due to the accidental release of ammonia which occurred when the insured was performing maintenance at a food processing plant.
 

The insurer refused to defend on the grounds that the release was a release of a pollutant. The trial judge held, that the pollution exclusion clause is worded to protect the insurer from liability for environmental pollution and the improper disposal or contamination of hazardous waste.  The exclusion ought not to be interpreted to apply to any accidental occurrence that caused any damage to the customer’s property, and which did not lead to environmental pollution as commonly understood.  If the insurer wished to include the emission of any of the enumerated substances, then it ought to say so in clear terms. Accordingly, CGIC had a duty to defend.
 

The insurer appealed. The Ontario Court of Appeal agreed that the insurer must defend but came to that conclusion for different reasons. The pleadings alleged negligence while performing a contract and not liability for a release of a pollutant. Accordingly, CGIC must defend.  In closing, the Appeal court agreed it was not necessary to deal with the pollution exclusion but expressed agreement with the trial judge’s approach.
 

The insurer appealed once again to the Supreme Court of Canada. Leave to appeal was dismissed, and, is usually the case, no written reasons were issued.
 

This decision emphasizes that Canadian courts have difficulty applying the pollution exclusion to situations other than liability for government mandated cleanup of toxins, contaminants, and other commonly accepted pollutants.  It also serves as a reminder that the pleadings, not the underlying facts, govern the duty to defend.