Coverage Pointers - Volume XXIV, No. 1

Volume XXIV, No. 1 (No. 623)
Friday, June 24, 2022
A Biweekly Electronic Newsletter


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

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

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

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


Dear Coverage Pointers Subscribers:

Do you have a situation?  Bring them on as we LOVE situations. 

If you think we’ve been around for a while, you’re right.  With this issue, we commence our 24th year of publication.  Thanks to all involved and thanks to our readership.

See the source image

Empowerment Program – this Tuesday.

Last opportunity to sign up for a 90-minute Risk Transfer program on Tuesday, June 28th at 1:00 EST, conducted via Zoom.


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John Trimble, from the Indianapolis law firm of Lewis Wagner and I, have presented this Zoom training program four times, so far, over the last two months, with two more live programs scheduled.  Over 350 claims professional and lawyers have taken part.  We have limited openings for our sixth and likely, final program, this coming Tuesday, June 28th at 1:00 Eastern.  If you (or your professional staff) are interested in attending, let me know ASAP ([email protected]).  No charge.

What some companies have done is gather claim professionals in a conference room and shared with their staffs that way.

What does the program cover?  The speakers provide a systematic and repetitive approach to dealing with tenders of defense under additional insured provisions and trade contract indemnity/hold harmless clauses.  We discuss how and when the additional insured, contractual indemnitee and named insured are to be protected under tenders (including a discussion of the insured contract exception to the contractual liability exclusion).  In addition, we review the often-overlooked Supplementary Payments provision of the CGL policy.  And so much more!  Click here and send me an email if you’re interested in enrolling.


Canadian Defence Lawyers:

I am a proud member of the Canadian Defence Lawyers, an organization that serves defence counsel and insurers from the Pacific to the Atlantic.  Last week, I had the opportunity to speak at its annual insurance symposium of issues relating to Canadian disclosures under New York’s Comprehensive Insurance Disclosure Act (CIDA).  Heather Sanderson, our Canadian columnist, spoke on insurance issues related to climate change. Thank you, my friends in the CDL, for inviting me.


Expert Witness and Mediation Services:

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


Need a mediator?

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

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

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

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

Try mediation.


Training, Training and More Training:

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


Peiper on Property and Potpourri:

I don’t know Chicken Little.  Never met the guy, although he seems like a bit of a downer at parties from what I’ve heard. 

We return this week with a few interesting topics for your perusal in the column.  The Fourth Department issued a rare decision on the deterioration exclusion found within a first party policy.  The court, rightly, took the words as they were written, and opined that where a loss was occasioned out of deterioration (regardless of how long the condition pre-existed) coverage was extinguished. 

We also review a Second Department decision on defaults as part of our ongoing public service announcement.  Failure of the insurance company IS NOT, standing along, sufficient to vacate a default judgment.  While often law office failure is sufficient, simply offering that a defense was not assigned timely is not enough to open a proceeding foreclosed by a non-appearance.  Don’t let this happen to you.

Now, back to Chicken Little (or his ancestor Henny Penny).  I’m not here to tell you the sky is falling, but I am disturbed about the Botanical Gardens decision that came down from the First Department last week.  The Court reviewed a claim for contingent business interruption coverage arising out of a COVID-19 related business closure.  Although the coverage in that policy does not appear to track, exclusively, traditional ISO based coverage, the Court did find some inconsistencies in the Civil Authority aspect of the claim and denied Allied’s motion.  Again, is the first crack in the dam or simply an anomaly.  Time will tell as we move forward, but it is far from a positive development. 

There is a second, perhaps even more troubling, aspect to this decision. The Court also kept open the question of extra-contractual claims due to an alleged breach of the duty of good faith and fair dealing.  In support, reference is made to the Bi-Economy decision from 2008 which addressed consequential damages.  It is a curious inclusion because Bi-Economy specifically stated that it was not changing NY’s first party bad faith rules.  More study is need with this portion of the decision, as well.  We don’t think that the First Department is opening the door,  however slightly, on bad faith, but it is worth keeping an eye on it.

Steven E. Peiper

[email protected]


Here’s Looking at You, Kid – 100 Years Ago:

The Kingston Daily Freeman
Kingston, New York
24 June 1922


Occupants of Automobile Can
Face Each Other.

Particularly Handy When Launching
or Attending Outdoor Events and
for Similar Purposes–Pian of Construction

          An eastern motorist has added something of novelty and convenience to his closed car by hinging the front seat so that it can be reversed to face the rear seat, when lunching in the car, attending games, and for similar purposes.

          To do this, it was necessary to remove the seat back altogether and upholster the lower edge as well as the rear edge of the seat. The hinges, which are also the seat braces, are made of wrought iron and are of equal length; they are padded and covered with material to match the upholstery of the car. L-Shaped Brackets are riveted to each side of the seat and back as indicated in the drawing for attaching the hinges. The seat is reversible by pushing at the top, in the same manner as the seats in a trolley or railroad car are reversed.—G. A. Luers, Washington, D. C.–In Popular Mechanics Magazine.


Wilewicz’ Wide-World of Coverage:  

Check back next time for all of the latest from the Federal Circuit Courts.

Until then,

Agnes A. Wilewicz

[email protected]


Lunacy and Green Cheese – 100 Years Ago:

Times Union
Brooklyn, New York
24 June 1922

German Scientist Explores Moon
To Find if People Exist There

         Berlin, June 24.—Prof. Dr. Archenhold, chief of the Treptow Observatory, is conducting a series of experiments to ascertain whether human life exists on the moon.

         Thus far he has reached the conclusion that the moon is in a state of flux, constantly changing in its outer surface. This is an entirely new discovery with which most scientists do not agree.

         In the outer surface of the moon, Archenhold said today, the atmosphere is so rare that human life can not exist. In this respect, the atmosphere is much like that on the highest mountain peaks of this world or at great distances from the earth. Archenold’s experiments show, however, that there are deep grooves in the moon and that perhaps down in these valleys there may be animal and plant life.

         In order to determine whether or not this is possible, he is continuing his experiments.

         His previous experiments show that there are craters in the moon which are in intermittent eruption. His telescopes have shown him that smoke and ashes come from these craters and that the surface of the moon is continually changing as a result of these eruptions.

         Archenhold was attracted to a study of these phenomena first through a book written in the Middle Ages by a scientist who declared there appeared to be doves flying about on the surface of the moon. These “doves,” Archenhold says, are undoubtedly the smoke and ashes which come from the moon craters.


Moral Hazards and Auto Insurance – 100 Years Ago:

The Montreal Star
Montreal, Quebec, Canada
24 June 1922


Good Personal Character
Often Primary Factor in
Automobile Insurance

          An interesting factor, which is perhaps little known to the great majority of motorists who apply for insurance on their cars, is that the more substantial companies are now looking very carefully into the moral hazard likely to be incurred in writing insurance. In other words, the personal character of the automobile owner seeking insurance is being investigated to an extent never done before. This moral hazard, while not a novelty to some companies, is, in its recent tendency toward a nationwide application, something new in automobile insurance.


          This character investigation is very thorough. Its wider application is primarily due to the heavy losses of the past year or two in lost and stolen cars combined with the increased use of motor vehicles for criminal or objectionable purposes. Certain motorcar owners who have had the unfortunate experience of having their insurance applications denied would doubtless find, in their final analysis, the report on their personal characteristics, involving possibly some financial difficulty, objectionable mode of hying, or careless or suspicious use of the car, had been deemed an unsafe moral hazard. Perhaps some of these denied applicants by the more reputable companies have been able to get motor insurance elsewhere, for there are concerns where this care as to personality is not so rigidly observed.


Barnas on Bad Faith:

Hello again:

Thank you to everyone who attended our client party last week as we celebrated our Firm’s 45th anniversary and our new look.  It was nice to see some familiar faces and some new ones at an in-person event again.  We are already looking forward to the party to celebrate our golden anniversary.  It will be here before you know it.

We took a week off from softball last week to run in the Corporate Challenge.  I am disappointed to report that I logged the slowest time of all qualified HF runners.  You have to question the offseason training regimen, which consisted of doing absolutely no distance running since the last time we ran the Corporate Challenge virtually in 2020.  I will have to go back to the drawing board next year to try and improve, but the reality is the next time I run a race will probably be the 2023 Challenge.

I have a case from Tennessee in my column where the court allowed a bad faith claim to survive summary judgment.  The insurer denied coverage for a fire claim to a home under a homeowners policy based on a policy condition requiring a sprinkler system.  The insured was able to survive summary judgment by arguing that the agent improperly answered the application about the sprinkler question and that the insurer did not follow its typical practice of waiving the requirement for in-home sprinkler systems.

Brian D. Barnas

[email protected]


American Tourists Entering Canada – 100 Years Ago:

The Montreal Star
Montreal, Quebec, Canada
24 June 1922


          The Automobile Club of Canada has taken up with the Government, the matter with regard to the issuing of permits for American tourists entering Canada. As the ruling now stands, the president of an Automobile Company or an employee directly connected with an automobile industry is not permitted to enter Canada, even though his visit is positively one of pleasure and recreation. Within the past three weeks the presidents of two of the largest automobile concerns in the United States were refused admittance to Canada, and turned back at the border, although their motor trip up to Quebec was purely one of pleasure.


Kyle's Construction Column:

Dear Readers:

The previous week was eventful at HF, as we celebrated the firm’s 45th anniversary with our client party on Wednesday, followed by the Corporate Challenge on Thursday. It was great to race again for the first time in years, probably since my last college cross-country race. While we may not have had the most runners out there and may not have crowded the top of the leaderboard, we all had a good time and enjoyed some good food and drinks post-race. We will look to rebound with a strong performance on the softball diamond tonight!

Unfortunately, there were no interesting new coverage cases to report on this week in the world of construction. 

Until next time,

Kyle A. Ruffner

[email protected]


Life Insurance Ad – 100 Years Ago:

The Dallas Express
Dallas, Texas
24 June 1922

Excelsior Mutual Benefit

Dallas, Texas

          Most people need money when there’s death in the family. Sometimes they want to carry the body out of town or they may want to send for a relative. If you think you need this kind of SERVICE, take Insurance with the—


          We pay death claims in 24 hours. Any person desiring such protection, call at room 209 Pythian Temple 2549 Elm St., or call Y. 4557.



S. OOFIELD, Secretary


Fleming’s Finest:

Hi Coverage Pointers Subscribers,

On Tuesday, Buffalo Olmstead Parks broke the Guinness World Record for the longest line of garden flamingos – 4,260 garden flamingos were carefully placed in Front Park to ensure there was physical contact between every flamingo.  The flamingos were available for “adoption” after the event, so there is a new addition to the Fleming family. In other news, softball is back after a two-week hiatus due to bad weather and the J.P. Morgan Corporate Challenge.

This week’s case from the Indiana Supreme Court considered whether an insurer had a duty to defend and indemnify its insured, Big Daddy’s Show Club, when the policy specifically excluded coverage for bodily injury for which an insured may be liable by (1) causing or contributing to a person’s intoxication, or (2) furnishing alcoholic beverages to a person under the influence of alcohol.

Catch you later,

Katherine A. Fleming

[email protected]


Main Wins Dentist’s Heart – 100 Years Ago:

Daily News
New York, New York
24 June 1922

Dentist’s Wife Tells
Court Servant Girl
Won Husband’s Heart

          Asking reasonable allowance for temporary alimony and counsel fees, pending the trial of her action for separation from Dr. William H. Harris, dentist, Mrs. Sadie Harris told Justice Gannon in Supreme Court, Brooklyn, yesterday, that she believes her husband is now living with Ethel Rae, former servant girl, to whom he had given jewels and furs since he deserted his wife four months ago. She added that her husband has an income of $1,000 a month.

          She declares in her supporting papers that she was a sculptress when she married him in 1913 and worked at her art for four years after in order to support him while he was studying dentistry.


Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

My oldest son is officially graduating from Pre-K (because that’s a thing, and they have songs about it too). I’m excited for his next chapter. Nervous, but excited. He’s excited too, he just doesn’t know it yet.

This week’s legislative list in Ryan’s Capital Roundup has a brief write-up about a new prohibition of adverse action by medical malpractice insurers who provide coverage to abortion or reproductive health care providers who provide such services to out-of-state patients from areas where such conduct may otherwise be illegal.

Until next time,

Ryan P. Maxwell

[email protected]


“Puny Children” Gain Strength – 100 Years Ago:

Daily News
New York, New York
24 June 1922


          Weak, puny, undersized and undernourished children are made so by lack of open air play facilities, declared William F. Johnson, acting secretary of the Children’s Aid Society, yesterday in endorsing THE NEWS plans to keep the schoolyards open after school hours as one of the best health aids for hundreds of pupils.

          “Fear of parents to subject their children to the vehicular perils of the streets is one of the causes of the child problem which we have been trying to solve for a good many years,” asserted Mr. Johnson.

          “Rather than have their boys and girls play amidst the dangerous traffic, parents keep them in dark, stuffy homes, where sunshine and fresh air are lacking,” he said.

          “It seems to me that The DAILY NEWS plan of putting these children into the large, airy schoolyards and keeping them there all day is the best proposal yet suggested for the elimination of street dangers.”


Dishing Out Serious Injury Threshold:

Dear Readers,

Hope everyone was able to enjoy Father’s Day with their family. Unfortunately, the weather here was a bit windy for the boat, but we enjoyed some family time, nonetheless. Looking forward to more nice weather weekends for the rest of summer.

There was one interesting case this issue where plaintiff’s appeal was denied as plaintiff failed to submit any physician affidavit sufficient to raise a triable issue of fact. In fact, plaintiff only relied upon plaintiff’s deposition testimony.


Michael J. Dischley


John D. Rockefeller’s Brother Died – 100 Years Ago:

Dixon Evening Telegraph
Dixon, Illinois
24 June 1922


Oil Magnate, Brother of
John D., Died in Tarrytown, N. Y.

By Associated Press Leased Wire

          Tarrytown, N. Y., June 24.—William Rockefeller, oil magnate and brother of John D. Rockefeller, died here today from pneumonia, shortly before 7 o’clock.

          Mr. Rockefeller had been ill at his home, Rockwood Hall in North Tarrytown, since Sunday but word of his condition was not made public.

          Five doctors, under the charge of Mr. Rockefeller’s personal physician, Dr. W. J. Robertson, were in attendance, when the end came. Mr. Rockefeller, who contracted a heavy cold during the rains of the last week end had just completed building a $250,000 mausoleum in the Sleepy Hollow cemetery. The mausoleum was constructed according to his own plans and under his personal direction.

Was 81 Years Old

          Mr. Rockefeller, who was 81 years old, had not recently been active in business, although he was active head of the Standard Oil company of New York from its establishment in 1865 until 1911. Although somewhat overshadowed by his elder brother, John D. Rockefeller, William was one of the richest men in America.

          Mr. Rockefeller began to sink yesterday morning, John D. Rockefeller remained at his home in Pocantico Hills, but was kept constantly informed of his brother’s condition. He reached Rochwood Hill a few minutes after the end came. At the bedside were Mr. Rockefeller’s two sons and daughter. Although he retained many of his directorships, Mr. Rockefeller of late years shifted much of his business responsibilities to the shoulders of his son Percy.


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

We just returned to Connecticut after spending some much-needed R&R at my partner’s beachfront cottage on the Canadian side of Lake Erie. It is extremely peaceful and beautiful there—and with diesel prices what they are, almost no pleasure craft were on the water to disturb the calm. Dan and Chris are amazing hosts, and we had a wonderful time staying in their Bunkie (what Canadians call a guest house).

While we were there, we heard the area repeatedly referred to as the Canadian Riviera. An apt description, minus the topless beaches, warm waters, luxury yachts, and French cuisine of the actual Riviera. So, being who I am, I set out to do some research. To my surprise, it appears that no one in Canada agrees on what part of the country is the real Canadian Riviera. Some say it’s in Quebec, others say Vancouver, and others even narrow it to Lake Okanagan, in British Columbia, while others (rightly, it seems) use the term to refer to the series of isolated beaches along the north shore of Lake Erie stretching from Buffalo in the east to Erie, Pa in the west. Whatever you call it, it’s a beautiful place for a quiet beach vacation (and the best Chinese food north of Mott Street!).

In this edition of the Connecticut Chronicles, we return, once again, to the issue of appraisal. It seems that Connecticut is very quickly headed to a place where appraisal on demand will be the norm.

Keep keeping safe and enjoy summer.

Lee S. Siegel

[email protected]


Bridegroom Vanishes – 100 Years Ago:

Buffalo Courier
Buffalo, New York
24 June 1922


          Yesterday’s search by the police to locate Gordon Durward, twenty-seven years old, No. 381 Main Street, failed to result in any clue as to his whereabouts. The young man disappeared Tuesday on the eve of his wedding with Gladys M. Impey, No. 38 Wildwood Place. No member of his family could be located yesterday, the janitor at the apartment stating that the brother with whom he lived left nearly a week ago.

          Wednesday when Durward did not show up for the ceremony, members of the Impey family went to his home but found no one at home. A note pinned to the door stated that Durward was ill and in a hospital. A search of all the institutions in the city has failed to reveal any trace of the groom-to-have-been. Police declare the belief that he merely dropped out of sight, frightened possibly at the prospect of matrimony.


Rauh’s Ramblings:

Hello all!

I hope you are having an enjoyable week.  It is busy as usual at HF, and I am looking forward to a (hopefully) relaxing weekend.  This week, I found a case from the Fifth Circuit which involves a Plaintiff who sued her employer’s long- and short-term disability carrier when they denied her claim for benefits based on the pre-existing condition exclusion.  Read my summary to find out how the Court dealt with Plaintiff’s ERISA claims!

Until next time,    

Patricia A. Rauh


Same Bridegroom Located – 100+ Years Ago:

Buffalo Evening News
Buffalo, New York
24 June 1922

Missing Former Soldier Is
in Naval Training, Belief

Local Records Show Gordon E. Durward Enlisted on
Day He Disappeared, Deserting Bride-to-be.


          Mystery surrounding the disappearance of Gordon Durward, 27 years old, 381 Main Street, may be solved by discovery in the navy recruiting station here on the enlistment record of Gordon Edgar Durward, 26 years old, who gave his address as Farnham, N. Y.

          Durward, a former soldier, disappeared on June 15, three days before he was to marry Gladys M. Impey, 38 Wildwood Place, according to statements made by Miss Impey in reporting to the police. Durward enlisted on that date and asked to be shipped immediately.

Editor’s note:  As stories below indicated, they eventually found him (he enlisted) and the couple married several months later.


Storm’s SIU Examen:

Hi everyone:

A trifecta of three no-fault cases for you this week:

  • Insurer established a prima facie case that insured failed to appear for EUO; EUO need not be scheduled within 30 days of insurer’s receipt of the claim but rather within a reasonable time; and failure to appear at an EUO constitutes a breach of a condition precedent to PIP coverage and voids coverage regardless of the timeliness of the denial.
  • Insurer proves prima facie case of rate evasion in no-fault case.
  • Insurer is not required to set forth objective reasons for requesting an EUO in order to establish its prima facie entitlement to summary judgment. 

Remember the “seven rules of life”: “be kind; be thankful and appreciative; don’t give up, do your best, you can do it; ignore them, let it go; avoid negativity; serve others; and take care of your body, mind and spirit”.   

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

Have a nice two weeks!

Scott D. Storm

[email protected]


Bridegroom and Bride Get Hitched – < 100 Years Ago:

Buffalo Evening News
Buffalo, New York
22 August 1922


          Mr. Gordon Durward of this village and Gladys Impey of Buffalo were married Saturday.


North of the Border: 

Last week I had the pleasure of speaking at the Canadian Defence Lawyers’ Insurance Coverage Symposium that took place at the Hyatt Hotel in downtown Toronto. This symposium is first rate, attracting speakers from across the country speaking on the leading issues of the past year facing the Canadian insurance industry. My 50-minute talk was on the impact of climate change on the Canadian P&C industry. Dan Kohane also spoke on the newly imposed legislative requirements on Canadian insurers who are defending claims in New York State. It was terrific to have Dan with us for this day-long event.

Climate change induced extreme weather events are resulting in creative interpretations of longstanding personal lines and commercial lines property policies. This week I discuss the attempt to dissect the meaning of ‘within’ found in most personal lines’ sewer backup endorsements.

P.S. Our new grandson regained his birth weight and is thriving.

Heather A. Sanderson

[email protected]


Headlines from this week’s issue, attached:

Dan D. Kohane

[email protected]

  • Defendant Was Able to Compel Agreed High-Low Arbitration when it Properly Revealed Coverage Limits.  Plaintiff’s Mistaken Understanding of Those Limits Do Not Provide Reason to Avoid Arbitration

  • Arbitration Clause in Insurance Contract Given Full Effect, Other Language Notwithstanding

  • Worker Comp Lien Validly Asserted Against Proceeds of Legal Malpractice Settlement

  • Good Primer on “Furnished or Available” under Non-Owned Auto Exclusion

    Steven E. Peiper

    [email protected]

  • Question of Fact on Contingent Business Interruption COVID-19 Claim
  • Deterioration of Bricks Falls with Within Excluded Risks
  • Delay by Insurer May be Insufficient to Vacate Default Judgment

Michael J. Dischley

  • Plaintiff Failed to Raise a Triable Issue of Fact as Plaintiff Failed to Submit a Physician Affidavit and Merely Relied Upon Plaintiff’s Deposition Testimony 

Agnes A. Wilewicz

[email protected]

  • Gone fishing.

Brian D. Barnas

[email protected]

  • Bad Faith Claim Survived Motion for Summary Judgment

Lee S. Siegel

[email protected]

  • Interpreting Klass, Trial Court Further Expands Appraisal    


    Kyle A. Ruffner

    [email protected]

  • No interesting new coverage cases to report on this week in the world of construction. 

Ryan P. Maxwell

[email protected]

  • New Law Prohibits Medical Malpractice Insurers From Taking Adverse Action Against New York Health Care Providers Providing Legal Reproductive Health Care To Out-of-State Patients

Patricia A. Rauh

  • Although Defendant Made a Material Misrepresentation Upon Which the Plaintiff Reasonably and Detrimentally Relied, there were no "Extraordinary Circumstances", as are Required to Prevail on an ERISA Estoppel Claim

Scott D. Storm

[email protected]

  • Insurer Established a Prima Facie Case that Insured Failed to Appear for EUO; EUO Need not be Scheduled Within 30 days of Insurer's Receipt of the Claim but Rather Within a Reasonable Time; and Failure to Appear at an EUO Constitutes a Breach of a Condition Precedent to PIP Coverage and Voids Coverage Regardless of the Timeliness of te Denial 
  • Insurer Proves Prima Facie Case of rate Evasion in No-fault Case 
  • Insurer is Not Required to Set Forth Objective Reasons for Requesting an EUO in Order to Establish its Prima Facie Entitlement to Summary Judgement

Katherine A. Fleming

[email protected]

  • No Duty To Defend Or Indemnify Overserved Patron In Drunk Driving Accident Due To Policy Exclusion

Heather A. Sanderson

[email protected]

  • "Within" in a Sewer Backup Endorsement is an Unambiguous Word That Means Within the Exterior Walls of the Insured Dwelling 

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

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

Dan D. Kohane
[email protected]


Agnes A. Wilewicz

[email protected]

Patricia A. Rauh



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


Steven E. Peiper, Team Leader
[email protected]

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



Dan D. Kohane
[email protected]

Alice A. Trueman


Jody E. Briandi, Team Leader
[email protected]

Diane F. Bosse

Topical Index

Kohane’s Coverage Corner
Peiper on Property and Potpourri

Dishing Out Serious Injury Threshold
Wilewicz’s Wide World of Coverage

Barnas on Bad Faith

Lee’s Connecticut Chronicles

Kyle’s Construction Column

Ryan’s Capital Roundup

Rauh’s Ramblings

Storm’s SIU Examen

Fleming’s Finest

North of the Border


Dan D. Kohane
[email protected]

06/22/22       Maynard v. Smith
Appellate Division, Second Department
Defendant Was Able to Compel Agreed High-Low Arbitration when it Properly Revealed Coverage Limits.  Plaintiff’s Mistaken Understanding of Those Limits Do Not Provide Reason to Avoid Arbitration

This was a lawsuit for personal injuries arising out of an April 27, 2017, motor vehicle accident. The plaintiff's attorney was notified twice in writing by the defendant's insurance carrier that the bodily injury limits were "100,000/$300,000."

In October 2018, the plaintiff commenced this action against the defendant to recover damages for personal injuries allegedly sustained in the accident. In July 2019, the parties entered into an arbitration agreement which provided, inter alia, that any award would be restricted to "no less than $0.00 and no more than $50,000." The plaintiff's attorney thereafter refused to arbitrate, asserting that he had been mistaken as to the defendant's policy limits. Defendant then moved to compel arbitration.

In order to compel a party to arbitrate pursuant to a contractual agreement there must be 'no substantial question [as to] whether a valid agreement was made or complied with'. Generally, a party's unilateral mistake is a ground for rescission of a contract only where it was induced by fraud or other wrongful conduct by the other party" Moreover, "the equitable remedy of rescission is not available to relieve an allegedly mistaken party of the consequences of their failure to exercise ordinary care".

The purported mistake in the high-low agreement at issue arose not from any fraudulent inducement by the defendant, but from the failure of the plaintiff's attorney to exercise ordinary care under the circumstances. Accordingly, the Supreme Court should have granted the defendant's motion compel arbitration.


06/21/22       Westport Insurance Corporation v. HBC US Holdings Inc.
Appellate Division, First Department
Arbitration Clause in Insurance Contract Given Full Effect, Other Language Notwithstanding

The insurance contract at issue includes an arbitration provision. The parties agreed that "[i]f the Insured and the Insurer fail to agree as to the amount of any claim payable hereunder, or the interpretation of this policy, then, on written demand of either, each shall select a competent and disinterested arbitrator and notify the other of the same within 20 days."

The contract also contains an endorsement of plaintiff's "miscellaneous revisions." Under that endorsement, the "Applicable Law, Court Jurisdiction" provision is "hereby appended." The provision reads that "[t]he parties irrevocably submit to the exclusive jurisdiction of the Courts of the State of New York, and to the extent permitted by law the parties expressly waive all rights to challenge or otherwise limit such jurisdiction."

The agreement to arbitrate disputes was not negated by an additional clause" under the endorsement page. Furthermore, the arbitration clause and the exclusive jurisdiction provision can be read in harmony giving each full effect


06/14/22       Continental Indemnity Company v. Redzematovic
Appellate Division, First Department
Worker Comp Lien Validly Asserted Against Proceeds of Legal Malpractice Settlement

Workers Compensation carrier sought to assert the lien provided by Workers' Compensation Law § 29(1) against the monies received by underlying plaintiff in settlement of her legal malpractice action against her prior attorneys who failed to timely commence an action against the tortfeasors responsible for her workplace accident. Workers' Compensation Law § 29(1) provides that, if an employee who is eligible for workers' compensation benefits is injured "by the negligence or wrong of another not in the same employ, such injured employee . . . [may] pursue his remedy against such other," and, if the injured employee has received workers' compensation benefits, the workers' compensation carrier "shall have a lien on the proceeds of any recovery from such other, whether by judgment, settlement or otherwise," to the extent of the compensation provided Under the statutory language, the lien does not apply against any recovery obtained by the injured employee from any source, such as from her own uninsured motorist insurance coverage, but "only against recoveries from the third-party tortfeasors who are responsible for the claimant's injuries" (id. at 708). Although defendant did not recover directly from the tortfeasors, the legal malpractice settlement obtained as a result of the first attorney's failure to timely commence an action constitutes a third-party recovery within the meaning of Workers' Compensation Law § 29 because the recovery from the legal malpractice "settlement was a substitute for the usual third-party recovery against a negligent tort-feasor or wrongdoer".  Accordingly, the settlement proceeds are subject to the Workers' Compensation lien which attaches to the recovery.


06/10/22       Timpano v. New York Central Mutual
Appellate Division, Fourth Department
Good Primer on “Furnished or Available” under Non-Owned Auto Exclusion

Timpano, on behalf of the Estate of Yar, brought a declaratory judgment action seeking a determination that New York Central Mutual (“NYM”) owned in defense and indemnity under an auto policy in an underlying lawsuit. In that action, it was claimed that passengers in a car the late Yar was driving were injured when the vehicle collided with another vehicle.

Yar was driving his son’s car and NYCM claimed that the vehicle was excluded under the policy.   The vehicle that decedent was driving at that time was owned by his son.

The NYCM disclaimer letter relied on Exclusion B.2 of the liability coverage part.That exclusion removes coverage for the use of any vehicle, other than the covered vehicle listed on the declarations page of the policy, which is "[f]urnished or available for [decedent's] regular use."

Where an insurer disclaims coverage, "the notice of disclaimer must promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated".  Here, the amended disclaimer letter stated that the vehicle driven by decedent was not listed in the policy as a covered automobile, and that New York Central was advised that the vehicle was "furnished and/or available for [decedent's] regular use," which was sufficient to apprise plaintiff that New York Central was disclaiming coverage based on Exclusion B.2.

However, whether it was “furnished or available for the regular use” of the driver is unclear and questions of fact exist. In determining whether a vehicle was furnished or available for the regular use of the named insured, factors to be considered are the availability of the vehicle and frequency of its use by the insured.  The purpose of that provision of coverage] for a non-owned vehicle not furnished or available for the regular use of the insured is to provide protection to the insured for the occasional or infrequent use of a vehicle not owned by him or her] and which coverage is not intended as a substitute for insurance on vehicles furnished for the insured's regular use.

Here, plaintiff submitted in support of the motion for summary judgment a statement made by decedent's son that decedent had used the vehicle in question two or three times before the day of the accident, that the keys were kept by the "key station" in their home, and that decedent could have used the car anytime it was in the driveway if the son was not using it. Plaintiff, however, also submitted the son's deposition testimony, wherein the son testified that he had purchased the vehicle approximately five to six months before the accident and that decedent had driven it only once. He further testified that decedent could not use the vehicle without first asking for permission. Inasmuch as plaintiff's own submissions on his motion for summary judgment raise triable issues of fact concerning the availability of the vehicle and decedent's use of the vehicle, we conclude that denial of that motion is required, "regardless of the sufficiency of the opposing papers


Steven E. Peiper

[email protected]


06/14/22       New York Botanical Gardens v. Allied World Assurance Co.
Appellate Division, First Department
Question of Fact on Contingent Business Interruption COVID-19 Claim

Plaintiff commenced this action after its claim for contingent business interruption coverage related to COVID-19 shut-downs was denied by Allied World.  Apparently, CBI was triggered under the policy where there was “necessary suspension” of operations which was a result of “an order by government body or authority denying access to the location.”  Importantly, the suspension or order must have been caused by a “pollution event” occurring at an “independent location.” 

Allied World appears to have conceded that COVID-19 constituted a “pollution event” at an “independent location.”  Its denial was based upon the argument that there was no order denying access to the insured’s premises.  In denying Allied World’s application for summary judgment, the Appellate Division noted that the insurer failed to demonstrate that CBI was only triggered where access to the facility was “completely denied.”  The court pointed to other instances in the policy, including partial resumption of operations to mitigate damages, as proof that a total ban was unnecessary to trigger coverage. 

In reaching this conclusion, the Court noted that existing case law involving commercial property losses and civil authority coverage was not applicable to the matter at bar.   

Because Allied did not meet its burden on summary judgment, plaintiff’s claims for breach of good faith and fair dealing also survived.  The court noted that the extra-contractual claim was not duplicative of the breach of contract claim “since…it relies upon different facts and seeks different damages from the contract claim.”

06/10/22       S&J Properties of Watertown, LLC v. Main Street America
Appellate Division, Fourth Department
Deterioration of Bricks Falls with Within Excluded Risks

Plaintiff commenced this action after its claim for insurance related to a “bulging” wall was denied by Main Street.  Main Street denied, apparently, on the basis of the “deterioration” portion of the broader “wear and tear” exclusion found in most first party policies. 

In reversing the trial court, the Appellate Division noted that the exclusion was meant to “relieve the insurer of liability when its insured sought reimbursement for costs incurred in correcting…deterioration of the subject premises.”  The Fourth Department advises that both sides agreed the “bulge” was caused by the deterioration of bricks that had been subject to freeze/thaw cycles. The discernable difference between the two parties was that plaintiff argued the deterioration only occurred over a span of two months, whereas Main Street offered expert proof that the deterioration was more systemic. 

The Court noted that the exclusion for deterioration did not contain a temporal limit, and any deterioration loss was not covered.

Practice Point – There is a second point worth noting here.  Apparently, Main Street’s motion did not contain a copy of the policy issued to plaintiff.  This, as readers of this space know, is a fatal defect in the motion.  The contract (i.e., the policy) is required to make one’s prima facie case that there is no coverage.  Here, however, as plaintiff did not raise it at the time of the motion before the trial court, the evidentiary issues were not preserved for appellate review.    


06/22/22       Ahmed v. Essex Terrace, Inc.
Appellate Division, Second Department
Delay by Insurer May be Insufficient to Vacate Default Judgment

Plaintiff commenced this action as a result of workplace injuries allegedly sustained at a site owned by Essex.  When Essex did not appear timely, plaintiff moved for, and was granted, a default judgment.  Upon receipt of the judgment, Essex attempted to vacate the default and sought the Court’s approval for service of a late answer. 

In reviewing the application to vacate, the Appellate Division repeated the long-understood standard that one must demonstrate both a meritorious defense and a reasonable excuse of the delay.  Here, Essex offered that it believed counsel was going to be appointed by its insurance carrier.  The Court noted that delays by the insurer are generally insufficient to excuse a default, and further, here Essex only offered conclusory and unsubstantiated statements that the insurer was responsible for the delay.  Thus, there was no reasonable excuse for the delay and the merit of Essex’s potential defense was irrelevant.


Michael J. Dischley


06/10/22       Lee Lamendola v. Abdulaziz Alharbi
Appellate Division, Fourth Department
Plaintiff Failed to Raise a Triable Issue of Fact as Plaintiff Failed to Submit a Physician Affidavit and Merely Relied Upon Plaintiff’s Deposition Testimony 

Appeal from an Order of the Supreme Court, Erie County (Henry J. Nowak, J.), entered March 18, 2021. The order granted the motion of defendant for summary judgment and dismissed the complaint.

Plaintiff commenced this action seeking damages for injuries he allegedly sustained when a vehicle operated by defendant collided with the vehicle plaintiff was driving. Supreme Court granted defendant's motion for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury under the category alleged by him, i.e., the 90/180-day category. Plaintiff appeals.

The Appellate Division found that the defendant met his initial burden of establishing as a matter of law that plaintiff did not sustain a serious injury under the 90/180-day category. Defendant submitted plaintiff's medical records, which revealed no abnormal findings on the CT scan and MRI, and also submitted the report of the examining physician, who concluded that there were no objective findings associated with plaintiff's claims of headache, lightheadedness, and difficulty with concentrating that were purportedly caused by the motor vehicle accident. Contrary to plaintiff's contention, defendant's submission of the medical report of the physician who performed plaintiff's neurological evaluation does not create a question of fact inasmuch as the physician's findings were based solely on plaintiff's subjective complaints.

In opposition to the motion, the Appellate Division found that plaintiff failed to raise an issue of fact. The deposition testimony of plaintiff that he was unable to return to work and could no longer participate in certain recreational activities as a result of his injuries is insufficient to raise a triable issue of fact, in the absence of " 'a physician's affidavit substantiating the existence of a medically determined injury which caused the alleged limitation of [his] activities' ".

As such, the Appellate Division Ordered that the order so appealed from is unanimously affirmed without costs.


Agnes A. Wilewicz

[email protected]

Gone Fishing.

Brian D. Barnas

[email protected]

06/14/22       Joy v. AmGuard Insurance Company
United States District Court, Western District of Tennessee
Bad Faith Claim Survived Motion for Summary Judgment

Joy had homeowners’ insurance with Am Guard.  She had obtained the policy through Lancaster Agency, an authorized agent of AmGuard.  The policy conditioned coverage on the presence of a sprinkler system in the home for fire suppression.  After a fire, AmGuard denied coverage based on the lack of a sprinkler system at the property.  AmGuard brought a lawsuit against AmGuard and Lancaster alleging breach of contract and bad faith.  AmGuard sought summary judgment on the bad faith claim.

The court determined that the bad faith claim survived summary judgment and could be presented to the jury.  To recover for bad faith in Tennessee, a plaintiff must prove the policy had become due and collectible, the plaintiff made a formal demand for payment and waited sixty days after the demand before following suit, and the refusal to pay was made in bad faith.

First, the court found that Joy had raised an issue of fact regarding entitlement to coverage for the claim.  The Joy application had stated that there was a sprinkler system in the home.  Joy argued that the information about the sprinkler system originated from AmGuard’s electronic form.  Joy also argued that the computer system automatically put “yes” in response to a prompt about a sprinkler system and argued that a Lancaster employee answered the question incorrectly based upon an incorrect understanding of the question.  Under Tennessee law, AmGuard could be estopped from denying coverage if the lack of coverage was caused by the mistake of its agent.  Thus, Joy raised an issue of fact about whether the policy was due and collectible.

The court also found there was an issue of fact as to whether AmGuard refused to pay the claim in bad faith when viewing the evidence in the light most favorable to Joy.  The court reasoned that a reasonable juror could find that AmGuard interjected the information about the sprinkler system into the application and that Lancaster’s error about the nature of the question resulted in the sprinkler condition finding its way into the Joy policy, despite the Lancaster Agency's actual knowledge that the property did not have sprinklers.  The court also found that the jury could conclude that AmGuard denied the claim without investigating the claim by Joy that there was an error in processing the policy application.  In addition, the court noted that home sprinkler systems are rare in rural West Tennessee, and there was testimony that AmGuard’s typical practice was to drop the sprinkler discount and remove the condition if the homeowner did not provide proof of a sprinkler system. 


Lee S. Siegel

[email protected]

06/14/22       Youm v. Cincinnati Insurance Company
Superior Court of Connecticut (Stamford) 
Interpreting Klass, Trial Court Further Expands Appraisal   

As we reported in January, the Connecticut Supreme Court took up the issue of when appraisal is appropriate in a first party property damage claim. The underlying dispute was a common one: the wind damaged the homeowner’s roof shingles, the carrier acknowledged a covered loss, and then they fought over how much of the roof needed to be replaced. The homeowner demanded appraisal, but Liberty claimed that this was a coverage dispute making appraisal inappropriate.  

The Connecticut Supreme Court found that the scope of an insurer's replacement obligation under the state’s matching statute is a question of the amount of loss, and issues of adjacency and reasonableness of matching, are to be resolved by the appraisal panel.  

Then in May we reported on a Superior Court judge’s apparent expansion of Klass’s application beyond the matching statute, in 51 Roses [opinion still unavailable]. There, a vacant commercial property was burned to the ground by vagrants. Notwithstanding substantial coverage issues, the trial court held that appraisal was appropriate to determine the “value of the property and the extent of the damage.” Interpreting Klass, the court wrote that appraisal can be compelled where the “damages in question [are] the result of a covered peril, and the issue to be appraised [is] purely a question of fact.”

Now, we go even one step further into the abyss. Here, the court threw off the shackles of 51 Roses, compelling appraisal. The homeowner sought coverage for damage caused by a “sewage flood.” Cincinnati disclaimed coverage. Although not referenced in the opinion, a standard homeowners insurance policy does not include sewer backup coverage. Often an insured can purchase a sewer backup endorsement, however, that does not seem to be the case here. In reliance on the disclaimer, Cincinnati resisted appraisal, citing in part 51 Roses. Cincinnati argued that in interpreting Klass, the 51 Roses court required at a minimum that “the damages in question must have been the result of a covered peril….” In 51 Roses, the carrier conceded that a fire loss is a covered peril (if the vacancy exclusion and post-loss transfer issues are resolved in the insured’s favor).

But in Youm, we don’t even have that! While noting that the insured had not even commenced a declaratory judgment action to challenge the carrier’s denial, the court held that appraisal was still appropriate. “A factual dispute over the amount of the loss arguably covered under the Policy and a written request to arbitrate is all that is needed to trigger appraisal and avoid waiver of appraisal rights,” wrote the court. In effect, the court dispensed with the minimal requirement of the showing of a covered cause of loss before an insured can compel appraisal. It seems that very quickly Connecticut is going down a road in which all first-party losses will be subject to appraisal, regardless of the presence of a covered cause of loss.


Kyle A. Ruffner

[email protected]

Nothing this week of interest to report.

Ryan P. Maxwell
[email protected] 

Legislative List

06/13/22       Adverse Action Against Legal Reproductive Health Care
New York State Governor
New Law Prohibits Medical Malpractice Insurers from Taking Adverse Action Against New York Health Care Providers Providing Legal Reproductive Health Care to Out-of-State Patients

Last week on Monday, Governor Hochul signed into law (Chap. 221 of the laws of 2022) a bill that prohibits medical malpractice insurance companies from taking any adverse action against an abortion or reproductive health care provider who provides abortion or reproductive health care to out-of-state patients. According to the Sponsor Memorandum, this law justified in order to protect doctors and ensure that women can safely access abortion and related reproductive health care services in New York, despite such reproductive services being illegal elsewhere.

Section 3436-a of the New York Insurance Law was amended to enable such prohibition and expressly includes services performed by means of telehealth. The “adverse action” prohibited is defined as follows:

2. As used in this section, "adverse action" shall mean but not be limited to: (a) refusing to renew or execute a contract or agreement with a health care provider; (b) making a report or commenting to an appropriate private or governmental entity regarding practices of such provider which may violate abortion laws in other states; and (c) increasing in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount for, any medical malpractice insurance contract or agreement with a health care provider.

The law took effective immediately.


Patricia A. Rauh


06/15/22       Brunner v. Dearborn Nat'l Life
U.S. Court of Appeals, Fifth Circuit
Although Defendant Made a Material Misrepresentation Upon Which the Plaintiff Reasonably and Detrimentally Relied, there were no “Extraordinary Circumstances”, as are Required to Prevail on an ERISA Estoppel Claim

In August 2015, Lisa Brunner (“Plaintiff”) discovered she had a brain tumor and underwent surgery to remove the tumor in September 2015.  She also received radiation and chemotherapy following the surgery as her symptoms continued.  Her doctor, Dr. Noll found that Plaintiff suffered from impairments in learning and memory, and also noted a decline in attention, working memory, and left-hand dexterity.  However, Dr. Noll also noted that Plaintiff “compensated well and maintained adequate daily functional capabilities.”

In October 2016, Plaintiff was hired by Situs Group, a commercial real estate company.  After a few months, Plaintiff started to struggle with completing her work on time and was experiencing various cognitive impairments.  Situs Group maintained an ERISA employee welfare benefit plan that provided long-term disability benefits to eligible current and former employees, and the insurance was provided by Defendant, Dearborn National Life Insurance (“Dearborn”).

Shortly after starting her employment with Situs Group, Plaintiff attended a benefits meeting and was informed by the benefits coordinator that participants could receive benefits regardless of pre-existing conditions and that they would not be questioned about their pre-existing conditions.  A Dearborn representative was also present at this meeting and did not correct or otherwise qualify the representations made by the benefits coordinator regarding eligibility. Plaintiff decided to accept these benefits, but while reviewing the Open Enrollment form, she discovered language that was inconsistent with the statements made by the benefits coordinator during the meeting.  However, Plaintiff was assured by the benefits coordinator that if she enrolled as new hire, she would not be subject to the pre-existing condition exclusion.  Therefore, Plaintiff signed up for short-term disability benefits and long-term disability benefits.

Though Plaintiff had been informed otherwise, her chosen short-term disability plan excluded “any loss or Disability caused by, resulting from, arising out of or substantially contributed to, directly or indirectly, by…a Pre-Existing Condition.”  The long-term disability plan contained the same exclusion but defined “Pre-Existing Condition” differently than the short-term disability plan.

In March 2017, Plaintiff took a leave of absence and applied for short-term disability benefits, stating that her disability arose from her brain cancer and its treatment.  She planned to return to work in August 2017.  Dearborn initially denied the claim for short-term disability benefits, citing the pre-existing condition exclusion in the policy.  However, Situs Group requested that the exclusion be waived with respect to short-term disability benefits, and Dearborn ultimately approved the short-term disability benefits.  Plaintiff was informed she would receive the benefits based on an exception to the pre-existing condition exclusion.

Brunner later informed Situs Group that she would not be returning to work, so they extended her short-term disability benefits for the maximum duration, referred her claim to the long-term disability benefits department, and terminated her employment.  In September 2017, Plaintiff’s claim for long-term disability benefits was denied and she requested a review of her denial on March 22, 2018, which began a 45-day period in which Dearborn needed to review her claim.  Plaintiff argued for the first time that her disability arose from “cognitive impairments” rather than the treatment for the brain tumor.  She also wrote a letter to Dearborn explaining the representations made to her during the benefits meeting.

Plaintiff was informed in May 2018 that Dearborn was requesting additional medical records and extending its deadline by 45 days because they had not reviewed all of the medical records.  Dearborn then requested additional medical records two more times before their deadline.  Prior to making any determination, Plaintiff filed suit against Dearborn on June 2, 2018, asserting claims under ERISA.  Dearborn continued to request materials from Plaintiff until eventually denying her claim outright on August 14, 2018.

A magistrate judge determined the case was prematurely filed and stayed the litigation while the parties more fully developed the record.  After reviewing Dr. Noll’s October 2016 evaluation, Dearborn again denied Plaintiff’s claim and the stay was lifted.  Both parties moved for summary judgment and the district court determined that Plaintiff had not proven all the elements of an estoppel claim, denied her motion for summary judgment and entered a final judgment dismissing the case with prejudice.  Plaintiff timely appealed.

Plaintiff raised at least 8 points of error on appeal.  Plaintiff argued that the district court erred by allowing Dearborn more time to review her medical records and by closing the administrative record on a date beyond the statutorily mandated deadline.  The Court stated that a plan administrator must substantially comply with ERISA and technical non-compliance can be excused if the purpose of Section 1133 is fulfilled.  The Fifth Circuit agreed with the district court that Dearborn had substantially complied with ERISA procedures and was entitled to extend the deadline to respond to Plaintiff’s claim.

Plaintiff also argued that the district court erred by granting summary judgment to Dearborn on Plaintiff’s claims under Section 502(a)(1)(B) and that the district court erred by applying the pre-existing condition exclusion and not determining that her disability resulted from visuo-construction and visuomotor integration deficits rather than from her pre-existing condition.  The Court found hat the policy at issue unambiguously excluded coverage for a pre-existing condition and that the exclusion was properly applied here.

Plaintiff further argued that the district court erred by rejecting her claim for ERISA estoppel.  She argued that the district court correctly found that the defendants made material misrepresentations upon which she reasonably and detrimentally relied but erred when it decided that she did not rely on them under extraordinary circumstances.  The Court stated that to prevail on an ERISA estoppel claim, a plaintiff must demonstrate: (1) a material misrepresentation, (2) upon which she “reasonably and detrimentally relied,” (3) “under extraordinary circumstances.”  The Court found that the first two elements were satisfied, but that the Plaintiff failed to show extraordinary circumstances.  Specifically, the conversations Plaintiff had with Dearborn after the initial misrepresentations were made did not amount to repeated affirmative misrepresentations, which could establish her entitlement to benefits.

The Fifth Circuit affirmed the district court’s grant of summary judgment and its subsequent ruling regarding estoppel under ERISA.


Scott D. Storm

[email protected]


08/03/20       Country-Wide Ins. Co. v. Sheldon Jacob, et al  
Supreme Court, New York County
Insurer Established a Prima Facie Case that Insured Failed to Appear for EUO; EUO Need not be Scheduled Within 30 Days of Insurer’s Receipt of the Claim but Rather Within a Reasonable Time; and Failure to Appear at an EUO Constitutes a Breach of a Condition Precedent to PIP Coverage and Voids Coverage Regardless of the Timeliness of the Denial

Country-Wide Ins. Co. seeks a declaratory judgment that it owes no duty of No-fault coverage on the grounds that Jacob twice failed to appear for an examination under oath. The remaining defendants are medical service providers who rendered services to Jacob following the accident and have now sought reimbursement from plaintiff.

Here, plaintiff submits the EUO notices sent to Jacob at the address he listed on his application for no-fault benefits, the statements on the record establishing that Jacob failed to appear on both occasions, the denial of claim form attesting to a general denial due to Jacob's failure to appear, and the affidavits of plaintiff's No-Fault Litigation/Arbitration Supervisor, and plaintiff's EUO Clerk, establishing plaintiff's practices for the mailing of EUO notices and the scheduling of EUOs, and the facts supporting plaintiff's processing and denial of defendants' claims. Accordingly, plaintiff has established a prima facie case that Jacob failed to appear for duly noticed and scheduled EUOs, and that as a result plaintiff was permitted to, and did in fact deny defendants' claims for reimbursement.

Defendant has not raised an issue of fact regarding whether the EUO notices were appropriately mailed and whether Jacob failed to appear. Moreover, the failure to appear at an EUO constitutes a breach of a condition precedent to coverage under a no-fault policy and voids coverage regardless of the timeliness of the denial of coverage. Accordingly, Metro's arguments regarding the timeliness of the denial of claims are unavailing.

Finally, Metro argues that the record does not establish that the EUO notices were timely mailed to Jacob in the first instance. An EUO need not be scheduled within 30 days of defendant-insurer's receipt of the claim. While an insurer may not unduly delay requesting an EUO, an EUO request complies with the regulations where it is made within a reasonable amount of time.  Here, plaintiff scheduled the EUOs while it was still receiving claims from the medical provider defendants, and accordingly the time selected was reasonable. Metro's argument that without the precise date of Metro's bills included in the record it is impossible to judge the reasonableness of the time frame for requesting the EUOs is unavailing. It is settled law that a party appearing in opposition to a motion for summary judgment must lay bare its proof and present evidentiary facts sufficient to raise a genuine triable issue of fact.  Metro, which certainly has access to and knowledge of its own claims to plaintiff, failed to submit any evidentiary proof in opposition to the motion, relying solely on the affirmation of its counsel.  An affirmation of counsel without personal knowledge of the facts is insufficient to raise a triable issue of material fact.

05/12/22       Liberty Mutual Ins. Co., eta al. v. Jhoan Bien-Aime
Supreme Court, New York County
Insurer Proves Prima Facie Case of Rate Evasion in No-fault Case

Liberty asserts that Ben-Aimi procured a No-fault policy using an address in Wyandanch, New York, but after its investigation insists that she lived in Queens. At her EUO she testified that she had moved back to the Queens address (her parents' house) on the morning of the accident. Prior to the accident, she lived at the Wyandanch, New York address in a house owned by her uncle although she did not have a lease, pay bills or even know the first name of her uncle's wife who lived in that house. Ben-Aime's employer has the Queens address on file.  Bien-Aime procured the policy in August 2019 with the Wyandanch address and the investigation showed the subject car was at the Queens address going back to 2017 and it was in Queens consistently in 2018.

Liberty argues that they are entitled to summary judgment because Ben-Aime misrepresented her address to procure a lower rate. Plaintiffs claim they would not have written the policy for Ben-Aime with the premium they offered had they known the vehicle would be in Queens.

Liberty met its burden by submitting the affidavits of the investigator, the underwriter and the EUO transcripts of Ben-Aime. These all support plaintiffs' assertion that the car was garaged in Queens.

The Court recognizes that the EUO of Ben-Aime contains some evidence that she lived in Wyandanch. But there was more than enough testimony for plaintiffs to conclude she lived in Queens when she took out the policy. Ben-Aime admitted that her employer had the Queens address on file and that she received mail at the Queens address. She also acknowledged that she never paid rent, had a lease or knew the name of her uncle's wife while purportedly living there. Apparently, Ben-Aime lived at this address because it was close to her college, but she admitted she finished college in 2016. The policy at issue was purchased in 2019 and Ben-Aime had been working in Manhattan when the policy was procured, testifying that she had worked for two separate employers in Manhattan for the last five years.

Although this constitutes circumstantial evidence, the Court finds that plaintiff was entitled to conclude that Ben-Aime misrepresented where she lived.

04/28/22       NY Wellness Medical, P.C., A/A/O Carl Grant v. Nationwide Mutual Insurance Company
Appellate Division, First Department
Insurer is Not Required to Set Forth Objective Reasons for Requesting an EUO in Order to Establish its Prima Facie Entitlement to Summary Judgment

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint on the ground that plaintiff failed to appear for duly scheduled examination under oath.  The District Court denied the motion but found that defendant had established the timely and proper mailing of the EUO scheduling letters and the denial of claim form, as well as plaintiff's failure to appear for the EUOs. The District Court further found that the only remaining issue for trial was the reasonableness of defendant's EUO requests.  Reversed on Appeal. 

To establish its prima facie entitlement to summary judgment dismissing a complaint on the ground that a provider failed to appear for an EUO, an insurer must demonstrate, as a matter of law, that it twice duly demanded an EUO from the provider, that the provider twice failed to appear, and that the insurer issued a timely denial of the claims  -- all elements that the Civil Court found to have been established pursuant to CPLR 3212(g).

Plaintiff argues that the grounds for defendant's EUO requests were not based on objective reasons. However, contrary to plaintiff's contention, defendant was not required to set forth objective reasons for requesting EUOs in order to establish its prima facie entitlement to summary judgment.  As plaintiff failed to raise a triable issue of fact, defendant is entitled to summary judgment dismissing the complaint.

Katherine A. Fleming

[email protected]


06/16/22       Parks v. Illinois Cas. Co.
Supreme Court of Illinois
No Duty to Defend or Indemnify Overserved Patron in Drunk Driving Accident Due to Policy Exclusion

On July 5, 2015, William Spence (“Spence”) drank alcohol at Big Daddy’s Show Club (“Big Daddy’s”) and drove away in his truck. Dan the Man, LLC owned Big Daddy’s and D&D Saloon, LLC owned Little Daddy’s; Appellant Daniel Parks (“Parks”) owned both entities. Meanwhile, the Eberts stopped at the flashing red lights marking a four-way intersection before proceeding to cross the street. Spence failed to stop at the flashing lights and collided with the Eberts’ vehicle. At the time, he had a blood alcohol content of 0.195%. Police removed Spence from Big Daddy’s earlier in the night because “he got out of hand.” That same night, Christopher France (“France”) stopped by the show club to see if the employees needed any help. France ordinarily worked as a bouncer for Little Daddy’s, and occasionally worked at Big Daddy’s, but he was not on the clock that night. After France noticed Spence lingering in the parking lot, he ordered him to leave. Spence grabbed a pipe from his truck and proceeded to step toward France with the item in hand. France threatened him with bodily harm if he would not leave the property in his truck. Spence then left and collided with the Eberts’ vehicle.

The Eberts filed their lawsuit against Big Daddy’s, Little Daddy’s, and Parks (collectively, “Parks defendants”). In their second amended complaint, they claimed Big Daddy’s violated Indiana’s Dram Shop Act by serving alcohol to Spence when it knew, or should have known, of his inebriation. The Eberts also claimed the Parks defendants: (a) continued to serve Spence alcohol when they knew, or should have known, he was inebriated and impaired; (b) allowed Spence to drive his vehicle from Big Daddy’s when they knew, or should have known, he was inebriated and impaired; (c) failed to notify law enforcement that Spence left Big Daddy’s and operated his vehicle in an inebriated state; and (d) failed to obtain alternative transportation for Spence to prevent him from operating his vehicle. Illinois Casualty had issued separate and identical businessowners and liquor liability policies to each show club; each of these four policies were in effect on the night of the collision between Spence and the Eberts.

Illinois Casualty sought a declaration that it did not owe a duty to defend or indemnify the Parks defendants in the underlying lawsuit. As support, Illinois Casualty relied on language in its businessowners policies excluding coverage for claims of bodily injury for which an insured may be liable by reason of causing or contributing to the intoxication of any person or furnishing alcoholic beverages to a person under the influence of alcohol. Illinois Casualty moved for summary judgment, which the trial court granted in its favor, finding the insurer did not owe the Parks defendants “any duty to defend or duty to indemnify with respect to the underlying lawsuit” under the liquor liability policy issued to Little Daddy’s and the businessowners policies for both clubs. Nevertheless, the trial court concluded Illinois Casualty did owe a duty to defend or indemnify the Parks defendants under the Big Daddy’s liquor liability policy. On appeal, the Court of Appeals concluded the businessowners policies imposed a contractual duty on Illinois Casualty to defend the show clubs.

The Indiana Supreme Court found that the liquor liability exclusion in the businessowners policies was unambiguous. The court did not find that reasonable people would honestly differ as to the meaning of the term “intoxication” or the phrase “under the influence.” The court also found that the unambiguous language in Big Daddy’s businessowner policy excluded coverage for the Eberts’ claims. The policy excluded the Eberts claim Big Daddy’s carelessly and negligently violated Indiana’s Dram Shop Act by continuing to serve Spence alcohol when it knew, or should have known, he was inebriated, resulting in their injuries. The policy also excluded the Eberts claim Big Daddy’s carelessly and negligently continued to serve Spence alcohol and failed to obtain alternative transportation for him when they knew, or should have known, of his inebriation and impairment.

For the remaining claims, the court applied the efficient and predominant cause analysis from the Indiana Court of Appeals. Big Daddy’s served Spence alcohol, and he subsequently drove his vehicle from the premises while intoxicated and collided with the Eberts’ vehicle. Thus, the efficient and predominant cause of the collision was Spence’s drunk driving after he was served alcohol at Big Daddy’s. The court found that the efficient and predominant cause of the Eberts’ injuries was drunk driving precipitated by the negligent service of alcohol, and because the insurance policy excluded coverage for claims of bodily injury after causing or contributing to a person’s intoxication or furnishing alcohol to a person under the influence of alcohol, the policy excluded the Eberts’ claims from its coverage.


Heather A. Sanderson

[email protected]


06/10/22       Gill v. Wawanesa Mutual Insurance Company, 2022 BCSC 981
British Columbia Supreme Court
“Within” in a Sewer Backup Endorsement is an Unambiguous Word that Means Within the Exterior Walls of the Insured Dwelling

According to the Insurance Bureau of Canada, Insured damage for climate change induced severe weather events across Canada reached C$2.1 billion in 2021. The severe weather events of 2021 included the November flooding in British Columbia and summer hailstorms in Calgary.  But Canada is not facing severe weather losses alone. This is a world-wide phenomenon. According to Munich Reinsurance Company, 2021's global losses from natural disasters hit US $355 billion. 2021 now ranks as the sixth highest in insured losses since 1983.

These severe weather events put pressure on traditional industry wordings. Insureds and their counsel are searching for coverage where none should exist to deal with the impact of severe weather events on their property. They have employed and will continue to employ creative interpretations of ordinary words to persuade courts that an ambiguity exists and therefore coverage exists.

And so, the trial level British Columbia Supreme Court, sitting in New Westminster, was asked to determine the meaning of ‘within’ as it appears in a sewer backup endorsement. Really. Multiple paragraphs of judicial ink, comprising 22 pages of indexed reasoning was spilled on this exercise. You will be pleased to know that this court confirmed that ‘within’ means ‘inside’ and therefore ‘within’ is not outside. 

This lofty argument all began on December 20, 2019. It had been raining for some time. The outside underground drainage of a residence (more like a gated mini castle) in a semi-rural part of Surrey, British Columbia became blocked. The blockage caused water that was to be carried away by the drainage system to backup – in other words, flow backwards towards the house. The water that was backing up escaped through a drain located near a sundeck. The water that backed up through this drain eventually migrated into the house and caused damage.

On the day that the water backed up, the homeowner was insured with Wawanesa Mutual Insurance Company under a homeowners’ policy that was endorsed with a sewer backup endorsement. That endorsement provided coverage for the “sudden and accidental backing up or escape of water or sewage within your dwelling … through a sewer on your premises.” Wawanesa agreed with the insured homeowner that if the escape of water had been from a drain within the insured property, the claim would be paid. However, the water escaped from a drain outside the insured building and therefore there was no coverage.

Much of the judgment was consumed by describing the insured residence using words and not photos. The drain is imbedded in the concrete floor of a sundeck and capped with a grate. The drain is connected under the sundeck to the perimeter drainage system of the house.

The sundeck is on the ground level. The sundeck is the first level of a three-level deck at the back of the residence. The sun deck is not closed in on all sides.  The trial judge said that anyone looking at the sundeck would describe it as a partially closed-in outdoor patio.

The court addressed whether the escape of water from the drain on the floor of the sundeck was an escape from “within your dwelling” that engaged the coverage. The insured urged the court to define the perimeter of the ‘dwelling’ and if the loss occurred within that perimeter, then the loss was ‘within’ and covered. The court rejected that argument finding that the sundeck was a paved area adjoining the ‘dwelling’ and not ‘within’:

More significantly, any average person applying for insurance would understand the phrase “within your dwelling” to mean inside the dwelling or inside the house. For the average person, the determining factor in deciding whether something is “within” a dwelling would be its location relative to the exterior walls of the dwelling. Something inside those exterior walls is “within”. Something on the outside of the exterior walls is not “within” but is outside. Put differently, any average person applying for insurance would know and understand that the phrase “within your dwelling” does not include areas outside the exterior walls of the house.

The coverage afforded by the Sewer Backup Endorsement of the Policy is in respect of “sudden and accidental backing up or escape of water or sewage within your dwelling”. Giving these words their usual and ordinary meaning as they would be understood by the average person applying for insurance, there is only a single interpretation that emerges, namely, the backing up or escape of water must occur within the exterior walls of the dwelling or building. The backing up or escape of water that occurred here did not occur within the exterior walls of the dwelling. It occurred on the sun deck, an area that was outside the exterior walls of the basement of the dwelling or house. The sun deck may have been covered by the deck on the main floor of the house, but it was fully exposed to the elements on two sides. In no sense would any average person applying for insurance say or conclude that this area was “within” the dwelling or building. To the contrary, the average person would readily understand that the sun deck, though partially protected, is an outdoor patio and not “within” the dwelling.

Therefore, for the time being, in Canada, ‘within’ in a sewer backup endorsement unambiguously means inside the exterior walls of the insured dwelling.

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