Coverage Pointers - Volume XXIV, No. 19

Volume XXIV, No. 19 (No. 640)
Friday, March 3, 2023
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.

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Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.  Please remember that the ACTUAL issue of Coverage Pointers is attached for your reading and dancing pleasure.

Congratulations to my good friend John Woodard, the 2023 recipient of the FDCC Lifetime Achievement Award. A partner in the Tulsa firm of Coffey, Senger & Woodard, PLLC, he has provided superb and unmatched service to the Federation, the legal profession, and the community.  He has also subscribed to Coverage Pointers since its inception (which is another reason to be recognized).  I am proud to call John and his wife, Carolyn, my dear friends.

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Just back from the FDCC meeting in Nashville.  Now there’s a fun city.  I had the honor of participating in a mediation panel with my good friends, Jean Lawler, Tom Cordell, and Mark Harwell, and joined other FDCC Past Presidents for a special dinner.  Heather Sanderson, our Canadian correspondent, took part in an excellent panel which she describes below.  We are delighted to have her on our editorial staff.

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PLRB Claims Conference and Expo:

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Registration is around the corner for the PLRB Claim Conference and Expo in Orlando where I will be speaking on Risk Transfer, this time with John Hanlon, Director, Complex Claims and Litigation at Kemper.  We have 60 already preregistered and have room for plenty more.


Today’s issue:

Mega-congrats to our own Scott Storm for a spectacular victory in the United States District Court for the Western District of New York.  The court tossed out unfair claims practices and estoppel claims based on a simple mistake by an insurer, which was quickly rectified. His note is below and his extended summary is in the issue attached.

There’s a lot of good stuff in Mapfre Insurance Company of New York v. Ferrall, a decision we report on in my column.  It’s the old assault v. accident dilemma with a good reminder that a liability insurer is not bound by the determination’s made in the underlying lawsuit, if it defended its insured.  Why?  Because the insurer can’t put on witnesses and the parties to the underlying lawsuit often have a reason to avoid putting on those who would push the case out of coverage.


Training and More Training:

Schedule your in-house training for 2023.  Need a topic?  Here are 160 or so coverage topics from which to choose.


Need a mediator?

Coverage mediation is a thing!  Subject matter expertise may be useful.

Hey coverage lawyers.  Hey 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 out 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 knows 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.



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:

  • 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:

A relatively quiet week with the Court’s for this issue.  We would, however, recommend a review of the First Department’s decision in the Greenway Mews case against Liberty Insurance Underwriters which appears to suggest that pre-judgment interest is not available in a Direct Action claim.  We’re not really clear on the Court’s logic, to be honest, but it will be a decision that will come in quite handy in the right case.

For those of you not sure on what a Direct Action is, Insurance Law 3420(a)(2) establishes a right for the injured party (and any judgment creditor) to commence an action directly against the tortfeasors insurer if certain other conditions are met.  At common law there is no right for an injured party to sue the insurer of a third-party tortfeasor because the injured party has no rights under the insurance contract.  This could, potentially, leave an injured party without recourse if an insurer wrongfully disclaimed coverage to the alleged tortfeasor. 

The Insurance Law solves that problem by establishing a statutory right for the insured party to take a judgment against the tortfeasor.  If, after the judgment is presented to the tortfeasor’s liability insurer, and thirty days pass without a response from the insurer, the judgment creditor will then be granted standing to pursue recovery directly against the tortfeasor.  That is exactly what happened in the Greenway Mews claim. 

We presume that the Court reasoned because Liberty owed no duties to the plaintiff under the insurance contract (irrespective of the standing created by the Insurance Law), there was no evidence of a breach of the agreement.  The damages for the breach would have been from the insured who was not asserting a claim.  Still, however, there certainly could/should have been pre-judgment interest assessed against UAD and we question why that wasn’t recoverable.  A mystery for another day, perhaps.

That’s it for this week.  See you all soon.  

Steven E. Peiper

[email protected]


Payday – 100 Years Ago:

The New York Age
New York, New York
03 Mar 1923

Mrs. Briscoe Wins Suit
Against Elder Strachn

(Special to The New York Age)

            Baltimore, Md.—On February 21, before Judge Gorter, Mrs. Ada L. Briscoe of 2206 Druid Hill avenue was awarded a verdict of $150 damages against Elder M. C. Strachn of the Third Seventh Day Adventist Church, located at Roberts street and Druid Hill avenue.

            Mrs. Briscoe was suing for $5,000, basing her claim on an incident alleged to have happened at the church on July 16, 1921, when following her protest against transferring the church property from ownership of the congregation to custody of the Chesapeake Conference she charged that the Elder Strachn forcibly ejected her from the building. In doing this, she claimed, he pinned her hands behind her back and with the assistance of some of the members, pushed her more than halfway the church, out into the vestibule.

            Following this, on the same day, charges Mrs. Briscoe, Elder Thompson told the members that if they did not vote Mrs. Briscoe out of the church, he would leave. He is further accused of saying, “just as I have done that woman I’ll do the biggest and smallest here.” Mrs. Briscoe testified that she was sore for two months from the rough treatment received. She entered suit on August 5, 1921, and the case was tried February 7 and 8. Warner T. Guinn was her counsel.


Wilewicz’ Wide-World of Coverage:    

Dear Readers,

Hopefully everyone is staying warm during these throes of bleak mid-winter, though recently it does not appear that any part of the country has been spared by some sort of impactful weather event. In this neck of the woods, we are enjoying the white fluffy parts, but we could really do without the icy slushy ones.

Now, the Second Circuit was quiet this past week. So, instead, I offer you an opportunity. As many of you know, I am on the Editorial Board of the ABA Tort Trial & Insurance Practice Section’s The Brief magazine. It is one of the last circulated print magazines and it goes to thousands of insurance industry professionals quarterly, and around the world (yes, the ABA is an international organization).

At this time, we are actually soliciting content for upcoming editions. Have you ever wanted to be published – in a print periodical that lands on thousands of your colleagues’ desks? Do you have an article idea that you just need an impetus to put pen to paper? Do you have an interesting brief that you could convert into an article and get your name out there for marketing purposes? Whatever your reason – drop me a line. If you are want of ideas, I can help there, too. Submissions can be full articles or just brief “Practice Tips”. Let’s get in touch and get started.

Until then,

Agnes A. Wilewicz

[email protected]


Financial Compensations – 100 Years Ago:

The Daily Item
Port Chester, New York
03 Mar 1923

Big Verdict
Against New
Haven Road

            A decision of the Supreme Court of Errors of the State of Connecticut has given to Baruch & Rosan, Port Chester attorneys, their second large verdict against the New York, New Haven & Hartford Railroad Company within a few weeks. Only a short while ago the local lawyers secured from a Superior Court jury at Hartford, a verdict of $15,000 for the widow of a railroad employee who had been crushed to death between two sections of a freight train. That verdict was conceded by legal authorities to be the largest ever returned against the railroad company in a Connecticut Court.  Now the Supreme Court of Errors, reversing a decision of the Superior Court, has given to them a verdict of $10,000 in the case of a young woman who was killed by a train at a grade crossing at Springdale, near Stamford.

            In this second case, Baruch & Rosan represented Julius Ulrich, administrator of the estate of his daughter, Minnie B. Ulrich. The fatal incident that happened on December 22nd last—three days before Christmas. Miss Ulrich and a party of friends were riding across the New Haven tracks at Springdale in an automobile when the death train bore down upon them. The Ulrich girl was killed, and the other occupants of the car were seriously injured. The automobile was almost completely demolished. Miss Ulrich’s father brought suit. At the conclusion of the trial in Bridgeport, the Superior Court Justice before whom the case was heard directed a verdict in favor of the railroad company. Baruch & Rosan appealed to the Supreme Court of Errors and have had their contentions upheld. James W. Carpenter of New Haven represented the railroad company throughout the proceeding.


Barnas on Bad Faith:

I am looking forward to DRI’s Insurance Coverage and Claims Institute seminar next week in Chicago at the Fairmont Chicago Millennium Park.  If you have not yet signed up, there is still time to do so.  If you have signed up and are attending, I hope to see you there. 

I have a bad faith case from Pennsylvania in my column today where the court goes into a nice discussion of the claim handling history and finds that the insurer did not act in bad faith.  There is some nice language in the decision about making offers below full authority and potentially inaccurate apportionments of value that may be useful in future cases.  Give it a look if you are so inclined.

Brian D. Barnas

[email protected]


Women’s Rights – 100 Years Ago:

Buffalo Morning Express
Buffalo, New York
03 Mar 1923


            Objection to 26 bills designed to bring about equal rights for women was raised at a legislative hearing in Albany by representatives of the League of Women Voters, who charged that the bills did not actually assure all they were intended to assure. Designation of a legislative commission for further investigation was recommended, with the suggestion that the women be named to act with the commission. Senator Cottillo pointed out that he had introduced the measures at the suggestion of women’s organizations and that they were the product of the legal advisors who had carried out investigations for those organizations.

            But Mr. Cottillo forgot that there are several kinds of women’s organizations and that not all women have the same business interests or political beliefs.


Kyle's Construction Column:

Dear Readers,

This week’s case, from the Court of Appeals of Oregon, involves an appeal concerning whether an insurance company had a duty to indemnify its insured and pay a portion of an arbitration award that plaintiffs in the underlying action had obtained against the insured. The court determined that the trial court did not err in granting the insurance company’s summary judgment motion declaring that the insurance policy did not provide coverage for the insured’s liability to the underlying plaintiff, as the underlying claim arose solely out of the breach of contractual duties.

Until next time…

Kyle A. Ruffner

[email protected]


Disagreements – 100 Years Ago:

Press and Sun-Bulletin
Binghamton, New York
03 Mar 1923

Husband Appears to Be
Fighting Losing Battle

            Harrisburg, Pa., March 3.—Charles Uttley has been routed in his conflict with Mrs. Uttley over the naming of their 19-day-old son.

            Mrs. Uttley has demanded the name of “William Ferguson Uttley” from the start. Uttley has been adamant against William Ferguson. However, it was discovered yesterday that when the birth certificate was filed it was under the name of William Ferguson.

            Uttley insisted today that when his wife and son return home from the hospital the next Monday it will be revealed that he “has just begun to fight.”   

Editor’s Note: The Mrs. won the battle.  William Ferguson Uttley was so named and lived 71 years until his death in 1994.  He had two daughters, so never had to think about carrying on the family name.


Fleming’s Finest:

Dear Coverage Pointers Subscribers:

Thankfully, we are less than 20 days until Spring, although you would not know it from the weather. After the recent winter storm, it took a couple of days to get the nice layer of ice off my car.

This week’s case from the Oregon Supreme Court is all about causation where a plaintiff has preexisting conditions. One of the primary issues at the trial court level was whether the defendant’s driving was the cause-in-fact of the plaintiff’s alleged injuries, and the issue on appeal was whether the trial court properly instructed the jury on causation.

Until next time,

Katherine A. Fleming

[email protected]


No Insurance – 100 Years Ago:

The Buffalo News
Buffalo, New York
03 Mar 1923


Governor Considers Proposal
a Hardship—Legislators
Against Executive’s Plan
to License Owners of

Albany Bureau,

            Buffalo Evening News


            ALBANY, March 3.—Governor Smith has taken a stand against pending legislation requiring every automobile owner to obtain at least $2,000 insurance to protect individuals and property from damage that might result from operation of his car. The governor considers it unnecessary hardship on automobile owners. As an indication of his sincerity, he is going to cancel insurance he has been carrying on some of his own cars.

            “I don’t believe in forcing every owner of an automobile to take out insurance,” said the governor. “By passing such a law you would require the rich man to buy insurance, when there is no need for it. His resources guarantee protection to anyone injured.”

            On the other hand, however, legislators point to the case of a man with a small amount of money who buys a second-hand car on the installment plan. He crashes into another car and causes damage into thousands of dollars. Upstate legislators think compulsory insurance necessary to protect victims of these incidents, who now can’t recover for their damages, because the car doing the damage does not represent enough value to make a law suit worthwhile, and the owner has nothing beyond what is invested in the car.


Ryan’s Capital Roundup:

Gone fishing. Back next issue.

Ryan P. Maxwell

[email protected]


Driver’s License – 100 Years Ago:

The Buffalo Times
Buffalo, New York
03 Mar 1923


            From the public, the automobile industry and the great majority of law-abiding auto owners, THE TIMES anticipates vigorous co-operation with Governor Smith in the measures he is taking to reduce automobile accidents to a minimum and to prevent the insurance of motoring licenses to persons unfit to be trusted with operation of cars.

            In a special message to the Legislature, Governor Smith recommends legislation to vest the licensing of motor vehicles and their operation with the local police authorities instead of a State bureau.

            The Governor holds that the system of licensing for revenue should give place to a regulatory plan, bringing licenses under the direct control of cities, the small municipalities and, in rural districts, the sheriffs of counties.

            There is no reason to doubt that this would notably reduce the number of accidents. By transfer of the licensing power from a State bureau, which cannot be presumed to know the character of every applicant, to local authorities, it would go far to do away with the danger of automobiles being put to criminal uses.

            On this point we have the recent police complaint that the carrying away of safes in order to enable safe-breakers to plunder them at leisure, is mainly due to automobiles falling into criminal hands.

            Get a system of auto licensing, not on the model of the present revolver law, under which crooks seem able to get revolvers without trouble, while the decent citizen has difficulty to obtain one for his own protection but ensuring the honest and capable auto operator ease in obtaining a license while barring the unfit, and it would be just what is needed. 


Dishing Out Serious Injury Threshold:

Dear Readers,

Hope everyone is enjoying the year so far. It’s scary to say that we already have two months down. Hoping to enjoy some of the nice weather coming our way and get out and enjoy nature in the coming months.

I have a couple cases to talk about in this issue, both out of the Second Department. Both deal with a Defendant expert that opines that plaintiff’s injuries are degenerative in nature but failed to address plaintiff’s claims that the accident exacerbated plaintiff’s preexisting injuries.


Michael J. Dischley

[email protected]


Romance – 100 Years Ago:

The Buffalo Times
Buffalo, New York
03 Mar 1923


            When a man has invited a woman to luncheon, to dinner or to a late supper after the theater, he precedes her into the restaurant until he has attracted the attention of the head waiter. When he has notified that functionary that he wants a table for two he allows the woman to precede him as both follow the head waiter to the allotted table. The table waiter draws out the chairs and seats the woman first, directly opposite her host.

            Each is given a menu card, but the woman leaves it to her entertainer to order the dishes. He asks her approval for each selection, of course, and he may request her to suggest something preferred by her. But a man who is familiar with what’s what never asks a woman who is his quest to order the items of the repast for both of them. Nor does a well-bred woman embarrass her host by any curiosity concerning the bill or the tip to the waiter.


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

I marvel at our editor’s consistency and dedication in putting out this newsletter every two weeks for the past 20+ years. I sit here trying to come up with something to write, disbelieving that another two weeks has gone by. Yet somehow the calendar doesn’t lie. Marking the passage of time in two-week increments easily leads to existential crisis. While not as maddening as marking life by the tenth of an hour, it is much harder to look back every fortnight than what we are instructed in Ecclesiastes 3:1-8 (“a season, and a time for every matter under heaven”) (see also, The Byrds). This past two-week increment had me in Northampton, Massachusetts, celebrating a friend’s sixtieth birthday. For those that don’t know, Northampton is a true college town, home to four colleges and a community college, including 30,000 kids at UMass, Amherst. So, after a lovely dinner party and mature cocktails (think espresso martinis), a subset of partygoers found us at 1 am in a college dance club, chugging Buds from the bottle and dancing to unidentifiable music. After the lights came on, we queued up on an endless pizza line, shoulder-to-shoulder with kids thirty years our junior. Somehow, the passage of time from young college student to old lawyer seemed too consuming; so, for now, I’ll tackle getting older every other week.

As for old, the Connecticut Supreme Court may have finally laid to rest a 2012 case, which has now made state-wide law twice. Read CP for the details.

Keep keeping safe.

Lee S. Siegel

[email protected]


Committing Crimes – 100 Years Ago:

Times Herald
Olean, New York
03 Mar 1923


            Irene Davis, 16 years old, charged with carrying a concealed weapon, was fined $50 when arraigned before Judge Keating in police court last night. It was alleged that she threw a long butcher knife at Officer John Grandusky when the latter was in Wayne street on Thursday evening making an arrest. If the fine is not paid she will be sent to Little Valley jail for 50 days.


Rauh’s Ramblings:

Hello Everyone,

I hope you are all having a great week.  It is a sunny day and almost 50 degrees in Buffalo, which feels really nice, especially following the horrible ice storm last week.  Unfortunately, another storm system appears to be on the horizon, so it doesn’t appear that the mild temperatures will be sticking around for long.

This week, I found a case recently decided in the Fourth Circuit involving a denial of life insurance benefits under an employer-provided policy.  The Fourth Circuit ruled whether the defendant, Prudential, abused its discretion in denying the Plaintiff’s claim for benefits.  Check out my case summary to see the Court’s ruling.

Until next time,                            

Patricia A. Rauh

[email protected]


Seeking Payment – 100 Years Ago:

The Buffalo Commercial
Buffalo, New York
03 Mar 1923

SEEKS $102.60 FROM

            Attorneys Loran L. Lewis Jr., and William C. Carroll, Erie county Savings bank building, have started a suit in the supreme court against National System of Bakeries company, Cleveland, for $102.60, of which $2.60 is the cost of a telephone call from Buffalo to Cleveland.

            Lewis and Carroll claim they were retained by the Cleveland concern to prosecute a suit against one, Parry, in the federal district court, that it was discontinued by the Cleveland company and that they were not paid for their services.


Storm’s SIU:

Hi Everyone:

I’m writing from sunny and hot Orlando while on vacation.  Since I’m on vacation, I will report on additional cases next edition.  However, I wanted to share with you the privilege I have had of successfully representing a client in the case of Francabandiero v. National General, 2023 WL 2253194 (W.D.N.Y. Feb. 23, 2023). 

In this case the Court dismissed the action including causes of action for breach of contract, breach of the implied duty of good faith and fair dealing, fraudulent misrepresentation, deceptive business practices in violation of General Business Law § 349, and unjust enrichment. 

In a nutshell, in prior correspondence the insurer had referred to the 2-year suit limitation condition of the policy but in the same letters also mistakenly mentioned a 3-year statute of limitations.  The error was corrected through correspondence to the insureds’ attorney 23-days before the two-year limitation period expired.  Nevertheless, the insureds did not commence suit until 50-days after the two-year anniversary of the loss.

The Court found no “waiver” (intentional relinquishment of a known right) and said that, even if there was, that it had been retracted 23-days before the suit deadline; and no estoppel (detrimental reliance), as the plaintiffs had been notified and the error corrected 23-days before the limitation period expired.  The plaintiffs also had been provided with the policy and, therefore, had presumptive, conclusive knowledge of its terms.

There is much more to the case which is discussed below.  The hyperlink in the case digest is to Westlaw.  If you are not a Westlaw subscriber and would like a copy, just email us and we will forward it to you. 

I look forward to talking with you again in two weeks. 

Now, back to the pool…

Scott D. Storm

[email protected]


Unconventional – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
03 Mar 1923

Girl’s Intended Is
Her Guardian
By Order

(Special Telegram to The Enquirer)

            Gettysburg, March 3—Under a peculiar set of circumstances which arose in the local court here recently Catherine O’Hannigan will have to obtain the consent of her intended husband before she can wed.

            Miss O'Hannigan, whose parents are dead, recently became engaged to Harry O. Melhorn. Under the state law Miss O'Hannigan, who is nineteen years old, and therefore a minor, must have the consent of a guardian before she can be married.

            In her petition to the court Miss O’Hannigan said she wanted to wed Melhorn and asked he be appointed her guardian. The petition was granted.


Gestwick’s Greatest:

Dear Readers:

Doubling down on the sentiments of my peers, I am seriously considering skating to work these days in lieu of driving. Seems safer that way, although I doubt my superiors will approve of ice skates being worn in the office. Who knows, maybe I’ll start a fad.

In the case I have for you this week, the New York State Supreme Court, County of New York, decided that the owner of a construction premises was entitled to coverage from the carrier for the subcontractor on the basis of a trade agreement even where it was not in direct privity with the subcontractor. The subcontractor’s carrier argued that this case should reach a different result than the parallel case between the general contractor and the subcontractor’s carrier, which held that the general contractor was entitled to additional insured coverage under the same endorsement, since the premises owner was subject to different potential sources of liabilities than the general contractor, namely, non-delegable duties owed to the underlying plaintiff not shared by the general contractor. In disagreeing with this contention and upholding the subcontractor’s carrier’s duty to defend, the Court ruled that the duty to defend is based on the allegations in the underlying complaint, not the ultimate determination on liability.

The other issue in the case was whether the subcontractor’s carrier owed back defense costs to Arch Specialty, the liability carrier for the premises owner. In holding in the negative, the Court noted that a side agreement between the premises owner and the general contractor that provided that the premises owner was also entitled to primary, non-contributory coverage from the general contractor’s insurer, would limit the scope of the monetary obligations owed by the subcontractor’s liability carrier to the premises owner, including those tied to the duty to defend. However, evidentiary issues arose with respect to the written contract between the owner and the general contractor, which were to be dealt with in the underlying action and were not resolved at the time of the present motion. Accordingly, the Court held that it was premature to decide the issue of back-defense costs, since any determination would necessarily be impacted by the side agreement between the owner and general contractor.

That’s it for this time! Until next time, stay safe, stay warm, stay happy.

Evan D. Gestwick

[email protected]


Secrets Fuel Separation – 100 Years Ago:

Dunkirk Evening Observer
Dunkirk, New York
03 Mar 1923


Plaintiff in London Divorce Case
Made Some Striking Admissions
in Court Today.

            London, Mar. 3.—The Russell divorce case, in which the Hon. John Russell, son of Lord Ampthill, seeks decree on grounds of misconduct increased in interest for London society today following striking admissions by the plaintiff under cross-examinations.

            Russell, who stated his marriage never had been consummated, while his wife claimed it had been while her husband was in a somnambulistic state admitted he frequently dressed as a woman. He confessed to possessing a feminine outfit, complete to corsets and silk stockings.


On the Road with O’Shea:

Subscribers and Non-Subscribers,

I hope everyone is getting along well as we begin the slow and steady march through March. Spring is shortly around the corner, but that doesn’t necessarily mean Western New York’s winter is over. An example being the past few days of separate snow and ice storms.

This week I have a case from the Second Department regarding the breach of policy conditions. Specifically, the settlement of a personal injury action without the carrier’s consent and then seeking SUM benefits from the carrier.

Ryan P. O’Shea

[email protected]


For Richer or For Poorer? – 100 Years Ago:

The Evening Sun
Baltimore, Maryland
03 Mar 1923

Should Girls Marry
For Love Or
For Money?

Feminists Strongly In Favor
Of Getting Love Affairs
Over Early and Then
Settling Down With
A Man Who Has


            Should a girl marry for love or money?

            Undoubtedly every girl needs at least one major romance in her life.

            There is nothing like a heavy heart affair for developing character, sacrifice, tenderness, patience, kindness and all the minor virtues come in its train.

            On the other hand, nobody can see straight when they’re in love.

            They are totally blind, like Cupid himself, to all imperfections in the object of their love. Judgment is distorted and reason is dethroned.

            If, therefore, a girl marries the man she loves, ten chances to one she is misleading herself.

            She imagines she is marrying a hero, and it isn’t the man’s fault that he isn’t what he isn’t and that eventually she will be disillusioned and probably cry her eyes out and consider herself a martyr to the end of her days unless she gets a divorce on the spot.

            Then, too, love may be the greatest thing in life—but it’s awfully greedy.

            A person in love is the most selfish object under the sun.

            She, or he, on the strength of that love, expects to be given all things, to be forgiven all things and to be all things to the object of his or her devotion.

            And, by Jove, if they don’t get all they expect after the first bloom has worn off they whine or sulk, according to their several natures, and bleat forth the words “I love you” as if they covered all deficiencies.

            Love should be classed among the diseases, to be got over like measles, whooping cough and chickenpox of childhood days.

            It should be regarded as a character-building element and nothing more.

            It certainly shouldn’t be regarded as the basis for marriage, it seems to me.

            For, look you, what happens to 99 per cent, of love marriages, minus a little hard cash, when trouble begins?

            Love is killed by the daily petty worries and troubles and life becomes a burden to people chained by dead love.

I’m not the first to discover this. There’s an old proverb that “when poverty enters the door, love flies out of the window.”

Then, should a girl marry for money? I’m in favor of it.

As one young miss put it very succinctly: “If one marries for money without love, one is certain of getting some happiness, but if one marries for love without money, one won’t get any happiness once the honeymoon is over.”

I advocate at least one love affair for girls before they marry.

It clears the brain of lots of foolish notions and then a girl can look around her with a cool head and make a suitable choice.

Being wise, she will choose a man with money for her husband, or if she thinks a certain young man a good prospect, capable of making money soon, then it is a safe investment of her life to marry that young man.

If later she finds she can respect the man she marries and that a certain amount of affection grows up between them, then, indeed, she may consider herself fortunate in having concluded so good a bargain.

It would seem, therefore, that there is more to be said in favor of money matches than love matches.

At least, I think so.


North of the Border:

We are back from a fabulous few days in Nashville where we attended the FDCC’s 2023 Mid-Winter meeting. I had the pleasure of appearing on a panel dissecting the coverage available to deal with the liabilities arising from a thorny civil rights issue – my co panelists, Martin Lavelle who is with Travelers in Hartford, and April Savoy, who is with Allstate, were amazing. We had fun planning and presenting together. Mr. Kohane’s well-attended and thought-provoking mediation panel followed ours.

The other thrill of Nashville was playing keyboard at a mock-up sound stage at the Musician’s Hall of Fame. One can dream. Learning to play the piano was my COVID project – despite not having ANY musical background, it has been a blast.

We are now back to reality and hard at it. My column today recounts a philosophical judicial discussion of the meaning of ‘within’.

Heather A. Sanderson
Sanderson Law, Calgary, Alberta

[email protected]


Headlines from this week’s issue, attached:


Dan D. Kohane

[email protected]

  • When Carrier Goes into Liquidation, Actions Against Insureds are Stayed.  Prompt Request for Permission to File Answer by Liquidation Bureau Assigned Counsel Should have been Granted
  • Question of Fact on Whether there was an Occurrence, Finding in Underlying Action Not Binding on Carrier
  • Agent Walks, No Special Relationship
  • Four Year Late Notice Did Not Prejudice Carrier’s Ability to Investigate or Defend the Claim


Steven E. Peiper

[email protected]

  • Buyer’s Remorse Rejected When Terms of Sale were “As Is”


Michael J. Dischley

[email protected]

  • Defendant Expert Opined that Plaintiff’s Injuries were Degenerative in Nature but Failed to Address Plaintiff’s Claims that the Accident Exacerbated Plaintiff’s Degenerative and Preexisting Injuries
  • Defendant Expert Opined that Plaintiff’s Injuries were Degenerative in Nature but Failed to Address Plaintiff’s Claims that the Accident Exacerbated Plaintiff’s Degenerative and Preexisting Injuries


Agnes A. Wilewicz

[email protected]

  • All’s Quiet on the Second Circuit Front


Brian D. Barnas

[email protected]

  • No Bad Faith where Insurer Conducted a Sufficiently Thorough Investigation and Made Reasonable Offers to Settle UIM Claim


Lee S. Siegel

[email protected]

  • Preponderance of the Evidence is the Correct Burden of Proof on an Exclusion
  • Plaintiff Attorney Disqualified From Trial As Key Witness to Bad Faith Claims


Kyle A. Ruffner
[email protected]

  • No Coverage Under a Commercial General Liability Policy for Underlying Claim Arising Solely from the Breach of Contractual Duties


Ryan P. Maxwell

[email protected]

  • Back at it next time


Patricia A. Rauh

[email protected]

  • Prudential did not Abuse its Discretion when it Denied Plaintiff’s Claim for Life Insurance Benefits and Plaintiff was not Entitled to Equitable Tolling


Scott D. Storm

[email protected]

  • Despite Error in Insurer’s Prior Correspondence Saying a 3-Year Statute of Limitation Applied, First-Party Property Litigation is Dismissed as Untimely as the Error had been Corrected and the Plaintiffs Notified 23-Days Before the Two-Year Suit Limitation Period Expired and They did not Commence Suit until 50-Days After the Expiration Date (No Waiver or Estoppel Exists).  


Katherine A. Fleming

[email protected]

  • The Existence of Preexisting Conditions and Aging Does Not Necessitate a Substantial Factor Instruction on Causation Although They May Contribute to a Plaintiff’s Injuries


Evan D. Gestwick

[email protected]

  • The Potential that a Party’s Liability May Stem from its Own Acts or Omissions is Immaterial in Analyzing the Duty to Defend


ON the ROAD with O’SHEA
Ryan P. O’Shea

[email protected]

  • Insured’s Settlement of Personal Injury Claim Without Carrier’s Consent Bars Future SUM Claim

Heather A. Sanderson
Sanderson Law, Calgary, Alberta

[email protected]

  • “Within” in a Sewer Backup Endorsement is an Unambiguous Word that Means Within the Exterior Walls of the Insured Dwelling


That’s all for now.    I think that our next issue will require Irish beer to accompany our publication.



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

[email protected]

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

Scott D. Storm

Thomas Casella

Brian D. Barnas

Eric T. Boron

Robert P. Louttit

Ryan P. Maxwell

Patricia A. Rauh

Diane F. Bosse

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea


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

Fleming’s Finest

Gestwick’s Greatest

On the Road with O’Shea

North of the Border


Dan D. Kohane
[email protected]

03/02/23       Morales v. American United Transportation, Inc
Appellate Division, First Department
When Carrier Goes into Liquidation, Actions Against Insureds are Stayed.  Prompt Request for Permission to File Answer by Liquidation Bureau Assigned Counsel Should have been Granted

Plaintiffs sought a default judgment against a defendant whose carrier was declared insolvent and placed into liquidation, shortly after the commencement of the action. The NYS Liquidation Bureau retained defense counsel and that counsel promptly contacted plaintiff’s counsel to have the motion withdrawn, so an answer could be filed.  Plaintiff’s counsel refused.

The lower court was correct in not granting the default judgment.  The excuse for not answering surely had merit. Indeed, under the Order of Ancillary Receivership, the underlying case was stayed. 

03/01/23       Mapfre Insurance Company of New York v. Ferrall
Appellate Division, First Department
Question of Fact on Whether there was an Occurrence, Finding in Underlying Action Not Binding on Carrier

Groskopf and Ferrall were involved in an altercation outside a bar in 2017. During the altercation, Edward struck Groskopf in the head with a baton, causing injuries. Groskopf commenced a personal injury action against Edward and his parents, the defendants James G. Ferrall and Irene M. Ferrall (hereinafter collectively the Ferrall defendants), alleging that Edward negligently and recklessly caused Groskopf's injuries (hereinafter the underlying action).

In November 2018, the plaintiff, Mapfre Insurance Company of New York (hereinafter Mapfre), commenced this action against Groskopf and the Ferrall defendants seeking a judgment declaring that it is not obligated to defend or indemnify the Ferrall defendants in the underlying action. In September 2019, Groskopf moved for summary judgment declaring that Mapfre is obligated to defend and indemnify the Ferrall defendants in the underlying action, and the Ferrall defendants separately moved for the same relief.

A liability insurer's "'duty to pay” is determined by the actual basis for the insured's liability to a third person. "The duty to indemnify on the part of an insurer requires a determination that the insured is liable for a loss that is covered by the policy. The burden to establish coverage and a duty to indemnify lies with the insured. However, the insurer has the burden of proving facts establishing that the loss falls within an exclusionary clause of the insurance policy.

Here, the insurance policy at issue defines an "[o]ccurrence" as "an accident . . . which results . . . in . . . '[b]odily injury.'" Although the term "accident" is not defined in the policy, "in deciding whether a loss is the result of an accident, it must be determined, from the point of view of the insured, whether the loss was unexpected, unusual and unforeseen". The policy also contains an exclusion for bodily injury "which is expected or intended by an 'insured.'"

Where harm is inherent in the nature of the intentional act, such intentional act will be deemed to have intentionally caused such harm. The court, fairly inquired, [1] whether an 'occurrence' is involved that gives rise to policy coverage and, [2] if so, whether it falls within the 'expected or intended' injury policy exclusion,

In support of their respective motions for summary judgment, Groskopf and the Ferrall defendants submitted, inter alia, transcripts of their own deposition testimony from the underlying action, and Groskopf's sworn statement submitted in support of criminal proceedings taken against Edward. In his statement, dated September 30, 2017,

Groskopf averred that earlier that morning, after 2:00 a.m., he was walking from his apartment to get pizza when he saw his friends involved in a verbal altercation with "some guys." He attempted to "diffuse" the situation. He was pushed by an "unknown person," and he pushed the person back. He "then saw a baton get whipped out and expanded." Upon seeing the baton, he said, "Woah, Woah," and backed up. He then "got struck on the head, fell on the ground, lost consciousness momentarily, then got up and attempted to chase the male down." At the scene, Groskopf identified the person who struck him with the baton, i.e., Edward, and requested "prosecution to the fullest extent" of the law.

According to Ferrall, he "didn't intentionally mean to hit anyone but create like a circle of just waving it to get them away" and did not recall how the five men reacted when he started swinging the baton. At some point, Edward struck one of the five individuals who were aggressively coming at him. In a criminal proceeding arising from the incident, Edward entered a plea of guilty to (1) assault in the third degree, admitting that he "recklessly" caused physical injury to another person, and (2) criminal possession of a weapon in the fourth degree, admitting that he knowingly possessed a weapon, i.e., the baton.

Here, Groskopf and the Ferrall defendants failed to establish, prima facie, their respective entitlement to judgment as a matter of law on whether an "occurrence" was involved giving rise to policy coverage and, if so, whether such occurrence fell within the "expected or intended" injury policy exclusion. Notwithstanding that, at their depositions in the underlying action, Groskopf, and Edward both gave versions of the incident characterizing Edward's act in striking Groskopf in the head with an illegal baton as being unintentional, varying inferences regarding Edward's intent may nonetheless be drawn from the circumstances described where the incident occurred during a heated altercation between two groups of men in the early morning hours. Moreover, in Groskopf's sworn statement in support of the criminal proceedings against Edward, Groskopf did not suggest that Edward's conduct in striking him was accidental, and, in fact, requested that Edward be prosecuted "to the fullest extent" of the law.

Since Mapfre was not a party in the underlying action, it did not have an opportunity to participate in the depositions or otherwise litigate the issue of Edward's intent in the underlying action   The mere fact that Mapfre provided the Ferrall defendants with counsel under a reservation of its right to disclaim coverage does not put it in privity with the Ferrall defendants (see id. at 1046). "To the contrary, the attorneys representing [the Ferrall defendants] . . . , although paid by [Mapfre] . . . , are obligated to act in the interest of [the Ferrall defendants]" (id.). As such, any determination in the underlying action regarding Edward's intent is not binding upon Mapfre (Indeed, in the underlying action, it was in the mutual best interests of Groskopf and the Farrell defendants to characterize Edward's conduct as accidental and, hence, within the coverage of the policy (see

Given that there are questions of credibility and that various inferences may be drawn from the circumstances, the Supreme Court should have denied the respective motions of the Ferrall defendants and Groskopf for summary judgment declaring that Mapfre is obligated to defend and indemnify the Ferrall defendants.

Contrary to the Supreme Court's determination, Groskopf and the Ferrall defendants also failed to demonstrate their respective prima facie entitlement to judgment as a matter of law based upon Mapfre's alleged untimely disclaimer. "A disclaimer is unnecessary when a claim falls outside the scope of a policy's coverage portion, since 'requiring payment of a claim upon failure to timely disclaim would create overage where it never existed'“.’」  Surely true with respect to whether or not there was an occurrence.

Editor’s Note:  A fair description of the law and a good discussion about cases not binding on carriers when they have not had a chance to litigate it.

02/21/23       Chauncey Realty, LLC v. Brownstone Agency, Inc.,
Appellate Division, First Department
Agent Walks, No Special Relationship

Brownstone is the agent and third-party administrator for Argonaut Insurance Company (Argonaut). Plaintiff is the insured under a policy issued by Argonaut.

Plaintiff sued Brownstone for breach of contract, based on Argonaut's denial of coverage on a loss following a fire at plaintiff's premises. Brownstone established its prima facie entitlement to summary judgment dismissing plaintiff's lone claim against it, based on an affidavit of its representative that coverage on the policy was disclaimed due to plaintiff's alleged material misrepresentations in its application for insurance.

There were no allegations, let alone evidence, to support a triable issue that plaintiff made a specific request for Brownstone to review its insurance application for any inaccuracies, or that a special relationship existed between plaintiff and Brownstone solely on the basis that the parties had an extended relationship as to insurance.


02/21/23        Salvo v. Greater New York Mutual Insurance Company
Appellate Division, First Department
Four Year Late Notice Did Not Prejudice Carrier’s Ability to Investigate or Defend the Claim

Plaintiff is entitled to a defense and indemnification from GNY notwithstanding plaintiff's untimely notice of the underlying defamation claim brought against her by another member of her condominium's Board of Managers. Initially, plaintiff's lack of knowledge that coverage was available to her under the commercial general liability policy issued by defendant to the Board did not excuse her four-year delay in notifying defendant of the claim. Plaintiff cannot claim that her lack of knowledge was justifiable absent a showing that she made reasonably diligent efforts to ascertain the existence of alternative or additional coverage, particularly where the insurer that previously assumed her defense,

Wesco Insurance Company had notified her in October 2016 that it was disclaiming coverage but was proceeding with her defense under a reservation of rights.

Nevertheless, the untimely notice does invalidate coverage because there is no showing in the record that the delay prejudiced defendant. Regardless of whether the insurance policy shifted the burden of proof with respect to the showing of prejudice (see Insurance Law 3420[c][2][A]), the record does not support a finding that the delayed notice caused defendant to suffer "actual prejudice" resulting from a "material deprivation of [its] right to control the defense of the [underlying] claim" .  Although the late notice deprived defendant of the ability to participate in the initial investigation and litigation of the claim, defendant has not explained how Wesco's defense of the matter materially prejudiced it. Moreover, the delay did not affect defendant's access to relevant evidence since discovery was still open at the time defendant received notice of the claim.


Steven E. Peiper

[email protected]


02/28/23       228 W 72 LLC v. 228A West 72 LLC
Appellate Division, First Department
Buyer’s Remorse Rejected When Terms of Sale were “As Is”

Plaintiff brought this claim asserting a breach of the contract for sale due to, apparently, an inoperable elevator at the premises.  The claim was dismissed as against 228A when it was established that there was no independent negligence cause of action asserted, and the contract specifically indicated the premises was being sold “as is” with 228 W 72 acquiring the premises “subject to all violations.”  Here, plaintiff was aware of the issues with the elevator due to standing DOB violations and its own inspection prior to closing the purchase.

Further, plaintiff’s claims against First American (as the title insurer) were dismissed because there is no indication the claims related to the elevator fell within the scope of the coverage.  Claims of independent negligence were also dismissed because simple negligence has no merit in a claim for a breach of the insuring agreement. 


Greenway Mews Realty, LLC v. Liberty Ins. Underwriters, Inc.
Appellate Division, First Department
Direct Actions Do Not Trigger Claims for Pre-Judgment Interest

Greenway obtained a $1,350,000 indemnity judgment against UAD.  We trust that the judgment was based upon a previous payment issued by Greenway’s insurer, Seneca. This is because Seneca and Greenway both commenced the instant action against Liberty seeking to directly recover the judgment as against UAD. 

Greenway/Seneca argued that not only were they entitled to recover the $1,350,000 previously paid, but also post-judgment interest in the amount of $150,344.69, pre-judgment interest and attorneys’ fees.  Liberty, eventually, acknowledged its obligation for the $1,350,000 judgment and that it owed post-judgment interest.  It disputed, however, that it owed any pre-judgment interest and, further still, that it owed attorneys’ fees to Greenway/Seneca.  On motion the trial court ruled that no pre-judgment interest was owed, and the claims for attorneys’ fees were also unsupportable under New York law.   

With regard to the claim for attorneys’ fees, the Appellate Division agreed.  A party who brings an action seeking to enforce its rights under an insurance policy is not entitled to recovery legal fees.  Here, Greenway (as the judgment creditor of UAD) and Seneca (as the real party in interest) were challenging Liberty’s denial to UAD pursuant to Insurance Law 3420(a).  As they were the parties seeking to enforce the bargain of the policy, albeit UAD’s bargain, fees were not recoverable.

The interest question required a bit more of a nuanced answer.  As an initial matter, the Court noted that Greenway/Seneca were not entitled to seek interest on the acknowledged post-judgment interest.  Interest, on interest, would amount to a double recovery, and is prohibited by New York law.  The pre-judgment interest claim was also properly rejected where, as here, the claim is brought by statutory right pursuant to Insurance Law 3420(a)(2).  Even if it was a claim for breach of contract, however, the Court ruled that there was never any proof established that Liberty actually breached its agreement. 


Michael J. Dischley
[email protected]

03/01/23        Felicia Cuthill v. Won Min Yun
Appellate Division, Second Department
Defendant Expert Opined that Plaintiff’s Injuries were Degenerative in Nature but Failed to Address Plaintiff’s Claims that the Accident Exacerbated Plaintiff’s Degenerative and Preexisting Injuries

In an action to recover damages for personal injuries, the plaintiff Felicia Cuthill appeals from an order of the Supreme Court, Queens County (Robert I. Caloras, J.), entered August 26, 2020. The order, insofar as appealed from, granted that branch of the defendants' motion which was for summary judgment dismissing the complaint insofar as asserted by the plaintiff Felicia Cuthill on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

The plaintiffs commenced this action to recover damages for personal injuries they each allegedly sustained in a motor vehicle accident. The defendants moved, inter alia, for summary judgment dismissing the complaint insofar as asserted by the plaintiff Felicia Cuthill on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. In an order entered August 26, 2020, the Supreme Court, inter alia, granted that branch of the defendants' motion. Cuthill appeals.

The defendants met their prima facie burden of showing that Cuthill 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 Cuthill's left shoulder and to the cervical and lumbar regions of her spine did not constitute serious injuries under either the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d). In opposition, however, the plaintiffs raised a triable issue of fact as to whether Cuthill sustained serious injuries to her left shoulder and to the cervical and lumbar regions of her spine under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d).

The defendants failed to establish, prima facie, that the alleged injuries to Cuthill's left shoulder and to the cervical and lumbar regions of her spine were not caused by the accident. Although the defendants' expert opined that Cuthill's injuries were degenerative in nature, the defendants failed to address the plaintiffs' claims, set forth in the bill of particulars, that the accident exacerbated Cuthill's degenerative injuries and other preexisting injuries to her left shoulder and the cervical and lumbar regions of her spine.

Finally, the defendants' submissions failed to eliminate triable issues of fact regarding Cuthill's claims, set forth in the bill of particulars, that she sustained a serious injury under the 90/180-day category of Insurance Law § 5102(d).

Accordingly, the Appellate Court found that the Supreme Court should have denied that branch of the defendants' motion which was for summary judgment dismissing the complaint insofar as asserted by Cuthill.


03/01/23        Cruz Menjivar v. Rodney Capers, et al
Appellate Division, Second Department
Defendant Expert Opined that Plaintiff’s Injuries were Degenerative in Nature but Failed to Address Plaintiff’s Claims that the Accident Exacerbated Plaintiff’s Degenerative and Preexisting Injuries

In an action to recover damages for personal injuries, the plaintiffs appeal from an order of the Supreme Court, Nassau County (Leonard D. Steinman, J.), dated April 20, 2020. The order, insofar as appealed from, granted the defendants' motion for summary judgment dismissing the complaint on the ground that neither plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident, and denied that branch of the plaintiffs' cross-motion which was for summary judgment determining that the plaintiff Cruz Menjivar sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

The plaintiffs commenced this action to recover damages for personal injuries that they allegedly sustained in a motor vehicle accident. The defendants moved for summary judgment dismissing the complaint on the ground that neither plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The plaintiffs cross-moved, among other things, for summary judgment determining that the plaintiff Cruz Menjivar sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. In an order dated April 20, 2020, the Supreme Court, inter alia, granted the defendants' motion and denied that branch of the plaintiffs' cross-motion. The plaintiffs appeal.

The defendants failed to meet their prima facie burden of showing that neither plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The defendants failed to submit competent medical evidence establishing, prima facie, that Menjivar did not sustain serious injuries to her right and left shoulders, and the cervical and thoracic regions of her spine under the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d). The defendants likewise failed to submit competent medical evidence establishing, prima facie, that the plaintiff Jorge Castillo did not sustain serious injuries to his right shoulder, and the cervical, thoracic, and lumbar regions of his spine under the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d).

Furthermore, the defendants failed to establish, prima facie, that the alleged injuries to the plaintiffs were not caused by the subject accident. Although the defendants' experts opined that both plaintiffs' injuries were degenerative in nature, the defendants failed to address the plaintiffs' claims, set forth in the bill of particulars, that the subject accident exacerbated their preexisting injuries and degenerative conditions. Since the defendants failed to establish that the plaintiffs' alleged injuries were not caused by the accident, the burden never shifted to the plaintiffs to explain any gap in their treatment.

As the defendants failed to meet their prima facie burden, it is unnecessary to determine whether the papers submitted by the plaintiffs in opposition to the motion were sufficient to raise a triable issue of fact. Accordingly, the Appellate Court found that the Supreme Court should have denied the defendants' motion for summary judgment dismissing the complaint.

However, the Supreme Court properly denied that branch of the plaintiffs' cross-motion which was for summary judgment determining that Menjivar sustained a serious injury under the 90/180-day category of Insurance Law § 5102(d). The plaintiffs failed to eliminate all triable issues of fact as to whether Menjivar sustained an injury or impairment which prevented her from performing substantially all of the material acts which constituted her usual and customary daily activities for not less than 90 days during the 180 days immediately following the subject accident.


Agnes A. Wilewicz

[email protected]

All’s Quiet on the Second Circuit Front.


Brian D. Barnas

[email protected]

02/28/23       Barbato v. Progressive Specialty Insurance Company
United States District Court, Middle District of Pennsylvania
No Bad Faith where Insurer Conducted a Sufficiently Thorough Investigation and Made Reasonable Offers to Settle UIM Claim

Barbato was involved in a motor vehicle accident on September 1, 2017.  He was insured under an auto policy issued by Progressive with $15,000 underinsured motorist coverage limits.

On December 1, 2020, Barbato's counsel called Progressive and requested Progressive open an underinsured motorist claim related to the September 1, 2017, accident.  His claim was assigned to Kyack, an experienced claims professional of over 20 years who has been employed by Progressive since July of 2020.

In her review, Kyack considered the facts of the accident and noted that the accident occurred while Barbato was driving straight in a left-turn-only lane, and the other driver made a left turn from the right-hand lane.  Based on those facts, Kyack noted she believed Barbato and the other driver were each 50% at fault for causing the accident.  Kyack noted Progressive to date had already paid Barbato $2,992 of his $5,000 in first party medical benefits relating to his alleged neck injury.  Finally, Kyack noted in her review that, according Barbato's counsel, the other driver involved in the accident has $25,000 in bodily injury liability coverage.

Kyack left a message for Barbato’s counsel on December 3, 2020, requesting medical records, authorizations, and lost wage information.  The next day, Kyack had a telephone conversation with Barbato's counsel during which he advised Kyack that the other driver's insurer had tendered its $25,000 liability limits.  She requested copies of the settlement documents by email.  On January 4, 2021, Progressive gave consent to settle with the underlying tortfeasor.

On January 15, 2021, Kyack discussed Barbato's underinsured motorist claim with her supervisor. Kyack noted that she would revise her liability assessment for the 2017 accident to 60% against the other driver and 40% against Barbato because the other driver was making a left turn and likely had a greater duty.  She also noted several facts about Barbato’s medicals and lack of lost wages.

Accordingly, Kyack appraised the total value of Barbato's injury claim at $30,000 to $40,000.  She then reduced the value by 40%, to a range of $18,000 to $24,000, to account for Barbato's share of fault for causing the accident.  She then subtracted the tort credit of $25,000 to account for the settlement Barbato received from the driver of the other vehicle, bringing the value of Barbato's claim to the range -$7,000 to -$1,000. Kyack then requested authority to settle the claim for up to $7,500 to account for Progressive's potential future defense costs arising from the claim.

On January 20, 2021, Kyack called Barbato's counsel and offered $3,000 to settle Barbato's claim.  Barbato's counsel asserted if Progressive was not willing to pay the full $15,000 policy limit, counsel would file suit.  The same day, Kyack requested a transcript of Plaintiff's September 1, 2017, recorded statement provided to Progressive. Kyack reviewed Barbato's statement and noted that in the statement, taken the same day as the accident, Barbato reported that he was not injured in the accident.  Kyack further noted that Barbato reported that he intended to go straight through the intersection using the left-turn-only lane.

On January 26, 2021, Kyack emailed Barbato's counsel a copy of the recorded statement and requested that counsel call her to discuss the claim.  Counsel replied that he was going to place the matter into suit.  Kyack revised her evaluation to reflect that Barbato was 75% responsible for the accident.  She also updated the evaluation to increase the amount of future defense costs, which brought the claim to a valuation of $15,000 factoring in the high end of possible damages and defense costs.  Kyack requested authority from Pellicore to settle the claim for up to $15,000, which was granted.

On February 5 Kyack emailed Barbato's counsel with an offer to settle for $7,500 and requested a call to discuss.  Counsel again responded that he would place the matter into litigation.  The instant action commenced on March 22, 2021.  Progressive’s defense counsel offered the policy limits of $15,000 on March 31.

Barbato asserted that Progressive acted in bad faith toward him in the handling of his bad faith claim.  The court noted that the fact Barbato proceeded straight from a left-turn only lane just before the accident was undisputed.  The steps Kyack took to review and process the claim were also undisputed.

Progressive argued that the case was a genuine dispute over the value of Barbato’s claim for benefits.  Barbato argued that Kyack’s conduct of offering less than her settlement authority was bad faith, but courts in the Third Circuit and Pennsylvania have repeatedly held an insurer does not act in bad faith merely because it makes a low but reasonable estimate of an insured's damages.  That Progressive ultimately tendered $15,000 to Barbato to settle the suit does not demonstrate that his claim was clearly worth that much, let alone that the initial $3,000 offer was unreasonable.

The court also rejected Barbato’s argument that Kyack updated her liability analysis after offering $3,000 as a delay tactic.  However, the mere fact that Kyack updated the valuation based on an apportionment of less fault to Barbato for the accident does not demonstrate the first valuation was unreasonable or that Kyack updated the valuation for some nefarious purpose.  Moreover, even if the initial 60/40 apportionment was incorrect, that would still not demonstrate bad faith since Progressive need not demonstrate its investigation yielded the correct conclusion, or that its conclusion more likely than not was accurate to show it had a reasonable basis for its $3,000 initial offer.  Progressive only had to show it conducted a review or investigation sufficiently thorough to yield a reasonable foundation for its action, which it did in this case.


Lee S. Siegel

[email protected]

02/21/23       Nationwide Mut. Ins. Co. v. Pasiak
Supreme Court of Connecticut
Preponderance of the Evidence is the Correct Burden of Proof on an Exclusion

The Supreme Court held that an insurer’s burden of proof on an exclusion is a preponderance of the evidence. The Court rejected the insured’s argument that a heightened standard of proof should apply on an exclusion.

Readers of this space are probably well-acquainted with the Pasiak case, now on a return engagement to the Connecticut Supreme Court. It is a case of unbelievable facts that made significant news on the insurability of punitive damages. In Pasiak I, the Court found that an award of common law punitive damages was not, as a matter of law, uninsurable against public policy. Nationwide Mut. Ins. Co. v. Pasiak, 327 Conn. 225, 173 A.3d 888 (2017).

The facts are unique. While the victim was working alone at Pasiak’s home office, an armed masked intruder entered the home and demanded that the victim open the safe. Unaware that a safe existed in the home, she could not comply. The intruder led her into a bedroom, tied her hands, gagged her, and blindfolded her. At one point, he pointed the gun at her head and threatened to kill her family. Pasiak, the homeowner insured, returned home during the incident, and was attacked by the intruder. During the struggle, the insured pulled off the intruder's mask, revealing him to be a friend of the insured. The insured made the assailant untie the victim but when she asked to leave the insured told her to stay and sit down. After the assailant left the victim then told the insured about the threats that the assailant had made to her and her family, but the insured would not call the police. He told the victim to stay with him and refused to let her call the police or to discuss the incident further. She remained with the defendant for several hours, in fear that, if she left, she or her family might be harmed by the assailant.

Pasiak I involved an award of common law punitive damages arising under Coverage B for a claim of false imprisonment. As you know, all the Coverage B offenses are, essentially, intentional conduct. In Pasiak I, the Court found that the covered offense was not simply an unspecified accident causing an unspecified injury but a specific intentional act—false imprisonment—expressly covered by the policy. “[I]n those various contracts where the company insures against liability for false arrest, false imprisonment, malicious prosecution, libel, slander, and invasion of privacy, [punitive] damages—under current judicial practices—almost necessarily will follow. It is not seemly for insurance companies to collect premiums for risks which they voluntarily undertake, and for which they actively advertise in competition with other companies, and then when a loss arises to say ‘It is against public policy for us to pay this award.’ ” Moreover, the court in a clarification of existing law, held that an award of common law punitive damages for a Coverage B offense, is covered.

Many commentators, in my opinion, have wrongly concluded that this holding applies broadly to all awards of common law and statutory exemplary damages. Pasiak I involved two key issues that limit its applicability – common law punitive damages (which under Connecticut law are intended to make the plaintiff whole rather than punish), for a covered intentional act (false imprisonment). No Connecticut court has confronted the insurability of statutory punitive damages which variably allow for double or treble damages for heightened or intentional conduct that, unlike Coverage B offenses, are not inherently covered.

Despite the holding on punitive damages, the Supreme Court remanded on the issue of the applicability of the business pursuits exclusion. Recall that all the conduct occurred in Pasiak’s home office, to Pasiak’s employee. The Court concluded that Nationwide was not limited to the evidentiary record of the underlying tort action to establish that the business pursuits exclusion barred coverage. On remand, the case was tried to the court, which determined that it was “to engage in a flexible fact-specific inquiry to determine if the [plaintiffs] satisfied [their] burden of [proving] that the false imprisonment or Socci's injury in this case was connected with, had its origins in, grew out of, flowed from, or was incident to [the defendant's] business pursuits.” The trial court found that Nationwide satisfied its burden of proof, that the business pursuits exclusion applied, and Pasiak was not entitled to coverage. Pasiak appealed to the Supreme Court, bypassing the intermediate appeals court.

The insured argued that the trial court should not have applied a preponderance standard to an exclusion. Rather, the insured asserted, the trial court should have construed the business pursuits exclusion in favor of the insured unless it had high degree of certainty that the policy language clearly and unambiguously excludes the claim.

The Supreme Court disagreed, finding that the insured was conflating the burden of proof of a fact with the rules of contract interpretation. “The standard of proof ordinarily refers to the degree of certainty by which the [fact finder] must be persuaded of a factual conclusion to find in favor of the party bearing the  burden of persuasion. An interpretive presumption, by contrast, is a rule we apply to help determine what a text—in this case, an insurance contract—means.(Citations deleted). It should have gone without saying, but the interpretation of an insurance contract is a question of law and not a matter of fact.

Finding that the trial court applied the correct standard of proof, the Court held that the evidence supported a finding that Nationwide satisfied its burden.


02/14/23       Gillespie-White v. GEICO
Superior Court of Connecticut, Middlesex
Plaintiff Attorney Disqualified From Trial As Key Witness to Bad Faith Claims

A plaintiff’s attorney who represented his client during the claim stage was found to be an essential witness at trial and was disqualified. Here, the plaintiff was injured in a car accident and apparently brought a UM/UIM action against GEICO. In addition to the breach of contract claim, plaintiff asserted the usual panoply of bad faith and CUIPA/CUPTA violations.

The complaint showed how counsel was front and center in the bad faith facts. The pleading enumerated emails and correspondence from counsel to which GEICO allegedly failed to respond, among other things. Rule 3.7 of the Rules of Professional Conduct provides that a lawyer shall not act as an advocate at trial in which the lawyer is likely to be called as a witness. A lawyer is considered a necessary witness when she has material knowledge that no one else can provide. “A finding of necessity takes into account such factors as the significance of the matters, weight of the testimony and availability of other evidence.” 

In concluding that the plaintiff’s attorney must be disqualified, the court held that, “Through the claims and settlement process it was Attorney White who had most of the communications and interactions that the plaintiff alleges in her causes of action and thus his testimony is necessary.” The court also noted that the plaintiff herself was not able to testify about the communications and deferred to her attorney. “[T]he court cannot find that Attorney White may fairly represent the plaintiff at trial in this matter because of his central involvement and the defendant's need to question him as a witness to fairly defend itself.”

[Ed. Note: This is a clever strategy used exactly where it was appropriate—where the insured’s attorney was the one building the so-called bad faith evidence. There is, however, a downside. For starters, the insured might get a better lawyer than the one being disqualified. For another, this now permits the disqualified lawyer to testify from the stand rather than being hamstrung in his role as counsel. Seeking to disqualify your opponent is a multi-faceted decision and shouldn’t be done just because you can.]


Kyle A. Ruffner

[email protected]

02/15/23       Twigg v. Admiral Ins. Co.   
Court of Appeals of Oregon  
No Coverage Under a Commercial General Liability Policy for Underlying Claim Arising Solely from the Breach of Contractual Duties

The underlying dispute in this action began when Twiggs hired Rainer Pacific to construct a new home on a lot that they had purchased. The construction process was not completed within the agreed upon time and, both during the construction process and after they moved into their home, the Twiggs alerted Rainer Pacific to a number of construction issues. After attempting to negotiate with Rainer Pacific for construction repairs the Twiggs ultimately filed an arbitration claim against the Rainer Pacific due to the lack of progress.

In the first arbitration proceeding, Twiggs alleged that Rainer Pacific had not constructed the home in accordance with the approved plans and specifications. The proceeding was settled by an agreement between Twiggs and Rainer Pacific known as the “repair agreement”. The repair agreement required Rainer Pacific to make repairs to the home, including correcting the sloped garage floor and drainage issues. However, months after the agreement required the repairs to be completed, Twiggs filed a second arbitration claim, alleging that Rainer Pacific failed to perform its obligations under the repair agreement in the allotted time. The arbitrator ultimately issued a decision concluding that, with the exception of the garage floor, Rainer Pacific almost entirely failed to perform or complete any of the items in the repair agreement and that even the garage repairs were defective. The arbitrator determined that Rainer Pacific, through its failure to complete the required work and defective efforts to repair the garage floor, materially and substantially breach the repair agreement, and awarded $604,594.80 to Twiggs.

Rainer Pacific tendered the arbitration claim to its insurer, Admiral, but Admiral denied coverage for the claim. As relevant to the issues in this case, the applicable commercial general liability policy provided coverage for property damage caused by an “occurrence” and contained exclusions for (1) preexisting damages, (2) damage to:  “that particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the property damage arises out of those operations”, and (3) damage to property that must be repaired or replaced because your work was incorrectly performed. The insurer contended that the policy did not provide coverage for the insured’s claim because the damage was not caused by an “occurrence,” as Rainer Pacific’s liability arose solely from a breach of the repair agreement, and because the arbitration awarded resulted from the original construction work, which was outside the relevant policy periods and excluded under the policy’s pre-existing damage exclusion. The trial court granted the insurer’s summary judgment motion, concluding that Rainer Pacific’s liability arose from its breach of contractual duties and not from a covered “occurrence” or “accident”.

On appeal, the court noted that an insurer’s duty to indemnify for an insured’s liability in a prior legal proceeding is based on the nature of the insured’s liability in the underlying legal action. In contrast to the duty to defend, which may arise merely if the underlying complaint provides any basis for which the insurer provides coverage, in order for the duty to indemnify to arise, the insured must be liable for harm or injury that is covered by the policy. Therefore, the court had to analyze the nature of the insured’s liability and damage that arose in the prior legal proceeding.

The underlying arbitration claim was a claim for breach of contract. The arbitrator clearly understood it to be a breach of contract claim, as it concluded that Rainer Pacific materially and substantially breached the repair agreement. While Twiggs presented issues regarding Rainer Pacific’s negligence in its original construction work as context for the claim, the allegations sought to prove the sole breach of contract claim, and the arbitrator ultimately determined that Rainer Pacific breached its contractual duties under the repair agreement. The court explained that liability for damages arising from breach of contract is not covered under an insurance policy. The policy only covers property damage caused by an “occurrence,” defined as an accident. The court determined that in this case that liability arose solely from breach of a contractual duty, which is not liability arising from an accident. “[T]here can be no accident, within the meaning of a commercial liability policy, when the resulting damage is merely a breach of contract”. As such, the court held that the insurer was entitled to summary judgment as a matter of law because Rainer Pacific’s liability in the arbitration was based solely on the breach of a contractual duty and not the result of an accident. Therefore, the trial court did not err in granting the insurer’s motion for summary judgment.

Ryan P. Maxwell
[email protected]

Back at it next time.


Patricia A. Rauh

[email protected]

02/23/23       Hayes v. Prudential Ins. Co. of America
U.S. Court of Appeals, Fourth Circuit
Prudential did not Abuse its Discretion when it Denied Plaintiff’s Claim for Life Insurance Benefits and Plaintiff was not Entitled to Equitable Tolling

Anthony Hayes (“Hayes”), worked as an environmental engineer for DSM North America, Inc., and had an employer-provided life insurance policy with defendant, Prudential Insurance Company (“Prudential”).  Prudential was both the insurer and the administrator of the employer-provided benefit plan (the “Plan”).  In 2015, Hayes lost his job because of medical issues, and his life insurance coverage ended.  However, the terms of the Plan did allow former employees to convert the employer-provided coverage into an individual policy.  To do so, the Plan required that Hayes initiate the conversion process “by the later of” 31 days after his employer-provided coverage ended or 15 days after receiving “written notice of the conversion privilege.”  The parties agreed that the conversion deadline was December 23, 2015.  Unfortunately, Hayes did not contact Prudential about converting his life insurance policy until 26 days after the Policy conversion deadline.  Hayes ultimately died in June 2016.

Hayes’ surviving spouse, the Plaintiff in this action, attempted to collect benefits under Hayes’ employer-provided life insurance policy.  Plaintiff submitted a request for benefits, which Prudential denied.  Plaintiff sought reconsideration from Prudential’s internal appeals committee, which confirmed the denial of benefits.  Prudential’s letter of reconsideration acknowledged that “medical records do support” the conclusion that “Hayes was incapacitated due to his medical conditions and symptoms during the time period he had to convert his coverage.”  However, the letter explained that “Prudential is required to administer claims made under the Plan in strict adherence to the policy provisions.”

Although Prudential offered Plaintiff another layer of “voluntary” internal review of the denial, Plaintiff chose not to pursue it and instead filed suit in federal district court under ERISA asking for a declaratory judgment that she was entitled to the benefits of Hayes’ life insurance policy. The district entered judgment for Prudential, concluding that Prudential “reasonably denied Plaintiff’s request for benefits” because Hayes had received timely notice of his conversion rights and did not covert his life insurance policy to an individual policy during the conversion period.  The district court also denied Plaintiff’s request to apply the doctrine of equitable tolling and find that she was entitled to the life insurance proceeds. Plaintiff appealed the district court’s ruling to the Fourth Circuit.

On appeal, the Court had to determine whether Prudential abused its discretion in denying Plaintiff’s claim.  The Plaintiff sued exclusively under 29 U.S.C. § 1132(a)(1)(B), which provides, in relevant part that “A civil action may be brought…by a…beneficiary…to recover benefits due…under the terms of [the] plan[.]”  The Court explained that this statute allows suits to recover benefits owed under the terms of the Plan, does it not permit a court to alter those terms.  As the Plaintiff admitted, Hayes had failed to covert his life insurance coverage in the time set forth in the policy.  Awarding benefits to the Plaintiff would require the Court to modify the terms of the Plan and policy to provide a workaround to its conversion deadline, which the Court is not able to do.

Plaintiff asserted that she was not trying to rewrite the terms of the Plan.  Rather, she said that she was asking the Court to apply the doctrine of equitable tolling to allow for an exception to the life insurance conversion deadline because Hayes was incapacitated during the conversion period.

Despite Plaintiff’s argument, the Court ruled that Prudential did not abuse its discretion in denying Plaintiff’s claim for benefits under Hayes’ life insurance policy and that the terms of the Plan do not provide for equitable tolling.  The Court noted that although federal courts generally apply a “presumption that federal statutes of limitations can be equitably tolled”, that would not apply here, and pointed to a Supreme Court case where it was emphasized that “the presumption in favor of equitable tolling applies ‘only’ to time periods that ‘operate as a statute of limitations.’”  See Arellano v. McDonough, 143 S. Ct. 543, 248 (2023) (internal citations omitted).  The life insurance conversion deadline at issue here is not a statute of limitations, nor does it operate as one.  The Fourth Circuit ultimately upheld the district court’s ruling.


Scott D. Storm

[email protected]

2/23/23         Francabandiero v. National General Ins. Co.
United States District Court, Western District of New York
Despite Error in Insurer’s Prior Correspondence Saying a 3-Year Statute of Limitation Applied, First-Party Property Litigation is Dismissed as Untimely as the Error had been Corrected and the Plaintiffs Notified 23-Days Before the Two-Year Suit Limitation Period Expired and They did not Commence Suit until 50-Days After the Expiration Date (No Waiver or Estoppel Exists)

Plaintiffs commenced this action on July 22, 2022, seeking to recover under an insurance policy issued to them by defendant National General Insurance Company for damages to their home sustained during a storm on June 2, 2020. They allege “breach of contract, breach of the implied duty of good faith and fair dealing, ... fraudulent misrepresentation, deceptive business practices in violation of General Business Law § 349, and unjust enrichment”. 

National General's motion seeking dismissal of the Complaint pursuant to Fed. R. Civ. P. 12(b)(6), (c), (d) and 56 is granted. 

National General issued a reservation of rights on July 17, 2020, advising the plaintiffs that “the investigation of this matter is being handled under a full Reservation of Rights”, which “preserves any of the rights of any of the parties without estoppel, waiver or forfeiture .... In any further handling of your claim (investigation, negotiations, or defense) any actions of the Company will not stop or waive the rights of the Company to assert the coverage defense(s)”.

In a letter dated August 17, 2020, National General referred the plaintiffs to policy “endorsement SH 10 31 08 12 SPECIAL PROVISIONS - NEW YORK, which states in relevant part: ‘G. Suits Against Us - No action can be brought against us unless there has been full compliance with all of the terms under Section I of this policy and the action is started within two years after the inception of the loss. For purposes of this condition, inception of the loss means the date on which the direct physical loss or damage occurred’”.  However, the letter mistakenly also stated that “the statute of limitations for this claim expires on June 3, 2023.”

By letter dated April 17, 2021, National General again told plaintiffs that the statute of limitations for their claim “expires on June 3, 2023”, but cautioned that “we do not waive any provision or stipulation of the policy .... All rights under said Policy and at law are fully reserved.”

In response to plaintiffs’ counsel’s request, by letter dated July 8, 2021, National General's attorney, Scott Storm, provided plaintiffs’ counsel with a flash drive containing the policy and correspondence between National General and plaintiffs. Plaintiffs’ counsel confirmed receipt of that information in a July 14, 2021, e-mail.

On May 10, 2022, Storm wrote to Plaintiffs’ counsel, stating that “[i]n prior correspondence to your client ... National General incorrectly referred to the expiration date of the statute of limitations as being in 2023. Please disregard those prior references, which are corrected by this correspondence. The policy language controls, not the prior erroneous correspondence. You were previously provided with a copy of the policy by letter dated July 8, 2021, from my office. Please refer to the ‘Homeowners Special Form’, policy form HO 3000 01 06, ‘Section I - Conditions’, ‘G. Suit Against Us’, as amended by the ‘Special Provisions - New York’ endorsement, policy form SH 01 031 08 12, for the actual limitations expiration date”.

Plaintiffs’ counsel claims that “[t]his bombshell of a message was conveniently tucked away in the last paragraph of a seemingly rudimentary letter requesting following up documentation .... In that regard, it is peculiar that this [letter], which contained such significant information, was sent ... with an email that indicates an attached letter requesting additional documents and nothing more”. He states that “[b]ased on where the Claim was and how the parties, including Attorney Storm, had conducted themselves since at least April 2021, as well as the nonchalant nature of the email simply indicating that additional items were being sought in the May 10, 2022 letter, [he] did not initially catch the monumental change that had been snuck into the last paragraph of Attorney Storm's May 10, 2022 letter”. 

Plaintiffs’ counsel further explains that his law firm was relocating its office at the time of that letter. “The last day our firm operated in the Rand Building was Friday, May 13, 2022, and the first day we were in our new location at the City Centre building was Monday, May 16, 2022. In the weeks leading up to and after our move, [I] was admittedly scrambled, and it was not until after Memorial Day weekend when I revisited Attorney Storm's May 10, 2022, letter ... that I noticed the last paragraph and understood the implications raised therein. By that time, the ‘new’ contractual suit limitation had expired.” 

In a June 29, 2022 letter to Storm, Plaintiffs’ counsel “reject[ed] your client's waiver of the statute of limitation under the insurance policy, particularly since it is being done at the midnight hour and after my clients have fully cooperated with the investigation of this claim”, stating that “[m]y clients and our firm have specifically relied on the written representation that the statute of limitations for a claim was modified to expire in 2023 .... National General's attempt to renege on its previous writing to my clients and put them in a position where they would be required to file a lawsuit in less than a month's time is the very type of bad-faith behavior my clients have had to deal with since they filed the claim”. 

Storm responded by letter dated July 13, 2022, stating that “[d]espite the prior correspondence from National General mistakenly referring to a three-year statute of limitations, this was corrected in my letter to you dated May 10, 2022, twenty-three days prior to the expiration of the limitation period, not the ‘midnight hour’ as alleged in your letter .... I had previously provided you with a copy of the policy by letter dated July 8, 2021, .... As the Francabandiero’s have possession of their policy they have conclusive, presumptive knowledge of the terms of their contract with National General”.  This litigation ensued.

Breach of Contract:

The relevant inquiry here is not when Storm or National General discovered the error - it is when Plaintiffs’ counsel discovered (or should have discovered) the error, and whether he had sufficient time after that discovery to commence the action. 

Plaintiffs argue that there are “ambiguities regarding what the contractual statute of limitations period was under the Policy, and that ambiguity must be resolved in favor of the Plaintiffs. In particular, the Policy attached to the Defendant's Answer, which covers the period of December 30, 2019, to December 30, 2020, contains the endorsement, ‘SH 01 31 08 12 SPECIAL PROVISIONS - NEW YORK.’ However, all of National General’s correspondence to the Plaintiffs throughout the claims process, until May 10, 2022, referenced the endorsement ‘SH 10 31 08 12 SPECIAL PROVISIONS - NEW YORK’.”

That alleged ambiguity does not present a genuine issue of fact. Plaintiffs’ counsel admits that “[t]hat endorsement [SH 10 31 08 12] was apparently not part of the Policy”. As stated by Storm, the adjuster “merely juxtaposed two numbers (‘10’ for ‘01’) in referencing the endorsement .... [T]here is no such thing as an ‘SH 10 31 08 12 SPECIAL PROVISIONS - NEW YORK [underlining added]’ endorsement.” Condition G of the endorsement, which is part of the policy, unambiguously states that “[n]o action can be brought against us unless there has been full compliance with all of the terms under Section I of this policy and the action is started within two years after the inception of the loss. For purposes of this condition, inception of the loss means the date on which the direct physical loss or damage occurred.” 

Plaintiffs’ counsel does not deny that he received a copy of the policy from Storm in July 2021. “[I]f he did not read it when he received it, he and his clients are nonetheless chargeable with knowledge of its contents as of the date of receipt [citation omitted]”.  “It was his duty to read the policy ... and in any event he was charged with notice of its contents [citation omitted]”.

Since plaintiffs allege that the damage to their home occurred on June 2, 2020, Condition G of the policy clearly required the action to have been commenced no later than June 2, 2022. “Generally, two-year limitations periods in insurance policies are regularly upheld and enforced by courts applying New York law [citation omitted]”.

In attempting to avoid the consequences of that requirement, plaintiffs argue that there was a “clear intent of the Defendant to modify the terms of the Policy to contain a contractual suit limitation of June 3, 2023”.  The Court disagreed.  The adjuster makes clear that his references to a June 3, 2023, statute of limitations were mistaken, not intentional.

“My correspondence to the plaintiffs dated August 17, 2020, erroneously stated the statute of limitations for them to settle their claim or commence litigation against National General expires June 3, 2023. However, the policy contains a two-year contractual suit limitation condition (‘Suit Against us’), which requires the plaintiffs to fully comply with the policy conditions and commence suit within two-years of the date of water loss (date on which the direct physical loss or damage occurred). My August 17, 2020, letter does assert and quote the ‘G. Suit Against Us’ condition of the Subject Policy stating the two-year contractual suit limitation period. The error was compounded in other correspondence (i.e. April 21, 2021, letter) based upon the same mistake and utilizing former letters as templates for subsequent correspondence ... Legal counsel for National General, Mr. Storm, noticed the error and corrected it in his May 10, 2022 ... correspondence to plaintiffs’ counsel.”

While the adjuster’s April 21, 2021, letter does state that the statute of limitations expires on June 3, 2023, it also states that “we do not waive any provision or stipulation of the Policy .... All rights and defenses under said Policy and at law are fully reserved”. [“Reading the ... Letter as a whole, it falls far short of demonstrating a clear intent to modify the terms of the Policy as originally issued [citation omitted].”  Moreover, even if the adjuster’s April 21, 2021, letter could be considered a modification of the contractual statute of limitations, that modification was itself modified by Storm's May 10, 2022, letter reinstating the two-year deadline.

In the alternative, plaintiffs argue that “the factual allegations of the Complaint, when accepted as true, demonstrate that the Court should apply the defenses of waiver and estoppel in the instant case”.  However, a party opposing a motion for summary judgment “cannot rest on allegations in the pleadings and must point to specific evidence in the record” demonstrating a genuine issue of material fact [citation omitted].

Plaintiffs recognize that “[i]n the context of insurance policies, waiver is the intentional relinquishment of a known right”.  “Waiver can result only from a defendant's intentional decision not to assert a right [citation omitted].”  “Such intention must be unmistakably manifested and is not to be inferred from a doubtful or equivocal act” [citation omitted], “nor can it be created by negligence, oversight, or thoughtlessness” [citation omitted]. 

In addition to the adjuster’s Affidavit stating that his reference to a June 3, 2023, deadline was mistaken, his letters are equivocal on their face. As previously discussed, his August 17, 2020, letter mentions a June 3, 2023, deadline but also quotes a contractual two-year deadline, and his April 21, 2021, letter, while mentioning the June 3, 2023, deadline, expressly reserves all rights and defenses under the policy.

In any event, a waiver “can, to the extent that it is executory, be withdrawn, provided the party whose performance has been waived is given notice of withdrawal and a reasonable time after notice within which to perform” [citation omitted]. It is undisputed that Storm's May 10, 2022, letter referred plaintiffs’ counsel to the correct filing deadline, which he could have verified by reference to the policy. Whether or not plaintiffs’ counsel read the May 10, 2022, letter or the policy, he is charged with notice of their contents, since both were in his possession. 

Plaintiffs’ counsel had 23 days (from May 10 to June 2, 2022) within which to commence an action. He could have done so by merely filing a Summons with Notice.  Therefore, assuming arguendo that there was a waiver of the policy's statute of limitations, that waiver was retracted well in advance of the policy deadline.

The same reasoning is fatal to plaintiffs’ estoppel argument, since they acknowledge that “[a] plaintiff seeking to apply the doctrine of equitable estoppel must establish that subsequent and specific actions by the defendants somehow prevented plaintiff from timely bringing suit”.

I recognize that “[f]iling deadlines, like statutes of limitations, necessarily operate harshly and arbitrarily with respect to individuals who fall just on the other side of them [citation omitted]”.  However, “[i]nsurance policies, like all contracts, should be enforced according to their terms [citation omitted]”, and “if the concept of a filing deadline is to have any content, the deadline must be enforced [citation omitted]”.

Having considered and rejected plaintiffs’ arguments concerning modification, waiver and estoppel, the Court said it must apply and enforce the policy's two-year deadline for commencement of an action. Since this action was not commenced within that deadline, plaintiffs’ claim for breach of contract cannot survive.

Breach of Implied Duty of Good Faith and Fair Dealing:

Plaintiffs’ Second Cause of Action alleges that National General “had an obligation to perform its contractual duties in good-faith”, and that it breached that duty.  Although plaintiffs accuse National General of “demonstrat[ing] a gross disregard for [their] rights under the Policy”, they admit that “the duties of good faith and fair dealing do not imply obligations inconsistent with other terms of the contractual relationship”.

A breach of the covenant of good faith and fair dealing “is considered a breach of the underlying contract” [citation omitted]. “Thus, when a complaint alleges both a breach of contract and a breach of the implied covenant of good faith and fair dealing based on the same facts, the latter claim should be dismissed as redundant [citation omitted].” 

Moreover, since plaintiffs’ breach of contract claim is barred by the policy's two-year deadline for commencing an action, her claim for breach of the implied duty of good faith is likewise time-barred, as it “also arises under the contract [citation omitted]”. Therefore, this claim must be dismissed.

Declaratory Judgment:

Plaintiffs’ Third Cause of Action alleges that “[a]s a result of National General's failure to honor its contractual obligations under the Policy ... a justiciable controversy exists”.  However, “[a] cause of action for a declaratory judgment is unnecessary and inappropriate when the plaintiff has an adequate, alternative remedy in another form of action, such as breach of contract [citation omitted]”.  “[P]arties to an agreement may not seek a declaration of their contract rights when their agreement specifies a different, reasonable means for resolving such disputes”, and “New York courts have consistently upheld two-year limitations periods in insurance contracts as reasonable [citation omitted]”. 

“New York law requires its courts to look to the substance of a claim to determine which statute of limitations applies. If this examination reveals that a claim for declaratory relief could have been resolved through another form of action which has a specific limitations period, the specific period of time will govern [citation omitted].”  Since plaintiffs “cannot circumvent the statute of limitations by bringing their claims as an action for declaratory judgment”, [citation omitted], this claim likewise fails.

Fraudulent Misrepresentation:

Plaintiffs’ Fourth Cause of Action alleges that National General “knew that Plaintiffs would rely on its written representations that they had until June 3, 2023, to resolve their Claim or file a lawsuit, and ... induced the Plaintiffs into relying on these representations in order to get them to sleep on their rights”.

Plaintiffs admit that “[t]he element of justifiable reliance is essential to any fraud claim” [citation omitted]. As previously discussed, neither plaintiffs nor their attorney could justifiably have relied on the adjuster’s correspondence mentioning a June 3, 2023 deadline for commencing an action [citation omitted].  Plaintiffs and their legal counsel possessed the policy, and “[an] insured is conclusively presumed to have read and assented to the terms of an insurance policy that he or she has received” [citation omitted].

Although the adjuster’s letters stated that the deadline was June 3, 2023, his August 17, 2020, letter also quoted the contractual two-year deadline, and his April 21, 2021 letter also stated that no policy provision is waived. That discrepancy should have led them to make further inquiry as to the correct deadline. “Knowledge of facts which, to the mind of a man of ordinary prudence, beget inquiry, is actual notice, or, in other words, is the knowledge which a reasonable investigation would have revealed [citation omitted]”.  “The duty of inquiry having arisen, plaintiff is charged with whatever knowledge an inquiry would have revealed [citation omitted].” 

Finally, any possible confusion as to the correct deadline was cleared up by Storm's May 10, 2022, letter, 23 days prior to the deadline for commencing suit. Since there is no genuine issue of fact as to whether plaintiffs justifiably relied upon the adjuster’s misstatements as to the correct deadline, their fraud claim cannot survive.

Violation of General Business Law § 349: 

Plaintiffs’ Fifth Cause of Action alleges that “National General's claim settlement practices and policies are consumer oriented and are materially misleading”, and that they were damaged thereby. However, “[p]rivate contract disputes, unique to the parties ... would not fall within the ambit of the statute” [citation omitted].  “A defendant will not be held liable under §349 where the disputed private transaction does not have ramifications for the public at large [citation omitted].” 

Other than the conclusory allegations of their Complaint, plaintiffs offer no evidence that the conduct of which they complain has ramifications for the public at large beyond the parties to this case, nor do they suggest how discovery could support those allegations. Therefore, this claim also fails.

Unjust Enrichment:

Plaintiffs’ Sixth Cause of Action alleges that “[a]lthough [they] paid all of their insurance premiums to the Defendant, the Defendant refused to provide the insurance coverage that Plaintiffs paid for”, and that “[b]ased on the foregoing, the Defendant has been unjustly enriched to the detriment of the Plaintiffs”.

However, “New York law precludes claims of unjust enrichment where an insurance policy governs the subject matter at issue [citation omitted]”.  “Thus, where, as here, the insurance company and the insureds are contractually bound by the terms of the policy, any resort to equitable remedies ... is unavailing.” 


Katherine A. Fleming

[email protected]

02/24/23       Haas v. Estate of Mark Steven Carter
Supreme Court of Oregon
The Existence of Preexisting Conditions and Aging Does Not Necessitate a Substantial Factor Instruction on Causation Although They May Contribute to a Plaintiff’s Injuries

In 2014, defendant Carter was driving a car that struck plaintiffs’ stopped car. Plaintiffs brought a negligence action against Carter. At trial, one of the primary issues was whether Carter’s driving was a cause-in-fact of the injuries that plaintiffs alleged. Plaintiff Roberta Haas alleged that, as a result of Carter’s negligence, she suffered injuries to her neck and back and required medical treatment, including surgery. Shortly after the collision, Roberta Haas began to experience neck and back pain. Several months later, she was still experiencing significant pain, and she consulted an orthopedic surgeon. In 2015, Haas underwent a lumbar fusion. At trial, the orthopedic surgeon testified that, prior to the collision, Haas had had an “extensive cervical and lumbar physical history,” including a bout of osteomyelitis in her neck in 2010 that had led to extensive neck surgery. She also had had a cervical fusion which had left her with what her surgeon considered “an infirm condition.” The orthopedic surgeon testified that the surgery performed in 2015 was attributable to the 2014 collision, but he also stated that, prior to the collision, Haas’s spine was already “a mess” and that anything, even a sneeze, could have made Haas symptomatic.

Plaintiff Kevin Haas also alleged injury to his neck and the need for medical treatment, including surgery. After the 2014 collision, Kevin Haas noticed soreness in his neck, and a couple of months later, he received physical and massage therapy, which appeared to improve his condition. However, in 2017, Haas was still suffering pain and under-went neurosurgery, which disclosed a partially healed tear in the casing of a spinal cord disc that was consistent with the date and mechanism of the injury that he had sustained in the 2014 collision. At trial, the neurosurgeon attributed Haas’s neck problems and the need for surgery to the collision but also testified that annular tears are not uncommon and that they frequently occur due to age and degeneration.

Plaintiffs requested jury instructions on but-for causation and substantial factor causation, but the trial court only delivered the but-for instruction. The jury returned a verdict for the defendants, and plaintiffs appealed, arguing that they were entitled to the substantial factor instruction.

Plaintiffs argued that because there were multiple possible causes of plaintiffs’ back and neck problems, the jury should have been given the substantial factor instruction to determine whether the collision was a substantial factor in causing their injuries. Defendants disputed that multiple causes had acted concurrently to bring about plaintiffs’ injuries and argued that preexisting conditions are not concurrent causes of injury are instead the predicate for susceptibility to injury or for aggravation of prior injury.

The Court of Appeals concluded that the substantial factor instruction was not required because plaintiffs had not shown that there were multiple potential causes of their injuries, and the court distinguished between susceptibilities increasing the likelihood of injury and conditions that actively contribute to a disability or need for treatment. Plaintiffs did not identify anything other than Carter’s negligent driving that caused their injuries and had not provided specific evidence showing a causal link between their underlying conditions and the injuries for which they sought treatment.

The Oregon Supreme Court disagreed with the appellate court that to be entitled to a substantial factor instruction, plaintiffs must establish some other factor actively contributed to their injuries. However, the Supreme Court rejected plaintiff’s argument that in every multiple causation case, a trial court is required to give a substantial factor instruction. The Supreme Court reasoned that most negligence causes include evidence of multiple causal factors, and in most cases, a but-for instruction correctly describes the necessary cause-in-fact relationship. A but-for instruction does not implicitly tell a jury that it must find that the defendant’s conduct was the sole or predominate cause of the alleged harm. A case where a but-for instruction will not work is if two causes concur to bring about an event, and either one of them, operating alone, would have been sufficient to cause the identical result. Here, the plaintiffs did not argue that the but-for instruction failed because either one of multiple causes would have been sufficient operating alone to cause the identical result. Many people have preexisting conditions, and people age, but the mere fact that such conditions may contribute to a plaintiff’s injuries does not mean that a trial court must use a substantial factor instruction. A defendant can argue that a preexisting condition was the sole cause of the plaintiff’s injury.

The Supreme Court addressed concerns that this reasoning might undermine the eggshell skull rule if a jury understands a but-for instruction as requiring a plaintiff to prove that preexisting conditions would not have otherwise caused the plaintiff to suffer the same or similar injury in another event. However, the question for a jury is whether the injury that in fact occurred would have occurred when and as it did without the defendant’s tortious conduct. The question is not whether the plaintiff would have suffered the same or similar injury in a different event.

The Supreme Court concluded by noting that together, a but-for instruction on causation and a previous infirm condition instruction on damages may suffice. For clarity, an instruction expressly telling the jury that “many factors may operate either independently or together to cause injury,” and that it “may find that defendant’s conduct caused the injury even though it was not the only cause” also could be helpful. It also could be helpful to expressly tell the jury how to understand the relationship between causation and damages.


Evan D. Gestwick

[email protected]

02/24/23       Arch Spec. Ins. Co. v. HDI Gerling Am. Ins. Co. et al
New York State Supreme Court, County of New York
The Potential that a Party’s Liability May Stem from its Own Acts or Omissions is Immaterial in Analyzing the Duty to Defend

A construction worker was injured on the job and sued the premises owner, SHS, the general contractor, Wilcox, and one of the subcontractors, ThyssenKrupp, for his injuries. SHS and its liability carrier, Arch, then initiated this declaratory judgment action seeking a declaration that HDI, ThyssenKrupp’s carrier, owed SHS a defense in the underlying action, and must reimburse Arch for defense costs incurred to date.

Arch first pointed out that the instant case arose from a parallel declaratory judgment action between Wilcox, the general contractor for the project, and HDI, the subcontractor’s liability carrier, which arose out of the same accident. There, it was determined that the subcontractor’s carrier owed the general contractor a defense with respect to the underlying action on the basis of a trade agreement between the general contractor and ThyssenKrupp, the subcontractor. The HDI policy contained a blanket additional insured endorsement which provided that additional insureds were any party where required by written contract or agreement. Since the subcontract between Wilcox and ThyssenKrupp required that Wilcox be added as an additional insured under ThyssenKrupp’s liability policy, the court in that case held that Wilcox qualified as an additional insured under the HDI policy and was therefore owed a defense by HDI in the underlying action. Notably, the court there recognized the possibility that Wilcox might ultimately be found liable solely for its own independent negligent acts and/or omissions. In terms of indemnification, Wilcox would not be covered under HDI’s additional insured endorsement in this instance, since the subcontract provides that additional insured requirement provided that Wilcox was only to be added as an additional insured with respect to liabilities arising out of operations conducted by or on behalf of ThyssenKrupp—not for liabilities arising out of its own errors or omissions. Meanwhile, the additional insured endorsement provides that any party is an additional insured “where required by written contract or agreement.”

Arch argued that the same result should be reached in the instant action, since it, too, was named in the very same contract between Wilcox and Thyssen-Krupp. HDI, on the other hand, argued that reaching the same result would be inappropriate in this case, since SHS, as the premises owner, was positioned differently than Wilcox, the general contractor. Specifically, HDI argued that SHS, as the premises owner, was subject to liabilities arising from its own acts or omissions by reason of its breach of a non-delegable duty owed to the injured worker stemming from its status as premises owner (a duty that Wilcox, on the other hand, would not owe).

Ultimately, the court held this fact does not make the Wilcox situation distinguishable, since the duty to defend is based on the allegations within the underlying pleadings, and not on the future ultimate liability determination.

In light of this determination, the next issue in the case was whether HDI owed back defense costs to Arch. In addressing this issue, the court first recognized the existence of a side agreement between SHS and Wilcox, which required Wilcox to provide primary, non-contributory coverage for the benefit of SHS. The court then recognized that this would limit the scope of HDI’s monetary obligations under any duty to defend. However, evidentiary issues regarding this side agreement were currently being litigated in the underlying action; accordingly, the court held that it would be premature to decide the priority of coverage, until a determination was made regarding the admissibility of the side agreement. For the same reason, the court held that it was unable to determine whether HDI was responsible for reimbursing the back defense costs to Arch. Instead, the court held that HDI was simply required to pick up the defense of SHS going forward.


ON the ROAD with O’SHEA
Ryan P. O’Shea

[email protected]

02/22/23       Soshnick v. GEICO Gen. Ins. Co.
Appellate Division, Second Department
Insured’s Settlement of Personal Injury Claim Without Carrier’s Consent Bars Future SUM Claim.

In this short decision, the Second Department considered the insured’s choice to settle the underlying action without GEICO’s consent in an auto personal injury claim.

In July 2017, Soshnick was allegedly injured in an auto accident. Subsequently, he filed a personal injury action against the driver of the other vehicle. In January 2019, Soshnick notified GEICO of a SUM claim seeking recovery under the GEICO policy. However, Soshnick informed GEICO in June 2019, that he had settled the personal injury claim. Appropriately, GEICO denied the SUM claim on the basis that Soshnick settled the underlying personal injury action without GEICO’s prior consent.

Soshnick then filed suit against GEICO in November 2019 seeking the recovery of his requested SUM benefits and GEICO moved for dismissal. GEICO was awarded summary judgment that it was not obligated to provide SUM benefits. On appeal, the Second Department affirmed the Supreme Court’s decision.

In finding for GEICO, the Second Department reiterated the general rule regarding settlement of personal injury claims without the carrier’s consent. If an insured settles a personal injury claim in violation of a condition a policy condition requiring the carrier’s written consent and fails to protect the carrier’s subrogation rights, the insured is precluded from seeking SUM benefits.


Heather A. Sanderson
Sanderson Law, Calgary, Alberta

[email protected]

02/27/23       Gill v. Wawanesa Mutual Insurance Company, 2023 BCCA 97 (CanLII)
British Columbia Court of Appeal
“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 were 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 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’.

The insured appealed to the British Columbia Court of Appeal. This time, that Court used something called a photograph rather than words to describe the location of the drain that backed up and the relationship between the sundeck and ‘the building’.  The photograph ‘seals the deal’. The Court of Appeal stated:

The sole issue before the judge was whether the drain on the sun deck was “within [the Gills’] dwelling” within the meaning of the sewer backup endorsement.

[14]      Wawanesa admitted that the sun deck was part of the building and thus formed part of the “dwelling” as defined in the policy. That conclusion reflects the evident fact that the sun deck is part of the building partially occupied by the insureds as a private residence.

The sun deck is located entirely within the exterior concrete foundation and footings of the Gills’ home, at the lowest level of the home, as depicted on the architectural plans. The sun deck had a ceiling with lights in it, and two decks directly above. Columns set on the exterior walls of the structure support the deck structure above. The perimeter rectangle shape of the sun deck is within the footprint of the structure. Two sides of the perimeter of the sun deck have openings to the outdoors.

[5]         The following photograph illustrates the sundeck area, taken from inside the sun deck area, with the arrow pointing to the drain in the floor on the photographer’s side of the lounge chairs. One side that has openings to the outdoors is seen on the left side of the photograph; the other side that has similar openings is unseen behind the photographer.


A picture containing text, floor, indoor, building

Description automatically generated


Respectfully, “within” or “inside” are simply prepositions expressing a relationship to the nouns they precede. The word “within” does not always equate to indoors as opposed to outdoors. It simply begs the question: within what? For example, to be “within Canada”, or “inside Canada” means to be anywhere in Canada, whether indoors or outdoors. 

[28]      The phrase “within your dwelling” in the insurance policy expressed a spatial relationship with the dwelling. Based on the definition of the dwelling as the building wholly or partially occupied as a private residence, an object on the sun deck was within the dwelling. This is so whether or not the sun deck was entirely enclosed from the elements. The drain on the sun deck was therefore within the dwelling. To hold otherwise is to disregard Wawanesa’s acknowledgement that the sun deck is part of the dwelling. It results in the sun deck being both part of the dwelling but entirely outside the dwelling, an inconsistent and nonsensical result.

[29]      I return to the perspective of an average person purchasing insurance. If an average person purchasing insurance was told that the insurance policy defines the dwelling as the building and the building includes the sun deck, and the person was then asked whether the drain on the sun deck was “within the dwelling”, the answer would be “yes”.

[30]      This interpretation also is consistent with the manner in which the sun deck was built and used as a living area of the Gills home, and thus is consistent with the parties’ expectations.

Therefore, for the time being, in Canada, ‘within’ in a sewer backup endorsement unambiguously means inside the exterior walls of the insured dwelling.  The drain in issue was found to be within the exterior walls of the insured dwelling.

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