Coverage Pointers - Volume XXIV, No. 4

Volume XXIV, No. 4 (No. 625)
Friday, August 5, 2022
A Biweekly Electronic Newsletter

Hurwitz Fine P.C.
The Liberty Building
424 Main Street, Suite 1300
Buffalo, New York 14202
Phone: 716-849-8900
      Fax: 716-855-0874     

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

www.hurwitzfine.com

© Hurwitz Fine P.C. 2022
All rights reserved
 

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

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

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

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

Dear Coverage Pointers Subscribers:

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Do you have a situation? We do love situations.

And He Scores the Blue Ribbon …

Greetings to my friends, far and wide.  We are delighted to be back from the FDCC Annual Meeting in Seattle.  For the many who inquired (actually, nobody did) I am pleased to report that I brought home the blue ribbon in the FDCC paella cook-off, with the able assistance of my sous-chef (and wife), Chris Naples. If truth be told, and is should be, my competitor, Sean Griffin, is a fabulous chef, far more versatile that the undersigned.  We raised a good deal of money for the FDCC Foundation and a lot of fun getting there.

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NFJE

I recent attended the Annual Symposium sponsored by the National Foundation for Judicial Excellence.  Tremendous program, entitled “State Courts at the Forefront – Law at the Time of Change.”  The NFJE is a wonderful industry, corporate and defense counsel funded program designed to educate state court appellate judges on cutting issues of interest to the defense community.  The NFJE deserves the support of every insurance company, corporation and defense lawyer looking for a balanced judiciary to support the rule of law.  www.nfje.net 

Highlights

You will see a couple of cases in my column where a win was turned into a loss by parties who failed to authenticate documents properly when submitting motions to the court.  Be forewarned.  Read these cases and don’t make the same mistakes.

Expert Witness and Mediation Services:

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

Need a mediator?

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

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

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

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

Try mediation.. 

Training, Training and More Training:

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

Newsletters:      

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

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

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

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

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

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



Peiper on Property and Potpourri:

Perhaps it the summer heat, but I don’t have much to offer this week.  We do have one interesting, and short (bonus), read from the First Department involving how much reference to liability insurance at trial is too much.  Take a moment to review it.  Here’s a hint, a passing reference to insurance, standing alone, is not enough to trigger a mistrial. 

On to more important things.  We join the masses in congratulating our long serving editor in his recently won glory at the FDCC annual meeting.  Inspired by our former colleague, and Dan’s artisan skill on the paella pan, I too have been known to toast some small/mid grain rice.  I know my limits, though, and would not agree to fight a battle that has already been lost. 

I have, however, offered to compete in a pulled pork competition with Iron Chef Kohane and Smoke Master David Adams.  My suggestion has, heretofore, gone unheeded.  Perhaps one day we’ll answer that question.   If we do, please direct all applications to serve as a judge to our editor and presumed cookoff organizer.  Ha.

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

Steve
Steven E. Peiper

[email protected]

 

Accident Policies Required for Building– 100 Years Ago:

The Chat
Brooklyn, New York
05 Aug 1922

SUPERINTENDENT MOORE IS
READY FOR NEW STATE LAW

The new State law requiring builders to take out accident policies for men who they employ has created a new condition for the Queens Building Department to contend with. Commissioner John W. Moore has prepared to take care of the additional work. It means he will have to see to it that with every application filed for permits there is evidence that the building has taken out the necessary policies for his men. In speaking of the new law, Commissioner Moore said:

“The laws of the State and the ordinances of this city have required that before a building can be started the builder should have his plans approved by the Building Bureau in each borough in the city and a permit granted. In practice heretofore the approval by the Commissioner and Buildings of plans was considered a permit to proceed with the building. But when the new law went into effect requiring the builder to produce a policy of insurance for his workmen before he could get a permit the Commissioners of the several Building Bureaus consulted with the Corporation Counsel who rendered a decision that it would be necessary in each instance to give the builder a permit. This was a new document and the Corporation Counsel drew up a form. This form was submitted to the insurance companies and finally a form was adopted. We have not been able to issue any of these permits up to date because they had to be printed, but we have just received a supply and we will start to issue the permits immediately.”

 

Wilewicz’ Wide-World of Coverage:          

Dear Readers,

This week, the Wide World of Coverage comes to you from the road, as travel is rebounding and the world is learning to deal with our ever-changing reality. Air travel has been increasingly inconvenient of late, so we have opted for the open road to head to court appearances and vacation time the past few months. Most recently, I have been working out of our downstate Melville office, and crisscrossing the state this summer for work. The change of scenery has been refreshing, as have the weekend breaks on the beach.

Since our last writing, a review of the Second Circuit’s published decisions reveals that the Court has been busy. However, they have focused their attention on criminal and immigrations matters, not insurance contract disputes. Alas, coverage may be too cerebrally-taxing for the heat and humidity of August. Understandably. I’m sure they will be back in September with interesting decisions of note. We will be sure to report back then.

Check back next time,

Agnes
Agnes A. Wilewicz

[email protected]

 

Flaming Hot Rates – 100 Years Ago:

Times Union
Brooklyn, New York
05 Aug 1922

FIRE INSURANCE
RATES REDUCED

Cut of One Per Cent. In Manhattan
Because of New Fire Alarms.

One of the first fruits of the new million dollar fire alarm telegraph system on Manhattan Island which was recently placed in service, is the reduction of one percent in fire insurance rates on all new and renewed insurance. This announcement was made by Fire Commissioner Drennan during the week following the receipt of a letter from the New York Board of Underwriters in which the Fire Commissioner is advised there will be a saving on premiums of about $250,000.

The action of the Underwriters was taken at a recent meeting and a resolution ordering a reduction of one percent in insurance rates was unanimously adopted, following a report by a special committee appointed in 1904 to investigate and report on the inadequacy and the unreliable condition of New York’s old fire alarm system.

 

Barnas on Bad Faith:

Hello again:

Tonight, is our last softball game of the regular season.  I’m happy to report that Team HF has already locked up a playoff spot for a second consecutive year.  Criticism of the manager has died down a bit with the recent team success.  However, you can be sure it will ramp back up if the team suffers another first round exit.  The glow of breaking the playoff drought will wear off soon amidst the weight of postseason expectations.  The key question for this week: do we rest the starters for the playoffs and play some September callups or do we go all out and try to enter postseason play on a winning streak?

With college football coming up soon, we go to SEC country for the two cases in the column today.  In the Kinsale case from Florida, the court granted summary judgment on a bad faith claim, finding the insurer had no duty to initiate settlement negotiations because the insured’s liability was never clear.  In the western division of the conference, an Arkansas federal court dismissed a bad faith claim on a motion to dismiss because bad faith tort claims are not assignable under Arkansas law.  The Gators and Razorbacks do not meet this season.

The Premier League is back early this year and kicks off this weekend.  Come On You Spurs!

Brian
Brian D. Barnas

[email protected]

 

Get ‘Em While They’re Hot – 100 Years Ago:

New York Herald
New York, New York
05 Aug 1922

Motor Cars in State
Pass the Million Mark

Special Dispatch to THE NEW YORK HERALD.
New York Herald Bureau,

Albany, Aug. 4.

The number of automobiles registered in this State, including pleasure cars, omnibuses and trucks, has passed the million mark. In the last few days, it is estimated that there are 1,030,000 such cars licensed in New York State and that this number at the end of the year will be increased to 1,100,000.

The income on automobiles this year, it is estimated, will be about $15,000,000. Seventy-five percent of this amount goes to the State and 25 percent to the county. The increase in pleasure cars over the last year is about 26 percent and in commercial cars 33 percent

         Editor’s note:  Last year there were 4,232,748 cars registered in New York

 

Kyle's Construction Column:

Dear readers,

I am excited to be heading away on a weeklong beach vacation starting tomorrow at Virginia Beach. My (extended) family rents a beach house every other year and I am looking forward to getting away for a while, enjoying the heat, and hopefully not working too much. Unfortunately, this means I will be missing the last firm softball game of the season and the first round of the playoffs, so I will be hoping for a first-round victory so I can get to play in (at least) one more game this year. Best of luck team!

This week’s case involves an endorsement to a policy of insurance limiting coverage to a particular business description, which included only the work of painting contractors.

Until next time,

Kyle
Kyle A. Ruffner

[email protected]

 

A Baby Had a Baby - 100 Years Ago:

Buffalo Evening News
Buffalo, New York
05 Aug 1922

Best Doll I Ever Had – Girl
of 11 Years Calls Her Baby

America’s Youngest Mother Refuses Steadfastly to
Reveal Paternity of 19-day-old Child.

HARDIN, O., Aug 5 - “My baby’s coming is a mystery to me.”

Elizabeth Irwin, America’s youngest mother, today celebrated her 11th birthday by making that one reply to the grilling of county prosecutors seeking to determine the paternity of her 19-day-old baby.

Steadfastly, the girl-mother refused to lift one corner of the veil of mystery in which the whole affair is shrouded.

“I didn’t know anything was going to happen until I got sick and then the baby came,” Elizabeth told prosecutor Lippincott.

“He’s the best doll I ever had.”

The Rev. and Mrs. L. W. Irwin, Elizabeth’s stepfather and mother, urged authorities to exert every effort to penetrate the girl’s childish innocence.

“I will demand prosecution of the man responsible for Elizabeth’s plight,” the stepfather declared.

The girl was fearless as questions were hurled at her and talked freely for more than an hour to the officers. She asserted repeatedly that she had no romances or boyfriends.

Editor’s note:  See next story.

 

Fleming’s Finest:

Hi Coverage Pointers subscribers:

Summer is almost over because pumpkin spice everything is creeping back into the stores. More disturbingly, Halloween paraphernalia is also making an early appearance. In slightly more insurance-related news, I watched a truly unique film this week called “Purple Hearts” about two enemies, a marine and an aspiring singer, who enter into a sham marriage to obtain military insurance (she has Type 1 diabetes but cannot afford insulin) and benefits but fall in love in the process (classic). The film glosses over the consequences of fraud, but there are some big musical numbers. 5/10.

In this week’s case, the Supreme Court of Pennsylvania considered whether the Appellant’s legal  malpractice claims against Appellees, her former attorneys, were barred under the Court’s decision in Muhammad v. Strassburger, McKenna, Messer, Shilobod & Gutnick, 587 A.2d 1346 (Pa. 1991), in  which it  held  that a  plaintiff  may  not  sue  his  attorney on  the  basis  of  the adequacy  of  a settlement  to  which  the  plaintiff  agreed unless  the  plaintiff alleges the settlement was the result of fraud.

It is still firm softball season, so …

Catch you later,

Kate
Katherine A. Fleming

[email protected]

 

Pastor Charged for Baby’s Baby – 100 Years Ago:

Greenville Daily News
Greenville, Ohio
16 Dec 1922

HARDIN PASTOR
FOUND GUILTY

Of Having Attacked Stepdaughter,
Who Is 10-Year-Old-Mother—May
Serve One To Twenty Years.

Sidney, O., Dec 16 – Rev. L. W. Irwin, 47 years old, former pastor of the Methodist Church at Hardin, this county, charged with having attacked his 10-year-old stepdaughter, Elizabeth Ladd Irwin, to whom a boy baby was born July 17, was found to be guilty by a jury in the Court of Common Pleas here Friday afternoon, after five hours deliberation.

Irwin, who entered the ministry 11 years ago was arrested at Amelia Clermont County where he has been assigned.

Elizabeth the child mother confessed that Irwin was responsible for the birth of her baby son and had relations with her since she was seven years old.

Imposing of sentence from one to twenty-one years was deferred. Irwin will ask for new trial, it is reported.

Editor’s note:  Follow up from previous story but see next one for final disposition.

 

Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

Many memories together, my good ol’ boy. Keep fighting. I believe there are more walks and wrestles in our future. Stay strong.

In Ryan’s Capital Roundup, I have outlined a new insurance circular pertaining to disaster planning, preparedness, and response by the property/casualty insurance industry, which repeals and replaces last year’s Circular Letter No. 6 (2021) on the same topic. Read my column to maintain compliance with DFS expectations. Also read my column so I maintain my sanity.

Until next time,

Ryan
Ryan P. Maxwell

[email protected]

 

Pastor Sentenced to Prison – 100 Years Ago:

Dayton Daily News
Dayton, Ohio
19 Dec 1922

IRWIN GIVEN
20-YEAR TERM

SIDNEY, Dec. 19. - Rev. L. W. Irwin, 47, Methodist minister, convicted of attack in connection with birth of a son to his 10-year-old stepdaughter, Elizabeth Ladd Irwin, late yesterday was sentenced to serve 20 years of hard labor in state penitentiary by Judge J. D. Barnes in the Court of Common Pleas.

Editor’s Note:  Jail time, indeed.

 

Dishing Out Serious Injury Threshold:

Dear Readers,

I hope everyone is having a great summer so far. We have been enjoying weekends on the boat and have been getting ready for my brother’s wedding coming up this weekend. So, it has been busy.  

The case selected for this issue was a decision was a decision obtained by our own Anastasia McCarthy and Brian Webb in the 4th Department. Here, defendants were able to establish that plaintiff did not meet the necessary Significant Limitation of Use threshold and plaintiff failed to raise a triable issue of fact.

Enjoy,

Michael
Michael J. Dischley

[email protected]
  

 

Pitcher Pulls a Fast One – 100 Years Ago:

The Richmond Item
Richmond, Indiana
05 Aug 1922

PRACTICAL JOKER PUTS
ONE OVER ON ‘EM ALL

CLEVELAND, August 4. - Joe Edwards, Cleveland Indians pitcher, is responsible for this one: “Down in Mississippi, last summer, two amateur teams were playing an overtime game that lasted until darkness. The visiting team scored a run in the first half of the fifteenth. In the last half of the same inning, the home team had the bases filled with two out and two strikes on the batter.

At that point, the pitcher called the catcher up for a conference. Slipping the ball to the backstop, unseen by anyone else, he said:

“Jim, you take the ball. I’ll go through all the motions of pitching, and you smash the ball into the mitt so as to make a noise like a fast ball. It’s so dark no one will know the difference and we can’t afford to take another chance on this guy.”

“It worked. The pitcher made a bluff of pitching the ball. The catcher did his part of the trick, the umpire yelled: ‘Strike three. You’re out.’

“’That wasn’t a strike,’ yelled the batter. ‘It was six inches outside.’”

 

Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

This past week, I experienced a culinary adventure. Those of you in Connecticut or who visit the Hartford area are well acquainted with the Max Restaurant Group, as in Max Downtown, Max Oyster Bar, Max Fish…you get the idea. Max teams up with Rosedale Farm here in Simsbury, where I live, to host farm to table culinary events under the big tent out in the middle of the corn fields. It’s quite Gatsby. This time, Max joined forces with famed Indian culinary star Chef Prasad. Incorporating locally grown produce, we experienced a multi-course tasting menu amazing

   Indian-inspired cuisine. Who knew that chilled pressed cottage cheese could be so good?

 

   Oh, and the cocktails, local wine, and entertainment were top notch. It was quite the experience and I wholly     recommend it.

 

   In coverage news, there was a bevy of insurance decisions from the Connecticut state and federal courts over     the last few weeks – too many to work up all of them for you. Here’s the take-away from this edition, don’t       hesitate, for he who waits is barred by the suit limitations clause. Timely commence your coverage actions,    giving yourself space to fix mistakes. We’re in the mistakes business and are not immune to making them. Don’t wait for the last second.

Keep keeping safe.

Lee
Lee S. Siegel

[email protected]

 

Workhouse or Jailhouse – 100 Years Ago:

The Brooklyn Citizen
Brooklyn, New York
05 Aug 1922

CAN’T FIND JOB,
JUDGE GIVES HIM
ONE IN WORKHOUSE

Joseph, H. Effly, a clerk, 46 years old, of No. 1889 Cornelia Street, Ridgewood, Queens Borough was committed to the workhouse for six months by Magistrate Kochendorfer, in the Ridgewood Police Court, when he was brought into court on the complaint of his wife, who charged that he had failed to provide for the support of herself and their ten-year-old son, Charles.

Effley had been in the same Court some weeks ago and was ordered to pay the family $10 a week for support. His wife told the Magistrate her husband had failed to obey the mandate of the Court.

“You must furnish a bond for $250 to guarantee payment,” said the court. “Your Honor, I’m out of work, cannot get a job and have no money,” said Effley.

“I’ll find you a job,” responded the Court. “Six months in the workhouse.”

 

Rauh’s Ramblings:

Hello CP Subscribers!

I cannot believe August is already upon us – it feels like summary just started, but hopefully we get another 8 weeks or so of warm weather up in Buffalo before the long, cold, and dark winter starts!

This week, I have a case from the Fifth Circuit regarding the interpretation of an “any given occupation” provision in a disability insurance policy and whether the term is ambiguous.  Read my summary to find out how the Court ruled!

Until next time!       

Patty
Patricia A. Rauh

[email protected]

 

Striking Disorderly Conduct – 100 Years Ago:

The Standard Union
Brooklyn, New York
05 Aug 1922

BUFFALO CAR STRIKE
DISORDER CONTINUES

BUFFALO, Aug. 5. - Disorders continued in the local street car strike last night. One conductor was severely beaten on one of the first cars to run on the West Side at night without a police guard. A policeman on a Seneca Street’s car was struck with a railroad spike when a shower of scrap iron came raining through the windows, and dynamite was exploded at some points on the East Side.

Gangsters armed with slungshots were operating at Michigan and Glenwood Avenue and bombarded a Michigan car on which a patrolman and several passengers were riding. One of the missiles, traveling at a high rate of speed, passed through a window.

Torpedoes were placed on the tracks at Seneca and Keppel Street and at Genesee Street and Walden Avenue, but did no damage

 

Storm’s SIU Examen:

Hey friends:

I had the pleasure of attending the joint NYSSIU (N.Y. State Chapter of Special Investigation Units) and NYACT (N.Y. Anti-Car Theft & Fraud Assoc., Inc.) Summer Conference last week at West Point.  Always informative.  Awesome organizations you should consider if not already attending. 

Three cases and one article this week for you: 

  • “Just as a picture is worth a thousand words, a video can sometimes tell the whole story”. Criminal acts exclusion operates to bar coverage for an underlying personal injury claim based upon a video of the incident.Nolo contendere plea does not suffice to prove a criminal act.The court explains the law on self-defense and concludes this was not it.Principles of judicial estoppel also undermined the self-defense argument based upon admissions at the sentencing hearing.
     

  • Insured precluded from stacking her resident son’s separate UIM policy coverage onto hers as he had executed a valid stacking waiver.
     

  • Plaintiff’s cause of action under N.Y. Bus. Law § 349 is dismissed on a Fed. R. Civ. P. 12(b)(6) motion as, even liberally construed, it only plead a private contract dispute over policy coverage and the processing of plaintiff's insurance claim, not conduct affecting the consuming public at large.
     

If you did not read the last edition of Coverage Pointers, I am excited to share with you my article "Headed in the Wrong Direction" featured on the front page and published in the Second Quarter 2022 issue of the New York Insurance Association’s (NYIA) quarterly magazine Your NY Connection.  To read this edition of NYIA's Your NY Connection, click here. To read the full article, click here.

In this article I analyze the burden of proof for 1st-party property lack of cooperation coverage defenses. The courts and litigants have often incorrectly been citing to the 3rd-party liability "Thrasher standard", which is different and more onerous than the 1st-party property standard. This article considers the differences between the two standards and clarifies what the correct burden of proof is for 1st-party property claims. Courts are already inclined to rule against insurance companies as the deep pocket. 1st party property insurers shouldn't make it even more difficult on themselves in litigation by citing to the wrong burden of proof when denying coverage for a claim due to the insured's failure to cooperate.

“If we are not meant to have midnight snacks, why is there a light in the fridge?” 

Talk to you again in two weeks,

Scott
Scott D. Storm

[email protected]

 

Golden or Gold Digging? – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
05 Aug 1922

Aged Millionaire
to Wed Beauty

(By the United Press.)

Atlanta, Ga., Aug. 5. - Asa G. Candler, 71, multi-millionaire manufacturer of soft drinks admitted his engagement today to Mrs. Onesma De Bouchelle, noted New Orleans beauty, but referred questioners to his fiancée when asked about the date.

“I prefer that all announcements be made by Mrs. De Bouchelle,” he said. Two of the leading families of the south will be united when they are married. Mrs. De Bouchelle, who divorced Adolph Roquet at Reno last year, is the descendant of an old French family.

Reports from Reno, Nevada, where Mrs. De Bouchelle is now living, conflicted as to the wedding plans. One report said the marriage would take place in Reno the latter part of the month, the other that it would be solemnized in San Francisco in the fall.

 

North of the Border:

Dear friends:

I have now returned from a fabulous week of fellowship, CLE, and plain fun at the FDCC Annual Meeting held in Seattle, Washington. The week was punctuated with meetings discussing the business of the FDCC. I’m honored to report that I was re-appointed for another one-year term as a director of that fine organization. I’m energized and excited about another year to further the strategic plan, working with a group of exceptional lawyers and people.

The courts across Canada are quiet. I took this opportunity to expand on one of the CLE sessions of last week – one that deals with the perennial problem of identifying ourselves in the digital economy in a way that thwarts the risk of cyber-attacks.

‘Till next time.

Heather
Heather A. Sanderson

[email protected]

 

Gas Price Reductions Were Achievable – 100 Years Ago:

Times Union
Brooklyn, New York
05 Aug 1922

GASOLINE LOWER

Cut of 2 Cents Announced By
Standard Oil Co.

The Standard Oil Company of New York yesterday announced a reduction of two cents a gallon in the wholesale price of gasoline, thus bringing it down to twenty-five cents a gallon. In addition to the gasoline cut, varnish makers and painters’ naphtha was also reduced two cents a gallon to twenty-four cents. The Texas Company cut its gasoline price two cents a gallon in the same territory served by the Standard of New Jersey.

 

Headlines from this week’s issue, attached:

KOHANE’S COVERAGE CORNER

Dan D. Kohane

[email protected]

  • Interesting Question – Who Has the Burden of Proof in an Application to Stay Uninsured Motorist Arbitration?Second Department Places it on the Insurer.

 

PEIPER on PROPERTY (and POTPOURRI)

Steven E. Peiper
[email protected]

  • Defendant’s Own Reference to Insurance Does Not Trigger Mistrial

 

DISHING OUT SERIOUS INJURY THRESHOLD

Michael J. Dischley

[email protected]

 

  • Plaintiff Failed to Raise a Triable Issue of Fact in Opposition to Defendant Motion.

 

WILEWICZ’S WIDE WORLD of COVERAGE

Agnes A. Wilewicz
[email protected]

  • Summer Doldrums; Second Circuit Silent on Coverage This Week

     

BARNAS on BAD FAITH

Brian D. Barnas
[email protected]

  • Bad Faith Claim Not Assignable Under Arkansas Law

  • No Bad Faith Where Insured’s Liability Was Never Clear

 

LEE’S CONNECTICUT CHRONICLES

Lee S. Siegel
[email protected]

  • Recognizing Split of Authority, Court Applies Lower Pleading Standard to Bad Faith

  • Injured Party Has No Standing to Sue Tortfeasor’s Insurance Company

  • Insured Locked Out By Suit Limitations Clause For Not Serving Suit Within Time Period

     

KYLE'S CONSTRUCTION COLUMN

Kyle A. Ruffner
[email protected]

  • Policy Endorsement Limited Coverage to Activities that Fell Within the Policy’s Business Description

     

RYAN’S CAPITAL ROUNDUP

Ryan P. Maxwell

[email protected]

  • New DFS Circular Letter Sets Expectations For Planning and Preparing For and Responding To Disasters By The Property/Casualty Industry
     

RAUH’S RAMBLINGS

Patricia A. Rauh
[email protected]

  • Provision in Disability Policy Regarding “Any Gainful Occupation” Not Ambiguous nor Subject to Alternative Reasonable Interpretation

 

STORM’S SIU EXAMEN

Scott D. Storm
[email protected]

  • “Just as a picture is worth a thousand words, a video can sometimes tell the whole story”. Criminal acts exclusion operates to bar coverage for an underlying personal injury claim based upon a video of the incident.Nolo contendere plea does not suffice to prove a criminal act.The court explains the law on self-defense and concludes this was not it.Principles of judicial estoppel also undermined the self-defense argument based upon admissions at the sentencing hearing.
     

  • Insured precluded from stacking her resident son’s separate UIM policy coverage onto hers as he had executed a valid stacking waiver.
     

  • Plaintiff’s cause of action under N.Y. Bus. Law § 349 is dismissed on a Fed. R. Civ. P. 12(b)(6) motion as, even liberally construed, it only plead a private contract dispute over policy coverage and the processing of plaintiff's insurance claim, not conduct affecting the consuming public at large.
     

  • First-Party Property Standard of Proof for Lack of Cooperation.

 

FLEMING’S FINEST

Katherine A. Fleming
[email protected]

  • Claims Not Barred In Legal Malpractice Action Regarding Failure To Properly Advise Client Of The Consequences Of Signing A Release.

 

NORTH of the BORDER

Heather A. Sanderson
[email protected]

  • Passwords are an Outdated Security Measure Against Cyberattack

 

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

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


NEWSLETTER EDITOR
Dan D. Kohane

[email protected]

ASSOCIATE EDITOR
Agnes A. Wilewicz

[email protected]

ASSISTANT EDITOR
Patricia A. Rauh

[email protected]


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

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

 

Michael F. Perley
Agnieszka A. Wilewicz
Lee S. Siegel
Brian F. Mark
Scott D. Storm
Thomas Casella
Brian D. Barnas
Ryan P. Maxwell
Patricia A. Rauh
Diane F. Bosse
Joel R. Appelbaum
Kyle A. Ruffner
Katherine A. Fleming

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

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

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

Alice A. Trueman

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

Diane F. Bosse

Topical Index

Kohane’s Coverage Corner

Peiper on Property and Potpourri
Dishing Out Serious Injury Threshold
Wilewicz’s Wide World of Coverage

Barnas on Bad Faith

Lee’s Connecticut Chronicles

Kyle’s Construction Column

Ryan’s Capital Roundup

Rauh’s Ramblings

Storm’s SIU Examen

Fleming’s Finest

North of the Border

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

07/27/22       GEICO v. McCracken
Appellate Division, Second Department
Interesting Question – Who Has the Burden of Proof in an Application to Stay Uninsured Motorist Arbitration?  Second Department Places it on the Insurer.

Alison McCracken allegedly was injured as a pedestrian when she was struck by a vehicle. The driver of the vehicle was insured by the GEICO, which tendered its entire policy limit of $25,000 on McCracken's personal injury claim. Subsequently, McCracken sought supplemental uninsured/underinsured motorist (“SUM”) benefits under a GEICO insurance policy issued to her father, and filed a demand for arbitration.

GEICO sought to stay the arbitration, claiming that McCracken was not a resident relative of her father pursuant to his GEICO policy. McCracken answered the petition, and submitted an affidavit claiming that she lived with her father as of the date of the accident. After a framed-issue hearing, the Supreme Court granted the petition and permanently stayed the arbitration, finding that she was not a resident.

As the party seeking to permanently stay arbitration pursuant to the SUM endorsement of its insurance policy, GEICO bore the burden of coming forward with evidence establishing that McCracken was not a qualified insured person pursuant to the policy. Thereafter, the burden shifts to the party opposing the stay to rebut the prima facie.

Here, by submitting the police accident report that listed an address for McCracken other than that of her father's residence, GEICO met its prima facie burden of providing evidence that McCracken was not a resident relative of her father pursuant to his GEICO policy as of the date of the accident. McCracken failed to rebut this initial showing with evidence that she resided at her father's home with a degree of permanence and intention to remain.

Editor’s Note:  While this has been the general rule, that the carrier seeking to stay SUM arbitration has the burden of proving that the SUM claimant is NOT an insured, one can argue (I certainly can), that this flies in the face of the rule that a party seeking to establish his, her, or its right to coverage has the initial burden of proving that entitlement.  Here the proof offered by GEICO was slim, a police report, and the court did in fact focus on the inadequate rebuttal proof offered by the claimant.
 

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

07/26/22       Gbadehan v. Williams
Appellate Division, First Department
Defendant’s Own Reference to Insurance Does Not Trigger Mistrial

Plaintiff commenced this action after sustaining injury during an automobile collision between a livery vehicle and an SUV driven by defendant Williams.  During both direct and cross-examination, plaintiff offered that she contacted her insurance company immediately after the accident.  We are advised that no objection was raised to Ms. Williams apparently offered comments.  Also during cross-examination, Ms. Williams also offered that she may have asked her co-defendant for his insurance information immediately after the accident.  Co-defendant’s counsel moved to strike the response from the Record, but the Court apparently did not respond to the request. 

On re-direct by her own counsel, Williams again offered that she had sent everything to GEICO (her insurer).  At the conclusion of the trial, the Court exercised its discretion and set aside the trial verdict. 

The Appellate Division disagreed.  While first noting that reference to liability insurance at trial carries with it the possibility of prejudice, “passing reference” to insurance does reflexively trigger a mistrial.  Here, the two primary references in question were elicited by defense counsel from his own client, and counsel made no objection to her testimony.  Because plaintiff did not prompt the reference to liability insurance, the Court did not find sufficient circumstances to disturb the jury’s verdict. 
 

DISHING OUT SERIOUS INJURY THRESHOLD
Michael J. Dischley

[email protected]

08/03/22       Melissa A. Morales v. Nicholas Carlisi, et al.
Appellate Division, Second Department
Plaintiff Failed to Raise a Triable Issue of Fact in Opposition to Defendant Motion.

In an action to recover damages for personal injuries, the plaintiff appeals from (1) an order of the Supreme Court, Nassau County (Karen V. Murphy, J.), entered October 23, 2019, and (2) an order of the same court (Thomas Feinman, J.) entered May 7, 2020. The order entered October 23, 2019, granted the defendants' separate motions for summary judgment dismissing the complaint insofar as asserted against each of them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The order entered May 7, 2020, denied the plaintiff's motion for leave to renew her opposition to the defendants' separate motions.

The plaintiff commenced this action to recover damages for personal injuries that she allegedly sustained in a motor vehicle accident that occurred on July 25, 2014. The defendants separately moved for summary judgment dismissing the complaint insofar as asserted against each of them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. In an order entered October 23, 2019, the Supreme Court granted the defendants' separate motions. Thereafter, the plaintiff moved for leave to renew her opposition to the defendants' separate motions. In an order entered May 7, 2020, the court denied the plaintiff's motion. The plaintiff appeals from both orders.

The Appellate Court found that defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. The defendants submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine and the plaintiff's left shoulder and knees did not constitute a serious injury under either the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d). In opposition, the Appellate Court found that plaintiff failed to raise a triable issue of fact as her experts failed to compare their range-of-motion findings to what is normal.

Accordingly, the Appellate Court found that the Supreme Court properly granted the defendants' separate motions for summary judgment dismissing the complaint insofar as asserted against each of them.

"A motion for leave to renew must be based upon new facts not offered on the prior motion which would change the prior determination and must contain a reasonable justification for the failure to present such facts on the prior motion". Here, the plaintiff failed to provide a reasonable justification for her failure to present the new facts in her original opposition to the defendants' separate motions, and, in any event, those facts would not have changed the prior determination.

Thus, the Appellate Court found that the Supreme Court properly denied the plaintiff's motion for leave to renew her opposition to the defendants' separate motions.

 

WILEWICZ’S WIDE WORLD of COVERAGE
Agnes A. Wilewicz

[email protected]

Summer Doldrums; Second Circuit Silent on Coverage This Week.

 

BARNAS on BAD FAITH
Brian D. Barnas

[email protected]


07/27/22       4 Star General Contracting v. United Fire & Casualty Company
United States District Court, Western District of Arkansas
Bad Faith Claim Not Assignable Under Arkansas Law

United Fire issued a policy to Stainless Innovations insuring real and personal property in Fort Smith, Arkansas.  In August 2020, the property was damaged by a hailstorm.  United Fire paid the actual cash value, but it allegedly refused to issue payment for holdback depreciation or correctly identify the scope of replacement cost value.  Stainless assigned its breach of contract claim to 4 Star.  4 Star then filed a lawsuit alleging breach of contract and bad faith.

United Fire moved to dismiss the bad faith claim.  Under Arkansas law, tort claims are not assignable.  Arkansas courts had not previously addressed whether bad faith claims could be assigned.  However, the court concluded that the bad faith claim could not be assigned because it is a tort claim.

07/14/22       Kinsale Insurance Company v. Pride of St. Lucy Lodge 1189, Inc.
United States District Court, Southern District of Florida
No Bad Faith Where Insured’s Liability Was Never Clear

On March 1, 2015, the Lodge hosted a social event featuring a DJ and alcohol.  A fight broke out between two groups of patrons, and they were ejected from the event.  The fight continued in the parking lot, and in the early hours of March 2, 2015, Tanya Oliver was shot in the head while seated in a vehicle in the parking lot.

Kinsale first received notice of the shooting over eight months after the incident.  The Lodge initially claimed it was not connected with the shooting, but it did later acknowledge that the victim was in its parking lot.  Kinsale eventually received an attorney letter from Oliver’s attorney that stated the Lodge might be responsible, but it did not sate what the Lodge did wrong or why it would be liable.

Investigation of the claim revealed  that two women from different groups got into a fight on the dance floor at the Lodge.  Both groups had been drinking alcohol.  Lodge security broke up the fight and escorted the groups out of the Lodge through separate doors on opposite sides of the building.  A Lodge security guard stated that the shooting occurred just outside the gated rear parking lot area ten to fifteen minutes after security broke up the fight inside the Lodge.  There were no security tapes or witnesses.  The Lodge’s investigator did not believe that the Lodge had any liability.

Kinsale attempted to contact Oliver’s attorney at least six times without response over a four-month period.  No response or demand was received.  Unbeknownst to Kinsale, Oliver had retained a new attorney.  Oliver eventually died as a result of her injuries, and her representative commenced a lawsuit in state court against the Lodge.  Kinsale offered its $50,000 assault and battery sublimit, which was rejected.  The case proceeded to trial, and the jury found Oliver and her friends 30% liable and the Lodge 70% liable.  Judgment was entered against the Lodge for $3.5 million. 

Kinsale filed a declaratory judgment action seeking a declaration that the $50,000 assault and battery sublimit applied to the judgment.  Oliver’s estate and the Lodge counterclaimed for bad faith.  The parties eventually agreed that Kinsale had no contractual liability beyond the sublimit.  Kinsale then moved for summary judgment on the bad faith claim.

The court granted summary judgment.  Kinsale argued that it could not be held liable for bad faith because the Lodge’s liability was never clear.  The court stated that the only way Kinsale could have acted in bad faith if Kinsale had an affirmative duty to initiate settlement negotiations.  However, liability for the Lodge was never clear.  At no point during the claim investigation did Kinsale or its investigator consider the Lodge liable.  In fact, none of the parties who looked into the Lodge's liability ever suggested that the Lodge might bear more than questionable liability.  The jury ultimately found the Lodge only 70% liable.  That the Estate waited over a year after the shooting to file its negligent security action against the Lodge also cut against the theory that the Lodge was clearly liable.

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

8/2/2022 KRM Realty, LLC v. Selective Ins. Co. of South Carolina
Superior Court of Connecticut (Stamford)
Recognizing Split of Authority, Court Applies Lower Pleading Standard to Bad Faith

The trial court let stand an amended cause of action for bad faith, applying a lower pleading standard. Judge Golger recognized that there is a split of authority regarding the specificity required in pleading bad faith. Under the more stringent standard, a plaintiff must plead specific facts showing how the defendant acted in bad faith and in what manner the conduct was done with a dishonest purpose, an intent to deceive, or defraud, or sinister motive. On the other hand, several courts have more recently applied a less stringent standard, requiring only that the plaintiff allege sufficient facts from which bad faith may be inferred. However, even where courts employ an inference analysis, they have looked to allegations that the conduct was purposeful.

Here, the court opted for the inference approach, finding that when construed broadly the allegations permit an inference of bad faith.

[Ed. Note: This is among the reasons why removal to federal court, when possible, is almost always the right decision. A federal court, applying federal pleading standards, would not follow the inference approach but would instead require pleading of actual facts, under Iqbal and Twombly.]
 

8/1/2022 Sypher v. Federal Ins. Co.
Superior Court of Connecticut (New London)
Injured Party Has No Standing to Sue Tortfeasor’s Insurance Company

An injured plaintiff cannot bring a direct action against the other driver’s insurance company. That mistake may cause plaintiff to be barred by the statute of limitations.

Sypher was injured when his vehicle collided with Webb’s, on February 21, 2020. In March 2022, he sued both GEICO and Federal but soon after discontinued against Federal. Significantly, he did not sue Webb, the supposedly at fault driver. GEICO moved to dismiss the complaint, for lack of standing and the court agreed. “GEICO's only connection to this matter is its contractual relationship as the insurer for the alleged tortfeasor, who is not named in this suit. GEICO and plaintiff have no legal relationship whatsoever, and no tie to one another, unless and until plaintiff were to sue GEICO's insured and prevail. Without a legal right to assert against GEICO, plaintiff has no standing to bring this action and therefore, the complaint must be dismissed.”

Importantly, the court also refused Sypher’s motion to substitute Webb for GEICO. The court noted that a typical substitution involves replacing a deceased party with the estate or administrator or correcting a party’s name. This, instead, was not a case of misjoinder but a case of naming a defendant without standing or valid legal basis. “The remedy for suing the wrong party is to sue the right party.”

So, why would GEICO bother to fight the substitution of its insured? Connecticut has a two-year personal injury statute of limitations and, perhaps, even with the tolling from COVID-19, a newly filed action against Webb would be time barred.
 

7/22/22         Florimon v. Allstate Ins. Co.
United States District Court, Connecticut
Insured Locked Out By Suit Limitations Clause For Not Serving Suit Within Time Period

Allstate successfully fended off a homeowner’s breach of contract and bad faith suit, relying in the insured’s failure to effectuate service of suit within the insurance contract’s 24-month suit limitations provision.

On or about October 31, 2019 (or November 1, 2019 as per a proposed amended complaint), wind damaged Florimon’s Norwich, Connecticut home. Allstate assessed the damage at greater than $90,000 but for unknown reasons denied coverage. Florimon filed suit against Allstate in state court on November 1, 2021 but the Marshall did not serve Allstate until November 5, 2021. Allstate removed and then moved to dismiss in reliance on the suit limitation provision.

Connecticut law recognizes the enforceability of insurance contract suit limitation clauses. Here, the policy provided: “Any suit or action must be brought within twenty-four months after the inception of loss or damage.” Allstate argued that under Connecticut law, an action is not commenced until the defendant is properly served, and that service was beyond the policy’s suit limitations period. The court agreed, rejecting the insured’s argument that filing of the action (and sending an email copy of the complaint to Allstate) was sufficient to satisfy the terms of the insurance contract. “In the absence of any allegation that the damage occurred within two years of the date of service, and without any apparent reason for the delay, Mr. Florimon commenced this lawsuit after the contractual limitations period and, as a result, the breach of contract claim is time-barred.” 

The court not only threw out the breach of contract cause of action but also found that the bad faith claim was also time barred by the suit limitations period. However, the court permitted the insured leave to amend the complaint’s CUTPA/CUIPA claims, which are not precluded by the suit limitations clause.

 

KYLE'S CONSTRUCTION COLUMN
Kyle A. Ruffner

[email protected]

7/26/22         First Mercury Ins. Co. v. ARMR Grp.
United States District Court for the Eastern District of Kentucky
Policy Endorsement Limited Coverage to Activities that Fell Within the Policy’s Business Description

The Defendant, ARMR, obtained a policy of insurance from State National Insurance Company. On the application for insurance, the owner of ARMR indicated that the company was a general contractor that performed commercial and residential painting. When asked to select the activities ARMR performed, he selected “painting”. The commercial general liability policy, therefore, contained an endorsement that limited coverage to a specific business description, which included exterior and interior painting, as well as subcontracted work relating to painting.

Wells & Wells Construction Co. was a general contractor that oversaw the construction of a residential apartment development in Kentucky. Wells subcontracted with ARMR to perform work that included cleaning, disinfecting, sanitizing, and remediation of water and moisture exposure following heavy rains. ARMR applied a disinfectant, sanitizer, and cleaner known as Shockwave to exposed lumber surfaces in the apartments. After the development was completed, residents began noticing water leaks, which were traced to CPVC piping and fittings that were failing due to exposure to Shockwave. As a result, Wells filed this action against ARMR alleging it knew or should have known that Shockwave was chemically incompatible with the CPVC pipes and fitting in the buildings.

The insurer, State National, filed a claim against ARMR seeking a declaratory judgment that ARMR is not covered under the policy. The insurer argued that these was no coverage under the policy because ARMR’s work involving the application of Shockwave did not fall within the policy’s business description. ARMR contended that there was a genuine issue of material fact regarding what it meant to be a “painting contractor”, suggesting that its definition includes those who use painting equipment to perform cleaning services.

Kentucky courts refer to dictionary definitions to give terms their ordinary meanings as persons with the ordinary and usual understanding would construe them. The court rejected ARMR’s broad ranging definition of a “painting contractor”, holding that when assigning the terms their ordinary meaning, the work performed when ARMR applied Shockwave did not fall within the business description because it did not constitute “painting”. Further, the court held that subcontracting activities listed in the policy’s business description endorsement were also limited to those of a painting contractor, as it was initially reported that all of ARMR’s work was painting. Therefore, the court granted the insurer’s motion for summary judgment and held the insurer did not owe an indemnity or a defense to the insured, ARMR Group for the allegations asserted in the underlying matter.
 

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

Regulatory Wrap-Up

7/25/22         Disaster Planning, Preparedness, and Response
Department of Financial Services
New DFS Circular Letter Sets Expectations For Planning and Preparing For and Responding To Disasters By The Property/Casualty Industry

Last week, DFS set forth in Circular Letter No. 10 (2022) the standards expected of authorized property/casualty insurers, co-operative property/casualty insurance companies, financial guaranty insurance companies, mortgage guaranty insurance companies, title insurance companies, non-profit property/casualty insurance companies, reciprocal insurers, captive insurance companies, the New York State Insurance Fund, the New York Property Insurance Underwriting Association, the New York Medical Malpractice Insurance Plan, the New York Automobile Insurance Plan, the Motor Vehicle Accident Indemnification Corporation, rate service organizations (“RSOs”), and the Excess Line Association of New York (“ELANY”) (collectively, “addressees”) in planning and preparing for, and responding to, disasters occurring anywhere in the world, including in New York State, that could affect an addressee’s ability to continue doing business and servicing the people of New York State. This new circular replaced Circular Letter No. 6 (2021).

DFS advised of several key points of emphasis at the various stages of disaster planning and response, with a few outlined below (see the full letter for more detail):

  1. Before a Disaster Strikes

  1. Pre-Disaster Data Survey

  • Outside of any RSO or ELANY, all addressees must submit, pursuant to Insurance Law § 308, a response to the Department’s pre-disaster data survey, which is available on the Department’s website. The Department will use the responses it receives to apportion corporate emergency access system adjuster cards as described in Supplement No. 1 to Circular Letter No. 8 (2007).
     

  1. Business Continuity and Disaster Response Plans

  • Each addressee should perform at least annually a business impact analysis to predict the consequences of disruption of any business function and process as a result of a disaster, and to gather information needed to develop recovery strategies.The business impact analysis should identify the operational and financial impacts resulting from the disruption of business functions and processes (for a detailed list of considerations, see Circular No. 10).

  • All addressees should use the results of this analysis to establish, maintain, and update as necessary a business continuity plan. Additionally and independently of the business continuity plan, other than ELANY, an RSO, or a financial guaranty insurer, an addressee should perform at least annually a risk-based analysis of its capacity to assist customers in New York State affected by a disaster occurring anywhere in the world, including in New York State, and should use the results of this analysis to establish, maintain, and update as necessary a disaster response plan that takes into account the results of the analysis.
     

  1. Filing of Pre-Disaster Data Survey, Disaster Response Plan and Questionnaire, and Business Continuity Plan Questionnaire

  • By August 19, 2022, each addressee must submit a response to the pre-disaster data survey to the Department, as applicable, pursuant to Insurance Law § 308. 

  • By October 7, 2022, each addressee must submit to the Department a disaster response plan, a response to the disaster response plan questionnaire, and a response to the business continuity plan questionnaire, as applicable, pursuant to Insurance Law § 308. 
     

  1. After a Disaster

  1. Disaster Liaisons

  • After a disaster, the Superintendent may contact designated addressee disaster liaisons representing addressees with the greatest amount of direct written premiums in the disaster area. Disaster liaisons are expected to be able to provide coverage data and claim statistics as requested by the Department.***
     

  1. Independent Adjuster Temporary Permits

  • Insurance Law § 2108(n) permits the Superintendent to issue a temporary permit to a person to act as an independent adjuster for an authorized insurer “in order to facilitate the settlement of claims under insurance contracts involving widespread property losses arising out of a conflagration or catastrophe common to all such losses.”The authorized insurer on whose behalf the person will be adjusting claims must execute and file with the Superintendent a written application for the temporary permit and must certify that the person who will be doing the adjusting is qualified by experience and training to adjust claims.
     

  1. Hurricane and Windstorm Deductibles

  • An insurer should notify the Department whenever the insurer activates, or intends to activate, a hurricane or windstorm deductible under any property/casualty insurance policy by sending an email to

    [email protected].
     

  1. New York Information Network

  • The former Insurance Department issued Insurance Circular Letter No. 12 (2002) establishing the New York Information Network (“NYIN”).  The NYIN is the main conduit through which the Department will communicate intelligence reports and other critical but sensitive information on terrorism to the New York insurance community. 

  • In instances where the Department needs to communicate sensitive information to addressees, the Department will initiate the communication through the NYIN and information will be directed to the primary intelligence or information officer only.

 

RAUH’S RAMBLINGS
Patricia A. Rauh

[email protected]

07/27/22       Fedesna v. The Canada Life Assurance Co.
Fifth Circuit Court of Appeals
Provision in Disability Policy Regarding “Any Gainful Occupation” Not Ambiguous nor Subject to Alternative Reasonable Interpretation

Plaintiff, Thomas Fedesna (“Fedesna”) began practicing as a chiropractor in the 1970’s and purchased an individual disability insurance contract in 1985.  In 2011, he fell off a ladder and injured his neck, back, and arms.  Fedesna submitted a claim to his disability insurance carrier, defendant, The Canada Life Assurance Company (“Canada Life”). 

Canada Life paid Fedesna $4,500 per month for 5 years.  At the 5-year mark, the terms of Fedesna’s contract with Canada Life triggered a shift in his coverage and the payments were stopped because Fedesna was no longer considered to be totally disabled pursuant to the terms of the contract.  “Total Disability” is defined in the Canada Life contract as follows:

“Total Disability means that you are unable, due to injury or sickness, to engage in your regular occupation.  This definition changes after benefeits have been payable during any one continuous disability for the longer of (a) 60 months or (b) to your age 55.  Total disability will the mean that you are unable, due to injury or sickness, to engage in any gainful occupation.  Any gainful occupation means work for which you are reasonably suited by your education, training, and experience.”

Since Fedesna had been paid continuous total disability benefits for 60 consecutive months, the insurance coverage shifted from a policy covering an inability to “engage in [his] regular occupation”, i.e., chiropractic medicine, to covering an inability “to engage in any gainful occupation.”

Fedesna argued that any attempt to distinguish between the initial coverage language and the time-triggered coverage language is futile.  He argued that “any gainful occupation” refers to whatever gainful occupation he was capable of obtaining at the time of his disability, not 5 years post-injury.  Fedesna argued that his interpretation is reasonable, but also that Canada Life’s contrary interpretation is reasonable and therefore, an ambiguity exists as well as a fact issue over the contract terms, and a trial is necessary to sort out these issues.

Canada Life argued that Fedesna’s interpretation is unreasonable and the “any gainful occupation” clause means exactly what is says with no requirement to ignore the present circumstances of the insured.

In its opinion, the Court addressed the rule that if a policy provision is ambiguous, the Court must adopt the insured’s construction of the provision as long as that construction is not unreasonable.  However, if the policy provision is susceptible to only one reasonable interpretation, the Court must enforce the provision as written.

Here, the Court ruled that Canada Life’s interpretation is correct.  The deletion of the word “regular” and inclusion of the word “any” are dispositive, and Fedesna’s alternative interpretation cannot carry his burden to show ambiguity.  Therefore, since there is no only one reasonable interpretation of the policy language, the judgment is AFFIRMED.

 

STORM’S SIU EXAMEN
Scott D. Storm

[email protected]

7/5/22 Safeco Ins. Co of Ill. V. Gasiorowski
United States District Court, E.D. Pennsylvania.
“Just as a Picture is Worth a Thousand Words, a Video can Sometimes Tell the Whole Story”. Criminal acts Exclusion Operates to Bar Coverage for an Underlying Personal Injury Claim Based Upon a Video of the Incident.  Nolo Contendere Plea Does Not Suffice to Prove a Criminal Act.  The Court Explains the Law on Self-Defense and Concludes This Was Not it.  Principles of Judicial Estoppel Also Undermined the Self-Defense Argument Based upon Admissions at the Sentencing Hearing.

Safeco brings this action seeking a declaration that it has no duty to defend or indemnify its insured in a personal injury case arising out of a physical altercation that resulted in a criminal assault charge after its insured, Gasiorowski, punched and then tackled Avizohar, because he was trespassing on PECO Energy Company property that Gasiorowski was licensed to use. Avizohar alleged that Gasiorowski "menacingly approached" Avizohar as he led a horseback ride through the PECO property, pulled Avizohar off his horse, struck him in the face, and pinned him down. Gasiorowski was criminally charged and pled nolo contendere to simple assault, harassment, and false imprisonment.

This Court had previously denied Safeco's motion to dismiss, holding that Gasiorowski's nolo plea did not suffice to prove he committed a criminal act, and that there were factual issues as to whether his use of force was privileged. Discovery is now complete, and Safeco returns with a motion for summary judgment, buttressed by a video of the incident. Upon review, the Court said it is convinced that this case falls within the rule:  "When opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment." Because the video incontrovertibly shows that no reasonable jury could find that Gasiorowski was acting in self-defense, the Court concluded that summary judgment is warranted.

Although Gasiorowski does not dispute that the criminal exclusion act is unambiguous, he argues that there is a dispute of material fact as to whether his actions were criminal. The Court had previously reasoned that Gasiorowski's nolo contendere plea does not conclusively establish that his conduct was criminal because a nolo contendere plea is not admissible in a subsequent civil or criminal case against the defendant who made the plea.  Nonetheless, the video incontrovertibly showed that Gasiorowski punched Avizobar and then pinned him to the ground to restrain him for a length of time.

Gasiorowski argues that he should nonetheless receive the insurance coverage because he was acting in self-defense. Under Pennsylvania law, use of force is justifiable "when the actor believes that such force is immediately necessary for the purpose of protecting himself against the use of unlawful force by such other person on the present occasion." Self-defense encompasses both subjective and objective elements. Subjectively, the defendant "must have acted out of an honest, bona fide belief that he was in imminent danger," and objectively, that "belief must be reasonable in light of the facts as they appeared to him." 

The Court said that no reasonable juror could find that Gasiorowski reasonably believed that he was in imminent danger. As depicted in the video of the incident, Avizohar was slowly taking two steps on an angle that would lead him around Gasiorowski with his palm open in a non-aggressive manner, when Gasiorowski suddenly punched Avizohar so strongly that he fell to the ground. Even taking as true Gasiorowski's disputed allegation that before punching Avizohar, Avizohar had pulled on the reins of his horse, causing the horse's head to strike Gasiorowski, Avizohar was off the horse and was not acting aggressively. No reasonable juror could find that Gasiorowski was in imminent danger at the time that he threw the punch. And although Gasiorowski argues that he was "suddenly surrounded" by three men, he fails to point to any evidence in the record indicating that Avizohar's companions were poised to charge at him. To the contrary, the video indicates that both companions were stationed at a distance during the initial punch and restraint, and none of their comments are aggressive or threatening. And in yet another contradiction, although Gasiorowski contends that his sunglasses were broken when Avizohar used his horse to butt his head, the video shows him wearing them throughout the altercation.

Gasiorowski's argument that he was acting in self-defense is further undermined by his statements under oath during the sentencing hearing on November 30, 2018, where, for purposes of seeking leniency, Gasiorowski effectively admitted that his conduct was not objectively reasonable. Specifically, in response to questions from his lawyer, he conceded that although he "felt threatened" during his interaction with Avizohar, he nonetheless overreacted.

Mr. Gasiorowski is not entitled to change his position before the courts because it suits his convenience. Principles of judicial estoppel weigh strongly against such a result. In simple terms, a party cannot play "fast and loose with the courts" by espousing a position in one forum, and then contradicting it in another to secure a procedural advantage. 

Finally, no reasonable juror could find it was permissible for Gasiorowski to pin Avizohar to the ground and physically restrain him until police arrived at the scene. The use of confinement as force is only permissible "if the actor takes all reasonable measures to terminate the confinement as soon as he knows that he safely can." Gasiorowski failed to do so. 
 

7/6/22           Bubonovich v. State Farm Mut. Auto. Ins. Co.
United States Court of Appeals, Third Circuit.
Insured Precluded from Stacking her Resident Son’s Separate UIM Policy Coverage onto Hers As He had Executed a Valid Stacking Waiver.

Bubonovich was involved in a two-car accident. After recovering the limits of the other driver's liability coverage and her own underinsured motorist (UIM) coverage, she filed a claim seeking the proceeds from her resident son's UIM coverage. When that claim was denied, she sued State Farm claiming that she was entitled to "stack" her son's UIM coverage on top of her own recovery. The Court granted State Farm's motion for summary judgment, ruling that Plaintiff could not "stack" her son's UIM coverage because he had executed a valid stacking waiver. 

Because Bubonovich is attempting to collect under her son’s policy, it is her son’s policy and its exclusions that are relevant to the legal issues presented in this case.  Stacking insurance can be validly waived in single-vehicle policies, and because the son had waived the ability to "stack" his insurance, any claimants could not recover under his policy.

Plaintiff argues that both of the relevant policyholders have not waived stacking coverage, as she did not execute a stacking waiver. But we look only to the policy under which the claimant is trying to recover to determine if coverage is available.  As such, whether Plaintiff waived coverage on her policy is beside the point.

Plaintiff's two remaining arguments fare no better. First, she argues that she paid for stacking on her policy, so if stacking is not allowed here, she paid an extra premium and received no benefit. Yet she could have stacked her own benefits had she been injured while driving her son's car. Plaintiff then argues that if we honor the stacking waiver in her son’s policy, we are effectively voiding all of the son’s UIM coverage. But the son could receive the benefit of his own UIM coverage were he to be injured by an underinsured driver. As such, denying stacking here does not deprive either the Plaintiff or her son of the "benefit of the bargain": they both get the insurance coverage they've paid for.
 

6/23/22         King v. LM Insurance
United States District Court, W.D. New York.
Plaintiff’s Cause of Action Under N.Y. Bus. Law § 349 is Dismissed on a Fed. R. Civ. P. 12(b)(6) Motion as, Even Liberally Construed, it Only Plead a Private Contract Dispute Over Policy Coverage and the Processing of Plaintiff's Insurance Claim, not Conduct Affecting the Consuming Public at Large.

Plaintiff commenced this action challenging the denial of an insurance claim under a homeowner's insurance policy issued by LM Insurance. Plaintiff asserts two claims for relief including common law breach of contract, and deceptive acts and practices in violation of N.Y. Bus. Law § 349 ("§ 349").  Defendant filed a Fed.R.Civ.P. 12(b)(6) motion seeking dismissal of the Second Claim for failure to state a valid claim under § 349.  Granted.  

Plaintiff in 2017 moved out of the home in connection with divorce proceedings, returning in 2019 when he was awarded the home in connection with the matrimonial proceedings. Upon returning to the home he discovered it had been "extensively vandalized and that numerous items of his personal property, including a safe and its contents had been stolen."

Plaintiff alleges the insurance adjuster told him he did not need to obtain estimates of the damage; rather, Defendant would supply the damage estimates which Plaintiff would use to prepare his insurance claim, including proof of loss form.  Defendant sent Plaintiff a preprinted document titled "Homeowner Loss Information Sheet", accompanied by a letter from Defendant's Claims Handler advising Defendant would provide an estimate of damages to the insured premises' structures.  The accompanying instructions with the proof of loss form stated that "the insured should use the estimates provided by the insurance carrier as a guide in completing the Proof of Loss form."  Nevertheless, no itemized estimate of damages was forthcoming from Defendant. Defendant's failure to provide Plaintiff with timely estimates of the structural damage to his home rendered it more difficult for Plaintiff to prove the full amount of his insurance claim, delayed Plaintiff's submission of the Proof of Loss form, thereby "delaying the perfection of his claim of loss and the eventual decision on that claim."  Further, the delay caused Plaintiff to incur increased attorney fees because of the additional time required to assist Plaintiff with completing the Proof of Loss form. Defendant disclaimed all liability under the Policy and refused to pay anything on Plaintiff's insurance claim.

Defendant moves to dismiss Plaintiff's Second Claim alleging a violation of N.Y. Bus. Law § 349 ("§ 349"). A complaint must be dismissed pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted if it does not plead "enough facts to state a claim to relief that is plausible on its face." 

Plaintiff's Second Claim alleges a violation of N.Y. Bus. Law § 349 which provides in relevant part that "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful."  To establish a prima facie case under § 349(a), a plaintiff must allege:

(1) the act or practice was consumer-oriented;

(2) the act or practice was misleading in a material respect; and

(3) the plaintiff was injured as a result." 

"Section 349 does not grant a private remedy for every improper or illegal business practice, but only for conduct that tends to deceive consumers."  "As a threshold matter, in order to satisfy General Business Law § 349 plaintiffs' claims must be predicated on a deceptive act or practice that is ‘consumer oriented'". 

In the instant case, Plaintiff's Second Claim alleging a violation of § 349 asserts that Defendant, by first instructing Plaintiff to await Defendant's calculation of damages which Plaintiff was to include on the Proof of Loss form to submit in connection with Plaintiff's claim, and then failing to timely provide Plaintiff with such damages calculation, caused Plaintiff to untimely submit his claim which did not include a calculation of damages provided by Defendant, resulting in Plaintiff's claim being denied. These allegations sufficiently allege the second two factors for a prima facie case.  The allegations, however, fail to establish the first factor requiring the challenged act be consumer oriented.

In particular, because § 349 "was intended to ‘afford a practical means of halting consumer frauds at their incipiency without the necessity to wait for the development of persistent frauds,'" a plaintiff alleging a violation of § 349 need not allege "a repetition or pattern of deceptive behavior."  Nevertheless, the alleged deceptive conduct "must have a broad impact on consumers at large; ‘[p]rivate contract disputes unique to the parties * * * would not fall within the ambit of the statute.'"  Because the plaintiffs alleged no facts to support such speculative argument, the district court dismissed the claim for failing to state a claim. 

In the instant case, not only has Plaintiff failed to allege any facts plausibly supporting that Defendant's delay in providing the insurance loss estimates prevented Plaintiff from including such estimates in a timely submitted insurance claim, but Plaintiff does not even allege that such conduct is part of Defendant's practices which "are part of a systemic program aimed at the policyholders generally, having an impact on insurance consumers at large…".  Accordingly, Plaintiff's allegations, even liberally construed, at best show a private contract dispute over policy coverage and the processing of Plaintiff's insurance claim filed with Defendant, not conduct affecting the consuming public at large, and thus do not plausibly state a cause of action under § 349. 
 

"Headed in the Wrong Direction"
07/12/2022 New York Insurance Association (NYIA), Your NY Connection, Quarterly Magazine, Second Quarter 2022. 
First-Party Property Standard of Proof for Lack of Cooperation.

In this article, I discuss how the third-party liability standard for proving an insured’s lack of cooperation (the Thrasher Standard) does not apply when proving lack of cooperation in first-party property claims.  Although the insurer is said to have a “heavy burden” to establish non-cooperation in third-party claims, it has repeatedly been held that the burden of proof is far less stringent for property insurers.  New York courts and litigants have been increasingly misapplying the “Thrasher standard” to first-party property losses, gradually blurring the disparity between the two standards, resulting in a reduction of dispositive motions in favor of insurers.  In this article, we provide practical advice as to what the actual standard is for proving lack of cooperation in first-party property claims.

 

FLEMING’S FINEST
Katherine A. Fleming

[email protected]

07/20/2022   Khalil v. Williams
Supreme Court of Pennsylvania
Claims Not Barred In Legal Malpractice Action Regarding Failure To Properly Advise Client Of The Consequences Of Signing A Release.

Appellant filed a complaint on March 29, 2017, asserting claims of legal malpractice based on negligence; legal malpractice based on breach of contract; negligent misrepresentation; breach of contract; and fraudulent misrepresentation. Appellant alleged, inter alia, that Appellees failed to exercise ordinary skill and knowledge by allowing her to enter into a settlement agreement in a case– specifically, the release – that would preclude her subsequent counterclaims in a second case; that Appellees breached their contractual duty to exercise ordinary skill and knowledge in representing her in connection with the second case; that Appellees repeatedly and erroneously advised her that the release would not affect her counterclaims in the second case; and that Appellees breached their contractual duty to diligently and competently represent her interests in both cases.

After a lengthy legal saga, the Court granted review of the following issues: (1) Should the Court overturn Muhammad v. Strassburger . . . which bars legal malpractice suits following the settlement of a lawsuit absent an allegation of fraud? (2) Did the Superior Court misconstrue the averments in [Appellant’s] complaint and err as a matter of law when it held that [her] legal malpractice claims were barred by Muhammad v. Strassburger?

Appellant argued that the Superior Court erred as a matter of law when it relied on Muhammad to affirm the trial court’s grant of Appellees’ motion for summary judgment and its dismissal of her claims. Specifically, she maintained that her claims were based upon Appellees’ erroneous legal advice regarding the scope and effect of a release, rather than her dissatisfaction with the amount of her settlement, and she contended that the lower courts mischaracterized her claims in this regard. She alleged both fraud and negligence in her complaint but asserted that the Superior Court cherry-picked paragraphs from the complaint that addressed the fraud claims, ignoring most of the complaint’s factual allegations related to her claims of legal malpractice, negligent misrepresentation, and breach of contract. Appellant additionally suggested that the Court should overturn Muhammad.

The Court concluded that the Superior Court erred in holding that Appellant’s negligence and breach of contract claims were barred under Muhammad. Both the trial court and the Superior Court focused on select, fraud-based averments in Appellant’s complaint wherein she asserted that she did not sign the final release but instead signed a different version of a release that she claims was switched with the final release. The lower courts ignored other averments in Appellant’s complaint which did not allege fraud but rather alleged legal malpractice by Appellees in allowing Appellant to enter into a settlement agreement in one case that subsequently precluded her from raising her desired claims in a second case while repeatedly advising Appellant that the settlement agreement would not preclude those claims.

Appellant did not challenge the amount of the settlement, but instead, her claims were based on Appellees’ alleged failure to properly advise her of the consequences of signing the release. If Appellant’s claims were based on fraud, regardless of whether they were also couched in negligence or contract, they were not barred by Muhammad. Likewise, if Appellant’s claims were based on negligence and challenged Appellees’ legal advice, those claims also were not precluded by Muhammad.

Since Appellant was not merely challenging the amount of her settlement in the first case but rather alleged that Appellees provided incorrect legal advice regarding the scope and effect the release, the Court held that Muhammad’s bar on lawsuits based on the adequacy of a settlement was not implicated in this case. Accordingly, the Court concluded further consideration of the wisdom of Muhammad was unnecessary. The Court reversed the Superior Court’s decision to the degree it affirmed the trial court’s grant of summary judgment in favor of Appellees on Counts I through IV of Appellant’s complaint, and it direct that the matter be remanded to the trial court for further proceedings consistent with the Court’s opinion.

 

NORTH of the BORDER
Heather A. Sanderson

[email protected]

Passwords are an Outdated Security Measure Against Cyberattack

Cyber security expert, Dr. Erin Cole, explained in a session at the FDCC Annual Meeting in Seattle on July 28, 2022, that passwords, even ‘the strong’ cryptic ones generated by password keeper apps, are insufficient to prevent data breaches and phishing attacks.  Passwords are now on databases accessed by cybercriminals and therefore they are an outdated security system.

A minimum standard of care to protect the data of a business, said Cole, is two factor authentication (2FA) where a one-time, time sensitive passcode is sent to a mobile device registered to an account.

In an article published in Canadian Underwriter, July 2022 edition, a cyber forensic expert is reported as saying that phone spoofing by cybercriminals can defeat 2FA. The user has no way of verifying the device that provided the login code is legitimate.  Cybercriminals can intercept the connection and provide a code that unlocks the user’s account and provides access to the data.

The existence of multi-factor identification (MFA) is now an almost universal standard that must be met to obtain cyber insurance. MFA usually involves three steps to identify the user:  something the user knows like a password; something that the user has like a smartphone; and by something that is personal to the user like the use of an authenticator app, or a second code.

In the same Canadian Underwriter article, it is reported that cyber criminals are also able to use social engineering techniques to overcome MFA security. For example, an email, apparently from the user’s bank asks the user to login (which delivers to the cybercriminal the user’s username and password) and then asks the user to log into a second window to verify that the user’s MFA code is correct. With that, the cybercriminal possesses the data.

According to the same Canadian Underwriter article, this technique to defeat MFA (and others) will likely require users to verify their identity by using an authenticator app on a biometrically secure phone – one that is opened with a fingerprint, facial recognition, or voice recognition.  One can expect that this increased level of security – some requirement to insert biometric data into the MFA authentication process - will be a cyber insurance requirement once current cyber policies renew.

Businesses must think carefully about the privacy risks of storing the biometric data used to unlock users’ accounts. Under the new privacy legislation in place in Quebec (which is predicted to be emulated by the Federal Government and other Canadian provinces), [1] a business must provide notice to the Commission d’accès à l’information (CAI) du Québec at least 60 days in advance of creating a biometric database. One can expect that following the issuance of that notice, soon-be-in-place regulations will impose stringent requirements on the security of that biometric data as well as stringent disclosure requirements advising that the data is being held


[1]             See the article on this legislation in “North of the Border”, Coverage Pointers - Volume XXIII, No. 13 Friday, December 10th, 2021.

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