Coverage Pointers - Volume XXIV, No. 5

Volume XXIV, No. 5 (No. 626)
Friday, August 19, 2022
A Biweekly Electronic Newsletter


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

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

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

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

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The Sturgeon Moon over Lake Erie
View from Crescent Dreams
August 11, 2022

Dear Coverage Pointers Subscribers:
Do you have a situation? We do love situations.

I do not like the fact that the days are getting shorter, and the night has the nerve to arrive earlier.  When I come home from work, my goal is to relax, perhaps with an adult beverage, and enjoy the lake view from my summer cottage.  That view is closing out earlier each night.  If someone can do something about it, I’d appreciate it.

There’s a meaningful case from the New Jersey Supreme Court in my column.  It allows the consideration of extrinsic evidence to reduce or eliminate the duty to defend where the underlying case will not resolve the coverage issue.  We may try to find the opportunity to try to use that precedent in a New York lawsuit.  Keep your eyes open for that possibility.  Creative minds ...

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Hurwitz Fine is pleased to announce that 22 of the firm’s attorneys have been selected by their peers for inclusion in the 2023 edition of The Best Lawyers in America©. Among this list, six Hurwitz Fine attorneys were named to the Best Lawyers: Ones to Watch in America™ list.

Firm President/Managing Partner Jody E. Briandi was also named the Best Lawyers 2023 Litigation – Insurance “Lawyer of the Year” in Buffalo.

The attorneys named to the 2023 edition of The Best Lawyers in America and the practice areas they were honored for are as follows:

(Year) First year the lawyer was listed in the published practice area.

(*) Lawyers who are listed for the first time in Best Lawyers.

[#] Anniversary for which lawyer is eligible (5, 10, 15, 20, 25, or 30 years).

Six Hurwitz Fine attorneys were also named to the “Ones to Watch” list:

  • Brian D. Barnas (2021)
    • Insurance Law
  • Ryan P. Maxwell (*)
    • Insurance Law
  • Anastasia M. McCarthy (2021)
    • Personal Injury Litigation - Defendants
    • Product Liability Litigation - Defendants
  • Marc A. Schulz (2021)
    • Construction Law
    • Litigation - Construction
    • Personal Injury Litigation - Defendants
  • Alice A. Trueman (2021)
    • Personal Injury Litigation - Defendants
  • Brian M. Webb (2021)
    • Personal Injury Litigation - Defendants

Since it was first published in 1983, Best Lawyers® has become universally regarded as the definitive guide to legal excellence. Best Lawyers lists are compiled based on an exhaustive peer-review evaluation. Almost 108,000 industry leading lawyers are eligible to vote (from around the world), and this year, they received over 13 million evaluations on the legal abilities of other lawyers based on their specific practice areas around the world. For the 2023 Edition of The Best Lawyers in America©, more than 10 million votes were analyzed, which resulted in more than 66,000 leading lawyers being included in the new edition. Lawyers are not required or allowed to pay a fee to be listed; therefore, inclusion in Best Lawyers is considered a singular honor.


New York State Bar Association Continuing Legal Education Program
A Primer on Risk Transfer: Contractual Liability and Additional Insured Coverage
Presented by Dan D. Kohane

A Primer on Risk Transfer_675


Lawyers who handle construction (Labor Law) and other personal injury lawsuits often struggle with issues of risk transfer. How do parties who sued in lawsuits (owners, landlord, contractors, etc.) transfer their liability to other parties? Lawyers, insurers, and courts struggle with issues of additional insured coverage, contractual indemnity and hold harmless agreement and tenders of defense under both forms of risk transfer. This program would be of interest to both trial and coverage lawyers.

Start Date:                                   August 23, 2022, at Noon to 2:00 PM Eastern:

Ethics and Professionalism Credit:          0.5

Skills Credit(s):                            1.5

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.


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:

Take me out to the ball game, take me out the crowd…

And so goes the rest of the song that most Americans have committed to memory. Written in 1908, the most famous words in baseball were inspired by an invitation to a New York Giants game. The Giants are gone, but the lives on every night in parks across the country.

It is also “sung” in Canada too, but in Toronto it follows a bit a peculiar tradition.  The seventh inning stretch is extended in the 416 by a local ditty known as “Ok, Blue Jay.”  I’m not going to sugarcoat it for you, it is mildly disturbing while being mildly amusing at the same time.  The folks at the Blue Jays games sure do seem to love it, though, so who am I to criticize. 

As for anything relevant this week, we are also mildly disturbed by the Fourth Department’s decision in Olivieri.  In it, the Court appears to adopt a duty to defend style analysis for a trade contract/indemnity provision. In essence, if the indemnity provision is broadly worded, a party may owe indemnification based solely upon the allegations in the Complaint.  Respectfully, we are not so sure that there is an underlying “duty to defend” in an indemnity provision and are troubled the Appellate Division blending the lines between trade contract obligations and insurance principles.  If the circumstances of a claim are proven to trigger an obligation to indemnity (which includes attorneys’ fees), by all means that risk can be properly transferred.  That said, indemnity contracts should be based upon what’s proven, not what’s alleged.  

That’s it for this week. 

Steven E. Peiper

[email protected]


Sharing or Stealing the Wealth? - 100 Years Ago:

Times Herald
Olean, New York
19 Aug 1922


Will Filed in Probate to Be First
Step In Hard Fought Legal

(By the Associated Press)

SAN FRANCISCO, Aug. 19 - The will of Mrs. Teresa Bell listing property valued at $904,000 in which she disclaims five men and women as her children was on file in probate court today. James M. Wilkens was named executor. The filing it is believed, is the first step in what may prove to be a hard-fought legal battle in which one and probably two of the children will contest disposal of the property and statements as to their parentage.

Mrs. Muriel Bell Poster of Hollister, Calif., one of the five who had always believed themselves to be the child of Mrs. Bell announced that she would contest the will.  In a statement Mrs. Sam Washington, an aged negress, said that she was present at the birth of the children, and there was no doubt they were the offspring of Thomas and Teresa Bell.

Mrs. Washington said she nursed all the children and that there was no doubt Mrs. Bell was their mother.


Wilewicz’ Wide-World of Coverage:

Just a quick missive this week, as summer rolls along. Things are finally starting to cool a little and the hint of Fall is in the air. I’m not nearly ready for back-to-school, so at our house we are trying to stretch the lazy days of summer as much as we can. Our usual sleeping in has been punctuated by the roofing/gutter contractors that finally arrived after months of delays, but apart from that, things are indeed rolling right along.

This week, once more the Second Circuit did not address any coverage decisions of note. I’m sure that there are plenty in the pipeline and we are gearing up for a busy Autumn. Until then...

See you in September!

Agnes A. Wilewicz

[email protected]


Confinement For a Cigarette – 100 Years Ago:

Buffalo Evening News
Buffalo, New York
19 Aug 1922


KANSAS CITY, Aug. 19 - Smoking in public cost Mary Helm, 35 years old, a fine of $500 and a sentence of six months in jail here today.

She was arrested while smoking a cigarette in a park here last night.

“Aw, judge have a heart,” Mary pleaded when arraigned in Municipal court here. “My mother doesn’t know I smoke, and I have to sneak out to have a cigarette.”  “But women should not smoke in public,” Judge John T. McCombs replied sternly.  “Why not?” Mary defended. “They are doing everything else we do. Shouldn’t they do that?”  “You are fined $500 and sentenced to six months in jail,” was the court’s only comment.

The technical charge was vagrancy.


Barnas on Bad Faith:

Hello again:

Unfortunately, our Firm softball season has come to an end, as a shorthanded HF squad fell to the DA last week.  I am sorry to see the softball season go.  We had great participation this year and had a lot of fun.  We will be right back at it next year.

This weekend, I am going to my first ever NASCAR race at Watkins Glen.  I started watching a lot more auto racing during the pandemic when I watched the Drive to Survive F1 documentary on Netflix (highly recommended) and when NASCAR was the first sport back.  I have gotten into it way more than I would have ever expected.  I will be rooting for the old guy Kevin Harvick to produce his third straight win on Sunday in the Finger Lakes.  I can’t wait.

I have a Michigan case from the Sixth Circuit in my column this week.  The insured made a voluntary payment to settle a dispute prior to a lawsuit being commenced.  The court found that the insurer could not have acted in bad faith in the absence of litigation, and that any obligation to the insured under the policy was barred by the voluntary payment. 

Brian D. Barnas

[email protected]


Beer is in the Clear - 100 Years Ago:

The Kingston Daily Freedom
Kingston, New York
19 Aug 1922


Mayor Authorizes Sale of Beer and
Ale as Substitute for Buggy
Water, but Beer Must Be Real.

By Telegraph to The Freeman.


Johnstown, Pa., Aug. 19. - Every eye, or most of them, in this city was today turned in the direction of the saloons which Volstead’s law has not yet put out of business by starvation. Mayor Joseph Cauffel, having drawn a few bugs and worms out of the faucet at his home, has issued an edict that the city’s water is dangerous to the lives of the inhabitants and as a remedy he has officially announced that all the saloons can go as far as they like selling beer. The only proviso the mayor makes is that the beer be real goods, no home brew or near beer stuff. Drug stores have been advised that they can go the limit selling ale if it’s cold.

The mayor positively prohibits sale of moonshine and all adulterated beverages. It must be genuine stuff or nothing.

The city’s motorcycle police squad was turned into a bunch of nimble Paul Reveres, flying about town notifying the saloon men to get busy. Soon there was a horde of anxious barkeeps at city hall anxious to ascertain if the mayor was kidding or was, he serious. He avowed he was most serious.

So joyful are the hotels that have sworn to chase all the bootleggers out of the city.  Unofficial reports this morning said beer was being sold.  Saloon men are a bit cautious, fearful prohibition sleuths will put an end to the mayor’s popular scheme.


Kyle's Construction Column:


Kyle A. Ruffner

[email protected]


You’re Dead to Me - 100 Years Ago:

The Brooklyn Daily Eagle
Brooklyn, New York
19 Aug 1922

Wife Reported Dead 20
Years Ago, Reappears;
Husband Repudiates Her

(By Cable to The Brooklyn Daily Eagle
and Phila. Ledger; Copyright, 1922.)

London, Aug. 19—Forty years ago David Pulford’s wife was sent to an asylum and twenty years later Pulford was informed that she was dead, but today the magistrate at Bungay, Norfolk, decided that the woman who appeared before him is Pulford’s wife and that he would have to pay maintenance despite the fact that he reputed the complaint.

Pulford acknowledged marrying Emma Emerson in 1888, but insisted the woman in court was not she, and said in his own behalf that he had visited his former home every year, but not until now had he seen the woman who said she was his wife.

The woman said she had been waiting for her husband to come to her, and the magistrate seemed puzzled as to his verdict until the woman’s sister swore that Pulford was the same man her sister married because of a peculiarity in his gait, which she recognized when he was made to walk across the court.


Fleming’s Finest:

Hi Coverage Pointers subscribers,

This week, I was doing legal research on a very specific legal question when I heard that the perfect case had recently been featured in Coverage Pointers. It was a surreal moment. The moral of the story is that Coverage Pointers is cool and essential reading for practitioners everywhere*.

This week’s case comes from the South Carolina Supreme Court. The Supreme Court considered whether the presence of COVID-19 in or near properties and/or related governmental orders constituted “direct physical loss or damage.” The Supreme Court held that the presence of COVID-19 and the corresponding government orders prohibiting indoor dining did not fall within the policy’s trigger language of “direct physical loss or damage.” If you are surprised, then you must be new to this publication.

Sadly, firm softball season is over after making it to the playoffs, but Team HF will be living large at Sahlen Field this week for our end of summer party.

Catch you later,       

Katherine A. Fleming

[email protected]

*This cover note is sponsored by Hurwitz Fine (just kidding—it was actually super helpful).


Reconciliation With Russia - 100 Years Ago:

The Brooklyn Daily Eagle
Brooklyn, New York
19 Aug 1922


Russia Would Resume Friendly
Trade Relations


(By Cable to The Brooklyn Eagle and
Phila. Ledger; Copyright, 1922.)

Peking, Aug. 19—Although the Soviet representative, M. Joffe, remains confined to his house with illness, your correspondent learns that Russia’s negotiations with China will be directed toward a resumption of friendly trade relations.

Russia’s trump cards are the fact that she is virtually in control of Mongolia and her vested rights in the Chinese Eastern Railroad. About 2,000 Soviet troops are now in Mongolia, which claims to be an independent republic, and which has exchanged diplomatic representatives with Moscow. The Russians entered Mongolia in 1920 for the purpose of suppressing Gen. Von Engern Sternberg and other Czarist leaders and have ever since continued in occupation.


Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

I miss our dog, Colby. He was a beloved member of our family and a constant from the day we picked him up from the shelter. He was there for the purchase of our home. He was there for our marriage. He was there for the birth of our boys. He was there for me through law school and the bar exam. He was there. We gave him our love, through hugs, handshakes, hardware (both knees), and ultimately heaven.

I have shared this many times with others that have lost pets, but now, more than ever, it hits home:

Just this side of heaven is a place called Rainbow Bridge.

When an animal dies that has been especially close to someone here, that pet goes to Rainbow Bridge. There are meadows and hills for all of our special friends so they can run and play together. There is plenty of food, water and sunshine, and our friends are warm and comfortable.

All the animals who had been ill and old are restored to health and vigor. Those who were hurt or maimed are made whole and strong again, just as we remember them in our dreams of days and times gone by. The animals are happy and content, except for one small thing; they each miss someone very special to them, who had to be left behind.

They all run and play together, but the day comes when one suddenly stops and looks into the distance. His bright eyes are intent. His eager body quivers. Suddenly he begins to run from the group, flying over the green grass, his legs carrying him faster and faster.

You have been spotted, and when you and your special friend finally meet, you cling together in joyous reunion, never to be parted again. The happy kisses rain upon your face; your hands again caress the beloved head, and you look once more into the trusting eyes of your pet, so long gone from your life but never absent from your heart.

Then you cross Rainbow Bridge together....

Author unknown...      

On a more positive note, this week marks the end of my oldest son’s first summer camp. Eight weeks later, he has gained remarkable confidence socially and experienced much of what WNY has to offer. The next chapter is Kindergarten, which I know will be the next of many wild rides to come. Onward.

For this week’s column, I dug into the old From the Filings Cabinet segment (because what else was there to write about). Turns out, DFS filing disapprovals can be summed up in a single line these days, without further comment. So, I chose to provide my comments (sheer speculation really) on a recent disapproval, exploring why an earned premium endorsement might have run afoul of Article 23 of the New York Insurance Law. Email me and let me know if you think I was on the right track (or way off).

Until next time,

Ryan P. Maxwell

[email protected]


Insurance Propaganda – 100 Years Ago:

Rutland Daily Herald
Rutland, Vermont
19 Aug 1922

This advertisement is published by the following Agencies of oldline stock Insurance Companies


There is nothing mysterious about your insurance policy. It is merely a contract under which you agree to pay the insurance company a certain premium in return for its pledge to make good in the event of loss.

Like any other contract, the insurance company should read carefully. Your insurance agent should be questioned concerning it just as he should be consulted upon every point that concerns your insurance needs.

Fire insurance is a hazardous business, but you will find that a policy in a strong stock company offers the very broadest protection consistent with your own safety and the financial security of the company.

The insurance policy is the insurance company’s pledge to you, it’s policyholder. If it seems complex, it is only because it was designed to ensure payment of all JUST claims and to guard against the unscrupulous claim that would rob you in the long run by making necessary an increase in rates.


Dishing Out Serious Injury Threshold:

Dear Readers,

I hope everyone is having a great summer so far. August has been a busy month and were nearing the end. Seems like the summer is just flying by but I’m looking forward to some nice weather and family time Labor Day weekend. 

I’ve selected two cases for this issue. In the first, the Appellate Division found that plaintiff’s expert affidavit was insufficient as the expert did not identify how his range of motion was measured and did not include the normal range of motion for reference. In the second, the Appellate Division found that defendant’s expert did not properly substantiate his opinion that plaintiff’s limited range of motion was self-imposed.


Michael J. Dischley


Puzzling Policies – 100 Years Ago:

The Topeka Daily Capital
Topeka, Kansas
19 Aug 1922


Seek Advice from Kansans
Concerning Proper Course.

Nature of Policies and Rates Change
Since Year Ago, Leaving Free Fair
Officials in Quandary.

How about rain insurance? That is a question that is bothering the minds of the Kansas Free State Fair officials now. Many letters have been sent out to prominent citizens asking their opinions on the rain insurance matter. Premiums have increased and the form of policies has changed, leaving the officials in a quandary.

In 1921 a policy was carried, insuring the receipts at the racetrack, day, and night, up to $25,000. The policy covered the entire period of the fair and a full twenty-four hours each day.

Broke Even in 1921.

The policy provided that in case the gross admission receipts at the racetrack, day, and night, fell below $25,000, by reason of rainfall, that the insurance company would pay the fair the difference between the money collected in admissions and the $25,000 face of the policy—provided that said rainfall amounted to at least .50 of an inch. This policy cost 12 ½ percent, or $3,105. In 1920, the fair carried a similar policy at the same cost.

In 1921 rain fell on Monday, Tuesday, and Saturday, amounting to a total of 1.62 inches. The receipts at the racetrack amounted to $21,292, and the insurance company paid the fair the difference between that sum and the face of the policy, or $3,708.


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

Been traveling (for fun) and am now on the road to our home office in Buffalo for   our summer outing a - Buffalo Bisons Baseball Bonanza. I’ll fill you in on all the great Connecticut happenings in our next edition.  

Lee S. Siegel

[email protected]


Tennis Affairs – 100 Years Ago:

The Berkshire Eagle
Pittsfield, Massachusetts
19 Aug 1922


Defeats Former American National

Miss Helen Wills of San Francisco, 16 years of age, at the West Side Club, Forest Hills, NY, yesterday reached heights in the tennis world that seldom are approached by women who have spent the energy of years contesting with stars of the court.

By an exhibition of sheer steadiness, the youthful Californian defeated in straight sets Mrs. May Sutton Bundy of Los Angeles, mother of three children, the only American to win the British women’s championship at Wimbledon, and a former American national champion. She won the American title nearly two decades ago when only a year older than Miss Wills is now. The score was 6-4, 6-3.

The conqueror of Mrs. Bundy today will meet the supreme test of her mounting ambition - Mrs. Molla Bjurstedt Mallory of New York, who has sat on the national throne for five years. Mrs. Mallory toyed yesterday with Miss Leslie Bancroft of West Newton, defeating her 6-9, 6-4.


Rauh’s Ramblings:

On a staycation this week.  See you in two weeks!

Patricia A. Rauh


Fire Insurance Ad – 100 Years Ago:

Albuquerque Journal
Albuquerque, New Mexico
19 August 1922


When you saw the other fellow’s house burn—you thought of your fire insurance.

Did you take out that additional insurance you wanted? We will be glad to have a man call on you and fix it up. Houses for sale, for rent, for lease, many furnished houses for rent or lease.

Phone 610


Storm’s SIU Examen:

Hi friends:

I’m watching our family favorite LA Dodgers (PCT .698) beat the Brewers while I write to you.  Love baseball.  Thursday the entire firm went to support the Buffalo Bisons take on the Lehigh Valley Ironpigs.  It’s the most exciting time of the year as we approach the MLB playoffs. 

One case for you this week: 

  • Court Dismisses Class Action Suits Which Allege Insurer Sold Illusory UM and UIM Stacking Benefit Coverage to Single-Vehicle Insurance Policyholders.

“Every day is a new opportunity.  You can build on yesterday’s success or put its failures behind and start over again.  That’s the way life is, with a new game every day, and that’s the way baseball is.”  ~ Bullet Bob Feller

Talk to you again in two weeks,

Scott D. Storm

[email protected]


Postcard for Protection - 100 Years Ago:

The Chat
Brooklyn, New York
19 Aug 1922

Are Your Insurance
Rates Too High?

Let us examine your insurance pro-positions with but one aim in view, that is to lower the cost to you. Many of our clients are enjoying a reduction of from 10 to 40 per cent. We make no charge for our services. A postcard will start us working for your interest.



585 Nostrand Ave., Brooklyn
Telephone, Decatur 5400


North of the Border:

I am back at work this week after an impromptu long weekend in the Toronto area to visit friends and to watch the WTA National Bank Open.

Love watching professional tennis on TV. It is even better in person. Doubles play was even more fun to watch as you don’t see the hand signals between the players on television. Oh, to be able to deliver my legal arguments with the same flair, precision, and speed in a different court.

This week’s article is about a decision rendered in June as to whether the dispute resolution process that resolves the quantum of a property claim can be halted after it is instituted.

Heather A. Sanderson

[email protected]


Bootleggers Beating the Rap – 100 Years Ago:

The Daily Messenger
Canandaigua, New York
19 Aug 1922


Atlanta, Ga, Aug. 19—Only a few bootleggers in Atlanta are ever caught and of these few, 85 per cent get off with a “small license fee,” according to a report prepared by the commission of civics of the Christian Council of Atlanta and submitted to the Evangelical Ministers’ Association.

The average monthly fine for the month of June in the City Criminal Court, where misdemeanor cases are tried, was $52.85, according to the report, which characterized this sum as a “license fee”.

“What are we coming to?’ the report asks, reciting that in a total of 167 liquor cases disposed of the court during June fines were imposed on 101 and chain gang sentences on nineteen.

Presuming those forfeiting their bonds to be guilty, the report continues, there was only 15 per cent of those found guilty who were punished other than by license fees averaging $52.85.


Headlines from this week’s issue, attached:

Dan D. Kohane

[email protected]

  • Property Owner Failed to Establish that Contractor Did Not Provide Additional Insurance Coverage as Required by Agreement
  • Extrinsic Evidence May be Used, in Certain Circumstances, to Limit an Insurer’s Defense Obligation


Steven E. Peiper

[email protected]

  • Court Finds a Duty to Defend in an Indemnity Provision


Michael J. Dischley

  • Plaintiff’s Expert Findings Insufficient to Raise Triable Issue of Fact.
  • Defendant Expert Failed to Adequately Explain Opinion that Plaintiff’s Limited Range of Motion was Self-Imposed.


Agnes A. Wilewicz

[email protected]

  • All quiet on the Circuit Court front. See you in September.


Brian D. Barnas

[email protected]

  • No Bad Faith Without Lawsuit Against the Insured


Lee S. Siegel

[email protected]

  • Assignment of Insured’s Rights to Contractor Ruled Valid
  • Insured’s Failure to Give Notice or Cooperate Defeats Injured Plaintiff’s Direct-Action Claim


Kyle A. Ruffner
[email protected]

  • Nothing this week.


Ryan P. Maxwell

[email protected]

  • Recent DFS Disapproval Finds Proposed Earned Premium Endorsements Ran Afoul of Article 23 Governing Property/Casualty Insurance Rates

Patricia A. Rauh

  • See you in two weeks.

Scott D. Storm

[email protected]

  • Court Dismisses Class Action Suits Which Alleged Insurer Sold Illusory UM and UIM Stacking Benefit Coverage to Single-Vehicle Insurance Policyholders.


Katherine A. Fleming

[email protected]

  • The Presence of Covid-19 And Related Government Orders Are Not Direct Physical Loss or Damage.


Heather A. Sanderson

[email protected]

  • Once Initiated, a Supervising Court will Not Lightly Terminate the Dispute Resolution Process under the Provincial Insurance Acts which is a Cost Effective and Time Efficient Means to Determine the Value of a Property Insurance Claim. 

We will see you, in September (unless we lose you, to a summer love).  To my wife, Chris, I wish a happy 30th anniversary of our first date (and this is a test to see if she reads the Coverage Pointers cover note, all the way to the end.


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

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

Dan D. Kohane

[email protected]

Agnes A. Wilewicz

[email protected]

Patricia A. Rauh

Dan D. Kohane, Chair
[email protected]

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

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

Steven E. Peiper, Team Leader
[email protected]

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

Dan D. Kohane
[email protected]

Alice A. Trueman

Jody E. Briandi, Team Leader
[email protected]

Diane F. Bosse

Topical Index

Kohane’s Coverage Corner

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

Barnas on Bad Faith

Lee’s Connecticut Chronicles

Kyle’s Construction Column

Ryan’s Capital Roundup

Rauh’s Ramblings

Storm’s SIU Examen

Fleming’s Finest

North of the Border

Dan D. Kohane
[email protected]

08/17/22       Breland-Marrow v. RXR Realty, LLC
Appellate Division, Second Department             
Property Owner Failed to Establish that Contractor Did Not Provide Additional Insurance Coverage as Required by Agreement

Debra Breland-Marrow (“Deborah”) claims to have slipped and fell on ice and water on one of the steps of a staircase inside a building owned and operated by, RXR Realty, LLC (“RXR”), and BEWCO.  She and her husband sued RXR and BWECO and both defendants sued ABM Janitorial Service Northeast, Inc. (“ABM”).

RXR and BEWCO moved for summary judgment dismissing the complaint and on the third-party causes of action for contractual indemnification and to recover damages for breach of contract for failure to procure insurance. RXR and BEWCO claimed that they did not create the alleged hazardous condition or have actual or constructive notice of its existence.

RXR and BEWCO were able to convince the court that they did not create the condition or have constructive notice of it, and they were awarded summary judgment.

With respect to their claim against ABM, "the right to contractual indemnification depends upon the specific language of the contract" The indemnification clause in RXR's contract with ABM required proof of a "negligent act or omission or misconduct" by ABM, and RXR and BEWCO failed to establish, prima facie, that they were entitled to recover reasonable attorney's fees and disbursements regardless of whether ABM was at fault in the happening of the accident.

RXR and BEWCO also claimed that they were entitled to summary judgment against ABM because ABM breached its contract with them by not providing insurance coverage.

Contrary to the contention of RXR and BEWCO, they were not entitled to summary judgment on the third-party cause of action to recover damages for breach of contract for failure to procure insurance. However, RXR and BEWCO did not submit any evidence to show that ABM failed to comply with its obligation to procure insurance naming RXR as an additional insured.

08/10/22       Norman International v. Admiral Insurance Company
New Jersey Supreme Court
Extrinsic Evidence May be Used, in Certain Circumstances, to Limit an Insurer’s Defense Obligation

The high court in New Jersey held that a court might consider evidence outside of the four corners of the complaint to limit the duty to defend. Will it be the start of a trend?  As extracted from the Court’s syllabus:

Generally, to ascertain whether there is a duty to defend, the complaint should be laid alongside the policy and a determination made as to whether, if the allegations are sustained, the insurer will be required to pay the resulting judgment, with any doubts resolved in favor of the insured. There are times, however, when comparing the causes of action in the complaint to the exclusionary clause will not provide an answer as to whether there is a potentially covered claim. That situation occurs “when coverage, i.e., the duty to pay, depends upon a factual issue which will not be resolved by the trial.” Burd v. Sussex Mut. Ins. Co., 56 N.J. 383, 388 (1970). In such cases, “the duty to defend may depend upon the actual facts and not upon the allegations in the complaint.”

The court’s opinion included this language:

Stated differently, if coverage will not be an issue resolved during trial, it may not be sufficient to look only at the complaint because the duty to defend depends on facts not relevant to the causes of action in the complaint.

See pages 14-15 of the decision.


Steven E. Peiper

[email protected]

08/04/22       Olivieri v. Barnes & Noble, Inc.
Appellate Division, Fourth Department
Court Finds a Duty to Defend in an Indemnity Provision

Plaintiff commenced this action seeking to recovery damages for bodily injuries sustained in a slip and fall incident at a Barnes & Noble store.  We are advised that plaintiff’s claims were dismissed on summary judgment, and all that was left is Barnes & Noble’s claims for indemnification against National Janitorial Solutions (“NJS”).  NJS, we are told, was the entity responsible for maintaining the floors at the Barnes & Noble in question.  We are also advised that NJS apparently subcontracted its obligation to an unnamed third-party company. 

In support of its motion for contractual indemnification, Barnes & Noble simply argued that it was entitled protection from NJS where the “claim” and/or “action” arose out of a “breach of the agreement or any warranties made by NJS.”  NJS opposed the indemnity claim by arguing that plaintiff’s claim was dismissed, and therefore it was clear that they did not breach any agreement or warranty relative to the surface of the floor or their work at the store. 

The Appellate Division noted that plaintiff’s claim was premised upon allegedly unsafe and/or slippery floor conditions.  Applying the broad interpretation of “arising out of” the Court ruled that plaintiff’s claims were “originating from, incident to, or having a connection with” NJS’ obligations under the contract.  It mattered not to the Court that there was no finding of negligence, or even that NJS had breached the terms of the contract.  Rather, the Court focused on the allegations in the plaintiff’s Complaint and her Bill of Particulars as support for the indemnity award. 

The Appellate Division did, however, dismiss the common law indemnity claim against NJS. To successfully prove common law indemnity, the movant must establish negligence on the part of the party from whom indemnity is sought. Here, with the Court ruling that NJS had no active negligence (as part of dismissing plaintiff’s claim), there was no basis for a common law claim.

Finally, the Court dismissed Barnes & Noble’s arguments that NJS breached its obligation to procure insurance when it failed to ensure subcontractors named Barnes and Noble as an additional insured.  Here, NJS did procure coverage for itself and Barnes and Noble.  It did not, however, require Barnes and Noble receive additional insured protection as part of the trade subcontract.  Nevertheless, in reviewing the Barnes and Noble/NJS contract, the Court noted that there was no indication Barnes and Noble ever required NJS to ensure subcontractors named Barnes and Noble.  Without an explicit obligation to do so, NJS was under no contractual obligations to ensure additional insured status under the subcontractor’s policy.


Michael J. Dischley

08/10/22       Orcun Dinc v. Jakup Shalesi, et al.
Appellate Division, Second Department
Plaintiff’s Expert Findings Insufficient to Raise Triable Issue of Fact.

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Carl J. Landicino, J.), dated September 28, 2020. The order granted the motion of the defendant Jakup Shalesi for summary judgment dismissing the complaint insofar as asserted against him on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

The plaintiff commenced this action to recover damages for personal injuries that he allegedly sustained in a motor vehicle accident that occurred on March 20, 2016. The defendant Jakup Shalesi (hereinafter the defendant) moved for summary judgment dismissing the complaint insofar as asserted against him on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. In an order dated September 28, 2020, the Supreme Court granted the defendant's motion, and the plaintiff appeals.

The Appellate Division found that defendant made a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. They found that defendant 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 right knee did not constitute serious injuries under either the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d). The defendant also demonstrated, prima facie, that the plaintiff did not sustain a serious injury under the 90/180-day category.

In opposition, the Appellate Division found that plaintiff failed to raise a triable issue of fact. The report of the plaintiff's expert, Peter Wohl, a chiropractor, was insufficient to raise a triable issue of fact, as he failed to identify the method utilized to measure range of motion, and failed in his report to provide the normal range of motion.

Accordingly, the Appellate Division found that the defendant's motion for summary judgment dismissing the complaint insofar as asserted against him was properly granted.

08/10/22       Ahmed M. Almady v. Marissa A. Martinez, et al.
Appellate Division, Second Department
Defendant Expert Failed to Adequately Explain Opinion that Plaintiff’s Limited Range of Motion was Self-Imposed.

In an action to recover damages for personal injuries, the plaintiff Hanin Elhassanin appeals from an order of the Supreme Court, Dutchess County (Maria G. Rosa, J.), dated January 6, 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 Hanin Elhassanin 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 that they allegedly sustained in a motor vehicle accident that occurred on December 29, 2017. The defendants moved, inter alia, for summary judgment dismissing the complaint insofar as asserted by the plaintiff Hanin Elhassanin 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 dated January 6, 2020, the Supreme Court, among other things, granted that branch of the defendants' motion. Elhassanin appeals.

The Appellate Division found that defendants failed to meet their prima facie burden of showing that Elhassanin did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. They found that defendants failed to submit competent medical evidence establishing, prima facie, that Elhassanin did not sustain a serious injury to the cervical and lumbar regions of her spine and to her shoulders under either the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d), as the defendants' expert found significant limitations in the range of motion of these body parts. The expert failed to adequately explain and substantiate, with competent medical evidence, his belief that the limitations were self-imposed. Further, the defendants failed to establish, prima facie, that these alleged injuries were not causally related to the accident. Since the defendants failed to meet their prima facie burden, it is unnecessary to determine whether the opposing papers were sufficient to raise a triable issue of fact.

Accordingly, the Appellate Division found that Supreme Court should have denied that branch of the defendants' motion for summary judgment.


Agnes A. Wilewicz

[email protected]

All quiet on the Circuit Court front. See you in September.


Brian D. Barnas

[email protected]

08/03/22       Trident Fasteners, Inc. v. Selective Insurance Company
United States Court of Appeals, Sixth Circuit
No Bad Faith Without Lawsuit Against the Insured

TFI is an automotive supplier that makes customized screws, bolts, and fasteners.  Selective insured TFI under commercial general liability and commercial umbrella policies.  In October 2018, TFI reached out to Selective for coverage relative to an alleged product defect claim being made by its customers Tenneco and MCS.  After several months of not hearing from Selective, TFI reached out again in February 2019 to inquire if Selective would participate in a resolution.  Selective assigned a new adjuster.

TFI again contacted Selective in April 2019.  On May 10, 2019, Selective denied consent for TFI to settle and instructed it not to engage in any settlement discussions with Tenneco.  TFI did not heed these instructions, and it settled the dispute with Tenneco on June 28, 2019.  Selective contended that it issued a reservation of rights letter on June 25, 2019, which TFI received the same day.  TFI claims it did not receive the letter until after the settlement.  Selective disclaimed coverage claiming that TFI breached the policy by making a voluntary payment.

TFI filed a lawsuit against Selective alleging that it breached the policy and acted in and bad faith.  TFI claimed that Selective violated its duty to investigate, its duty to process insurance claims, and its duty to negotiate settlements.  Selective counterclaimed that it was not obligated to pay the settlement.

The court addressed three separate duties that TFI claimed Selective had violated.  First, the court found that Selective had not violated its duty to investigate because there was no complaint or agency demand letter against the insured to trigger the duty to defend and duty to investigate.  Under Michigan law, the duty to defend and investigate requires the filing of a lawsuit. The court also concluded that the lack of a lawsuit against TFI resolved its claim that Selective violated its duty to process the claim.  Third, the duty to negotiate also requires a lawsuit before a duty to act in good faith arises.  Such duty arises from the control over litigation of claims against the insured exercised by the insurer.  Absent litigation, there is not duty to settle.

Turning to the facts of the case, the court found that there was no complaint or agency demand letter against TFI by Tenneco.   Tenneco never initiated litigation, and as a private entity it could not make an agency demand.  As such, Selective did not owe TFI a good faith duty and could not have breached the policy in the absence of actual litigation against TFI.

Having so concluded, the court held that TFI’s voluntary payment to settle the claim without Selective’s consent was a breach of the policy that barred coverage.


Lee S. Siegel

[email protected]

8/5/2022       Rising Star Roofing, LLC v. New London County Mut. Ins. Co.
Superior Court of Connecticut (Tolland)
Assignment of Insured’s Rights to Contractor Ruled Valid

A Connecticut trial court denied an insurer’s motion to dismiss a breach of contract action, finding that the insured’s assignment of her rights under a homeowners policy to her contractor was not voided by the policy’s anti-assignment provision.

Evelyn Machung’s Vernon, Connecticut home suffered wind and rain damage following a severe October 2019 storm. Her carrier, NLCM inspected the property, estimating the loss at $9,043.66. Machung and Rising Star entered into an Assignment of Insurance Claim and Insurance Benefits agreement pursuant to which Rising Star agreed to repair Machung's property in exchange for Machung assigning Rising Star all of her rights under the insurance claim. Of course, disputes followed as to the actual cost of repair, with Rising Star ultimately charging almost $30,000. NLCM refused to pay above its estimate (revised to $13,000) and Rising Star sued.

NLCM moved to dismiss the complaint, arguing lack of standing and insufficient consideration. NLCM asserted that as a stranger to the insurance contract, Rising Star did not have the right to assert a claim. It also relies on anti-assignment clause in the insurance policy. Rising Star countered that Machung had the right to assign her insurance claim in exchange for Rising Star's promise to repair her property.

The court agreed with Rising Star and denied the motion, finding that Connecticut courts have long accepted post-loss assignments of rights. “[T]he court notes that numerous courts have determined that this provision [anti-assignment clause] is inapplicable to situations such as the one presented here where the assignment takes place after the damage that is the subject of the claim occurs.” The court also found that the assignment contract was sufficiently clear and the promise to repair the property was sufficient consideration for the assignment, in order to vest the court with subject matter jurisdiction. The court, however, did not rule on the enforceability of the assignment contract at the motion to dismiss stage.

8/3/2022 Cleveland v. GEICO General Ins. Co.
Superior Court of Connecticut (Hartford)
Insured’s Failure to Give Notice or Cooperate Defeats Injured Plaintiff’s Direct-Action Claim

Michael Floyd, a GEICO insured, rear-ended Shawn Cleveland. Floyd did not report the accident or the subsequent lawsuit and defaulted. The court entered a $28,600 judgment for Cleveland, which he pursued against GEICO under Connecticut’s direct action statute. The court found that GEICO was prejudiced by Floyd’s breach of contract and, as a result, GEICO had no obligation to defend or indemnify under the auto policy.

GEICO received notice of the accident from Cleveland's insurer, Progressive. GEICO took heroic efforts to contact Floyd. They telephoned ten times, emailed three times, emailed a reservation of rights letter, receiving no response. GEICO sent representatives to Floyd's home but was unable to find or make any contact with him. Finally, GEICO sent a reservation of rights letter via certified mail. GEICO hired a private investigator to locate and communicate with Floyd. GEICO's investigator went to six separate addresses around Connecticut to locate and speak with Floyd. Although the private investigator was able to locate Floyd's brother, the private investigator was unable to make contact with Floyd.

Floyd never provided notice to GEICO or interacted with GEICO in any way regarding the accident. The court found that Floyd breached the policy’s requirements regarding notice and cooperation, prejudicing GEICO. Since Cleveland was subrogated to Floyd’s rights, GEICO had no obligation to pay the judgment.

Kyle A. Ruffner

[email protected]

Nothing this week.

Ryan P. Maxwell
[email protected]


From the Filings Cabinet

08/09/22     DFS Disapproves Commercial Auto Form Due to Article 23
Department of Financial Services
Recent DFS Disapproval Finds Proposed Earned Premium Endorsements Ran Afoul of Article 23 Governing Property/Casualty Insurance Rates


Slim pickings this week, but I have discovered a recent commercial auto form filing rejection from New York’s Department of Financial Services (“DFS”) that I found intriguing, so here it is.

On August 9, 2022, DFS disapproved a form filing because “the proposed forms are in conflict with Article 23 of the Insurance Law.” Intriguing, I know. Mysterious even.

According to the filing carrier, these “proposed forms” were to “be used for specialty risks that require a large deductible plan and specify the claim handling charges that are mutually agreed to by us and the insured.” Therein, “[t]he language clarifies what was previously contained in our financial terms and conditions outside of the policy.” The proposed form went on to indicate that

“The actual premium for ‘claim handling charges’ shall be calculated using the values shown in the Schedule of this endorsement and shall be billed on a basis as mutually agreed to by you and us. These ‘claim handling charges’ are in addition to composite billed premium.


These ‘claim handling charges’ will be considered fully earned and payable when the claim is reported to us. This condition applies even if the ‘insured’ subsequently determines that the claim should not have been reported to us.


‘Claim handling charges’ means a mutually agreed upon charge per claim based on the applicable claim type, to cover the cost of handling the claim through to conclusion.”

“Mutually agreed to by you and us” seems fair to me. So, what went wrong exactly? I have some thoughts.

The purpose of Article 23 “is to promote the public welfare by regulating insurance rates to the end that they not be excessive, inadequate or unfairly discriminatory, to promote price competition and competitive behavior among insurers, to provide rates that are responsive to competitive market conditions, to improve the availability and reliability of insurance and to authorize and regulate cooperative action among insurers within the scope of this article.” N.Y. Ins. Law §2301.

Under N.Y. Ins. Law §2314, and with the above purpose of Article 23 in mind, “[n]o authorized insurer shall . . . knowingly, charge or demand a rate or receive a premium that departs from the rates, rating plans, classifications, schedules, rules and standards in effect on behalf of the insurer, or shall issue or make any policy or contract involving a violation thereof.”

Given the completely uninformed opinion of the man behind this keyboard, who simply had to find something to write for this edition of Coverage Pointers, I would venture a guess that fully earned “claim handling charges” likely depart from most standard rating plans. But what do I know?

Well, I do know that under N.Y. Ins. Law §3428(a), “whenever an insurance contract made or issued in this state is cancelled or otherwise terminated by the insured before the expiration thereof in accordance with the terms of such contract, the earned premium to be retained by the insurer shall be determined by the applicable rate filing, if any, otherwise in accordance with the provisions of such contract.” Thus, provided the filing insurer had an approved rating plan on file with DFS, it is impermissible to calculate an earned premium in a manner that varies from the insurer’s applicable earned premium calculation in its rate filing.

Given it is unlikely that all insureds would “mutually agree[]” with the carrier as to the same “claims handling charges,” I would have to imagine that the only path towards the goal of the carrier in this instance would be to instead make a rate filing with DFS, updating its rating plan with provisions advising as to an acceptable calculation of “claim handling charges” for which premium may be deemed earned.

Maxwell’s Minute: I have certainly seen minimum earned premium provisions in the past. From my limited experience, these provisions are prevalent in policies that are not subject to filings with DFS. Under those circumstances, N.Y. Ins. Law §3428(a) permits carriers to set minimum earned premium within the policy itself “in accordance with the provisions of such contract.” That is not this. This carrier (actually these carriers) were obviously required to make form filings with DFS and, thus, likely required to set rates by way of rate filings. Where a rate filing exists, the approved rate filings provisions as to earned premium (or lack thereof) govern.

This carrier might need to consider a blanket change to the minimum earned premium calculation in its rate filing instead. Assuming such a minimum earned premium calculation was not deemed excessive, inadequate, or unfairly discriminatory, the carrier would be able to rely upon N.Y. Ins. Law §3428(a) to its hearts content following approval of the new rate filing in retaining earned premium (and, of course, returning unearned premium).

Do not get me started on the return of unearned premiums by unauthorized carriers under a premium finance agreement…


Patricia A. Rauh

See you in two weeks!


Scott D. Storm
[email protected]

07/27/22       Jones v. GEICO Choice Ins. Co.
United States District Court, E.D. Pennsylvania.
Court Dismisses Class Action Suits Which Alleged Insurer Sold Illusory UM and UIM Stacking Benefit Coverage to Single-Vehicle Insurance Policyholders.

Plaintiffs proposing to represent classes of similarly situated Pennsylvania single-vehicle insurance policyholders with GEICO, have sued it alleging that GEICO charged them for a stacking benefit in their automobile insurance policies that they could not receive (illusory coverage). GEICO moves to dismiss the complaints which is granted.  The plaintiffs are asking this Court to rewrite the Pennsylvania Motor Vehicle Financial Responsibility Law, which it refuses to do.

The plaintiffs claim that GEICO offered stacked underinsured and uninsured motorist coverage when, based on the information provided to GEICO in their application, GEICO knew or should have known that they were applying for a single-vehicle policy and would not have been eligible to receive stacked benefits under any circumstance.

The Court begins by explaining what insurance stacking is in the first place.  Uninsured motorist coverage ("UM") applies when an insured "suffers injury or damage caused by a third-party tortfeasor who is uninsured."  On the other hand, underinsured motorist coverage ("UIM") applies "when a third-party tortfeasor injures or damages an insured and the tortfeasor lacks sufficient insurance coverage to compensate the insured in full." 

Stacking is the combining of the coverage limits. This can happen in two different ways. First, a single insured can stack coverage limits on multiple vehicles under a single insurance policy (e.g., one person has more than one vehicle insured by GEICO), which is called "intrapolicy stacking." Second, a single-vehicle insured can receive stacked benefits if he is an insured under more than one separate insurance policies that provide stacked UM/UIM benefits (e.g., an insured has a policy and a member of the insured's household has a separate policy covering a different vehicle), which is called "interpolicy stacking." 

The plaintiffs claim that GEICO sold them a single-vehicle policy with stacked uninsured and underinsured motorist benefits but that none of the members of the proposed class:

(1) had another vehicle,

(2) had another insurance policy for purposes of UM or UIM coverage, or

(3) had any other vehicle or insurance policy in their household such that they could have recovered stacked UM or UIM benefits.

In other words, they claim that they were sold stacking coverage from which they could never receive stacked benefits and because the coverage was only "illusory," they allege they suffered an injury in the form of an increased monthly premium payment. GEICO's offer of this coverage, the plaintiffs allege, violated the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL). The plaintiffs claim that GEICO's coverage was illusory and pose six counts: Declaratory Relief (Count I), Return of Premiums (Count II), Unjust Enrichment (Count III), Violation of the Pennsylvania Consumer Protection Law (Count IV), Common Law Fraud (Count V), and Injunctive Relief (Count VI). The Court grants GEICO's motions to dismiss in full.

This Court has jurisdiction of these cases under the Class Action Fairness Act (CAFA), which only requires minimal diversity, an alleged class of at least 100 members, and an amount in controversy over $5,000,000. 28 U.S.C. § 1332(d)(2), (d)(2)(A), (d)(5)(B). The GEICO insurance policies at issue have a choice of law provision stating that Pennsylvania law will apply.

Coverage is illusory "where the insured purchases no effective protection." Stated slightly differently, "[c]overage under an insurance policy is not illusory unless the policy would not pay benefits under any reasonably expected set of circumstances." 

The Pennsylvania Motor Vehicle Financial Responsibility Law requires that insurers provide stacked UM and UIM as the default coverage in Pennsylvania. 75 Pa. Con. Stat. § 1738(a). As the Pennsylvania Supreme Court explained, the "MVFRL makes clear that to effectuate a waiver of UM/UIM coverage, an insurer must provide the insured with a statutorily-prescribed waiver form, which the named insured must sign if he wishes to reject the default provision of stacked coverage."  The MVFRL reflects "the clear intention of the General Assembly to compel insurers to provide stacking coverage absent a valid waiver."  This applies to both multi-vehicle and single-vehicle policies.  Thus, under Pennsylvania law, an insurer must both provide stacking and the chance to waive that stacking coverage, even on single-vehicle policies.

The plaintiffs contend, however, that providing stacking coverage to them, as required by law, means GEICO provided illusory coverage. This argument is based on a statement by Pennsylvania's insurance commissioner, cited by the Pennsylvania Supreme Court in Craley as to why single-vehicle policyholders obtained an actual (meaning not illusory) benefit from stacking coverage:

[S]ingle-vehicle policy holders could obtain a real benefit from the provision of stacking in at least two situations: (1) where the insured is injured in his own vehicle insured with uninsured motorist coverage and is also covered as an insured under another policy providing uninsured motorist benefits, and (2) where the individual is injured in a vehicle other than his own insured vehicle and is an insured under the non-owned vehicle's policy, which also has uninsured motorist coverage (such as an employee’s vehicle).

Relying exclusively on these two scenarios, the plaintiffs argue that they receive no benefit from the first scenario because they are not covered as an insured under another policy, and that they receive no benefit from the second scenario because that scenario has, according to the plaintiffs, been eliminated by the Pennsylvania Supreme Court's later decision in Generette v. Donegal Mut. Ins. Co., 957 A.2d 1180 (Pa. 2008). In other words, the plaintiffs' argument is that the two identified scenarios are the only circumstances in which an insured receives stacking benefits and, they argue, they did not fall within either, thus making their coverage illusory.

GEICO disputes the plaintiffs' understanding of the law, arguing that the plaintiffs' argument fails on its face both because Generette did not do what the plaintiffs argue and because there are other scenarios in which the plaintiffs would have received stacked benefits in the event of an accident.  The Court agrees that the Plaintiffs' legal argument, indeed, suffers from numerous flaws.

The statement that the plaintiffs rely on is quite explicit that the two named scenarios are not the only ones in which a single-vehicle policyholder would receive a stacking benefit. The Court proceeds to disprove through examples the plaintiffs' legal arguments regarding the two (non-exhaustive) scenarios identified by the insurance commissioner.  

To demonstrate that coverage is illusory, the plaintiffs must show that "the policy would not pay benefits under any reasonably expected set of circumstances."  Here, there are numerous reasonably expected circumstances in which the policy would pay stacked benefits.  In sum, the plaintiffs' theory that GEICO provided illusory coverage is not accurate and they have not met their burden to prove otherwise.

Beyond the fact that their coverage was not illusory, the plaintiffs' theory of the case fails for additional reasons. As explained above, the MVFRL mandates that insurers provide stacked coverage as the default coverage in Pennsylvania and also requires that insurers offer an insured a statutorily prescribed waiver to decline this coverage. 

The plaintiffs' theory would invert the current statutory scheme. The current scheme in Pennsylvania is an opt-out scheme—insureds automatically receive stacking coverage unless they waive it. Under the plaintiffs' plan, a single-vehicle insurance applicant who indicates he has no other vehicle and no other members in his household (meaning he is not an insured under any other policy) but who later wants stacked insurance would need to affirmatively contact the insurer and opt into the stacking coverage and the concomitant higher premium. But that is not how the Pennsylvania legislature established the statutory scheme, and the Court "cannot and should not interpose [its] views on public policy for those of the legislature" because the Court's role is to "interpret statutes, not re-write them." 

The Court asserts rhetorical questions to demonstrate that the plaintiffs' solution is not a solution at all. Instead, the plaintiffs' proposal would create a system in which insureds who possibly have (or possibly do not have) stacked coverage in their policy would be required to litigate that their failure to opt in should not preclude coverage. Maybe the plaintiffs' idea for an opt-in system is a policy proposal for the Commonwealth's insurance commissioner, the governor, and the Pennsylvania legislature to decide, not this federal Court. 

Plus, the simplest and most obvious solution is already available. The plaintiffs do not dispute that GEICO offered stacked UM and UIM coverage and also gave them the opportunity to waive that coverage and receive a discount to their premiums. Had the plaintiffs chosen to waive stacking coverage here, they would not be in this predicament. And if their grievance is that the stacking waiver, which insurers are required to provide under Pennsylvania law, does not adequately appraise potential customers of the fact that as a single-vehicle insured they may want to think differently about stacking coverage than a multiple-vehicle insured, that, too, is an issue to take up with the Commonwealth's insurance commissioner, the governor, or the Pennsylvania legislature. 

Having determined that GEICO did not provide illusory coverage to the plaintiffs, Count I for Declaratory Relief must be dismissed.  The Court has determined that GEICO did not provide illusory coverage. Thus, there is nothing for the Court to declare.

Moving to Count II for return of premiums, the return of premiums is a remedy, not a cause of action.  Therefore, this count must be dismissed because it is not a claim upon which relief can be granted.

Likewise, under Count VI, the plaintiffs seek injunctive relief. But the count for injunctive relief must also be dismissed because injunctive relief is a remedy, not an independent cause of action. Unjust enrichment can occur only when parties exchanged a benefit outside of a contract. 

The plaintiffs also claim that GEICO's conduct constitutes unfair and deceptive practices as defined in 73 Pa. Stat. § 201-2(4)(v)(vii) and (xxi) and thus violates the UTPCPL.  The plaintiffs have not alleged that GEICO engaged in any deceptive conduct, as required under the UTPCPL. The plaintiffs have, instead, alleged that GEICO offered them stacking coverage and the ability to waive that coverage, as GEICO was required to do under Pennsylvania law. At base, therefore, the plaintiffs' argument is that the standard language of the policy and certain endorsements (after the plaintiffs had already purchased it) is deceptive because the policy offers a benefit that the plaintiffs claim they did not and could not receive. This argument runs into two separate problems. First, as explained in detail above, the coverage was not illusory. Second, the plaintiffs do not dispute that they were offered the chance to waive this coverage with a statutorily prescribed waiver form. 75 Pa. Cons. Stat. §§ 1738(b), (d). As the Pennsylvania Supreme Court has explained, "[t]his waiver provision has the salutary effect of providing insureds with detailed notice and knowledge of their rights to UM/UIM coverage absent such formal waiver."  Thus, a better argument (though the plaintiffs do not raise it) would be that the language of the waiver provision itself does not sufficiently alert them to the benefits available for single-vehicle insureds who decline to waive stacking. That, however, would not be a claim for a deceptive practice against GEICO, but instead a matter to bring to the attention of the Commonwealth's insurance commissioner, the governor, or the Pennsylvania legislature. Therefore, the Court grants GEICO's motions to dismiss Count IV of the plaintiffs' complaints in full.

Finally, the plaintiffs allege a count of common law fraud against GEICO based on the same claim. To state a claim for common law fraud under Pennsylvania law, the plaintiffs must allege "(1) a representation; (2) which is material to the transaction at hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false; (4) with the intent of misleading another into relying on it; (5) justifiable reliance on the misrepresentation; and (6) the resulting injury was proximately caused by the reliance." 

The plaintiffs' argument fails for a number of reasons. First, this theory of false representation is based on a mischaracterization of Generette, as explained above. Second, the plaintiffs have not suggested any set of facts under which GEICO made these representations knowing them to be false. The plaintiffs' theory rests on a novel reading of Generette—thus, their theory is essentially that GEICO did not read that case as they did. Third, the plaintiffs have not suggested how it would be fraudulent for GEICO to offer stacking and waiver of stacking as is required by Pennsylvania stale law. The plaintiffs' theory would actually require GEICO to affirmatively disregard Pennsylvania law.


Katherine A. Fleming

[email protected]

8/10/2022     Sullivan Mgmt., LLC v. Fireman's Fund Ins. Co.
South Carolina Supreme Court
The Presence of Covid-19 And Related Government Orders Are Not Direct Physical Loss Or Damage.

The United States District Court for the District of South Carolina certified a question of law to the South Carolina Supreme Court. Sullivan Management, LLC operated restaurants in South Carolina and sued to recover for business interruption losses during COVID-19 under a commercial property insurance policy issued by Fireman's Fund Insurance Company and Allianz Global Risks US Insurance Company (“Fireman’s”). The question was:

Does the presence of COVID-19 in or near Sullivan's properties, and/or related governmental orders, which allegedly hinder or destroy the fitness, habitability or functionality of property, constitute "direct physical loss or damage" or does "direct physical loss or damage" require some permanent dispossession of the property or physical alteration to the property?

On March 17, 2020, Governor Henry McMaster issued an executive order prohibiting on-site consumption of food and beverages at restaurants. This order followed the governor's declaration of a public health emergency and coincided with the issuance of "stay-at-home" orders by many localities across the state. Sullivan, which operates several Carolina Ale House establishments in South Carolina, sought coverage from its property insurance carrier for the loss of income as a result of both the presence of the coronavirus in its restaurants and the government-ordered prohibition of indoor dining. Fireman's denied the claim for failure to trigger coverage, and Sullivan filed suit in state court. Fireman's subsequently removed the case to federal court and then filed a motion to dismiss. After the parties submitted briefs on the motion to dismiss, the court certified five questions, which the Supreme Court accepted

Sullivan contended the presence of COVID-19 and associated government orders prohibiting indoor dining constituted "direct physical loss or damage." It asserted the definitions of "physical", "loss", and "damage" warranted coverage, either by the plain language of those terms or alternatively, because the terms are ambiguous. Additionally, Sullivan argued other provisions in the policy, including the communicable disease coverage extension, demonstrated the phrase has a broad interpretation and is not limited to situations involving permanent dispossession of property.

Conversely, Fireman's asserted neither the presence of the coronavirus nor the government shut-down orders constitute "direct physical loss or damage" because that phrase requires "actual" or "discernable" physical damage. Fireman's supported its interpretation that there must be a "physical alteration, destruction, or permanent dispossession of property" by highlighting the policy provision affording coverage during the "period of restoration", which is the time it takes to repair, replace, or rebuild the property. Fireman's contended the restoration provision would be mere surplusage if the phrase in question were construed as broadly as Sullivan requests.

The policy did not define “direct physical loss or damage,” so the Supreme Court looked to the common meaning of the terms. The Supreme Court noted that many courts across the country have addressed this issue. Based on South Carolina law, the contention that a government shut-down order caused direct physical loss or damage is meritless. Although the order prohibiting indoor dining affected Sullivan’s financial well-being, the order was not directly physical. Rather, COVID-19 and the governor’s order caused intangible economic harms since the mere loss of access to a business is not the same as direct physical loss or damage. Further, the presence of virus particles in facilities did not constitute physical loss or damage because the presence of COVID-19 does not constitute a physical loss of or damage to property. The presence of COVID-19 does not alter the appearance, shape, color, structure, or other material dimension of the property.

Because neither the presence of the coronavirus nor the government order prohibiting indoor dining constituted "direct physical loss or damage," the policy's triggering language was not met.


Heather A. Sanderson

[email protected]

06/10/22       King v. Aviva Insurance Company
2022 BCSC 973
British Columbia Supreme Court
Once initiated, a supervising court will not lightly terminate the dispute resolution process under the provincial insurance acts which is a cost effective and time efficient means to determine the value of a property insurance claim. 

Pauline King owned a condo on the 17th floor of an apartment style condo complex located in West Vancouver, British Columbia, between English Bay and the Burrard Street Bridge. Beautiful location. Terrific views. But in April 2019 her peace and tranquility were disturbed by a water leak. Her condo was damaged.

Ms. King instituted an insurance claim under her condo policy issued by Mutual Fire Insurance Company of British Columbia and another claim under the condo corporation’s policy issued by Aviva Insurance Company of Canada, Allianz Global Corporate & Specialty, Temple Insurance Company, and Lloyd’s Underwriters. A dispute broke out over the scope of those repairs and the cost of those repairs.  Ms. King invoked the Dispute Resolution Process under the British Columbia Insurance Act with respect to each claim.

That process is available under the Insurance Acts of all common law Canadian provinces. Some of those Acts call it the appraisal process. After a proof of loss is delivered, either the insured or the insurer can initiate the process, if it is initiated, then the insured selects an appraiser; the insurer does likewise; both agree on an Umpire. This body of three is then sole arbiter of the quantum of the claims. If the appraisers cannot agree, the Umpire decides. The decision, once rendered, is appeal proof, subject to issues such as whether there has been a violation of natural justice.

Appraisers for the insured and the two groups of insurers were appointed. The parties agreed on a method to combine the two dispute resolution processes to avoid duplication of cost and inconsistent findings. Over the next three years, the process proceeded. In the meantime, Ms. King filed a civil claim for damages against the insurers.

However, Ms. King refused to submit her materials to complete the process. She told the insurers she wanted to halt the process and have all issues decided by the Court. When they refused, then, acting for herself, she brought this application for an Order to terminate both Dispute Resolution Processes.

Ms. King’s chief reason to ask for the termination order was that the process was no longer the efficient, cost-effective procedure that it was meant to be and that the issue of the scope of the repairs was a legal issue that the Court must decide. Further, Ms. King’s appraiser had to withdraw, and she was left without representation.

The insurers replied that the process ought to be left to continue; that Ms. King proved during that application that she was capable of presenting written arguments and had detailed knowledge of the facts. The Court refused the application stating

… the DRP has advanced to the stage where all that is left to be done is for the …[insured]… to make her submission and the Umpire to render a decision. In contrast, this action is still in its infancy with no steps taken beyond the initial filing of pleadings. It would be antithetical to the principles of proportionality, efficiency and fairness to require the parties to essentially start all over and engage in a lengthy and potentially expensive court process …I acknowledge that the …[insured]… has lost the services of her designated representative and that she is statutorily barred from acting in that capacity personally. However, I accept the …[insurers’] … position that given the …[insured’s]… knowledge of the facts and issues and the degree of preparation she exhibited on this application, she can likely find someone to stand as even a bare nominee to present her case.

The insured’s through and well-presented argument at this application was her undoing. The insurers must have thoroughly enjoyed delivering that backhanded compliment.


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