Coverage Pointers - Volume XXV No. 1

Volume XXV, No. 1 (No. 648)
Friday, June 23, 2023
A Biweekly Electronic Newsletter

© Hurwitz Fine P.C. 2023
All rights reserved

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

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

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

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


Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.

A special welcome to our 50 new subscribers, who joined our mailing list after participating in Ryan Maxwell’s continuing education presentation last week. He can be reached at 716.849.8900 or by email:  [email protected]

You are reading our cover note.  Attached is the actual issue of Coverage Pointers, our bi-weekly insurance publication.  Back issues of the newsletter can be found on our firm website,  Just click on the newsletter link at the top of that page.  And speaking of Coverage Pointers:


Celebrating 25 Years of Success at Poplar Insulation - Poplar Insulation


Hurwitz Fine P.C. is pleased to provide you with the first issue of Volume 25 of our electronic coverage newsletter, Coverage Pointers.  Since our first issue, on July 8, 1999, 648 issues ago, we have been publishing bi-weekly, with the occasional special edition to announce a breaking development.

With over 3,000 subscribers, from all over the world, we have been proud to provide you with the most up-to-date summaries of insurance coverage decisions from New York, Connecticut, and other locations.

I thank our splendid editorial staff who make certain that they scour the courts for important and relevant decisions and provide you, our loyal and dedicated readers, with the best of the best.

Often imitated, never duplicated, we are here for you.


Congratulations to Heather Sanderson:


We congratulate our friend and Canadian column editor, Heather Sanderson, of Sanderson Law in Alberta Canada on her ascendency to the presidency of the Canadian Defence Lawyers!  A great lawyer providing great leadership.  Reach out to Heather if you need recommendations of Canadian counsel.  She has connections throughout the nation.

Calgary, Alberta, Canada

email [email protected]
tel. 403-837-2508


Landlords and Additional Insureds:

We are seeing a whole lot of cases involving the breadth of additional insured coverage for landlords under tenant-issued policies.  There is a disturbing case reported in my column where a tenant’s carrier, despite a specific exclusion for accidents outside of the rented premises, was held liable to provide AI coverage to a NYC landlord for a sidewalk accident involving a passerby.  Over the next few weeks, it is our intention to craft a longer analysis of the current state of affairs involving this kind of AI coverage tender.

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

Need a mediator?

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

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

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

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

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

Try mediation.


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

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

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

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

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


Peiper on Property (and Potpourri):

I bring you a very important message, and topic for discussion.  You can thank me later. 

June 23rd marks National Detroit Style Pizza Day.  Now, I don’t know if you have ever had Detroit Style (but those of you who know, know).  It is a thick crust, square slice, style of pizza.  Not quite deep dish (think Chicago), but deeper and cheesier than its cousin in Buffalo.  The cheese usually, but not always, extends to the very edge of the piece.  It is also marked by the fact that the sauce is placed on top of the cheese and toppings. 

Totally different than NY Style, and totally worth the experience. 

Ironically, the best Detroit Style Pizza anywhere is from the venerable old pizza parlor named Santucci’s on North Broad Street in Philadelphia.  Philadelphians will argue that it is not Detroit Style, but they are wrong.  It is fantastic, or at least it was 20+ years ago when I resided in the 215.

So be encouraged to find a version of Detroit Style in your respective area code. Unless, of course, you live in and around St. Louis.  I fear your taste in pizza may be irretrievably lost.    

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


Steven E. Peiper

[email protected]

Editor’s Note – it’s also National Pink Flamingo Day and National Pecan Sandies Day.  And if you’re stressed, June 23 is also National Let It Go Day, described as follows:

Let it Go Day, marked annually on June 23, is the perfect reminder for you to stop wasting your energy and time on negative feelings from events in the past and instead strengthen yourself. Everyone at some point in their life has experienced events that they regret or something that hurt them so much that they are unable to get over it. No matter how much time has passed, it feels very hard to let go of those things. But isn’t it time to move on from those negative feelings that are dragging you down?


Patriotism Mandated by Code – 100 Years Ago:

The Morning Call
Allentown, Pennsylvania
16 JUN 1923


Washington, June 15. The code covering proper civilian usage of the American flag and conduct in its presence was adopted at the concluding session today of the conference of national organizations called by the American Legion and a permanent committee was authorized to disseminate it through the country.

Resolutions adopted recommended that each of the more than sixty organizations represented should urge singing of the "Star Spangled Banner" and its singing in all schools and in juvenile organizations as suggested to the conference yesterday by President Harding. State legislatures also were asked to enact uniform laws requiring display of the flag in and over all schools, parks and playgrounds and over other public buildings.

Considerable discussion over what was described as the unpatriotic attitude of a number of teachers and textbooks in public schools resulted in adoption of another resolution demanding that "all persons employed in a public capacity, national, state and municipal whose compensation is paid from public funds be required to pledge allegiance and support to the constitution and respect for the flag of the United States."

Opposition was recorded to proposals for salute of the flag.

Wilewicz’ Wide-World of Coverage:    

Once more on the road and in the air. This time for more court, at least. Tune in to the next edition for more.


Agnes A. Wilewicz

[email protected]


Jury Acquits Allegedly Homicidal Wife – 100 Years Ago:

Buffalo Morning Express
Buffalo, New York
23 JUN 1923
Husband and wife acquitted by jury
in murder of woman’s brother.

Mrs. Creighton is returned to jail to
await another murder trial.
By the Associated Press.

Newark. N.J., June 22—Mrs. Mary Creighton and her husband, John, were acquitted by a jury late today of the murder by poisoning of Charles Raymond Avery, Mrs. Creighton’s brother.
The jury was out but an hour, returning at 4:46 o'clock, to deliver its verdict before a large crowd which had awaited the outcome of the case.
The defendants awaited the verdict with tense Impatience, Mrs. Creighton clutching nervously at her handkerchief. She fell sobbing into her husband's arms when the verdict was read, and it was several minutes before either could recover sufficiently to acknowledge the congratulations of their counsel and friends.
Mrs. Creighton was taken back to Essex County jail to await trial on another indictment charging her with the murder of her mother-in-law, Mrs. John F. Creighton, who is alleged to have been poisoned several years ago. Creighton was freed.
Mrs. Creighton's lawyer said he would seek tomorrow to obtain her release in bail pending her next trial.

Barnas on Bad Faith:

Hello again:

Congrats to our Editor on a quarter-century of Coverage Pointers.  A remarkable accomplishment.  Happy to have been along for the ride for approximately one-third of the journey.  Here’s to many more.

We have reached the time of the year where MLB is the only one of the four major sports leagues in action.  Unfortunately, the Blue Jays are not providing me much joy these days, sitting at 41-35 and 10.5 games out of the AL East division lead (from the sour grapes club: 41-35 would lead the AL Central and the NL Central).  There still is a lot of season left to go, but the division does not seem realistic at this point, and the Wild Card is going to be a battle.  The Jays just are not good enough in their own division or against good teams so far this year, and the depth in the starting rotation is not there.  Hopefully, we have a few deadline moves forthcoming to bolster the roster before the stretch run.

I had a great time at the DRI Bad Faith and Young Lawyers conferences in Charlotte last week.  Congrats to my friend, Brandon McCullough, on chairing an excellent program, as well as everyone else involved in program leadership, planning, and marketing.  The program was such a success that DRI is bringing it back a year early and sending it to Nashville in 2024.  Be on the lookout for more information about that coming soon.

In my column this week I have a bad faith case from the Sixth Circuit where the court applied Kentucky law.  The court dismissed the bad faith claim against GEICO finding that, even if it had delayed unnecessarily in paying the claim, this alone was insufficient to establish bad faith.


Brian D. Barnas

[email protected]


A Butcher, A Landlord, A Brewer Supply, A Bar: No Punchline – 100 Years Ago:

Buffalo Morning Express
Buffalo, New York
23 JUN 1923

Seize 15,000 gallons and
fake labels; arrest four men.

New York, June 22.—Fifteen thousand gallons of denatured alcohol, twelve stills, 29 barrels of wine and thousands of counterfeit labels and revenue stamps were seized by prohibition agents in a raid in West New York, N.J., tonight. Four men were arrested by the dry forces, headed by R. Q. Merrick, division prohibition chief of New York and Northern New Jersey.

All the stills and 5,000 gallons of the alcohol were found in one building. The stills were in full operation, the agents said. A few doors away 10,000 gallons of alcohol were found and was said to have belonged to two men arrested at the first address.

The counterfeit stamps and labels were found in the basement of an apartment house while the wine was seized in a butcher shop.

Lee’s Connecticut Chronicles:

Gone exploring the other side of the Pond. I'll report back in two weeks. 


Lee S. Siegel

[email protected]


Plugging The Holes in The Grand Jury – 100 Years Ago:

Mount Vernon Argus
White Plains, New York

23 JUN 1923
State To Guard Against ‘Leaks’ From

Grand Jury Room in Ward Inquiry
Chambers Declares It Will Be Impossible for Him to Reveal
Testimony Because New Investigation Is to Be Secret.

White Plains, June 13 (By I.N.S.) Deputy Attorney General Wilbur Chambers who will be in charge of the extraordinary Westchester County grand jury when it begins its inquiry into the mysterious shooting of Clarence Peters by Walter Ward declared today, he was going to see that there were no leaks from the grand jury room.

Chambers will have a conference with newspapermen each day the grand jury meets but he made it known it would be impossible for him to reveal any testimony given. He said it would be a secret investigation from start to finish and declined to say whether he would tell the names of witnesses questioned.

The grand jury will be sworn in Monday morning by Supreme Court Justice Wagner of Manhattan.

Kyle's Noteworthy No-Fault:

I hope everyone is doing well. Starting this edition, we have a slight change of pace for my column. From now on, I will be bringing you the latest interesting no-fault decisions in New York.

This week we have two noteworthy no-fault cases. In Sackett v. State Farm, the Third Department considered with the lower court properly denied plaintiff’s request for declaratory judgment, holding that the plaintiff failed to show that she was entitled to further APIP benefits, and that State Farm was not precluded from asserting a lien on the APIP benefits already paid to plaintiff. In American Transit Insurance Company v. Dr. Jong Won Yom, the court considered whether the applicant established entitlement to no-fault compensation for acupuncture treatment service provided to assignor, and whether the applicant provided proof that it submitted its bills for service within forty-five (45) days after the services were rendered.


Kyle A. Ruffner
[email protected]


Choice Clothing Decision Makes Mayor Irritate – 100 Years Ago:

The Buffalo News
Buffalo, New York

23 JUN 1923
Perkins Coatless, Council Undignified

The city council was robbed yesterday afternoon, according to Mayor Schwab when Commissioner Perkins appeared in his shirt sleeves.

“Does he think he is at a picnic?” the mayor remarked to newspapermen. ‘He should have some respect for this body.’

Mr. Perkins peeled off his coat before the council convened.  It was a warm day outside and inside and he anticipated a warm session of the council. He prepared accordingly.

Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers:

My son’s first year of K-12 is in the books, and it was a wild ride. I have found that parenting is often that, albeit in the best way possible. This first year, my son has learned a lot. I can honestly say that I have too. We as parents have many important lessons in store for our children over the span of their lifetime, but I would be remiss if I failed to acknowledge the lessons learned by our children through school, sports, over soft-drinks and snacks with friends, or even merely navigating countless other streets and spots that fill in all the gaps that make our children uniquely themselves. We should not strive to build our children in our image, but rather strive to have our children learn for themselves who they are as individuals. It is our role as parents to give them opportunities to do just that—find and be themselves. Hard to believe I’ll have another entering K-12 in the coming years as well. Simply amazing to watch them grow into themselves, isn’t it?

Shoutout to all the teachers out there! Where would we be without you?

This edition, I have a case from the SDNY discussing the intricacies of seeking declaratory relief in the first-party context under the federal Declaratory Judgment Act.

Until Next Time,


Ryan P. Maxwell

[email protected]


Operator? ... Hello? ... Click – 100 Years Ago:

Daily News
New York, New York
23 JUN 1923

Boston, June 22. A strike of telephone operators throughout all New England called today to be effective next Tuesday.

Rauh’s Ramblings:

On parental leave.               


Patricia A. Rauh

[email protected]


Chi Town Police Get Lesson in Diversity – 100 Years Ago:

Daily News
New York, New York
23 JUN 1923

Chicago, June 22.—Fred G. Thompson, alias Mrs. Francis Carrick, who posed interchangeably as the husband of a woman and the wife of a man, was formally charged with the murder of Richard C. Tesmer in a warrant sworn out by the Chicago police today.

The police, however, have no evidence against the strange "she man" beyond her original identification by the murdered man’s widow.  The warrants followed writs of habeas corpus for Thompson, Frank Carrick, his "husband," and Marie Clark, his "wife." The writs were granted on the ground that the police had deprived them of their liberty for a week without placing any charge against them.

Believing that Marie Clark and Carrick, who is raving at the Psychopathic Hospital after his enforced abstinence from drugs, can shed no further light on the mystery, the police are prepared to let them go.

Storm’s SIU:

Hi Team:

Although my favorite college baseball team, ORU Golden Eagles (2023 season record 52-14), has ended its historic season in the College World Series (1st College World Series appearance since 1978) falling to the TCU Horned Frogs Tuesday 1-6, I am nonetheless happy to report a success for a client at the Appellate Division, Fourth Judicial Department. 

The Appellate Division unanimously affirmed the decision of the Supreme Court that no coverage exists for defective pipes under the unambiguous language of the policy’s Building Ordinance or Law coverage.  Among other things, the plaintiffs failed to identify an ordinance or law which required the replacement of the defective pipes throughout the house. The defective pipes are also precluded from coverage under the policy's exclusions and the Building Ordinance or Law coverage requires there to have been a “Loss Insured” as defined in the policy. 

A complete copy of the Supreme Court decision may be read in my LinkedIn post HERE

Back to rooting for the Dodgers.  Talk to you again in two weeks. 

Little League baseball is a very good thing because it keeps the parents off the streets.”  ~Yogi Berra


Scott D. Storm

[email protected]


He Said; She Said; Jury Says He Gets the Cash – 100 Years Ago:


Democrat and Chronicle
Rochester, New York
23 JUN 1923

Young Women’s Testimony
Fails to Win Verdict

Proceedings in City Court, civil branch, were considerably enlivened yesterday when three socially prominent young women appeared at witnesses in a negligence action brought by Mrs. Hilda Whitney, wife of Frederick M. Whitney, of No. 12 Audubon, street, against Ralph L. Ellis, a truckman. The girls were Miss. Helen Whitney, daughter of the plaintiff; Miss. Melba Gray daughter of Malcolm F. Gray, of No. 96 Chili Avenue, and Miss. Margaret Todd, daughter Libanus Todd, of Rock Beach.

Mrs. Whitney sued to recover $90.45 for damages to her car sustained when her daughter, driving west in East Avenue about 1 o'clock on the afternoon of April 5th collided near Pitkin Street with a truck driven by Ellis. Miss. Whitney contended the truck "suddenly loomed up in front of her" when the driver cut in front to turn into Pitkin Street. She admitted she was busily engaged in shifting gears shortly before the crash.

Gray, 22 years old, testifying in support of her friend, was sure Ellis was to blame. She said she had driven a car herself for ten years, not counting two years' experience with an electric.

"I don't consider that driving," said Miss Gray.

Miss. Gray and Miss. Todd were in the car with Miss. Whitney when the accident happened.

Ellis had a counter claim for $166.71. He said he had about completed the turn into Pitkin Street when Miss. Whitney's car crashed into his truck. The jury saw things his way and awarded him full damages.

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

Summer is finally here, and the dog is not impressed by the heat cutting his golf outings short. Very relatable. He still has plenty of energy to get up to mischief but less to chase golf balls in the sun.

This week’s case comes from the Bluegrass State. The Kentucky Supreme Court found that a final judicial determination of coverage is not necessary prior to filing a third-party tort claim against an insurer. Instead, plaintiffs have the burden of proving that an insurer is obligated to pay to prevail on a bad faith claim.

Catch you later,


Katherine A. Fleming

[email protected]


Cutting, Shaving, and Styling the Demands Ends Strike – 100 Years Ago:

Brooklyn Daily Eagle
Brooklyn, New York
23 JUN 1923

The journeymen barber strike in the Eastern District which has been on for three weeks was settled early today, and the men returned to their chairs.

The boss barbers met in the Royal Palace Hall, 16 Manhattan Ave., last night, and after a long discussion offered the journeymen barbers $32 a week, 30 percent of all receipts over $42 in each chair, and a closing hour of 8 p.m., instead of 9 p.m., on Saturdays. The original demand of the journeymen was for $35 a week, 50 percent of the receipts over $45 a chair, and an 8 o'clock closing hour on Saturday. The journeymen, about 2,000 in number, accepted the offer and the strike ended.

Gestwick’s Greatest:

Dear Subscribers:

Ahhh, a fresh volume. No longer will I have to sift through old editions of CP to find the edition de jour. Well … until we fill this volume up with more coverage-y goodness, that is. Special congratulations to my colleague, Dan Kohane, and the rest of the crew on 25 years of this remarkable newsletter to which I am lucky to be a contributor.

This past fall, another colleague of mine, Brian Barnas, and I penned an article on the implied covenant of good faith and fair dealing, and its routine dismissal when coupled with a separate cause of action for breach of contract. This article appears in the winter edition of the American Bar Association’s magazine called “The Brief.” If you’re a subscriber, head on over to your freshly printed edition for more of Brian and me! If you’re not a subscriber, subscribe, then go!

This week, I have a case about a man who ran over his wife with his car in their own driveway. No, seriously. The couple were each named insureds on a personal auto policy issued by New York Central. The wife made a claim for supplemental spousal liability coverage, which was denied. The insureds contested the denial on the ground that New York Central did not comply with the various notice requirements that such coverage was available, to wit, that the notice: (1) must be contained on the front of the premium notice; (2) in boldface type; and (3) must contain a concise statement explaining supplemental spousal liability insurance and that it is available to the insured for an additional premium. The court upheld New York Central’s denial of supplemental spousal liability coverage, reasoning that it complied with these requirements.

While not necessarily the main point of the case, I should point out that, as of only a few short years ago, New York changed its supplemental spousal liability statute from an “opt-out” regime, to an “opt-in” requirement. For decades, every personal auto policy issued in the State of New York was deemed to include supplemental spousal liability coverage unless the insured took the affirmative step to specifically opt out of it. Now, just the opposite is true—no personal auto policy issued in New York is deemed to include supplemental spousal liability coverage unless the insured specifically purchases the coverage for an additional premium.

That’s all for two weeks. I will be thinking of you all next week when I am in Lake George with my family enjoying the mountainous view and serenity.

Until then,


Evan D. Gestwick

[email protected]


Tribute To One of The OG’s Of Baseball – Who Played his First Major League Game, 100 Years Ago Today:

Oakland Tribune
Oakland, California
05 APR 1966
McQuaid, Ex-Acorn, Dies at 67

Herb McQuaid, 67, a San Pablo resident who pitched for the New York Yankees, Oakland Oaks, and other major and minor league baseball teams, died yesterday morning at the Kaiser Hospital in Richmond.

McQuaid, a native of San Francisco, was with the Oaks of the Pacific Coast League after appearing in 12 games with the Cincinnati Redlegs in 1923 and 17 with the Yankees in 1926. A 6-foot-4-inch right-hander, McQuaid was a teammate of Babe Ruth's and Lou Gehrig's with the Yankees in 1926, when they lost to the St. Louis Cardinals in the World Series.

Since retiring from baseball, McQuaid had been active in old-timers' baseball organizations.  He had been employed as a security guard in San Francisco in recent years, while residing in the Eastbay.

Survivors are a daughter, Mrs. Doris Hutchinson of Fremont, and three grandchildren.

Funeral services are to be at the Grant Miller Mortuary in Oakland at 1 p.m. Saturday.

On the Road with O’Shea:

Dear Readers,

Hope everybody is doing well and is gearing up for the 4th of July. Personally, I will be heading to the Thousand Islands that week for some down time and hopefully some decent fishing.

This week I have a quick read No-Fault case from the First Department where an assignee’s counsel could have received fees, but for the insured’s failure to appear at a policy required independent medical exam.

See you in four weeks,


Ryan P. O’Shea
[email protected]


Insure Against a Smashup – 100 Years Ago:

Mainland Journal
Pleasantville, New Jersey
23 JUN 1923

NOBODY wants to be financially liable for a smash-up. But when two cars collide, the resulting damage must be paid by someone. Provide for
Automobile Insurance
The cost of accidents comes high, much more so than the cost of insurance, which foots the bill, however heavy.
Insure in the Hartford Fire Insurance Company and protect yourself from the many risks to which your car is exposed, such as theft, fire, collision, and property damage. Let this agency recommend the coverage which fills your individual requirements.
Floyd M. Smith
First National Bank Building

Louttit’s Legislative and Regulatory Roundup:

Hello All,

Today’s column notes a bill which was recently introduced to New York’s State legislature that will educate auto policyholders on the benefits of increasing SUM/UM coverage. If passed, it will be interesting to see its effect on both underwriting and claims industrywide. We will keep track of this very important piece of legislation.


Robert P. Louttit

[email protected]


Marriage Bureaus Use Caveman Approach– 100 Years Ago:

Honolulu Star-Bulletin
Honolulu, Hawaii
23 JUN 1923

Women who advertise for husband, 238. Men advertising for wives, 68. That's how the ads run in a recent Issue of the largest matrimonial paper published.

It's not difficult to understand why women outnumber the men three and a half to one. Women are handicapped by convention. They are the sit-back-and-waiters. Men, unrestrained, are the go-getters. (Theoretically, at any rate.)

A man who would take unto himself a wife can look them over and arrange an introduction if one is necessary.  But a woman can't walk up to a man, object matrimony.

Women who advertise in the papers published by matrimonial bureaus naturally "talk up" their charms as selling points facial beauty, form, disposition, popularity, sympathetic instinct.

The men. in their ads, do their heavy talking about the money they have and their prospects. In short, their ability to be a "good provider."

It's the old cave-man system: "Come with me, fair damsel; I have a rainproof cave, a nice warm fire, and I can fetch in plenty of meat and lick all comers."

Rob Reaches the Threshold: 

Hello Coverage Pointers Readers:

I’ve got some exciting news to share since our last installment – I shot my best round ever over this past weekend. I put together an 80 (+8).  However, it was somewhat bittersweet, because after a great birdie on hole 17, my par putt on 18 went begging past the cup, which would have given me the elusive sub-80 score we all strive for. Thus, the grind to break 80 continues…       

For this Coverage Pointers edition, I did not have to look far for a wonderful Appellate Division decision on serious injury. My colleague, Hurwitz Fine’s own member, Brian Webb, scored a solid decision out of the Fourth Department – wherein the Appellate Division reversed the lower court’s denial of numerous branches of defendants’ motion for summary judgment. The matter stems from a motor vehicle accident and subsequent claims of serious injury by plaintiff for six (6) different body parts, pursuant to six (6!) categories for serious injury under Insurance Law § 5102(d). All body parts and 3 of the 6 claimed categories of serious injury survived the motion per the Order of the Supreme Court. However, Mr. Webb wouldn’t let that slide. Appeal was sought, body parts and serious injury threshold categories were challenged, and victory was had.

I hope you all enjoy the read (and shameless plug of my colleague’s great legal work).


Robert J. Caggiano

[email protected]


Consider Your Peace of Mind – 100 Years Ago:

The Berkshire Eagle
Pittsfield, Massachusetts
23 JUN 1923

The Price You Pay
for Fire Insurance

Is almost nothing when you consider the protection you have and the peace of mind which you have as well.

There is an opportunity of reducing that cost however and many men have been doing: it for many years with MUTUAL insurance.

This has been a Pittsfield institution since 1835 and last year our dividend was 25%.


Pittsfield, Mass.

North of the Border

I am just back from the Canadian Defence Lawyers (CDL) Annual General Meeting that took place at a resort just north of Toronto. This was a significant event as it marked the 25th Anniversary of this organization. On a personal note, it marked my rise to the position of President for a one-year term. An honour such as this did not seem to be in the cards four decades ago when I graduated from law school and started my career. The year will go by in a flash, I am sure.  I will do my best to keep the good ship CDL on course. Here’s hoping for favourable winds.

I was slammed back to reality by attending a two-day hearing on a file that I am monitoring, causing me to compartmentalize the multiple lives I will be living over the next 12 months.

All is quiet in the Canadian courts as it comes to insurance coverage. I have taken this opportunity to write a piece on the third-party liability of the Canadian private sector for the loss of personal private information due to data breach. Enjoy.


Heather A. Sanderson

Sanderson Law, Calgary, Alberta

[email protected]


Headlines from this week’s issue, attached:


Dan D. Kohane
[email protected]

  • Yet Another Sidewalk Case, Where the Tenant’s Carrier Was Held Obligated to Defend the Landlord Despite a Specific Exclusion for Accidents that Occurred Outside of the Leased Premises.  Thousands Flee

  • Commercial Landlord Not Free from Negligence.  Insufficient Proof to Establish that Tenant had Legal Obligations to Member of Public for Sidewalk Injuries.  However, Landlord Proves that Tenant Failed to Procure Promised Insurance Because Tenant Failed to Offer Policy into Evidence

  • Overbroad Indemnity Agreement in Construction Agreement Struck Down under GOL 5-322.1.  Coverage Denial for Additional Insured Coverage Should Lead to Declaratory Judgment Action Against Carrier, Not Lawsuit Against Party that Promised Insurance for Breach of the Agreement


Steven E. Peiper

[email protected]

  • Court Upholds Supreme Court Decision Denying Declaratory Judgment But Holds the Lower Court Should Have Determined the Plaintiff’s Motion was Premature.


Agnes A. Wilewicz

[email protected]

  • Planes, Trains, and Automobiles!


Brian D. Barnas

[email protected]

  • Mere Delay in Payment, Even if Substantial, is Alone Insufficient to Establish Bad Faith under Kentucky Law


Lee S. Siegel

[email protected]

  • Gone exploring the other side of the Pond. I'll report back in two weeks. 


Kyle A. Ruffner

[email protected]

  • Court Upholds Supreme Court Decision Denying Declaratory Judgment but Holds the Lower Court Should Have Determined the Plaintiff’s Motion was Premature.

  • Court Denies Petition to Vacate No-Fault Master Arbitration Award, Affirming Cross Petition to Confirm the Award and Holding the Claimant is Entitled to Attorney’s Fees


Ryan P. Maxwell

[email protected]

  • Court Dismisses Carrier-Filed First-Party Declaratory Judgment Action Absent Prospective Focus on Threat of Future Damages


Patricia A. Rauh

[email protected]

  • On parental leave


Scott D. Storm

[email protected]

  • No Coverage for Defective Pipes under Building Ordinance or Law Coverage


Katherine A. Fleming

[email protected]

  • Final Judicial Determination of Coverage not Necessary Prior to Filing a Third-Party Tort Claim Against an Insurer


Evan D. Gestwick

[email protected]

  • Insureds Must “Opt-in” to Supplemental Spousal Liability Coverage; No Longer “Opt-out”


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

[email protected]

  • Insured’s Failure to Submit to Independent Medical Exam Dashes Recovery of No-Fault Assignee’s Attorney’s Fees


Robert P. Louttit

[email protected]

  • New Proposed Assembly Bill Regarding the Inclusion of SUM Benefits, Notice Requirements, and More


Robert J. Caggiano

[email protected]

  • Denial of Numerous Branches of Defendants’ Motion for Summary Judgment Reversed Where Defendants Met Their Burden Showing Plaintiff Did Not Sustain a Serious Injury Under Various Categories of § 5102(d) to Multiple Claimed Body Parts 

Heather A. Sanderson
Sanderson Law, Calgary, Alberta

[email protected]

  • Two Canadian Appeal Level Decisions, One in 2022 and the Other in 2023, Have Substantially Closed the Door on the Likelihood of Cyber Third-Party Liability Risk, Endorsing the View that a Business that has Been Hacked was the Victim of a Crime, and is Not Liable for the Data Theft.  Businesses May Still Be Liable for the Loss Based on a Breach of Contract or Statutory Liability


Enjoy the Fourth of July and Canada Day.  You need us?  We’re here.




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]


Evan D. Gestwick

[email protected]

Dan D. Kohane, Chair
[email protected]

Steven E. Peiper, Co-Chair

[email protected]

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Scott D. Storm

Brian D. Barnas

Eric T. Boron

Robert P. Louttit

Ryan P. Maxwell

Patricia A. Rauh

Diane F. Bosse

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea

Steven E. Peiper, Team Leader
[email protected]

Michael F. Perley

Scott D. Storm

Brian D. Barnas


Dan D. Kohane

[email protected]

Alice A. Trueman


Jody E. Briandi, Team Leader
[email protected]

Diane F. Bosse

Topical Index

Kohane’s Coverage Corner

Peiper on Property and Potpourri
Wilewicz’s Wide World of Coverage

Barnas on Bad Faith

Lee’s Connecticut Chronicles

Kyle’s Noteworthy No-Fault

Ryan’s Federal Reporter

Rauh’s Ramblings

Storm’s SIU

Fleming’s Finest

Gestwick’s Greatest

On the Road with O’Shea

Loutit’s Legislative and Regulatory Roundup

Rob Reaches the Threshold

North of the Border


Dan D. Kohane

[email protected]


06/21/23       1416 Coney Island Realty, LLC v. Wesco Insurance Company

Appellate Division, Second Department

Yet Another Sidewalk Case, Where the Tenant’s Carrier Was Held Obligated to Defend the Landlord Despite a Specific Exclusion for Accidents that Occurred Outside of the Leased Premises.  Thousands Flee

Wesco Insurance Company (“Wesco”) insured the leased premises pursuant to a commercial general liability policy.  1416 Coney Island (“Coney Island”) was the named insured on the policy, and the owners were listed as additional insureds.

Wesco was notified of the underlying action upon its receipt of the complaint on March 8, 2017. AmTrust, on behalf of Wesco, disclaimed coverage as to the owners, relying on a provision in the policy excluding coverage as to the owners for liability for bodily injury “that is not sustained within that part of the premises leased to [Coney Island],” and conditionally disclaimed coverage as to Coney Island only if it was determined that the accident occurred on the sidewalk abutting the adjacent premises, rather than on the sidewalk abutting the leased premises.

Coney Island commenced this action, among other things, for a judgment declaring that Wesco is obligated to defend the owners in the underlying action and to indemnify the owners in the event the underlying claims are determined to arise out of an occurrence on the sidewalk in front of the leased premises and are not determined to have arisen out of a duty imposed on the owners by statute, ordinance, or law. Additionally, a judgment was sought declaring that Wesco is obligated to indemnify Coney Island in the underlying action if liability arose from an occurrence on the sidewalk in front of the leased premises, and to reimburse the owners and Coney Island for legal fees and expenses they incurred in defending the underlying action.

An insurance carrier’s duty to defend “arises whenever the allegations in a complaint state a cause of action that gives rise to the reasonable possibility of recovery under the policy.  If any of the claims against an insured arguably arise from covered events, the insurer is required to defend the entire action” (id. At 264 [internal quotation marks omitted]). “If the allegations of the complaint are even potentially within the language of the insurance policy, there is a duty to defend”.

Here, Wesco failed to establish, prima facie, that it has no duty under the subject policy to defend the owners in the underlying action. The owners’ potential liability in the underlying action arose out of their ownership, maintenance, or use of the leased premises, as the sidewalk was necessarily used for access in and out of the leased premises. Contrary to Wesco’s contention, it failed to establish, prima facie, that the sidewalk was specifically excluded from coverage under the policy, pursuant to a provision excluding coverage as to the additional insureds for liability arising from injury not sustained within the leased premises.

Moreover, Wesco failed to establish, prima facie, that it has no duty to indemnify the owners and Coney Island. Here, the duty depends upon the extent to which the negligence of the owners and Coney Island contributed to the injuries of the injured plaintiff in the underlying action.

Editor’s note:  This was a “passing wayfarer” case, the individual was not using the sidewalk to enter the leased premises.  Why can’t an insurer exclude those claims?


06/13/23       Heredia v. C.S. Realty Associates LLC

Appellate Division, First Department

Commercial Landlord Not Free from Negligence. Insufficient Proof to Establish that Tenant Had Legal Obligations to Member of Public for Sidewalk Injuries.  However, Landlord Proves that Tenant Failed to Procure Promised Insurance Because Tenant Failed to Offer Policy into Evidence

Plaintiff alleges that she slipped and fell on oil on the sidewalk in front of the property owned by C.S. and managed by Sutton. E&O was the commercial tenant occupying the ground floor of the building. It is undisputed that the oil was from a nearby food vendor cart.

The court correctly denied property defendants summary judgment dismissing the complaint because they failed to make a prima facie showing that they did not have constructive notice of the oily condition that caused plaintiff’s accident The testimony of E&O’s owner regarding E&O’s general sidewalk maintenance procedures, by itself, was insufficient to satisfy their burden (). Further, Sutton is not relieved of liability as a matter of law, as the record is unclear as to whether Sutton, as the property manager, had undertaken obligations with respect to the sidewalk that entirely displaced defendant C.S.’s statutory duty to maintain the sidewalk in a reasonably safe condition under Administrative Code of City of NY § 7-210.

It is clear, however, that E&O obligations with respect to the maintenance of the sidewalk pursuant to its lease were not so comprehensive and exclusive as to have displaced C.S.’s statutory duty. Without entirely displacing the owner’s duty, E&O’s obligation under its lease to clean the sidewalk did not create a legal duty to plaintiff, and absent a showing that E&O created or exacerbated the dangerous condition or made special use of the sidewalk, the court correctly granted E&O summary judgment dismissing the complaint against it.

Supreme Court correctly denied property defendants’ summary judgment on their crossclaim/third-party claim for contractual indemnification. Although plaintiff’s accident occurred on the sidewalk and not the demised premises, which falls the scope of the indemnification provision in its lease, property defendants failed to show prima facie that an act or omission of E&O caused the hazardous condition and their own freedom from fault.


06/09/23       Clyde v. Franciscan Sisters of Allegany N.Y., Inc.

Appellate Division, Fourth Department

Overbroad Indemnity Agreement in Construction Agreement Struck Down under GOL 5-322.1.  Coverage Denial for Additional Insured Coverage Should Lead to Declaratory Judgment Action Against Carrier, Not Lawsuit Against Party that Promised Insurance for Breach of the Agreement

Plaintiff commenced this negligence action seeking to recover damages for injuries that he sustained when he slipped and fell on an accumulation of snow and ice located in a temporary parking lot used by workers on a remodeling project for a residential building owned by defendant Franciscan Sisters of Allegany, N.Y., Inc. (“Sisters”).  Sisters had retained Kinley Corporation (“Kinley”) to construct the temporary parking lot to be used by workers on the site.

Kinley subcontracted with plaintiff’s employer—New York Commercial Flooring, Inc. (NYCF)—to perform specific work on the remodeling project. Kinley commenced a third-party action against NYCF asserting causes of action for, inter alia, contractual indemnification and breach of the subcontract.

The indemnification provision in the subcontract between Kinley and NYCF plainly obligates NYCF “to indemnify [Kinley] for [its] own acts of negligence,” rendering it “void and unenforceable under General Obligations Law § 5-322.1 Further, the indemnification provision does not contain a savings clause stating that indemnification is required only “‘[t]o the fullest extent permitted by law’ “

Kinley alleged that NYCF breached the subcontract because it had failed to procure insurance for Kinley. The subcontract required NYCF to procure insurance for Kinley, Kinley submitted no evidence that NYCF failed to procure insurance in compliance with the subcontract.  The only evidence Kinley supplied to support its allegation is the assertion in an affidavit from Kinley’s attorney that NYCF’s insurer had not accepted Kinley’s tender for defense and indemnity. In that affidavit, Kinley’s attorney asserts that, in response to its tender for defense and indemnity, he was told merely that “further discovery [was] needed . . . to determine whether Kinley was responsible” for the accident.

Kinley has supplied no evidence establishing that the tender was not accepted because NYCF did not procure insurance for Kinley—it did not even submit a copy of NYCF’s insurance policy. If Kinley believed that NYCF’s carrier was wrong, it should have commenced a declaratory judgment action to challenge that decision.



Steven E. Peiper

[email protected]


06/20/23       Traverez v. LIC Development Owner, LP

Appellate Division, First Department

Strict Construction of Indemnity Agreements Prevents Its Extension to Areas Not Specifically Contemplated

Plaintiff, an employee of Collins, sustained an injury when she fell from a ladder.  At the time of the incident, Collins was performing work pursuant to a contract it had previously entered into with Tishman.  Tishman, in turn, brought a third-party action seeking contractual and common law indemnification from Collins.

As relevant, the indemnification clause provided Collins would indemnify Tishman for claims “brought by tenants ‘or others whose personnel or property may be damaged by [Collins]’.”  Collins argued that the clause was not specific enough to include claims by Collins employees, and the Appellate Division agreed noting that the word “others” referred to third parties insured by Collins or those operating on Collins’ behalf. Because a clear right against Collins for circumstances like this was not explicitly preserved in the contract, the Court refused to extend its breadth

The common law claim was summarily dismissed where the plaintiff did not sustain a grave injury, and, thus, Section 11 of the Workers’ Compensation barred the portion of Tishman’s claim.



Agnes A. Wilewicz

[email protected]

 Planes, Trains, and Automobiles!



Brian D. Barnas

[email protected]

06/07/23       World Heritage Animal Genomic Res., Inc. v. GEICO Indem. Co.

United States Court of Appeals, Sixth Circuit

Mere Delay in Payment, Even if Substantial, is Alone Insufficient to Establish Bad Faith under Kentucky Law

On March 31, 2017, Lucinda Christian was involved in an automobile accident with Laura Wright. Wright caused the accident.  At the time, Christian was driving a truck owned by World Heritage Animal Genomic Resources, Inc. (“WHAGR”).  Wright was driving a car owned by her grandparents.  The Hartford insured Wright’s vehicle for up to $100,000 per person for bodily injury liability.  GEICO also personally insured Wright for up to $25,000 per person for bodily injury liability.  Under the circumstances of this accident, Hartford served as the primary insurer and GEICO was the excess insurer.

In January 2018, Hartford settled with Christian and paid out its policy’s maximum coverage of $100,000.  Later that year, GEICO offered, and Christian accepted, a policy-limits payout from GEICO in the amount of $25,000.

In March 2019, Christian and WHAGR sued Wright and GEICO in Kentucky state court.  They alleged statutory bad faith and common-law bad faith against GEICO.  After the case was removed, Christian and WHAGR voluntarily dismissed their claims against Wright.  Thereafter, GEICO moved for summary judgment on Christian and WHAGR’s bad-faith claims.

Christian had brought a common-law third-party bad faith claim and a KUCSPA statutory bad faith claim against GEICO.  Specifically, Christian alleged GEICO acted in bad faith by falsely denying having received her medical records and other information related to her claim, thus acting fraudulently to obtain a more favorable settlement and delaying payment on her claim until November 2018.

The parties disputed the events that occurred in the months following the accident.  Christian asserted that she sent her medical records by mail to GEICO in December 2017.  Further, she claimed to have mailed GEICO five letters beginning in December 2017 demanding that GEICO pay her the policy limits of $25,000 to address her damages from the accident.  Christian also contended that Hartford’s claims adjuster sent an additional copy of her medical records to GEICO after settling for the policy limits of the Hartford policy.

GEICO denied receiving Christian’s medical records before October 2018 or any of Christian’s demand letters.  GEICO contended that after Christian’s attorney informed it in 2017 about the accident and that Hartford was the primary insurer, it received no further information about Christian’s claim until August 2018.  GEICO further asserted that after it received Christian’s medical records in October 2018, it settled Christian’s claim for policy limits in November 2018.

The demand letters were not considered by the court because Christian had intentionally withheld them from discovery.

The Sixth Circuit affirmed the summary judgment award of the district court.  The court held that Plaintiff could not satisfy the element of a bad faith under Kentucky law requiring that GEICO knew there was no reasonable basis for denying the claim or acted with reckless disregard for whether such a basis existed.  To satisfy this element, a plaintiff is required to show that the insurance company’s conduct was outrageous and caused the plaintiff actual damage.  The alleged conduct must amount to more than negligence and requires proof of intentional conduct or reckless disregard of the rights of an insured or claimant.

Here, the court found no evidence that GEICO engaged in outrageous or punitive conduct.  GEICO settled Christian’s claim ten months after Christian settled with Hartford. And when GEICO made a settlement offer to Christian, it offered policy limits.

Christian argued that GEICO acted in bad faith by lying about not receiving her medical records and delaying paying her claim.  However, Christian did not present any evidence that GEICO’s failure to respond to Christian after allegedly receiving her medical records was intentional or anything beyond mere negligence.  Christian also failed to present any evidence that GEICO’s conduct was part of a scheme to deter her from pursuing her claim or that GEICO repeatedly requested unnecessary information.  While GEICO may have delayed in settling the claim, that delay alone was insufficient to establish bad faith under Kentucky law.



Lee S. Siegel

[email protected]

Gone exploring the other side of the Pond. I’ll report back in two weeks. 



Kyle A. Ruffner

[email protected]

06/15/23       Sackett v. State Farm Mut. Auto. Ins. Co.    

Appellate Division, Third Department

Court Upholds Supreme Court Decision Denying Declaratory Judgment But Holds the Lower Court Should Have Determined the Plaintiff’s Motion was Premature.

In Sackett, the vehicle the plaintiff was driving was rear-ended by a vehicle driven owned by Tak-Wing Tam, causing the plaintiff multiple injuries. The plaintiff was insured by State Farm and had no-fault coverage up to $50,000 and additional personal injury protection coverage up to $50,000. State Farm then settled with the insurance carriers of the driver and the owner of the vehicle for the policy maximums and paid the plaintiff’s medical expenses up to the policy limit of her no-fault coverage. State Farm also paid $7,292.85 of her APIP coverage but refused to pay out any additional money under the APIP coverage and informed plaintiff that it had placed a lien on the $7,292.85 that had been paid out.

Therefore, the plaintiff commenced this action alleging that her settlement was not sufficient to compensate her for her injuries and sought a declaratory judgment that State Farm was required to pay the remainder of her APIP coverage for her medical expenses. In addition, two days later, the plaintiff filed an order to show cause seeking the same relief sought in the complaint. The Supreme Court, treating the order to show cause as a motion for summary judgment, denied the request for declaratory judgment held that the plaintiff failed to show that she was entitled to further APIP benefits, and that State Farm was not precluded from asserting a lien on the APIP benefits already paid to plaintiff.

On appeal, the Appellate court first determined there was no error with the Supreme Court treating plaintiff’s order to show cause essentially as a motion for summary judgment seeking ultimate relief. However, the court stated that a motion for summary judgment may not be made before the issue is joined and, in a declaratory judgment action, all the material facts and circumstances should be fully developed before the respective rights of the parties may be adjudicated.  Therefore, the court stated that, rather than reaching a decision on the merits, the Supreme Court should have determined that the plaintiff was barred from seeking summary judgement and denied the motion as premature.

According to the appellate division, there were issues that needed to be adjudicated, such as State Farm’s right to subrogation, the potion of plaintiff’s settlement that is for pain and suffering, and thus no subject to subrogation, and whether plaintiff has been made whole. Therefore, the court concluded that while denial of the plaintiff’s motion was warranted, the basis should have been that the motion was premature. The appellate division held the complaint must be reinstated and the matter remitted for further proceedings.


06/05/23       Am. Transit Ins. Co. v. Dr. Jong Won Yom     

New York State Supreme Court, Kings County

Court Denies Petition to Vacate No-Fault Master Arbitration Award, Affirming Cross Petition to Confirm the Award and Holding the Claimant is Entitled to Attorney’s Fees

The petition in this matter arose out of a motor vehicle collision in which Mann Joung Chon, the Assignor of the no fault benefits, allegedly sustained injuries to his neck, upper back, lower back, right knee, and right shoulder. The dispute involved fees for five bills for acupuncture treatment services provided to the Assignor from after Dr. Jong Won Yom, the Applicant and the assignee of the no fault benefits, applied for reimbursement for services he provided to the assignor. The Applicant submitted the bills to the insurer for payment, who initially denied two of the bills on the ground that the NYS Worker’s Compensation Board was the proper forum for the claims on the belief that Assignor was working at the time of accident. The assignor also denied some of the bills on the grounds that they were not submitted to it within 45 days from the date that services were rendered. Further, the insurer denied the claims on the grounds that the Assignor’s injuries did not arise out of an insured event based on a lack of causation, based on the examination under oath of the Assignor and the report, dated October 9, 2020, of biomechanical science expert Omid Anthony Bellezza, Ph.D.

At the no-fault arbitration hearing, the issues involved (1) whether the applicant established entitlement to no-fault compensation for acupuncture treatment service provided to assignor; (2) whether the applicant provided proof that it submitted the bill for services rendered from February 19, 2020 through March 30, 2020 within forty-five (45) days after the services were rendered; and whether the insurer sufficiently established that this matter should be referred to the Worker’s Compensation Board for adjudication. The arbitrator agreed with the insurer’s denial based on the applicant’s failure to submit the bill within 45 days of service for the dates of February 19, 21, and 22, but found all other bills were timely submitted. Further, the arbitrator rejected the insurer’s denial based on its contention that the assignor was working at the time of accident. The insurer also argued that the injuries being treated were not caused by the subject motor vehicle accident based on the analysis of a biomechanical expert. However, the arbitrator determined that the insurer’s expert was not qualified to give testimony regarding medical care or treatment. Accordingly, the arbitrator issued an award of $3,798.00 for the services rendered and attorney’s fees in accordance with 11 NYCRR 65-4.6(d) subject to a maximum fee of $1,360. A master arbitrator reviewed the decision and held it had a rational and plausible basis in the evidence, and that there was no reason to disturb the arbitrator’s decision and award.

The court explained that in reviewing the award of a master arbitrator, a court is limited to the grounds set forth in CPLR Article 75, which include the question of whether the determination had evidentiary support, was rational, or had a plausible basis. Already, the Master Arbitrator reviewed the record and award of the no-fault Arbitrator and did not find the No-Fault Arbitrator’s interpretation of the evidence and applicable law pertaining to this dispute to be arbitrary, capricious, or contrary to law. Accordingly, the court held that the evidentiary submissions and legal reasoning offered by the petitioner did not make a prima facie showing that the no-fault Arbitrator’s award or the Master Arbitrator’s award was either arbitrary or capricious. The court held the affirmance was based on sound and well-reasoned analysis and dismissed the petition.

Further, the court granted the cross petition of respondent Dr. Jong Won Yom, confirming the master arbitration award. The court held there was no legal basis to deny the cross petition. CPLR 7510 provides that the court shall confirm an award upon application of a party made within one year after its delivery to him, unless the award is vacated or modified upon a ground specified in section 7511. Dr. Jong Won Yom also sought additional attorney fees for opposing the instant petition and for seeking confirmation of the master arbitrator’s award. The court held an addition fee was appropriate, because where a valid claim for no-fault benefits is overdue, the claimant is entitled to recover his attorney’s fee for services necessarily performed in connection with securing payment of the overdue claim. However, the court held that the doctor must submit an affirmation supporting this request in accordance with the instant action and order.


Ryan P. Maxwell

[email protected]

06/14/23       Starr Indemnity & Liability Co. v. Exist, Inc.

Southern District of New York

Court Dismisses Carrier-Filed First-Party Declaratory Judgment Action Absent Prospective Focus on Threat of Future Damages

Starr Indemnity & Liability Company (“Starr”) provides first-party property insurance for Exist, Inc. (“Exist”), a national apparel wholesaler. Following two independent claims for coverage from Exist, including a theft claim and a water damage claim, Starr filed a declaratory judgment action under the federal Declaratory Judgment Act (“DJA”), 28 U.S.C. §2201, seeking a declaration of non-coverage. In response, Exist moved to dismiss, claiming that relief under the DJA “is improper because it seeks merely to confirm that its denials were proper and does not seek any prospective relief.” Rather, Exist characterized Starr’s claims as being “in the form of an affirmative defense to a breach of contract action” and therefore not suitable for declaratory judgment.”

Quoting from the DJA, the SDNY noted that judicial declarations under the DJA are discretionary and “[i]n a case of actual controversy within its jurisdiction, ... any court of the United States may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought,” but Starr was without an “absolute right” to bring a claim. When exercising discretion, courts consider “the totality of circumstances, including whether declaratory judgment (1) will ‘serve a useful purpose in clarifying and settling the legal relations in issue;’ or (2) ‘afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.’”

In assessing the purpose of the DJA, the SDNY advised that “The fundamental purpose of the DJA is to ‘avoid accrual of avoidable damages to one not certain of his rights and to afford him an early adjudication without waiting until his adversary should see fit to begin suit, after damage has accrued.’ Thus ‘[w]here the insurer’s obligation [if there be one] is ongoing and where the full value of a claim has not yet accrued, a declaratory judgment pursues a useful forward-looking function.’” However, “where the declaratory judgment action seeks solely to determine whether the insurer is liable for losses already accrued and there is no threat of future damages, the action ceases to have a forward-looking function impacting intended future conduct.

The SDNY agreed with Exist that the DJA was an inappropriate procedural mechanism under the circumstances presented. Describing why, the SDNY provides that:

“The declaratory relief that Plaintiff seeks is a declaration that Plaintiff is not liable on already accrued claims, specifically the Theft Claim and the Water Damage Claim. In other words, Plaintiff solely seeks a judgment that it does not have to pay Plaintiff out for its already accrued losses related to these claims. Such relief serves no purpose other than as a method for Plaintiff to preempt Defendant—the natural plaintiff who could sue for damages on a breach of contract theory—from filing their own suit and choosing the forum.”

In support of this finding, the SDNY notes that the suit under the DJA was essentially forum shopping by Starr. “If an insurer may deny coverage through the initiation of a lawsuit, as Plaintiff did here, and if the injurer also is able to bring a declaratory action on a claim that it is not liable for already accrued claims, then the insurer will be able to beat the insured to the courthouse in every case and invoke the general presumption in favor of the first-filed action.”

The SDNY also expressly provides that Starr is “not forced to incur any ‘additional harm’ by waiting for Defendant to initiate suit.” The decision indicates that “[e]ven if Defendant were to wait years to initiate suit, Plaintiff will be in no different position than it is today. It will either have to pay out the money for the two claims to Defendant or it will not have to. Plaintiff does not allege that it would incur any further potential costs in the interim.”

Although the SDNY can discern theoretical future benefit from resolving this matter—through the lens of risk management data points for Exist to change its ways in the future—these benefits are not “of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”

At the end of the day, the SDNY characterized Starr’s invocation of the DJA as an impermissible, affirmative assertion of an affirmative defense to a breach of contract action. “‘[T]he anticipation of defenses is not ordinarily a proper use of the declaratory judgment procedure,’ as ‘[i]t deprives the plaintiff of his traditional choice of forum and timing, and it provokes a disorderly race to the courthouse.’”


Maxwell’s Minute-Entry: The forum-shopping flavor in the decision is interesting, given Exist’s nationwide business and its incorporation and principal place of business in the State of Florida. Exist may have a point that it should choose the forum, where both claims arise from incidents involving apparel either located in or destined for Exist’s Florida warehouse facility.

Relative to federal practice in New York, this decision, and the Second Circuit caselaw it relies upon should be carefully considered by insurers when deciding whether to file their next declaratory judgment action in federal court. The SDNY certainly recognizes a need for relief under the DJA in the third-party context, but the first-party context appears to be a potential minefield relative to coverage lawsuits. In essence, to adjudicate an action under the DJA, the complaint must articulate clearly defined prospective reasons why a declaration is necessary to avoid future damages (e.g., bet the company, business interruption losses come to mind).

There are practical consequences associated with this line of decisions in the Second Circuit. Statutory interest accrues under New York law at a rate of 9% per annum from the date of any breach of contract. By judicially sanctioning delay of the filing of a first-party, breach of contract action, a perverse incentive arises for the insured to do just that—delay—which not only potentially ties up insurance reserves for years, but also increases any ultimate damage award significantly, adding unnecessary and avoidable settlement pressure on questionable claims.

The simple answer might just be to file your next first-party declaratory judgment action in New York state court. The action may not move as fast as federal court, but you certainly would not find yourself waiting six years to adjudicate the issues. The one caveat that comes to mind is where an insurer may have an independent cause of action, such as fraud, where it might be entitled to recover advanced payments negated due to fraudulent conduct of an insured.



Patricia A. Rauh

[email protected]

On parental leave.



Scott D. Storm

[email protected]

06/09/23       Jack v. State Farm Fire and Cas. Co.

Appellate Division, Fourth Department

No Coverage for Defective Pipes under Building Ordinance or Law Coverage

Happy to report a success for a client at the Appellate Division, Fourth Judicial Department, which unanimously affirmed the decision of the Supreme Court that no coverage exists for defective pipes under the unambiguous language of the policy’s Building Ordinance or Law coverage. Among other things, the plaintiffs failed to identify an ordinance or law which required the replacement of the defective pipes throughout the house. The defective pipes are also precluded from coverage under the policy’s exclusions and the Building Ordinance or Law coverage requires there to have been a “Loss Insured” as defined in the policy.  A complete copy of the Supreme Court decision may be read on my  LinkedIn page HERE.



Katherine A. Fleming

[email protected]


06/15/23       Estate of Bramble v. Greenwich Ins. Co.

Supreme Court of Kentucky

Final Judicial Determination of Coverage not Necessary Prior to Filing a Third-Party Tort Claim Against an Insurer

In early 2007, the heirs of Ben and Lillian Salyer (collectively “Salyer Heirs”), filed an action against J. D. Carty Resources, LLC, and Anaconda Drilling of Kentucky, LLC alleging that the defendants had trespassed on their land from 1993 onwards, drilled natural gas wells, and thereby damaged their land and deprived the heirs of mineral royalties. In March 2008, based on surveys, Carty admitted that its wells had drawn natural gas from under the Salyer Heirs’ property and, subsequently, the trial court entered a partial summary judgment as to liability. In December 2008, Carty entered an agreed judgment with the Salyer Heirs to pay $628,000, with payments to be made in monthly installments over the course of 2009. Carty defaulted almost immediately.

Greenwich, who insured Carty during two policy years, had defended Carty under a reservation of rights and without admitting its policy covered the conversion of the natural gas, and it offered to contribute $20,000 to Carty towards payment of Carty’s agreed judgment with the Salyer Heirs. Carty’s counsel, retained by Greenwich, advised the Salyer Heirs’ counsel of Carty’s release in favor of Greenwich, and the Salyer Heirs sought payment by Greenwich of their agreed judgment with Carty. The Salyer Heirs were granted leave to file their fourth amended complaint to assert claims against Greenwich and Bituminous Casualty Company, who insured Anaconda. The claims were for violation of the UCSPA and common law bad faith. Greenwich was aware of the litigation when it was filed in early 2007. In August 2010, Greenwich filed a motion to sever the claims against it from the remaining issues in the case. It reaffirmed that it had been defending the underlying case under a reservation of rights and that before a bad faith claim could proceed, coverage and an obligation to pay had to be established. Thereafter, the parties filed cross motions for summary judgment with respect to whether the policy covered the Salyer Heirs’ claims. In early 2011, the trial court entered an Order granting the Salyer Heirs’ motion for partial summary judgment, holding Greenwich’s policies covered Carty’s actions which formed the basis of the Salyer Heirs’ complaint and subsequent judgment.

Greenwich appealed, but the Court of Appeals granted the Salyer Heirs’ motion to dismiss the appeal as interlocutory. As a result, no final determination was made as to whether the insurance policies covered Carty’s actions and the Salyer Heirs’ claims. On remand, litigation as to the bad faith claims resumed, and Greenwich moved to dismiss the fourth amended complaint, arguing that Kentucky law prohibits a third party from pursuing a claim under the UCSPA to determine coverage and that a third party may not pursue a common law bad faith claim. The trial court granted the Salyer Heirs’ motion in April 2018, and scheduled a jury trial. The jury awarded the Salyer Heirs $834,000 in compensatory damages and $14,300,000 in punitive damages, and the trial court entered a judgment in addition to the order that Greenwich was liable on the original agreed upon judgment between the Salyer Heirs and Carty. Greenwich appealed.

On appeal, the Court of Appeals held that the Salyer Heirs could not pursue their bad faith claims because coverage had not been established when they filed their third-party bad faith complaint.

The Kentucky Supreme Court reversed and remanded, reasoning that the case law cited by the Court of Appeals misapplied the state’s bad faith law since no cases establish a hard and fast rule for when a third-party complaint can bring a bad faith case. The Supreme Court recognized the longstanding rule that tort victims do not have a direct cause of action against a tortfeasor’s insurance company without first obtaining a judgment against the tortfeasor. However, the Salyer Heirs’ claim against Greenwich was their own bad faith claim. Thus, the Salyer Heirs did not need to first obtain a judicial determination of coverage prior to filing a third-party tort claim against the insurer. Instead, they had to demonstrate that the insurer was obligated to pay to prevail on the bad faith claim.



Evan D. Gestwick

[email protected]


06/15/23 Levy v. New York Central Mutual Fire Insurance Company

New York State Supreme Court, County of Westchester

Court Finds This Insured Must “Opt-in” to Supplemental Spousal Liability Coverage; But Change Is Afoot

A woman and her husband were both named insureds on a personal auto policy issued by New York Central. The husband was pulling the insured auto into their driveway when he collided with his wife, who was standing nearby, causing her to sustain a fracture. The wife made a claim under their policy with New York Central for supplemental spousal liability (“SSL”) coverage, which was denied. This suit followed.

New York Central’s denial of SSL coverage was based on the fact that the insureds did not opt into such coverage. From 2003 until recently (more on that in the editor’s note below), New York Insurance Law 3420(g) required insurers to offer SSL coverage to their insureds and provide notice that such coverage was available for purchase.

As is the subject of the instant action, New York Insurance Law 3420(g) and its accompanying regulations provide a great deal of notice requirements that insurers must follow. These requirements are designed to ensure that the prospective insured is placed on adequate notice of the availability of SSL coverage and the fact that, if they do not opt into it, they do not have such coverage. Specifically, 3420(g)(2) requires that “[S]uch notification shall be contained on the front of the premium notice in boldface type and include a concise statement that supplementary spousal coverage is available, an explanation of such coverage, and the insurer’s premium for such coverage.” It also requires that subsequent notices be provided upon renewal. New York Regulation Title 11, Section 60-1.6 clarifies that the requirement that the notice be contained “on the front of the premium notice” means the front of either the declarations page, premium notice, premium bill, installment bill, or any attachment thereto.

Crucial to the disposition of this case is that, if the above notice requirements are not obeyed, the policy will be deemed to include SSL coverage, even if the insureds took no affirmative steps to purchase such coverage. Here, the insureds argued that the notice was not on the front page of the policy but was instead “in the middle of the policy.” However, the court found that the notice complied with this part of the requirements, since the notice was on the first page of various policy notices. The insureds also argued that the notice was deficient because less than all of it was in boldface font, and that the title of the notice was not in all capitalized letters. In rejecting this argument, the court noted that, although the title of the notice was not in all capitals, nor was the entire notice bolded, various parts of the notice were bolded in a way that sufficiently alerted the insured to an important notice. The court also noted that neither the statute nor the regulation requires the entire notice to be in boldface font. Additionally, the regulation provides that an equivalent to the sample notice provided thereby may be used; the court took this to mean that the title of the notice did not necessarily have to be in all capitalized letters.

Editor’s Note: The 2002 amendment to Insurance Law §3420(g) at issue in this case required an insurer to provide such coverage to an insured under a motor vehicle policy where the insured requested the coverage (an “opt-in”) and further required the insurer to provide notice to the insured of the availability of the coverage. While the 2002 amendment created an “opt-in” for those insureds who wanted additional coverage (at additional premium), just last year a new amendment passed. This latest 2022 amendment resulting in the creation of an “opt-out,”  meaning that all policies are now required to provide this coverage (at additional premium) until an insured affirmatively declines such coverage. Although an insurer is still required to notify the insured, such notice now advises that an insured may opt-out from the coverage in writing.

Not married? Requirements are requirements. Ask your broker to opt-out and you may save a buck or two in premium next renewal period.


ON the ROAD with O’SHEA

Ryan P. O’Shea

[email protected]


06/13/23       Matter of American Tr. Ins. Co. v Smart Choice Med., P.C.

Appellate Division, First Department

Insured’s Failure to Submit to Independent Medical Exam Dashes Recovery of No-Fault Assignee’s Attorney’s Fees

In the short decision from the First Department, we look at a No-Fault case involving the breach of policy conditions. Particularly, the provision requiring submittance to an independent medical examination (“IME”).

Here, American Transit moved to vacate a master arbitrator’s award in the favor of Smart Choice totaling $1,211.48 and denied the recovery of attorney’s fees for Smart Choice’s counsel. Smart Choice appealed the vacatur.

In affirming the vacatur of the arbitrator’s award, the court found the insured breached the American Transit policy conditions. Specifically, the condition precedent to coverage that the insured appear for an IME. American Transit established its burden by entering the initial IME letter, a second scheduled IME letter, a third scheduled IME letter, and an affidavit of the medical professional retained to conduct the IME who affirmed the insured did not appear at any of the three scheduled dates.

Notably, the Appellate Division found that if a valid portion of a claim for No-Fault benefits is overdue, pursuant to NY Ins. Law § 5106(a), a claimant may collect attorney’s fees for the services performed on their behalf.



Robert P. Louttit

[email protected]


06/15/23       New York Assembly Bill A07815

New York State Assembly

New Proposed Assembly Bill Regarding the Inclusion of SUM Benefits, Notice Requirements, and More

Bill number A07815 was recently introduced into New York’s legislature that ensures that auto insurance policies that are issued, renewed, or amended include SUM coverage for bodily injury in an amount equal to the bodily injury liability insurance limits of coverage provided under a motor vehicle liability insurance policy unless policyholders explicitly opt-out of the coverage, or opt for lower SUM limits. It also requires notice and information to be given to policyholders in relation to SUM coverage, and a statement strongly recommending SUM coverage, and that failure to provide information in a correct manner shall result in the insurance policy being read to include the maximum supplemental uninsured/underinsured coverage available equal to the liability limits regardless of premiums paid.

Proponents of the bill assert that, currently, many drivers who choose higher liability limits are unaware that they have the option to insure themselves up to the limits of their liability levels, and do not do so.  Subsequently, when they are injured, they frequently learn that they have not exercised the option to protect themselves above the SUM minimum level, though they were protecting the rest of society at a much higher coverage. By automatically including SUM coverage for all policies issued after the effective date of the legislation, the bill will increase SUM coverage statewide, and protect motorists while nevertheless including an opt-out clause and a notice provision to give consumers an informed choice if they do not wish such coverage.

We will monitor this bill and provide updates of its progress in future columns.



Robert J. Caggiano

[email protected]


06/09/23       Sywak v. Grande et al.  

Appellate Division, Fourth Department

Denial of Numerous Branches of Defendants’ Motion for Summary Judgment Reversed Where Defendants Met Their Burden Showing Plaintiff Did Not Sustain a Serious Injury Under Various Categories of § 5102(d) to Multiple Claimed Body Parts 

Defendants, Joseph Dwyer, and Robert Dwyer sought appeal of an Order from Supreme Court, Erie County, which, in part, denied their motion for summary judgment dismissing the complaint against them. Said motion asserted that Plaintiff, William Sywak, did not sustain a serious injury under any of the six categories of Insurance Law § 5102(d) which he alleged [fracture, significant disfigurement, permanent loss of use, permanent consequential limitation of use (PCLU), significant limitation of use (SLU), and 90/180]. The motion also asserted Plaintiff did not sustain economic loss in excess of Basic Economic Loss (“BEL”).

The Supreme Court Order granted the Dwyer Defendants’ motion in part, dismissing claims of serious injury under the fracture, significant disfigurement, and permanent loss of use categories. However, the motion was denied with respect to the remaining three categories of serious injury [PCLU, SLU, 90/180], and denied the BEL argument. Dwyer Defendants’ appeal focused on the denied branches of their motion.

The matter stems from a motor vehicle accident which occurred on September 4, 2018. On that date, Plaintiff was a passenger in a vehicle owned and operated by defendant Barbara Grande, which was rear-ended at an intersection in Evans, NY, by a vehicle owned by Defendant Robert Dwyer and operated by Defendant Joseph Dwyer. Plaintiff subsequently alleged serious injury under the six aforementioned categories of § 5102(d) to his cervical spine, lumbar spine, left hip, left arm, left shoulder, and left leg. Notably, the Supreme Court’s Order denying summary judgment with respect to the PCLU, SLU, and 90/180 categories of serious injury applied to all claimed body parts.

In support of their motion, the Dwyer Defendants submitted Plaintiff’s deposition testimony, his own medical records from numerous providers, and an Independent Medical Examination report. This proffered IME report concluded that Plaintiff did not sustain a significant injury of any kind in the subject accident. Additionally, Plaintiff’s own medical records were devoid of any imaging which showed a fracture and detailed an extensive prior medical history for the Plaintiff’s cervical spine – including prior fusion surgeries. Lastly, Plaintiff conceded at his deposition that he was never placed under formal restrictions by his physician subject to the motor vehicle accident, nor were there any activities which he could no longer do because of the injuries being claimed.

In opposition, notably, Plaintiff only argued that he sustained injuries under the PCLU, SLU, and 90/180 categories of serious injury. In support of this opposition, Plaintiff submitted an affidavit from his treating chiropractor, an affidavit of a nurse who accompanied him to the Defendants’ IME, an affidavit from the Plaintiff himself, and additional medical records from his treating surgeon.

On review, the Fourth Department found the Dwyer Defendants made a prima facia showing that Plaintiff did not sustain a serious injury, under any alleged category, to his left hip, left leg, left arm, and left shoulder. It was further found that Plaintiff did not raise any triable issue of facts in opposition for these body parts.

For the cervical spine, the Fourth Department engaged in a more in-depth analysis of the three relevant categories alleged of serious injury. Regarding the 90/180 threshold, it was found that the Dwyer Defendants met their initial burden where they established Plaintiff was not prevented “from performing substantially all of the material acts which constituted his usual daily activities for at least 90 out of the 180 days following the accident.” Plaintiff failed to raise a triable issue of fact.

Similarly, the Fourth Department found that the Dwyer Defendant met their initial burden on motion for the PCLU and SLU categories of § 5102(d), where the evidence submitted showed plaintiff suffered from preexisting and degenerative conditions in his cervical spine and did not suffer a traumatic injury as a result of the accident. Specifically, the imaging studies of Plaintiff’s cervical spine submitted by the Defendants, which were performed prior to and after the subject accident, were essentially the same. Further, Defendants’ IME physical established that Plaintiff had no functional disability or limitations in his cervical spine causally related to the subject accident. When the burden shifted to the Plaintiff, he failed to present evidence adequately addressing how his alleged cervical injuries were causally related to the subject accident, considering his past medical history.

For these reasons, the Fourt Department modified the Supreme Court’s Order, and granted summary judgment denying claims of serious injury for the cervical spine.

However, lastly, the Fourth Department examined the claims of serious injury to Plaintiff’s lumbar spine. Notably, the finding for the 90/180 category discussed above also applied to the lumbar spine – thus the Fourth Department’s examination focused on the PCLU and SLU categories of § 5102(d). In such analysis, contrary to all other injury claims, it was found that Plaintiff raised a triable issue of fact via submission of the expert opinion of his treating chiropractor. Specifically, that provider relied upon objective proof of Plaintiff’s lumbar spine injury, provided quantifications of plaintiff’s loss of range of motion along was qualitative assessments of plaintiff’s condition, and concluded that said lumbar spine injury was significant, permanent, and causally related to the subject accident. Additionally, it was found that the evidence presented a sufficient explanation for a gap in Plaintiff’s lumbar spine treatment.

Accordingly, the Fourth Department modified the Supreme Court Order on multiple grounds. Ultimately, the only injury claim which now survived Dwyer Defendants’ motion was for the lumbar spine, under the SLU and PCLU categories of § 5102(d).



Heather A. Sanderson

Sanderson Law, Calgary, Alberta

[email protected]


06/05/23        Owsianik v. Equifax Canada

Ontario Court of Appeal 

Two Canadian Appeal Level Decisions, One in 2022 and the Other in 2023, Have Substantially Closed the Door on the Likelihood of Cyber Third-Party Liability Risk, Endorsing the View that a Business that has Been Hacked was the Victim of a Crime, and is Not Liable for the Data Theft.  Businesses May Still Be Liable for the Loss Based on a Breach of Contract or Statutory Liability

One of the largest incidents of potential identity theft occurred when the Equifax database was breached in May and June of 2017. The private records of 147.9 million Americans along with 15.2 million British citizens and about 19,000 Canadian citizens were compromised in the breach. Information accessed in the breach included first and last names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers. According to press reports, the breach occurred due to a failure by Equifax who had been warned to implement a security patch to key software in March of 2017 but failed to do so. This failure was augmented by Equifax’s failures to implement appropriate encryption of the sensitive data and an insecure network design.

In February 2020, the United States government issued an indictment against members of the Chinese People’s Liberation Army alleging that they perpetrated the hack of Equifax’s systems. The Chinese Communist Party denied these claims.

A class action was filed against Equifax in Ontario.

Trans Union, a competitor to Equifax is a Canadian credit reporting group. Like Equifax, it too sustained a data breach and like Equifax, a class action was filed in Ontario against Trans Union.

The Marriott Hotel Group has suffered at least three data breaches in the last several years. Like the Equifax breach, a class action was also filed in Ontario against Marriott arising from one of those data breaches.

All three class actions pleaded that the putative classes in each action had a cause of action against the defendants based on the privacy tort, intrusion upon seclusion. All three actions pleaded that the defendants in each class action were negligent in the handling of the data which enabled the hack and the intrusion upon the seclusion of those who provided the personal information to each defendant.

The common issue of whether each of these class actions should be certified based on that tort was heard by the Ontario Court of Appeal in 2022. The decision was released on November 25, 2022. That court refused certification on the basis that the defendants in each class action, referred to in this appeal as “the database defendants” had committed the tort of intrusion upon seclusion.

The tort of intrusion of seclusion requires an intentional or reckless intrusion or invasion of privacy, which is highly offensive to a reasonable person.

The database defendants argued that the tort of intrusion of seclusion does not apply to them because they did not actually invade or intrude upon the privacy of the members of each of the classes in each of the appeals. They contended that even if it is proven that their inadequate security measures allowed third-party hackers to access the private information stored in the databases, they should not be held liable for the actions of these independent hackers. They compared their situation to that of a negligent operator of a storage facility who is not considered a thief when a third-party steals property from a storage unit due to the operator’s negligence.  The Database Defendants does not invade the privacy of the persons whose information is stored in the databases if a third party takes advantage of the Database Defendants’ failure to adequately protect the information and access that information.  Essentially, the Court agreed with that argument.

The Court held that the first element of the tort, the conduct requirement, requires an act by a defendant which amounts to a deliberate intrusion upon, or invasion into, the plaintiffs’ privacy. The prohibited state of mind, whether intention or recklessness, must exist when the defendant engages in the prohibited conduct. The state of mind must relate to the doing of the prohibited conduct. The defendant must either intend that the conduct which constitutes the intrusion will intrude upon the plaintiffs’ privacy, or the defendant must be reckless that the conduct will have that effect. If the defendant does not engage in conduct that amounts to an invasion of privacy, the defendant’s recklessness with respect to the consequences of some other conduct, for example the storage of the information, cannot fix the defendant with liability for invading the plaintiffs’ privacy.  The Court held that the claims in each appeal fail at this critical conduct point.  The liability of the database Defendants lies in a breach of contract or a breach of a statutory duty to protect the data.

In short, the Court of Appeal refused to extend the existing law of intrusion upon seclusion to these scenarios. The Court stated:

“I do not agree that extending liability for the commission of the intentional tort of invasion of privacy by a stranger to Equifax would amount to an incremental change in the law. The extension of the common law proposed in this submission would not be a small step along a well-established path but would be a giant step in a very different direction.”

In summary, based upon the facts pleaded, the defendants did not commit any acts that could be considered an intrusion or invasion of privacy. The alleged intrusions were carried out by unknown third-party hackers, independent of the defendants’ actions. Therefore, the tort of intrusion of seclusion does not apply to the database defendants.

The Alberta Court of Appeal in Setoguchi v. Uber UV, 2023 ABCA 45, a decision released February 7, 2023, followed this decision of the Ontario Court of Appeal, and refused certification of a class action for a loss of personal information arising from a hack. The Alberta Court of Appeal agreed with the Ontario Court of Appeal and held that the tort of intrusion upon seclusion should not be expanded to apply to database custodians who are hacked by third parties over whom they have no control.  However, that Court also held the representative plaintiffs had “no hope” of establishing that simple loss of publicly available information (such as names, phone numbers, and email addresses) amounted to compensable injury or loss. The Plaintiff further argued that when aggregated, the stolen data made the proposed class members more susceptible to phishing scams and other fraud in the future. However, the Court likewise rejected this argument, as Canadian tort law has generally refused to recognize damages for risk of future harm or risk of increased harm. Moreover, there must be a substantial risk of future identity theft for compensable harm to be recognized. No such “substantial risk” was present in this case, so no compensable harm could be recognized.

Together, these appeal level decisions have substantially reduced the likelihood of successful class actions in Canada arising from the release of personal, private information following a database hack or other type of ransomware attack. 

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