Coverage Pointers - Volume XXVI No. 1

Volume XXVI, No. 1 (No. 674)
Friday, June 21, 2024
A Biweekly Electronic Newsletter


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

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

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

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


Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.

Welcome to Volume 26, No. 1 of Coverage Pointers, as we enter into our 26th issue of continuous publication.

If there is an electronic coverage newsletter that has been around longer than CP, we don’t know of its existence.  Lots of others out there, many have come and gone,  MANY have come and gone (I said that twice).  Thanks to our loyal readers and our dedicated editorial staff.

Happy Summer.  For those in Western New York and Southern Ontario, summer is our version of Nirvana, Yep, we have snow in the winter, but when it melts, the buildings are still there.  We don’t have 100+ degrees temperatures, though, so nobody fries eggs on the sidewalk.

Welcome our two newest attorneys to our firm, Sara Zaprowski and Lexi Horton, both just admitted.  Lexi joins our coverage team, so you’ll be seeing her regularly.  We’ll need to get her a CP column.

Bios come in the next edition.

Section 3420(d)(2) Raises its Ugly Head

There are all kinds of interesting decisions in this issue, attached.  For those not fully familiar with New York liability insurance protocols, you’ll find a classic Insurance Law 3420(d)(2) failure on the part of an insurance company.   What crime did it commit?  It received a complaint and waited 34 days (without explaining why it waited so long), before it raised a coverage exclusion and condition breach in a coverage denial letter.  The result?  The court struck the exclusion and condition breach from the policy and the insurer was stuck defending and indemnifying a claim that should have been excluded.


Use and Operation

OK, then we have another Second Department decision that we believe was off the rail.  A car stops and lets out a passenger.  She walks a couple of steps and slips on ice. The claim is that the driver was negligent in letting off the pedestrian in a dangerous place.  Court finds that the auto policy has to respond.  Terrible decision, in my humble opinion, and flies in the face of a Court of Appeals opinion where a bus passenger, leaving the vehicle, steps into a hole and after suffering an injury, applied for no fault benefits.  Our high court found that the accident did not arise out of the use and operation of a motor vehicle, the same decision that should have guided the court in this case.  Would have helped if the court was offered that decision and commented on it, we suppose.

And there is so much more to the issue.


Kudos to Agnes Wilewicz on her appointment as Vice Chair of the ABA’s Insurance Coverage Litigation General Committee.


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Heather Sanderson Designated as K.C.

Heather Sanderson, our long-standing Canadian columnist, was recently hono(u)red with the Kings Counsel designation, a terrific accomplishment rarely granted.

The designation of King's Counsel is made by the Minister of Justice through a selection process that includes consultation with the Canadian Bar Association and the Law Society.

The designation reflects superior legal ability; proof of good character and integrity; and considers contributions as a legal professional to the community and the profession and contributions to the community generally.

Her husband, Len Polsky, was also so designated.  You will note that the K.C. designation now appears after her name in her column.  Congratulations to both Heather and Len.


Just published – our 13th submission on New York Coverage for the Syracuse Law Review Annual Survey of New York law.

We have a limited number of copies available if you’re interested.

Need a mediator for an insurance dispute? 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 V. Christopher Potenza 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 Elizabeth Midgley at [email protected] to subscribe.


Huge Verdict for Back Injuries – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
21 June 1924


South Park Girl Gets Verdict for $1,200

          A jury in Part VII of the Supreme court has returned a verdict for $1,200 before Justice Clinton T Horton, in favor of Aileen Gallagher of No. 111 Triangle street against the International Railway company.

          Questioned by her attorney, John J. Brown, Miss Gallagher related how she was injured while a passenger on a northbound Fillmore Avenue streetcar on December 12th, 1923, when it was hit by a south bound Fillmore avenue car at East Parade avenue and Genesee street.

          At the time of the impact, Miss Gallagher was thrown against the side of the seat, receiving injuries to her back, as well as nervous shock.

          The action was brought by her father, Thomas Gallagher as guardian ad litem, as Miss Gallagher at the time of the accident was thirteen years old and a student in the freshman class of South Park high school.


Peiper on Property (and Potpourri):

Congratulations to Agnes for her recognition at the ABA.  She is kind of a big deal! 

Congratulations, too, to Lexi Horton and Sara Zaprowski who were just advanced to fully admitted lawyers.  Lexi and Sara distinguished themselves as law clerks with us last summer, and we’re really looking forward to having them as full-time members of our team.  While Sara is working with our litigation team, Lexi has fully embraced the madness of insurance coverage.   You’ll enjoy working with both. 

And, for those concerned, our re-education of Sara continues.  We’ll turn her into a coverage lawyer before the snow flies! 


Steven E. Peiper

[email protected]


The Body Was Found 75 years Later– 100 Years Ago

The Buffalo Enquirer
Buffalo, New York
21 June 1924


Gallant Britishers Buried in Snows Of Great Peak – Bodies May Be Lost Forever

          London, June 21. – Mount Everest, the world’s highest and only unconquered mountain peak, has claimed the lives of two gallant British climbers, George Leigh Mallory and A. C. Irvine.

          Their bodies lie in the grip of the eternal, fearful snows of Everest, a mile and a half from the summit, a height never before attained by man. The rest of the party returned to a base camp safely, and Colonel Norton, another of the explorers, telegraphed meagre details of the tragedy.

          Serious doubts were expressed today that man will never succeed in climbing to the “roof of the world.”

          World-wide tributes to the courage of Mallory and Irvine were pouring in today. That they had faced the perils of Everest’s steep slopes knowing full well the danger was attested to by Mallory’s message:

          “The third time we walk up east Rongbuk glacier will be the last, for better or worse. We expect no mercy from Everest.”

          They received none and the unconquerable peak enfolded them in its restless swirling snows presumable about a fortnight ago.

          It is understood here the bodies could not be recovered.

Editor’s Note: In 1999, news broke that the body of explorer and mountaineer George Mallory had turned up. Mallory had disappeared some 75 years earlier, while trying to become the first person to scale Mount Everest, and now, an expedition searching for his remains had found them, at the foot of the Northeast Ridge, mummified and frozen solid. A label sewn into the tattered clothing confirmed that the remains belonged to Mallory.

But evidence has surfaced that Mallory’s body may have been found more than sixty years earlier, during a 1936 expedition. That year, Everest pioneer Frank Smythe was exploring the mountain and spotted the body during a telescope survey. Smythe described the incident in a letter he wrote to Edward Norton, leader of the 1924 Mallory expedition. Just recently, Smythe’s son, Tony, turned up a copy of the letter tucked in the back of one of his late father’s diaries while working on a biography about his father’s adventures on the mountain.


Barnas on Bad Faith:

Hello again:

The sports calendar is thinning out as we approach the official start of summer.  The Celtics made quick work of the Mavericks in five games to win Banner 18.  The Stanley Cup Final is nearing conclusion as well, although the Oilers have won two games to send the series back for what is sure to be an exciting game 6 in Edmonton.  We also had a great U.S. Open with a dramatic victory by Bryson DeChambeau over Rory McIlroy.  We do have Euro this summer, and England is off to a good start with a win over Serbia.  If you prefer your soccer to come from the Western Hemisphere, Copa America is kicking off today, and the United States, Canada, and Mexico have all been invited to participate this time.  I am thankful to have some soccer to watch given how dreadful the Blue Jays are.

I have a nice decision from the Fourth Circuit in my column this week on a North Carolina case.  The court dismissed the bad faith claim in a first party case that amounted to nothing more than a disagreement on value.  The court noted that the insurer had paid approximately half of the eventual appraisal award, and the insureds’ demand was more than double the appraisal award.  The bad faith claim was dismissed given these facts and the lack of allegations that the insurer denied the claim based on malfeasance.


Brian D. Barnas

[email protected]


Immigration Concerns – 100 Years Ago:

The Standard Union
Brooklyn, New York
21 June 1924

Japs Rush to Reach U.S. Before Exclusion Act Becomes Effective

TOKIO, June 21. – Japanese rushing to the United States in an Effort to enter the country before the American exclusion law becomes effective total 4,612, according to figures sent here from Azaki, from which port the majority have sailed.

Of this number 782 are brides of Japanese who either have formerly lived in the United States, or who are there now.

The emigrants are now aboard ships in the Pacific, some bound for Seattle and the remainder for San Francisco.


Lee’s Connecticut Chronicles:

Dear Nutmeggers:

Welcome back to a little game we like to play here at the beach called: Guess What Season It Is Now!  Yesterday, I started my errands in long sleeves, and it still felt cold. The sun peaked out and it was hot, the wind started to blow, and it was cold. This morning, I walked the dog dressed in a fleece pullover. At lunch time, the AC was cranking because the heat index hit 95°. Now, the windows are open blowing in the cool sea air. It seems in a typical day we get two and maybe even three seasons. It’s hard to keep up. Of course, as always, the answer is layers, dress in layers.

But no one is complaining about the cold in Nashville. I was there last week for the DRI Insurance Bad Faith Conference and let me tell you it was hot, like Nashville hot chicken hot. Weather aside, gathered were some of the best carrier-side bad faith practitioners in the country. The level of knowledge and discourse was top notch. If you can get your hands on the papers and presentations do so—I’d share them, but something tells me the business folks at DRI would be unhappy if I gave away for free what they charged a petty penny for.

On the Connecticut insurance front, the courts let us down with nothing newsworthy to report. We give a little blurb about a diversity jurisdiction issue, as the basics are always worth a reminder.

Keep keeping safe.


Lee S. Siegel

[email protected]


English Test – 100 Years Ago:

The Spokesman-Review
Spokane, Washington
21 June 1924

The Right Word


          Readers of this column have shown so great an interest in the tests that have been offered from time to time, that “The Right Word” has decided to publish another within a few days and give everyone a chance to make the 100 per cent class. Watch it. Do your best when you answer the questions.


The Troublesome Who and whom

          R. Apell writes as follows:

          “Kindly inform me in your ‘Right Word’ column whether the following sentences are correct:

          “I do not know whom it is that I loved.”

          “I can not believe in a God whom I do not believe acts always for the best.”

          “Is whom wrong or ought it to be who?”

          Whom is incorrect in each of the two sentences submitted by the correspondent. The right word is who.

          The subject of the first sentence is 1. “Who (not whom) it is” is the object of “do not know.” Therefore, in analyzing the sentence, we must consider “who it is” separately, Now, you would not say “whom is it”; or would you say, “whom it is.”

          In the second sentence, who (not whom) is the subject of acts. Note the following: who acts always for the best.

          “I do not believe” is parenthetical. The expression has no control of who.


Kyle's Noteworthy No-Fault:

Dear Readers,

This week’s no-fault case involves an insurer’s action seeking de novo review of the underlying arbitration, in which the medical provider was awarded the amount sought, $4,998, due to the insurer’s failure to submit sufficient proof in support of its fee schedule defenses. The provider brought a motion to dismiss the insurer’s complaint, which was granted by the court on the basis that the insurer did not state a cause of action. The insurer did not demonstrate the provider’s bills were excessive and, further, the court rejected the insurer’s contention that the provider acted arbitrarily by amending the amount in dispute to less than $5,000 to deny the insurer a right to a de novo adjudication pursuant to CPLR 5106(c).


Kyle A. Ruffner

[email protected]


Keeping out Foreigners – 100 Years Ago:

The Buffalo News
Buffalo, New York
21 June 1924



Blood of Founders, Which is Of Many Nationalities, Will be Polluted if Immigrants Are Not Chosen Carefully.



          Sickly, neurasthenic, psychopathic brains may have our pity, and our treatment when they are found amongst us; but I want to see them kept from entering the United States on the plea that they are idealists, that they flee persecution, that they want to live in a kind of land of free speech. Reach the kind of manifesto they publish when they get here. I will quote a fragment from one of these, as it was reprinted in the New York Times of Nov. 10, 1919:

          “We must mercilessly destroy all the remains of government authority and class domination – all legal papers pertaining to private ownership of property, all field fences and boundaries, and burn all certificates of indebtedness – in a word, we must take care that everything is wiped out from the earth that is a reminder of the right of private ownership of property.”

          Now I don’t want to keep the type of mind that thinks this way out of the country because I’m afraid of it. That sort of talk isn’t going to make a dent in any sane man’s thinking. But the sort of mind that oozes it out lives in a body that will transmit that sort of mind to its children. It will not contaminate our American thinking so much as it will pollute the blood of the nation with more weak stock.

          “There is perhaps no group in America so free from racial or religious prejudice as the workingmen. It is a matter of indifference to them whether an immigrant comes from Great Britain, Italy or Russia. The chief consideration is that wherever he comes from, he shall he endowed with the capacity and imbued with the determination to improve his own status in life, and equally determined to preserve and promote the standard of life of the people among whom he expects to live,”

          These are the words of a laboring man, who became a labor leader in the United States. They express an idea and a sentiment that has taken root and is growing up in this republic of ours and which is going to modify our whole national attitude toward the great problem of selective immigration.


Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers:

Last Saturday, my oldest went 4 for 4 from the plate and was ecstatic. However, he faced adversity at the plate yesterday, going 1 for 4 on the day, with two groundouts and a strikeout. His first at-bat was a grounder to 1B, which the fielder gloved on his way to make the out. His second at-bat saw a few foul balls before striking out. His third at-bat, the pitcher fielded a dribbler and made an impressive throw across the field for the out. But his fourth at-bat—batting second in the last inning, down two, when his team needed him the most—he ripped a ball up the middle and ultimately came around to score the game-tying run before his teammate sealed the win thereafter. Baseball is a game of adversity and even the best to ever do it saw long stretches hitting one out of every three. He fielded grounders at 3B and P, with runners just beating throws, and he hustled after balls in the outfield to prevent extra bases. And while he was upset with his first two at-bats, we celebrated the fielders who got him out on his third, and he rose to the occasion when called upon the fourth time through the order. Quite an afternoon of baseball.

This edition of Ryan’s Federal Reporter again showcases a United States Supreme Court decision concerning the insurance industry. This time, SCOTUS makes clear that insurers are indeed interested in the financial resolution of claims made against its insureds, when those claims are entangled within a Chapter 11 Bankruptcy proceeding. Seems odd to me that this was a decision that needed to be made, but what do I know?

Until next time,


Ryan P. Maxwell

[email protected]


Pickpockets Jailed – 100 Years Ago:

Times Union
Brooklyn, New York
21 June 1924

4 Pickpockets, One, 70, Sent Up for 6 Months

          Four alleged pickpockets, all of whom, according to the police, had previously been sentenced on similar charges, were sent to the workhouse for six months each yesterday by Magistrate Rayfiel in the New Jersey Avenue Court.

          They are William Fergusion, of 211 Third avenue, Manhattan, James Sheehan, of 81 Peck Slip, Manhattan, Joseph Perlis, of 1702 Sterling place, Brooklyn, and Lester Brooks, of 17 Buffington avenue, Manhattan.

          Fergusion, who is 70 years old, and Sheehan, were arrested June 8, at the East New York station of the Long Island Railroad and the other two on June 15, at the Eastern Parkway station of the B.M.T by Detectives of the Manhattan Police Headquarters Pick Pocket Squad.


Storm’s SIU:

Hi Team:

Two interesting cases this edition:  a good refresher on the importance of and proper issuance of sworn statement in proof of loss forms; and a not a “residence premises” case:

  • Summary Judgment Granted to Insurer on 1st-Party Property Claim Where Insured’s Attorney Failed to Timely Submit Sworn Statement in Proof of Loss Forms Within the 60-Policy Time limitation.  It was Sufficient Under the Circumstances of this Case that the Blank Proof of Loss Forms Were Sent to the Insured’s Attorney.  There was no Breach of Contract Due to the Insurer Requesting the Proofs Six Months After the Claim was Reported.  No Evidence of Estoppel. 

  • No Coverage for Plaintiff’s 3-Unit Property When Policy Only Covered Up to Two Units – Not a “Residence Premises”.  The Court Rejects Arguments of Waiver, Estoppel and Reformation.

Have a great two weeks until we write again. 


Scott D. Storm

[email protected]


Beer Stolen – 100 Years Ago:

Dunkirk Evening Observer
Dunkirk, New York
21 June 1924



Vessel With Cargo Had Been Seized by Agents at Malone Cargo Has Since Disappeared.

          Fort Edward, June 21 – (United Press) – Prohibition agents of the Albany and Malone districts, United States customs officials and sheriff deputies all over the northern part of New York State have a big job on their hands.

          They are trying to find a whole boatload of Canadian ale that was seized a few days ago by Malone agents while it was moving through the Champlain canal from Plattsburgh. It is estimated that the boat carried 120,000 bottles of ale at the time it was seized.

          The other day, when representatives of the customs office in Albany came to fort Edward to libel the craft they found that it was in good condition. Everything about the boat was all right. It was just as good a boat as the day it was seized, but all the ale was gone, and nobody can be found who knows anything about how it was taken off the boat, who took it off or where it was taken to.

          A “complete investigation” is being made by Edward Shaffer, prohibition enforcement officer for the Albany district, who is making a search for the lost ale at the direction of R. Q. Merrick, divisional prohibition chief of New York and New Jersey.

          Captain E. F. Scott in charge of the seized barge, the Massauga, who was arrested with the members of the crew, said he did not know that the barge contained ale until it was seized. Customs and prohibition agents heard that the cases of ale had been taken off the barge before it was seized, that the ale was hidden in an old barn where it was found later by Malone Prohibition agents. These agents destroyed the 156 cases, it was reported.

          As the matter stands now the government has labeled a boat that is as dry as Kansas ever was, and there is no trace of the lost ale.


Fleming’s Finest:

On vacation this week; see you in two.


Katherine A. Fleming

[email protected]


Own a Radio?  Notify Your Insurer – 100 Years Ago:

The Buffalo News
Buffalo, New York
21 June 1924

If you install a radio in your home be sure to notify your fire insurance company.

          Most Insurance companies will not increase the premium on a house which has a radio receiving set installed in it, but failure to notify the company of such a technical “risk” as the addition of a radio set may invalidate the policy.

          A short letter to the insurance company stating the fact that a set has been installed is usually all the trouble it is necessary to take. Expert electricians have agreed that a receiving set in the house (crystal or tube0 when properly installed and carrying a lightning arrester does not increase the fire risk. Insurance companies have accepted this opinion.


Gestwick’s Garden State Gazette:

Dear Readers:

To kick off the summer, I broke in the new grill my girlfriend bought me for my birthday. After that went well, I decided to invite the whole family over this Saturday for Chiavetta’s chicken. If you’re from the Western New York region, you know what I’m talking about. If you’re not, I encourage you to go to the Wegmans nearest you and treat yourself to a bottle of Chiavetta’s marinade. You won’t be disappointed.

This week, I have a claims made policy to discuss. Allow me to pose a hypothetical: if you owned a business, and one of your employees was accused of sexual assault while on the job, would you suspect, or at least worry, that a claim might someday be made against you by the victim? Would your answer change at all if you found out no criminal charges were brought against the employee? Read on to see where I’m going with this.


Evan D. Gestwick

[email protected]


KKK Gifts to Schools – 100 Years Ago:

The Brooklyn Dailly Eagle
Brooklyn, New York
21 June 1924


          East Rockaway, L.I., June 21 – Three flags were presented to the new East Rockaway grammar school which was dedicated last night. Two of the flags were given by masked figures, who said they represented the Knights of the Ku-Klux Klan; the third was given by the East Rockaway Civic Welfare League. A Bible was given by the square Club.

          Addresses were made by Robert Baker, president of the Board of Education, who reviewed the progress of the school, and by Charles T. Whecrock, former Assistant Commissioner of Education of the State of New York. The subject of his address was “Democracy and the Public School.”

          “The public schools are the hope of the nations,” he said. “Democracy cannot exist without them. They are also the hope of the world because indirectly they mean democracy throughout the world.” He emphasized the need of a practical education for children up to the age of 16.


O’Shea Rides the Circuits:

Hey Readers,

There is quite a decision to be made this weekend. The smoker is prepped and ready, but the question is what to make? A duck, chicken wings, a whole chicken, or classic ribs? A brisket is out of the question, as I do not have time for that operation. Personally, I am leaning towards the duck.

This week I have a quick summary order from the Second Circuit regarding a Directors & Officers policy and a contractual liability exclusion.

Until Next Time,


Ryan P. O’Shea

[email protected]


St. Lawrence Seaway?  Feggetaboutit– 100 Years Ago:

The Buffalo Commercial
Buffalo, New York
21 June 1924



          Showing why the St. Lawrence deep waterway canal to the sea is impractical, Representative S. Wallace Dempsey at the sixth annual convention of the National Federated Flour clubs in the Hotel Statler last evening said the project is a dead issue in this country.

          Although the organization two years ago adopted a resolution favoring the St. Lawrence route, much applause was given Representative Dempsey following his remarks. The delegates to the convention this morning made a tour of inspection of Buffalo’s elevators and mills and the corn exchange.


Rob Reaches the Threshold:

Dear Readers,

At the time of our last publication, I was in the desert in Arizona fighting the heat as we played some (poor) golf at some excellent courses. At the time of this publication, New York is facing some record highs and heat. Hopefully the golf game improves as I tee it up this weekend. I hope you all are staying cool and enjoying the start of summer.

The appellate divisions were a little light on cases this time around, but we are able to examine a decision out of the Second Department which scrutinizes the moving defendants’ submissions for their argument that the deceased plaintiff did not sustain serious injuries under Insurance Law 5102(d).

Enjoy the read.

Robert J. Caggiano

[email protected]


The Lawyer in this Story Eventually Became a Judge, Annulled his Marriage and Remarried – 100 Years Ago:


The Buffalo Commercial
Buffalo, New York
21 June 1924

Lawyer Loses Suit To Divorce His Wife

Woman Attorney Conducts Own Case Successfully; Pair May Live Apart If Desired

          Papers filed in the county clerk’s office disclose that the application of Attorney Carlton A. Fisher for an annulment of his marriage to Attorney Edvige V. Fisher has been denied on the findings of Referee Charles B. Wheeler. Mr. Fisher is employed by the law firm of Locke, Babcock, Adains & Hollister and Mrs. Fisher by the law firm of which Senator Parton Swift is the head.

          Strict secrecy guarded the trial of the case which attracted much attention because the young attorneys appeared for themselves all during proceedings. Mr. Lawyer accused Mrs. Lawyer of having mental and physical defects which she concealed from him before their marriage. He would not have married her had he known about them, he contended. They met in Brooklyn and were married after a hurried courtship. She denied having any defects, that is, physical or mental, and the court agreed with her.

          The Fishers are living apart and they can continue to do so if they want to.


Goldberg’s Golden Nuggets:

Hi All:

Welcome summer – one of two seasons here in New York. Naturally there is a heatwave, but I believe the Melville office is only on the periphery of the high temperatures. However, I’m quite glad that school will be out soon as it will mean the traffic downstate will lighten up for a few months.

Speaking of traffic, I bring to you a case that looks normal from the text of the Appellate Division’s order, but under the hood, you would not be able to link the Decision & Order on appeal to the ultimate outcome. And, just under the wire today before publication, a Second Department case involving two companies, two cars, and two policies – a tough puzzle of which corporate entity to name as a defendant which results in the carrier avoiding indemnity obligations.

Stay cool and wear sunscreen. Protect your skin.


Joshua M. Goldberg

[email protected]


Auto Coverage on the Cheap – 100 Years Ago:

Elmira, New York
21 June 1924



          $2,500.00 Automobile Accident Insurance Policy for $1.00 Per Year Corner Main and Water Streets. Phone 3762-W.


LaBarbera’s Lower Court Library:

Dear Readers:

Life with the pup is going swimmingly. She loves almost everything. So far, the only things on the “dislike” list are (1) her own reflection; (2) the heat; and (3) sweet potatoes. She hasn’t tried sweet potatoes yet; just the sight of a raw sweet potato has her shaking in her boots! 

This week I am reporting on a New York County decision, where the court grapples with the question of whether an electric unicycle classifies as a motor vehicle under the subject automobile policy and VTL §125.

Until next time!


Isabelle H. LaBarbera

[email protected]


Immigrants Keep Out – 100 Years Ago:

The Chillicothe Constitution – Tribune
Chillicothe, Missouri
20 June 1924



          WASHINGTON, June 20 – Secretary of State Hughes has informed the Japanese Government that the door is closed for any change in the immigration law excluding Japanese ad that the act of congress must be considered as final.

          The secretary of state, in a note answering Japan’s protest of May 31 against the exclusion law, expresses the good will of this government towards Japan, and recalls the wish of President Coolidge to modify the law, but declares, that the action of congress “is mandatory upon the executive branch of the government and allows no latitude for the exercise of executive discretion.”

          The note is couched throughout in friendly terms, Hughes expressing the “conviction that the recognition of the right of each government to legislate in control of immigration should not derogate in any degree from the mutual goodwill and cordial friendship which has always characterized the relations of the two countries.” It was presented to Japan through Ambassador Hanibara here.

          Going in detail into all the treaty arrangements on immigration between this government and Japan resulting finally in the gentlemen’s agreement, Hughes declares that the United States does not Violate any of them in excluding Japanese by law.


North of the Border:

Although my adult kids who were born in Calgary cannot bring themselves to support the monstrous comeback of the Edmonton Oilers that is in progress in the Stanley Cup Finals, I have no issue throwing my support behind the Oilers. Is it because I’m an immigrant to Alberta from Quebec? Who knows?

But I am amazed at the coolness under pressure exhibited by Connor McDavid … last night at the close of three periods of fabulous skating and puck handling, in a must win game for the Oilers, it came down to the last two minutes of the third with the Oilers ahead by a single goal. The Florida Panthers had pulled their goalie for an extra attacker … the puck left the Oilers zone and was headed for the empty net. The Panther’s Matthew Tkachuk (who used to play for the Calgary Flames) made a diving save, sweeping the puck away from the goal line just in time – believing that he was his team’s hero. Tkachuk clearly did not know that McDavid was sailing up behind him and that Tkachuk’s sweeping save placed the puck on McDavid’s stick who circled to his left, avoiding another Florida player, and deftly placed the puck into the empty net, sealing the Panthers’ fate and compelling game 6 in Edmonton. Poetry in motion.

We now have a nailbiter of a game back in Edmonton on Friday night. If the Oilers win, we will have a winner take all Stanley Cup final in Florida for the history books. If the Panthers win …. well, this correspondent will be relegated to saying that it was a great series.

My column deals with an important appeal of a trial judgment on the COVID-19 property coverage.


Heather A. Sanderson, K.C.
Sanderson Law, Calgary, Alberta

[email protected]


Headlines from this week’s issue:

Dan D. Kohane

[email protected]

  • Town Did Not Become Insured Under a Village Policy When the Village Dissolved, Where Policy Required Insurer’s Consent to Transfer Policy Rights

  • Thirty-Four Day Late Notice of Disclaimer Dooms Carrier’s Right to Rely Upon Policy Exclusions and Conditions

  • Split Court Finds That Driver Who Parked Car Near Ice, Provides Auto Coverage for Driver When Alit Passenger Slips on the Ice.  Thousands Flee

  • Since the Insured Did Not Live at the Residence Premises, Coverage Did Not Exist


Steven E. Peiper

[email protected] 

  • No Dwelling Coverage Where Property Is Not the Residence Premises
  • Suit Limitation Clause Upheld as a Shortened Statute of Limitations


Brian D. Barnas

[email protected]

  • Bad Faith Claim Dismissed Where Insurer Issued Supplemental Payments on Claim and Promptly Paid Appraisal Award That Was Half of Insureds’ Demand


Lee S. Siegel

[email protected]

  • A Reminder About Diversity Jurisdiction


Kyle A. Ruffner
[email protected]

  • Court Grants Medical Provider’s Motion to Dismiss Insurer’s Complaint, Which Failed to State a Cause of Action for de Novo Review of Underlying Arbitration Dispute


Ryan P. Maxwell

[email protected]

  • Insurer Financially Responsible for Bankruptcy Claims Is a Party In Interest Entitled to Appear and Be Heard In Chapter 11 Bankruptcy


Scott D. Storm

[email protected]

  • Summary Judgment Granted to Insurer on 1st-Party Property Claim Where Insured’s Attorney Failed to Timely Submit Sworn Statement in Proof of Loss Forms Within the 60-Day Time Limitation.  It was Sufficient Under the Circumstances of This Case That the Blank Proof of Loss Forms Were Sent to the Insured’s Attorney.  There Was No Breach of Contract Due to the Insurer Requesting the Proofs Six Months After the Claim Was Reported.  No Evidence of Estoppel
  • No Coverage for Plaintiff’s 3-Unit Property When Policy Only Covered Up to Two Units – Not a “Residence Premises”.  The Court Rejects Arguments of Waiver, Estoppel and Reformation.


Katherine A. Fleming

[email protected]

  • On vacation this week; see you in two.


Evan D. Gestwick

[email protected]

  • Court Finds No Coverage Under Claims-Made and Reported Policy Under Prior Knowledge Clause Where Insured Admittedly Knew of an Act That Objectively May Result in a Claim


Ryan P. O’Shea

[email protected]

  • Claim That Board Member Violated Shareholder Agreements Falls Within Contractual Liability Exclusion, But-for Test Applied


Robert J. Caggiano

[email protected]

  • Second Department Affirmed a Decision Denying Summary Judgment Where the Moving Defendants Failed to Meet the Requisite Burden of Proof Showing That the Plaintiff Did Not Sustain a Serious Injury Within the Meaning of Insurance Law § 5102(d).   


Joshua M. Goldberg

[email protected]

  • Unattended Vehicle Strikes Down Stolen Vehicle Disclaimer
  • Coverage Denied to Corporations Sharing Vehicles and Employees


Isabelle H. LaBarbera

[email protected]

  • Court Finds That an Electric Unicycle is a “Motor Vehicle” Under the Subject Insurance Policy and VTL §125, Denying Insurer’s Petition for Temporary Stay of Arbitration


Heather A. Sanderson, K.C.
Sanderson Law, Calgary, Alberta

[email protected]

  • Commercial All-Risk Property Insurance Policies That Cover “All Risks of Physical Loss or Damage” Extend to Physical, Tangible Harm to Property and Business Interruption Coverage Consequent on That Loss and Damage; These Policies Are Not Triggered by the Possible Presence of the COVID-19 Virus or the Civil Authority Measures to Deal With the COVID-19 Threat


That’s all there is and there is no more.  Until we return in two weeks, on July 5th.  An early Happy Canada Day (Monday, July 1) and Happy Fourth of July to all of our friends.



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 and New Jersey.

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

Ryan P. Maxwell

Joshua M. Goldberg

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea

Isabelle H. LaBarbera


Steven E. Peiper, Team Leader
[email protected]

Michael F. Perley

Scott D. Storm

Brian D. Barnas


Dan D. Kohane
[email protected]

Joshua M. Goldberg


Jody E. Briandi, Team Leader
[email protected]


Topical Index

Kohane’s Coverage Corner

Peiper on Property and Potpourri

Barnas on Bad Faith

Lee’s Connecticut Chronicles

Kyle’s Noteworthy No-Fault

Ryan’s Federal Reporter

Storm’s SIU

Fleming’s Finest

Gestwick’s Garden State Gazette

O’Shea Rides the Circuits

Goldberg’s Golden Nuggets

LaBarbera’s Lower Court Library

North of the Border


Dan D. Kohane

[email protected]


06/20/24       Town of Brookhaven v. New York Municipal Ins. Reciprocal
Appellate Division, Second Department
Town Did Not Become Insured Under a Village Policy When the Village Dissolved, Where Policy Required Insurer’s Consent to Transfer Policy Rights

NYMIR issued a policy to the Incorporated Village of Mastic Beach (“Village”).

The Town of Brookhaven (Town”) sued NYMIR claiming that NYMIR was obligated to defend and indemnify the Town is regard to personal injury claims originally made against the Village but subsequently asserted against the Town due to the Village's dissolution in underlying action brought by someone named Young.  The Town argued that pursuant to General Municipal Law § 790, upon the Village's dissolution, the plaintiff had assumed the Village's debts, liabilities, and obligations and that the plaintiff became entitled to various rights held by the Village, including entitlement to the insurance coverage provided by the policy issued by NYMIR to the Village.

However, the insurance policy included a provision requiring written permission from NYMIR to transfer any such rights under the policy.

The party claiming insurance coverage bears the burden of proving entitlement). However, a party is not entitled to coverage if it is not named as an insured or additional insured on the face of the policy as of the date of the accident for which coverage is sought.  Where a third party seeks the benefit of coverage, the terms of the policy must clearly evince such intent.

Here, the plaintiff failed to meet its prima facie burden of demonstrating as a matter of law that it was either an insured or additional insured under the policy. It is undisputed that the policy was issued to the Village and did not name the Town as an insured or additional insured and that NYMIR's written consent to transfer the rights under the policy to the Town was never obtained. Further, contrary to the Town’s contentions, the Town did not automatically obtain the rights under the policy pursuant to General Municipal Law §790 or pursuant to certain Town of Brookhaven resolutions.


06/20/24       Charles Bardylyn Enterprises, Inc. v. Rockingham Ins. Co.
Appellate Division, Second Department
Thirty-Four Day Late Notice of Disclaimer Dooms Carrier’s Right to Rely Upon Policy Exclusions and Conditions

In February 2020, Sessoms commenced an action against Charles Bardylyn Enterprises, Inc. (“CBE”), claiming CBE owned certain property located in Brooklyn (hereinafter the premises). Sessoms alleged that on December 14, 2019, he was at the premises when he was "caused to sustain serious and permanent injuries from unsafe conditions which caused him to slip and fall." CBE interposed an answer to the complaint in the underlying action.

CBE had a commercial general liability policy of insurance with Rockingham Insurance Company (“Rockingham”) covering sums that CBE became legally obligated to pay as damages because of "bodily injury" to which the policy applied.

However, the policy contained a "[h]abitability" exclusion, which provided that the policy did not apply to bodily injury arising out of, inter alia, the alleged or actual "[f]ailure to maintain any premises in, or restore any premises to, a safe, sanitary, healthy, habitable and tenantable condition."

The policy also contained an endorsement entitled "TENANT SPECIAL CONDITIONS." This endorsement provided, among other things, that in order for coverage to apply to claims for bodily injury arising out of a tenant's occupancy of the premises, CBE was required to maintain several documents related to the tenancy.

Rockingham purportedly was notified of Sessoms's claim by a notice of claim dated January 24, 2020. By letter dated February 28, 2020, Certus Claims Administration, LLC (hereinafter Certus), Rockingham's third-party claims administrator, notified CBE that Rockingham lacked sufficient information to accept or deny the claim. By letter dated March 23, 2020, Certus notified CBE that Rockingham disclaimed coverage under the policy, inter alia, on the basis of the habitability exclusion.

Insurance Law § 3420(d)(2) requires an insurer to provide its insured and any other claimant with timely written notice "as soon as is reasonably possible" of its disclaimer or denial of coverage The timeliness of an insurer's disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage.  an insurer's explanation [for the delay in disclaiming coverage] is insufficient as a matter of law where the basis for denying coverage was or should have been readily apparent before the onset of delay.

Here, the record demonstrates that the facts supporting the disclaimer were apparent from the face of the complaint in the underlying action. Rockingham disclaimed coverage by letter dated March 23, 2020, at least 34 days after it received a copy of the complaint in the underlying action and knew or should have known of the basis for denying coverage. Thus, under these circumstances, the delay was unreasonable as a matter of law.

An insurer that fails to provide the insured with timely notice of its disclaimer or denial of coverage on the basis of a policy exclusion "will be estopped from disclaiming liability or denying coverage" (Plotkin v Republic-Franklin Ins. Co., 177 AD3d 790, 793 [internal quotation marks omitted]). The failure of Rockingham to provide a timely notice of disclaimer to CBE rendered Rockingham's disclaimer of coverage on the basis of the habitability exclusion and the tenant special conditions endorsement ineffective.

Thus, CBE established its prima facie entitlement to judgment as a matter of law declaring that Rockingham is obligated to defend and indemnify CBE in the underlying action by demonstrating that Rockingham failed to provide timely notice of its disclaimer (see id.). In opposition, Rockingham failed to raise a triable issue of fact. For the same reasons, Rockingham failed to establish its entitlement to summary judgment declaring that it is not obligated to defend or indemnify CBE in the underlying action.

However, CBE' was not entitled to a judgment declaring that it is entitled to select independent defense counsel in the underlying action, since Rockingham and CBE share a common interest in defending the underlying.


06/12/24       Matter of Progressive Drive Insurance v. Malone
Appellate Division, Second Department
Split Court Finds That Driver Who Parked Car Near Ice, Provides Auto Coverage for Driver When Alit Passenger Slips on the Ice.  Thousands Flee

Amanda Malone was injured while carrying her daughter, immediately after removing her daughter from the inside of a vehicle operated by Anthony Caperna. Malone picked up her daughter, turned without closing the vehicle door, walked two steps toward the door of a residence owned Storms and fell on a patch of snow and ice on the front lawn.

Malone sued Storms claiming slippery conditions to exist on the premises, and that Anthony and his father, Arthur Caperna, Jr. (“the Capernas”), the insured owner of the vehicle, were negligent in failing to properly position the vehicle for passengers disembarking by parking on a slippery and dangerous area.

The vehicle was insured by Progressive.  A motion was made by the Capernas to dismiss the underlying complaint and the motion was denied, the court finding that the Capernas did owe a duty to provide those leaving the vehicle with a safe place to alight."

Progressive commenced this proceeding for a judgment declaring that it is not obligated to defend or indemnify Arthur in the underlying action on the ground that the accident was not a motor vehicle accident that involved the use, operation, or maintenance of a covered vehicle.

A liability insurer's 'duty to pay is determined by the actual basis for the insured's liability to a third party.  'The duty to indemnify on the part of an insurer requires a determination that the insured is liable for a loss that is covered by the policy'. Generally, the determination of whether an accident has resulted from the use or operation of a covered vehicle requires consideration of whether, inter alia, the accident arose out of the inherent nature of the vehicle and whether the vehicle itself produced the injury. 'Negligence in the use of the vehicle must be shown, and that negligence must be a cause of the injury'.  However, not every injury occurring in or near a motor vehicle is covered by the phrase "use or operation."

The accident must be connected with the use of an “automobile qua automobile.'"

Here, Malone specifically alleged in the underlying action that Anthony parked his vehicle in a negligent manner on a slippery surface and that such negligence was a proximate cause of her accident. Progressive failed to establish its prima facie entitlement to judgment as a matter of law declaring that the accident was not a covered event, as there is a triable issue of fact as to whether Malone had completed unloading the vehicle. As there are allegations that the vehicle was used negligently and that such negligence contributed to the accident,

A dissenting judge held the record here does not support a finding that Progressive has an obligation to either defend or indemnify Arthur Caperna, Jr., in an underlying action. Malone testified at her deposition that, although it was "hard" for her to get into the vehicle, there was nowhere else that Anthony could have parked that would have allowed her access to the vehicle without forcing her to walk across the snow on the lawn.

That judge determined that Malone's accident did not result from the use or operation of the covered vehicle. Progressive submitted Malone's deposition testimony in the underlying action, in which she admitted that she and her oldest daughter had both walked between the vehicle and the home safely, that Malone did not notice any ice on the grass between the home and the vehicle, and that there was nowhere else that Anthony could have parked when dropping off their children. Therefore, Progressive established, prima facie, that the Capernas did not breach their duty to provide Malone with a safe place to alight, and thus, that Malone's accident was not the result of some act or omission related to the use of the vehicle (see Liebman v Heiss, 256 AD2d at 449). In opposition, the respondents failed to raise a triable issue of fact as to whether Anthony failed to notice, or should have noticed, the alleged icy condition of the lawn near where Malone exited the vehicle (see id.).

Editor’s Note:  Really?  How about the Court of Appeals holding in the famous “stepping in a hole, getting out of a bus” case:

Plaintiff Kendra Cividanes testified at a General Municipal Law § 50–h hearing that she injured her left ankle when she “stepped off the last step into a hole and fell” as she exited the rear of a bus owned and operated by defendants New York City Transit Authority and Manhattan and Bronx Surface Transit Operating Authority. The Appellate Division properly held that the No–Fault Insurance Law is inapplicable because plaintiff's injury did not arise out of the “use or operation” of a motor vehicle (Insurance Law § 5104 [a]). The “use or operation” of the bus was neither a “proximate cause” nor an “instrumentality” that produced plaintiff's injury (see Walton v. Lumbermens Mut. Cas. Co., 88 N.Y.2d 211, 214, 644 N.Y.S.2d 133, 666 N.E.2d 1046 [1996] [noting that the No–Fault Insurance Law's scope of coverage should be interpreted to “reflect the Legislature's intent to draw a line between motor vehicle accidents and all other types of torts and to remove only the former from the domain of common-law tort litigation”] ). Manuel v. New York City Tr. Auth., 82 A.D.3d 1059, 918 N.Y.S.2d 787 (2d Dept.2011), which held on similar facts that the No–Fault Insurance Law's restrictions on tort liability were applicable, should not be followed.

Cividanes v City of New York, 20 NY3d 925, 926 [2012]


06/11/24       Downie v. Jiles v. Allstate Insurance Company
Appellate Division, First Department
Since the Insured Did Not Live at the Residence Premises, Coverage Did Not Exist

It is undisputed that the named insured under the homeowner's policy . . . did not reside at the subject premises. Accordingly, under the terms of the policy, the subject premises were not covered".

It made no difference whether defendant Kareem Jiles qualifies as an insured person under the policy. The policy defines "Insured premises" to include the "residence premises," which includes the "dwelling," which includes the "structure [] identified as the insured property on the Policy Declarations [] where you reside." "You" refers to "the person named . . . as the insured," and Kareem Jiles is not a named insured. The "Insured premises" also includes "any premises used by an insured person in connection with the residence premises," but the property was not used in connection with the "residence premises" in this case.


Steven E. Peiper

[email protected]


06/20/24       Landau v. IDS Property & Casualty Insurance Company
Appellate Division, Second Department
No Dwelling Coverage Where Property Is Not the Residence Premises

Another residence premises question.  Plaintiff’s residence was damaged by fire.  During the investigation, a question was raised over whether the fire was intentionally set.  Nevertheless, in the context of the investigation, IDS also discovered that plaintiff did not reside at the premises at the time of the fire. 

Where, as here, IDS demonstrated that plaintiff did not reside at the premises, and the policy only provided coverage for dwellings qualifying as the residence premises, coverage was properly denied.


06/12/24       Pavoist v. Kensington Insurance Company
Appellate Division, Second Department
Suit Limitation Clause Upheld as a Shortened Statute of Limitations

Plaintiffs sustained damage to the foundation of their premises as a result of ongoing demolition activities.  Eventually, a claim was presented to Kensington which was denied.  Plaintiffs then commenced the instant suit more than two years after the incident giving rise to their claims of damage. 

The Kensington policy contained a two-year suit limitation clause, and Kensington promptly moved to dismiss it on the grounds that the claim was barred by the applicable statute of limitations. (CPLR 3211[a][5]).  Here, the Court recognized the long-standing rule that parties to a contract were free to limit the timeline for when a suit commenced, and here such timeframe was limited to two years.  Because the suit was filed untimely, it followed that dismissal was appropriate.

Peiper’s Point – We recognize that there is a line of authority consistent with this case, which treats a suit limitation clause as a statute of limitation.  We, respectfully, disagree with that line of analysis.  The suit limitation clause is a contractual provision, which, frankly, is a policy defense to any claim. 

From our perspective, the appropriate defense here is not statute of limitation, but rather the failure to state a cause of action.  In essence, the existence of the suit limitation clause precludes relief under the policy, regardless of the statute of limitations.  


Brian D. Barnas

[email protected]


05/31/24       Bailey v. Certain Interested Underwriters at Lloyd’s London
United States Court of Appeals, Fourth Circuit
Bad Faith Claim Dismissed Where Insurer Issued Supplemental Payments on Claim and Promptly Paid Appraisal Award That Was Half of Insureds’ Demand

In August 2018, the Baileys bought a beach house in Carteret County, North Carolina.  The home was insured through Lloyd’s.  In September 2018, the house was damaged by Hurricane Florence.  Lloyd’s adjuster visited the house and appraised the hurricane damage as minor.  The Baileys made repairs costing $170,000.

After a subsequent storm, the Baileys noticed new water damage and hired an engineer.  The engineer determined the prior damage caused by the hurricane was greater than initially determined.  The Baileys notified Lloyd’s, sent the engineer report to their insurer, and asserted a claim for coverage.  Based on the new report, Lloyd’s made additional payments for a total payment of $447,019.23, However, the parties continued to disagree on the scope of damages, with the Baileys claiming over $2 million in damages.  On April 27, 2021, the dispute was submitted to appraisal, and the panel awarded $1,002,114.  Lloyd’s paid this amount.

This case was commenced prior to the final appraisal award.  After the appraisal award was entered, the Baileys added causes of action for breach of contract, bad faith, violations of the North Carolina Unfair and Deceptive Trade Practices Act (“UDTPA”), and negligence.  The appeal concerned the district court’s dismissal of the Baileys’ claims for breach of the implied covenant of good faith and fair dealing and violation of the UDTPA.

The Fourth Circuit affirmed the dismissal of the good faith and fair dealing claim.  The complaint contained no plausible, nonconclusory allegations that the insurance adjuster knew, yet concealed, the true extent of the damages.  The complaint alleged that the adjuster conducted a visual inspection and concluded that the extent of the damage could be determined based on that inspection.  While he may have been wrong about the extent of damage or the need to conduct further inspection, honest disagreement or innocent mistake does not amount to bad faith. 

The court noted that the Baileys’ demand following the engineer inspection was over $2 million, which was double the final award.  At that time, Lloyd’s had paid $447,019.23.  The Fourth Circuit reasoned that this underscored the reasonableness of the disagreement on the scope of damages.  Lloyd’s cannot be said to have acted in bad faith by refusing to pay the Baileys demand when the appraisal panel awarded less than half.  Lloyd’s willingness to provide supplemental payments above the initial assessment also demonstrated its good faith.  The case amounted to nothing more than a disagreement about the value of the Baileys’ damages.

The Fourth Circuit also dismissed the claims for violation of the UDTPA.  The Baileys alleged no unfair or deceptive business practice. As with the common law covenant of good faith claim, the Baileys attempted to squeeze allegations that Lloyd’s was mistaken about and reasonably disagreed regarding the scope of coverage into a claim that it committed a deceptive trade practice.  The allegations of the complaint made it clear that Lloyd’s adjuster simply conducted an inadequate visual inspection and was thus unaware of the true scope of the property damage. Further, Lloyd’s paid the Baileys under the policy, agreed to submit the dispute regarding the scope of damage to an appraisal panel, and ultimately paid the full amount of the damages as determined by that panel.


Lee S. Siegel

[email protected]


06/04/24        Staron Enterprises Ltd. v. Cincinnati Ins. Co.
United States District Court, District of Connecticut
A Reminder About Diversity Jurisdiction

Fresh off of our firm’s diversity training, how about a word on diversity—jurisdiction that is. Just about every insurance coverage lawyer looks to get that new coverage or bad faith action removed to federal court. As my CivPro professor often said, ‘Federal court means smarter judges, better bathrooms.’ Twenty-five years later, I can say that he was right, especially about the bathrooms. Well, apparently policyholder lawyers don’t like nice bathrooms, or smart judges, and often fight like heck to remand cases back the state court.

In this case, Staron Enterprises played a remand advocate’s biggest trump card – the damages stipulation. In support of its remand application, the insured signed a stipulation that the plaintiff will not seek more than $75,000 exclusive of interest and costs from the defendant upon remand. Cincinnati opposed, arguing, that at the time of removal (when these things are supposed to be measured), that the value of the case exceeded the jurisdictional minimum. The court held that while Cincinnati’s belief may have been reasonable, the damages stipulation defeated diversity jurisdiction requiring that the case be remanded.

Editor’s Note: A remand back to Connecticut state court—home to the nation’s insurance capital—with a damages cap, well that’s not a bad “loss” if you ask me.



Kyle A. Ruffner

[email protected]


06/04/24       Am. Trans. Ins. Co. v. Bay Ridge Ortho. Assoc., P.C. a/a/o Antoine
Supreme Court, Kings County
Court Grants Medical Provider’s Motion to Dismiss Insurer’s Complaint, Which Failed to State a Cause of Action for de Novo Review of Underlying Arbitration Dispute

The defendant healthcare provider submitted claims for first-party no-fault benefits to the plaintiff insurer for services provided to its assignor, in the amount of $8,211.29. The insured denied the claims asserting various defenses, including that the provider billed amounts that exceeded the fee schedule amounts allowed under the Insurance Law. The provider then initiated an arbitration proceeding and sought leave to amend the amount in dispute to $4,998.00, by withdrawing claims denied based upon an independent medical examination by the insurer, which was granted. The insurer did not submit any proof at the arbitration in support of its fee schedule defenses and, therefore, the arbitrator awarded the provider the sum of $4,998.00. The Master Arbitrator affirmed.

The insurer commenced this action seeking a de novo adjudication of the dispute, claiming that although CPLR 5106(c) only allows for de novo adjudications of arbitration disputes if the amount of the award was $5,000 or greater, it should be entitled to a de novo adjudication in this case because the provider acted arbitrarily and contrary to law in seeking to amend the amount in dispute to $4,998.00. The insurer claimed that if the appropriate fee schedules were used, the actual amount owed on the claims that were not withdrawn would be $5,912.10. The insurer claimed that by amending the amount in dispute to $4,998.00, the defendant's real motive was to unlawfully deny the insurer the right to a de novo adjudication under CPLR 5106(c). It also claimed that by amending the amount in dispute, the provider admitted it submitted bills in excess of the appropriate fee schedules and is thereby disqualified from recovering attorney's fees under the no-fault regulations. The provider moved to dismiss the complaint for failure to state a cause of action and to confirm the underlying arbitration award.

The court first addressed the insurer’s argument that the provider was not entitled to attorney’s fees. It is well settled that to prevail on a fee-schedule defense, a No-Fault insurer must demonstrate the amount of a provider's claim for assigned first-party benefits was in excess of the appropriate fee schedules Here, the court held that since the insurer did not submit any evidentiary proof at the arbitration supporting its fee schedule defenses, the plaintiff never demonstrated that defendant's bills were excessive. The court held that while if a provider charges in excess of the limitations contained in the section 5108 Insurance Law schedules, the insurer is entitled to attorney’s fees (11 NYCRR § 65-4.6(h)), the insurer did not demonstrate at the arbitration that the provider’s charges were excessive. Therefore, the court rejected the insurer’s contention that the provider is not entitled to attorney’s fees.

The court also rejected the insurer’s contention that the provider acted arbitrarily and contrary to law by amending the amount in dispute to less than $5000. While the insurer asserted this amendment was to deny the insurer a right to a de novo adjudication of the dispute pursuant to CPLR 5106(c), the court emphasized that the New York policy to favor and encourage arbitration as a means of expediting the resolution of disputes and conserving judicial resources. Accepting the insurer’s argument position would be contrary to this policy and would serve to squander judicial resources. It was the Court's view that such amendments should be encouraged, not discouraged.

Accordingly, the court granted the provider’s motion to dismiss the insurer’s complaint pursuant to CPLR § 3211(a)(7) on the grounds that the complaint fails to state a cause of action for a de novo adjudication of the arbitration dispute pursuant to CPLR 5106(c). Further, the insurer’s motion was denied in its entirety.


Ryan P. Maxwell
[email protected]


06/06/24       Truck Insurance Exchange v. Kaiser Gypsum Co., Inc.
Supreme Court of the United States
Insurer Financially Responsible for Bankruptcy Claims Is a Party in Interest Entitled to Appear and Be Heard in Chapter 11 Bankruptcy

Truck Insurance Exchange (“TIE”) was the primary insurer for various companies that manufactured and sold asbestos containing products. As with many asbestos defendants, two such insureds—Kaiser Gypsum and Hanson Permanente Cement (the “debtor-insureds”)—filed for Chapter 11 bankruptcy following thousands of asbestos lawsuits. The debtor-insureds filed a proposed reorganization plan under 11 U.S.C. §542(g), which would create a trust fund for purposes of resolving asbestos claims. This plan, however, treated insured and uninsured claims differently, requiring insured claims to be litigated in tort, while uninsured claims were to be directly submitted to the trust for resolution.

TIE opposed the plan as a “party in interest” under Bankruptcy Code §1109(b), claiming that the plan would, among other things, expose TIE to millions of dollars in fraudulent claims absent certain disclosures and authorizations that would be available for insured claims. TIE also argued that the plan would unilaterally alter its rights under its insurance policies. Both the district court and Fourth Circuit Court of Appeals affirmed the plan, which they found was “insurance neutral,” while also finding that TIE was not a “party in interest”. But the United States Supreme Court had the final say, finding the opposite true.

The Supreme Court found that the text, context, and history of §1109(b) plainly establish that an insurer like TIE is a “party in interest” that may be directly and adversely affected by the plan. Additionally, the Supreme Court found that the “insurance neutrality doctrine” is wrong and of minimal practicality, conflating the merits of TIE’s objection with its standing to object as a “party in interest”. While an insurer’s obligations and policy rights may ultimately be unaffected, focusing entirely upon this point ignores all the other ways the plan can alter and impose obligations on the parties to an insurance contract. Mere financial exposure makes TIE interested enough to object.

Maxwell’s Minute: Generally speaking, there is often commentary from injured plaintiffs and policyholder-defendants (really their attorneys) that insurance companies delay and/or refuse to pay legitimate claims. It appears that the debtor-insureds did so here, contending that TIE was a mere “peripheral party,” rather than a party legitimately interested in combatting millions of dollars in potentially fraudulent claims. This decision was a step in the right direction, recognizing the legitimacy of an insurer’s concerns regarding potential fraud and its impact on the financial pool available for resolution of legitimate claims. The less fraud, the better, as far as I am concerned—who’s with me!?!?


Scott D. Storm

[email protected]

06/11/24       Starikovsky v. State Farm
United States District Court, S.D. New York
Summary Judgment Granted to Insurer on 1st-Party Property Claim Where Insured’s Attorney Failed to Timely Submit Sworn Statement in Proof of Loss Forms Within the 60-Day Time Limitation.  It Was Sufficient Under the Circumstances of This Case That the Blank Proof of Loss Forms Were Sent to the Insured’s Attorney.  There Was No Breach of Contract Due to the Insurer Requesting the Proofs Six Months After the Claim Was Reported.  No Evidence of Estoppel

Starikovsky brings this action against his homeowner's insurer, State Farm, alleging it improperly denied his claim for damage to his home following a "catastrophic flood." Plaintiff asserts claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and a violation of New York General Business Law § 349. Plaintiff also seeks a declaratory judgment that defendant is obligated to pay his claim.

On July 25, 2022, defendant's counsel sent a letter to plaintiff's counsel (via email and certified mail) demanding, among other things, "Sworn Statements in Proof of Loss in support of any claims for damages" arising from the flood. Included with the letter were six blank proof of loss forms. The letter also recited a provision in the Policy which required plaintiff to submit “sworn proof of loss" within sixty days after an applicable loss or damage to the Premises.

Plaintiff signed completed proof of loss statements on August 2, 2022, but plaintiff's counsel did not transmit them to defendant until October 19, 2022. On December 6, 2022, defendant formally disclaimed coverage for the flood damage because, among other things, plaintiff had "failed to comply with the proof of loss condition" in the Policy. Defendant is entitled to summary judgment because plaintiff failed to submit proof of loss statements within sixty days after his receipt of defendant's demand.

Under New York law, the failure of an insured to submit proofs of loss within sixty days after receiving an insurer's demand "is an absolute defense to an action on the policy, absent waiver of the requirement by the insurer or conduct on its part estopping its assertion of the defense."  This defense is only available if the insurer gives the insured "written notice that it desires . . . a proof of loss and furnishes the insured with suitable blank proof of loss forms." Ins. Law § 3407. 

It is undisputed plaintiff's counsel furnished sworn proofs to defendant's counsel eighty-six days after defendant's demand. Thus, the plaintiff’s submission was untimely. Accordingly, absent a valid excuse on plaintiff's part or some conduct on defendant's part suggesting waiver or estoppel, this action is barred.

The Policy requires an insured to furnish State Farm with sworn proofs of loss "within 60 days after" an applicable loss.  Thus, plaintiff argues his deadline to provide proofs of loss was actually March 16, 2022—sixty days from the flood on January 15, 2022. Plaintiff asserts defendant was therefore required under the Policy to "timely and promptly" send a demand for proofs, along with suitable blank forms, so plaintiff could meet the March 16, 2022, deadline. According to plaintiff, defendant breached the Policy by failing to make a demand until July 25, 2022.

Although it is not entirely clear, the Court understands plaintiff to argue he was excused from performing under the Policy because defendant breached it first. This argument is unavailing.

As an initial matter, plaintiff points to no language in the Policy which affirmatively obligated defendant to demand proofs of loss promptly after receiving notice of the flood.  The relevant provision in the Policy addresses the duties of the insured, not the insurer. To the extent plaintiff believes defendant had implied duties under the Policy, he has not expressly made this argument.

In any event, Section 3407(a) modifies and supplements proof-of-loss provisions in New York insurance contracts: "[i]f the insured shall furnish proofs of loss within sixty days" after receipt of an insurer's demand, the insured "shall be deemed to have complied" with any contractual provision "relating to the time within which proofs of loss are required." N.Y. Ins. Law § 3407(a). Thus, notwithstanding the Policy's literal language, plaintiff could have satisfied his contractual obligation to furnish proofs of loss if he had submitted them within sixty days after his receipt of defendant's July 25, 2022, demand. By extension, plaintiff's failure to transmit the proofs within sixty days after receipt of the demand "is an absolute defense to an action on the policy." 

Plaintiff next argues defendant did not comply with Section 3407(a) because defendant sent the demand for proof of loss statements to plaintiff's attorney, rather than to plaintiff himself. This fact does not alter the analysis.

Under Section 3407(a), the failure of an insured to furnish proofs of loss "shall not invalidate or diminish any claim" on a subject policy unless the insurer or insurers shall "give to such insured a written notice that it or they desire proofs of loss to be furnished by such insured to such insurer or insurers on a suitable blank form or forms." N.Y. Ins. Law § 3407(a) (emphasis added). Put differently, "the failure to produce proof of loss will not invalidate the claim unless the insurer gives a written notice and a blank form." 

Here, the defendant sent notice of his desire for proofs of loss to an attorney whom plaintiff had retained to represent him in connection with the insurance claim at issue.

There is some support for plaintiff's position that service of a demand for proofs of loss on an insured's agent is not necessarily sufficient under Section 3407(a). However, here, the insured's agent is his attorney, and it is undisputed plaintiff did, in fact, receive notice of the demand sufficiently in advance of the sixty-day deadline to return them. Plaintiff signed the proof of loss statements on August 2, 2022—that is, just eight days after the demand was sent. Therefore, service on plaintiff's counsel was sufficient under Section 3407(a).  Accordingly, plaintiff has not raised a triable issue of fact as to defendant's compliance with the requirements of Section 3407(a).

Plaintiff further argues, in the event the Court finds defendant complied with Section 3407(a) and did not first breach the Policy, defendant should be estopped from asserting the instant defense because it acted in bad faith by waiting to demand proofs of loss until six months after plaintiff had submitted his insurance claim. The Court disagrees.

Under New York law, estoppel may arise "where an insurer acts in a manner inconsistent with a lack of coverage, and the insured reasonably relies on those actions to its detriment."  "Estoppel is not to be found lightly."  To invoke estoppel here, plaintiff must show a genuine factual dispute as to whether: (i) defendant, by its actions or statements, led plaintiff to believe it would cover his claim even if plaintiff did not submit proofs within sixty days after demand; (ii) plaintiff relied on defendant's statements or actions in not timely submitting proofs; and (iii) plaintiff's reliance was justifiable.

Plaintiff has not identified how defendant's statements or actions justifiably led him to believe he did not need to timely provide proofs of loss. Plaintiff disputes the findings and necessity of defendant's investigation into his claim, but "steps taken by an insurer to investigate a claim do not constitute waiver or estoppel."  Plaintiff also argues that if defendant had been acting in good faith, plaintiff would not have been "compelled" to commence this action.  But it is unclear to the Court how this assertion demonstrates defendant should be estopped from relying on plaintiff's failure to timely furnish proofs of loss.

Moreover, in multiple communications with plaintiff and his counsel, defendant reserved its rights and indicated it was not waiving any Policy terms or conditions. Thus, plaintiff would not have been justified in believing defendant would excuse plaintiff's noncompliance with the Policy's proof-of-loss provision. In sum, plaintiff has not raised a genuine issue of material fact as to estoppel.


06/10/24       Hall v. Mountain Valley Indemnity
United States District Court, S.D. New York
No Coverage for Plaintiff’s 3-Unit Property When Policy Only Covered Up to Two Units – Not a “Residence Premises.”  The Court Rejects Arguments of Waiver, Estoppel and Reformation

The Premises are a three-story building that consists of three units: a ground-floor unit, a second-floor unit, and a third-floor unit.  The exterior of the Premises contains two distinct tones of paint, gray on the ground floor, and tan on the second and third floors. At or around the time of the loss at issue in this action, Plaintiff resided on the third floor of the Premises, which contained a kitchen, dining room, bedroom, and bathroom. Plaintiff rented the second-floor unit of the Premises, which contained a kitchen, dining room, bedroom, and bathroom, to tenants. The ground-floor unit contained furniture, including a bed and a sofa. It also had windows, a refrigerator, a stove, a sink, cabinets and counterspace and a separate bathroom complete with a shower. The ground-floor unit also has its own unique lock and key separate from any other unit at the Premises. The ground floor of the Premises also contains a boiler, a water heater, and utilities. At or around the time of the loss, Plaintiff's son, who is an electrician, resided on the ground floor.

The Premises has only two electric and two gas meters, with the ground floor and the third floor connecting to a single electric meter and a single gas meter, while the second floor connected to the other electric meter and gas meter. There also are only two mailboxes at the Premises, one for Plaintiff and the other for the second-floor tenant.

On May 9, 2022, a heavy fire broke out at the Premises, destroying the building and rendering it uninhabitable. Plaintiff submitted a timely sworn proof-of-loss to Defendant for $551,073.37 in property damage and an $80,000 loss in personal property.  Defendant denied coverage for Plaintiff's claim on the grounds that the Premises was a three-family dwelling, thereby removing the Premises from the definition of a "residence premises" as required by the policy and disqualifying it from the coverage grant.

Plaintiff and Defendant dispute whether the Premises is covered under the plain terms of the Policy. In addition, Plaintiff argues that even if the Court rejects his interpretation of the Policy, he is entitled to coverage for the loss caused to the Premises based on the principles of waiver and estoppel. Finally, Plaintiff argues that he is entitled to coverage for the loss to the Premises based on principles of mutual mistake and reformation. The Court considers each argument in turn and rejects them.

The Policy provides coverage to the "dwelling on the `residence premises' shown in the Declarations."  Thus, a home is covered under the Policy if it: (1) is "on the `residence premises'"; and (2) is shown in the Declarations. The first requirement, that the home be a residence premises, is satisfied if: (1) the Named Insured resides in it; (2) it is described in the Declarations; and (3) it is either the "one family dwelling, other structures, and grounds" where the Named Insured resides or the part of another building where the Named Insured resides, or the entirety of a two-family dwelling in which the Named Insured resides in one of the family units. 

Under New York law, the number of dwelling units contained in a building is determined by its structural configuration and the number of self-contained dwelling units, and not by the number of families who reside in it. Defendant has established that the Policy is not ambiguous, and that under the Policy, Plaintiff is not entitled to coverage of a premises that includes three units. Instead, the Policy establishes that Plaintiff is entitled to coverage of a dwelling with at most two-family units.  Thus, to be eligible for coverage, the insured premises must be a one- or two-family owner occupied home, but not a three-family home.

There also is no genuine issue of the fact that, at the time of the fire, the Premises had three family-dwelling units, in the form of three self-contained dwelling units. Each of the three floors has its own kitchen, bathroom, living space, and separate entrance; each is therefore a self-contained unit. 

Plaintiff offers two further arguments in support of coverage. First, Plaintiff argues that the residence premises should be defined solely by the Declaration and that because the Declaration refers to the Residence Premises as being at 1022 Ogden Avenue, the structure at that location was covered by the Policy regardless of the number of units it contained. That argument, however, is without merit. The Policy must be interpreted as a whole, and the language that gives "residence premises" meaning is that in the Broad Form that contains the grant of coverage. That language defines residence premises to be a one or two-family dwelling. It thus follows that it is not sufficient for a structure to be covered under the Policy that the structure is located at 1022 Ogden Avenue; for it to be insured, the structure must also qualify as a residence premises under the Policy.

Second, Plaintiff also refers to the language of the Broad Form that includes within the definition of a residence premises "[t]hat part of any other building" where Plaintiff resides and "which is shown as the `residence premises' in the Declarations." Plaintiff argues that the language cannot be construed to be limited to a two-dwelling unit without rendering other parts of the Policy definition that specifically include a two-family dwelling unit surplusage. But this argument too lacks merit. The building described as the residence premises in the Amended Declaration is limited to premises with two family units. Thus, regardless of whether the Policy definition of "residence premises" would permit the parties by subsequent declaration to include within the Policy coverage a structure other than a one- or two-unit dwelling, the parties here did not do so.  Defendant has therefore established that the Policy did not cover the Premises.

Plaintiff next argues that, even if the Policy is construed to limit coverage to premises that contain two or fewer units, the Court should still hold that he is entitled to coverage for the Premises because Defendant was on notice of the number of units in the building yet continued to accept premiums under the Policy and "lull Mr. Hall into believing that he had coverage for the next twenty years."

An insured cannot, by the doctrine of waiver, obtain insurance "coverage to more than it originally bargained."  "[W]here the issue is the existence or non-existence of coverage (e.g., the insuring clause and exclusions), the doctrine of waiver is simply inapplicable."  [W]aiver cannot create coverage where such coverage is not already "subsisting".

Estoppel is distinct from waiver.  Estoppel applies "where an insurer acts in a manner inconsistent with a lack of coverage, and the insured reasonably relies on those actions to its detriment." Plaintiff has not adduced facts that would support an argument of equitable estoppel. He asserts that Defendant "acted for twenty years as if there was valid insurance coverage," and points to an inspection conducted by Defendant of the Premises in 2002, which Plaintiff claims would have put the insurer on notice of the configuration of the building. Construing the facts most favorably to the non-moving party, Defendant performed an inspection of the building located at 1022 Ogden Avenue when Defendant first issued insurance on the Premises in 2002. Although it is not known whether an exterior or interior inspection of the building occurred, a person driving by the building would have been able to discern whether it was a three-story building, and a person walking through the ground floor entrance in 2002 would have seen a closed door with a lock that led to the ground floor unit. According to Plaintiff, these facts together establish that Defendant was on notice of the building's configuration when it issued the Policy.

Defendant's past conduct is not inconsistent with its current position. The conduct to which Plaintiff points was Defendant's collection of premiums. But that conduct is not inconsistent with its current position that the Policy did not cover the Premises. The Policy, on its face, provided insurance only for a two-unit dwelling. Defendant agreed only to insure a two-family dwelling and a two-family dwelling is one that can house two families. It is not a three-unit dwelling. There is no evidence that Defendant ever stated that it would insure a three-unit dwelling or that Plaintiff ever represented anything other than that the Premises contained two units.

Plaintiff has therefore not established that estoppel is applicable here.  "Where, as here, there is no coverage under the policy, the doctrines of waiver and estoppel may not operate to create such coverage." "[T]he doctrine of estoppel may not be invoked to create coverage where none exists under the policy."

Finally, Plaintiff argues that the Policy should be reformed to cover the Premises based upon the doctrine of mutual mistake. Plaintiff contends that Defendant "claims to have made an error in its classification of the building," and that reformation of the Policy to cover the Premises would "have the effect of providing the coverage that the parties intended."

"A claim for reformation of a written agreement must be grounded upon either mutual mistake or fraudulently induced unilateral mistake."  "In a case of mutual mistake, the parties have reached an oral agreement and, unknown to either, the signed writing does not express that agreement. In a case of fraud, the parties have reached agreement, and unknown to one party but known to the other (who has misled the first), the subsequent writing does not properly express that agreement."  This standard is difficult to satisfy. "[T]here is a `heavy presumption that a deliberately prepared and executed written instrument manifest[s] the true intention of the parties' and a correspondingly high order of evidence is required to overcome that presumption." Id. at 234 (internal citation omitted). Accordingly, "a party proposing reformation must demonstrate `in no uncertain terms' what the parties really agreed to and prove that a mistake occurred." 

Plaintiff has not offered evidence that creates a triable issue of mutual mistake. The most that Plaintiff's evidence establishes is that he assumed that the Policy he purchased would cover the Premises because, at all times, there was a resident in the first-floor unit. The intention of the Plaintiff that the Premises would include three dwelling units and still be covered under the Policy is not enough to warrant reformation if the insured did not communicate that intention to the insurer.  The language of the Policy itself limits coverage to one- or two-family dwellings.  That is what Plaintiff paid for and what he received. Although it is reasonable to infer that both Plaintiff and Defendant assumed that the building at 1022 Ogden Avenue would qualify for homeowners' insurance, there is no basis to infer that the insurer understood and agreed that Plaintiff would include in the first-floor space living quarters, a bathroom and a kitchen that would make that space a self-contained dwelling unit.

Plaintiff also has not offered evidence that Defendant defrauded or misled Plaintiff into believing that the Premises could be more than a two-family dwelling and still be covered by the Policy. Plaintiff avers that Defendant conducted an inspection and could have seen in 2002 that the Premises had three floors and that the ground floor had its own lock. But Plaintiff claims coverage under the 2022-2023 Policy and the relevant question thus is whether Defendant misled Plaintiff into believing that the Premises, as configured at that time, would be covered. There is no evidence to support that proposition. Moreover, the fact that a building has three floors and that there was a lock on the ground floor would not put the insurer on notice that behind the lock there was a living space, a bathroom, and a kitchen. The only representations contained in the record are those contained in the Policy—that the Premises would be covered if they contained no more than two dwelling units. That is all that Defendant agreed to. Plaintiff is not entitled to reformation on grounds of fraud.


Katherine A. Fleming

[email protected]


On vacation this week; see you in two.


Evan D. Gestwick

[email protected]


06/13/24       CMGK, LLC d/b/a Massage Envy v. Certain Underwriters at Lloyd’s
New Jersey Supreme Court, Appellate Division
Court Finds No Coverage Under Claims-Made and Reported Policy Under Prior Knowledge Clause Where Insured Admittedly Knew of an Act That Objectively May Result in a Claim

Massage Envy was insured under a professional liability insurance policy, written on a Claims-made-and-reported basis, issued by Lloyd’s. A massage therapist was accused of inappropriately touching a woman while rendering massage services. The incident occurred prior to the effective date of the policy, but the claim was made while the policy was in effect. Lloyd’s denied coverage on the basis of the prior knowledge clause. This lawsuit followed.

The policy contained a sexual acts liability endorsement, where Lloyd’s agreed to pay damages as a result of sexual injury arising out of sexual acts perpetrated by the insured or its employees. Importantly, this insuring agreement was subject to a caveat, known as the “prior knowledge clause,” which provided that if, prior to the effective date of the policy, the insured had knowledge of an act, error, or omission which may result in a claim being made under the policy, the insuring agreement is not triggered.

The policy went into effect on March 9, 2018. The massage in question took place on September 23, 2017. The customer filed a police report on September 26, 2017, and the owner learned of the allegation the day prior. The customer filed the underlying tort lawsuit against Massage Envy on September 4, 2018, and Massage Envy tendered its defense and indemnity to Lloyd’s the following day.

The policy was written on a claims-made-and-reported basis, meaning that it is immaterial that the loss occurred outside of the policy period. Rather, the relevant timeframe is when the claim was first made against the insured. At first glance, it may appear that the claim was made against the insured right in the middle of the policy period, and that all was well—think again.

Khalifa, the owner of that Massage Envy franchise, was aware of the alleged incident just days after it happened—in September 2017—prior to the commencement of the policy period. On this basis, Lloyd’s denied coverage, on the ground that the insured had knowledge of an act likely to result in a claim prior to the policy’s effective date.

Khalifa and Massage Envy disputed this coverage position, contending that they “honestly believed” that no claim would be made against them, citing the fact that the police department found insufficient evidence to charge the therapist with a crime. The Court disagreed.

In New Jersey, many courts use a subjective-objective standard when determining whether an insured had knowledge of an act that may result in a claim. The first prong of the inquiry—whether the insured knew of the act in question—gets a subjective analysis that asks whether that specific insured actually knew of the act. In this case, Khalifa admitted that he was aware of the allegations in September 2017, before the policy went into effect. The second prong of the analysis—whether it might reasonably be expected that the act would result in a claim under the policy—gets an objective analysis. This means that, instead of asking what the specific insured in question might have thought, courts instead ask what a reasonable person under similar circumstances may have thought. This insured, Mr. Khalifa, testified that he believed no claim would be made because the companion police investigation turned up insufficient evidence to charge the therapist with a crime. The Court held Mr. Khalifa’s belief was unreasonable, as a reasonable person would have justifiably expected that a civil claim would be made, despite no criminal charges being pressed.

A win for the good guys.

Editor’s Note:  This makes sense, at least from a lawyer’s perspective. A higher standard is needed to charge a suspect with a crime, and any charge must be supported by evidence. Meanwhile, in civil litigation, individuals are free to make claims now and prove them later. That the DA’s office didn’t turn up enough evidence to charge the therapist doesn’t mean the victim herself won’t make a civil claim. And even from a layperson’s perspective, it still makes sense. I would hazard that nobody calls a criminal charge a “claim—” most people call them “charges.” Yet the policy says “claim.” How does one not think, or at least worry about, being sued amid sexual assault allegations against their company and one of its employees?


Ryan P. O’Shea

[email protected]


06/17/24       Paraco Gas Corp. v. Ironshore Indemnity, Inc.
United States Court of Appeals, Second Circuit
Claim That Board Member Violated Shareholder Agreements Falls Within Contractual Liability Exclusion, But-for Test Applied

Paraco distributes propane and fuel equipment. It purchased a Directors and Officers liability policy (“D&O Policy”) from Ironshore. A suit was brought against two of Paraco’s officers, Joe and Christina Armentano, which alleged Joe transferred shares in violations of Paraco’s Shareholder agreements. So, Paraco and the Armentanos sought coverage from Ironshore under the D&O Policy. Ironshore declined the duties to defend and indemnify. Paraco and the Armentanos filed a federal declaratory judgment action. The district court dismissed based upon an exclusion in the policy. Paraco appealed with the position that all claims in the underlying complaint did not fall within the exclusion. The exclusion reads:

Section III. The Insurer shall not be liable to make any payment for Loss in connection with any Claim made against any Insured: . . . N. alleging, arising out of, based upon or attributable to any actual or alleged contractual liability or obligation of the Company or an Insured Person under any contract, agreement, employment contract or employment agreement to pay money, wages or any employee benefits of any kind.

The Second Circuit affirmed the dismissal by summary order. Focusing on the “arising out of” language, the court noted New York law finds the term is broadly construed. Paraco conceded that 9 of the 10 claims arose out of breaches of Paraco’s Shareholder Agreements, which fall within Section III.N’s exclusion. Narrowing down to the remaining claim, the court looked at whether it also involved Paraco’s contractual liability. The remaining claim alleged the Class A Shareholder Agreement remained valid and Joe Armentano’s purported termination of the Class A Shareholder Agreement was invalid.

Paraco’s position is that the claim was based on its Board’s corporate and fiduciary powers, not the Shareholder Agreements themselves. The company further argued the claim related to the Board’s abdication of its duties and would exist regardless of the obligations under the Shareholder Agreements. Ironshore argued that but for Joe Armentano’s breach of the Shareholder Agreements, a contractual agreement, there would be no claim.

With a quick citation to, Mount Vernon Fire Ins. Co. v. Creative Hous. Ltd., the Second Circuit agreed with Ironshore. It reasoned not only did the claim allege the existence of the violation of a contract but relied on the contract for the theory of harm. Thus, no claim could exist but for the alleged violation of the Shareholder Agreements. Although it determined the claim was not for breach of contract per se, it was firmly based on breaches of Joe Armentano’s violations of the agreements. As for the allegations against Paraco’s Board, the court simply stated a pleading must provide particular facts for derivative actions. Which in this circumstance included a demand futility statement, and such a statement did not transform the action or claim itself.


Robert J. Caggiano

[email protected]


06/05/24       Waters v. Saha, et al
Appellate Division, Second Department
Second Department Affirmed a Decision Denying Summary Judgment Where the Moving Defendants Failed to Meet the Requisite Burden of Proof Showing That the Plaintiff Did Not Sustain a Serious Injury Within the Meaning of Insurance Law § 5102(d).   

Defendants appealed from an Order of Supreme Court, Queens County, which denied the branch of Defendants’ motion for summary judgment dismissing the complaint on the ground that Plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). On review, the Second Department unanimously affirmed the granting of the motion, finding the evidence presented by the moving Defendants failed to meet the requisite burden of proof for summary judgment. 

By way of background, this matter stems from a motor vehicle accident where a vehicle owned and operated by Plaintiff James Waters’ wife (deceased) came into contact with a vehicle operated by Defendant Liton C. Saha. As a result of the accident, Plaintiff alleged his deceased wife suffered numerous injuries, including to her lumbar and cervical spine. It was alleged these injuries met the serious injury threshold under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d).

Specifically, on review the Second Department found that the moving Defendants failed to submit competent medical evidence establishing, prima facie, that the decedent did not sustain a serious injury to her cervical and lumbar spine regions under the permanent consequential limitation of use or significant limitation of use categories of insurance Law § 5102(d). Further, the Defendants failed to submit evidence that the alleged spine injuries were not caused by the subject motor vehicle accident.

Accordingly, the Second Department unanimously affirmed the lower court’s denial of the branch of Defendants’ summary judgment motion seeking to dismiss the complaint against them on the basis that decedent did not sustain a serious injury under Insurance Law § 5102(d).  


Joshua M. Goldberg

[email protected]


06/13/24       Matter of Government Empls. Ins. Co. v Goines
Appellate Division of the Supreme Court, First Department
Unattended Vehicle Strikes Down Stolen Vehicle Disclaimer

In a Petition to Stay Arbitration, Petitioner GEICO sought to permanently stay a UM/UIM Arbitration after Proposed Additional Respondent Liberty Mutual disclaimed liability on the ground that the insured vehicle was stolen. GEICO established that the subject vehicle was left unlocked, unattended, and running - a violation of VTL §1210(a). As a result, Liberty Mutual’s disclaimer was found to be improper and Liberty Mutual failed to adduce any evidence that the statute was not violated.

Notes: VTL §1210(a) is statute of common sense – don’t leave your car running, unlocked, and with the keys conspicuously inside the vehicle and walk away. Also interesting, the lower court denied the Petition on the grounds that GEICO did not submit an attorney affirmation in support of the petition, despite the petition itself being affirmed and verified by an attorney with the same information required for an affirmation. Respondent did not even raise this issue in its opposition/answer to the petition, but instead, relied only upon the disclaimer issued by Liberty Mutual.


06/20/24       State Farm Mut. Auto. Ins. Co. v Premium Laundry Corp.
Appellate Division of the Supreme Court, Second Department
Coverage Denied to Corporations Sharing Vehicles and Employees

This case arises out of a motor vehicle accident which resulted in a death of one of the parties involved, Margarita Martinez. A lawsuit was brought by Mario Martinez, individually and on behalf of the decedent, against Premium Laundry Corp. alleging that a 2004 Ford Econoline van resulted in the decedent’s unfortunate demise. The 2004 Ford Econoline van was owned by Minerva Xiras Corporation, a company with common ownership and used in business related to that of Premium Laundry Corp. Premium Laundry Corp. was the owner of a different vehicle, a 2000 GMC Savana. State Farm insured both vehicles under separate policies. Meanwhile, Premium Laundry and Minvera, although distinct entities, would share the vehicles, resulting in employees of Premium Laundry driving the 2000 GMC and employees of Minerva driving the 2004 Ford.

State Farm, in recognition of the sloppy arrangement and potential for vicarious liability, afforded a defense to Premium Laundry while denying any duty to indemnify Premium Laundry. Ultimately, Martinez ended up prevailing and obtained a judgment against Premium Laundry. Premium Laundry thereafter assigned its rights against State Farm to Martinez. During the pendency of the underlying action, State Farm commenced this declaratory judgment action seeking a determination that it was not obligated to defend and/or indemnify Premium Laundry. State Farm contended that the 2004 Ford Econoline Van was not owned by Premium Laundry and was not under Premium Laundry’s insurance policy.

The lower court found in State Farm’s favor and awarded summary judgment to State Farm, declaring it was not obligated to indemnify Premium Laundry or pay any part of the judgment obtained in the underlying action. The Appellate Division affirmed, find that the vehicle involved in the loss, the 2004 Ford Econoline, was not the covered vehicle under Premium Laundry’s policy. As the policy provided no coverage whatsoever for the claim, State Farm did not have to provide notice to Martinez and its disclaimer was valid.

The Appellate Division also determined that Martinez failed to raise an issue of fact as to whether the ‘Non-Owned Car’ or ‘Temporary Substitute Car’ provisions of the Premium Laundry policy were applicable. State Farm’s policy defined a Non-Owned Car as “a car that is neither owned by the insured nor available for its regular use.” As Premium Laundry and Minerva’s employees routinely used the respective vehicles interchangeably, the 2004 Ford was not a ‘Non-Owned Car’ as set forth in the policy. Nor was the 2004 Ford a ‘Temporary Substitute Car’ since it well….it was not a temporary substitute car.


Isabelle H. LaBarbera

[email protected]


06/05/24       Matter of Progressive Advanced Ins. Co. v. Mitchell
New York State Supreme Court, New York County
Court Finds That an Electric Unicycle is a “Motor Vehicle” Under the Subject Insurance Policy and VTL §125, Denying Insurer’s Petition for Temporary Stay of Arbitration

A man was driving his motor vehicle when he collided with an individual operating an electric unicycle. The man submitted a claim with his automobile insurer, Progressive Advanced Insurance Company (“Progressive”), seeking uninsured motorist/supplementary underinsured motorist benefits. He subsequently filed a Demand for Arbitration before the American Arbitration Association.

Progressive brought a special proceeding, seeking a permanent stay of arbitration; or alternatively, a temporary stay to commence a framed issue hearing and complete discovery.  Progressive argued that the subject policy did not provide uninsured motorist/supplementary underinsured motorist benefits in relation to the subject accident, because an electric unicycle does not classify as a “motor vehicle” under the policy or under VTL §125.

Under the Progressive policy, Progressive will “pay all sums which the insured, as defined herein, or the insured’s legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the insured, and caused by accident arising out of such uninsured motor vehicle’s ownership, maintenance or use…”

Motor vehicle was not defined within the Progressive policy. However, under the policy, an “uninsured motor vehicle” is defined to exclude any motor vehicle that is:

(1)      insured under the liability coverage of this policy; or

(2)      owned by you, the named insured, or your spouse residing in your household; or

(3)      self-insured within the meaning of the financial responsibility law of the state in which the motor vehicle is registered, or any similar state or federal law to the extent that the required amount of such coverage is equal to, or greater than, the third-party bodily injury liability limits of this policy; or

(4)      owned by the United States of America, Canada, a state, a political subdivision of any such government or an agency of any of the     foregoing; or

(5)      a land motor vehicle or trailer, while located for use as a residence or premises and not as a motor vehicle or while operated on rails or crawler-treads; or

(6)      a farm type vehicle or equipment designed for use principally off public roads, except while actually upon public roads.

The Court found that Progressive failed to meet its burden to establish that the electric unicycle is not an “uninsured motor vehicle” under the policy. An electric unicycle was not specifically excluded under the definition of “uninsured motor vehicle.” The Court was unpersuaded by Progressive’s argument that the electric unicycle does not classify as a motor vehicle under VTL §125.

A “motor vehicle” is defined under VTL §125 as:

Every vehicle operated or driven upon a public highway which is propelled by any power other than muscular power, except (a) electrically-driven mobility assistance devices operated or driven by a person with a disability, (a-1) electric personal assistive mobility devices operated outside a city with a population of one million or more, (b) vehicles which run only upon rails or tracks, (c) snowmobiles as defined in article forty-seven of this chapter, (d) all terrain vehicles as defined in article forty-eight-B of this chapter, (e) bicycles with electric assist as defined in section one hundred two-c of this article, and (f) electric scooters as defined in section one hundred fourteen-e of this article. For the purposes of title four of this chapter, the term motor vehicle shall exclude fire and police vehicles other than ambulances. For the purposes of titles four and five of this chapter the term motor vehicles shall exclude farm type tractors and all terrain type vehicles used exclusively for agricultural purposes, or for snow plowing, other than for hire, farm equipment, including self-propelled machines used exclusively in growing, harvesting or handling farm produce, and self-propelled caterpillar or crawler-type equipment while being operated on the contract site.

Here, the Court found that the electric unicycle was propelled by a power other than muscular power. Despite the exclusion for bicycles with electric assist, and electric scooters, there is no specific exclusion for electric unicycles within VTL ­§125. As such, the Court found that an electric unicycle does not fall within one of the listed exceptions of VTL §125, and therefore, fits within the definition of “motor vehicle” under VTL §125.

Accordingly, the Court denied the branch of Progressive’s petition which sought a permanent stay of arbitration, as well as the request for a framed issue hearing. However, the Court granted the temporary stay of arbitration to allow for the completion of discovery permitted under subject insurance policy.


Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta

[email protected]


06/14/24       Workman Optometry Prof. Corp. v. Certas Home & Auto Ins. Co.
Court of Appeal for Ontario
Commercial All-Risk Property Insurance Policies That Cover “All Risks of Physical Loss or Damage” Extend to Physical, Tangible Harm to Property and Business Interruption Coverage Consequent on That Loss and Damage; These Policies Are Not Triggered by the Possible Presence of the COVID-19 Virus or the Civil Authority Measures to Deal With the COVID-19 Threat

In previous editions of this column, I have mentioned and discussed the June 5, 2023, Ontario trial decision in Workman Optometry:  Workman Optometry Professional Corporation v Certas Home and Auto Insurance Company, 2023 ONSC 3356.

That decision was appealed to the Ontario Court of Appeal who released its decision this past Friday, June 14, 2024.  The case concerns coverage for a class action proceeding brought by a number of small and mid-sized businesses in Ontario against several property and casualty companies. That class action claims that the insureds included in the class are each entitled to business interruption coverage under their commercial package insurance policies due to the reduction, and in some cases elimination, of foot traffic cause by the COVID-19 public health measures that in some cases included the outright closure of businesses.  Each of the class action insurers alleged a loss of business income due to those measures.

The trial court was asked to address the following issues in a common issue trial:

  1. Whether the presence of the COVID-19 virus or its variants caused physical loss or damage to property within the meaning of the business interruption provisions of each of the defendants’ property insurance wordings (“Common Issue #1”);

  2. Can an order of a civil authority in respect of business activities that was made due to the COVID-19 virus, or its variants cause physical loss or damage to property within the meaning of the business interruption provisions of each defendants’ property insurance wordings (“Common Issue #2”);

  3. If the answer to either of the first two questions in “yes”, are there any exclusions in any of the defendants’ property insurance wordings that would result in coverage for such loss or damage being excluded? (“Common Issue #3)

Common Issue #1- The trial court determined that the broad ‘all-risk’ coverage is limited by the words “all risks of physical loss or damage”. Those words require some tangible or concrete harm to the insured property. COVID-19 did not adversely harm property in a sufficiently tangible or concrete way to qualify as being direct physical loss or damage. The answer to common issue #1 was held to be “No”.

Common issue #2 – Counsel for the insureds argued that the presence, or potential presence, of COVID-19 in and on their commercial property caused a “loss of use”, and that loss of use falls withing the meaning of physical loss of or damage to property. They argued that anything that could make the use of their property dangerous causes a loss of use, which is physical loss of or damage to property.  The trial court held that the business interruption coverages in all policies in issue insure business interruption losses (including, among things, lost income from loss of “use”) only if the loss has been caused by “physical loss or damage to” property.

If the plaintiffs’ argument that “physical loss or damage to” property includes loss of use, the business interruption coverage would insure loss of use (the interruption of the business) caused by loss of use. Put another way, the plaintiffs’ argument would mean that business interruption insurance provides coverage for losses suffered due to the inability to use property resulting from the inability to use property. This results in a nonsensical circularity.

In the context of property damage, physical loss or damage refers to the effect the covered peril must have on the insured property to trigger coverage, not the covered peril itself. The trial judge dismissed this argument stating that physical loss of or damage to property would not be understood by the ordinary policy holder to include loss of use.

Finally, the insureds argued that as the insurers involved issued pandemic exclusions to their policies following the onset of the COVID-19 pandemic, the insurers must have intended that the policy covers this loss of use -- something cannot be excluded if it is not covered in the first place.  The trial court dismissed this argument as well stating that insurers may, and frequently do, use a “belt and suspenders” approach to the drafting, or amending, of their policies. The law does not prevent this or impose a “penalty” upon drafters who do so. The Supreme Court of Canada in the seminal decision, Ledcor, also stated that there need not be “perfect mutual exclusivity” between an insuring agreement and exclusions; the Court held that the Alberta Court of Appeal had erred by approaching its analysis of the coverage issue by relying on exclusions to imply coverage.  The same analysis applies here.

The trial judge therefore concluded that the answer to common issue 2 is “No”.  As the answers to common issue #1 and #2 were both ‘No”, there was no need to discuss common issue #3.

The appeal of this decision was heard by the Ontario Court of Appeal on June 12, 2024. The various insurers were represented by a group of 30 leading largely Ontario-based insurance counsel. The insured group was represented by three counsels. It is apparent that the Ontario Court of Appeal was not in the least persuaded by the argument of the counsel for the insureds. Two days later, on June 14, 2024, that Court held:

the …[insureds]…. assert that the trial judge made two errors: (1) he incorrectly held that the real or apprehended physical presence of SARS-CoV-2 on commercial property was not “physical damage” to the extent that it rendered the property dangerous; and (2) he incorrectly held that a “loss of use” resulting from the presence of SARS-CoV-2 did not amount to “physical loss” within the meaning of the various insurance policies.

We do not accept these submissions. On both issues, we agree with the reasoning and conclusions of the trial judge. His reasoning is thorough and impeccable, and his conclusion is correct.

In short, the Court of Appeal of Ontario gave the trial judge a gold star. It is seldom the case that an appellate court declares that the trial judge’s reasoning is both thorough and impeccable.

The insured group has 30 days to seek leave to appeal to the Supreme Court of Canada. Hopefully this definitive endorsement of the trial judge’s reasoning will persuade the Supreme Court not to grant leave. If this Ontario Court of Appeal decision is left undisturbed, there will be a significant nail in the coffin of the massive monetary threat to the property insurance industry posed by these arguments.  But that threat will remain, albeit in diminished form.

The coverage issues are not necessarily over despite this very strong decision. Arguments premised upon manuscript and uncommon wording may continue in addition to allegations of bad faith, breach of contract and breach of the Canadian Competition Act. 

Nonetheless, it will be interesting to see if this decision means that another class action known as the Nordik Windows action against a single insurer, Aviva, can proceed and whether it also effectively dismisses a class action filed by the various Canadian branches of the Royal Canadian Legion and another by a group of denturists also against Aviva.

© Hurwitz Fine P.C. 2024
All rights reserved

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