Volume XXV, No. 17 (No. 664)
Friday, February 2, 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.
Back from Arizona. I prefer cacti and mountains and 65 degrees over cold and grey, if someone asked me. Nobody did.
This issue presents a teaching moment with several interesting cases. One (he says unabashedly) is in my column and it underscores a tactic we have used successfully but isn’t used that often. Here’s the question: assume that are defending a party in a lawsuit and partial summary judgment is entered against that party. For example, you represent (or insure) a general contractor in a Labor Law (construction) lawsuit and a court has ruled that it is liable to the plaintiff, subject to a later determination on quantum. You are convinced that your primary policy of $1,000,000 will be exhausted and surpassed when the jury determines the amount of damages.
Do You Have an Interest in Cutting Off Interest?
Interest in New York State courts runs at nine (9%) per cent per year and it may be years before a jury renders a verdict on damages, with appeals of liability and damage discovery still ahead. Interest starts to run when liability is determined. So, if in February 2024, a judge awards partial summary judgment on liability and the damage award doesn’t come in until February 2027, three yeas from now, the insurer will be liable to pay interest on the judgment.
How much interest? Well, let’s look at Supplementary Payments, which requires the insure to pay, in addition to the policy limits:
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f. Prejudgment interest awarded against the insured on that part of the judgment we pay. If we make an offer to pay the applicable limit of insurance, we will not pay any prejudgment interest based on that period of time after the offer.
g. All interest on the full amount of any judgment that accrues after entry of the judgment and before we have paid, offered to pay, or deposited in court the part of the judgment that is within the applicable limit of insurance.
On bodily injury claims, New York does not award pre-judgment interest (it does, on contract and property damage claims). On bodily injury claims, like the one I’ve described, interest will start to run at 9%, once the liability judgment is determined. So, if it takes three years for the damage award to be issued, $1,000,000 is increased to $1,270,000 (and that assumes that the judgment is paid the day of the verdict).
How does an insurer avoid the accumulation of interest? The answer is clear in the policy provision but less clear in the case law. Without depositing into court, the case law instructs that an unconditional offer of the policy limits together with accumulated interest up to the time of the offer will cut off interest. The key word is unconditional. That means, the insurer cannot demand anything (including a release) in exchange for the offer. We were successful in cutting off interest in a 2008 decision, called Miraglia v. Essex Insurance Company, 2008 WL 10665119 (N.Y.Sup. Orange County).
The decision reported on in today’s issue demonstrates what happens when an offer of the limits, with accumulated interest, but it is not made unconditionally . Seek legal advice on composing the right letter.
We welcome Isabell LaBarbera into the practice of law, and a stellar member of our coverage team.
Sol, Who’s Sol?
In my search for newspaper articles on Groundhog Day, I found this article in the Lebanon Courier and Semi-Weekly Report from February 13, 1852: “Sol” must have been Punxsutawney Phil’s great-great grandfather. This was the oldest reference I could find in my newspaper search,
By the way, Old Sol was around 100 years ago and on Groundhog day in 1923, predicted six more weeks of winter. Punxsutawney Phil was so named in 1961.
Of course, someone has written an article about coverage issues resulting from negligence on the part of the groundhog.
For those who are taking notes, it is Groundhog Day, not Ground Hog Day or Groundhog’s Day or Groundhogs Day
YOUR INPUT APPRECIATED
For the past few years, in partnership with my colleague, John Trimble from Lewis & Wagner in Indianapolis, we have offered on-line Zoom training programs providing a Primer for CGL coverage, Risk Transfer, Choice of Law and other topics. We have had thousands of participants in these programs and the feedback has been fantastic.
We’re now planning our 2024 training schedule. Are there topics for which your staff could use interactive Zoom training? Are you interested in the programs we’ve shared in the past because of new hires? Let us know.
Just respond here and let me know: [email protected].
In Ryan Maxwell’s column, you’ll find a Second Circuit case – a rare one – on SUM coverage and the consequences (none in this case) of an insurer not offering the coverage in accordance with the law.
Need a mediator for an insurance dispute? Coverage 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.
Newsletters:
We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:
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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.
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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.
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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.
Jury Awards $3,000 for Wrongful Death – 100 Years Ago:
Daily News
New York, New York
2 Feb 1924
SHE WINS $3,000
VERDICT AGAINST
SLAYER OF MATE
An unusual verdict, probably the first of its kind in New Jersey, was returned yesterday in Hudson County Circuit Court, Jersey City, in a suit for damages against Luigi Juliano for having stabbed to death Carmine Calagiano, in North Bergen, Oct. 7, 1920. The jury awarded Mrs. Antoinette Calagiano, the widow, $3,000.
Juliano is in State prison at Trenton, serving a term of from ten to twenty years, having been convicted of second-degree murder. Mrs. Calagiano had learned Juliano owned property in Hudson County. The death of her husband followed a quarrel over thirty cents.
Peiper on Property (and Potpourri):
Happy February. We return this week with indemnification issues in triplicate. Some interesting issues, too, involving General Obligations Law 5-322.1. We’re still awfully quiet on the property front, but here’s hoping that beat picks up as we push toward Spring.
Tomorrow is Groundhog Day. So, in homage to our friends in Punxsutawney, we will suspend our normal “National Day Of” review. Other than about 5 days, Winter has pretty much been a bust this year. So, let’s hope there are no shadows seen tomorrow and we can get on with Spring.
That’s it for now. See you in two weeks.
P.S. – As with previous years, we take the first issue to remind you that pitchers and catchers report to Spring Training as early as February 9th. Surely, the first sign of Spring if we’re left disappointed by the rodent.
Steve
Steven E. Peiper
Woodchuck Massacre – 100 Years Ago:
Democrat and Chronicle
Rochester, New York
2 Feb 1924
PERRY MAN KILLS 278
WOODCHUCKS IN YEAR
Perry, Feb 1. – George Blodgett of the Blodgett-Lange Company has turned over the woodchuck medal to Earl Vincent who killed 278 chucks last year. In a single week Vincent pelted 131, a record he hung up as a vacation pastime. For a three-year period, Blodgett probably leads, but Vincent outdistanced him last year and the mythical medal goes to him.
Farmers appreciate the assistance of these hunters in ridding the section of agriculturists who feel that there should be a bounty on the woodchucks as well as on crows. In the course of a year, it is figured woodchucks do thousands of dollars damage to growing crops in this part of Wyoming county.
Barnas on Bad Faith:
Hello again:
Football season is over for the Bills, and the Orange, Raptors, and Sabres do not look like they are in danger of making it to postseason play. Accordingly, my sports attention has fully shifted to the upcoming NASCAR season and the Premier Leage. My favorite driver, Kevin Harvick, has retired, so I am a bit of a NASCAR fan free agent. I am leaning towards either sticking with the 4 team and new driver, Josh Berry, or taking my fandom to Ross Chastain, the new driver of the Busch Light car. We will see how the season develops. In the meantime, I have been enjoying the new NASCAR Full Speed documentary on Netflix. It is definitely worth a watch if you like the all-access sports documentary genre.
I have two cases in my column this week. The 88-18 Tropical decision is a New York case from the Second Department where the court dismissed a breach of fiduciary duty claim against the insurer but allowed a cause of action for declaratory judgment to go forward. Harriman is from the Fourth Circuit and applies South Carolina law. The court dismissed a claim of bad faith, finding that the insurer had a reasonable basis for denying coverage based upon the coverage opinion of its counsel.
Brian
Brian D. Barnas
Groundhog Day – 100 Years Ago:
The Standard Union
Brooklyn, New York
2 Feb 1924
GROUNDHOG VISIT
ENDS IN FRIGHT
The ground hog made his annual appearance today. His stay was shortened by the appearance of the sunny skies. The little animal, still yawning from the long sojourn in his subterranean home, forged his way to the surface, only to slip right back again. According to the weather man, the ground hog saw his shadow as soon as his eyes got above ground, became frightened, and retired for six weeks more of sleep.
This is an indication, the Weather Man says, that it will be about six or seven weeks before fur coats and wraps can be laid away in moth balls until next fall.
Lee’s Connecticut Chronicles:
Dear Nutmeg Newsies,
It was a quiet couple of weeks since our last publication, although I had the pleasure of spending some quality time with my colleagues in our Melville, Long Island, office. Notwithstanding some heating issues that resulted in workers destroying our conference room table, with some ingenuity and heavy lifting we overcame. It’s always an odd feeling for me when I visit Melville, since I grew up in next door Dix Hills. It’s that strangeness of things being familiar yet somehow different at the same time. I’m sure you can relate. I definitely need to visit more often so I can continue exploring.
In coverage news, it was a busy week for GEICO on the UIM front, winning one and losing one. GEICO was reminded that although Connecticut is an off set to limits state, a 2014 amendment ensures that insureds can still get full limits when payments to other claimants reduce the available limits. Still, GEICO was reassured that a resident relative driving a separately insured vehicle does not qualify for UM/UIM benefits under mom and dad’s policy.
Until next time, keep keeping safe.
Lee
Lee S. Siegel
What’s a Collision? – 100 Years Ago:
The Commercial Appeal
Memphis Tennessee
2 Feb 1924
DEFINED COLLISION
High Court Holds Word Has Very Restricted Use.
MONTGOMERY, Ala., Feb. 1.- When an automobile unaided takes to the open road and finally ends its career by dropping down a 90-foot precipice, its act cannot be considered as a collision within the meaning of an insurance policy. This decision was rendered by the supreme court today and as a result the American Compounding Company will be unable to collect collision insurance from the St. Paul Fire & Marine Insurance Company. The case came from Walker County.
The plaintiff’s automobile stood for some time in one place. Then it started down the road without a driver at the wheel and did not stop until it had gone over the precipice. The supreme court held that a collision within the meaning of an insurance policy is an impact between two objects on the open road. Three justices insisted that a collision occurred, but a majority of the supreme court over-ruled them.
Kyle's Noteworthy No-Fault:
Dear Readers,
Yet another heartbreaking divisional round exit from the playoffs this year. Unfortunately, to make matters worse, our good friends, the Kansas City Chiefs, will be back in the Super Bowl, yet again.
I have two no-fault cases this week, both involving the review of arbitration awards. In the first case, the court reviews the master arbitration award regarding the exhaustion of policy benefits claim. In the second, the court considers a petition to confirm a no-fault master arbitration award and request for attorney’s fees.
Until next time,
Kyle
Kyle A. Ruffner
[email protected]
Executioner Makes it Personal – 100 Years Ago:
Democrat and Chronicle
Rochester, New York
2 Feb 1924
EXECUTIONER KILLS SELF
Breslau, Germany, Feb. 1.- Surrounded by 45 candles lighted in memory of the persons he had beheaded, Paul Spaehe, public executioner, was found dead to-day in his apartment, having shot himself.
Ryan’s Federal Reporter:
Hello Loyal Coverage Pointers Subscribers:
We have a new foster dog at the Maxwell HouseTM (jk) and, I must say, that this one would be a keeper if we were not on a mission to help all of the doggos out there. Although seemingly 97% of the dogs that cycle through the City of Buffalo Animal shelter are “pit-bulls,” I am convinced that our new friend, Elvis, is mixed with a labrador of some sort. We love him so much already that we even ordered for him a DNA test to add more to his story. And there is so much to tell already. His coat is a bit fluffy and soft as can be. He is a big lug and loves a good belly rub. We are working on a stomach bug (it’s not all rainbows and butterflies), but shelters are Pitri dishes and bugs are temporary (thank heavens).
This edition, Ryan’s Federal Reporter summarizes a recent Second Circuit decision in the SUM context. Optional means optional, statutorily speaking.
Until next time,
Ryan
Ryan P. Maxwell
Juror Misconduct – 100 Years Ago:
Daily News
New York, New York
2 Feb 1924
JUROR’S QUERIES
UPSET VERDICT
Because one of the jurors had visited the scene of the accident and talked there with a witness, the Appellate Division of the Supreme Court, Brookly, yesterday reversed two damage awards of $1,781 and $12,153 which a Westchester County jury had given Allad D. Morrow and Mrs. Morrow, respectively. They were injured when their automobile collided with the car of Wilmer S. Dotts, white Plains, in the city of April 9, 1923.
Storm’s SIU:
Hi Team:
Check back next edition for more interesting cases. Have a great two weeks.
Scott
Scott D. Storm
War Romance – 100 Years Ago:
The Buffalo Times
Buffalo, New York
2 Feb 1924
WAR ROMANCE
ENDS IN COURT
Lima, O., Feb 2.- Shattering of a war-time romance was revealed here today. Harry W. Wheatley, 31, son of A. W. Wheatley, head of the Wheatley Company, brokers, with London and Paris offices, filed suit for divorce yesterday from Mrs. Annie A. Pearson Wheatley, formerly of Appledore, Kent, England.
The marriage of the Lima boy and the English girl in England in the summer of 1910 resulted from an unusual war romance.
Young Wheatley joined the Royal Flying Corps early in the war, while flying over England, something went wrong with Wheatley’s plane, and it fell into the grounds of a large estate.
He was carried into the house and there nursed back to health, his nurse being his future wife
Incompatibility of temperament is the general charge in the petition.
Fleming’s Finest:
Hi Coverage Pointers Subscribers:
Happy February! Hope you are getting some (any) sun—wherever you may be.
This week’s case comes from the Alaska Supreme Court and considers whether an injury while moving the body of an airplane (fuselage) arises out of the ownership, maintenance, use, or loading or unloading of an aircraft.
Catch you later,
Kate
Katherine A. Fleming
Husband’s Self-Help Helps Himself to Jail – 100 Years Ago:
Buffalo Courier
Buffalo, New York
2 Feb 1924
STOLE DRESS FOR WIFE
(By Special Wire to The Courier.)
Niagara Falls, Feb. 1 – John Loughlin, forty-two, No. 9 Trafalgar Street St. Catherines, Ont., told Police Judge Piper today that the reason he stole a dress from a Main street sore here was to clothe his wife who is an inmate of an insane asylum in Canada. Loughlin was committed to jail for sixty days. At the end of his term, he will be turned over to Dominion authorities who say they hold a warrant for his arrest on a charge of violating the Ontario temperance act and with evading arrest when he was aware there was a complaint against him for having liquor in his possession illegally.
Gestwick’s Garden State Gazette:
Hello Readers:
I am happy I was able to take a break from all of my Groundhog Day preparations to write to you all. I really hope my buddy, Punxsutawney Phil, or just “Phil,” for short, misses his shadow entirely tomorrow, forecasting an early spring. Why am I so eager for spring, you might wonder? Well, the Toronto Blue Jays finally found a solid designated hitter in Justin Turner, having just signed him a few days ago. Boasting a career batting average of .288 over nearly 6,000 plate appearances in his long career, he may also fill the void where Matt Chapman used to stand, over at third base—that is, as long as fellow newcomer, Isaiah Kiner-Falefa, isn’t already there. Spring also includes the NLL and NHL playoffs, St. Patrick’s Day, as well as my birthday. We’re also located in Buffalo, so spring is always a very welcome development around here.
As for coverage, I have a New Jersey case that essentially tracks New York’s position on whether government-mandated shutdowns of businesses can lead to business interruption coverage under a commercial property policy. The answer: no. Read on to find out why.
Until next time!
Evan
Evan D. Gestwick
The Love Triangle – 100 Years Ago:
The Brooklyn Daily Eagle
Brooklyn, New York
2 Feb 1924
PREVENTS HUSBAND
FROM SAILING WITH
ANOTHER WOMAN
The eternal triangle came into play again today on Pier 57, North River, when the wife of James F. Gough prevented the sailing of her husband and his alleged common law wife, Julia Howell, formerly a waitress at the Hotel Hermitage.
Gough, who said is an exporter of films, booked passage for himself and wife on La Savoie on Jan. 26. Mrs. Gough said that she had learned that it was his intention to go abroad and, fearful that her regular stipend of $20 a week for herself and son, James F. Gough Jr., would be stopped she telephoned to all the steamship companies and learned that Gough had booked passage on La Savioe.
When Gough and the Howell woman arrived on the pier a Treasury Department official, followed by Mrs. Gough, approached the astonished couple and requested their passports.
Patrolman Herman Erhard of Traffic A placed Gough under arrest while Mrs. Gough followed closely and gave him what she termed a piece of her mind.
Julia Howell, who is a slender, dark-haired little woman, both pretty and petite, did not open her mouth during the fusillade from the lips of the irate Mrs. Gough.
O’Shea Rides the Circuits:
Hey Everyone,
Don’t get large dogs that can open the door to the garbage can. My dogs have formed an odd tandem. One opens the door to smell the garbage [to each their own], the other then bobs for any item it deems worthy of digestion, which is all the items. This past week I broke down a chicken and scrapped the rest. Low and behold, upon return from work the discarded chicken was gone and coffee grounds were everywhere, amongst other devastation.
This week I have a brief, unpublished decision from the Ninth Circuit. The opinion concerns whether a mistaken interpretation of a statute creates an accident where an insured’s employer nonetheless acted with intent. I would like to point out Mr. Maxwell’s column for an interesting decision from the Second Circuit that will undoubtedly affect insurers’ approach to offering supplementary uninsured and underinsured liability coverage in auto policies.
Until Next Time,
Ryan
Ryan P. O’Shea
[email protected]
Cards or Tiles? – 100 Years Ago:
The Marion Star
Marion, Ohio
2 Feb 1924
POKER PLAYED IN CHINA
MAH JONG IN AMERICA
Philadelphia, Feb. 2.- Poker is a more common game in China than the well-known Mah Jong, according to a Chinese student at the University of Pennsylvania. “First, it is not a sacred and ancient game,” he said. “They say it originated with Confucious, but that sage would have frowned on such frivolity. Then you should discount all statements that it is the most popular game played in China. I would say that your American poker is played more extensively in my country than Mah Jong.”
Louttit’s Legislative and Regulatory Roundup:
Nothing to report at this time.
Rob
Robert P. Louttit
Ford May Have Not Had a Better Idea – 100 Years Ago:
The Buffalo News
Buffalo, New York
2 Feb 1924
FORD’S WORLD PEACE PLAN:
MAKE ALL SPEAK ENGLISH
NEW YORK, Feb. 2.- Henry Ford meant to enter his plan in the Bok contest for promotion of international peace - but he over-looked it.
According to the Dow-Jones financial news bureau, Ford revealed his plan to a representative of that agency:
Make everybody speak English.
This plan, Ford is reported to have explained, “is very simple and would, if put into effect, absolutely insure international peace.”
Rob Reaches the Threshold:
Hello Readers,
At the time of our last article, the vibes in Westen New York were mixed – on one hand, the Buffalo Bills were rolling towards long-awaited revenge against Patrick Mahomes, and on the other, most of the Buffalo area had feet of snow covering the ground. Fast forward two weeks later . . . the vibes are still mixed, just reversed. The Bills suffered (another) heartbreaking loss to the Chiefs, but the weather flipped and now literally all the snow is gone. The roller coaster that is 2024 has started.
For this installment, I bring you a nice little decision out of the First Department wherein the Court presents a strong, concise analysis of each specific category claim of injury under Insurance Law Section 5102(d).
I hope you all enjoy the read.
Rob
Robert J. Caggiano
Warden Kidnapped? – 100 Years Ago:
Daily News
New York, New York
2 Feb 1924
3 CONDEMNED MEN
TAKE WARDEN AND
FLEE DEATH HOUSE
Little Rock, Ark., Feb. 1. – Three gunmen and murderers awaiting electrocution at the State penitentiary here escaped today. They overpowered and kidnaped Warden A. P. Martin, fleeing in his automobile.
The warden entered the death-house cell to talk to the prisoners, Emery Connell, Joe Sullivan and Eulos Sullivan, when the three attacked him. They were armed with revolvers and shotguns, which had been smuggled into the prison. They bundled the warden into his automobile and made their escape past prison guards.
Goldberg’s Golden Nuggets:
How about an inspirational quote from Ned Ryerson – you know, he did the whitling belly-button trick at the high school talent show:
“See, whenever I see an opportunity, I charge it like a bull. "Ned the Bull", that's me now. You know, I have friends who live and die by the actuarial tables and I say, "Hey! It's all one big crap-shoot anywho!" Tell me, have you ever heard of single premium life because I think that could really be the ticket for you.”
Happy Groundhog’s Day.
Josh
Joshua M. Goldberg
Warden Kidnapping Doesn’t End Well for Kidnappers – 100 Years Ago:
The Madison County Record
Huntsville Arkansas
7 Feb 1924
Two Escaped Convicts Killed,
Third Captured
Little Rock, Feb. 5. – Emory Connell and Eulos Sullivan convicted murderers who fled the Arkansas prison death cells here in a spectacular escape last Friday morning, late Tuesday paid for their lives for their crimes.
They were shot to death in the woods near Redfield, Ark., a village 28 miles south of here, in a gun battle with a party of a dozen Little Rock policemen and newspaper reporters. Fred Snodgrass, a newspaperman, was wounded slightly in the foot during the shooting.
Connell and Sullivan, laying hidden in the foliage of a fallen treetop, opened the final battle of their careers. Members of the posse had passed their hiding place without noticing them when the desperadoes opened fire at comparatively close range.
The posse men scattered, taking refuge behind trees and wood ricks, and poured bullets into the treetop. When the bandits no longer returned the fire, the bodies were brought to light. Each had been struck several times.
Editor’s Note – they caught the third guy and he was later executed.
LaBarbera’s Lower Court Library:
Hello Readers!
This month sure did fly by. So far, 2024 has been filled with excitement. Most notably…I am officially official! Last week I was admitted as an attorney in the State of New York. Now it is time for the real fun to begin…
I have a case this week that begs the question “how long is too long to move to intervene?” The court considered time timeliness of the motion, whether any substantial discovery had taken place, and whether any current party would be prejudiced by the addition of a new party. On balance, the court found that it was proper to add a new party, given the current stages of the proceedings. Read on for the specifics.
Until next time,
Isabelle
Isabelle H. LaBarbera
Populist Leader – Facing Criminal Charges -- Recruiting Supporters – 100 Years Ago:
The Herald Statesman
Yonkers, New York
2 Feb 1924
HITLER FACTION FOR VENGEANCE
Dictator von Kahr in Bavaria Is Disliked by Many and
a New Putsch Seems Likely to be Established
Munich, Feb 2 – When Bavarian political leaders declare that, in their opinion the Hitler-Ludendorff-Kahr coup of November 8 was the last attempt at a forceful overthrow of the existing regime they are, either consciously or unconsciously, telling an untruth. Moreover, when they add that the Hitlerites merely represent a small minority of the people of Bavaria, without decisive influence upon future political events, they are unwittingly or deliberately deceiving public opinion. Some of them, indeed regard it as their most important mission in life to lull public opinion into a feeling of security, so that the blow which is unquestionably being plotted will come with all the more staggering force when the moment is deemed ripe.
Hitler Popular
The truth is that the Hitler following is very large. Singularly enough, it has grown tremendously since the collapse of the “Putsch” of November 8. It is noteworthy that the greater part of the Bavarian people did not begin to sympathize with Hitler’s movement until the full truth of the double-crossing game of the now famous “Beer Cellar Putsch” became known and with it the dubious and tricky role played by the present dictator, von Kahr. For a great number of Bavarians sympathy with the incarcerated Hitler merely means hatred against Kahr, who is ruling with a rod of iron and only keeps down to a whisper the country-wide charges of “treachery” and “cowardice” against him. Kahr is today the most hated man in all Bavaria. His conduct has made a martyr out of Hitler, who formerly was never taken quite seriously by the mass of the population, despite the widespread press-agenting for him.
North of the Border:
See you in two weeks.
Heather
Heather A. Sanderson
Sanderson Law, Calgary, Alberta
Headlines from this week’s issue, attached:
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
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Insurance Carriers Pay Attention: If You Want to Cut off Post Judgment Interest, You Need to Make an UNCONDITIONAL Offer of Policy Limits Including Interest
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
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Asbestos Contract Subject to GOL § 5-322.1 Scrutiny
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Question of Fact on Breadth and Intent of Indemnification Clause
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Mutual Indemnity Clauses Overcomes Potential GOL Issues
BARNAS on BAD FAITH
Brian D. Barnas
[email protected]
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Claim for Breach of Fiduciary Duty by Insurer Dismissed on Motion to Dismiss
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Bad Faith Claim Failed under South Carolina Law where Insurer Relied on Reasonable Coverage Opinion of Counsel
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]
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UIM Determined Based on Amount Payable to Insured, Not the Face Value of the Policies
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Resident Relative Driving Own Car not a UIM Insured
KYLE'S NOTEWORTHY NO-FAULT
Kyle A. Ruffner
[email protected]
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Court Upholds Master Arbitrator’s Award, Confirming Exhaustion of the Policy Benefits
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Court Grants Petition to Confirm No-Fault Award but Denies Award of Attorney’s Fee to the Petitioner for Prevailing in the Proceeding
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
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Declining to Reform New York Auto Policy to Include Optional SUM Coverage for Alleged Failure to Meet Opt-In Notice Requirement
STORM’S SIU
Scott D. Storm
[email protected]
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Check back next edition for more interesting cases
FLEMING’S FINEST
Katherine A. Fleming
[email protected]
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Injuries While Moving Inoperable Airplane Arose Out of Ownership of an Aircraft
GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]
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Business Interruption not Covered Absent Direct Physical Loss or Damage; Governmental Shutdown Orders do not Constitute Such
O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]
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Misinterpretation of Statute Does not Create Accident
LOUTTIT’S LEGISLATIVE and REGULATORY ROUNDUP
Robert P. Louttit
[email protected]
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Nothing to Report this Issue. See You in Two Weeks
ROB REACHES the THRESHOLD
Robert J. Caggiano
[email protected]
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First Department Modified and Reversed, in Most Part, a Decision Granting Summary Judgment for a Defendant where Plaintiff’s Evidence Raised Triable Issues of Fact on Whether he Suffered Serious Injury to his Spleen and Left Knee Under Multiple Categories of Insurance Law § 5102(d)
GOLDBERG’S GOLDEN NUGGETS
Joshua M. Goldberg
[email protected]
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No Special Duty in FDNY Rescue Operation
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Vehicle Two In Chain Reaction Collision Fails to Establish Liability
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Plaintiff Fails to Prove Knee Surgery Satisfies §5102(d) Serious Injury Threshold
LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]
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Not too Late for Purported Additional Insureds to Intervene in Rescission Action
NORTH of the BORDER
Heather A. Sanderson
Sanderson Law, Calgary, Alberta
[email protected]
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Nothing to Report this Issue. See You in Two Weeks
We’re hoping that the groundhog does the right thing.
Reach out if we can help you.
Hurwitz Fine P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in Connecticut.
In addition, Dan D. Kohane is a Foreign Legal Consultant, Permit No. 000241, issued by the Law Society of Upper Canada, and authorized to provide legal advice in the Province of Ontario on matters of New York State and federal law.
NEWSLETTER EDITOR
Dan D. Kohane
[email protected]
ASSOCIATE EDITOR
Agnes A. Wilewicz
[email protected]
COPY EDITOR
Evan D. Gestwick
[email protected]
INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
[email protected]
Steven E. Peiper, Co-Chair
[email protected]
Michael F. Perley
Agnieszka A. Wilewicz
Lee S. Siegel
Brian F. Mark
Scott D. Storm
Brian D. Barnas
Robert P. Louttit
Ryan P. Maxwell
Joshua M. Goldberg
Kyle A. Ruffner
Katherine A. Fleming
Evan D. Gestwick
Ryan P. O’Shea
Isabelle H. LaBarbera
FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
[email protected]
Michael F. Perley
Scott D. Storm
Brian D. Barnas
NO-FAULT/UM/SUM TEAM
Dan D. Kohane
[email protected]
Alice A. Trueman
Joshua M. Goldberg
APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]
Topical Index
Peiper on Property and Potpourri
Barnas on Bad Faith
Ryan’s Federal Reporter
Gestwick’s Garden State Gazette
Louttit’s Legislative and Regulatory Roundup
Rob Reaches the Threshold
LaBarbera’s Lower Court Library
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
01/23/24 Allied World Assurance Co. v Greater New York Mut. Ins. Co.
Appellate Division, First Department
Insurance Carriers Pay Attention: If You Want to Cut off Post Judgment Interest, You Need to Make an UNCONDITIONAL Offer of Policy Limits Including Interest
GNY was the primary insurer and Allied World (“AWAC”) was the excess insurer of the defendant in the underlying personal injury action. GNY's general liability policy included a supplementary payments provision (SPP) that obligated GNY to pay, with respect to any suit it defended, an additional amount of court costs, prejudgment interest, and post-judgment interest. With respect to GNY's ability to terminate its prejudgment interest obligation, the SPP provided that if GNY made "an offer to pay the applicable limit of insurance, [GNY] will not pay any prejudgment interest based on the period of time after the offer." Similarly, with respect to GNY's ability to terminate its post-judgment interest obligation, the SPP provided that GNY would pay interest that accrued "before we have paid, offered to pay, or deposited in court the part of the judgment that is within the applicable limit of insurance."
On February 10, 2020, the jury in the underlying action rendered a $3.3 million verdict in favor of the injured party. On February 12, 2020, GNY sent AWAC a letter stating that "in consideration of the verdict," it was tendering to AWAC $1,000,000, the GNY policy limit, with the tender to be construed as an "offer to settle under the terms of the policy." The judgment in the underlying action was entered on July 27, 2020, in the total amount of $3,439,406, including prejudgment interest at the statutory 9% rate, plus costs and disbursements. On February 4, 2021, AWAC entered into a post-judgment settlement and release of the underlying action for $3.15 million, and on February 26, 2021, AWAC paid $2.15 million towards the settlement.
GNY's February 12, 2020, letter failed to terminate its obligation under the SPP to pay accrued interest. An offer terminating an insurer’] obligation to pay must be a "tender" of the policy limit, and an offer is not a tender if it is conditional. The offer in GNY's February 12 letter was manifestly conditional, stating that the tender was to be construed as an "offer to settle under the terms of the policy" and that it was "contingent upon" AWAC's written agreement that GNY was not responsible for the post-judgment interest.
That was the problem – it was a conditional offer.
The court found that AWAC did not make the showing necessary to reduce its share of the settlement payment, as it failed to establish the amount of interest that was factored into the payment settling the underlying action.
Editor’s Note: The most important part of this decision for the insurers who are reading this summary is that post-judgment interest can be truncated if there is an UNCONDITIONAL offer of the policy limits plus interest accrued until the time of the offer. You cannot demand a release; you cannot condition it on ANYTHING. We have successfully cut off post-judgment interest on a couple of occasions, but it takes a special kind of letter.
Our success was in a case call Miraglia:
This Court holds that plaintiff's argument runs counter to the clear provisions of Paragraph 7 of the Policy that the obligation to pay interest ends when Essex offers to pay “the part of the judgment that is within the applicable limit of insurance”. Such an interpretation of the Policy would fail to “give force and effect to all of its provisions.” Pilsener Bottling Co., Inc. v. Sunset Park Indus. Associates, 201 A.D.2d 548, 549, 607 N.Y.S.2d 961, 962 (2nd Dept., 1994). See also, Muzak Corp. v. Hotel Taft Corp., 1 N.Y.2d 42, 46, 150 N.Y.S.2d 171, 174, 133 N.E.2d 688, 690(1956)[“The rules of construction of contracts require us to adopt an interpretation which gives meaning to every provision of a contract or, in the negative, no provision of a contract should be left without force and effect.”]; Woodson v. American Transit Ins. Co., 281 A.D.2d 282, 722 N.Y.S.2d 138 (1st Dept., 2001 )[Insurer's obligation to pay post-judgment interest on a judgment ceased when insurer paid the part of the judgment that is within the insurer's limit of insurance not when all the interest was paid.]
Contrary to plaintiff's argument, the Policy unambiguously provides that the obligation to pay post-judgment interest terminates once Essex has “offered to pay... the part of the judgment that is within the applicable limit of insurance.” (See Paragraph 7.) The March 10, 2008, letter does exactly that ….
Miraglia v Essex Ins. Co. [N.Y. Sup Ct, Orange County 2008] 2008 WL 10665119
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
01/25/24 Vasquez v. Manhattan College
Appellate Division, First Department
Asbestos Contract Subject to GOL § 5-322.1 Scrutiny
Defendant Manhattan College filed a motion to renew its opposition to a pre-answer motion to dismiss filed by EMC. In support of its application, Manhattan argued that it could not include a 2018 AIA contract entered into between itself and EMC because it was unable to locate and depose a former employee who had negotiated the terms of the agreement. It was also established that EMC would not adjourn its motion to enable Manhattan to properly explore discovery. Under the circumstances, Manhattan presented a reasonable explanation for why the contract or argument on it was not presented in the first batch of motion papers.
Manhattan’s victory was short lived, however, as when the Court addressed the merits of the argument it determined Manhattan had failed to establish a question of fact. Simply, the 2018 AIA contract at issue contained an indemnification clause running in favor of Manhattan. However, the proof on the Record demonstrated that the work being performed at the time of Mr. Vasquez’s injury was subject to a second agreement, from 2019, which contained no indemnity protections. Without any basis to conclude the 2018 document was meant to extend to the other work performed by EMC, it followed that the indemnity claims against EMC in this lawsuit were properly dismissed by the trial court.
Further, the Court also found, as a matter of law, there was no way that Manhattan would not bear some allocation of negligence. Here, the indemnity clause in the 2018 AIA contract did not include “fullest extent permitted by law” savings language and, as such, was violative of General Obligations Law § 5-322.1. Thus, even if the 2018 AIA contract was potentially applicable to the 2019 work, it was void in any event.
01/18/24 Bradley v. NYU Langone Hospital
Appellate Division, First Department
Question of Fact on Breadth and Intent of Indemnification Clause
This matter has its origins in a Labor Law claim where plaintiff allegedly sustained injury when she slipped and fell on a wet staircase. The reason for its inclusion here, however, is the indemnity dispute between NYU Langone and ASR (electrical contractor). NYU Langone sought indemnity under a clause that broadly extended to “NYU Hospital [and]… anyone else acting for or on behalf of any of them… [as well as] any other indemnitee required under the General Contract or others reasonably requested to be named.”
The Appellate Division reversed the trial court’s decision granting ASR’s motion for summary judgment. In reaching its decision, the First Department noted that the clause was broader than just the entities specifically named. To read otherwise would be to ignore the above-referenced language. By the same logic, however, the Court concluded that NYU Langone also failed to meet its burden as movant because it did not establish any evidence which demonstrated it was meant to be included as an understood indemnitee.
Peiper’s Point – We respectfully dissent. Absent any indication that ASR was aware, or reasonably should have been aware, that NYU Langone was potentially entitled to indemnification, the Court should not have revived its claim on appeal. Somewhere in the document there must be some level of recognition of who NYU Langone is, and why, then, the indemnity clause should be extended for their benefit. Here, that does not appear to have happened, and it would appear to us that ASR met its burden on summary judgment.
01/18/24 Merrick v. Macerich Co.
Appellate Division, First Department
Mutual Indemnity Clauses Overcomes Potential GOL Issues
As part of the ongoing bodily injury litigation, Macerich moved for summary judgment seeking conditional contractual indemnification against TEC. TEC was the elevator maintenance contractor at the premises. In accepting Macerich’s argument, the Court noted that the clause at issue was contemplated mutual indemnity between Macerich and TEC. Because it did not contemplate Macerich being indemnified for its own negligence, it followed that there were no issues with GOL § 5-322.1.
BARNAS on BAD FAITH
Brian D. Barnas
[email protected]
01/24/24 88-18 Tropical Restaurante Corp. v. Utica First Ins. Co.
Appellate Division, Second Department
Claim for Breach of Fiduciary Duty by Insurer Dismissed on Motion to Dismiss
The plaintiff commenced this action against Utica First to recover damages for breach of fiduciary duty and for a judgment declaring that the insurer was obligated to defend and indemnify the plaintiff in an action. The complaint in the underlying action alleged that a patron of a restaurant owned and operated by the plaintiff was injured when an employee of the plaintiff assaulted him on the plaintiff's premises. The insurer disclaimed coverage on the basis of an assault and battery exclusion contained in the plaintiff's insurance policy. Utica moved to dismiss and requested that the motion be treated as one for summary judgment.
A court may reach the merits of a motion to dismiss a properly pleaded cause of action for declaratory judgment where no questions of fact are presented. Here, the complaint adequately set forth a cause of action for declaratory relief, but the insurer's submissions failed to dispel all factual issues regarding the merits of that cause of action. Accordingly, the motion to dismiss the cause of action for declaratory judgment was denied.
However, the cause of action alleging breach of fiduciary duty was dismissed. Generally, an insurance company does not owe its policyholder a common-law fiduciary duty except when it is called upon to defend its insured. Further, a special relationship does not arise out of an ordinary arm's length business transaction between two parties. The complaint did not allege facts that would give rise to a fiduciary or special relationship between the plaintiff and the insurer.
01/24/24 Harriman v. Associated Industries Insurance Company
United States Court of Appeals, Fourth Circuit
Bad Faith Claim Failed under South Carolina Law where Insurer Relied on Reasonable Coverage Opinion of Counsel
Harriman was a registered representative and investment advisor with IMS. In 2014, Harriman approached representatives from Palmaz Scientific about investing in the company for an IMS client. Harriman claims that, while doing so, she discovered damning information about Palmaz and its CEO and blew the whistle by sharing the information with her clients. Palmaz disagreed and litigation commenced in which Palmaz asserted defamation claims against Harriman.
IMS was insured by Associated. Harriman sought coverage from Associated under the policy issued to IMS for the defamation claims. Associated’s coverage counsel reviewed the relevant documents and denied coverage because the claims were not a covered Wrongful Act committed in the rendering or failing to render Professional Services on behalf of IMS. After receiving Associated’s coverage denial, Harriman tendered the claim to Travelers under another insurance policy she had. Travelers agreed to defend her and eventually settled the case.
Harriman commenced an action against Associated asserting claims for breach of contract and insurance bad faith. The court first concluded that the breach of contract claim failed because Associated had no obligation to defend. The court concluded that the Associated Policy was excess to the Travelers policy and Associated had no obligation to defend.
The bad faith claim was also dismissed because Harriman failed to raise a genuine dispute of material fact about the reasonableness of Associated refusal to defend. The court first noted that the existence of the Travelers policy did not give Associated a good faith basis to deny coverage because Associated did not know of the policy at the time of the denial. However, Harriman presented no evidence that Associated lacked a reasonable basis for its position. Associated denied coverage based on an attorney's determination that the allegations did not trigger the Associated policy. Courts applying South Carolina law have held that, when an insurer relies on an expert's coverage opinion, the party asserting bad faith must present evidence showing the insurer knew or had reason to know the attorney's report was somehow faulty. Harriman did not do so, and merely raising questions about the correctness of the position was insufficient. The attorney’s coverage opinion was, at a minimum, reasonable.
The Fourth Circuit did not endorse Associated's broadest argument—that Harriman's bad faith claim was negated as a matter of law because Associated relied on its attorney's recommendation. Instead, it held that Harriman failed to present evidence raising a genuine dispute of material fact.
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]
01/24/24 Serrano v. GEICO General Ins. Co.
Superior Court of Connecticut, Waterbury
UIM Determined Based on Amount Payable to Insured, Not the Face Value of the Policies
The trial held that Serrano was entitled to underinsured motorist benefits even though the face value of the insured and the tortfeasor’s policies were equal.
Geico insured Serrano for UIM of $25,000 per person and $50,000 per accident. The tortfeasor had the same coverage. However, there were multiple liability claims by parties injured in the accident limiting the amount available to Serrano. Serrano settled his claim against the tortfeasor for $13,000, exhausting the per accident coverage. Serrano then made a claim for the remaining $12,000 from Geico, which denied the claim asserting that the tortfeasor was not underinsured because the face values of the policies were the same.
The court disagreed, citing the 2014 amendment of UIM statute which requires that carriers compare the amount actually available to an insured after other claimants are paid, rather than simply looking to the face value of the policies. “The court agrees that the legislature, both in its express language and by the statements made by the legislature in support of the 2014 amendment, intended for carriers to compare the amount actually available after other claimants are paid and not the face value of the policy to the underinsured liability coverage of the claimant. If the amount actually available to the claimant after other payments is less than a claimant's underinsured liability coverage, then the tortfeasor's vehicle is underinsured.”
The court denied GEICO’s motion for summary judgment, presumably pending a valuation of the plaintiff’s injuries.
01/23/24 Bartolf v. GEICO General Ins. Co.
Superior Court of Connecticut, Tolland
Resident Relative Driving Own Car not a UIM Insured
Zachary lived with his parents, who insured three vehicles with GEICO. In April 2021, Zachary was in a motor vehicle accident while driving a Ford F350 that he owned and separately insured. Nevertheless, he sued, claiming that he was entitled to UIM benefits from his parents’ GEICO policy. GEICO moved for summary judgment and the court agreed that there was no coverage.
The GEICO policy, employing what appears to be the standard Connecticut UM/UIM endorsement, provided that while Zachary was a resident relative, he was not an insured because he owned a car that was required to be insured. [The policy contains an exception that had Zachary been occupying a scheduled vehicle that the GEICO UIM would have been primary.] Further, the other insurance provision made it clear that if an insured was occupying a vehicle owned by the insured, only the UIM coverage applicable to that vehicle will apply.
The court rejected Zachary’s argument that the definition of insured was ambiguous. Zachary argued that because he qualified as an insured for liability for the use of a non-owned auto, it was unclear under the policy who qualified as an insured for UIM. The court held that the UIM endorsement was clear and unambiguous as to who is included as an insured.
KYLE’S NOTEWORTHY NO-FAULT
Kyle A. Ruffner
[email protected]
01/16/24 In the Matter of Lam Quan, MD, PC, a/s/o Mirambeaux v. GEICO
Appellate Division, First Department
Court Upholds Master Arbitrator’s Award, Confirming Exhaustion of the Policy Benefits
The Supreme Court of New York County denied the petitioner’s petition to vacate a master arbitrator’s award, which affirmed a lower arbitrator’s award. On appeal, the First Department held that the lower court correctly upheld the master arbitrator’s determination that there were no grounds to vacate the initial arbitration award. The master arbitrator found the no-fault arbitrator reached a decision in a rational manner and was not arbitrary and capricious, incorrect as a matter of law, in excess of policy limits, or in conflict with other no-fault arbitration proceedings.
The court explained that, as the First Department held in Matter of New Millenium Pain & Spine Medicine., PC v Progressive Cas. Ins. Co. , the fact that the arbitrator followed First Department precedent in Harmonic Physical Therapy, P.C. v Praetorian Ins. Co. (47 Misc 3d 137[A], 2015 NY Slip Op 50525[U] [App Term, 1st Dept 2015]), rather than Second Department precedent in Alleviation Med. Servs., P.C. v Allstate Ins. Co. (55 Misc 3d 44, 49 [App Term, 2d Dept 2017], affd on other grounds 191 AD3d 934 [2d Dept 2021]), did not warrant reversal. Rather, as the Court previously held, by awarding a claim after a policy has been exhausted, an arbitrator has exceeded his or her power since an insurer's duties cease upon the insurer's payment of the contractual limit on its no-fault policy.
In addition, the petitioner argued that the insurer took the 20% wage offset twice - when issuing payment against gross wages and when taken against the no-fault personal injury protection limit of liability. However, the court determined that this argument was unpreserved and, if considered, was unavailing. Accordingly, the court held that the petitioner was not entitled to attorneys' fees.
01/12/24 John T. Mather Mem. Hosp. a/a/o Ojeda v. Am. Trans. Ins. Co.
Supreme Court, Kings County
Court Grants Petition to Confirm No-Fault Award but Denies Award of Attorney’s Fee to the Petitioner for Prevailing in the Proceeding
In this special proceeding pursuant to CPLR 7502 and 7510, a medical provider filed a petition to confirm a No-Fault Insurance master arbitration award against the insurer. The court granted the petition but without an award of an attorney's fee for services rendered in connection with the petition to confirm.
The court held that the petitioner was awarded the principal amount, interest, attorney's fees, and return of filing fee as determined in the arbitration and held that the interest accrued from the arbitration filing date. The attorney's fee for the arbitration was determined to be 20% of the sum of the principal plus interest to payment. The attorney's fee for the master arbitration was $130.00 per the award of the Master Arbitrator.
This Court denied attorney's fees to the petitioner for prevailing in the special proceeding to confirm the master arbitration award. In seeking an attorney's fee, petitioner relied on 11 NYCRR 65-4.10(j)(4), which provides, "The attorney's fee for services rendered in connection with a court adjudication of a dispute de novo, as provided in section 5106(c) of the Insurance Law, or in a court appeal from a master arbitration award and any further appeals, shall be fixed by the court adjudicating the matter." However, the court held the petitioner's action seeking to confirm an arbitration award was not in the nature of appeal. An "appeal" is an action taken by a party to have a determination reviewed because it was adverse to the party. The master arbitrator's award was not adverse to the petitioner, who agreed with the determination. The court further held that nothing in the language of the statute provided support to grant the petitioner an attorney's fee. The language of the regulation would not apply to an unopposed Article 75 special proceeding to confirm a master arbitration No-Fault award.
Further, the petitioner claims that the insurer has failed to pay the amount due per the No-Fault insurance arbitration result. The court disagreed, as the No-Fault Insurance Regulations provided for a remedy in this type of situation: If a dispute is resolved in accordance with any of the optional arbitration procedures and if payment is not made by the insurer in accordance with the terms specified in the conciliation letter or arbitration award within 45 days following such resolution, an additional attorney's fee shall be paid by the insurer when the attorney writes to the insurer in order to receive such overdue payment. The additional attorney's fee shall be $60 and shall become payable only after written request from the attorney to the insurer. Such fee shall not be payable if payment was made by the insurer prior to the attorney's request for such payment or if an arbitration award is appealed in accordance with the provisions of this Part.
Therefore, once payment is obtained, the court held the petitioner was entitled to $60 for its efforts to secure. The fee will be payable since the insurer did not appeal the determination of the master arbitrator. The remedy sought by the petitioner was therefore rejected, as the petitioner was not entitled to hourly attorney fees as it argued.
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
01/23/24 Loomis v. ACE American Insurance Company
Second Circuit Court of Appeals
Declining to Reform New York Auto Policy to Include Optional SUM Coverage for Alleged Failure to Meet Opt-In Notice Requirement
Let me get ahead of this. New York SUM coverage is currently an opt-out. However, once upon a time in the not-so-distant past, New York’s statutory scheme relative to SUM Coverage was an opt-in, requiring merely notification to an insured of the availability of SUM. Loomis concerned a pre-opt-in policy.
William Loomis is a truck driver who was injured in a New York car accident. Although he recovered some damages from the tortfeasor's insurer, it was not enough and he subsequently sought recovery from Defendant ACE American Insurance Company ("ACE"), his employer's insurance company, for the remainder.
When ACE declined to pay, Loomis sued under New York law (and Indiana law). He claimed that ACE failed to comply with state laws requiring an insurer to provide underinsured motorist coverage. The primary issue was whether ACE was liable to Loomis for underinsured motorist coverage (“SUM Coverage”) under the law of either state.
Loomis argued that ACE failed to comply with New York laws requiring insurers to offer optional SUM Coverage to policyholders and thus the ACE policy should be reformed to provide coverage to an injured insured that should have been entitled to the SUM Coverage that was not properly offered. The Second Circuit disagreed. “Although insurers are required to offer [SUM Coverage] to insureds in New York, the coverage is optional. Even if ACE violated New York law by failing to offer [SUM Coverage], Loomis's claim seeking reformation of the insurance contract between Loomis's employer and the insurer to include the optional SUM Coverage is not supported by New York law.
Specifically, at the relevant time (again, not now), New York law required that:
“. . . [U]pon issuance of a policy of motor vehicle liability insurance . . . insurers shall notify insureds, in writing, of the availability of supplementary uninsured/underinsured motorists coverage. Such notification shall contain an explanation of supplementary uninsured/underinsured motorists coverage and the amounts in which it can be purchased. Subsequently, a notification of availability shall be provided at least once a year ....”
N.Y. Ins. Law § 3420(f)(2)(B). However,
“Even assuming that ACE violated New York law by failing to give [its insured] the required notice that SUM coverage was available, Loomis is not entitled to the equitable remedy he seeks under New York law-namely, reformation of the insurance contract between ACE and [its insured] to include the optional SUM coverage that was neither offered to nor purchased by [the insured]. Nothing in the statute supports Loomis's proposed remedy, and he has not presented a cognizable claim for reforming the Policy under New York common law.”
Although New York law required uninsured motorist coverage (“UM Coverage”), SUM Coverage is different:
“New York law requires only that insurers offer to provide optional supplemental uninsured/underinsured motorist coverage. Id. § 3420(f)(2)(B). Nothing in the statute suggests that an available remedy for an insurer's failure to properly offer the optional SUM coverage is to read the coverage into a policy that otherwise disclaims it.”
Loomis additionally failed to convince the Second Circuit of an entitlement to reformation under New York common-law, by failing to invoke concepts of “fraud” or “mutual mistake” during motion practice.
Accordingly, “even if ACE failed to properly provide XPO with notice of optional SUM coverage, it does not follow that Loomis is now entitled to that coverage.”
Maxwell’s Minute: The Second Circuit’s discussion of New York law is where I will wrap my write-up on this one. But if you are interested in the court’s handling of a similar issue under Indiana Law, feel free to read the decision itself linked above. The Court framed that discussion as follows (and the jury is still out on that one, as you can see below):
“Second, under Indiana law, we must assess whether an insurer who issues an automobile liability insurance policy that does not provide liability coverage until the insured pays a $3 million "retained limit" is liable to pay underinsured motorist benefits under Indiana law when the insured suffers damages in excess of the tortfeasor's $50,000 policy limit and has no other underinsured motorist coverage to cover damages up to the $3 million retained limit.
***
Loomis [] argues that Indiana law requires the insurer to provide underinsured motorist coverage. On this question, we cannot confidently predict how the Indiana Supreme Court will interpret the relevant statute, and no controlling precedent from Indiana's highest court resolves the important questions that this case raises about the state's underinsured motorist insurance regime. Therefore, we CERTIFY questions to the Indiana Supreme Court.”
STORM’S SIU
Scott D. Storm
[email protected]
Check back next edition for more interesting cases.
FLEMING’S FINEST
Katherine A. Fleming
[email protected]
01/26/24 Thompson v United States Auto. Ass’n
Supreme Court of Alaska
Injuries While Moving Inoperable Airplane Arose out of Ownership of an Aircraft
Thompson was severely injured while she and her husband were pushing an inoperable airplane (Piper) to get it onto a trailer. Thompson sought to recover under her husband’s homeowner’s policy. The policy excluded injuring arising out of the ownership, maintenance, use, loading or unloading of an aircraft. Thompson claimed that the Piper had become mere parts after her husband removed the wings, elevators, and tail rudder to make repairs. The lower court disagreed, concluding that the body of the Piper (fuselage) was still an airplane, so there was no coverage under the policy. The court reasoned that even if Thompson’s injuries were proximately caused by only part of an aircraft, the injuries may still be causally connected to the ownership of an aircraft. Further, the court described Thompson’s argument as an unreasonable narrowing of the exclusion to require proximate cause with exclusions only applicable to fully assembled, operable planes. The husband had also registered the Piper as an aircraft with the Federal Aviation Administration and held an aircraft owner-specific liability for the Piper.
The Alaska Supreme Court agreed with the lower court’s interpretation of the homeowner’s insurance policy exclusion. Based on the reasonable expectations of the lay insured, the Supreme Court concluded that the policy’s exclusion of coverage for injuries arising out of the ownership or maintenance of an aircraft excluded coverage for Thompson’s injuries. The Supreme Court noted that maintenance often requires removing parts to repair or replace them, and it did not matter that the repairs were incomplete for several years. Regardless of whether the Piper was an airplane or a collection of airplane “parts” when it injured Thompson, the injury arose out of her husband’s ownership. The broad language excluding injuries arising out of the ownership and maintenance of an aircraft supported the reasonable expectation that Thompson’s injuries would not be covered because the movement of the fuselage and Thompson’s resulting injuries arose out of her husband’s ownership and maintenance of the Piper.
GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]
01/25/24 AC Ocean Walk, LLC v. Am. Guar. & Liab. Ins. Co., et al.
Business Interruption not Covered Absent Direct Physical Loss or Damage; Governmental Shutdown Orders do not Constitute Such
Plaintiff operates the Ocean Casino Report in Atlantic City, New Jersey, and brought this lawsuit against its numerous insurance carriers seeking property and business interruption coverage for loss of business income during the shutdowns imposed by the New Jersey Governor during the height of COVID-19. Three of the defendant insurance carriers moved to dismiss the plaintiff’s complaint on the grounds that the COVID-19 pandemic did not cause a direct physical loss or damage to the casino’s property, and therefore, that no coverage was available. The trial court denied the motion, finding that the plaintiff had sufficiently pled in its complaint that the pandemic had caused exactly that. This appeal followed.
Each of the policies at issue contained the same insuring agreement, which provided, in pertinent part, that each policy provided coverage against “direct physical loss of or damage caused by a Covered Cause of Loss to Covered Property, at an Insured Location . . ..” Each policy also defined “Covered Cause of Loss” to mean “all risks of direct physical loss of or damage from any cause unless excluded.”
Separately, each policy contained an endorsement providing coverage for business interruption, providing that the insurer would pay for “Time Element loss” resulting from the necessary suspension of the insured’s business activities at an insured location. This insuring agreement goes on to require that the suspension “must be due to direct physical loss of or damage to property . . . caused by a Covered Cause of Loss at the Location . . ..”
Interestingly, the policies also contained an “Interruption by Communicable Disease” (“ICB”) amendatory endorsement, providing business interruption coverage for the “actual Gross Earnings loss sustained by the Insured, as provided by this Policy, resulting from the necessary Suspension of the Insured’s business activities at an Insured Location if the Suspension is caused by order of an authorized governmental agency enforcing any law or ordinance regulating communicable diseases . . . .”
Lastly, as relevant, the policies all contained a Contamination Exclusion, providing that contamination, and any costs due to contamination, including the inability to use or occupy the property, and any costs associated with making the property safe or suitable for use or occupancy, would be excluded, unless such contamination resulted from direct physical loss or damage not otherwise excluded.
In case anyone has forgotten, New Jersey, like many states, imposed an Executive Order (in New Jersey’s case, it was called E.O. 104), effective March 16, 2020, which mandated that certain types of facilities close immediately, and remain closed to the public until further notice. Among those facilities ordered to close were casinos, such as Plaintiff’s establishment. In New Jersey, casinos were not allowed to re-open until July 2, 2020. According to the decision, Plaintiff obeyed these executive orders in full, closing its casino effective March 16, 2020, and re-opening it in a limited fashion effective July 2, 2020.
In light of the closure of its casino, Plaintiff submitted a claim to the defendant insurers, seeking coverage for lost business income. In October 2020, the defendants agreed to pay their proportionate shares of ICB coverage, and in February 2021, denied coverage as to the remaining portions of the policies. In this lawsuit, Plaintiff seeks to recover under the portions of the policies under which coverage was denied.
Plaintiff’s position was essentially that the “actual presence” of COVID-19 created a “near-certain risk of danger and harm to its employees and customers” because of “airborne transmission.” Specifically, Plaintiffs alleged that the property was damaged in the sense that respiratory droplets from infected individuals landed on surfaces and objects within the casino, “becoming a part of that surface,” thereby physically changing the property.
Defendants’ position was that the insured property suffered no direct physical loss or damage, as required by the relevant insuring agreements. Defendants also took the position that, even if the insuring agreements were triggered in the first instance, the contamination exclusion operated to bar coverage.
The key coverage question on appeal was whether COVID-19 caused a direct physical loss of or damage to any of Plaintiff’s covered property. The appellate court began its discussion by noting that none of the policies at issue defined the phrase “direct physical loss of or damage to . . ..” In New Jersey, like many other states, when determining the meaning of an insurance policy provision, a court must first look to the plain meaning of the language at issue, if the contract provides no specific definition. If the contract term in question is “insufficiently clear to justify depriving the insured of their reasonable expectation that coverage would be provided,” New Jersey courts read the provision in favor of the insured. The same rule applies to those instances in which a genuine ambiguity is found.
In evaluating the phrase “direct physical loss of or damage to . . . .” the court noted that when “physical” is paired with another word, like “physical injury,” it means a “detrimental alteration,” “damage or harm to the physical condition of a thing,” or “a distinct, demonstrable, and physical alteration” of its structure. The court also noted that, once the link between the insured premises and the physical damage to property reaches a certain level of attenuation, New Jersey courts do not find any “direct physical loss” or damage. In Newman Myers Kreines Gross Harris, P.C. v. Great N. Ins. Co., for example, a utility provider shut off power to a portion of New York City in anticipation of Superstorm Sandy, in an effort to prevent greater damage to the electrical grid and related equipment. The court there held that the plaintiff’s resulting loss of income during the power outage was not covered by its insurance policy, since no “physical loss or damage” had occurred, only a loss of use.
In sum, the court held that the loss of use of the casino was caused by the governmental orders promulgated in the wake of the COVID-19 pandemic—not the potential presence of the virus itself. In dicta, the court also noted that even if there was a direct physical loss, the contamination exclusion still would have applied.
Editor’s Note: The veteran subscribers may recall that our own Ryan Maxwell used to have a column on this topic, covering New York law. Seems that New Jersey treats it the same way New York does.
O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]
01/24/24 Nat’l Promotions and Advertising, Inc. v. Nat’l Surety Corp.
United States Court of Appeals, Ninth Circuit
Misinterpretation of Statute Does not Create Accident
In this unpublished opinion, National Promotions (“NP”) appealed from the dismissal of its complaint. NP’s business is to post advertising signs on temporary construction sites on behalf of its clients. National Surety was NP’s insurer. NP was sued for trespass, conversion, and other torts arising out of its business activities. National Surety declined to cover NP for lack of an occurrence.
The allegations of the underlying suit alleged NP’s contractor intended to enter a construction site and remove posters, which gave rise to the claims against NP. NP argued that the contractor’s conduct was based on the erroneous interpretation of a California statute, thus creating accident. The Ninth Circuit rejected this argument.
The court found that NP failed to plead an occurrence giving rise to coverage. It noted that a mistaken belief of law did not constitute an accident, because NP’s contractor acted with intent in entering the job site and the conduct that occurred there. Further, NP’s argument the underlying complaint also stated a claim for negligent supervision triggered the duty to defend was also rejected. The court noted that the same reasoning applied because NP did not allege that its contractor’s conduct was unexpected or unforeseeable. It found that the contractor acted at NP’s direction, and thus, the contractor’s action were foreseeable.
LOUTTIT’S LEGISLATIVE and REGULATORY ROUNDUP
Robert P. Louttit
[email protected]
Nothing to Report this Issue. See You in Two Weeks
ROB REACHES the THRESHOLD
Robert J. Caggiano
[email protected]
01/09/24 Keri v. Beye et al
Appellate Division, First Department
First Department Modified and Reversed, in Most Part, a Decision Granting Summary Judgment for a Defendant where Plaintiff’s Evidence Raised Triable Issues of Fact on Whether he Suffered Serious Injury to his Spleen and Left Knee Under Multiple Categories of Insurance Law § 5102(d)
Plaintiff appealed from an Order of Supreme Court, Bronx County, which granted Defendants motion for summary judgment dismissing the complaint on the ground that Plaintiff did not meet the serious injury threshold of Insurance Law § 5102(d). On review, the First Department, unanimously modified on the law, to deny the motion except as to Plaintiff’s claim of a permanent consequential injury to his spleen.
By way of background, this matter stems from a motor vehicle accident, where a vehicle operated by Defendant Issa Beye, owned by his employer, Defendant Lens Cab Corp., struck the vehicle owned and operated by Plaintiff Andras Keri. As a result of the collision, Plaintiff asserted significant and permanent consequential limitation of use injuries to his left knee and spleen. He also claimed that his injuries qualified under the “90/180” category of Insurance Law § 5102(d).
On review, the First Department started its analysis with the significant or permanent consequential limitation of use claims to the spleen. Contrary to the findings of the lower Court, it was found that Defendants had failed to meet their initial burden on summary judgment demonstrating plaintiff did not suffer an injury to his spleen. Specifically, no medical evidence was submitted that addressed Plaintiff’s claim in his bill of particulars that he sustained a lacerated spleen as a result of the accident. Additionally, Defendants’ expert radiologist failed to review CT scans of plaintiff’s abdomen and pelvis taken after the accident.
However, Defendants’ evidence did sufficiently establish that Plaintiff did not sustain a permanent consequential limitation of use injury to the spleen. Regarding this claim, Plaintiff’s own deposition testimony was submitted wherein he testified that he sought treatment for only two months and then the injury had healed. Accordingly, the First Department held that Plaintiff raised a triable issue of fact only to whether he sustained a significant, but nonpermanent, limitation of use of his spleen.
Moving to the left knee, the First Department similarly found that Plaintiff raised a triable issue of fact in opposition. Defendants initially met their burden via their expert’s report who found Plaintiff to have normal range of motion and no relevant physical findings on exam. Additionally, the expert sufficiently related positive MRI findings to degenerative disease as opposed to traumatic etiology. However, in response, Plaintiff submitted affirmed reports of his treating physician who found reduced range of motion and other positive findings on exam of the left knee, both shortly after the accident and two years later. Plaintiff’s physician also opined that the MRI findings were “new” as opposed to degenerative, citing Plaintiff’s lack of prior symptoms or treatment for the knee prior to the subject motor vehicle accident.
Lastly, the First Department examined Plaintiff’s “90/180” claims. Initially, Defendants again met their initial burden via evidence that Plaintiff’s spleen injury healed within two months of the accident, and that the knee left injury was not causally related. However, Plaintiff sufficiently raised an issue of fact in opposition via submission of his deposition testimony regarding a six-month absence from work, along with a physician’s note regarding his work status.
Accordingly, the First Department unanimously modified and reversed the Supreme Court, Bronx County’s, Decision granting summary judgment, except as to Plaintiff’s claim for permanent consequential loss of use of his spleen, without costs.
GOLDBERG’S GOLDEN NUGGETS
Joshua M. Goldberg
[email protected]
01/31/24 Marino v City of New York
Appellate Division, Second Department
No Special Duty in FDNY Rescue Operation
This action against the City of New York and emergency responders sought to hold the city liable for injuries sustained during a rescue attempt after Plaintiff’s kayak tipped over in Jamaica Bay. Plaintiff alleged that the City and the city defendants (FDNY marine division firefighters) were negligent during the rescue which resulted in his body being struck and injured by the propeller of the boat that was in use during the rescue operation.
The Supreme Court granted the City’s motion for summary judgment, holding that the City established that it did not owe a special duty to the Plaintiff. On appeal, the Appellate Division affirmed the Supreme Court’s decision, finding that the defendants, a municipality, were acting in a governmental function, which requires a plaintiff to “prove the existence of a special duty as an element of his or her negligence cause of action.” The Appellate Division found that “[t]he plaintiff’s submissions failed to establish that the defendants lulled the plaintiff into a false sense of security, or induced him to forego other avenues of assistance, and therefore placed the plaintiff in a worse position than he would have been had the defendants never assumed the duty.”
01/24/24 Zeldin v Larose
Appellate Division, Second Department
Vehicle Two in Chain Reaction Collision Fails to Establish Liability
This action involves a chain reaction collision involving five vehicles. Plaintiff was operating a vehicle directly behind the lead vehicle, in a five-car accident, and sought summary judgment on the issue of liability against the operator and the owner of the rearmost vehicle, alleging that the rearmost vehicle’s inability to stop is what caused the resultant chain of collisions.
The Supreme Court denied the Plaintiff’s motion and the Appellate Division affirmed. The Appellate Division found that plaintiff could not rely upon the uncertified police accident report and that “the plaintiff’s conclusory affidavit, which was based upon unidentified sources, was insufficient to establish, prima facie, that [the rearmost vehicle] proximately caused the plaintiff’s injuries….The plaintiff did not know how the accident occurred and merely averred that she learned from unidentified sources that there were three vehicles directly behind her that were involved in the same collision.”
02/01/24 Cardwood v R&F Limousine
Appellate Division, First Department
Plaintiff Fails to Prove Knee Surgery Satisfies §5102(d) Serious Injury Threshold
Plaintiff claimed injuries to the left knee warranting surgery as the result of a motor vehicle accident. Defendant established through a radiology review that Plaintiff’s left knee showed degenerative conditions and no evidence traumatic injury, shortly after the accident. Defendant’s IME reported normal range of motion and objective tests. Plaintiff failed to raise an issue fact with the Appellate Division stating the unaffirmed operative report was inadmissible since it was not relied upon defendant’s experts and in any even the report did not opine as to causation or rule out the degenerative conditions noted by defendant’s experts.
LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]
12/19/23 Manhattan Concrete v. Prime Property & Casualty Ins. Co.
Supreme Court, New York County
Not too Late for Purported Additional Insureds to Intervene in Rescission Action
Two employees of Manhattan Concrete (“MC”) were hurt at a construction site. MC claims that it purchased a construction contractor liability policy from Prime. The two employees sued Prime and Prime denied coverage to MC.
Prime contents that MC make misrepresentations in the policy application which would have led to Prime not issuing the policy and counterclaimed for rescission.
Two non-parties, LGA Hospitality Group (“LGA”) and Atria Builders (“Atria”), the owner and general contractor, respectively, collectively referred to as “Movants” brought a motion to intervene, both claiming additional insured status.
Prime complained that they waited too long to intervene. The court found the motion was timely, no substantial discovery had taken place, and so there is no prejudice to the parties already in this action. This is not a situation in which this case is on the trial calendar or dispositive motions are fully briefed. And Movants should have a say in a matter where Prime seeks to rescind a contract that may provide Movants coverage as additional insureds.
NORTH of the BORDER
Heather A. Sanderson
Sanderson Law Calgary, Alberta
[email protected]
Nothing to Report this Issue. See You in Two Weeks
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