Coverage Pointers - Volume XXV No. 18

Volume XXV, No. 18 (No. 665)
Friday, February 16, 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.


HF Coverage Pointers Header


Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.  New York presents special coverage challenges. We want you to avoid having situations so we are offering offer a:


Lunch and Learn - CATCH


Early Announcement for CP Subscribers – Limited Availability


Coverage 101 Announcement


If you handle New York coverage work, either as a claim professional or as a lawyer, this training is for you. New York coverage protocols differ significantly from those in other states, primarily because of the statutory requirements set forth in Insurance Law §3420(d).  When must a coverage letter be sent?  Who is required to receive a copy?  What happens if you don’t follow the rules?

If you are preparing to write, for example, a reservation of rights letter on a New York loss, like the ones that you write in other jurisdictions – STOP.  You may be shooting yourself in the foot, or heart, or wallet. There may be – and often are – very  dangerous consequences if one fails to send out a timely, properly copied, coverage letter or if it does not contain a high degree of specificity.

If there is a New York accident and an out-of-state policy and you’re feeling comfortable ignoring New York rules – STOP, read and appreciate what our great state may do to you if you fail to follow our rules.

The Zoom presentation will take place at 1:00 PM Eastern Time on Friday, April 5, and should last about 75 minutes.  There will be time for Q&A.  For claims supervisors reading this message, this is the perfect opportunity for a “lunch and learn”.

This announcement will be posted on LinkedIn early next week if our subscribers don’t “fill up the room”.

Contact me by email to register:  [email protected]

PLRB Claims Conference:  Who doesn’t want to be in Boston for St. Patrick’s Day?

Hope to see you there.  Along with Kemper’s John Hanlon, we’ll be presenting on risk transfer, contractual indemnity and additional insured coverage.  Click on the graphic for more information.



COVID Coverage Decision from New York High Court:

High Court Unequivocally Requires Actual Tangible Damage as a Trigger for Business Interruption Losses; COVID Related Closures of Restaurants are Not Resultant from “Direct Physical Loss or Damage”

Steve Peiper reviews a unanimous February 15 decision from the New York Court of Appeals, joining most civilized jurisdictions, in denying Business Interruption claims out of the pandemic,


Intercompany and otherwise

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.

As an aside:


A person in a tank top

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One hundred years ago tomorrow, February 16, 1924, American swimmer Johnny Weissmuller set the 100m freestyle record at 57.4 seconds. It now stands at 44.94 seconds, by the way.  Weissmuller is much more famous for playing Tarzan in twelve feature films from 1932 to 1948.



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.


US Senator Shot – 100 Years Ago:

Tampa Tribune
Tampa, Florida
16 Feb 1924

Sen. Greene
Shot During
Street Fight

            WASHINGTON, Feb 15. – Frank L. Greene Senior Senator from Vermont, was shot and seriously wounded here late Friday night during a pistol duel between prohibition agents and bootleggers.         

            The bullet struck him over the left eyebrow and surgeons at the hospital to which he was taken immediately were unable to determine whether it had lodged in the brain. Senator Greene was conscious however, and this was viewed as a good sign.

            Senator Greene and Mrs. Greene were walking west on Pennsylvania avenue near the capitol when the gun battle started. More than a dozen shots were exchanged, but no one else was injured. The Senator was wounded while trying to shield Mrs. Greene in the hail of bullets.

            Bystanders told the police the shooting had barely begun before Senator Greene fell. They rushed to his aid and placed him in an automobile escaped, but the police held O. E. Fisher a prohibition agent who said he had fired four shots.


Editor’s Note:  On the evening of February 15, 1924, Greene was walking with his wife near an alley on Capitol Hill when Prohibition agents were about to arrest several men unloading a still from their car. The bootleggers ran, the agents fired their guns, and Greene was struck in the head by a stray bullet.  Greene was in critical condition for several weeks, and never fully recovered.  His right arm was paralyzed, and his legs were severely weakened.


Peiper on Property (and Potpourri):

The Court of Appeals dropped a significant decision in our laps today, and the editors have scrambled to include it in this issue for your perusal and enjoyment.   Spoiler alert, the Court’s decision is in line with scores of decisions from around the county that have held the exact same thing:  Business Interruption claims cannot occur unless there is first an event which causes tangible loss or damage to property. 

In rejecting the insureds claims that coronavirus droplets caused damage to property, or otherwise rendered properties uninhabitable, the Court noted the long-accepted fact that coronavirus, while potentially deadly to people, did not harm inanimate objects.  As such, no damage to property meant no coverage for economic damages arising out of pandemic era restrictions on business. 

There is a reason for the language construed by the courts.  It should not be forgotten that business interruption policies arise from property policies.  There are very few, if any, business interruption policies which do not arise as an adjunct from the larger BPP or BOP.  As business interruption always had as its underpinnings damage to property as a prerequisite to coverage, any claims which could not demonstrate actual, physical damage were doomed to fail. 

This should close the book on the standard business interruption coverage forms. There are other manuscript forms winding their way through the courts which may compel a different result, but if your policy is tied to a broader property coverage policy it is likely subject to the Court’s ruling in Consolidated Restaurant Operations, Inc. 

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

Steven E. Peiper

[email protected]


Bankrupt Governor – 100 Years Ago:

The Buffalo News
Buffalo, New York
16 Feb 1924


            CLARKESDALE, Miss., Feb. 16. – Earl Leroy Brewer, former governor of Mississippi, who possessed a fortune of $500,000 three years ago, today announced he was facing inevitable bankruptcy, with debts of $1,000,000 and negligible assets.

            Brewer said the indebtedness consisted of notes and endorsement of notes signed in 1920 and 1921, to assist many young men to buy homes in the Mississippi Delta. Depression in agriculture resulted in the buyers being unable to meet their payments and Brewer met all demands made on the notes out of his personal fortune which now is exhausted.


Barnas on Bad Faith:

Hello again:

We are only one month away from the DRI Insurance Coverage and Claims Institute at the Loews Hotel in Chicago.  It will be a great program and there are plenty of excellent networking opportunities and chances to grow your professional network as part of the conference.  If you have not signed up, there is still time! You can register at the following link

I have a Kentucky case in my column that touches on a recurring issue in insurance litigation: whether the insurance claim adjuster can be held personally liable for bad faith or unfair claim practices.  Kentucky law on this issue had been unclear, but the decision in my column this week concluded that there is no cause of action against an insurance company’s employee adjuster for bad faith. 

Brian D. Barnas

[email protected]


Rum Runners – 100 Years Ago:

The Buffalo News
Buffalo, New York
16 Feb 1924


Fear of Hijackers Along with Lawful Menaces Causing Seamen to Shy at Rum Vessel Berths, Worrying British Owners.

LONDON, Feb. 16 – With both the law and outlawry ranged against the ships that take liquor to assuage thirsty American shores, it is becoming increasingly difficult to engage crews for these vessels.          

            Repeated instances of piracy and “hijacking,” with the uncertainty of the efficacy of the new Anglo-American rum running treaty, are hazards too great for most seafaring men, and the skippers of rum ships are worried.

            It is said that British exporters of illicit cargoes to the United States have presented gold watches to successful rum smugglers, inscriber: “For Overseas Service.”


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

Well, it’s been a quiet month on the coverage front here in Connecticut. Perhaps it was all the snow we finally got, about 10 to 12 inches in some spots. I think that’s more than we had all last winter. But for those of you following COVID-19 coverage, the New York Court of Appeals finally weighed in today, holding as have some 800 courts before it that there is no business income coverage for operations that were impacted by the various executive orders.

But New York City was not shut down this Valentine’s Day.

Jill and I had a great time at the famous Smoke Jazz Club on New York’s Upper West Side. The house was a sea of red, filled with couples celebrating the holiday of love.

Looking forward to sharing some new coverage insights with you next edition, I’m just hoping that the courts will do their job.

Lee S. Siegel

[email protected]


King Tut – 100 Years Ago:

The Buffalo Times
Buffalo, New York
16 Feb 1924


Egyptian Government Insists That Visiting Days Be Observed Same as Before

            LONDON, Feb. 16. – The dispute between Howard Carter and Egyptian officials over conditions surrounding work in the tomb of Tutankhamen has reached a deadlock, according to dispatches received here, and the peculiar position of the moment is that Carter holds the keys to the tomb bit is not allowed to enter.

            Both sides to the dispute adhere rigidly to their respective viewpoints. Mr. Carter, according to the Cairo correspondent of the Daily Mail, wrote to the premier, Said Zagloul Pasha, threatening to take legal action against the government, to which the premier replied that Carter was free to take action but the government was determined that the appointed days for visiting the tomb be observed. He added:

            “I am sorry to have to remind you that the tomb is not your property. The science which you rightly invoke cannot conceive that, owing to the incident over the visits of people whom you wished to favor, you and your colleagues will abandon your investigations, in which not only Egypt but the whole world is interested.”


Kyle's Noteworthy No-Fault:

Dear Readers,

This week’s case involves two appeals from master arbitrator’s awards affirming arbitration awards denying the medical provider’s, New Millenium Pain & Spine Medicine, P.C., claims for no-fault benefits for services provided to the insured. In both instances, the court determined that there were not sufficient grounds to vacate the awards. First, the award was not “so irrational as to require vacatur” and second, given a split of authority between the First and Second Departments on the issue of policy exhaustion, the fact that the arbitrators followed First Department precedent rather than Second Department precedent did not warrant reversal.           

Kyle A. Ruffner

[email protected]


Family Trade Goes Wrong – 100 Years Ago:

The Buffalo Times
Buffalo, New York
16 Feb 1924


DENVER, Feb. 16. – Behind a charge of disturbance filed in the justice of the peace court at Brighton against Peter Polombo, 40 years old, an Italian truck gardener of Derby, Colo., by his neighbor, Cundia Derecza, also an Italian, is a story of one man’s desire for another man’s wife, a tale of bargaining between the two men, wherein it was proposed that each trade his wife and two children, according to revelations made public by the authorities of Adams County.

            The story of Derecza, said to have been related to the authorities, following the arrest of Polombo on a disturbance charge, when it was feared, according to the authorities, that the score between the men might be settled with led, is one of the most singular stories of a marital tangle that ever fell on the ears of Adam’s County authorities.

Covets Neighbor’s Wife.

Polombo, according to Derecza’s alleged story to the authorities looked on Mrs. Derecza with covetous eyes, and unable lawfully to take the women by conquest, entered into a bargain with the husband to trade wives and children as men are wont to trade cattle and horses.

Bargaining between the men, according to Derecza’s story, did not reach a final stage of negotiations until, it is charged, Polombo appeared at the Derecza ranch and proposed that the “swap” be made then.

From the tangled skein of Derecza’s story the Adams county authorities learn, they say, that the Italian had mentioned Polombo’s proposal to swap families to his wife on several occasions and she flatly refused to become one of the pawns in the transaction.

The attitude of Mrs. Dereca respecting the proposals of Polombo was conveyed to the latter when he appeared at the Derecza place according to information given Sheriff Miller, and the refusal of the woman precipitated the quarrel which the authorities declare they feared might end in the principals resorting to primitive methods to settle their differences.


Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers:

Another Super Bowl in the books and another year Buffalo was forced to live by the age-old adage: “There’s always next year.”

This edition, I have summarized a motion for reconsideration that actually worked (for once). When it comes to additional insured tenders, we must always keep track of where the tenders are coming from. It can make all the difference.

Until Next Time,

Ryan P. Maxwell

[email protected]


Familial Confusion – 100 Years Ago:

The Buffalo Commercial
Buffalo, New York
16 Feb 1924


            NEW ROCHELLE, N. Y., Feb. 16. (A. P.) – Just after he was married today, Theodore Wult, banker, discovered that his son, besides being Mrs. Wult’s step-son was her son-in-law, and Mrs. Wult found that her daughter, in addition to being her husband’s step-daughter was his daughter-in-law, but that nevertheless the step-daughter and step-son were not step-sister and step-brother.          

            Mr. Wult, who married for the second time, and the former Mrs. Sophie Lake, who married for the third time, had stepped into their limousine from the church when Wult, Jr., stepped on the running board and offered congratulations.

          “Now it’s your turn to congratulate me,” suggested the son.

            “What for?” asked the father “I” the son explained “married Mrs. Lake’s that is stepmother’s-or, rather Mrs. Wult’s daughter day before yesterday. You might congratulate me on the choice of a mother-in-law.


Storm’s SIU:

Hi Team:

Four interesting cases for you this week:

  • Insurer Not Liable for Breach of Contract or Bad Faith to Insured Who Alleged Faulty Repairs by Contractor Purportedly Recommended by Insurer; Nor Was the Insurer Required to Defend or Indemnify the Insured in a Mechanic’s Lien Action by Contractor.

  • Insurer Properly Determined that a Vehicle with a Reconstructed Title (Repaired Salvaged Vehicle) was Worth Less Than One with a Regular Title; "Return of Premiums" is Not a Viable Cause of Action; and No Unjust Enrichment Claim Existed as Plaintiff had an Insurance Policy with Defendant. 

  • Fire Insurance Claim Against Insurer Dismissed Due to Breach of the Two-Year Suit Limitation Condition; Claim for Breach of the Insurer’s Duty of Good Faith and Fair Dealing Dismissed as Duplicative of the Breach of Contract Claim; Plaintiff’s Motion to Add Broker as a Defendant Denied as Not a Necessary Party. 

  • Even if an Insurer Violates New York Law by Failing to Offer SUM Coverage, Reformation of the Insurance Contract to Include the Optional Coverage is Not Supported by New York Law.

I would like to chat more but in the words of Professor Hinkle in Frosty the Snow Man, I’ve got to get “busy, busy, busy” --  EUO’ing and combating fraud.  But I will write again in two weeks. 

Talk to you then,

Scott D. Storm

[email protected]


Ouch – 100 Years Ago:

Times Union
Brooklyn, New York
16 Feb 1924

Hubby Pulled her hair,
Says Wife in Suit

            Mrs. Dorothy Hochette, of 46 Prospect place, who is suing her husband, Charles W. Hochette, for separation declares in an affidavit on file in Supreme Court that Hochette has been attentive to one “Bella” since 1922. He has been given to taking drinks, she alleges, and has used vile language in her presence.

            He seized her by the neck and also pulled her hair on January 21 last, she claims, and told her to get out of the house because he was “finished” with her. Previous to that, in November, she had found a letter sent to her husband that contained a photograph of a woman and note requesting him to call on the telephone, she says. It was signed with the initial “B.”

            Hochette, in his affidavit makes a general denial of the charges, and declares with particular emphasis that he has never been unduly friendly with any woman.           

            Mrs. Hochette asked Justice Lazansky today for $100 a week alimony and $750 counsel fee pending trial of the action. She claims her husband makes $8,000 a year with the Galena Oil company. The pair were married on April 21, 1915, and have two children.


Fleming’s Finest:

Hi Coverage Pointers Subscribers:

Hope everyone enjoyed the exciting Super Bowl game. I read an interesting statistic that the team wearing white normally wins the game, and the last time a team not wearing white won was when the Chiefs beat the 49ers in 2020.

In this week’s case, the Hawaii Supreme Court held that a subrogee insurance company has an independent right to continue to pursue claims and/or legal theories against a tortfeasor that were not asserted by the subrogor employee, after summary judgment has been granted against the subrogor employee, on the subrogor employee’s claims.

Until next time,

Katherine A. Fleming

[email protected]


Mexican Border Crisis Not New – 100 Years Ago:

The Buffalo Commercial
Buffalo, New York
16 Feb 1924

Urges Fence To Curb Border Vice Traffic

U.S. Investigator Reports Mexican Border Town Wide Open, Alive With Chinese Dens of Iniquity.

            LOS ANGELES, Feb. 16. (A.P.) – A fence along the American Mexican border extended five miles each side of Calexico, a similar barrier at Tijuana, night and day riders to guard them and an embargo on all traffic from the United States into Mexico at those points between 7 P.M. and 7 A.M., each day, are the recommendations to be submitted to Washington by Lucien Wheeler of the department of Justice Bureau of investigation, he announced here yesterday.

            Wheeler’s recommendations follow a report he has just submitted to the department at Washington on vice-conditions in Mexicali the Mexican town facing Calexico, Calif.

            A summary of conditions at Mexicali declared by Wheeler to be correct, includes the following outstanding features.

            A wide-open town with licensed opium dens, narcotic supply houses, an American gambling house, a Chinese gambling house, seven disorderly houses already operating and a new one costing $110,000 to be opened this week. There are approximately 200 girls in these places.

            The disorderly houses virtually are all owned and operated by Chinese interests, financed by Chinese syndicates in Los Angeles and San Francisco.

            Two breweries, one of which is completed.


Gestwick’s Garden State Gazette:

Dear Readers:

Another Super Bowl in the books, and another one in which the Buffalo Bills did not participate. Maybe next year. Anyway, I’m off to drown my sorrows in some delicious churros in Disney World next week with my lovely girlfriend and her family. Maybe Mickey and Minnie can boost my spirits.

Before I go, I have an interesting case for you about what can happen if one allows another to take their sweet rental ride for a spin. The insured rented a Lamborghini to celebrate her sister’s birthday weekend in style. A bit too generously, she allowed her sister’s boyfriend to take it for a spin, only to find the Lamborghini, moments later, wrapped around a tree. In deciding that there was no coverage for the rental company’s claim made against the insured, the Court held that the key question was whether the insured reasonably believed that she could allow the boyfriend to drive the car. Because he was unlicensed, and because the rental agreement was clear that no one but the insured was to operate it, the Court found no coverage.

Until next time,

Evan D. Gestwick

[email protected]


Judge Scolds Jury – 100 Years Ago:

The Brooklyn Citizen
Brooklyn, New York
16 Feb 1924


Freeing of Four Held as Robbers Bitterly Criticized by Jurists.

            Judges Franklin Taylor and George W. Martin in the County Court last night bitterly arraigned two juries for their failure t find guilty four men arraigned on charges of robbery, and said to them that it is because of the inefficiency of jurors that crime and lawlessness run rampant in the city.          

            The case before Judge Taylor was that of Maxwell Stimmel, of No. 188 Covert street, charged with burglary in the third degree on complaint of Patrolman Conrad Pope who alleged that early on the morning of January 14 he arrested Stimmel as he stood before a broken window in a candy shop at No. 300 Saratoga avenue. The police charge Stimmel served time at Sing Sing prison and Elmire for burglary.

            The defendant denied the charge and said he was walking home after having left a girl, when he was arrested. He could not give the name of address of the girl.

            “Gentlemen”, the judge began, “this is the most foolish verdict I have ever heard. A police officer caught this defendant red handed in the commission of a crime and yet, with a cock-and-bull story he goes clear.

            “such a stroke of luck will not be his again. He is a felon; but he will never drive a car in Brooklyn’s streets again. I will see to that. The license he received through perjury will be revoked.”

            Warming to his subject the judge went on:

            “I never before have questioned the verdict of a jury, but this verdict is deserving of sever condemnation. This is one instance in which the jury is discharged without the thanks of the court. I want the names and addresses of every man who served on this jury.”

            According to the police, in 1923 shortly after his release from Sing Sing prison Stimmel secured a license to drive a bus and worked for the department of Plant and Structures on the Delancy street line.


O’Shea Rides the Circuits:

Hey Readers,

The past two weeks have flown by. On a low note, the Chiefs won the Super Bowl, on a high note, the Ottawa Senators seem to have finally clicked (I say with bated breath).

This week I have a case from the Eighth Circuit addressing conditions in a life insurance policy. Specifically, whether the term Policy Date would avoid the policy’s conditions of delivery of the policy and acceptance by the policyholder.

Until Next Time,

Ryan P. O’Shea

[email protected]


Shoeless Joe, Whaddya Know? – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
16 Feb 1924


Another surprise and sensation has been developed in the case of Joe Jackson. Discredited White Sox Player. The unexpected turn of events in Milwaukee where a judge set aside a verdict rendered in favor of Jackson by the jury, severely criticized the members for daring to bring in a favorable return for the plaintiff and finally dismissing the case from the court, has established a situation which will require abundant legal talent to straighten out. Jackson sued the Chicago club for $18,500 in back salary and bonus. The jury awarded him a verdict of $16,711.04, which the court would not accept.

            While the action of the court creates a peculiar phase, what is probably more interesting to the average layman is the effect the verdict of the jury will have on Jackson’s status in the ranks of organized baseball. This verdict is virtually tantamount to repudiation of the charges that Jackson was guilty of violating his employer’s confidence. Joe was charged with having been involved in the “frame up” that resulted in the alleged tossing of games in the world series of 1919. Confessions by implicated players brought Jackson into the mess and he was denounced, discredited and discharged.

            The findings in this lawsuit rather vindicated Joe Jackson and upheld his contention that he was an unwilling victim of the scandal; that his name had been dragged into the mess without consent or knowledge. The jury sustained his claim in this respect. Yet the court flays the jury for bringing in such a verdict. Jackson’s lawyer claims the verdict will be so far-reaching as to bring about Joe’s ultimate return to the ranks of organized baseball.


Louttit’s Legislative and Regulatory Roundup:

 Nothing to report this week.

Robert P. Louttit

[email protected]


Women Distract – 100 Years Ago:

Buffalo Courier
Buffalo, New York
16 Feb 1924

More Truth than Poetry
By James J. Montague


            It has been asserted that the presence of girls’ clubs near the Harvard campus seriously interferes with the work of the students.

            ‘Twas the voice of the student, I heard him complain

            As he mournfully mooned on the campus,

            “We can’t be expected to cultivate brain If these skirts are permitted to vamp us.

            We can’t keep our minds upon Chemistry 3 when these Mabels and Sadies and Rosies, and Beckies and Betties we constantly see applying the puffs to their noses.

            “Oh send us away with our tutors and books, afar from silk hose and lace collars to some spot like those sheltered Athenian nooks

            Where Socrates walked with his scholars, perhaps it was Pericles – one can’t be sure,

            This history stuff we are dim in, but one thing is certain we must be secure from the wiles of these dreadful young women.


Rob Reaches the Threshold: 

Hello Readers,

Another two weeks, another roller coaster of emotions for my sport fandoms. My beloved – often downtrodden New York Knickerbockers – made some savvy moves at the deadline as the push for the playoffs ramp up. However, then the Chiefs won the Super Bowl, and we were all collectively sad. BUT – by the time you all read this, pitchers and catchers for the New York Yankees will have reported. Opening Day gets closer each day.

For this installment, the string of strong cases from First Department continues. This time the Court examines some strong evidence presented from a defendant seeking summary judgment arguing plaintiff did not sustain a serious injury under Insurance Law Section 5102(d). Then the Court picks apart the admissibility of evidence in opposition.

I hope you all enjoy the read.

Robert J. Caggiano

[email protected]


Dear Abby – 100 Years Ago:

Daily News
New York, New York
16 Feb 1924

Doris Blake’s Love Answers.

Have you a perplexing love affair on which you need the counsel of a friend? Write to Doris Blake, care THE NEWS, 25 Park Place, New York. If you wish a personal reply please send a stamped addressed envelope.

To the Contrary.

            “Dear Miss Blake: I am seventeen and know a fellow two years my senior. His friends tell me he loves me. He never kisses me. Do you think this is a sign he does not love me? GYPSY.”

            The fact that he does not attempt to kiss you shows he respects you and would not think of losing your friendship by doing such a thing. Beware of the boy who does not show you such respect.


Goldberg’s Golden Nuggets:

Despite how much my two-year-old loves watching the Frozen movies, she was steadfast in her refusal to go outside into the snow to build a snowman. I shouldn’t be surprised.

Anyway, I have two cases from the Second Department in this issue for you: No-Fault and Workers’ Compensation benefits face-off and a rare finding that a plaintiff failed to meet its burden for the serious injury threshold.

Be well!

Joshua M. Goldberg

[email protected]


Dented Car Worth More Than Dented Baby – 100 Years Ago:

The Brooklyn Daily Eagle
Brooklyn, New York
16 Feb 1924


Machine of 1914 Model More Valuable Than Injured Infant

Long Island City, L. I., Feb. 16 – A court in Part 1 of the Supreme Court, Queens, yesterday apparently believed that a 1914 model Ford touring car that was bought for $75 is worth more than the shoulder blade of a 3-year-old baby. The jury brought in a verdict of $200 in favor of Daniel R. Smith of 1022 Bergen St. Brooklyn, who had sued the City of New York to recover damages done to his motorcar and $50 in favor of 3-year-old Helen Smith, who had received a fractured shoulder blade. The damage to the automobile and the injury to the child Oct. 15, 1922, when Smith was driving his motorcar on Hillside Ave., Jamaica, and it struck three holes in the pavement. The car overturned and the occupants were injured.


LaBarbera’s Lower Court Library:

Hello CP Readers:

After a few days of warm weather here in Buffalo, temperatures have again dropped. Our friend, Punxsutawney Phil, believes Spring is on the way, and I am crossing my fingers that is the case! I tend to get antsy waiting for warmer weather when there is no snow in sight.

This week’s case comes from the Supreme Court of New York, New York County, and considers whether an insurer has produced enough evidence to have all claims dismissed against it on a motion for summary judgment. The court ultimately decided that there were issues of fact still existing in relation to each cause of action and denied the insurer’s motion for summary judgment in its entirety. 
Until next time…

Isabelle H. LaBarbera

[email protected]


Wealthy Young Girl Wanted – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
16 Feb 1924

YOUNG SCOTSMAN- Accountant, good appearance, very affectionate, plenty of brains, but no money, wishes to make the acquaintance of wealthy young girl; object matrimony. Clarence Stevenson, care postoffice, London, Ont. 


North of the Border:

2024 has been rather frenetic to date – lots of interesting opinion requests and work on existing files. All of which is energizing but at the time same time … it does wear after a while. But all is not lost, as next Saturday I will be leaving our -20C temps and will be off to the FDCC Winter Meeting in St. Petersburg, Florida, to reconnect with old friends and meet new ones.

I am moderating an interesting panel at the winter meeting entitled ESG Litigation Lands in America. My panel of three will be analyzing the tale of woe of a fictional, Texas oil and gas company which trades on the New York and Toronto stock exchanges. That company used overly aspirational language in its 2022 Annual Report stating that it would be net zero by 2050. That report caught the eye of a Canadian Pension Fund who invested in that Texas company and repeated that language in its own annual report stating that oil and gas companies can become sustainable. In the fall of 2023, an NGO in California and its Canadian cousin reported both the Texas company and the Canadian pension fund to the respective American and Canadian authorities accusing both entities of ‘greenwashing’. The Canadian Pension Fund retained FDCC member David Zuber; the Texas oil and gas company retained FDCC member Vicki Smith who in turn retained John Peiserich of JS Held as a consultant. David, Vicki and John will issue spot this fact pattern and try to keep the Pension Fund and the Texas oil and gas company afloat as these issues are dealt with. This fact pattern is fictional, but the same scenario is becoming more and more common.

My article today addresses a question I am often asked: How can a Canadian resident be compelled to testify in an American lawsuit?

Until next time.

Heather A. Sanderson
Sanderson Law, Calgary, Alberta

[email protected]


Headlines from this week’s issue, attached:


Dan D. Kohane
[email protected]

  • Retrocessional Insurer Can Sue Underlying Defense Counsel for Legal Malpractice.  Thousands Flee
  • What is a Product Recall under a Product Recall Policy?
  • Inconsistent and Internally Confusing Exclusion Sinks Coverage Denial
  • Question of Fact as to whether Unsigned Hold Harmless Agreement was Enforceable.  Claim of Breach of Contract to Provide Coverage Fails where there is Evidence that Coverage was Provided (Including Policy!)
  • If a Party Promises to Provide Upstream Parties Additional Insured Coverage and Does Not, it has Breached the Insurance Procurement Requirement


Steven E. Peiper

[email protected]

  • High Court Unequivocally Requires Actual Tangible Damage as a Trigger for Business Interruption Losses; COVID Related Closures of Restaurants are not Resultant from “Direct Physical Loss or Damage” 


Brian D. Barnas
[email protected]

  • Bad Faith Claim against Insurance Adjuster Barred by Kentucky Law


Lee S. Siegel

[email protected]

  • Nothing in Connecticut to report this week


Kyle A. Ruffner
[email protected]

  • Court Upholds Master Arbitrator Award Denying No-Fault Benefits Due to Policy Exhaustion


Ryan P. Maxwell

[email protected]

  • Court Reconsiders Priority of Coverage between Two Insurers Providing Additional Insured Coverage to the Same Entity


Scott D. Storm

[email protected]

  • Insurer not Liable for Breach of Contract or Bad Faith to Insured who Alleged Faulty Repairs by Contractor Purportedly Recommended by Insurer; Nor was the Insurer Required to Defend or Indemnify the Insured in a Mechanic’s Lien Action by Contractor

  • Insurer Properly Determined that a Vehicle with a Reconstructed Title (Repaired Salvaged Vehicle) was Worth Less than One with a Regular Title; "Return of Premiums" is not a Viable Cause of Action; and no Unjust Enrichment Claim Existed as Plaintiff had an Insurance Policy with Defendant 

  • Fire Insurance Claim against Insurer Dismissed Due to Breach of the Two-Year Suit Limitation Condition; Claim for Breach of the Insurer’s Duty of Good Faith and Fair Dealing Dismissed as Duplicative of the Breach of Contract Claim; Plaintiff’s Motion to Add Broker as a Defendant Denied as Not a Necessary Party

  • Even if an Insurer Violates New York Law by Failing to Offer SUM Coverage, Reformation of the Insurance Contract to Include the Optional Coverage is not Supported by New York Law


Katherine A. Fleming

[email protected]

  • Subrogee Insurance Company has Independent Right to Continue to Pursue Claims and/or Legal Theories against a Tortfeasor that were not Asserted by the Subrogor Employee, after Summary Judgment has been Granted the Subrogor Employee


Evan D. Gestwick
[email protected]

  • No Coverage for Accident Caused by Un-licensed Driver Operating a Rented Lamborghini Without Rental Company’s Consent, Even if Renter Gives Green Light


Ryan P. O’Shea

[email protected]

  • Preconditions of Delivery and Acceptance in Life Insurance Policy Bars Coverage


Robert P. Louttit

[email protected]

  • Nothing to Report this Week


Robert J. Caggiano

[email protected]

  • First Department Unanimously Affirmed, Without Costs, a Decision Granting Summary Judgment in Favor of Defendant where Plaintiff’s Evidence Failed to Raise an Issue of Fact on Whether he Suffered Serious Injury within the Meaning of Insurance Law § 5102(d)


Joshua M. Goldberg

[email protected]

  • Name a More Iconic Duo: No-Fault and Workers’ Compensation

  • Range of Motion – According to Who?


Isabelle H. LaBarbera

[email protected]

  • Triable Issues of Fact Existed as to Whether Plaintiff was Entitled to Coverage for Damage to a Drill Shaft


Heather A. Sanderson
Sanderson Law, Calgary, Alberta

[email protected]

  • Canadian Residents are Not Compellable Witnesses in American Civil Proceedings Unless a Canadian Court Issues an Order Compelling them to Testify in Response to an Order for Letters Rogatory Issued by an American Court of Competent Jurisdiction


That’s it for this issue.  See you in a couple of weeks.



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

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

Dan D. Kohane

[email protected]


Agnes A. Wilewicz

[email protected]


Evan D. Gestwick

[email protected]


Dan D. Kohane, Chair
[email protected]


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

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Scott D. Storm

Brian D. Barnas

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


Steven E. Peiper, Team Leader
[email protected]

Michael F. Perley

Scott D. Storm

Brian D. Barnas


Dan D. Kohane
[email protected]

Alice A. Trueman

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

Louttit’s Legislative and Regulatory Roundup

Rob Reaches the Threshold

Goldberg’s Golden Nuggets

LaBarbera’s Lower Court Library

North of the Border


Dan D. Kohane
[email protected]


02/15/22       Century Prop. and Cas. Ins. v. McManus & Richte

Appellate Division, First Department

Retrocessional Insurer Can Sue Underlying Defense Counsel for Legal Malpractice.  Thousands Flee

This one has all the markings of a case designed to eventually reach the Court of Appeals. A retrocessional insurer (i.e., the reinsurer of a reinsurer), Century, commenced a legal malpractice claim against the lawyers representing the insured in an underlying personal injury action. The court concluded that Century,  having paid out on the settlement on behalf of the insured in the underlying action, has standing to assert a claim for legal malpractice against the law firm the theory of equitable subrogation.

There was a personal injury action in NY Count in which the defendant law firm (“law firm”) were retained by “Tower B” and its insurer.   Tower B had contracted with Rite-Way to perform the demolition work. The underlying plaintiff brought a Labor Law Section 240(1) action against Tower B and others.

According to the terms of its purchase order with Tower B, Rite-Way was obligated to maintain $6 million in insurance naming Tower B as an additional insured and to contractually indemnify Tower B for any losses it sustained as a result of Rite-Way's work on a primary and non-contributory basis. Instead of the $6 million in coverage contractually required by the purchase order, Rite-Way maintained only a $2 million policy subject to a $250,000 self-insured retention (SIR). Rite-Way and its insurers initially declined a tender offer to defend and indemnify Tower B, and defendants filed a third-party complaint against Rite-Way on behalf of Tower B asserting claims for, among other things, breach of contract for failure to procure the contractually required insurance, and for common-law and contractual indemnification and contribution. The underlying defendants moved for summary judgment in the third-party action, and while the motion was pending, Rite-Way and its primary insurer agreed to accept the defense of Tower B, but not its affiliates, and only to the extent of Rite-Way's $2 million policy after the remainder of the SIR was exhausted .

Tower B ended up as the sole defendant in the underlying action. On June 14, 2017, defendants withdrew the summary judgment motion pending in the third-party action "on consent." In a stipulation dated June 14, 2o17, and filed electronically on June 27, 2017, defendants discontinued the third-party action by Tower B against Rite-Way, allegedly without authorization from the insured (Tower B) or its insurers.

Supreme Court ultimately rendered a finding of liability against Tower B in the underlying action upon a motion for summary judgment by Palaguachi, but before a trial on damages could take place, Tower B settled the action for $4.6 million. Once the defense costs were subtracted, Tower B was left with only approximately $1.8 million in coverage and still owed approximately $2.8 million toward the settlement. Century paid the $2.8 million on behalf of Tower B and later commenced the instant action asserting causes of action for legal malpractice against defendants as equitable and contractual subrogee of Tower B.

The claims against Tower B in the underlying action were covered by a $3 million primary insurance policy issued to Tower B by ACE American Insurance Company which was reinsured by ACE INA.  Century and ACE INA then entered into the retrocessional agreement, pursuant to which plaintiff accepted a 100% pro rata quota share reinsurance (retrocession) of ACE INA's interest and liabilities with respect to certain insurance policies, including the Tower B policy. Therefore, any loss under the Tower B policy was ultimately to fall upon Century. According to plaintiff, as the retrocessional insurer for Tower B, it "was contractually obligated to fund" a portion of the settlement in the underlying action on Tower B's behalf.

This contractual obligation forms the basis of plaintiff's Century’s claims of legal malpractice against defendants. In its amended complaint, plaintiff alleges that defendants were negligent in voluntarily withdrawing the motion and discontinuing the third-party action against Rite-Way; had they not done so, Tower B would have received complete indemnification from Rite-Way. Instead, because defendants withdrew the claims against Rite-Way, Tower B was left with exposure of approximately $2.8 million, which plaintiff ultimately paid.

The law firm argued that Century lacked standing to assert claims on behalf of Tower B, and could not assert direct claims for legal malpractice because it lacked privity or "near privity" with defendants.

"[A]bsent fraud, collusion, malicious acts or other special circumstances, an attorney is not liable for professional negligence to third parties not in privity. However, in cases where the elements of negligent misrepresentation are present, a relationship of "near privity" may be sufficient to sustain a legal malpractice claim To establish such a claim, the third party must allege "(1) an awareness by the maker of the statement that it is to be used for a particular purpose; (2) reliance by a known party on the statement in furtherance of that purpose; and (3) some conduct by the maker of the statement linking it to the relying party and evincing its understanding of that reliance" (id. at384; see also Federal Ins. Co., 47 AD3d at 61). Although this doctrine may allow a nonclient to sue for legal malpractice, plaintiff here was not in "near privity" with defendants, as it has not pleaded that it relied upon a negligent misrepresentation made by defendants.

A third party may still have standing to bring a claim for legal malpractice where, through contractual or equitable subrogation, it brings the claim on behalf of the attorney's client by stepping into their shoes legally.

The First Department found  that as an equitable doctrine, subrogation is "designed to promote justice, and thus, is dependent upon the particular relationship of the parties and the nature of the controversy in each case. The doctrine of equitable subrogation "is broad enough to include every instance in which one party pays a debt for which another is primarily answerable and which in equity and good conscience should have been discharged by the latter, so long as the payment was made either under compulsion or for the protection of some interest of the party making the payment, and in discharge of an existing liability"

In a 1994 Third Department case, the court had held that a reinsurer has no contractual relationship with the insured so there are no subrogation rights. Reliance Ins. Co. v Aerodyne Engrs. (204 AD2d 944 [3d Dept 1994])

This court rejected the holding in Reliance.

Where a reinsurer, or retrocessionaire, has paid a claim on behalf of an insured, equitable principles demand that the reinsurer be entitled to equitable subrogation on behalf of the insured. Having pleaded that it was contractually obligated to, and did, pay the majority of Tower B's settlement amount in the underlying personal injury action, and that it brings the instant action for legal malpractice as subrogee of Tower B, plaintiff can proceed with this action under the theory of equitable subrogation.

Editor’s Note:  I don’t buy it.  No privity, no near privity, no right to sue. What may make this case different is the 100% retrocessional agreement and the assignment of rights that appears to have taken place.  This was not a standard reinsurance agreement because the retrocessionaire ended up with the obligation to pay the claim directly.                                                                


02/15/24       Vyaire Holding Co. v. Westchester Surplus Lines Ins. Co. Appellate Division, First Department

What is a Product Recall under a Product Recall Policy?

Defendants issued consumer goods insurance policies on medical devices sold by plaintiffs (collectively, Vyaire). The Year One policy ended on March 7, 2019, at which point the Year Two policy began. Each policy was triggered by an "insured event" discovered in the policy period, provided that Vyaire gave written notice as soon as possible, no later than 30 days after discovery of the event. Additionally, the policies excluded coverage for pre-existing circumstances that Vyaire "knew of or should have known of, prior to the inception of this policy, which caused or could reasonably have been expected to cause . . . an 'insured event' ." "Insured event" was defined as a " 'stock recovery,' market withdrawal or recall" of an insured product that would cause bodily injury or property damage. "Stock recovery" was defined by the policies but "market withdrawal" and "recall" were not.

enFlow, a product insured under the policy, was first approved in 2006. By 2018, it was used in many different countries. Prior to March 2019, there were no reports of patient injury due to aluminum toxicity. In February 2018, however, Vyaire learned of a (then-unpublished) study indicating that enFlow may cause aluminum toxicity when used with a certain infusion. Over the following months, Vyaire corresponded with medical device regulators in two European Union (EU) countries regarding the safety of enFlow. After conducting its own testing, Vyaire concluded that enFlow appeared to release levels of aluminum that would be unsafe for certain patients, but that this release was actually of a nontoxic complex formed with malate in the infusion. On February 6, 2019, Vyaire learned that the infusion did not contain malate. Rather, it contained lactate, which was commonly used in medical solutions. Vyaire attested that, although it recognized this as a potential safety risk, it believed that a labelling change would be sufficient to resolve that risk.

Others disagreed. In early March 2019, Vyaire learned that many hospitals in the United Kingdom had ceased using enFlow, and two EU regulatory agencies expressed their intentions to take regulatory action. As a result, on March 5, 2019, Vyaire decided to suspend enFlow use in the EU. On March 7, 2019, Vyaire began to file the paperwork for a withdrawal with the FDA. On March 11, 2019[, Vyaire's testing revealed unacceptable levels of aluminum leaching with many different infusions. On March 12, 2019, Vyaire notified defendants that they were about to issue a world-wide recall of enFlow, and gave notice as to "all responsive policies." On March 13, 2019, Vyaire issued a global recall notification.

Supreme Court properly determined that coverage for Year Two was excluded under the prior notice exclusion. The record in this case established that by March 7, 2019, Vyaire knew or should have known about circumstances that could reasonably have been expected to cause an insured event.

The policy does not define "recall," which is not necessarily limited to removal of the product from the market  Vyaire presented sufficient evidence to raise issues of fact as to whether, in the context of medical devices, "recall" could include an ongoing process of corrective action other than removal. Vyaire has demonstrated that it began such a process during Year One.

To establish that it satisfied the notification requirement, however, Vyaire would have to prove that it discovered the event no earlier than February 10, 2019, and gave notice as soon as possible.  Before March 2019, there were no reported injuries due to aluminum toxicity from enFlow, despite its frequent and widespread use. Moreover, no regulatory agency had yet indicated any intention to recall the product. Yet, by that date, Vyaire had engaged in extensive communications with foreign regulatory agencies for approximately a year regarding enFlow's possible aluminum toxicity. Vyaire had also conducted its own testing regarding aluminum leaching. Vyaire knew that an infusion containing lactate, not malate, leached potentially dangerous amounts of aluminum. The competing claims raise issues of fact as to whether Vyaire had a reasonable belief, until at least February 10, 2019, that no insured event had occurred (see id.).


02/13/24       Bay Plaza Mall, LLC v. Argonaut Insurance Company

Appellate Division, First Department

Inconsistent and Internally Confusing Exclusion Sinks Coverage Denial
The Argo defendants have disclaimed coverage for any party in two underlying personal injury actions brought by individuals who were injured while working on a project at premises owned by Bay Plaza. The underlying plaintiffs were allegedly employed by B&G Electrical Contractors of NY Inc. (“B&G”)

Argo failed to demonstrate as a matter of law that the exclusion in their commercial general liability policy is "stated in clear and unmistakable language" and "applies in [this] particular case" The schedule in the exclusion, which defined "ongoing operations" that would not be covered, is rendered ambiguous by the logically inconsistent use of the term "subcontractor." The Argo defendants' proffered definition of "subcontractor" as "an individual or business firm contracting to perform part or all of another's contract" does not resolve the logical inconsistency, since they failed to identify any other contract plaintiffs had in place under which B&G was performing. If the Argo defendants' intent was to broadly exclude work by all entities contracting directly with plaintiffs, "[t]he parties could have easily drafted their agreement to that effect."

Moreover, it is not clear whether the accidents at issue in the underlying actions arose from B&G's electrical work under its contracts, or from general safety conditions at the job site which were not within the scope of B&G's work, or from conditions unrelated to the construction project. Thus, the Argo defendants did not establish that the allegations in the underlying actions come wholly within the exclusion. Further, plaintiffs have submitted evidence that the Argo defendants provided coverage for 12 prior similar claims and contend that they are bound by their own "practical construction" of the policy, which presents an issue that cannot be resolved on summary judgment.

We went back to the Record on Appeal to look at the exclusion:


This endorsement modifies insurance provided under the following:


Description of Designated ongoing Operation(s):


The following exclusion is added to paragraph 2., Exclusions of COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY (SECTION I – COVERAGES):

This insurance does not apply to “bodily injury” or “property damage”:

(1) Arising out of the ongoing operations described in the SCHEDULE of this endorsement;

(2) Included in the “products-completed operations hazard” and arising out of “your work” described in the SCHEDULE of this endorsement;

regardless of whether such operations are conducted by you or on your behalf or whether the operations are conducted for yourself or for others.

Unless a “location” is specified in the SCHEDULE, this exclusion applies regardless of where such operations are conducted by you or on your behalf. If a specific “location” is designated in the SCHEDULE of this endorsement, this exclusion applies only to the described ongoing operations conducted at that “location.” For the purpose of this endorsement, “location” means premises involving the same or connecting lots, or premises whose connection is interrupted only by a street, roadway, waterway or right-of-way-of a railroad…

Issues of fact include.

  • whether or not B&G was a subcontractor.

  • Inconsistency in the exclusion since the “subcontractors in which the insured directly contracted” doesn’t appear to be a subcontractor.

  • Where the work arose out of subcontractor’s work or not.


02/13/24       Solorzano v. Lophijo Realty Corp.

Appellate Division, First Department

Question of Fact as to Whether Unsigned Hold Harmless Agreement was Enforceable.  Claim of Breach of Contract to Provide Coverage Fails where there is Evidence that Coverage was Provided (Including Policy!)

The Belleclaire defendants failed to establish prima facie that the sample indemnification agreement shown to Gotham Air's witness at the deposition was valid and enforceable and that it applied to Gotham Air's work at the Belleclaire Hotel on the accident date of September 25, 2019. The agreement was undated, and no affidavit or testimony identified the agreement as applicable on September 25, 2019.

Although Gotham Air's principal testified that he signed an undated document containing a hold harmless provision, that he forwarded the document to the Belleclaire Hotel's managing entity before the accident that caused plaintiff's injury, and that he understood the document and intended to be bound by it before starting any work, he did not acknowledge that the document he was shown at the deposition was the same document he signed and forwarded to Belleclaire's managing entity before commencing the work. The evidence thus did not establish a meeting of the minds on the material terms of the indemnification agreement.

The Belleclaire defendants’ assertion that they were not named as additional insureds on Gotham Air's policy was uncorroborated by any documentary evidence such as the tender letter they purported to have sent to Gotham Air's insurance carrier or any affidavit from a person with first-hand knowledge (see Every contract between the parties required that defendants be included as additional insured. Gotham Air established prima facie that it satisfied its contractual obligation to procure insurance by producing a certificate of insurance in effect on the date of the accident that named defendants as additional insured, and by producing the insurance policy with blanket endorsements, which included as insured "any additional insureds as required by written contract."


02/02/24       LoStracco v. Lewiston-Porter CSD

Appellate Division, Fourth Department

If a Party Promises to Provide Upstream Parties Additional Insured Coverage and Does Not, it has Breached the Insurance Procurement Requirement
This was a Labor Law case with a number of interesting Labor Law indemnity issues, successfully argued by our Marc Schulz. You can read all about the Labor Law claims in our sister publication, Labor Law Pointers.

There was one insurance issue.

Empire was responsible, under the trade contract, for providing additional insured coverage for a number of upstream parties.  It had a subcontract with Javen and that contract required that not only Javen, but the District and Campus, be named as additional insureds. The policy contained an automatic-enrollment provision, which Empire contended proves that it complied with the additional insured requirement, made any organization an additional insured if Empire had a written contract with that organization.

Inasmuch as Empire did not have any contracts with the District or Campus, the automatic-enrollment provision did not encompass those parties. Empire therefore failed to meet its initial burden on its motion of establishing that it procured the requisite insurance and thus did not breach its contract with Javen.
Editor’s Note:  Since this was only a motion to dismiss, the consequences of that breach were not discussed.  Usually, it’s premium differential.


Steven E. Peiper

[email protected]

02/15/24       Consolidated Rest. Operations, Inc. v. Westport Ins. Corp.

Court of Appeals

High Court Unequivocally Requires Actual Tangible Damage as a Trigger for Business Interruption Losses; COVID Related Closures of Restaurants are not Resultant from “Direct Physical Loss or Damage”

Consolidated operated dozens of restaurants which were covered under a Commercial Property Policy issued by Westport.  Among the coverages extended thereunder was a Business Interruption limit for economic loss occasioned out of “direct physical loss or damage” to the otherwise insured property.  In the aftermath of the tumult of the Spring of 2020, Consolidated made a claim for business interruption losses sustained by its various locations due to COVID 19 restrictions and/or simply the slowdown in human beings eating at restaurants.  

In short, Consolidated argued that it sustained a significant reduction in revenue due to suspended or curtailed operations caused by concerns over coronavirus transmission and government related restrictions on business activity.  Westport denied the claim on the basis that while the pandemic era restrictions were a major source of economic loss, the policy in question only triggered where there was property damage which precipitated the economic loss. 

Upon filing suit, Westport immediately moved to dismiss and the trial court granted the application. In affirming the Westport denial, the trial court ruled that the premises maintained by Consolidated had to be rendered “uninhabitable” or, at least, in need of repair/replacement of tangible portions of the property.  Because Consolidated had not alleged any actual damage, it followed that Consolidated had not properly pleaded a cause of action for loss resulting from physical loss or damage to insured property. 

The Appellate Division, First Department affirmed the trial court’s ruling.  The First Department ruled that business interruption coverage did not trigger unless there was a claim of “direct physical loss of property, not simply the inability to use it.”  In short, there needed to be some “tangible alteration of property.” Because Consolidated made no allegation of “physical change, transformation or difference [in property]” it failed to plead a viable cause of action.

Consolidated sought review by the Court of Appeals on two grounds.  The first challenged the Appellate Division’s determination that a viable business interruption claim required “tangible, ascertainable damage, change or alteration to the property.”  The second claim argued that even if tangible alteration was needed, its Complaint properly so alleged.

In affirming both the trial court and the Appellate Division, the Court of Appeals first noted that it read the “phrase ‘direct physical loss or damage’ to mean ‘direct physical loss’ or ‘direct physical damage’.”   Thus, “physical damage” required “a material physical alteration to the property – one that is perceptible, even if not visible to the naked eye.”  Simply stated, the Court did not believe Consolidated pleaded, nor could prove, that its properties sustained a material physical alteration. Indeed, the Court noted that Consolidated’s Complaint “fails to identify…a single item that it had to replace, anything that changed, or that was actually damaged at any of its properties.”  Further, there was no support for the argument that coronavirus droplets harmed structures or surfaces, only the people who touched the structures or services sustained injury. 

The Court spent most of its efforts, however, on deconstructing Consolidated‘s argument that “direct physical loss” should be interpreted to include impaired functionality or partial loss of use.  It is first noted that if the policy had been intended to cover loss for loss of use of property it would have so stated.  Here, however, the only construction was that a loss required “actual, complete disposition” of property.
Nevertheless, Consolidated argued that cases which have provided property damage recovery where the property was rendered uninhabitable due to infiltration of chemicals, fumes and other dangerous substances should compel coverage without actual physical damage.  In rejecting Consolidated’s claims that contamination by coronavirus particulates rendered the restaurants uninhabitable, the Court noted that in every instance the properties remained open for take-out and delivery services.  Further, for the restaurants that were closed, as alleged by Consolidated, there was no proof that the closures were caused by contamination which rendered them uninhabitable. 

The Court concluded its opinion by directly stating that Consolidated’s policy only “cover economic losses to the extent they are caused by ‘direct physical loss or damage.”  The mere presence of coronavirus at an insured premises is, insufficient by itself, to establish actual damage to property.


Brian D. Barnas

[email protected]

02/09/24       Breedlove v. State Farm Fire and Casualty Company

Court of Appeals of Kentucky

Bad Faith Claim Against Insurance Adjuster Barred by Kentucky Law

Breedlove was involved in an accident while riding his motorcycle.  He was traveling in the right lane when Coles unsuccessfully attempted to merge by speeding ahead of Breedlove’s motorcycle.  Coles’ left rear quarter panel struck the motorcycle’s front wheel, and Breedlove suffered injuries to his head, knee, and back.  Breedlove spoke with police on the scene, but, according to Breedlove, the conversation revolved around his health and not the circumstances of the accident.

Breedlove sought recovery for his property and bodily injuries from Coles’ insurer State Farm.  State Farm obtained the police report, which mistakenly reversed the vehicles’ roles in the accident.  The police report concluded by stating the officer could not determine fault for the incident.  State Farm’s adjuster Binion contested State Farm’s liability and denied payment based upon its belief that Breedlove had improperly merged. 

Breedlove’s counsel did not attempt to correct the faulty police report.  Instead, he sent two of the bystander witness 911 recordings to State Farm.  One of the recordings definitively stated that Coles was responsible for the accident.  Nonetheless, State Farm chose to rely on the facts outlined in the police report, which remained uncorrected.

Breedlove later filed a negligence claim against Coles along with a UIM claim against his own insurers.  Breedlove also included a complaint that State Farm and Binion had violated Kentucky’s Unfair Claims Settlement Practices Act and engaged in bad faith by denying State Farm’s liability and payment.  Thereafter, State Farm retained counsel who recognized the error in the police report.  Once State Farm recognized the error, the underlying negligence claim was resolved.  The bad faith claims continued.

The bad faith claim against Binion was dismissed.  Prior to this case, Kentucky law was unclear whether an Unfair Claims Settlement Practices Act and common law bad faith claims could be asserted against an insurance adjuster.  The court concluded that adjusters employed by the insurer are not liable for Unfair Claims Settlement Practices Act or common law bad faith claims.  The court reasoned that the contractual relationship of the insured was with State Farm, not Binion.  Because Binion was under no contractual obligation to pay Breedlove, no cause of action for bad faith may lie against him.

The bad faith claim against State Farm was also dismissed.  While State Farm relied upon the inaccurate bad faith assessment, it could not be shown that it lacked a reasonable basis for denying the claim.  The court noted that insurers commonly rely on police reports as evidence regarding the circumstances of an incident giving rise to a claim.  State Farm’s initial analysis of liability based on the police report was not unreasonable even though it turned out to be wrong.  Second, even though Breedlove faced a delay in State Farm’s recognition and payment of the claim, mere delay in payment is not outrageous conduct sufficient for a bad faith claim absent some affirmative act of harassment or deception.


Lee S. Siegel

[email protected]

Nothing in Connecticut to report this week.


Kyle A. Ruffner

[email protected]

02/06/24       In the Matter of New Millennium Pain & Spine Med., P.C. a/a/o Hicks v. Garrison Prop. & Cas. Ins. Co., and In the Matter of New Millennium Pain & Spine Med., P.C. a/a/o Simpson v. GEICO Cas. Co.

Supreme Court, Appellate Division, First Department

Court Upholds Master Arbitrator Award Denying No-Fault Benefits Due to Policy Exhaustion

In this matter, the Appellate court considered two appeals from the medical provider from master arbitration awards that denied the provider’s claim for no-fault benefits for services rendered to the insured. In both cases, the supreme court denied the medical provider’s application pursuant to CPLR article 75 to vacate a master arbitration award, which affirmed an arbitrator's award denying the provider's claim for no-fault benefits for medical services rendered to the insured.

On appeal, the First Department held that the Supreme Court correctly denied the petitions to vacate the master arbitration awards. The court explained that generally, a court will not set aside an arbitrator's award for errors of law or fact unless the award is so irrational as to require vacatur. In addition, the fact that the arbitrators followed First Department precedent in Harmonic Physical Therapy, P.C. v Praetorian Ins. Co., 47 Misc 3d 137[A] (App Term, 1st Dept. 2015) rather than Second Department precedent in Alleviation Med. Servs., P.C. v Allstate Ins. Co., 55 Misc 3d 44 (App Term, 2nd Dept 2017), aff’d on other grounds 191 A.D.3d 934 (2nd Dept 2021) did not warrant reversal. In Harmonic, the court held that after the denial of the medical provider’s claim, payments to other health care providers exhausted the insurance policy’s limits. In Alleviation, the court held that the insurers claim that it did not need to pay the claim at issue because it paid other claims after denying that claim lacked merit, holding that fully verified claims are payable in the order they are received.

In upholding the master arbitrator’s application of the precedent set in Harmonic, the court explained that First Department has held that, in awarding a claim after a policy has been exhausted, an arbitrator exceeded his or her power since an insurer's duties cease upon the insurer's payment of the contractual limit on its no-fault. Therefore, there were no grounds to set aside the arbitrators awards.

Further, the court determined that the medical provider was not precluded from arguing for the first time in its petitions that the insurer inappropriately took the 20% wage offset twice: first, when issuing payment against gross wages, and second, when taken against the no-fault personal injury protection limit of liability. Insurance Law§ 5102[b]; 11 NYCRR 65-1.1. However, the court held that argument was not persuasive because Insurance Law § 5102(b) allows an insurer to deduct from first-party benefits to reimburse a person for basic economic loss for personal injury arising out of the use or operation of a motor vehicle, 20% of lost earnings plus any other setoffs, such as amounts recovered or recoverable for Social Security disability or Worker Compensation benefits, or disability benefits under article 9 of the Workers Compensation Law.


Ryan P. Maxwell
[email protected]

02/15/24       Phoenix Ins. Co. v. Allied World Nat’l Assur. Co.

Southern District of New York

Court Reconsiders Priority of Coverage Between Two Insurers Providing Additional Insured Coverage to the Same Entity

This is an insurance coverage dispute between The Phoenix Insurance Company (“Travelers”) and Allied World National Assurance Co., Inc. (“Allied World”). In an Underlying Action, Jennifer Boerke alleges that she was injured when a ceiling tile fell and hit her while she was at a building owned by 25 Broadway Office Properties LLC (“25 Broadway”). Boerke sued not only 25 Broadway, but also the tenant, Relay Graduate School of Education (“Relay”), and Nucor Construction Corp. (“Nucor”), the general contractor hired to perform renovations on the space. Nucor subcontracted with Dimensional Construction Inc. (“Dimensional”) to perform certain drywall/ceiling work on the space. Travelers insured Nucor and provided a defense to both Nucor and 25 Broadway in the Underlying Action.

In this declaratory judgment action, following prior motion practice, Travelers was awarded a declaratory judgment that “(a) Allied World has a duty to defend Nucor and 25 Broadway in the Underlying Action and that (b) Allied World's duty to defend is primary to that of Travelers.” However, Allied moved for reconsideration, contending “(1) that the Court wrongly found Allied World owed any duty to defend because there was insufficient evidence to conclude Dimensional performed work in the area where Boerke's injury occurred; (2) that even if Allied World had a duty to defend 25 Broadway, its obligation was not primary to that of Travelers, and the two insurers should be obligated to share defense costs equally; and (3) that because 25 Broadway's insurance policy is not in the record, the Court could not have concluded Allied World owes a present duty to defend.”

The SDNY denied Allied’s motion relative to points (1) and (3) as simple rehashes of prior arguments asserted on the motions for summary judgment. However, relative to point (2), the SDNY recognized a need to clarify its declaratory judgment.

The SDNY had previously found that “‘Allied World's duty to defend is primary to that of Travelers,’ without specifying whether this portion of the ruling applied with respect to Nucor, 25 Broadway or both.” Providing clarification, the SDNY notes that “this portion of the ruling was intended to apply only with respect to Nucor.” This clarification was necessary because.

The Travelers policy states that it is excess over any other insurance available to the insured or additional insured. . . . By contrast, the Allied World policy specifies that “[t]his insurance is primary to and will not seek contribution from any other insurance available to an additional insured under your policy,” but only if two conditions are met: “(1) The additional insured is a Named Insured under such other insurance; and (2) You have agreed in writing in a contract or agreement that this insurance would be primary and would not seek contribution from any other insurance available to the additional insured.” . . .

Both conditions are plainly satisfied with respect to Nucor: Nucor is the “Named Insured” on the Travelers policy and Dimensional expressly agreed in its contract to provide Travelers (and others) with primary insurance coverage. . . . However, the first condition is not met with respect to 25 Broadway, because 25 Broadway is clearly not the “Named Insured” under the Travelers policy. Travelers offers no real response to this argument, beyond pointing out that the Nucor-Dimensional policy required Dimensional to obtain primary insurance coverage for 25 Broadway as well. . . . But agreements made in a contract between Nucor and Dimensional cannot modify the plain terms of the insurance policy between Allied World and Dimensional.

Therefore, Allied World was obligated to provide excess coverage only to 25 Broadway. Importantly, both parties “agree[d] that, in the event the Court finds Allied World's coverage obligations to be excess, rather than primary, Travelers and Allied World should be obligated to share the defense costs equally.”

Maxwell’s Minute Entry: When addressing additional insured tenders, always consider where the tender is coming from. It can make the difference on an issue like this. Since this case is hot off the press and has not been made available to the public as of yet, a copy of the decision is available upon request.


Scott D. Storm

[email protected]

02/06/24       Pettiford v. State Farm Ins. Co.

United States District Court, E.D. Pennsylvania

Insurer Not Liable for Breach of Contract or Bad Faith to Insured who Alleged Faulty Repairs by Contractor Purportedly Recommended by Insurer; Nor was the Insurer Required to Defend or Indemnify the Insured in a Mechanic’s Lien Action by Contractor

[Abridged] Plaintiffs garage roof collapsed.  State Farm approved a claim to repair the damage and allegedly referred Plaintiffs to Defendant John Doe, a person or entity that then allegedly recommended that the Plaintiffs use contractor QRS to do the repairs. Based upon this recommendation, Plaintiffs allege they entered into a residential construction contract. Plaintiffs allege that QRS did not finish the project in a timely manner and performed defective work that it did not correct. Ken Group LLC, working on behalf of Plaintiffs, calculated the proposed cost of completing the garage at $73,525.00.  State Farm has not extended coverage for this additional proposed work, and Plaintiffs have refused to make final payment to QRS for completion of the project which led QRS to file a mechanic’s lien action.  State Farm additionally has declined to defend or indemnify Plaintiffs in the defense of this action.

Plaintiffs filed their Complaint against Defendants for breach of contract and bad faith arguing that the Defendants knew or should have known that QRS did not have the ability to complete the project they were recommended for in a timely and workmanlike manner, had an obligation to ensure that its recommended contractor was suitable for the project, and had an obligation to indemnify Plaintiffs for "losses attributable to their damaged garage" and QRS' "deficient and incomplete work."

Plaintiffs have failed to plead sufficient facts in support of their breach of contract and bad faith allegations against Defendants. Plaintiffs are suing not based on the original damage sustained to their garage but for the defective performance of, and failure to indemnify against, a contractor that Plaintiffs allege was recommended by Defendant. Defendants, in their Motion to Dismiss, argue that the alleged damages and indemnification request are not covered by the parties' insurance policy and that, consequently, they cannot make out claims for breach of contract or bad faith.  Plaintiffs have not set forth a plausible claim of either breach of contract or bad faith, notably because they have failed to plead facts: (1) establishing the relationship between State Farm and John Doe; (2) showing how or why Plaintiffs were required or obligated to accept the contractor recommended by John Doe; and (3) why State Farm's recommendation of John Doe and the corresponding recommendation of QRS required State Farm to, in effect, warrant the performance of QRS such that State Farm was obligated to defend Plaintiffs against QRS.

The root of Plaintiffs' claims is not the faulty workmanship itself but Defendants' alleged obligation and failure to ensure that QRS was able to competently complete the project for which it was recommended. Under Pennsylvania law, a breach of contract cause of action requires: (1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract and (3) resultant damages.  Losses aggravated by inadequate workmanship and repair are unambiguously excluded in the relevant contract.  Plaintiffs attempt to sidestep this exclusion by alleging that Defendants' improper recommendation of QRS directly and proximately aggravated those losses because they should have known QRS could not properly complete the repairs. There is no contractual provision that Plaintiffs point to that requires either that Defendants recommend a suitable contractor or, if such a contractor is recommended, that it meets certain standards. The argument that Defendants' actions deprived Plaintiffs of their full rights under the policy by subjecting them to a more costly and lengthy repair process in breach of their contract is based on too attenuated a fact pattern — that State Farm referred Plaintiffs to John Doe and John Doe then recommended QRS does not, absent more, create a contractual obligation that State Farm investigate QRS' suitability for the project. As such, the Court finds that Plaintiffs have not pled facts sufficient to bring a cause of action for breach of contract.

The allegation that Defendants' refusal to indemnify Plaintiffs against QRS' mechanics lien action was made in bad faith is similarly deficient. Bad faith conduct under Pennsylvania law can be shown where the defendant "did not have a reasonable basis for denying benefits under the policy and that the defendant knew or recklessly disregarded its lack of reasonable basis for denying the claim."  Conduct "importing a dishonest purpose and meaning a breach of a known duty . . . through some motive of self-interest or ill will" may be considered bad faith, though "mere negligence or bad judgment is not."  Where an insurer acts in bad faith towards an insured, the court may award interest on the amount of the claim, award punitive damages, and assess attorneys' fees against the insurer. 42 Pa. C.S. § 8371.

Here, the allegation that Defendants breached a known duty and acted in bad faith by refusing to indemnify Plaintiffs in QRS' mechanics lien action is not plausibly established. The insurance policy provides that State Farm will indemnify Plaintiffs for suits brought "for damages because of bodily injury or property damage to which this coverage applies, caused by an occurrence," which is defined as an "accident."  Defendants argue that they have no duty to indemnify Plaintiffs for their own refusal to pay QRS because refusal to pay for faulty workmanship is not an accident and is not otherwise a part of its indemnification obligations. 

Absent a showing that Defendants ultimately bear some fault for QRS' alleged poor performance, Plaintiffs are left with an allegation of faulty workmanship, which is not included in Defendants' indemnification obligations. As with Plaintiffs' breach of contract claim, the mere fact that State Farm referred Plaintiffs to John Doe who then recommended QRS is not enough to show that Defendants were unreasonable in refusing Plaintiffs' claim for indemnification based on John Doe having made that ultimate recommendation, however poorly QRS performed. As such, the Court finds that the facts as presented by Plaintiffs do not meet Plaintiffs' burden in making out a plausible bad faith cause of action.


01/25/24       Petery v. USAA Cas. Ins. Co.

United States District Court, E.D. Pennsylvania

Insurer Properly Determined that a Vehicle with a Reconstructed Title (Repaired Salvaged Vehicle) was Worth Less than One with a Regular Title; "Return of Premiums" is not a Viable Cause of Action; and no Unjust Enrichment Claim Existed as Plaintiff had an Insurance Policy with Defendant

[Abridged] Petery filed a Complaint seeking return of premiums paid and relief for unjust enrichment. In January 2020, Petery's Acura was involved in an accident and determined to be a total loss by USAA. (Petery chose to keep his vehicle, have it repaired, and then obtain a "Reconstructed Title". In Pennsylvania, "Reconstructed Title" designations are applied to vehicles that are initially issued a "certificate of salvage" because they are inoperable, but "thereafter restored to operating condition." 75 Pa.S.C.A. § 1165; see also 75 Pa.S.C.A. 1161 (requiring "certificates of salvage" to be applied to any "salvage vehicle"); 75 Pa. S.C.A. § 102 (defining "Salvage vehicle" as: "A vehicle which is inoperable or unable to meet the vehicle equipment and inspection standards under Part IV (relating to vehicle characteristics) to the extent that the cost of repairs would exceed the value of the repaired vehicle.")

Eight months after this first accident, Petery's Acura was involved in another accident and again caused a total loss.  USAA determined the car was worth less at the time of this second accident than it had been at the time of the first. Plaintiff claims that it was improper that he "paid premiums for comprehensive and collision coverage for the 2004 Acura TL in the same amount as if it had a Regular Title rather than a Reconstructed Title." Plaintiff thus seeks to recover "all premiums paid in excess of the coverage benefit provided for comprehensive and collision coverage in the event of a total loss."

Defendant's motion sets forth the following reasons for seeking dismissal of Plaintiff's Amended Complaint: 1) the claims are barred by the filed rate doctrine; 2) a "return of premiums" claim is not a viable cause of action; 3) Plaintiff cannot state a claim for unjust enrichment; and 4) Plaintiff was not charged an "excess" premium. In his brief in opposition to Defendant's motion to dismiss, Plaintiff only addresses the filed rate doctrine. However, each of these arguments provides an independent basis to dismiss Plaintiff's claims.

Under Pennsylvania law "return of premiums is a remedy, not a cause of action."  "Therefore, this count must be dismissed because it is not a claim upon which relief can be granted." 

Count II of Petery's Complaint contains a claim for unjust enrichment. However, it is well known that "[a] cause of action for unjust enrichment may arise only when there is no express contract between the parties."  As Petery admits in his Amended Complaint, "at all times material hereto" he was insured under "an auto policy issued by USAA to Paul Petery." Accordingly, Petery cannot state a claim for unjust enrichment because his relationship with USAA is founded upon a written policy — his insurance policy. 


01/02/24       Camali TV, Inc. v. Travelers Property Casualty Co. of America

United States District Court, E.D. New York

Fire Insurance Claim against Insurer Dismissed Due to Breach of the Two-Year Suit Limitation Condition; Claim for Breach of the Insurer’s Duty of Good Faith and Fair Dealing Dismissed as Duplicative of the Breach of Contract Claim; Plaintiff’s Motion to Add Broker as a Defendant Denied as Not a Necessary Party

[Abridged] Defendant Travelers has moved to dismiss this insurance coverage dispute based on breach of the two-year contractual suit limitation condition.  The Court grants Travelers' motion to dismiss the claims in Plaintiff's complaint, denies as futile Plaintiff's request to add a claim against Travelers for breach of the covenant of good faith and fair dealing, and denies Plaintiff's proposed amendments to add claims against its insurance broker.

Plaintiff commenced a lawsuit asserting claims related to Travelers' denial of insurance coverage following a fire that occurred at Plaintiff's property, including claims against Travelers asserting breach of contract and seeking $1,672,500 in damages related to Travelers' alleged failure to provide insurance coverage that Plaintiff is owed. 

Plaintiff's insurance policy with Travelers required that any "legal action against" Travelers be "brought within 2 years after the date on which the direct physical loss or damage occurred." Plaintiff alleges that the fire for which it sought insurance coverage occurred in September 2015, yet Plaintiff did not file this lawsuit until June 2022.

The parties' agreed upon two-year statute of limitations does, in fact, bar Plaintiff's claims because New York law permits parties to agree to a shorter statute of limitations than the six-year period that typically applies to breach of contract claims. See N.Y. C.P.L.R. § 213(2) (establishing six-year statute of limitations). The New York Court of Appeals has held, specifically in the context of an insurance dispute, that "an agreement which modifies the Statute of Limitations by specifying a shorter, but reasonable, period within which to commence an action is enforceable."  In doing so, the Court of Appeals explained that "there is nothing inherently unreasonable about a two-year period of limitation" and that it had previously "enforced contractual limitation periods of one year."  Following this rule, the Second Circuit has affirmed the dismissal of a plaintiff's claims based on a two-year statute of limitations provision contained in a similar Travelers insurance policy, explaining that the policy "was not only unambiguous, but it was also reasonable and therefore enforceable against the plaintiff]". The parties' agreed-upon statute of limitations is therefore enforceable—and not unconscionable as Plaintiff contends.

Plaintiff's proposed claim that Travelers breached its duty of good faith and fair dealing is futile because it is similarly time-barred by the insurance policy's statute of limitations.  Plaintiff alleges that Travelers failed in "its duties to investigate in good faith, adjust property damage and loss, and pay claims covered by Plaintiff's valid policy." This claim is based on the same coverage dispute involving the fire at Plaintiff's property to which the two-year statute of limitations applies, so it is still time-barred even though Plaintiff has attempted to repackage it as a different claim. 

Plaintiff's good faith and fair dealing claim is also futile because, even if it were not barred by the statute of limitations in Plaintiff's insurance policy, it would be dismissed as duplicative of Plaintiff's breach of contract claim. According to New York law, a good faith and fair dealing claim can survive dismissal when a breach of contract claim is dismissed "only if it is based on allegations different from those underlying the breach of contract claim, and the relief sought is not intrinsically tied to the damages that flow from the breach of contract."  The Court, therefore, denies Plaintiff leave to amend its complaint to assert against Travelers a claim for breach of the covenant of good faith and fair dealing.

Plaintiff asserts that it should be permitted to amend its complaint to assert claims against its broker Sherwood because Sherwood is a "necessary party," but Plaintiff's pre-motion letter does not cite any legal authority supporting that assertion. Plaintiff cannot add Sherwood as a defendant because doing so would destroy diversity jurisdiction. Furthermore, since Sherwood is not actually a necessary party, the Court's inability to add Sherwood to this case does not prevent it from deciding Plaintiff's claims in its original complaint against Travelers.  Sherwood is not a necessary party according to Rule 19(a)(1)(A) because that provision applies "only if in that party's absence complete relief cannot be accorded among those already parties."  Sherwood is not a party to Plaintiff's insurance policy with Travelers. 


01/23/24       Loomis v. Ace American Ins. Co.

United States Court of Appeals, Second Circuit

Even if an Insurer Violates New York Law by Failing to Offer SUM Coverage, Reformation of the Insurance Contract to Include the Optional Coverage is Not Supported by New York Law

[Brief summary]  This case requires us to determine whether: 1) an insurer who fails to comply with New York laws requiring insurers to offer optional supplemental uninsured/underinsured motorist coverage to motor vehicle liability insurance policyholders can be liable to an injured insured for the underinsured motorist coverage that should have been offered, and 2) whether an insurer who issues an automobile liability insurance policy that provides coverage above a $3 million "retained limit" is liable to pay underinsured motorist benefits under Indiana law when an 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.

We conclude that Loomis is not entitled to the relief that he seeks under New York law. Although insurers are required to offer supplemental uninsured/underinsured motorist coverage to insureds in New York, the coverage is optional. Even if the insurer violated New York law by failing to offer the supplemental coverage, Loomis's claim seeking reformation of the insurance contract between Loomis's employer and the insurer to include the optional supplemental coverage is not supported by New York law.

With respect to his argument that Indiana law requires the insurer to provide underinsured motorist coverage, 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.


Katherine A. Fleming

[email protected]

02/05/24       Park v. City and County of Honolulu

Supreme Court of Hawaii

Subrogee Insurance Company has Independent Right to Continue to Pursue Claims and/or Legal Theories against a Tortfeasor that were not Asserted by the Subrogor Employee, after Summary Judgment has been Granted Against the Subrogor Employee

While working as a bartender, Park was accidentally shot by an off-duty police officer who had several drinks before trying to load an already loaded gun. Park sued the City and County of Honolulu (the City), and Dongbu Insurance Co., Ltd. (Dongbu), the bar’s worker’s compensation insurance carrier, intervened. The circuit court granted the City’s motion for summary judgment against Park and granted partial dismissal or partial summary judgment against Dongbu. The City moved for summary judgment against Dongbu for its remaining claims, arguing that Dongbu’s claims failed because the court had dismissed Park from the case. The parties disagreed on what stepping into another’s shoes meant for subrogation and whether Dongbu could continue to litigate claims not raised by Park. The City moved to reserve the question of whether Dongbu could pursue its non-dismissed claims as a subrogee against the City to the Hawaii Supreme Court.

The Hawaii Supreme Court answered in the affirmative. An employer or insurer, standing in an employee’s shoes, may continue litigating its independent claim if the employee could have raised that claim. The Supreme Court reasoned that allowing the subrogee to pursue the claims protects subrogation and indemnity. Further, the result aligns with Hawaii’s statutory law, which allows a subrogee insurance company to intervene to protect its lien interest against the tortfeasor. A contrary result would also impair an employer or insurer’s ability to intervene because their claims would only be as good as the employees’, and it might allow wrongdoers to elude liability. As a result, the Supreme Court held that an intervening workers’ compensation subrogee-insurer may make any claim that a subrogor-plaintiff may make at the outset of the case. If the plaintiff’s claims are dismissed, the insurer’s claims remain.


Evan D. Gestwick

[email protected]

01/17/24       Cal. Cas. and Fire Ins. Co. v. Montez, et al

United States District Court, District of New Jersey

No Coverage for Accident Caused by Un-licensed Driver Operating a Rented Lamborghini Without Rental Company’s Consent, Even if Renter Gives Green Light

Montez rented a Lamborghini from Tri-State, a car rental company, to drive to New York City for her sister’s birthday weekend. While there, Montez permitted her sister’s boyfriend to take her for a spin. The boyfriend, who did not have a driver’s license, promptly wrapped the Lamborghini around a tree, totaling it. California Casualty brings this declaratory judgment action to confirm that it does not have to pay Tri-State’s claim for damage to the Lamborghini.

The rental agreement between Montez and Tri-State prohibited the operation and use of the Lamborghini by anyone other than an “authorized driver.” The only person identified as an “authorized driver” was Montez.

California Casualty issued a personal auto policy to Montez’s parents. That policy identified as insureds, in addition to Montez’s parents, anyone related to the named insureds by blood, marriage, or adoption, who resides with the named insureds. Montez and her sister met this definition. Montez’s sister’s boyfriend did not.

Turning to the policy’s exclusions, the Court first considered the rental property exclusion. This exclusion bars coverage for property damage to property rented to or used by any “insured.” The Court began its application of this exclusion by noting that both Montez and her sister qualified as “insureds.” The Court then noted that, at the time of the accident, Montez’s sister was riding as a passenger in the Lamborghini, as her boyfriend drove it. Montez was not in the vehicle at the time of the accident. In considering whether the Lamborghini was being “used” by an “insured,” the Court ruled that, consistent with New Jersey law, an automobile is being “used” by one riding in it, although another is driving. Because Montez’s sister was riding in the Lamborghini at the time of the accident, the Court held that it was therefore being “used” by an “insured.” Therefore, the Court held that the rental property exclusion applied.

The Court also considered the policy’s collision provision, which provided that California Casualty will pay for direct and accidental loss to “your covered auto” or any “non-owned auto,” and that if there is a loss to any “non-owned auto,” California Casualty would provide the broadest coverage applicable to any vehicle qualifying as “your covered auto.” However, this provision excluded coverage for loss to any “non-owned auto” while being used by either the named insured or a “family member” without a reasonable belief that they were entitled to do so. Without deciding whether the Lamborghini met the policy’s definition of a “non-owned auto,” the Court held that, even if it did, no coverage was available under this provision.

The dispositive issue, as far as the collision provision is concerned, is whether the “insured—” whether it be the named insured, or a “family member—” had a reasonable belief that they were entitled to use the Lamborghini in the manner in which they did. New Jersey case law has developed this exclusion to bar coverage “when a person is using a vehicle without a reasonable belief that he or she had permission of the owner or apparent owner to do so.” “Entitled,” in this context, has been held by New Jersey courts to mean either: (a) a legal right to use the vehicle; (b) consent or permission from the vehicle owner; or (c) both. The Court also noted that “whether an insured had a reasonable belief that he was entitled to use a . . . rental vehicle in a particular way depends upon the scope of the permission given by the owner.”

In applying this provision, as developed by New Jersey case law, the Court focused its analysis on the scope of permission granted by Tri-State to Montez, the renter. In doing so, the Court noted, again, that the rental agreement prohibited the operation and/or use of the Lamborghini by anyone other than Montez. The Court held that Montez was therefore not permitted to permit her sister’s boyfriend to operate the Lamborghini, nor could she reasonably believe otherwise. The Court reasoned further that Montez’s sister could not reasonably believe that she was entitled to use the Lamborghini, since she was underage, nor could her boyfriend hold this belief, since he did not possess a driver’s license.

Holding that each of the above policy provisions barred coverage, the Court granted California Casualty’s request for a declaration that it owed no coverage for Tri-State’s claim for the property damage caused to the Lamborghini.

Editor’s Note: The Court began its analysis of the collision provision by noting “[T]he dispositive inquiry is whether Renter or Passenger, not Driver, had a reasonable belief that she—Renter or Passenger—was entitled to use the Lamborghini in the manner in which she did.” Montez was not in the vehicle at the time of the accident, so the question seems to be whether her sister reasonably believed she was entitled to ride as a passenger in the Lamborghini, which the Court ruled qualified as “use.” Being underage is only dispositive of whether one can legally operate a rental vehicle—it has no bearing on whether they are entitled to ride in one. The holding seems to be occasioned not by Montez’s sister’s belief as to whether she could ride in the vehicle, but by Montez’s belief of whether she could allow her sister’s boyfriend to operate it.


Ryan P. O’Shea

[email protected]

02/08/24       Pacific Life Ins. Co. v. Kate Blevins

United States Court of Appeals, Eighth Circuit

Preconditions of Delivery and Acceptance in Life Insurance Policy Bars Coverage

On January 27, 2021, Travis Richardson applied for a life insurance policy with Pacific Life. Richardson went through an independent agent, Mr. Breshears, at the Champion Ins. Agency. Richardson named his fiancé, Blevins, as his sole beneficiary. Champion submitted the application to Pacific Life on February 1, 2021, requesting Pacific Life to physically mail the policy to Champion, which was Champion’s typical procedure. The application Richardson signed read:

Except as provided in the terms or conditions of any “Temporary Insurance Agreement (TIA)” that I may have received in connection with this Application, coverage will take effect when the Policy is delivered and the entire first premium is paid only if at that time each Proposed Insured is alive, and all answers in this Application are still true and complete.

Richardson never purchased any TIA and the policy also said that if Pacific Life amended the policy, there would be an amendment application that needed to be signed by all applicable parties prior to or at the time of delivery. Pacific Life approved the policy on March 11th, and Richardson immediately paid the first premium. Also on March 11th, Pacific Life uploaded the policy to its online portal, which Breshears accessed. However, Pacific Life determined it needed an Amended Application to correct errors (including Richardson’s birthday and zip code). On March 12th, Pacific Life physically mailed a copy of the policy to Champion, along with the Amendment to Application and first premium receipt both which to be approved by Richardson.

Also on March 12th, Richardson asked Breshears when the policy would be active. Brashears responded that if Richardson died that day, then the policy would pay a death benefit. Richardson. On March 14th, Richardson died. The next day on March 15th, the policy reached Champion. Pacific Life refunded the premium on March 25th and commenced a declaratory judgment action in July to receive a determination that the policy was never delivered and not in force. Blevins counterclaimed for waiver, constructive delivery, bad faith, estoppel, and apparent authority on the part of Breshears. The district court awarded summary judgment to Pacific Life and dismissed Blevins claims.

On appeal Blevins argued the policy was ambiguous. The court noted Richardson’s application was incorporated into the policy itself. The policy terms at issue were:

• Death Benefit – This Policy provides a Death Benefit on the death of the Insured while this Policy is In Force. ...

• When the Policy is In Force – This Policy is In Force as of the Policy Date, subject to your acceptance of the delivered Policy and payment of the initial premium. ...

The Policy elsewhere defined “In Force”:

• In Force – means a Policy is in effect and provides a Death Benefit on the Insured.

Blevins argued that the heading in the policy’s “specifications” entitled Summary of Coverages Effective on the Policy Date” and the definition of Policy Date that read “ the date the Policy and associate riders become effective; Policy and rider months, quarters, years and anniversaries are measured from this date.” Her argument is that these terms rendered the preconditions of delivery and acceptance as ambiguous, because the only logical reading is that coverage is available on the Policy Date.

The Court of Appeals disagreed because such a reading would render the policy’s conditions meaningless when the policy was read as a whole. The court further found the interpretation unreasonable as Arkansas law recognized the validity of such clauses, and Arkansas law controlled the issue. It further reasoned that the policy being effective under the term Policy Date was different and distinct from “In Force” as “ In Force” required delivery and acceptance, while “Policy Date” measures intervals. The court also found that “in force” and “effective” also identified the distinction as “in force” requires the policy to have taken effect on the Policy Date plus additional requirements (delivery and acceptance), to provide a death benefit. Meanwhile effective, is tied only to Policy Date (meaning when the riders become effective).

The Eighth Circuit also rejected that Pacific Life’s uploading of the policy acted as constructive delivery to an agent. Arkansas law finds delivery if the policy was mailed to the agent unconditionally for the sole purpose of delivery to the assured, delivery occurs. The court found the mere uploading of the policy did not constitute delivery of the policy. Notwithstanding the uploading of the policy, it was physically mailed to Champion and required Richardson to sign the Amendment Application and receipt, noting that Richardson rejected an E-signature. The court also found Richardson never accepted the policy through the premium payment or his inquiries to Breshears about coverage through emails because the policy itself required acceptance of the delivered policy.


Robert P. Louttit

[email protected]

Nothing to Report this Week.


Robert J. Caggiano

[email protected]

02/01/24       Cardwood v. R&F Limousine Inc.

Appellate Division, First Department

First Department Unanimously Affirmed, Without Costs, a Decision Granting Summary Judgment in Favor of Defendant where Plaintiff’s Evidence Failed to Raise an Issue of Fact on Whether he Suffered Serious Injury Within the Meaning of Insurance Law § 5102(d)

Plaintiff appealed from an Order of Supreme Court, Bronx County, which granted Defendant’s 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 affirmed granting of the motion, finding the evidence presented in opposition failed to raise an issue of fact.

By way of background, this matter stems from a motor vehicle accident, where a vehicle  owned and operated by Defendant  R&F Limousine, Inc., struck the vehicle owned and operated by Plaintiff Brandon Cardwood. As a result of the collision, Plaintiff asserted significant and permanent injuries to his left knee, lumbar spine, and left wrist. Notably, the left knee injury involved surgical intervention allegedly related to the subject loss.

On review, the First Department started its analysis by confirming the lower court’s finding that the Defendant met its initial burden for summary judgment dismissing the complaint. Specifically, Defendant presented a sworn report of a radiologist who reviewed plaintiff’s left knee MRI taken shortly after the accident, which showed only degenerative conditions. Further, Defendant submitted an affirmed expert report showing plaintiff had normal range of motion and objective testing on independent exam – and the expert opined plaintiff’s injuries had resolved. Notably, that same independent expert report contained findings that Plaintiff’s range of motion in the left knee was the same as compared to the uninjured right knee.

In opposition, the First Department also confirmed the lower court’s finding that Plaintiff failed to raise a triable issue of fact. Plaintiff’s evidence consisted of an unaffirmed operative report for the left knee from his orthopedic surgeon – which was deemed inadmissible since Defendant’s expert did not rely upon it. However, even if admissible, Plaintiff’s surgeon did not provide an opinion on causation, nor opine to how the observed degenerative conditions seen on imaging were ruled out as a cause of the treatment needed and injury claimed. Another expert report produced, from plaintiff’s orthopedist, was also deemed incompetent to create an issue of fact as it was based on the unsworn reports and unproduced records of another physician.

Accordingly, the First Department unanimously affirmed the Supreme Court, Bronx County’s, Decision granting summary judgment in favor of the Defendant dismissing the complaint against it, without costs.


Joshua M. Goldberg

[email protected]

02/07/24       State Farm Mut. Auto. Ins. Co. v Amtrust N. Am., Inc.

Appellate Division of the Supreme Court, Second Department

Name a More Iconic Duo: No-Fault and Workers’ Compensation

This action arose out of a July 2018 motor vehicle accident and as a result, State Farm provided No-Fault benefits to the occupants of its insured vehicle, the subrogors. State Farm thereafter learned that the subrogors both were receiving Workers’ Compensation benefits for necessary medical treatments for injuries that were causally related to the motor vehicle accident. State Farm commenced the instant action to recover the No-Fault benefits it had paid, under a theory of unjust enrichment, contending that the Defendant, the Workers’ Compensation carrier, was liable for the No-Fault benefits State Farm issued, and that it is now owed money for its payments. Amtrust moved to dismiss on the ground that the Workers’ Compensation Board is vested with jurisdiction over the coverage dispute. The lower court granted the motion and State Farm appeals.

The Appellate Division, Second Department, reversed the lower court’s decision to grant Amtrust’s motion to dismiss, holding that the Workers’ Compensation Board does have jurisdiction over the coverage dispute. However, the Appellate Division held that the Court should not have dismissed the action, but rather should have referred the matter to the Workers’ Compensation Board to determine “the extent to which the medical expenses incurred by the plaintiff’s subrogors are causally related to the subject accident and compensable under the Workers’ Compensation Law.”

Note: We now have the Second Department directing that the issue of compensability of individual medical bills rests with the Workers’ Compensation board, which includes issues of medical necessity and causal relation to a covered incident. Until that determination has been made, the Courts and arbitrators are without jurisdiction to determine those issues.


02/07/24       Gonzalez v Cohn

Appellate Division of the Supreme Court, Second Department

Range of Motion – According to Who?

In this personal injury action, the Defendant appeals from an order denying its motion for summary judgment dismissing the complaint on the ground that the Plaintiff did not sustain a serious injury within in the meaning of Insurance Law §5102(d). The Appellate Division, Second Department, reversed the lower finding that the Defendant met its prima facie burden, and in opposition, it was the Plaintiff who failed to raise a triable issue of fact. The Appellate Division found that the report of the Plaintiff’s expert physician was insufficient to raise a triable issue of fact, since the expert failed to identify the method used to measure the range of motion and failed to set forth what the normal ranges were. As a result, we get a rare decision of the Appellate Division, Second Department directing dismissal of a personal injury lawsuit on the issue of serious injury.


Isabelle H. LaBarbera

[email protected]

02/07/24       E.E. Cruz & Co., Inc. v. Starr Surplus Lines Ins. Co.

New York State Supreme Court, New York County

Triable Issues of Fact Existed as to Whether Plaintiff was Entitled to Coverage for Damage to a Drill Shaft

The Plaintiff was performing repair and replacement of three bridges in Westchester County. During the repair of the three bridges, a drill shaft was physically damaged as a result of water and/or silt infiltration. The Plaintiff tendered the matter to their insurer, who denied coverage for this loss. The current declaratory judgment action was commenced  in the New York State Supreme Court, New York County, to determine coverage responsibilities under the All Risks policy.

The Defendant made a motion for summary judgment, asking the court to dismiss all five of the causes of action. The Defendant argued that there was no coverage for this claim under the policy, because of the “Caisson Endorsement,” the “Cost of Making Good Exclusion,” and the lack of “Contractor’s Extra Expense” coverage extension.

In their decision, the court found that there was still a triable issue of fact and that Defendant failed to meet their prima facie burden. The court ruled that the Defendant did not meet their prima facie burden to rely on the Cost of Making Good Exclusion. The Court found that Defendant did not produce any evidence that the damage was caused by, or in any way related to, a “[f]ault, defect, error, deficiency or omission in design, plan or specification.”

Although the Defendant did produce documents referring to the damaged property as a “caisson,” Plaintiff submitted evidence that the claim relates to construction of a “drilled shaft,” a different and distinct type of structural support than a “caisson.” Moreover, the term caisson was not defined in the policy, so the court refused to extend the caisson endorsement to limit coverage for damage to a drilled shaft on this motion for summary judgment.

In the court’s decision on the “Contractor’s Extra Expense” coverage extension, it found that there was a questionable issue of fact regarding whether the parties understood that the coverage extension would be added to the policy. The extension was specifically stated as “not covered” on the policy’s declarations page. The court looked at the evidence presented, and industry standards, to determine that the coverage extension was understood by the parties to be included by default in the Defendant’s policy. Based on this, the court found that it is possible the Defendant altered the policy to exclude the coverage extension without providing notice to the Plaintiff. 

Accordingly, the court ordered that the motion should be denied in its entirety, finding that there were triable issues of fact in relation to all of the claims asserted by Plaintiff.


Heather A. Sanderson
Sanderson Law
Calgary, Alberta

[email protected]


01/15/24       Coface North America Insurance Company v. Sampson

Canadian Residents are Not Compellable Witnesses in American Civil Proceedings Unless a Canadian Court Issues an Order Compelling them to Testify in Response to an Order for Letters Rogatory Issued by an American Court of Competent Jurisdiction

Over the years I have received calls from American insurers and counsel as to how to go about conducting a ‘depo’ of an intended witness living in Canada. That process was nicely and neatly spelled out in this recent Ontario Superior Court trial level decision.

This dispute all began when Magna Tyres USA bought credit protection insurance from Coface North America Insurance Company. Magna (not MAGA – there is a ‘n’ in the name) – manufactures OTR tyres – the tyres you see on large off-road dump trucks and loaders that operate at mine sites and such.

Magna tendered a claim on its credit insurance for the non-payment of three bills sent to three entities referred to in the judgment as the “Three Buyers.” Coface was of the firm opinion that there some shenanigans afoot that rendered these bills circumspect. Coface denied the claim on the basis that it was not premised upon “valid and legally sustainable indebtedness.” At the time of the denial, and at the time of the application that gave rise to this decision, Magna Tyres USA was engaged in litigation against the Three Buyers in the United States. Magna Tyres USA also initiated a lawsuit in Florida against Coface requesting a declaration that it was entitled to coverage.

Coface defended its denial which was supported by declarations authored by Janet Sampson, an Ontario resident, and the former office manager of Magna Tyres Canada, a subsidiary of Magna Tyres USA. Coface wanted to ‘depo’ Sampson in the Florida action on these declarations. Magna refused to agree to produce her on the basis that her potential evidence was not relevant and, if it is relevant, she would not be credible and; if that is not all, she is former employee of a subsidiary company who lives in Ontario.

Undeterred, Coface moved in Florida for letters rogatory (a letter of request) from the United States District Court for the Middle District of Florida to obtain Sampson’s evidence for use in the trial of the Florida action. After what seems to have been a fractious application, U.S. District Court Judge Daniel C. Irick rejected Magna Tyres USA’s submissions and found that Coface had made a reasonable showing that Ms. Sampson’s evidence was properly discoverable according to Florida law. Accordingly, the issuance of letters rogatory was appropriate. With Judge Irick’s order in hand, Coface then applied to the Ontario Superior Court for an order to recognize and enforce the letter of request and, therefore, to compel Sampson to be examined under oath, by Coface’s US counsel pursuant to the United States Federal Rules of Evidence and the United States Federal Rules of Civil Procedure, in Toronto, Ontario.

Sampson opposed the request. Magna Tyres USA intervened to support Sampson’s position.

After an equally fractious application, that Ontario Court granted the order that Coface requested.

The Ontario Court began its reasons by stating the obvious: Ontario residents are not compellable witnesses in U.S. proceedings and U.S. courts do not have the jurisdiction to compel individuals or corporations that are resident in Ontario to be deposed, give evidence, or produce documents for use in U.S. proceedings.

To overcome this limitation, a U.S. court may issue a request to a judge of the Ontario Superior Court of Justice to perform an act which, if done without the sanction of this court, would constitute a violation of Canadian sovereignty. In this case, the Unites States District Court in Florida requested the Ontario Superior Court to issue an order to compel Sampson to be examined under oath on the terms set out in the Florida court order.

An Ontario Court will grant the order if four statutory conditions as set out in Section 60 of the Ontario Evidence Act and ss. 46 and 47 of the Canada Evidence Act are met.  This legislation and the Court of Appeal authority that has interpreted that legislation authorizes the Ontario Superior Court to order the production of documents and the examination under oath of Ontario residents at the request of a foreign country if:

  1. A foreign court, desirous of obtaining testimony in relation to a pending civil, commercial, or criminal matter, has authorized the obtaining of evidence;

  2. the party from whom the evidence is sought is within the jurisdiction of Ontario;

  3. the evidence soughtfromthe Ontario party isinrelationtoa pending proc before the foreign court or tribunal; and

  4. the foreign court or tribunal is a court or tribunal of competent jurisdiction.

    AND, in addition, there is evidence that:

  5. The evidence sought is relevant;

  6. The evidence sought is necessary for trial and will it be adduced at trial if admissible;

  7. Is the evidence sought not otherwise obtainable;

  8. Is the order sought contrary to public policy;

  9. Are the documents sought identified with reasonable specificity.

Almost all Canadian common law provinces and territories have similar provisions in their respective Evidence Acts.

Magna Tyres USA and Coface agreed that points (a) to (d) were met, but vehemently disagreed on points e) to i).  After reviewing affidavits submitted by Sampson, Magna Tyres USA, and Coface, the Ontario Superior Court declared that the order sought met the requirements of items e) to i).

One of the points that gave the court pause was whether Sampson would be out-of-pocket for the cost of retaining counsel in Florida and Ontario to assist her in testifying in Toronto with respect to the Florida action. The application judge asked counsel for Magna Tyre who was paying Sampson’s legal fees to resist Coface’s application? In reply, the Court was told that a Magna Tyre entity was paying those fees. Coface attested that it would pay the full administrative costs of the examination such as the fees of the court and video reporter.

The parties did not request costs of the Ontario application and therefore, there was no cost award given.


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