Coverage Pointers - Volume XXV No. 22

Volume XXV, No. 22 (No. 669)
Friday, April 12, 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. We also loved being in the Path of Totality. What a great term. Here’s the photo I took with my iPhone:


We welcome our new subscribers. This is our cover note with the current issue of Coverage Pointers attached.  That’s where you’ll find all the good stuff.  At the bottom of this coverage letter, you’ll find a table of contents for the issue attached.

What a week it’s been.  Last Friday, 750 of my closest friends spent 75 minutes with me for our New York Coverage Protocol program.  It seems, from the feedback, that a good time was had by all (or those who did not have a good time, didn’t write!).  Thank you for the feedback and thanks to those who expressed appreciation by contacting us for assistance in pending matters, shortly thereafter.  Surely appreciated.  And yes, if companies need a reprise for a claims staff meeting in the future, I’m sure we can work something out.

The slide deck is available for those who might want it.  The program was taped, and we can forward the video for those who might be interested in sharing it with colleagues who were unable to attend.

And yes, other programming on topics of interest will be scheduled and advertised here.

On the legal front, there are two really interesting cases in this week’s issue.  The first, you will find in Ryan Maxwell’s column, a federal case that has taken Indian Harbor head on.  That case, as you may recall, basically allows a party seeking additional insured coverage to plead itself into coverage.  Andrew Premisler, from the Lazar Potter & Gioacovas firm, scored a victory for common sense, taking a logical step back toward a more reasoned approach to additional insured status.

And then, in my column, you’ll read about the Second Department case involving our friends at Harleysville, sued by the New York State Housing Authority, decided on Wednesday. Rarely has a case caused such a ruckus in our office, with lively discussion and dissent among our coverage team.  The case involves an endorsement that the court found to be a “privity endorsement” but some disagree. I am joined by Mr. Barnas and Mr. Maxwell.

I have some affection for the decision as it relied upon my victory for Selective in the 2018 Yonker Lodging decision, at least to the extent it talks about privity endorsement. Mr. Peiper respectfully dissents in his cover letter. Mr. Siegel generally supports Peiper but is going back and forth between both sides, as a coverage purist.

Then there’s a discussion about the often criticized or embraced (depending on the day of the week and the nature of the side you’re on) Pecker Iron Works decision which reflects on the role of additional insured endorsements, generally.

The case involves an endorsement where the title of the endorsement suggests that additional insured coverage only applies if there is privity of contract, but the body of endorsement does not require privity.

One must love coverage to join in the debate, but we welcome input from those who want to give a thumbs up or down to the rationale in that opinion.



For the past few years, in partnership with my colleague, John Trimble from Lewis & Wagner in Indianapolis, we have offered on-line Zoom training programs providing a Primer for CGL coverage, Risk Transfer, Choice of Law and other topics. We have had thousands of participants in these programs and the feedback has been fantastic.

We’re now into our 2024 training cycle.  Are there topics for which your staff could use interactive Zoom training?  Are you interested in the programs we’ve shared in the past because of new hires?  Let us know.

Just respond here and let me know: [email protected]


AMP urged to mediate to help small financial planners - Inside Small ...


Need a mediator for an insurance dispute? Coverage mediation is a thing!  Subject matter expertise may be useful.

In the last two weeks, as a mediatory, I’ve resolved two coverage disputes through mediation.  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.



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.


Who Will Protect the Drunk Cop? – 100 Years Ago:

The Buffalo News
Buffalo, New York
12 April 1924


Excellent Record Saves Patrolman
When He Appears to Answer Charges.

            Hereafter drunken policemen will fare badly when brought before Mayor Schwab for a hearing, it was indicated this morning. The mayor reprimanded Fred L. Cannon of the Niagara Street Station for being drunk on duty but gave him no other punishment.

            Cannon has twice been decorated for bravery, is an efficient patrolman and has never before been up on charges, his superior officers testified.

            Police Chief Zimmerman asked the mayor to let it be known that hereafter conviction of intoxication while on duty will result in dismissal from the force. The Mayor intimated he would give future offenders severe punishment and might dismiss them as asked by the chief.

            Cannon explained that he took a bracer after sitting up with his sick wife and their three children.


Peiper on Property (and Potpourri):

A word, respectfully, on the Appellate Division’s decision in NYCHA v. Harleysville.  While we applaud the outcome for our SEPTA riding friends, we do question the decision’s alignment with the precedent that came before. The privity endorsements, principally CG 20 33, have long held that a carrier only confers additional insured benefits to someone who was in privity of contract with the named insured. To trigger privity protection, however, the Court has looked for  very specific language which explicitly provides that the named insured entered into a contract with the putative additional insured and explicitly agreed to name that entity as an additional insured on the policy. Where you do not have exclusivity with both of the parties to the trade contact and the parties to the insurance procurement clause, no privity obligation will be found. 

The language here provided: 

an insured any person or organization for whom you are performing operations only as specified under a written contract . . . that requires that such person or organization be added as an additional insured on your policy.

While the language contains exclusivity (i.e., “such person”) on the procurement portion, there is no exclusivity in the trade contract requirement.  It says, “for whom you are performing operations under a written contact.”  It does not say “written contract with such person”.  Accordingly, in this aspiring justice’s opinion, I’m not sure privity was preserved. 

That’s our two cents for this week.  We’ll see you again in two more.

Steven E. Peiper

[email protected]


Immigration, a Century-Old Issue– 100 Years Ago:

The Buffalo Commercial
Buffalo, New York
12 April 1924


           WASHINGTON, April 12. (A.P.) – An international issue of grave importance confronted both the senate and house today when they took up with expectations of action before adjournment the pending immigration proposals which would, in effect, exclude Japanese from the United States.

            The house, after disposing of minor amendments to the Johnson bill at a night session, had before it the vigorously contested quota and Japanese sections, and the senate resumed consideration of amendments to its immigration measure having a similar purpose with reference to admission of Japanese.


Barnas on Bad Faith:

Hello again:

We have made it to April, and it is Masters week.  Watching the Masters always gets me inspired to play golf.  I was able to sneak in a round during our unseasonably warm weather in early March, but I am still anxiously waiting for the golf season to arrive in earnest.  We should not be far off now.  I can’t wait to enjoy my pimento cheese sandwich and Azalea cocktail while watching the best golfers in the world take on Augusta National Golf Club this weekend.

My case this week is from the Seventh Circuit.  It involved an attempt by the insured to arbitrate a bad faith claim under an uninsured motorist policy.  The court concluded that the bad faith claim was not subject to the policy’s limited arbitration provision.  The bad faith claim was also dismissed.

Brian D. Barnas

[email protected]


Baseball to be Played On Easter Sunday – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
12 April 1924

Won’t Postpone Easter Game

(By the International News Service.)

            New York, April 12. Indications were today that the Brooklyn National League club would not accede to the request of Brooklyn ministers who have protested against the playing of a regularly scheduled game between the Dodger and Phillies in Brooklyn on Easter Sunday. Charles H. Ebbetts, president of the club, has declared that he couldn’t postpone the game without the sanction of the league and added that such a postponement would upset the schedule of the entire league, in a statement issued following a conference with a committee of clergymen.


Lee’s Connecticut Chronicles:

Dear Nutmeggers:

Gone to the beach—permanently! No, I’m not retiring. We sold the house in the suburbs and bought a little spot in one of Connecticut’s beach communities, just down the road from New Haven. It’s comfortable enough to accommodate weekend beach guests, but not big enough to encourage extended stays by the children. [None of them read my column, so I can be candid here.] I’m going to have to check with IT about protecting my laptop from sand. 

On the insurance side of things, we discuss four cases in this edition—another COVID-19 BI decision (it would be news if it went the other way), a federal judge declining jurisdiction to hear a declaratory judgment action, an important UIM decision involving multiple claimants, and a bonus case for our adjuster friends (no, you can’t be held liable for a negligent claim investigation).

Until next time, keep keeping safe.

Lee S. Siegel

[email protected]


Renting for Immoral Purposes – 100 Years Ago:

Buffalo Courier
Buffalo, New York
12 April 1924


            Chief City Court Judge Woltz yesterday imposed a fine of $100 on Joseph Cesate, No. 351 West Avenue, arraigned for sentence on a charge of renting rooms for immoral purposes. Cesare was taken into custody during a raid by Detectives O’Donnell, Reham and Louden on the “White Front Cafe,” No. 26 Broadway.         

            Cesare is alleged to have rented a room to Loraine Moody, No. 320 Franklin Street, and a detective. The woman is awaiting sentence on a vagrancy charge.

Editor’s Note:  What happened to the detective?


Kyle's Noteworthy No-Fault:

Dear Readers,

This week’s case involves a motion to dismiss brought by the MTA against the plaintiff who was injured while a passenger on a bus and filed a No-Fault claim. The court granted the MTA’s motion, as the plaintiff failed to comply with a condition precedent to bringing an action against a self-insurer, as she failed to submit notice of claim within thirty days of the accident or reasonable justification for her failure to comply.

Kyle A. Ruffner

[email protected]


The Double Life of a Double Wife – 100 Years Ago:

Buffalo Courier
Buffalo, New York
12 April 1924


            Philadelphia, April 11. – Arrested today on charges of swindling two men out of $5,000, Mrs. Anna Beswick a gray-haired, middle-aged women, admitted according to the police, that she was a bigamist and had committed forgery to placate blackmailers who threatened to expose her to her second husband, William C. Martin, president of a storage company and vice president of a suburban bank. She admitted, the detectives declared, that she had “robbed” Martin of at least $50,000 all of which was turned over to the alleged blackmailers whom she named as Herbert Russie and Edwin Hamilton and whose arrest she caused shortly after being taken into custody herself. Pawn tickets for jewelry, pledged by Mrs. Beswick were said to have been found in Hamilton’s pockets.

            Mrs. Beswick said she was the mother of eighteen children by her first husband, Samuel E. Beswick, a carpenter, and that nine of them were living.


Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers:

Daemen University Men’s Volleyball currently stands at 7-3 in NEC Conference play with two matches left this weekend at home on Friday and Saturday. That means yours truly will be back on the headset for matches against Merrimack and Sacred Heart. Although Daemen is firmly within the top three, these matches are necessary to ensure Daemen goes into the tournament the two-seed instead of three, with LIU sitting at 8-4 at the moment. You can catch the action on NEC Front Row (follow the links here, with Merrimack on Friday at 6pm EST and Sacred Heart on Saturday at 4pm EST. That’s like lunch time on the West Coast

This issue, I have summarized briefly a Second Circuit decision involving an alleged disparagement claim that wasn’t. More importantly, I have summarized a recent SDNY decision that denied additional insured coverage in a thorough and well-reasoned way. There is just something that doesn’t sit right with a purported additional insured having the ability to plead themselves into coverage—especially where the facts themselves do not support coverage. You won’t want to miss that one and there are some of those among us that will want to shake hands with Andrew Premisler and Christina Dellaporte of Lazare Potter Giacovas & Moyle LLP, who handled the matter on behalf of Travelers.

Until next time,

Ryan P. Maxwell

[email protected]


Can One Execute the Near Dead? – 100 Years Ago:

Buffalo Courier
Buffalo, New York
12 April 1924


            Ossining, N.Y., April 11. – Mrs. Anna Buzzi, sentenced to die for the murder of Frederick Schneider, a Bronx contractor, today continued in her refusal to permit physicians in Sing Sing prison to perform an operation for appendicitis. Her condition was said to be serious.

            Dr. Amos O. Squire, prison physician, and two of his colleagues favor the operation but Dr. Squire said consent of the prisoner was necessary “even if she was under the sentence of death.”


Storm’s SIU:

Hi Team:

Just getting back from a long weekend in Charlotte, North Carolina.  Beautiful city, bad traffic.

Coverage denials for 3rd-party liability claims are challenging in New York because of statutory law.  However, a late notice defense remains a viable consideration with respect to 1st-party property claims.  In the Hedvat case I reviewed this week, the Court reminds us that delays of as little as 10-26 days may be found unreasonable as a matter of law for property claims, with the Court considering a delay of as little as 16 days in this case. 

We often sign waivers when we participate in various activities.  I recently went axe throwing and had to sign one.  Are they effective?  In the Adventure Sports case, we will review a fact pattern where the release of liability language may not be enforceable. 

Have a great two weeks!  I miss you already.

Scott D. Storm

[email protected]


Racist Hotel Sanctioned – 100 Years Ago:

The New York Age
New York, New York
12 April 1924


          New Rochelle, N.Y. – J. Howard Harper of 112 Chauncey Avenue was awarded a verdict of $200 damages from Cudia, a Rye Beach Hotel keeper, by a jury in White Plains Supreme Court, Part H, Judge Morchauser presiding, as a consequence of the refusal of Cudia’s waiters to serve Mr. Harper and party with luncheon and cool drinks.

            Testimony showed that Mr. Harper and wife Mme. M. Pattilo Harper, with their guests, Professor and Mrs. Smith of Detroit, Mich., and Mr. and Mrs. Motley and daughter of New Rochelle, motored to the Rye Beach in the Smith’s automobile. After parking, the ladies were shown to seats at a table on the veranda while the men went inside to purchase lunch and soft drinks. But the waiter bluntly and discourteously refused to fill their orders, even to be taken out of the veranda, telling Mr. Harper that the proprietor had issued orders that no Negros were to be served. Mr. Harper reminded the waiter that his party was not asking to be served, but simply to be supplied with the refreshments ordered. The waiter declared that it made no difference. Said he, “You can’t get service of any kind here, matters not who you are, colored or Negroes.”


Fleming’s Finest:

Hi Coverage Pointers Subscribers:

Hope those in the path of totality were able to see the eclipse. There was just enough of a break in the clouds for us to see the various stages with our snazzy glasses. Truly a sight to behold.

This week’s case from the Arizona Supreme Court considered when claims for negligent procurement of insurance and promissory estoppel accrue. Unfortunately, a party settled a case in exchange for four time-barred claims.

See you in a fortnight,

Katherine A. Fleming

[email protected]


Saving Daylight Saving Time – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
12 April 1924


                        Fort Erie, Ont., April 12. – Fort Erie will go on daylight saving time on April 27, which is the same time as the Buffalo clocked will be moved forward. The council in unanimous in this respect. Bertie township, in which is located Crystal Beach, Ridgeway, Erie and Crescent beaches, where thousands of Buffalo summer resorters reside, will remain officially on standard time.


Gestwick’s Garden State Gazette:

Dear Readers:

Spring has seemingly sprung here in Buffalo, a welcome event indeed. In the sports world, the Bills have parted ways with Stefon Diggs, for seemingly not much. Time will tell who won that deal.

I have a case out of New Jersey’s Superior Court, Appellate Division, this week. It involves an auto policy issued to a mother and father, with the daughter as an additional covered driver. The daughter was in an accident using one of the covered autos. She settled with the tortfeasor for their policy limits and made a UIM claim with mom and dad’s auto insurer. The declarations provided a $100,000 UIM limit. Later in the policy, an endorsement modified this limit to just $15,000 per person and $30,000 per accident where the claimant was neither a named insured nor a “family member,” defined as a blood relative of the named insureds who lives with them. As the daughter did not live with her parents, she was not a “family member.” The insurer took the position that the UIM limit of $15,000 therefore applied. The Court disagreed, finding that the declarations did not warn that another policy provision may modify the limits provided, and therefore, that an ambiguity was created.

That’s all for this time around. See you in two weeks.

Evan D. Gestwick

[email protected]


Russians Dressing Down French – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
12 April 1924

Soviets Denounce French
Action in Trial of Spies

              Moscow, April 12. – Russia today sent a sharp note to France, “rejecting indignantly” the latter’s interference in the trial of anti-Soviet spies at Kieff.

            The Russian note was in reply to one from Premier Poincaire in which the French premier urged clemency for the alleged spies on humanitarian grounds.

            Georges Tchitcherin, Soviet foreign minister, did not mince words in his reply. He declared France had committed a hostile act.

            “The Soviet government rejects indignantly the attempt of the French government to interfere in the trial,” he wrote. “this is contrary to the most elementary respect for the sovereignty of other countries. “The French government, moreover, is well aware of the criminal work of the Kieff accused.

            “Because these Kieff spies were in contact with the French intelligence service, now France attempts to protect her own spies under a mask of humanity.

            “This is a hostile act. It comes in addition to other hostile acts, for example the sanctioning by France of the annexation of Bessarabia by Romania and the prevention of Chino-Russian understanding.

            “The soviet government is surprised that the French government disregards the feeling its deeds are creating among the Russian masses who have not forgotten their sufferings and the damage caused by French interventions.”


O’Shea Rides the Circuits:

Hey Everyone,

The planting season is upon us. While I’m not the most avid gardener, my fiancé is all about it. Apparently, so are the dogs but mostly for the tilling aspect. Time will tell if we actually reap peppers as we are 0-for-4 these past years.

This week I have two cases. One with precedent and the other a non-precedential opinion that touches on what qualifies as a proof of loss. The precedential case comes from the Second Circuit and addresses the failure to comply with a life insurance policy’s written notice of assignment condition. The second case is from the Third Circuit and deals with an insureds’ failure to submit a timely proof of loss. The Third Circuit noted that the insureds’ contested the adjusted value of the loss but did not submit any document that resembled a proof of loss.

Until Next Time,

Ryan P. O’Shea

[email protected]


How Much for Loss of an Eye? – 100 Years Ago

The Buffalo News
Buffalo, New York
12 April 1924

Damage Verdicts Awarded.

            Verdicts were awarded to plaintiffs in three damage suits, concluded today in supreme court. Arthur Barett, fireman on one of the Great Lakes Transit corporation steamers was given $2560 for the loss of his left eye.

            Martin Rott was given $3225 and his wife, Salome, $5000, in their action against the international Railway company. Mrs. Rott was injured while riding in a Genesee streetcar, which was sideswiped by another car at Bailey avenue.


Rob Reaches the Threshold: 

A week like no other. . . Hello readers – I am back from my recent trip which included great times with family and friends, many rounds of golf in beautiful weather, and an amazing trip to Monday’s practice round to the Masters at Augusta National. It is truly a breathtaking property and well-run experience, and I’ll remember it forever. I hope you all enjoy watching the actual tournament as it kicks off.

Unfortunately, it appears that the Appellate Division was also on vacation (maybe to Augusta?), as there are no recent cases on Serious Injury Threshold. That means I’ll be back next time.

Enjoy the articles from my colleagues.

Robert J. Caggiano

[email protected]


Peace Bridge Obstacles Removed – 100 Years Ago:

The Buffalo News
Buffalo, New York
12 April 1924


Beach Consents to Passage
Of MacGregor Bill Without Amendments

            WASHINGTON, April 12. – To maintain consistency, General Lansing H. Beach chief of engineers has agreed to waive all amendments proposed by him to the MacGregor bill authorizing the Buffalo and Fort Erie Public Bridge company to erect a highway structure connecting the United States and Canada.

            “According to our understanding of General Beach’s present attitude he will not press any of the amendments which he offered to the bridge bill,” Representative Clarence MacGregor announced after a conference with the general. It also was participated in by Chairman S. Wallace Dempsey of the rivers and harbors committee and John W. VanAllen, representing the company.

            This means, according to Mr. MacGregor, that the general will forthwith advise the interstate and foreign commerce committee that he has no objection to having the bill pass in its original form and Mr. MacGregor will insist upon immediate consideration and passage.

            The bill passed several years ago did not include the provision relative to the removal of the present Ferry Street structure which the engineers now deem important, and since it once was passed in that form. As a result of the present negotiations, the engineers again will consent to its early form. That leaves the Ferry Street bridge to be dealt with as a separate proposition if it appears after the bridge across the river is built that is no longer needed.


Goldberg’s Golden Nuggets:

Hello Readers:

We’re already half-way through April 2024, which I find astounding – the year is flying by. The time to file taxes is upon us, and I think we’re all hoping that there is a refund check involved. As for today’s case though, we see another dispute seeking to determine whether an entity is an additional insured under a commercial liability policy. We see contractual interpretation, statutory requirements, and waiver all being discussed in only three paragraphs by the First Department. Brevity does not always mean clarity.

Hope you all enjoy it and are well.

Joshua M. Goldberg

[email protected]


Beer Hall Putsch – 100 Years Ago:

The Daily Iberian
New Iberia, Louisiana
12 April 1924

General Ludendorff Acquitted

            Munch- General Erich Ludendorff, the master strategist of the Germany army in the world war, has been acquitted of the charge of treason in the part he played in the “beer garden” revolt at Munich last November. It was a popular verdict, and in anticipation of it great masses of flowers had been placed in front of the former German first quartermaster general, and one of his co-defendants, Adolph Hitler. Hitler did not fare so well. He was sentenced to five years’ confinement in a fortress, together with former Chief of Police Poehner. Their confinement, however, will extend over only six months, and the remainder of the time they will be on probation.


LaBarbera’s Lower Court Library:

Hello Readers:

The birdhouses are up, the birdfeeders are full, and yes … there may be a gnome or two involved. I have big plans to transform my backyard into a relaxing oasis in the coming weeks. Next on the list is to get my greenhouse up. Last year I had to deal with a pretty gnarly fly infestation. I am definitely hoping to avoid that on this go-around.  

This week’s case reminds us of the importance of properly submitting motions for a default judgment in a case requesting declaratory relief. Remember to address the merits!

Until next time…

Isabelle H. LaBarbera

[email protected]


Business Partner (and/or Wife) Wanted – 100 Years Ago:


Free Press Evening Bulletin
Winnipeg, Manitoba, Canada

12 April 1924

WANTED BY GENTLEMAN, LADY, with some money to join in business. Object Matrimony. Box 2190 Free Press.


North of the Border:

The last 10 days have been a blur … we got a call over the Easter weekend that a close elderly family member living in Montreal, had days or weeks … we dropped everything and left Calgary for Montreal intending to stay for up to a month if need be. That was followed by long stretches at the hospital, squeezing in as much time as possible for files and such. Remote work took on a new meaning … including a settlement zoom meeting from a linen storage area within the hospital.

Unbelievably there was response to medications which led to a discharge home. We remained in Montreal to see if all would be well.  We intend to fly back to Calgary on Saturday. In the meantime, we did experience the eclipse on April 8 as Montreal was in the path of totality. Totality was incredible.

We never know when circumstances will play havoc with our best laid plans.  When difficult circumstances materialize, we realize how much we rely on our friends and family to get through it all. Many thanks to all who reached out.

Heather A. Sanderson
Sanderson Law, Calgary, Alberta

[email protected]


Headlines from this week’s issue, attached:

Dan D. Kohane

[email protected]

  • Harleysville Wins a Close One. Privity Endorsement on the Cusp with Court Looking at Title of Endorsement for Guidance.  Pecker Iron Works Raises its Head and in Odd Twist, Additional Insured Carrier Becomes Excess


Steven E. Peiper

[email protected]

  • Poor Discovery Practices Sanctioned by NY County Supreme


Brian D. Barnas

[email protected]

  • Bad Faith Claim Could Not Be Arbitrated and Was Dismissed by Court Applying Illinois Law


Lee S. Siegel

[email protected]

  • COVID-19 Bodily Injury Claims Not Covered
  • Where Tortfeasor Exhausts Limits Paying Multiple Claimants, No UIM Coverage Available Where Limits Are Equal
  • Court Declines to Exercise Jurisdiction Over DJ Action
  • Independent Adjusters Owe No Duty to Insureds


Kyle A. Ruffner
[email protected]

  • Court Grants Motion to Dismiss Complaint as Plaintiff Failed to Submit Written Notice of Claim Against the Self-Insurer within 30 Days as Required by the No-Fault Law


Ryan P. Maxwell

[email protected]

  • No Coverage for Purported Disparagement Absent Any Assertion that Reflected upon Competitor Products
  • Neither Underlying and Third-Party Allegations, Nor Extrinsic Evidence Sufficient to Establish Duty to Defend Purported Additional Insured


Scott D. Storm

[email protected]

  • Plaintiffs’ 1st-Party Property Claim Dismissed Due to Their Failure to Notify Defendant of the Loss "as Soon as Possible," When They Took Affirmative Steps to Hire Contractors to Repair the Damages Permanently Altering the Property Prior to Giving Notice at Least 16 Days Later, Depriving Defendant of the Opportunity to Effectively Assess the Cause of the Flooding and the Extent of the Damage
  • Insurer’s Motion for Partial Judgment on the Pleadings Denied with Respect to River Boating Accident as its Insured may be Found Negligent in the Underlying Action Because the Exculpatory Language of a Release of Liability Contract may be Declared Partially or Wholly Invalid on Public Policy Grounds Based on Alleged Regulatory Violations
  • Coverage for Insured’s First-Party Property Claim is Precluded Due to Breach of the Contractual Suit Limitation Condition.  Court Rejects Insured’s Argument that the Limitation Period Should Commence Once She Determined the Exact Cause of the Loss.  Rather, it Commenced When the Damages First Manifested Themselves in a Way that Would put a Reasonable Person on Notice of Injury 


Katherine A. Fleming

[email protected]

  • Claims for Negligent Procurement of Insurance and Promissory Estoppel Accrue When an Insured Incurs Its Own Litigation Costs for Defense Against a Claim Due to an Insurer’s Negligent Failure to Obtain Insurance Coverage


Evan D. Gestwick

[email protected]

  • Court Holds Endorsement Modifying UIM Limit is Ambiguous When Declarations Provides Higher Limit, Absent Warning of the Modification


Ryan P. O’Shea

[email protected]

  • Failure to Comply With Written Notice of Assignment Condition in Life Insurance Policy Precludes Standing to Enforce Contractual Rights
  • Failure to Submit Timely Proof of Loss Bars Coverage


Robert J. Caggiano

[email protected]

  • Nothing new from the Appellate Division to report on, so I’ll be back in two weeks!


Joshua M. Goldberg

[email protected]

  • Second Department Directs Stay Pending Arbitration of Additional Insured Dispute


Isabelle H. LaBarbera

[email protected]

  • Insurer’s Default Judgment Motion Denied for Failure to Demonstrate the Merits of the Causes of Action


Heather A. Sanderson
Sanderson Law, Calgary, Alberta

[email protected]

  • Multiple Claims Arising from the Same Error or Omission Notified to Successive Policy Periods Insured by Separate Towers of Primary and Excess Policies do not Aggregate into a Single Claim


I’m a happy man.  My taxes are in.  That’s checked off the list.  Two weeks from now, I’ll be reporting from Santa Fe and two weeks after that, I’ll be back in the Land of the Blue Martinis.


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

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

Goldberg’s Golden Nuggets

LaBarbera’s Lower Court Library

North of the Border


Dan D. Kohane
[email protected]

04/10/24       New York City Housing Authority v. Harleysville Worcester Ins.
Appellate Division, Second Department
Harleysville Wins a Close One. Privity Endorsement on the Cusp with Court Looking at Title of Endorsement for Guidance.  Pecker Iron Works Raises its Head and in Odd Twist, Additional Insured Carrier Becomes Excess

Oceanhill, LLC entered into a contract with the Blue Sea Construction Company, LLC (“general contractor”), to perform construction services. The general contractor subsequently entered into a subcontract with the defendant A & R Electrical Maintenance (“subcontractor”), pursuant to which the subcontractor agreed to, provide all materials and labor necessary for the installation of electrical and CCTV systems in connection with a construction project. The subcontractor also agreed to indemnify and hold harmless the general contractor and the owner of the premises for any claims arising from the negligence or omission of the subcontractor. Additionally, the subcontractor was required to procure and maintain a commercial general liability insurance policy naming Oceanhill, the general contractor, and the defendant PPD Partners, LLC, as additional insureds thereunder.

Daversa, an employee of the subcontractor, was injured during the construction project. He sued subcontractor (that doesn’t make sense, it was his employer), the general contractor, the New York City Housing Authority, HP PPN Housing Development Fund Company, Inc., Oceanhill, PPD Partners, LLC, and Blue Sea Development Company, LLC. Thereafter, the New York City Housing Authority, HP PPN Housing Development Fund Company, Inc., Oceanhill, PPD Partners, LLC, and Blue Sea Development Company, LLC (hereinafter collectively the noncontractor plaintiffs), and the general contractor (hereinafter together with the noncontractor plaintiffs) commenced this action against Harleysville Worcester Insurance Company (hereinafter Harleysville), seeking a declaratory judgment declaring that Harleysville is obligated to defend and indemnify them as additional insureds in the underlying action under the subcontractor's commercial general liability policy of insurance issued by Harleysville.

Harleysville moved for summary judgment dismissing the complaint insofar as asserted against it and for a judgment, among other things, declaring that it was not obligated to defend and indemnify the plaintiffs as additional insureds in the underlying action. In an order dated October 30, 2019, the Supreme Court, inter alia, denied the motion. Harleysville appeals.

Harleysville established its prima facie entitlement to judgment as a matter of law dismissing the complaint insofar as asserted against it by the noncontractor plaintiffs and declaring that it is not obligated to defend and indemnify the noncontractor plaintiffs as additional insureds in the underlying action.  They were not named insureds nor additional insureds by name.

There was a blanket additional insured endorsement that provided.

“ADDITIONAL INSURED - OWNERS, LESSEES OR CONTRACTORS - AUTOMATIC STATUS WHEN REQUIRED IN CONSTRUCTION AGREEMENT WITH YOU - ONGOING OPERATIONS," which provides, in relevant part, that "Who Is An Insured is amended to include as an insured any person or organization for whom you are performing operations only as specified under a written contract . . . that requires that such person or organization be added as an additional insured on your policy."  [Emphasis added]

This policy language was interpreted to require privity of contract between the named insured and the party seeking additional insured status As only the general contractor contracted directly with the named insured, i.e., the subcontractor, only the general contractor qualifies for additional insured status under the terms of the policy. It must have been the “with you” language in the title that won the day for Harleysville.

The plaintiffs failed to raise a triable issue of fact in opposition to this showing. Language in the subcontract incorporating the terms of the prime contract between the general contractor and Oceanhill, which lists Oceanhill as the owner and requires the general contractor to add the owner as an additional insured under its policy.  Moreover, "incorporation clauses in a construction subcontract, incorporating prime contract clauses by reference into a subcontract, bind a subcontractor only as to prime contract provisions relating to the scope, quality, character and manner of the work to be performed by the subcontractor."

Coverage for additional insureds is "primary coverage unless unambiguously stated otherwise" (Pecker Iron Works of N.Y. v Traveler's Ins. Co., 99 NY2d 391, 393). Harleysville contends that any coverage afforded to the general contractor under the policy issued to the subcontractor would be excess to the coverage under the policy of insurance issued to the general contractor by the general contractor's insurer, State National Insurance Company (hereinafter State National).

The policy issued by Harleysville unambiguously provides that coverage for an additional insured is excess over other insurance available to the additional insured, unless a written contract requires that the coverage be primary and noncontributory. Here, the subcontract requires the subcontractor to include the general contractor as an additional insured, but it does not state that the coverage must be primary and noncontributory over other insurance available to the general contractor. The policy issued by State National to the general contractor provides that it is primary unless there is "[a]ny other primary insurance available to you covering liability for damages arising out of the premises or operations for which you have been added as an additional insured by attachment of an endorsement," in which case the coverage would be excess.

Thus, the subcontractor's policy issued by Harleysville is excess to the general contractor's policy issued by State National and coverage would only be triggered if the liability limits of the State National policy issued to the general contractor were exhausted (see generally State Farm Fire & Cas. Co. v LiMauro, 65 NY2d 369).

Editor’s note:  There’s a lot of chatter about this case in the cover letter.


Steven E. Peiper

[email protected]


03/28/24       Riverside Center Site 5 Owner, LLC v. Lexington Ins. Co.
Appellate Division, First Department
Poor Discovery Practices Sanctioned by NY County Supreme

Plaintiff, apparently, withheld up to 17 documents from discovery despite the fact that the requests were highly relevant to Lexington’s defense.  On motion to the trial court, Lexington requested discovery sanctions and the striking of the Note of Issue. 

The Note was clearly vacated due to the existence of continued discovery, and plaintiff was required to sit for a further deposition.  Although plaintiff argued that its failure to disclose the materials in question was inadvertent, it is noted plaintiff’s explanation was light on facts and support.  As such, the trial court also imposed sanctions in the form of costs for discovery before the Note of Issue, as well as post-Note of Issue discovery.   

The Appellate Division affirmed the trial court in large part but did modify the sanction award so that only prospective sanctions were imposed. 


Brian D. Barnas

[email protected]

04/01/24       Hartford Accident and Indemnity Co. v. Lin
United States Court of Appeals, Seventh Circuit
Bad Faith Claim Could Not Be Arbitrated and Was Dismissed by Court Applying Illinois Law

Lin was in a car accident while working as a food delivery driver for Win Win Seafood Wholesale, LLC in 2017.  Lin sustained serious injuries in the collision, but the at-fault driver, Katherine Chickey, was underinsured.  Lin—along with his wife, Li Chen, who brought a loss of consortium claim—settled with Chickey in a state-court suit for her insurance policy limits of $100,000.  Lin also received workers' compensation benefits from his employer's workers' compensation insurance carrier, Hartford Fire.  Lin then sought to recoup his additional losses under his employer's underinsured motorist policy, provided by Hartford Accident.  The underinsured motorist policy had $1 million policy limit.

Lin and Hartford Accident initially agreed to arbitrate the question of Lin's damages.  However, unable to resolve issues around arbitration and the underinsured motorist policy limits, Hartford Accident filed this declaratory judgment suit against Lin and Chen in federal court seeking to clarify the extent of its liability.

The parties sparred over the scope of the policy's arbitration clause, whether Hartford Accident acted in bad faith in delaying the resolution of Lin's claim, and to what extent the underinsured motorist policy's $1 million limit should be reduced by sums Lin received from other sources.

The Seventh Circuit concluded that Lin’s bad faith claim could not be arbitrated.  The arbitration clause of the policy provided as follows:

If [Hartford Accident] and an insured disagree whether the insured is legally entitled to recover damages from the owner or driver of an underinsured motor vehicle or do not agree as to the amount of damages that are recoverable by that insured, then the matter may be arbitrated.  However, disputes concerning coverage under this endorsement may not be arbitrated.

The court reasoned that the language revealed that only disputes about entitlement to damages and the amount of damages could be arbitrated.  The narrow agreement does not cover bad faith claims, and the motion to compel arbitration was denied.

The court also dismissed Lin’s claims for breach of the implied covenant of good faith and fair dealing and vexatious delay under Illinois’s insurance laws.  Lin alleged that Hartford Accident had all pertinent information that it needed to evaluate his insurance claim, but that Hartford Accident breached its contractual duties under the policy by failing to adjust the claim promptly and comprehensively.  However, the policy did not mention a duty to adjust, much less the strict deadlines Lin claims Hartford was bound to abide by in adjusting his claim.  Hartford’s contract did not incorporate various provisions of the Illinois Insurance Code and the Illinois Administrative Code that Lin relied upon.  Accordingly, the bad faith claim was dismissed. 

Lin’s claim based on § 155 of the Illinois Insurance Code was also dismissed because there was no evidence Hartford Accident’s delay was unreasonable or vexatious.  There was a bona fide dispute concerning the scope and application of insurance coverage after Lin’s demand was received.  The court also noted that delay of the matter during litigation was attributable to Lin.

The court also concluded that Hartford Accident was entitled to a setoff of the amount received from the Tortfeasor and Lin’s workers’ compensation award.  Lin received  $672,060.82.


Lee S. Siegel

[email protected]

04/02/24       Mashantucket Pequot Tribal Nation v. Factory Mut. Ins. Co.
Appellate Court of Connecticut
COVID-19 Bodily Injury Claims Not Covered

The Appellate Court affirmed the dismissal of the plaintiff’s complaint, seeking business income losses caused by COVID-19.

Despite trying to distinguish prior Connecticut Supreme Court decisions finding, on a summary judgment record, that COVID-19 does not cause property damage, the Appellate Court disagreed. “We conclude, however, that the physical loss or damage language in the present case is sufficiently similar to the language of the policies at issue in CT Dermatology and Moda. We emphasize, therefore, that, in order to obtain coverage, the plaintiff must allege facts showing “some physical, tangible alteration to or deprivation of the property that renders it physically unusable or inaccessible.” Quoting the Supreme Court, the court wrote that, “the plain meaning of the term direct physical loss of ... [p]roperty does not include the suspension of business operations on a physically unaltered property in order to prevent the transmission of the coronavirus. Rather, in ordinary usage, the phrase direct physical loss of ... [p]roperty clearly and unambiguously means that there must be some physical, tangible alteration to or deprivation of the property that renders it physically unusable or inaccessible.” (internal citation omitted).

The court observed that there was a change in governmental and societal expectations, that behaviors changed which negatively impacted the insured, but that the insured property was not damaged.


04/09/24       Bouchard v. Wheeler
Appellate Court of Connecticut
Where Tortfeasor Exhausts Limits Paying Multiple Claimants, No UIM Coverage Available Where Limits Are Equal

The Appellate Court determined that, where multiple auto accident victims exhaust the tortfeasor’s coverage, but each receives less than a full limit, this does not render the tortfeasor’s vehicle an underinsured auto where the limits are equal.

Connecticut law provides that a motor vehicle is not underinsured where the liability limits in the tortfeasor's policy are equal to or greater than the underinsured benefits in the claimant's policy. This is a straightforward evaluation where there is one injured person—one compares the limits of the tortfeasor’s liability policy with the limits of the insured’s UM/UIM policy. If, for example, the insured has a $250,000 UM/UIM limit, and the tortfeasor’s limit is $100,000, then the other car is underinsured. But if both cars have a $100,000 limit, there is no underinsurance.

Here, however, the facts were more difficult. Bouchard and her daughters were injured in an accident caused by Wheeler, as were non-plaintiffs. Wheeler’s carrier exhausted her $100/$3000,000 coverage paying the various claimants. Each of the Bouchard claimants received less than $100,000. Bouchard’s own UIM coverage afforded the same limits, $100/$300,000. Because the claimants each received less than a full limit, they sought UIM coverage from their insurer, Safeco. The carrier denied coverage, but the trial court held for the insureds, interpreting an amendment to the UIM statute to allow benefits where, as here, each received less from the plaintiff than their own coverage.

The Appellate Court reversed, finding that the applicable statute did not render the tortfeasor’s vehicle underinsured. “We have carefully reviewed the legislative history of P.A. 14-20. Nothing in it suggests that the General Assembly intended to alter the definition of “underinsured motor vehicle” contained in § 38a-336 (e)…. In light of the foregoing, we are hard-pressed to conclude that the legislature intended to amend that critical statutory definition—and overrule that substantial body of Supreme Court precedent—sub silentio.” (Citations omitted.) Instead, the court found that the UIM amendment merely established whether payments to non-insureds were a proper set-off in calculating the remaining UIM limits—they are not. Only monies received by the claimant from the tortfeasor’s insurer are a proper set-off to limits; however, this does not impact whether the tortfeasor-vehicle is an underinsured vehicle.


03/26/24       Ohio Security Ins. Co. v. Veteran Construction Svcs., LLC
United States District Court, District of Connecticut
Court Declines to Exercise Jurisdiction Over DJ Action

The District Court refused to hear Ohio Security’s declaratory judgment action seeking to avoid a defense of its insured for a multi-fatality workplace accident. Ohio insured the defendant, Veteran, under two successive CGL policies (the second of which was cancelled for non-payment of premium). The underlying plaintiffs were killed in a steam pipe rupture while working at a West Haven, Connecticut hospital. The plaintiffs alleged that Ohio’s insured, Veteran, was negligent in installing the steam valves.

Ohio sought a default against Veteran in the DJ action. The underlying plaintiffs, defendants in the DJ, did not oppose the motion. Ohio made two arguments: 1) that, under Coverage A, Ohio owes no duty because the decedents’ deaths did not occur during the relevant policy periods, and 2) that, under Coverage B, it owes no duty because neither Underlying Action alleges a “personal and advertising injury” that would trigger Coverage B.

The motion was referred to the Magistrate Judge who recommended a denial because granting a default would prejudice the underlying plaintiffs who are prosecuting a coverage defense. The District Court rejected the recommendation, choosing not to exercise the court’s jurisdiction. “The Court nevertheless declines to exercise its discretion to issue a declaratory judgment concerning Ohio's duty to defend, under the particular factual circumstances presented by this case. Further, it finds that the question of Ohio's duty to indemnify is not justiciable at this time.” 

The court found it relevant that Ohio failed to allege that the insured had sought a defense from it. “While there are two actions pending against Veteran, Ohio has neither alleged nor argued that Veteran has taken any actions—even of a preliminary nature—to request that Ohio defend Veteran in these actions.” The court pointed out that while Veteran has not appeared in the underlying actions, it’s principal has (pro so) and therefore is aware of the suits and could have tendered them to Ohio. “[T]he complaint is devoid of factual allegations concerning any request by Veteran that Ohio defend or indemnify it.” Because the insured took no action to seek coverage, the court concluded that a declaratory judgment would serve no useful purpose.

The court also found that the duty to indemnify was not justiciable. “[T]he Court holds that it lacks jurisdiction over Ohio's request for a declaratory judgment concerning its duty to indemnify because it cannot find that there is a practical likelihood of a judgment against Veteran in the Underlying Actions.” Again, the court pointed to the insufficiency of Ohio’s pleadings as depriving the court of jurisdiction over the matter. Nevertheless, the court wrote that even if the pleadings were sufficient, it would decline jurisdiction finding that a ruling would risk encroaching on the domain of the state court. “[W]ere this Court to wade into these issues for purposes of issuing a declaratory judgment, it could cause unnecessary friction with that tribunal and create a res judicata effect. These are reasons to decline to exercise jurisdiction. See Main Street Am. Assurance Co. v. DRW Properties, LLC, No. 3:21-cv-74 (JCH), 2021 WL 5988631, at *6 (D. Conn. Dec. 16, 2021) (declining to exercise jurisdiction over declaratory judgment request concerning a duty to indemnify where state court action remained pending).”



03/28/24       McSwiggan v. Certain Underwriters at Lloyd’s of London
Superior Court of Connecticut, Waterbury
Independent Adjusters Owe No Duty to Insureds

The court, in large part, granted the defendant-adjusters’ motion to dismiss. The plaintiff sued the adjusters, claiming that they negligently investigated his house fire, resulting in significant delays and “consistently obstructed Lloyd’s payment of the claim.”

Independent insurance adjusters, hired by the insurance company, owe no duty to the insured, the court held. The duty of loyalty ran to Lloyd’s, the court reasoned, not the homeowner. “Accordingly, this court concludes that there is no duty of care owed by the defendants to the plaintiffs and as such there can be no claim for negligence or negligent misrepresentation.”

Claims of statutory bad faith, under Connecticut’s CUTPA and CUIPA, were struck because the plaintiff failed to allege that the adjusters’ conduct was part of a general business practice. But the Massachusetts bad faith claims, under 93A, survived. The independent adjusters were licensed by Massachusetts and, applying Massachusetts law, the court reasoned that the complaint adequately alleged that some of the activities occurred within the Commonwealth in order to bring the alleged unfair trade practices within the statute’s ambit.


Kyle A. Ruffner

[email protected]


04/03/24       Jennings v. Metropolitan Transportation Authority
Appellate Division, Second Department
Court Grants Motion to Dismiss Complaint as Plaintiff Failed to Submit Written Notice of Claim Against the Self-Insurer Within 30 Days as Required by the No-Fault Law

The plaintiff in this action was allegedly injured while on a bus owned by the Metropolitan Transportation Authority after the bus stopped short, causing her to fall. The plaintiff submitted an application to the defendants for no-fault benefits, which was denied. Therefore, the plaintiff commenced this action to recover damages for her personal injuries. The Supreme Court granted plaintiff's oral application for leave to file a supplemental complaint, in which she alleged that the defendants had continued "in bad faith" to deny her application for no-fault benefits.

The defendants moved pursuant to CPLR 3211(a)(7) to dismiss the supplemental complaint. The Supreme Court granted the branch of the defendants' motion pursuant to CPLR 3211(a)(7) holding the facts demonstrated that the plaintiff failed to comply with a condition precedent under 11 NYCRR 65-2.4(b) to maintain an action against the defendants as self-insurers, and that the plaintiff's submissions in opposition to the defendants' motion failed to remedy that defect in the supplemental complaint. The plaintiff appealed.

The Court explained that, when considering a motion pursuant to CPLR 3211(a)(7) to dismiss a complaint for failure to state a cause of action, the court must accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory. Nevertheless, conclusory allegations are insufficient to survive a motion to dismiss.

Further, under the No-Fault law, no action may be brought against a self-insurer unless, as a condition precedent thereto, an eligible injured person submits written notice of a claim to the self-insurer as soon as practicable but no later than 30 days after an accident or submits written proof providing a clear and reasonable justification for the failure to comply with such time limitation. This notice requirement is satisfied when the eligible injured person submits an application for motor vehicle no-fault benefits to the self-insurer no later than 30 days after an accident.

In this case, the court held that the allegations in the supplemental complaint failed to demonstrate that the plaintiff complied with 11 NYCRR 65-2.4(b). According to the supplemental complaint, the plaintiff was injured on May 21, 2018, and she submitted her application for motor vehicle no-fault benefits to the defendants on August 2, 2018. Therefore, the allegations in the supplemental complaint demonstrated that the plaintiff failed to provide written notice of the claim to the defendants within 30 days of the alleged accident. Further, the court determined the plaintiff failed to demonstrate in opposition to the defendants' motion that she provided written proof to the defendants of a clear and reasonable justification for the failure to timely provide them with written notice of the claim.

Accordingly, the Supreme Court properly granted that branch of the defendants' motion pursuant to CPLR 3211(a)(7) to dismiss the supplemental complaint as asserted against them.


Ryan P. Maxwell
[email protected]

03/29/24       Tzumi Innovations, LLC v. Twin City Fire Ins. Co.
United States Court of Appeals, Second Circuit
No Coverage for Purported Disparagement Absent Any Assertion that Reflected upon Competitor Products

In a short Summary Order, the Second Circuit affirmed a decision from the SDNY (available here) that had dismissed a declaratory judgment action filed by Tzumi Innovations, LLC. Tzumi sought defense and indemnification from Twin City Fire Insurance Co. relative to an underlying class action lawsuit involving its marketing during the COVID-19 pandemic of Wipe Out! Wipes, which it claimed were “suitable for sanitizing surfaces, despite never having registered its products with, or having received approval from, the Environmental Protection Agency to make such claims.”

Tzumi argued that the claims asserted in this underlying class action were claims of “disparagement,” which should be covered under Twin City’s policy as “personal and advertising injury”. However, “personal and advertising injury” is defined to include “injury . . . arising out of . . . [o]ral, written or electronic publication of material that . . . disparages a person's or organization's goods, products or services.” Here, there was clearly no alleged disparagement of the products of another person’s products.” “The promotions identified in the Proskin action, which formed the basis of that complaint, did not include any assertions that reflected on competitor products and thus cannot support a claim of disparagement.” Thus, “[t]here is no possible factual or legal basis on which Twin City would be obligated to defend Tzumi under the ‘personal and advertising injury’ provision of the policy.”


04/05/24       New Hampshire Ins. Co. v. Travelers Indemnity Co.,
United States District Court, S.D.N.Y.
Neither Underlying and Third-Party Allegations, Nor Extrinsic Evidence Sufficient to Establish Duty to Defend Purported Additional Insured

In 2013, NYU Hospitals Center hired Turner Construction Company for a construction project. Turner subcontracted with E-J Electric Installation Company and E-J Power, LLC (collectively, E-J) and the “subcontract required that E-J obtain commercial general liability insurance and that E-J name Turner and NYU as additional insureds under the policy.”

On February 6, 2017, E-J electrician Joseph LoPalo was allegedly injured while working at the Kimmel Pavilion, when he stepped on an unsecured plank, which shifted, causing him to fall into a trench. LoPalo alleged that the accident “was caused solely and wholly by reason of the negligence. . . of [NYU and Turner], their contractors, agents and employees who were negligent in the ownership, operation, management and control of the [premises].” And NYU/Turner asserted claims for contribution, indemnification and breach of contract for failing to procure insurance in a third-party action against E-J.

Prior to the accident, Travelers issued E-J a commercial general liability policy. That policy covered as an additional insured, “Any person or organization [E-J] agree[s] in a ‘written contract requiring insurance’ to include as an additional insured on this Coverage Part; and has not been added as an additional insured for the same project by attachment of an endorsement under this Coverage Part which includes such person or organization in the endorsement's schedule.” However, such additional insureds were only covered “to the extent that, the injury or damage is caused by acts or omissions of [E-J] or [E-J's] subcontractor in the performance of ‘[E-J's] work’ to which the ‘written contract requiring insurance’ applies;” and “the person or organization does not qualify as an additional insured with respect to the independent acts or omissions of such person or organization.”

Additionally, NYU held a general liability OCIP for the project that was issued by New Hampshire Insurance Company, which named Turner as an additional insured. New Hampshire defended NYU and Turner but filed this action demanding that Travelers defend and indemnify NYU and Turner in the Underlying Action.

Travelers contended that LoPalo's injuries were not “caused by” E-J's acts or omissions, which made sense to the S.D.N.Y. since the phrase “caused by” means proximate causation. Certain Underwriters at Lloyd's, London v. Travelers Cas. Ins. Co. of Am., 664 F. Supp. 3d 288, 292 (E.D.N.Y. 2023) (your author’s case) (citing Burlington Ins. Co. v. N.Y.C. Tr. Auth., 29 N.Y.3d 313, 322 (2017) (not your author’s case, but he’s read it before, more than once).

Looking at the underlying complaint, the court was unable to find any alleged “facts tending to suggest any reasonable possibility that any action of E-J's was the proximate cause of LoPalo's injury.” Rather, “[t]he pleading specifically alleges that NYU and Turner and their contractors failed to provide safe access to the worksite, and negligently installed and maintained the walkway on which LoPalo fell,” which the court noted was “a far cry from those in cases where courts in this Circuit have held that an underlying complaint raises a reasonable possibility of coverage.”

Turning to the third-party complaint, there was “nothing factual therein to suggest a reasonable possibility that E-J was the proximate cause of LoPalo's injury.” Astutely, the S.D.N.Y. notes that “the mere fact that a third-party complaint was filed does not automatically trigger [a party's] duty to defend.” New York Marine & Gen. Ins. Co. v. Travelers Prop. Cas. Co. of Am., 632 F. Supp. 3d 303, 308 (S.D.N.Y. 2022). Rather, the third-party complaint merely asserted “in conclusory fashion” that “the claimed injury was ‘due to the primary and active carelessness, recklessness and negligence and/or negligent acts or omissions by [E-J],‘” without specifying “what ‘acts’ or ‘omissions’ those might be; nor does it offer a single fact in support of its claim.”

Resorting to extrinsic evidence beyond the pleadings, New Hampshire fared no better. Adopting Travelers reading, the court essentially found that “the remaining extrinsic evidence shows the accident happened because of circumstances that were solely the responsibility of NYU and Turner, and so resulted from NYU and Turner's own ‘independent acts or omissions.’” Although “[t]he E-J/Turner subcontract dictates that E-J has responsibility for the ‘prevention of accidents to workmen and property engaged upon or in the vicinity of the Work,’” it was clear that “the entirety of the relevant evidence shows that this was not the case.” Instead:

“[t]he evidence clearly shows that E-J had no safety obligations at the injury site. The location of the accident was at an exit door and walkway apart from where E-J's employees were conducting their electrical work. No E-J employees were working in the area that LoPalo fell. [] E-J was ‘simply send[ing]” LoPalo from “the vicinity of E-J's electrical work’ through the injury site in order to pick up and deliver materials.

Nor is it relevant that E-J had safety obligations with respect to its own work areas, as LoPalo was injured in an area separate from E-J's work areas. As per the NYU-Turner contract, Turner had sole and very specific responsibility for maintaining safe ingress and egress routes at the worksite. [] And the testimony of Ralph Dillon, Turner's superintendent, confirms that Turner consistently undertook those responsibilities at the work site.”

Accordingly, New Hampshire's evidence is insufficient to trigger coverage. The evidence was instead.

“clear that the E-J had nothing to do with the placement or maintenance of the plank and area where LoPalo tripped. [] The relevant evidence does not support the view that the E-J was responsible for hazards at the worksite that it did not create. Instead, the evidence shows that Turner was responsible for maintaining the worksite and conditions thereof where LoPalo was injured, And the underlying complaint's allegations, when compared to the parties’ respective safety responsibilities, point exclusively to Turner as the proximate cause of the accident.”

Accordingly, Travelers was found without a duty to defend or indemnify under the circumstances presented in the case.

Maxwell’s Minute: In New York state, following the Court of Appeals 2017 decision in Burlington Ins. Co. v. NYCTA, some courts have permitted purported additional insureds to plead themselves into additional insured coverage through their own allegations contained within a third-party complaint. This is a power that insureds do not possess and sets a dangerous precedent.

Luckily, cases like this one appear among a groundswell of recent federal district court cases that are a breath of fresh air on the issue. Do not simply accept conclusory allegations of negligence in a third-party action as sufficient to trigger additional insured responsibilities. Ask for facts and you may ultimately find they don’t exist.

A well-earned victory for Andrew Premisler and Christina Dellaporte of Lazare Potter Giacovas & Moyle LLP, who handled the matter on behalf of Travelers.


Scott D. Storm

[email protected]

03/31/24       Hedvat v. Chubb Nat. Ins. Co.
United States District Court, E.D. New York
Plaintiffs’ 1st-Party Property Claim Dismissed Due to Their Failure to Notify Defendant of the Loss "As Soon as Possible," When They Took Affirmative Steps to Hire Contractors to Repair the Damages Permanently Altering the Property Prior to Giving Notice at Least 16 Days Later, Depriving Defendant of the Opportunity to Effectively Assess the Cause of the Flooding and the Extent of the Damage

Chubb moved to dismiss the Complaint for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6), granted with prejudice.

The homeowners Masterpiece Policy specifically excluded from coverage "any loss caused by the faulty acts, errors, or omissions…in planning, construction, or maintenance" ("Faulty Construction Exclusion"), or "any loss caused by earth movement including…any expansion, contracting, sinking, rising, settling, or shifting of the earth, soil, or land" ("Earth Movement Exclusion"). 

The Policy required covered persons to: (1) notify the insurance company or their agent of the loss "as soon as possible"; (2) "take all reasonable means that are necessary to protect property from further loss or damage"; (3) "prepare an inventory of damaged personal property" and "attach bills, receipts, and other documents to support your inventory"; and (4) display the property to the insurance company when asked. 

In February 2022, Plaintiffs' driveway became flooded, and water backed up into the home. In March 2022, Plaintiffs hired Cesspool Pro to investigate and inspect the underground pipes and drywells on the property to determine the cause of the flooding and water backup.  In April, Cesspool Pro verified that the pipes connecting two of the drywells had collapsed, causing a drywell to overflow; neither party has stated that Cesspool Pro offered a reason for the collapse. Plaintiffs then hired NYC Remodeling Inc. in April to excavate the property, repair the pipes, and replace the affected drywells, during which activity "walkways, pavers, sprinklers, masonry, and landscaping" on the property were damaged. It is not clear when the repairs were completed.

On or about May 16, 2022, Plaintiffs notified Defendant about the damage and repairs and submitted a claim for reimbursement in the amount of at least $1,749,885. After receiving the claim, Defendant hired H2M architects + engineers ("H2M") to investigate the cause of the backflow. H2M did not conduct a site visit because all repair work had been completed, but did review "field measurements, visual observations, and information provided by Plaintiffs, Chubb, and any other sources referenced in its report."  

H2M reported that "the area surrounding cesspools showed signs of settling," which "can be caused when a pipe is cracked, or a joint is not properly installed."  H2M opined that "the failure of the septic systems resulting in backup water inside the residence is consistent with typical failures resulting from a blocked/collapsed pipe."  "H2M was unable to identify the cause of the pipe collapse," but since "pipe blockage and collapses are typically found in aging system . . . the fact that this system was installed recently would tend to indicate an installation or manufacturer defect in the pipe."  H2M agreed with the finding of Plaintiffs' contractor, Cesspool Pro, that "the blocked pipe caused the backup inside the house."  On August 12, 2022, Defendant denied Plaintiffs' claim in its entirety, relying on the H2M report and Defendant's interpretation of the Policy.

Plaintiffs commenced this action solely for breach of contract, alleging that Defendant failed to indemnify Plaintiffs for their loss contrary to the Policy.  Defendant moves to dismiss the Complaint for failure to state a claim arguing that: (1) Plaintiffs failed to notify Defendant timely pursuant to the Policy; (2) Plaintiffs' loss is excluded from the policy under the Faulty Construction Exclusion; and (3) the alleged damages to the walkway are precluded from coverage under the Earth Movement Exclusion. Plaintiffs counter that: (1) they did notify Defendant timely or, in the alternative, the reasonableness of any delay is a question of fact to be determined by a jury; (2) Defendant omits the key provision that applies to their claim and, thus, the Faulty Construction Exclusion does not preclude coverage; and (3) the Earth Movement Exclusion does not preclude coverage because the damage was due to the pipe failure, not settling.

Defendant contends that Plaintiffs' failure to comply with the notice provision of the Policy is an independent ground for dismissal. The provision required Plaintiffs to "notify us or your agent of your loss as soon as possible."  The Policy also required Plaintiffs to take reasonable steps to protect the property from further damage, prepare an inventory of damaged property and attach supporting documentation, such as bills and receipts, and show the damaged property when asked.  Defendant contends that Plaintiffs did not report the loss "as soon as possible." 

"Under New York law, compliance with a notice-of-occurrence provision in an insurance policy is a condition precedent to an insurer's liability under the policy."  "The test for determining whether the notice provision has been triggered is whether the circumstances known to the insured at that time would have suggested to a reasonable person the possibility of a claim."  In the context of a provision that requires notice "as soon as possible," the insured must notify the insurer "within a reasonable time in view of all of the facts and circumstances." 

"Where there is no excuse or mitigating factor, relatively short time periods of delay are deemed unreasonable as a matter of law."  How much time is "reasonable" varies from case to case but delays even as short as 10 to 26 days were unreasonable as a matter of law. The determination of the time of discovery of a claim is an objective test "based on the conclusions that a reasonable person would draw from the facts known to the insured." 

It is undisputed that the date of notice is May 16, 2022. However, the parties dispute the date of discovery of a possible claim. Defendant contends that "Plaintiffs were aware of the alleged damage, and, therefore, a possible claim, as of February 2022," when the flooding first occurred.  Plaintiffs contend that: (1) they were aware of "some type of a backup event in February 2022;" (2) they hired Cesspool Pro, which discovered the collapsed drywells; and (3) then hired NYC Remodeling in April to conduct repairs.  Notably, no specific dates are provided by Plaintiff as to any of these events.

The Court concurs with Defendant that the flooding in February should have put Plaintiffs on notice of a possible claim at that time. Plaintiffs waited until March to hire Cesspool Pro to investigate the cause of the flooding. Even if Plaintiffs may not have been aware of a possible claim at the time of the flooding in February, they certainly should have been aware after Cesspool Pro's investigation, which, at the latest, was sometime in April. Assuming, arguendo, that Cesspool Pro's report was not enough to put Plaintiffs on notice, Plaintiffs' decision in April to hire NYC Remodeling to excavate the property with heavy machinery was enough to give Defendant notice of a possible claim. While neither party states when in April NYC Remodeling conducted the repairs, viewed in the light most favorable to Plaintiffs, that may have been April 30th, which means there was at least a 16-day delay before Plaintiffs notified Defendant on May 16, 2022, and only after the work was completed when it was impossible for Defendant's expert to view the initial damage caused by the flooding and assess causation.

Plaintiffs’ contentions that any delay was reasonable because the extent of the damage was not clear until the contractors performed their work, and they notified Defendant "after carefully reviewing and digesting the contractors' findings" are unavailing. Neither reason is one of the mitigating circumstances nor excuses that New York courts typically recognize when permitting delayed notification. Permitted circumstances include the "lack of knowledge that an accident has occurred or a reasonable belief in nonliability," neither of which apply here.  Plaintiffs' purported diligence in assessing the contractors' findings is also unavailing. When an insurance policy provision requires losses to be reported "as soon as practicable" or, as here, "as soon as possible," and "the insured indefinitely reserves to itself the determination of whether a particular loss falls within the scope of coverage, it does so at its own risk." 

As Plaintiffs argue, the determination of reasonableness of delay ordinarily is a matter for trial.  "However, absent an excuse or mitigating circumstances, the issue poses a legal question for the court."  The circumstances here present a question of law for the Court to decide.

Plaintiffs have offered no excuse or mitigating circumstance as to why they did not notify Defendant or their agent of the loss as soon as possible, certainly before May 16th, in accordance with the Policy. Even in a light favorable to Plaintiffs, the Court cannot conclude that Plaintiffs notified Defendant of the loss "as soon as possible," especially when they took affirmative steps to hire contractors to repair the damages, permanently altering the property, prior to giving notice at least 16 days later. Notification occurred only after repairs were complete. At that juncture, Defendant was deprived of the opportunity to assess accurately and effectively the cause of the flooding and/or the extent of the damage to the property. The Court cannot find any justifiable reason for Plaintiffs' failure to notify Defendant at any one of four critical points in the scenario here: (1) as soon as the flooding occurred in February; (2) in March, when Cesspool Pro was called in to assess the cause of the flooding and extent of the damage; (3) when Cesspool Pro released its report in April; or (4) before Plaintiffs hired NYC Remodeling in April to fix the damage. As stated in the Complaint, NYC Remodeling was hired in April to excavate the property, repair the pipes, and replace the affected drywells, during which activity "walkways, pavers, sprinklers, masonry, and landscaping" on the property were damaged. No explanation for the delay has been offered by Plaintiffs. As such, the Court is constrained to find that, as a matter of law, the delay was not reasonable and contravened the plain language of the Policy. Accordingly, Defendant's motion to dismiss is granted.

The Court need not decide the other merits of these grounds for dismissal because the failure to comply with the Policy's notice provision precludes reimbursement under the Policy as a matter of law.


03/27/24       Philadelphia Indem. Ins. Co. et al. v. Yap
United States District Court, M.D. Pennsylvania
Insurer’s Motion for Partial Judgment on the Pleadings Denied with Respect to River Boating Accident as Its Insured May Be Found Negligent in the Underlying Action Because the Exculpatory Language of a Release of Liability Contract May Be Declared Partially or Wholly Invalid on Public Policy Grounds Based on Alleged Regulatory Violations

The Court denies motion for partial judgment on the pleadings filed by Plaintiff Philadelphia Indemnity based on the terms of outdoor activity waivers. This matter arises out of the death of Cheeyen Yap during a canoe trip in the Delaware Water Gap Recreation Area and the waiver forms he signed prior to the trip.  Cheeyen Yap's wife, Defendant Tina Yap, later filed a personal injury action against the company that facilitated the trip, Adventure Sports, and the other person in the canoe, Defendant Virginia Chan.  This declaratory judgment and breach of contract action followed.

Cheeyen Yap and Chan chartered a canoe from Adventure Sports in East Stroudsburg, Pennsylvania. That day, Adventure Sports transported Cheapen Yap and Defendant Chan to a launching point along the Delaware River. While out on the river, Defendant Chan stood up in the canoe and caused it to capsize. Cheeyen Yap was not wearing a life jacket and drowned.

Before they embarked, Cheeyen Yap and Chan signed two separate documents with Adventure Sports: 1) "Adventure Sports Liability Release & Rental Contract" with a subheading "Rental Contract" ("Rental Contract"); and 2) "Acknowledgement of Risks & Acceptance of Responsibility Release of Liability — Read Before Signing" ("Release of Liability"). The Rental Contract and Release of Liability contain indemnification clauses and exculpatory language.

Defendant Tina Yap alleges in the underlying negligence action that Adventure Sports held itself out as properly licensed and qualified by the National Park Service to organize boating trips within the Delaware Water Gap Recreation Area. Per these averments, when the Delaware River reaches a depth of eight (8) feet or more, federal regulations required Adventure Sports to implement mandatory safety measures, including the mandatory wearing of life jackets during boating activities.  The Delaware River allegedly measured at 8.10 feet on the date of the incident.  Per a theory of liability in that case, Adventure Sports violated the regulations by failing to ensure that Cheeyen Yap and Defendant Chan possessed life jackets and knew that the use of life jackets was mandatory. 

PIIC insured Adventure Sports under a commercial general liability policy. PIIC alleges it has incurred costs defending Adventure Sports in the underlying negligence action. Moreover, PIIC's insurance contract with Adventure Sports provides PIIC with subrogation rights.  Standing in the shoes of Adventure Sports in this action, PIIC now seeks indemnity — compensation for defense costs — based on the terms found within Adventure Sports' Rental Contract and Release of Liability. Counts 1 and 11 of the complaint seek a declaration that the defendants are obligated to defend and indemnify Adventure Sports in the underlying action and reimburse PIIC for all legal fees, costs, and expenses incurred. Counts III and IV assert breach of contract claims for recovery of damages in the form of costs paid to date by PIIC in defending against the negligence claims in the underlying action.

PIIC argues that the agreements are clear and unambiguous and thus require indemnification. The defendants counter that the existence of material issues of fact regarding enforcement of the indemnification provisions in the agreements and policy considerations preclude judgment as a matter of law.

The language relied upon by Pl IC appears in two different electronic documents signed by Cheeyen Yap and Defendant Chan. Paragraph 4 of the Release of Liability contains the words "indemnify" and "hold harmless" and Paragraph 6 of the Rental Contract contains provisions for the recovery of costs and attorneys' fees by Adventure Sports.

In relation to PIIC's indemnification rights through the Adventure Sports waiver forms, the words "indemnify" and "hold harmless" appear only once in the agreements, within Paragraph 4 of the Release of Liability. (Doc. 1-5, Complaint, Exhs. A-B).

The Release of Liability provides, in relevant part:


In consideration of being allowed to participate in any way in the Adventure Sports program, its related event and activities,

I the undersigned (BELOW), acknowledge, appreciate and agree that: ...

4. I, for myself and on behalf of my heirs, assigns, personal representatives and the next of kin, HEREBY RELEASE, INDEMNIFY, AND HOLD HARMLESS, ADVENTURE SPORTS, their officers, officials, agents and/or employees, other participants, sponsoring agencies, sponsors, advertisers, and if applicable, owner and lessor of premises used for this activity ("releasees"), WITH RESPECT TO ANY AND ALL INJURY, DISABILITY, DEATH, or loss or damage to person or property associated with my presence or participation, WHETHER ARISING FROM THE NEGLIGENCE OF THE RELEASEES OR OTHERWISE, to the fullest extent permitted by law.


In Pennsylvania, an indemnity agreement that covers loss due to the indemnitee's own negligence must be clear and unequivocal. 

PIIC argues that the indemnification obligation set forth in Adventure Sports' Release of Liability is clear and unequivocal and must be enforced.  Defendants argue that this language violates public policy based on Adventure Sports' alleged failure to ensure that Cheeyen Yap wore a life jacket according to federal regulations.  In response, PIIC counters that this motion is about indemnification obligations not public policy arguments more suited for a dispute over an exculpatory provision.  The court finds the defendants' arguments more persuasive.

In their simplest forms, an exculpatory clause "deprives one contracting party of a right to recover for damages suffered through the negligence of the other contracting party," while an indemnity clause, "effects a change in the person who ultimately has to pay the damages."  The Supreme Court of Pennsylvania has noted that "there is a substantial kinship between both types of contracts."

In Paragraph 4 of the Release of Liability, that kinship is on full display. That paragraph deprives Cheeyen Yap's estate of rights to recover damages for his death due to Adventure Sports' negligence in the same sentence shifting payment of any damages from Adventure Sports to Cheeyan Yap's estate (and Defendant Chan). Accordingly, the indemnification language relied upon by PIIC is inextricably connected with exculpatory language and the defendants' public policy arguments about exculpatory clauses must be considered in tandem with this indemnity clause. Furthermore, "the test used to determine the enforceability of exculpatory and indemnity provisions is the same." 

Under Pennsylvania law, "a valid exculpatory contract fully immunizes a person or entity from any consequences of its negligence."  It is generally accepted that an exculpatory clause is valid where three conditions are met. First, the clause must not contravene public policy. Secondly, the contract must be between persons relating entirely to their own private affairs and thirdly, each party must be a free bargaining agent to the agreement so that the contract is not one of adhesion. 

"An exculpatory contract contravenes public policy when it violates an obvious, ‘overriding public policy from legal precedents, governmental practice, or obvious ethical or moral standards.'"  An exculpatory contract withstands a challenge based on public policy if it does not contravene any policy of the law, that is, if it is not a matter of interest to the public or to the state. Id. (citations omitted).


An otherwise valid contract will not be voided in favor of a vague public policy goal; rather, [the Supreme Court of Pennsylvania] requires that to support such a heavy-handed result, the alleged public policy must be:

ascertained by reference to the laws and legal precedents and not from general considerations of supposed public interest . . .  [t]here must be found definite indications in the law of the sovereignty to justify the invalidation of a contract as contrary to that policy . . . [o]nly dominant public policy would justify such action. In the absence of a plain indication of that policy through long governmental practice or statutory enactments, or of violations of obvious ethical or moral standards, the Court should not assume to declare contracts . . . contrary to public policy. The courts must be content to await legislative action.

An exculpatory contract is void as against public policy in Pennsylvania if it immunizes a party from liability for their grossly negligent conduct, reckless conduct, or "where it immunizes a party from the consequences of violating a statute or regulation intended to preserve health or safety".

Neither gross negligence nor reckless conduct are pied in the underlying action, but, in that case, Defendant Tina Yap alleges that Adventure Sports violated federal regulations intended to preserve health and safety. As averred, the accident occurred within the Delaware River National Recreation Area.  This area is administered by the National Park Service under the United States Department of Interior.

The Department of Interior is authorized to prescribe federal regulations concerning boating or other water activities within National Park System units.  By regulation, the National Park Service has adopted the regulations of the United States Coast Guard ("USCG") regarding personal floatation devices ("PFD"). USCG regulations provide that no person may use a recreational vessel unless at least one wearable PFD is on board for each person and those PFDs are used in accordance with the requirements of the approval label and owner's manual, if applicable.

Additionally, pursuant to these regulations, the superintendent of a National Park Service unit "may require that a PFD be worn or carried on designated waters, at designated times and/or during designated water-based activities."  As such, the superintendent of the Delaware Water Gap Recreation Area has issued a compendium of park-specific regulations, including a requirement that PFDs are mandatory "during a period of high water, 8 feet or above, measured at the Montague River Gauge, for each individual onboard a vessel which is underway, on, or in the waters of the Delaware River, within the park."

As alleged in the underlying action, the Delaware River measured at 8.10 feet on the date of the incident and Cheeyen Yap was not wearing a PFD. Defendant Tina Yap avers that Adventure Sports held itself out as licensed by the National Park Service and bears duties and responsibilities to ensure the use of PFDs in compliance with federal regulations.

With only the pleadings and contracts to consider at this stage, the court cannot rule out that Adventure Sports may be found negligent in the underlying action based on the alleged regulatory violations. Under those circumstances, the exculpatory language in Adventure Sports' Rental Contract and Release of Liability may be declared partially or wholly invalid on public policy grounds depending on the factual record as it develops there. That same exculpatory language in the Release of Liability provides for indemnity and thus the same material issues of fact exist in this contract-based action. Accordingly, PIIC's motion for partial judgment on the pleadings will be denied.


03/15/24       Nelson v. State Farm
United States Court of Appeals, Third Circuit
Coverage for Insured’s First-Party Property Claim is Precluded Due to Breach of the Contractual Suit Limitation Condition.  Court Rejects Insured’s Argument that the Limitation Period Should Commence Once She Determined the Exact Cause of the Loss.  Rather, It Commenced When the Damages First Manifested Themselves in a Way that Would Put a Reasonable Person on Notice of Injury

Insured’s breach of contract claim based on State Farm's denial of coverage for property loss was time-barred.  Nelson had a homeowner's insurance policy with State Farm. The policy provided: "No action shall be brought unless there has been compliance with the policy provisions. The action must be started within one year after the date of loss or damage."

On or around April 3, 2018, Nelson noticed interior damage to the wall at the corner of her kitchen window "that appeared to be a bubble."  She spoke with a contractor who provided an estimate to repair the damage. She did not have it repaired at the time. Approximately five months later, she attempted to have the same contractor fix the damage, but he was unavailable throughout September, October, and November of 2018.

By the time she last contacted the contractor in November of that year, Nelson noticed additional damage. She stated that the damage "had spread in its original size," and she noticed damage to another corner of the window, as well as what she described as "tunneling" on the inside window frame.

In December of 2018, Nelson asked a different contractor, Jack Giacobbi, to perform the repairs. While inspecting the house with Giacobbi, Nelson saw similar damage in her guest bedroom. Nelson said that Giacobbi told her a gutter had separated from the roof and so water was not properly running off it but was instead "channeling into the flashing" around the windows, which caused the damage.  Nelson hired Giacobbi's company, Scopewell, to install a tarp on her roof.

On December 17, 2018, Nelson retained a public adjuster, Brian Pfister, to submit and manage her insurance claim for the damage. Nelson's contract with Pfister states that on April 3, 2018, her home sustained damages that "were caused by, and/or were the result of water."  On December 20, Pfister reported the damage to State Farm on Nelson's behalf.

The following day, Nelson retained ServiceMaster Restore by All Pro ("ServiceMaster"), a water remediation company, to inspect the property and damage at issue. ServiceMaster concluded that a "mechanical failure or defect in the overhang of the roof" caused the damage.  On December 22, ServiceMaster provided Nelson with an estimate for the water remediation, and she authorized it to perform the work. ServiceMaster "located areas of drywall around the kitchen window that had eroded severally [sic] to the point that these areas had no remaining structural integrity" and "found mold and deterioration throughout the affected areas of the kitchen" and in Nelson's upstairs bedroom. Nelson also observed mold when the drywall had been removed.

In either late December or early January, State Farm employee Chad Moore was assigned to handle Nelson's claim and to inspect the property. ServiceMaster completed its remediation work on January 7, 2019, and on January 9, 2019, Moore inspected the property with Pfister present. State Farm's claim records indicate Moore observed that: (1) "water appeared to have entered into the ... exterior wall from the roof or upper ... elevation allowing water to seep down through the framing"; (2) the water infiltration had caused varying degrees of deterioration and rot to the third-floor bedroom wall and the second-floor kitchen wall and subfloor; and (3) a tarp had been installed on Nelson's roof.

On January 19, 2019, State Farm sent Nelson a status letter that listed April 3, 2018, as the date of loss, quoted the Policy's provision requiring any action to be started within one year after the date of loss, and informed Nelson that her claim remained pending due to the coverage investigation and that State Farm "needed any information regarding the source of water and the reason for the tarp on the roof."

At the end of January, Pfister informed State Farm that Scopewell was the contractor that had installed the tarp. Moore could not reach Scopewell until February 27, 2019, at which point Scopewell advised Moore that it had not performed any roof inspection. That next day, Moore told Pfister that State Farm was sending someone to perform a roof inspection, but Pfister said the proposed inspector would not be allowed on the property. Moore then contacted a different contractor, Restoration Management Services ("RMS"), to conduct the roof inspection.

On March 1, 2019, State Farm sent Nelson another status letter which again identified April 3, 2018, as the date of loss and quoted the same contractual limitation provision requiring suit to be filed within a year of that date.

On March 11, 2019, RMS inspected Nelson's roof with Pfister present. RMS's report stated that there were many issues with the roof, and that the "drip edge on the roof without an overhang is not in the gutter but is on the rear elevation of the structure above the affected areas in the home."  As a result, RMS believed that "water was able to run off the drip edge down the rear elevation, which has caused the fascia to lift in the same area and penetrate onto the sheathing on the rear elevation."  Over time, this intrusion caused water damage to Nelson's home. RMS sent its report to Moore on March 15, 2019.

On March 29, 2019, Moore sent Pfister a copy of RMS's report along with a letter denying Nelson's claim based on State Farm's determination that the loss was not covered by the policy. The denial letter that explained State Farm had determined there was no coverage for the damage to the exterior wall because it was "related to design, construction or maintenance."  And "the water damage that has resulted in rot and deterioration ... is not covered, as well as that which has resulted in the development of mold/fungus."  The letter also reiterated the date of loss as April 3, 2018, and once again noted the contractual limitation period. After receiving no further communication from Pfister or Nelson, Moore closed Nelson's claim on April 11, 2019.

On April 16, 2019, State Farm received a letter of representation from Nelson's counsel stating, "it is my intention to commence litigation within ten (10) days if State Farm does not provide coverage for this loss."  On May 15, 2019, State Farm sent a letter to Nelson's counsel stating that it stood by its denial of coverage but offered to pay the costs of the initial water remediation work as a compromise. State Farm also reserved its policy defenses and, once again, reiterated the suit limitation provision. Nelson rejected State Farm's offer and initiated this action on May 22, 2019.

Following discovery, State Farm moved for summary judgment on all of Nelson's claims. 

Nelson's State Farm policy contained a suit limitation provision which stated that any "action must be started within one year after the date of loss or damage."  Nelson initiated her suit on May 22, 2019, and admits that she first discovered damage to her property on April 3, 2018, which would certainly appear to make her suit untimely. But she argues that April 3, 2018, should not be counted as the date of loss because she "did not know, and reasonably could not know, that water was entering the structure of her home from the roof until December of 2018."

Typically, a limitations period begins to run when the "right to institute and maintain suit arises.”. However, "in some circumstances, although the right to institute suit may arise, a party may not, despite the exercise of diligence, reasonably discover that he has been injured."  "In such cases, the discovery rule applies."  The discovery rule "tolls the running of the applicable ... limitations [period] until the point where the complaining party knows or reasonably should know that" it suffered a loss.  Nelson argues that in this case, "where the damage is progressive and continuing, ... the time limit for filing suit should run from the date on which the insured could reasonably be expected to discover that a continuing occurrence was causing damage."

She argues the appropriate date was sometime in December of 2018, rather than April 3, 2018. The record, however, unequivocally confirms that she first discovered damage on April 3, 2018. First, her contract with Pfister stated the date of loss as April 3, 2018, because that was the date that she told Pfister the damage began. In turn, Pfister reported to State Farm that April 3 was the date of loss. And she never disputed that date of loss before bringing this suit. She also testified at her deposition that she noticed damage in her home on that date, although she had "no idea" what caused it. It is undisputed, then, that Nelson discovered damage to her home on April 3, 2018, and that she did not file suit within one year of that date.

Nelson tries to skirt those facts by arguing that even if April 3, 2018, was the initial date of loss, the damage to her home was continuous and so "any claim for loss or damage that occurred on or after May 23, 2018, would not be time-barred" under the one-year limitation provision because that period is within one year of her filing of the suit. But once again, she is mistaken. "The general rule is that an occurrence is determined by the cause or causes of the resulting injury."  When considering the cause or causes of the injury, "the court asks if there was but one proximate, uninterrupted, and continuing cause which resulted in all of the injuries and damage."  Here, Nelson's property was continuously damaged by water entering the home where the edge of the roof meets the top of the outer wall. Each time it rained, water entered the home and caused damage, but that constituted a continuation of damage from a single proximate cause. 

While this proximate cause test "is appropriate for determining whether there is a single occurrence or multiple occurrences, it is not applicable in determining when an occurrence takes place."  "That inquiry is governed by an ‘effect' test" because "the determination of when an occurrence happens must be made by reference to the time when the injurious effects of the occurrence took place."  Under this test, when the injurious effects are continuous and ongoing, "the occurrence takes place when the injuries first manifest themselves."  "The time or date the direct physical damage or loss occurs for purposes of the suit limitations clause... is ascertained by determining when the injurious effects first manifest themselves in a way that would put a reasonable person on notice of injury."  The question is not whether Nelson was aware of the exact cause for the damage on April 3, 2018; what matters is that the damage manifested itself and that she knew of damage on that date.  That is why the policy's limitations period accrued on April 3, 2018. Because Nelson did not commence suit within one year of that date, her breach of contract claim is time-barred. 

Katherine A. Fleming

[email protected]


04/09/24       Satamian v. Great Divide Ins. Co.
Arizona Supreme Court
Claims for Negligent Procurement of Insurance and Promissory Estoppel Accrue When an Insured Incurs Its Own Litigation Costs for Defense Against a Claim Due to an Insurer’s Negligent Failure to Obtain Insurance Coverage

The owner of A.C. Watercraft Rental, LLC (ACW) contacted Farm Bureau Property and Casualty Insurance Company (Farm Bureau) to obtain liability insurance for all business-owned watercraft. Farm Bureau connected the owner with Great Divide Insurance Company (Great Divide). Great Divide issued a liability insurance policy for ACW, listed Risk Placement Services (RPS) as the agent of record and provided the owner with the policy schedule listing specific VINs for covered, business-owned watercraft. The business owner believed the policy covered all of the business’s inventory. However, a Yamaha watercraft was missing from the policy schedule and was later involved in a tragic accident resulting in Satamian’s death.

The owner filed a claim with Great Divide for defense and indemnification, but Great Divide denied coverage because the Yamaha jet ski was not listed on the schedule. During the Satamian family (Satamian) lawsuit, ACW served document demands on Great Divide, and pursuant to the subpoena, Great Divide provided a portion of its claim file confirming Farm Bureau and RPS were aware of the Yamaha jet ski but failed to include it on the policy schedule. ACW and Satamian settled, and ACW assigned its claims against Great Divide, RPS, and Farm Bureau to Satamian.

Satamian sued the defendants for negligent procurement of insurance, predicated on RPS and Farm Bureau’s failure to include the Yamaha jet ski in the policy schedule, and promissory estoppel, based on defendants’ assertions that ACW’s entire inventory of jet skis would be covered by the policy. The trial court granted RPS’s motion to dismiss based on the statute of limitations, and Satamian appealed on two grounds: (1) the discovery rule tolled the statute of limitations; and (2) the claims could not have accrued until the underlying action against ACW was final and non-appealable. The court of appeals rejected those arguments, reasoning that Satamian’s claims began to accrue when Great Divide denied coverage.

Under the discovery rule, a statute of limitations is tolled until the plaintiff knows what and who elements of causation. Satamian claimed that RPS was not identifiable as a potential “who”—a party responsible for ACW’s deficient coverage—before discovering a photograph RPS took of the Yamaha jet ski, but the argument ignored the fact that the policy was full of explicit references to RPS as Great Divide’s agent. Satamian also argued that, under the accrual standards for both negligent procurement and promissory estoppel, the claims were tolled under the discovery rule because ACW was unable to determine the “what” of the injuries until Great Divide issued a supplemental coverage disclaimer. The Supreme Court disagreed since ACW should have identified its injury at the latest when it was required to fund its own defense against the Satamian lawsuit. The negligent procurement and promissory estoppel claims accrued when ACW began funding its own defense, and the claims were time barred. As for the second argument, the Supreme Court did not apply the final judgment accrual rule because judgment finality is not an element of negligent procurement or promissory estoppel and is irrelevant in determining when ACW suffered damages. Satamian had settled with ACW for four time-barred claims against the defendants.

Thus, the Court vacated the court of appeals’ decision, but concurred in the result, and affirmed the trial court’s dismissal of the complaint.


Evan D. Gestwick

[email protected]


04/05/24       Motil v. Wausau Underwriters Insurance Company
Superior Court of New Jersey, Appellate Division
Court Holds Endorsement Modifying UIM Limit is Ambiguous when Declarations Provides Higher Limit, Absent Warning of the Modification

A young driver’s mother and father were named insureds under an auto policy with Wausau. The policy also listed the daughter as a covered driver, though not a named insured. The policy included four “covered vehicles,” including the 2014 Jeep Cherokee the daughter was operating at the time of her accident. The Cherokee was listed under an “alternate garaging address.” The policy charged a separate premium for each of these four vehicles. The policy’s declarations provided for limits of $100,000 for bodily injury, and $100,000 for uninsured/underinsured motorists coverage (“UIM”).

Separately, the policy contained an endorsement providing that the UIM limit was reduced to $15,000 per person and $30,000 per accident if the person claiming UIM benefits was not a named insured or “family member.” The policy defined “family member” as a person related by blood, etc., to the named insured, who is a resident of their household. While a blood relative, the daughter did not reside in the named insureds’ household.

On the ground that the daughter was not a named insured and did not meet the policy’s definition of “family member,” Wausau issued a letter explaining that any entitlement to UIM benefits would be limited to $15,000, in lieu of the $100,000 provided by the declarations. This case followed.

Applying New Jersey’s “reasonable expectations” test, the Court began its analysis by considering whether the reasonable expectations of coverage, as created by the declarations, could be contradicted by a later endorsement within the policy. Holding in the negative, the Court ruled that absent a warning within the declarations that the limit may be modified by endorsement.

In reaching its decision, the Court reasoned that the daughter was listed as a covered driver within the declarations page, that a separate premium was paid for each of the four vehicles, including the one the daughter was driving, and the declarations identified a limit of $100,000 for UIM benefits for “each person.” The Court cited a prior case, Lehrhoff v. Aetna Cas. and Sur. Co., which found that the insured was entitled to a higher limit as provided in the declarations of her policy, as opposed to the lower limit established by the endorsement, where a reasonable expectation of entitlement to the higher limit was created by the declarations page. The Court cited another case, Severino v. Malachi, which also cited Lehrhoff, and stands for the proposition that the reasonable expectation of coverage raised by the declarations page cannot be contradicted by other terms within the policy unless the declarations page itself clearly warns the insured of same.

The Court provided that the drafters of the policy could have unambiguously included language in the declarations page alerting that a covered driver using a “covered auto” with an identified alternate garaging address was subject to the lower limit. Because the policy did not do this, the Court held that the discrepancy between the provision within the declarations and the later endorsement created an ambiguity, to be construed against the insurer and resolved in favor of the insured.

Editor’s Note: The Court did not find the endorsement modifying the UIM limit to be ambiguous. Rather, the Court found that the contradiction between the limit provided in the declarations and that provided in the endorsement created an ambiguity.


Ryan P. O’Shea

[email protected]


04/05/24        Brettler Tr. of Zupnick Fam. Tr. 2008 A v. Allianz Life Ins. Co. of N. Am.
United States Court of Appeals, Second Circuit
Failure to Comply With Written Notice of Assignment Condition in Life Insurance Policy Precludes Standing to Enforce Contractual Rights

Allianz issued the Zupnick Family Trust a life insurance policy to Dora Zupnick on April 7, 2008. The relevant portion of the policy reads:

“You [defined as the owner of the policy] may assign or transfer all or specific ownership rights of this policy. An assignment will be effective upon Notice [defined as “Our receipt of a satisfactory written request”]. We [defined as Allianz] will record your assignment. We will not be responsible for its validity or effect, nor will we be liable for actions taken on payments made before we receive and record the assignment.”

In April 2012, the Trust assigned the policy to Miryam Muschel, and the policy required Allianz to be notified by assignment of written request. Allianz provides a Service Request form to do so. After a trustee, Brettler, signed the Owner’s Signature portion of the Service Request form on behalf of the Trust, it was transmitted to Allianz by the Trust’s attorney. In May 2013, Allianz notified Muschel it was owed $117,810.90 in premium payments by June. In June, the Trust sent Allianz the amount owed from a Chase bank account. Chase did not honor the check. Instead, the Trust notified Allianz the check was not cashed due to a bank error. Allianz considered the policy lapsed and ineffective due to nonpayment of premiums.

In May 2016, Muschel and the Trust signed a formal agreement assigning the policy to the Trust. Muschel and Brettler completed Allianz’s Request to Transfer Ownership form in connection with the agreement, but no one informed Allianz of the assignment back to the Trust. In September 2016, Brettler, on behalf of the Trust, brought the present declaratory judgment action to enforce the policy. Allianz moved to dismiss for lack of standing. The Eastern District granted the motion. Brettler appealed. The Second Circuit certified the question of whether the failure to comply with a provision of life insurance policy requiring written notice of an assignment renders an assignment ineffective.

In November 2023, the Court of Appeals reformulated the question as, “Where a life insurance policy provides that ‘assignment will be effective upon Notice’ in writing to the insurer, does the failure to provide such written notice deprive the purported assignee of contractual standing to bring a claim under the Policy against the insurer?” In response to the question, the Court of Appeals answered in the affirmative.

The Second Circuit requested supplemental briefing and the Trust argued that by commencing the suit, the Trust provided sufficient notice to confer standing. The court disagreed as the complaint was not written as a request to Allianz and does not mention either an assignment or the source of an assignment. The court cited the Court of Appeals by finding the lack of notice did not bind Allianz to the assignment and thus, the Trust could not enforce any contractual rights.


04/08/24       Siedzikowski v. Admin. of Fed. Emergen. Mgmt. Agency et al.
United States Court of Appeals, Third Circuit
Failure to Submit Timely Proof of Loss Bars Coverage

The Siedzikowskis sought coverage for flooding from Hurricane Ida in August 2021. The Siedzikowskis were not happy with the compensation received and commenced a suit seeking additional funds and claimed breach of their flood insurance contract. However, the terms of policy set forth a claim submission process, which the Siedzikowskis did not allege that they complied with to recover the additional funds.

The home’s previous owners had a standard flood insurance policy under the National Flood Insurance Program (“NFIP”). The policy weas underwritten by FEMA subject to regulations found within 44 C.F.R. pt. 61; 42 U.S.C. § 4107; and 44 C.F.R. §§ 62.1-6. NFIP Direct is the claims handler for claims under NFIP policies. Upon purchase, the Siedzikowskis assumed the policy and paid the premiums. To recover under the NFIP, the Siedzikowskis needed to promptly notify NFIP Direct of the loss, whereafter NFIP Direct arranges for an adjuster to inspect the property and prepare a report. After this, the insureds are required to submit a timely proof of loss. The insureds could have the NFIP Direct assigned adjuster prepare a proof of loss as a courtesy.

After Ida, the Siedzikowskis began the claim process with NFIP. The insureds notified NFIP Direct of the loss and it sent an adjuster to the home. On September 10, 2021, the adjuster inspected the home and on November 1, 2021, the adjuster provided a courtesy copy of a proof of loss to the Siedzikowskis to submit to NFIP Direct.

The Siedzikowskis disagreed with the proof of loss and advised the adjuster of the dispute. However, the adjuster submitted the proof of loss to NFIP Direct and advised the Siedzikowskis to deal directly with NFIP Direct. The insureds then communicated their dispute with NFIP Direct by letter. The insureds received $160,368.95, but they believed that they were owed over $150,000 in additional reimbursements for losses. Typically, insureds have 60 days to submit a proof of loss, but due to IDA that time was extended to 180 days by FEMA.

FEMA moved to dismiss the complaint, as did the adjuster’s employer. FEMA attached two proofs of loss that were paid in full and were the only ones submitted by the insureds. In response, the Siedzikowskis opposed the motion with a December 2021 letter to NFIP Direct that outlined their disagreements with the adjuster’s proof of loss. The district court granted the motion to dismiss with prejudice. The district court found the December 2021 letter did not constitute a proof of loss because it concluded that it did not list any specific amount sought and was not sworn to.

The Third Circuit affirmed the dismissal. The court found the Siedzikowskis failed to state a claim because the complaint did not allege that they submitted a timely proof of loss, nor is the complaint based on a document that had the essential qualities of a proof of loss. Without either document, the court found the insureds did not establish a breach of duty by NFIP Direct. The Third Circuit also found the district court did not abuse its discretion in dismissing with prejudice because the December 2021 Letter did not qualify as a valid proof of loss.


Robert J. Caggiano

[email protected]

Nothing new from the Appellate Division to report on, so I’ll be back in two weeks!



Joshua M. Goldberg

[email protected]


04/02/24       Greater N.Y. Mut. Ins. Co. v Kinsale Ins. Co
Appellate Division of the Supreme Court, Second Department
Second Department Directs Stay Pending Arbitration of Additional Insured Dispute

Plaintiff Greater New York Mutual Insurance Company commenced a declaratory judgment action seeking a determination that it qualified as an additional insured under a policy of insurance issued by Defendant Kinsale Insurance Company. Kinsale moved to stay the Declaratory Judgment action and the underlying lawsuit, pending an arbitration hearing on whether Greater New York qualified as an additional insured, in accordance with the terms of Kinsale’s policy. In a Decision & Order issued by Hon. Lyle E. Frank, the lower court denied Kinsale’s motion, reasoning that Plaintiff sufficiently plead a coverage cause of action and found that there was an ambiguity in whether the subject arbitration clause was applicable to the dispute.

On appeal, the Appellate Division reversed the decision and directed that the action be stayed pending an arbitration hearing on the issue of whether Plaintiff is an additional insured under the Kinsale policy. The Appellate Division relied upon language in the Kinsale policy, quoted as: “[a]ll disputes over coverage…including whether an entity or person is…an additional insured…shall be submitted to binding arbitration.” The Appellate Division found that this language “clearly and unambiguously apply to the instant dispute[] concerning the rights of plaintiff’s insureds as additional insureds under Kinsale’s policies.”

The Appellate Division also found that Kinsale’s disclaimer of coverage did not amount to a waiver of its right to arbitrate, which was not asserted in the disclaimer, but that the right to arbitrate is not a condition or exclusion requiring a disclaimer. As a result, the Appellate Division reversed the lower court decision and directed that both the declaratory judgment action and underlying lawsuit were to be stayed pending arbitration.

Editor’s Note: Here, the Appellate Division relied upon a rather truncated portion of an endorsement in the policy which governed the dispute herein. The full endorsement (accessible through NYSCEF here: Kinsale's Arbitration Endorsement),  is rather broad, and includes all coverage disputes, including disputes over whether an entity is an additional insured. There is a fine line being drawn here over which policy provisions trigger a timeliness obligation and potential for waiver. Here, however, it does seem that Kinsale is not fully asserting that no coverage at all exists, just that there are issues to be resolved by binding arbitration, such as whether the GNY insureds are additional insureds under Kinsale’s policy.



Isabelle H. LaBarbera

[email protected]


04/03/24       Utica First Ins. Co. v. Montespino Rest. Corp.
Insurer’s Default Judgment Motion Denied for Failure to Demonstrate the Merits of the Causes of Action

Vicente Rodriquez (“Claimant”) was allegedly injured after falling down the stairs at a restaurant. He brought an action against Montespino Restaurant Corporation (the “Restaurant Operator”) and Soundview 2020, LLC (the “Property Owner”). Utica First provided a defense to the Restaurant Operator, subject to a denial of coverage to the extent that the Claimant was an employee of the Restaurant Operator.

Utica First commenced a declaratory judgment action seeking a declaration that Utica First has no obligation to defend or indemnify any party in connection with the underlying personal injury action, and that Utica First may withdraw from the defense of the Restaurant Operator in the underlying personal injury action.

After the Restaurant Operator failed to appear in the declaratory judgment action, Utica sought a default judgment. However, Utica stated that it was not seeking a ruling on the substantive merits of, or the remedy sought for its claims in the complaint. Instead, Utica sought an order declaring the Restaurant Operator was in default for failure to serve an answer.

Both the Claimant and Property Owner opposed the motion. In opposition, the Claimant and Property Owner alleged that the Restaurant Operator’s appearance was imminent, and a default would be highly prejudicial to the defendants who have answered. Attached to this motion were two deposition transcripts, where both witnesses testified that the Claimant was not an employee of the restaurant.

The Court denied the motion. In the decision, the Court first recognized that based on the submissions, Utica First has established that service of process was complete and proper under the Civil Practice Rules and Laws.

However, the Court stated that Utica First failed to demonstrate the merits of the underlying causes of action and show its right to the demanded declaratory relief. In a declaratory judgment action, it is unequivocal that a default judgment will not be granted on default and the pleadings alone, but it is instead necessary to establish a right to the declaration sought. The Court reasoned that Utica First failed to submit any factual support for its causes of action. Instead, the only factual evidence in the record is the deposition testimony submitted in opposition, which undermined the merits of Utica First’s claims.

The Court held a finding, only that the Restaurant Owner has not appeared in the action, runs contrary to well-established law. Instead, in a declaratory judgment action, there must be some proof of liability to prima facie establish the validity of an uncontested action. Feffer v. Malpeso, 210 AD2d 60 (1st Dep't 1994).


Heather A. Sanderson
Sanderson Law
Calgary, Alberta

[email protected]


04/06/20       SNC-Lavalin Inc. c. Deguise
Québec Court of Appeal
Multiple Claims Arising From the Same Error or Omission Notified to Successive Policy Periods Insured by Separate Towers of Primary and Excess Policies Do Not Aggregate Into a Single Claim

While researching a point of law on a claims made professional liability tower issued to a Canadian insured, I came across this seminal decision from the Québec Court of Appeal. I thought I would share as there are aspects of the judgment that apply to contractual issues that have application beyond Québec. There are also interesting twists that are superimposed upon the insurance tower by the Québec Civil Code that only apply to Québec claimants and the performance in Québec of the triggered policies that compose that tower.

Note the judgment is 1,039 paragraphs long and is reported entirely in French. I am grateful to summaries published by the law firms of Robinson Shapiro and Clyde & Co., as well as “Google Translate” when my ability to understand what was being discussed in the judgment bottomed out. Each of these summaries are also in French, but somehow, they were more understandable.


SNC Lavalin (which I will simply call “SNC”) is an international engineering firm headquartered in Montreal, Québec. In 1996, SNC employed a geologist, André Blanchette, who certified in several reports that aggregate from a quarry that contained pyrrhotite was suitable for use in concrete for residential and commercial buildings. But he was wrong. Very wrong.

Pyrrhoite causes concrete to swell and expand when it comes into contact with water and air. Buildings with concrete containing this aggregate were at risk of collapse. Their foundations had to be removed and replaced. Hundreds of buildings built primarily in the Mauricie region, near the cities of Trois-Rivières and Shawinigan, were impacted.

A class action was launched for homes built between 1996 and 2008. In 2014, SNC was found 70% liable. The appeals concluded a few years later but the finding of liability remained.

SNC notified its errors and omissions insurers when it received notice of the first of the pyrrhoite claims and continued to do so when each subsequent claim was made.

SNC had negotiated annual, claims-made coverage, consisting of a tower of excess coverage over a primary policy, which in turn sat excess to SNC’s significant retentions. The primary policy and each policy in the tower each contained an aggregate limit. When claims expense associated with each claim exhausted the retentions, the primary policy was triggered. When its aggregate exhausted, then the policy above was triggered (and so on). “Claims expense” under the retentions and each of the policies included defence costs and third-party indemnity payments.

The insurers defended under multiple ROR’s. Following the last appeal on liability, the trial of the coverage issues began. What follows is a thumbnail of the coverage issues discussed in this judgment that could apply to policies governed by Canadian law outside of Québec.

One claim?

The first tower of coverage was put in place in 2004 and renewed annually through to and including the years in which the class actions were filed.  The first Pyrrhoite claims were notified to the 2009-2010 policy period. The policies composing the towers for 2010-2011, 2011-2012 and so on were renewed by the same insurers who knew about the claims reported in 2009-2010. In addition, the limits were increased.

The insurers argued that their total liability ought to be limited to the 2009-2010 policy year, independent of when the claims were made and reported. In support of their argument, they pointed to a clause in the primary underlying policy which stated that claims arising from a single error, omission or negligent act were to be considered a single claim.

The Québec Court of Appeal disagreed, holding that the purpose of the aggregation clause is to aggregate claims made against SNC and reported to the insurers during a single policy year or term, to avoid applying multiple “each claim” retentions. The policy, however, did not allow for aggregation beyond that period of insurance.  The claims in each policy period were a single claim, but those reported in subsequent policy periods were not aggregated with them.

“Prior Knowledge” Exclusion

Undeterred, the insurers then argued that coverage was limited to a single policy period by virtue of the "prior knowledge" clause that excluded occurrences that had already been notified to insurers on any other prior policy, or that were previously known to the insured. SNC’s insurers had renewed the policies after pyrrhoite claims were notified to a policy that they had issued.

The Court of Appeal again rejected the argument, holding that the clause was meant to exclude coverage for claims related to occurrences that had been notified to a different insurer, in order to prevent double indemnity.  In order for the exclusion to operate as the insurers contended it should, they would have had to use more specific wording than the exclusion in issue to have it apply to matters notified under any prior policies that they renewed.

Effect of a Retroactive Date in one of the Excess Policies

One of the excess policies contained a retroactive date that would preclude some of the claims.  The Court that the follow-form language eliminated any contractual effect of the retroactive clause in that one excess policy.

And now for the operation of the Québec Civil Code (CCQ) on the tower:

Choice of Law Clause

Another of SNC's excess insurers, Zurich compagnie d'assurances SA, invoked a "choice of law" provision stating that its policy was governed by Ontario law. It therefore contended that Québec law did not apply to its policy.

The Court of Appeal held that under article 3119 CCQ, Quebec law applies to an insurance policy, notwithstanding any agreement to the contrary, if it covers a property or interest situated in Québec, or if a person residing in Québec purchases it in Québec, and if the policyholder applies for the insurance in Québec, or the insurer signs or delivers the policy in Québec.

Zurich's policy covered an interest situated within Québec. It further found that the policy was delivered in Québec, since Zurich instructed the Toronto broker to forward the policy to SNC's head office in Montreal, where its risk management operations were located. For these reasons, Zurich's governing law clause was inoperative. Québec law applied.

Eroding Limits? Not in Québec

Québec law applies to all policies in all towers, regardless of the choice of law clauses in each triggered policy. Article 2414 CCQ states that any policy provision that derogates from the rights of third-party victims in Québec is null and void. Under Article 2500 CCQ, the proceeds of insurance must be applied exclusively to the payment of injured third parties. Finally, Article 2503 CCQ prohibits the insurer from deducting legal costs and other claim related expenses from insurance proceeds available to third parties.

The claims-made policies were eroding policies where claims expense and third-party indemnity payments eroded the applicable aggregate. During the 2009-2010 policy period, some of SNC’s insurers argued that claims expense consisting of defence costs and third-party indemnity for a dispute in Alberta eroded the available limits of the policies triggered by the Québec claim. In view of the CCQ provisions, and with respect to these pyrrhotite claims, the SNC insurers who paid the Alberta claim could only deduct the third-party liability payments paid to the Alberta claimants from the aggregate limits of their triggered policies. As Clyde & Co. concludes in their summary of this case, (translation) “it is conceivable that a primary policy could be exhausted by paying out defence costs in a jurisdiction that allows it. Meanwhile, the full limit would remain available to claimants in Québec, and the insurer would be compelled to pay defence costs in addition to the limit.”


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