Coverage Pointers - Volume XXV No. 4

Volume XXV, No. 4 (No. 651)
Friday, August 4, 2023
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.


A picture containing graphical user interface

Description automatically generated


Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.   We have some interesting cases in today’s issue, as you can see from the headlines below.  The actual issue of our publication is attached as a pdf.

Hope your summer is progressing nicely. It’s moving far too quickly for me.

Those of you who know me best know I’m a presidential historian by hobby.  On the evening of August 2, 1923, 100 years ago on Wednesday, President Warran Gamaliel Harding died in a San Franciso hotel room from a heart attack, although it had been first reported as a stroke. There remains some mystery about his death.  No autopsy was ever performed, and he was embalmed within two hours of his passing. He was the sixth president to die while in office (William Henry Harrison, Zachary Taylor, Abraham Lincoln, James Garfield and William McKinley before him).  Many of our 100 Years Ago stories cover the post-script to his death.  By the way, in the 100 years since, only two have passed away while serving as president, FDR and JFK.

Less than two weeks to go until we are presenting this great program – an Insurance Primer for Lawyers, Claim Professionals and Summer Associates.:  We have well over 450 folks already signed up to attend, many of whom will participate as part of a Lunch and Learn training program in their law firms and insurance companies:

Premium Photo | Man looking through a magnifying glass to the blank  insurance claim form

Insurance Coverage 101: A CGL Primer

Live Zoom Webinar

August 16, 20231:30 PM - 2:45 PM ET

Speakers:  Dan Kohane  and John Trimble

Does your firm or company have attorneys, summer associates, or claims professionals that are just learning or need a refresher on how to approach insurance coverage questions and even prepare coverage opinions? The FDCC Insurance Coverage Section is pleased to present a Zoom primer on Commercial General Liability coverage with a focus on a practical approach to liability coverage analysis, including a repeatable process to consider the policy grant, exclusions, and policy conditions. This 75-minute interactive presentation also discusses how to craft disclaimers and reservation of rights letters. Presented by the FDCC's two seasoned coverage attorneys, Dan Kohane, from the New York firm of Hurwitz Fine P.C., and John Trimble, from the Indiana firm of Lewis Wagner, LLP, the Insurance Coverage Section is offering this as the first in a series of programs meant to assist law firms and insurers alike, in handling insurance issues.

The presentation will be via Zoom from 1:30 PM to 2:45 PM Eastern Time on Wednesday, August 16, 2023. Written materials will be circulated electronically. We encourage firms with multiple registrants to view the broadcast in a conference room. To preregister, contact either Dan at [email protected] or John at [email protected]. You will then receive a link for the presentation.

It is anticipated that this lecture will yield one hour of CLE skills credit in New York and will be appropriate for both newly admitted (admitted two years or less) and experienced attorneys. You may wish to check with your own state to see whether those CLE credits will be recognized in your state.

Hope to see you there.

I just returned from two conferences.  I was pleased to be part of a panel entitled Living Life Beyond Your Career at the Federation of Defense & Corporate Counsel meeting at the Broadmoor in Colorado Springs.  The panel focused on the importance of more “senior” lawyers and claim professionals preparing to transition business and their lives as they approach retirement.  Why they asked a young guy like me to serve on this panel, I will never know.

I then traveled to Washington, D.C., to attend the 19th Annual NFJE Symposium, a training program for state appellate judges.  We had 140 judges from some 30 states attending, as the NFJE provides a balanced education program to assist in maintaining an educated state appellate judiciary.  I was honored to be the recipient of the 2023 Richard T. Boyette Award for outstanding contribution to the National Foundation for Judicial Excellence (NFJE).

The Boyette Award is the highest award bestowed by the NFJE and is presented to a person who has:

  • Demonstrated a commitment to excellence in judicial education.
  • Shown exceptional creativity and dedication in program development.
  • Excelled in fundraising activities on behalf of NFJE; and
  • Exemplified professionalism in promoting the case for a well-educated, independent judiciary.

The NFJE is an independent, 501(c)(3) charitable foundation that provides state appellate judges with educational programming and other tools to enhance the rule of law and administration of justice.


State Legal Outlines

Hurwitz Fine P.C. is a member of the Harmonie Group.  Harmonie just released a 50 State set of Legal Guidelines.  Our Chris Potenza, [email protected], edited the New York chapter.  Click here for access. Here is the topic list:

A.  Liability/Fault

  1. Fault Scheme
  2. Joint & Several Liability
  3.  Non-parties on Verdict Forms Available
  4. Charitable Immunity and COVID-19 Immunity
  5. Premises Liability

B.  Damages

  1. Damages Cap(s): General, Non-economic, Wrongful Death

  2. Charitable Immunity Caps

  3. Governmental Immunity Caps

  4. Paid vs Billed Medical Expense Allowed at Trial

  5. Punitive Damages Available — Limitations — Insurability

  6. Wrongful Death Damages

  7. Prejudgment and Post-Judgment Interest

  8. Statute of Limitations (Personal Injury, Sexual Assault, Intentional Torts and Breach of Contract)

  9. Specific Topics/Issues

  10. Unnsured/Underinsured Motorist

  11. Medial/PIP Tort Thresholds

  12. Statutory Offers of Judgment/Settlement and Implications

  13. Obligation regarding Responding to Policy Limit Demands

  14. Risk Transfer & Relevant Contractual Indemnity Law

  15. Statutory Elder Abuse/Enhanced Remedies

  16. Insured’s Right to Independent Counsel Based on a Reservation of Rights

  17. Timeliness of Coverage Declinations/Reservation of Rights Letters, as well as the Filing of Declaratory Judgment Actions

  18. Requirements regarding Pre-Litigation Disclosure of Insurance Policy Info


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


Need a mediator?

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

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

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

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

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

Try mediation.



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

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


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


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


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


Peiper on Property (and Potpourri):

Congratulations to our Editor, on his much-deserved recognition from NFJE.  Dan exemplifies the Firm’s culture which long ago appreciated engagement and service in professional organizations. He, along with all our lawyers, do way more than simply show up and look for the free cocktail receptions at conferences.  Although, in fairness, we do also look for those as well.

The first issue of the Dog Days of Summer, 2023, edition has little by way of substance.  We do review a Second Department ruling which addresses when a settlement is, in fact, a final settlement.  It’s worthy of a read simply to brush up on the rules. 

Other than that, the only other news of the day worthy of comment is that T. Swift just announced six days at Rogers Centre in beautiful downtown Toronto. If you’re interested, you’ll be among the 45 million people trying to score tickets! 

Best of luck to you, and for those blessed enough to secure your tickets, stop in and see us before you head across the Peace Bridge. 

Better yet, Dan will host you at the Land of Blue Martinis.  Just tell him Peiper sent you! 

See you in two weeks.


Steven E. Peiper

[email protected]


Camera Shy – 100 Years Ago:

Buffalo Times

Buffalo, New York

4 Aug 1923


Seeks Protection From Camera Genii


NEW YORK, Aug. 4.—To an Arab, being photographer is an emergency, Therefore, when cameramen asked Moulay Hassan Sarsar, a Mohammedan sheriff of Marrakech, Morocco, to pose when he arrived on the liner Lafayette, he fled to his cabin to pray.

He explained his religion forbade him to allow his picture to be taken.

He agreed to pose, but only after he had prayed to Allah to protect him from the "evil eye of the genii that lurks in the camera.”

After kneeling in his cabin for some time, he and his ten-year-old son stood for the picture. Sarsar is a representative in Morocco of Singer Sewing Machine Company.


Wilewicz’ Wide-World of Coverage:    

Dear Readers,

Summer on the road continues. This last month has seen us in Manhattan repeatedly, as well as on the scenic drive back and forth, upstate and down. We have also had brief stints in Albany, Newport, Saddlebrook, NJ (why not), Boston, Melville, LI, Providence, and Englewood, NJ (again, why not). The car has taken a beating but continues to run smoothly; it has been a safer bet than the increasingly unreliable air travel options of late.

Now, this week we have a quick one from the Fifth Circuit Court of Appeals, sitting in New Orleans. Addressing a coverage issue under Texas law, the Court analyzed whether there was coverage for a car accident involving a Lyft driver and a drive-by shooting. Check out the attached edition of this week’s CP for a summary, along with a link to the decision. I’ll leave you in suspense.

Until next time,



Agnes A. Wilewicz

[email protected]


Value of Hard Work Not Lost on Aristocrat’s Son – 100 Years Ago:

The Buffalo Times

Buffalo, New York

4 Aug 1923

Son of President Works as Laborer

HATFIELD Mass., Aug. 4.—While President Coolidge was en route to Washington yesterday, Calvin Coolidge, Jr., was at work under a hot sun in a tobacco field at the Dickinson & Day farm, Calvin, Jr., just 14 years old, attired in khaki trousers, an old shirt and well-worn shoes, was working for $3.50 a day. The day is nine full hours. Young Calvin said that the elevation of his father to the Presidency should make no change in the Coolidge mode of life.


Barnas on Bad Faith:

Hello again:

I have an interesting case in my column from New York County Supreme Court this edition.  The insured was sued in a personal injury action, but the corporation was dissolved while that action was pending based upon failure to pay taxes.  Plaintiff eventually obtained an excess judgment against the corporation, and the corporation purported to assign its bad faith claim to Plaintiff.  However, in the bad faith action, the court found that Plaintiff did not have standing to bring the claim because the corporation had been dissolved prior to the assignment.  It also appears that no demand within the policy limits had been made.  Accordingly, the bad faith claim was dismissed on summary judgment.

Until next time,



Brian D. Barnas

[email protected]


Women’s Financial Literacy, IT IS as Important as Men’s – 100 Years Ago:

The Daily Item

Port Chester, New York

4 Aug 1923

Business Training For Women

Do husbands who neglect to inform their wives of their financial affairs make a serious business mistake? Assuming, in fairness, that husband and wife are equal partners, wives are entitled to know how much capital the domestic concern has. But the subject is more important from a business standpoint.

A man who was believed to be fairly well to do died a few days ago in one of the large cities, leaving an estate worth much more than a million dollars. The widow will have to manage the estate.

A wealthy woman should know the rudiments of business so that she will be able to take care of her property. The woman who works for a salary should have sound business knowledge so that she may take care of herself and accumulate a competency. In fact, running a house is a business.


Lee’s Connecticut Chronicles:

Gone fishing – again! Spending some time at the Virginia shoreline this week. So far, I am undefeated with crab at every meal.

Our case this edition again returns to UM/UIM coverage. Connecticut statutes and public policy overwhelmingly favor this coverage. Before denying UM/UIM benefits, a carrier must be very careful that the policy language does not permit the coverage and that the policy language does not run afoul of the construct. The Appellate Court found coverage because the driver qualified as a liability insured, even though the plain language of the UIM endorsement did not provide for coverage. 

Keep keeping safe,


Lee S. Siegel

[email protected]


Stealing Bases . . . and Belongings – 100 Years Ago:

The Standard Union

Brooklyn, New York

4 Aug 1923


Park Thieves Ransack

Ball Players’ Lockers

The police of the Prospect Park precinct are mystified over the loss of $500 worth of ballplayers' belongings, taken from lockers in the building that houses the police and park administration offices. It is said this is the biggest haul made in series of sneakthief jobs.

About 5 P. M. yesterday members of the ball teams of the National Surety Company and the Insurance Company of North America returned to their respective lockers and discovered they had been relieved of street clothing, jewelry and other personal property amounting to $500. The caretaker had already gone, and the building was locked. The players gained admittance by means of a key left with them.

It was said that nearly every day during the baseball season there have been such occurrences. So far, no trace has been found of the perpetrators.

Detective Geisler, of the Seventy-seventh Precinct, has been assigned to the case.


Kyle's Noteworthy No-Fault:

Dear Readers,

This week I have two noteworthy no fault cases. In the first, the insurer sought a declaratory judgment that a medical provider had no right to receive payment for hundreds of no-fault claims for medical treatment, arguing the claims for treatment were foreclosed by defendant's failure to provide information and documents in response to discovery requests following defendant's examination under oath. In the second, the insurer brought this action against a medical provider, claiming he defrauded State Farm by submitting hundreds of fraudulent bills for no-fault insurance charges on behalf of insured patients. The insurer alleged common law fraud and unjust enrichment, seeking damages for benefits paid under no-fault insurance policies, as well as a declaratory judgment establishing that it is not obligated to pay unpaid, pending claims.

Until next time,


Kyle A. Ruffner
[email protected]


Insurance Matters to Men of Business – 100 Years Ago:


The Dunkirk Observer

Dunkirk, New York

4 Aug 1923


Businessmen Know


That world commerce with its great systems of transportation leans on modern insurance facilities for the protection against the dangers that constantly threaten and that frequently cause severe financial losses. Insurance is the bulwark against a score of threatening dangers.

The service that you will receive from this agency plus a policy are certain guarantees of protection.


KAISER & STARR              425 Central Ave., Phone 3457

                                                                Dunkirk, N.Y.


Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers!

It didn’t take long. We are fostering another shelter dog; except this time, we found a 6 - 7-year-old instead of a puppy and may be better for it. His name is Emmett, and he is a sweetheart, inside and out. Great with our young kids and dog, Maggie. We are loving our time with him but would love to see him flourish with his forever family soon.

For this edition, my column outlines an EDNY decision involving disclosure of supposed attorney-client privileged documents. This is an area of the law that insurers must pay special attention to, always.

Until next time…



Ryan P. Maxwell

[email protected]


Theaters to Shutter – 100 Years Ago:

The Buffalo Enquirer

Buffalo, New York

4 Aug 1923

Theaters May Close on Harding Funeral Day

New York Aug. 4.—A movement was under way today to close the theater and motion picture houses throughout the country on the day of President Harding's funeral. Three of New York's biggest theaters were dark, last night as a mark of respect to the dead President.

Augustus Thomas, head of New York's theatrical producers, and Will H. Hays are taking steps to induce theater owners to remain closed the day of the funeral.


Rauh’s Ramblings:

On parental leave.


Patricia A. Rauh

[email protected]


Harding’s Final Schedule – 100 Years Ago:

The Buffalo Enquirer

Buffalo, New York

4 Aug 1923





Body of Late President Harding

on Way to Capital—Nation Is Sorrowful


Washington, Aug. 4.—The official funeral program arranged for President Harding is:

            Tuesday, 1 p.m.—Body arrives at Union station on special train.

            1:15 p.m.—The body will be escorted to the White House by President Coolidge, supreme court justices and cabinet members.

            2 p.m.—The body will be placed state in the east room of the White House.  Only personal friends will be admitted.

            Wednesday, 10 a.m.—The official funeral cortege will leave the White House for the capitol.

            10:30 a.m.—A short funeral service will be conducted at the capitol by the Rev. Freeman Anderson, acting pastor of the Cavalry Baptist church, assisted by the Rev. James S. Montgomery, chaplain of the house of representatives.

            11 a.m.—The body will lie in state in the rotunda, where the people may file by to view the President in-death.

            6 p. m.—The doors of the capitol will be closed, and arrangements concluded to take the body to the train.

            7 p. m.—The special funeral train will leave for Marion, O., for burial.


Storm’s SIU:

Hi Everyone:

Two interesting cases for you this edition:

  • Questions of Fact Whether Insured Made Material Misrepresentations in Presenting their ALE Claim, Proven Through Evidence Extrinsic of the Complaint, Precludes a Motion to Dismiss (More Appropriately Submitted Later as a Summary Judgment Motion) but Claim for Bad Faith Dismissed.

  • Action by Shop Which Took Assignment of Twenty Insureds’ Claims Disputing the Amounts of Payment Dismissed Due to the One Year Contractual Suit Limitation Condition.  Arguments of Unconscionability, Ambiguity and Waiver and Equitable Estoppel Fail.

I hope you’re having an awesome summer.  It’s flying by.  Talk to you again in two weeks.


Scott D. Storm

[email protected]


Harding’s Wife Gives Last Loving Remarks – 100 Years Ago:

The Herald Statesman

Yonkers, New York

4 Aug 1923

"Wonderful in Death," Mrs. Harding Says

San Francisco, Aug. 4th.—"He was magnificent in life, but is more wonderful in death." This was the tribute that came from the trembling lips of Mrs. Warren G. Harding, just before the body of her beloved husband of 32 years was borne from the room in which brief funeral services were held in the Palace Hotel last evening. She was speaking to the Rev. James S. West, pastor of the First Baptist Church, who had just completed a brief prayer service.

"I want you to look at his face," said the widow. "He was magnificent in life but is more wonderful in death."


Fleming’s Finest:

Hi Coverage Pointers Subscribers:

In this week’s case, a tenant flushed cat litter, which resulted in an overflow from the shower and toilet. The insurer denied the claim based on the Businessowners Coverage policy’s water exclusion. However, the New Hampshire Supreme Court and the trial court found that a reasonable insured could understand the exclusion to only encompass water damage caused by events external to the property and not water damage resulting from an internal pipe clogged by a tenant’s disposal of cat litter. I am inclined to agree with the dissenting judges that internal drain backups or overflows are also excluded based on the policy’s clear language.  

Catch you later,


Katherine A. Fleming

[email protected]


Election Security Kicks Up in Kentucky – 100 Years Ago:

The Courier-Journal

Louisville, Kentucky

4 Aug 1923

Rewards for Conviction

Of Election Violators

Free and honest elections are at the very foundation of a republican form of government, and citizens, whatever their party affiliation, have a right to express themselves on questions of government without interference, crookedness, or manipulation.

Since a primary is an election within a party, conducted under legal restrictions, The Courier-Journal and The Louisville Times, eager to contribute as a public service to the conduct of an honest primary in Kentucky next Saturday, August 4, jointly offer a reward of $500 for information resulting in the arrest, conviction, and imprisonment of each violator in the following classes of election offenders:








Gestwick’s Greatest:

Dear Readers,

I hope everyone continues to enjoy their summer! I know I have been.

This week, I have a case discussing a seemingly erroneous decision from an arbitrator that, when compared to the standard applied to reversals of an arbitration award, doesn’t seem so erroneous. Following a car accident, the injured party sought no-fault benefits from his carrier, American Transit. After failing to appear for his Independent Medical Examination, as required of him by his policy, American Transit denied his no-fault claim.

The arbitrator recognized a split in the law between the First Department, made up of New York and Bronx Counties, and the Second Department, comprised of the rest of the downstate counties, as to whether a no-fault carrier is permitted to raise the insured’s policy violation as a defense during arbitration, where the carrier failed to raise it in its denial letter. Case law out of the First Department maintains that such failure does not preclude the carrier from raising it as a defense at arbitration, while the Second Department holds that it does. Interestingly, this case was brought in New York County Supreme Court, on which the precedent of the First Department is binding. The Court held that applying the Second Department’s standard did not rise to the level of “arbitrary and capricious,” the standard needed to reverse the decision of an arbitrator.

That’s all for this week, see you in two!


Evan D. Gestwick

[email protected]


Dead Presidents, a Predictable Happening? – 100 Years Ago:

Yonkers Statesman

Yonkers, New York

4 Aug 1923

Harding’s Death Is

Fifth in Odd Cycle

The death of President Harding, the sixth President to die in office, is the fifth in a definite cycle since the term of Zachary Taylor. The record shows that every fourth man who has been elected to fill the position of chief executive of the country’s affairs since the time of Taylor has died in office. These are as follows: Zachary Taylor, Abraham Lincoln, James A. Garfield, William McKinley, Warren G. Harding, William Henry Harrison of Ohio, the first president to die in office, served but one month of his term, the shortest in the history of our country, in 1841.

Will this tragic cycle become another of the country’s traditions similar to that which declares that we always go to war in the month of April?


On the Road with O’Shea:

Hey Readers,

Hope everyone is enjoying their summer so far. As an Ottawa Senators fan, this summer has seen its share of surprises. Alex DeBrincat is gone and forgotten, unsurprised. However, the signing of  Vlad Tarasenko will be more able to fill the hole left by him. Joonas Korpisalo, however, is a wild card. That signing is a little more questionable. We’ll see how that one works out.

This week I have two cases, one from the trial courts and another from the Appellate Division. The trial court case deals with a petition to stay arbitration regarding an allegedly stolen car. Meanwhile, the Appellate Division denied a carrier’s motion to enforce a settlement agreement. I hope you enjoy.

See you in two weeks,


Ryan P. O’Shea
[email protected]


That’s a Load of BS . . . No . . . PS – 100 Years Ago:

The Buffalo News

Buffalo, New York

4 Aug 1923




Council Makes No Progress

Toward Abatement of Nuisance

The city council has made no progress toward providing for the abatement of the Piggery nuisance by September 15, as ordered by a court. It was voted last Tuesday to construct an experimental plant at the piggery on the River road in the town of Tonawanda, but to do so the court must modify its original order unless the corporation counsel takes an appeal to the appellate division. Corporation Counsel Rann has gone on his vacation.

The people of the Tonawandas do not want any more of the piggery. They will not consent to an experimental station on the river road, being fearful that if a plant is established it will not be removed. The city now has authority to sell the hogs at the piggery, but it can not replace them. The hogs are ready for market.  If they are removed, however, the refuse will accumulate and add to the nuisance.


Louttit’s Legislative and Regulatory Roundup:

Hello All,

I hope everyone is continuing to enjoy their summer.

Today’s column notes a bill that will require the registration of bicycles with electric assist and imposes liability on employers of those who are issued violations while riding such vehicles.  These types of bicycles have become very popular in New York City, especially in the food service delivery industry. While not directly connected to the insurance industry, the registration of these bicycles and the imposition of liability on their employers may create an avenue for insurers to provide coverage for bodily injury or property damage arising out of their use. We will keep an eye on this piece of legislation as it makes its way through the Senate.

Robert P. Louttit

[email protected]


Gracious and Humble – 100 Years Ago:

Daily News

New York, New York

4 Aug 1923




Washington, D.C., Aug. 3.—Mrs. Grace Goodhue Coolidge, who will be first lady of the land, like Mrs. Harding, is human, first of all. Next, she is a college woman, the mother of two interesting boys, John and Calvin Jr., and is blessed with a keen sense of humor.

No woman ever came into the strong limelight of the next highest official position of this country with less experience than did she, and no woman has ever risen to the dignity and importance of her position as second lady of the land with any more grace and tact. And in this rising to the occasion, Mrs. Coolidge was still just herself, alert, kindly, gracious and entirely natural.

Mr. and Mrs. Coolidge have never maintained a home here other than a modest apartment in a downtown hotel. It was the same occupied during the whole of the second term of his office by Vice President and Mrs. Marshall.

There was an effort to provide for a pretentious vice-presidential home, made last season by John B. Henderson, the official houser of foreign diplomats, for many of them reside in houses which she owns in upper Sixteenth Street. This effort was quelled quickly by the Vice President himself, who said it was out of the question to maintain such a resident on a $12,000 a year salary.


Rob Reaches the Threshold:

Dear Coverage Pointers Readers:

I hope you all are enjoying your summer, which seems to be flying by. Know who isn’t enjoying their summer? The New York Yankees. And any Yankee fan. The season may ultimately scar me for life…

Now to shamelessly segue to this edition’s case, I examine a recent Fourth Department case which discusses facial scarring and the significant disfigurement category of Section 5102. It is a nice refresher of the appropriate standard for which a movant needs to meet on a motion for summary judgment.

I hope you all enjoy.

Until next time,


Robert J. Caggiano

[email protected]


Who Comes Next?  -- 100 Years Ago:

The Standard Union

Brooklyn, New York

04 Aug 1923

The Presidential Succession.

Early Friday morning the father of Calvin Coolidge administered to him the oath by which he solemnly swore “that I will faithfully execute the office of President of the United States and will, to the best of my ability, preserve, protect and defend the Constitution of the United States.”

The question, “Who is Vice-President of the United States?” was heard occasionally yesterday after the death of Mr. Harding became known.  The true answer would have to be, “If anybody, Calvin Coolidge.” For nobody else is Vice-President.  Is Mr. Coolidge still Vice-President?  A speculative question, though, of course, of no practical bearing.  There has been, however, in the past, very serious practical bearing of questions arising under the Constitution and laws regulating the Presidential succession.

The Constitution says the Senate shall choose a President of the Senate pro tempore “in the absence of the Vice-President or when he shall exercise the office of President of the United States.”  One thing is certain; the President of the Senate pro tempore is not Vice-President and never is called Vice-President.  But observe the curious wording of the reference to the Vice-President:  “When he shall exercise the office of President of the United States.”  It does not say:  “When the Vice-President shall become President of the United States.”

And, amazing as it may seem, nowhere does the Constitution say that the Vice-President shall become President upon the death of a President of the United States.

Now, of course, we know that Mr. Coolidge is President; but it is a fact that when the country was startled by the death of President Harrison in 1841, the most learned statesmen in Congress wrestled earnestly with the question whether the committee appointed to inform Mr. Tyler of the organization of Congress should address him as “The President” or as “The Vice-President now exercising the office of President.”

The Constitution gave no help in reaching a decision.


North of the Border:

I am now back in Calgary after attending the 2023 edition of the FDCC Annual General Meeting which took place at Broadmoor Hotel in Colorado Springs from July 24-28. It was fabulous to be together with so many of my FDCC friends and colleagues. (I have to be quite careful to emphasize that I was at the Broadmoor Hotel in Colorado Springs and not spending a week at the “Broadmoor,” the high security psychiatric hospital in England).

I am pleased to relate that I was again elected as a member of the FDCC Board of Directors, but this time, as a Senior Director. Quite an honour.

I’m back in the saddle in Calgary for the next three weeks before heading to Melbourne, Australia, to speak at the AIDA World Congress – the first Canadian to do so. Exciting times.

My column this week discusses a decision of the Alberta Court of King’s Bench that came to the unexpected conclusion that in the circumstances of that case, a duty to defend application should not be heard at the outset of the matter, but at, or following, the trial of the underlying action.



Heather A. Sanderson

Sanderson Law, Calgary, Alberta

[email protected]


Headlines from this week’s issue, attached:

Dan D. Kohane
[email protected]

  • Skid Steer is a “Motor Vehicle” Excluded from Coverage Under Homeowner’s Policy, Using Dictionary Definitions, Even Though Definition of Vehicle & Traffic Law May be Different

  • “Construction and Development Activities Exclusion” Clear Enough to Exclude a Lawsuit Arising out of a Construction Accident

  • No Need to Consider Extrinsic Evidence to Identify Party to be Added as Additional Insured if Trade Contract is Clear

  • When Carrier Learned that Plaintiff did not Fall on Alleged Additional Insured’s Property, and Immediately Tendered the Defense Back to Additional Insured and its Carrier, it was Not Estopped from Disclaiming Coverage


Steven E. Peiper

[email protected]

  • Agreement, the Settlement was Not Effective Until All Sides Acknowledged All Terms


Agnes A. Wilewicz

[email protected]

  • Fifth Circuit Court of Appeals Holds that Statements in Briefs, Without Sufficient Supporting Evidence, Are Insufficient to Create a Fact Dispute on Summary Judgment, in Coverage Case Involving a Drive-by Shooting Incident in a Lyft


Brian D. Barnas

[email protected]

  • Bad Faith Assignment by Dissolved Corporation was Ineffective to give Underlying Plaintiff Standing to Prosecute Bad Faith Lawsuit against Corporation’s Insurer


Lee S. Siegel

[email protected]

  • Employee Entitled to UM/UIM Coverage While in Rental Car


Kyle A. Ruffner
[email protected]

  • Court Denies Insurer’s Default Judgment Motion Due to Failure to Provide Documentation that Medical Provider Failed to Respond Adequately to Post-EUO Requests

  • Court Grants Insurer’s Motion for Preliminary Injunction to Stay Proceedings for No-Fault Benefits, Which Insurer Alleged Were Fraudulent


Ryan P. Maxwell

[email protected]

  • Court Finds Plethora of Claims Documents Discoverable Despite Claimed Attorney-Client and Work-Product Protections


Patricia A. Rauh

[email protected]

  • On Parental Leave

Scott D. Storm

[email protected]

  • Questions of Fact Whether Insured Made Material Misrepresentations in Presenting their ALE Claim, Proven Through Evidence Extrinsic of the Complaint, Precludes a Motion to Dismiss (More Appropriately Submitted Later as a Summary Judgment Motion) but Claim for Bad Faith Dismissed

  • Action by Shop Which Took Assignment of Twenty Insureds’ Claims Disputing the Amounts of Payment Dismissed Due to the One Year Contractual Suit Limitation Condition.  Arguments of Unconscionability, Ambiguity and Waiver and Equitable Estoppel Fail


Katherine A. Fleming

[email protected]

  • Kitty Litter Clogs Toilet – Resultant Water Damage Not Excluded Based On Ambiguity


Evan D. Gestwick

[email protected]

  • Seemingly Erroneous Arbitration Award Not So Erroneous After All


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

[email protected]

  • My Car Was Stolen, or Was It? Issue of Fact on Vehicle’s Use Results in Stay of Arbitration

  • Email Exchanges Between Counsel did not Create Mutual Accord for Settlement Agreement


Robert P. Louttit

[email protected]

  • Requires the Registration of Bicycles with Electric Assist Used for Commercial Purposes; Provides Liability of Employers for Certain Violations


Robert J. Caggiano

[email protected]

  • Fourth Department Finds Plaintiff Failed to Meet Initial Burden on Cross-Motion for Summary Judgment to the Extent that He Claimed Serious Injury for Facial Scarring Under the Significant Disfigurement Category of § 5102(D)


Heather A. Sanderson
Sanderson Law, Calgary, Alberta

[email protected]

  • A Duty to Defend Application is to be Heard at the Outset of the Action, Unless there is a Substantial Factual Dispute and Contested Positions Regarding Such Things as the Existence or Essential Validity of the Policy or, Whether the Applicant is an Insured Under the Policy, or Whether the Applicant Obtained the Policy or Other Such Argument


All the best.




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

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

Dan D. Kohane

[email protected]


Agnes A. Wilewicz

[email protected]


Evan D. Gestwick

[email protected]


Dan D. Kohane, Chair
[email protected]


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

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Scott D. Storm

Brian D. Barnas

Eric T. Boron

Robert P. Louttit

Ryan P. Maxwell

Patricia A. Rauh

Diane F. Bosse

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea


Steven E. Peiper, Team Leader
[email protected]

Michael F. Perley

Scott D. Storm

Brian D. Barnas

Dan D. Kohane

[email protected]

Alice A. Trueman


Jody E. Briandi, Team Leader
[email protected]

Diane F. Bosse

Topical Index

Kohane’s Coverage Corner

Peiper on Property and Potpourri

Wilewicz’s Wide World of Coverage

Barnas on Bad Faith

Lee’s Connecticut Chronicles

Kyle’s Noteworthy No-Fault

Ryan’s Federal Reporter

Rauh’s Ramblings

Storm’s SIU

Fleming’s Finest

Gestwick’s Greatest

On the Road with O’Shea

Loutit’s Legislative and Regulatory Roundup

Rob Reaches the Threshold

North of the Border


Dan D. Kohane
[email protected]


07/28/23       Fornino v. New York Central Mutual
Appellate Division, Fourth Department
Skid Steer is a “Motor Vehicle” Excluded from Coverage under Homeowner’s Policy, Using Dictionary Definitions, Even Though Definition of Vehicle & Traffic Law May Be Different

Fornino was insured under a homeowner's policy issued by New York Central Mutual Fire Insurance Company (NYCM) through an insurance agent, Payne.  After NYCM declined to defend and indemnify plaintiff in a personal injury action arising from the off-premises use of plaintiff’ skid steer owned by plaintiff, he sued NYCM and Payne

NYCM disclaimed based on the Policy's Motor Vehicle Liability exclusion.

Here, the Policy does not provide personal liability coverage or coverage for medical payments to others if the motor vehicle involved in the occurrence is being used somewhere other than the insured location. There is no dispute that the occurrence at issue here did not take place at either of the locations insured under the Policy. Thus, the question here is only whether the skid steer that was involved in the occurrence is a "motor vehicle" under the terms of the Policy. We conclude that it is.

The Policy defines a "motor vehicle" as "[a] self-propelled land or amphibious vehicle." Contrary to plaintiff's contention, that definition "is reasonably susceptible of only one meaning".  An ambiguity does not arise from an undefined term in a policy"—here, the term "vehicle"—"merely because the parties dispute the meaning of that term.  The relevant definition of "vehicle" is "a means of carrying or transporting something" (Merriam- Dictionary, vehicle [ dictionary/vehicle]).

Giving "vehicle" its "plain and ordinary meaning does not result in ambiguity" and, therefore, "the plain and ordinary meaning of the language used [in the Policy] must control its interpretation".  Contrary to plaintiff's contention, the fact that the Vehicle and Traffic Law may define "motor vehicle" differently is of no moment inasmuch as the contract itself provides a definition.

Payne submitted in support of its cross-motion established that it had no record showing that plaintiff made a specific request for third-party liability coverage related to use of the skid steer at a property other than the two insured locations. In opposition, plaintiff submitted evidence demonstrating that he had, at most, made a general request for coverage and that W.B. Payne had, in fact, obtained insurance coverage for the use of the skid steer at plaintiff's residence, in keeping with plaintiff's assertion that the skid steer was solely for personal use.

Editor’s Note – Great decision – keep it in mind when you’re dealing with e-bikes!


07/26/23       Grenadier Realty Corp. v. RLI Insurance Company
Appellate Division, Second Department
“Construction and Development Activities Exclusion” Clear Enough to Exclude a Lawsuit Arising out of a Construction Accident

In July 2012, nonparty Gargiso allegedly was injured when he stepped in a trench which was dug as part of a construction project that had been left unfinished. Gargiso sued the property owner, Howland and the property manager, Grenadier.  Grenadier, which had purchased a general liability insurance policy from the defendant RLI Insurance Company . RLI denied coverage based upon an exclusion in an endorsement to the subject policy for "bodily injury" arising out of "Construction and Development Activities."

In determining a dispute over insurance coverage, we first look to the language of the policy and unambiguous provisions of an insurance contract must be given their plain and ordinary meaning. The insurer has the burden of proving the applicability of an exclusion. Policy exclusions are to be strictly and narrowly construed and are not to be extended by interpretation or implication.\

Here, the subject policy provides coverage for, among other things, damages because of "bodily injury." The subject policy includes a construction and development exclusion, which, as is relevant, excludes from coverage "bodily injury" resulting from "Construction and Development Activities." Gargiso was injured when he stepped into a trench which had been dug as part of the construction activities in a parking lot on the property. RLI demonstrated that the construction and development exclusion unambiguously excluded from coverage bodily injury arising out of such construction and development activities. Therefore, RLI established that it did not have a duty to indemnify the plaintiffs in connection with the underlying action.


07/26/23       Hanover Insurance Company v. Catlin Specialty Ins. Co.
Appellate Division, Second Department
No Need to Consider Extrinsic Evidence to Identify Party to be Added as Additional Insured if Trade Contract is Clear

Hanover commenced this action seeking judgment declaring that the defendant Catlin Specialty Insurance Company was required to defend and indemnify the plaintiff's insured, nonparty Industria Superstudio Overseas (“Overseas”), in an underlying personal injury.  Catlin argued that Overseas was not entitled to coverage as an additional insured under an insurance policy issued by the defendant to the general contractor Bulson Management LLC.

Here, the construction contract at issue provides that the parties bound by its terms are the "Owner," namely "Fabrizio Ferri," the principal of Overseas, and "the Contractor," Bulson. It later specifies, "based on the premise that legal relationships on a construction project are comprised of two-party contractual arrangements," that the terms "Owner" and "Contractor" are "singular in nature," thus referring to exactly one person or entity. The space provided for the parties to identify a representative for the Owner was left blank. The signatories to the construction contract are "Graham R. Bruwer, Principal," on behalf of Bulson, and "Fabrizio Ferri."

Overseas is not mentioned at all.

Thus, this language unambiguously identifies Ferri as the only party contracting with Bulson.

There is no need to consider extrinsic evidence when the contract is clear.

The contract as between Ferri and Bulson and the additional insured language of that agreement to apply to them and not Overseas without reference to the extrinsic evidence the plaintiff offered in support of its alternative interpretation


07/26/23       Certain Underwriters at Lloyd's v. Covert Holdings, LLC Appellate Division, Second Department
When Carrier Learned that Plaintiff Did Not Fall on Alleged Additional Insured’s Property, and Immediately Tendered the Defense Back to Additional Insured and its Carrier, it was Not Estopped From Disclaiming Coverage

In 2015, Donald Howard allegedly was injured when he fell on the sidewalk in front of premises owned by the defendant, Covert Holdings, LLC (hereinafter Covert Holdings). Covert Holdings was insured by the defendant, DB Insurance, Ltd., and a tenant that leased a portion of the premises was insured by Underwriters, the plaintiff. Howard brought an action to recover damages for personal injuries against Covert Holdings and the plaintiff's insured, among others.

Underwriters initially provided a defense to Covert Holdings, but subsequently commenced this action against Covert Holdings and DB Insurance (hereinafter together the defendants), among others, seeking, inter alia, a declaration that it was not obligated to defend and indemnify Covert Holdings in the underlying action. The plaintiff alleged that it was not obligated to defend and indemnify Covert Holdings because the potential liability in the underlying action was not covered by the subject insurance policy.

Contrary to the defendants' contention, the plaintiff's denial or disclaimer of coverage was not untimely, since a disclaimer is unnecessary where, as here, the claim falls outside of the coverage terms rather than being subject to a policy exclusion.

The doctrine of estoppel precludes an insurance company from denying or disclaiming coverage where the proper defending party relied to its detriment on that coverage and was prejudiced by the delay of the insurance company in denying or disclaiming coverage based on the loss of the right to control its own defense.  Accordingly, an insurer, though in fact not obligated to provide coverage, may be precluded from denying coverage upon proof that the insurer by its conduct, otherwise lulled [the insured] into sleeping on its rights under the insurance. Prejudice is established only where the insurer's control of the defense is such that the character and strategy of the lawsuit can no longer be altered.

Under the particular circumstances of this case, the plaintiff had no duty to defend and/or indemnify Covert Holdings in the underlying action. Although the plaintiff initially provided a defense to Covert Holdings, in a letter dated November 3, 2016, the plaintiff asserted that it had recently discovered that Howard did not fall on the sidewalk in front of the portion of the premises leased by the plaintiff's insured, and demanded that DB Insurance assume the defense of Covert Holdings in the underlying action. In a letter dated December 20, 2016, the plaintiff specifically reserved its rights to withdraw from its defense of Covert Holdings in the underlying action, deny coverage obligations, and commence a declaratory judgment action, and sufficiently informed the defendants that this reservation of rights was based on the recent discovery that the accident location was not, in fact, on the sidewalk in front of the portion of the premises leased by the plaintiff's insured.  Therefore, it cannot be said that the plaintiff, by its conduct, lulled Covert Holdings into sleeping on its rights.

Editor’s note: Absolutely the right decision.  Underwriters paid close attention to the developments in the underlying lawsuit and quickly and properly tendered the defense back to the party it was defending as an additional insured.  That party’s carrier refused to pick up the defense and then complained that the original carrier should be estopped from denying coverage.  Hogwash.  Underwriters did exactly what it should have done – monitor the underlying lawsuit and act promptly when it learned of developments that impact coverage.

An Atta Lawyer goes out to Alexandra E. Rigney of Fleischner Potash, LLP.


Steven E. Peiper

[email protected]


07/27/23       Harleysville Ins. Co. v. Estate of Boser
Appellate Division, Second Department
Where a Carrier Inserted a Final Term into Otherwise Binding Settlement Agreement, the Settlement was Not Effective Until All Sides Acknowledged All Terms

Plaintiff’s decedent was killed in a 2017 motor vehicle accident.  In the context of the subsequent wrongful death claim, it appears that counsel attempted to negotiate a global resolution of the action against the tortfeasor and the underinsured motorist claims asserted against the Harleysville policy.  At one point, counsel for Harleysville sent correspondence to the Estate’s counsel confirming a total settlement of $500,000. However, the settlement was apparently conditioned on plaintiff acknowledging that the $50,000 paid by the tortfeasor’s carrier would offset the total damage.  Thus, if our reading is accurate, Harleysville thought it settled the matter for $450,000.

At some point, the Estate proceeded with a Demand for SUM Arbitration and was ultimately awarded $950,000.  Harleysville commenced this action to set aside the Arbitration Award as superseded by the prior settlement.  The Estate, in turn, asked for the Arbitration Award to be affirmed. 

The court noted that settlement reached out of Court must be reduced to writing with all of the terms agreed to by all signatories.  While an e-mail between counsel can be a sufficient writing, here the e-mail in question was subject the Estate accepting the $50,000 offset from the tortfeasor’s carrier.  As such, a final binding settlement had not been reached. 


Agnes A. Wilewicz

[email protected]


08/01/23       Maria Francia Neptune v. Indian Harbor Insurance Company
United States Court of Appeals, Fifth Circuit
Fifth Circuit Court of Appeals Holds that Statements in Briefs, Without Sufficient Supporting Evidence, Are Insufficient to Create a Fact Dispute on Summary Judgment, in Coverage Case Involving a Drive-by Shooting Incident in a Lyft

In the early hours of April 22, 2019, Maria Neptune, while working as a Lyft driver, accepted a request for a short ride from Houston to Cypress. At the pick-up spot, a young man got into her SUV. As was her practice, Neptune then locked the doors. But before she could begin driving, a man wearing a hoodie tried to get into the SUV. Neptune had noticed the man walking behind the passenger but at a distance, so she asked her passenger “if he was coming with someone.” The passenger answered no and told her to drive away quickly. As she did, the man in the hoodie began shooting at her SUV, ultimately breaking her back window.

Neptune drove straight to the drop-off location, a gated apartment complex. But her passenger did not have the correct gate code. Neptune drove around the complex trying the various gates. While trying a gate at the front of the complex, a vehicle pulled behind hers and began shooting at her, hitting one of her tires. Fortunately, Neptune managed to do a U-turn and drive away. About two miles from where she last saw the shooter, while trying to get to the highway, Neptune hit an “island or sidewalk before crashing into a wall.” Neptune and her passenger hid in the grass and waited for the police.

Texas law requires Lyft to have uninsured/underinsured motorist coverage for its drivers. See Tex. Ins. Code § 194.053. Lyft had coverage through Indian Harbor. The policy stated: “We will pay damages which an “insured” is legally entitled to recover from the owner or operator of an “uninsured motor vehicle” because of “bodily injury” sustained by an “insured” or “property damage” caused by an “accident.” The owner’s or operator’s liability for these damages must arise out of the ownership, maintenance, or use of the “uninsured motor vehicle.”” The policy in part defines “uninsured motor vehicle” as, “A land or motor vehicle or ‘trailer’ of any type . . . Which is a hit-and-run vehicle whose operator or owner cannot be identified. The vehicle must hit an ‘insured’, a covered ‘auto’ or a vehicle an ‘insured’ is occupying.”

Here, the underlying trial court and the appeals Court found that the policy’s plain language only covered uninsured motorist accidents if the uninsured motorist hit the insured or the insured’s car. Finding that Neptune produced no evidence that the shooter’s vehicle hit hers, the court concluded her coverage claim failed as a matter of law. The district court secondarily held, “To the extent that Doe’s driving enabled him to shoot at Plaintiff’s vehicle ultimately causing her injuries, those injuries did not ‘arise out of’ Doe’s use of a motor vehicle” under Texas law. The Fifth Circuit agreed. Statements in briefs, without supporting evidence, are insufficient to create a fact dispute on summary judgment.


Brian D. Barnas

[email protected]


07/16/23       Lewis v. Country-Wide Insurance Company
New York Supreme Court, New York County
Bad Faith Assignment by Dissolved Corporation was Ineffective to Give Underlying Plaintiff Standing to Prosecute Bad Faith Lawsuit Against Corporation’s Insurer

On June 4, 2007, the plaintiff sustained injuries in a collision on the Garden State Parkway in New Jersey while a passenger in a vehicle owned by Vertex and insured by Countrywide.  Vertex had $100,000 in liability coverage under the Countrywide policy.  Plaintiff commenced a personal injury action against Vertex in Kings County in December 2007.  On November 15, 2010, the court in the underlying action granted the plaintiff’s motion for summary judgment as to liability.

Countrywide maintained that Plaintiff suffered only a fractured rib as a result of the accident and the other injuries claimed were preexisting.  The jury found for the plaintiff in the amount of $750,000.00 for past pain and suffering and $300,000.00 for future pain and suffering.  By an order dated December 6, 2013, that court granted Vertex’s motion to set aside the jury verdict to the extent of directing a new trial on past pain and suffering unless the plaintiff stipulated to a reduction in damages.

On December 14, 2013, Countrywide delivered to the plaintiff a check for $135,125.00, representing tender of its policy limit of $100,000.00 and accrued interest on the policy from the date of the order granting summary judgment on liability.  By stipulation dated January 24, 2014, the plaintiff and Vertex agreed to reduce the past pain and suffering award from $750,000.000 to $300,000.000.  On March 24, 2016, a judgment was entered in favor of the plaintiff and against Vertex in the sum of $751,917.32.  The judgment was affirmed by the Appellate Division.

On December 23, 2019, Vertex assigned any bad faith claim it may have against Countrywide to Plaintiff in exchange for Plaintiff not enforcing the judgment against the personal assets of Vertex’s CEO.  However, in the meantime, Vertex had been dissolved by proclamation by the New York Secretary of State on October 28, 2009, during the pendency of the underlying action.  Apparently, neither the plaintiff nor Countrywide was then aware of the dissolution.

Plaintiff commenced this action against Countrywide alleging bad faith.  Countrywide moved for summary judgment, arguing that Plaintiff lacked standing to bring an action against Countrywide for bad faith because Vertex had been dissolved at the time of the purported assignment.  Countrywide also argued that there was no settlement demand within the policy limits in the underlying action.

The court agreed with Countrywide that Plaintiff lacked standing to bring the bad faith action.  Vertex had been dissolved by order of the Secretary of State based upon failure to pay taxes.  Pursuant to Tax Law §203-a, when the Secretary of State issues a proclamation of dissolution for failure to pay taxes, the corporation remains inactive and is not restored to active status until it pays all delinquent taxes.  Since Vertex was dissolved by proclamation in 2009 and has not since been reinstated, it was prohibited from entering into the purported assignment in 2019, some ten years later. Countrywide thus demonstrated that the assignment relied upon by the plaintiff to bring the action is ineffective since there was no right of action to assign.  The court also noted that the terms of the purported assignment appeared to be written to protect personal assets of Pepe rather than protect, dispose or convey any existing remaining assets of Vertex, even though Pepe purported to sign as its CEO.

The court also found that the essence of Plaintiff’s Complaint was that Countrywide violated Insurance Law § 2601, the Unfair Claims Settlement Practices Act.  However, New York law does not recognize a private cause of action for violation of that statute.  Even assuming the plaintiff had made a proper settlement demand within limits, he could not bring the instant bad faith claim. The court found that “in light of the procedural history of the underlying action, any plaintiff would have difficulty establishing that Countrywide acted with “gross disregard” of Vertex’s interests in that action.”


Lee S. Siegel

[email protected]


08/01/23       Curley v. Phoenix Ins. Co.
Appellate Court of Connecticut
Employee Entitled to UM/UIM Coverage While in Rental Car

Reversing the trial court, the Appellate Court found that a University of Bridgeport employee was covered by the University’s UM/UIM policy while driving a rental car on university business. In 2017, Curley was driving a rental vehicle in Trumbull to an off- campus event as part of her duties for the university when her vehicle was struck from behind. Curley received the full $250,000 limits from the tortfeasor and then made a claim under the university's $1 million UIM coverage.

Phoenix denied the claim, asserting that Curley was not driving a covered auto, as the rental vehicle was not a temporary substitute for an insured vehicle because no vehicles were out of service. Curley argued that she met the definition of a liability insured and therefore was statutorily entitled to UIM coverage.

On appeal, Curley argued that, (1) she was an insured under the policy because the university had authorized her to rent the vehicle for use in performing her job duties, (2) allowing an insurer to deny employees statutorily required coverage violated public policy, and (3) because CGS § 14-112 requires that a driver to maintain liability insurance for any vehicle, including rental vehicles, the policy must provide coverage for the rental vehicle. Phoenix countered that the Lessor Endorsement did not modify the UIM Endorsement, but only the Auto Dealers Coverage Form, the Business Auto Coverage Form, and the Motor Carrier Coverage Form. Since the UIM Endorsement was unambiguous, there was no reason to refer to other parts of the policy—especially an endorsement that did not modify the UIM coverage—to interpret the coverage provided.

The Appellate Court first found that Curley was a liability insured under the Phoenix policy. The business auto extension endorsement adds: “An ‘employee’ of [the university] is an ‘insured’ while operating an ‘auto’ hired or rented under a contract or agreement in an ‘employee's’ name, with [the university's] permission, while performing duties related to the conduct of [the university's] business”. Thus, because Curley is a liability insured, in the absence of a waiver by the university, CGS § 38a-336 mandates that she also be insured for underinsured motorist coverage. “Thus, by its terms, § 38a-336 (a) (1) requires that each automobile liability policy provide uninsured and underinsured motorist coverage to a class of persons that is coextensive with that insured under the liability section of the policy.” Gomes v. Massachusetts Bay Ins. Co., 87 Conn. App. 416, 425–26, 866 A.2d 704, cert. denied, 273 Conn. 925, 871 A.2d 1031 (2005); see also Gormbard v. Zurich Ins. Co., 279 Conn. 808, 823, 904 A.2d 198 (2006) (noting that there is “no better example of an attempt to limit otherwise mandated uninsured motorist coverage than a definition in an insurance policy that purports to limit uninsured motorist coverage to injuries arising out of the insured's use of a specified vehicle”).”

Because Curley occupied a covered auto at the time of the accident, the Court held that she was entitled to UIM benefits equal to the liability limits.


Kyle A. Ruffner
[email protected]


07/25/23       State Farm Mut. Auto. Ins. Co. et al. v. Garden Med. Care, P.C.
Supreme Court, New York County
Court Denies Insurer’s Default Judgment Motion Due to Failure to Provide Documentation that Medical Provider Failed to Respond Adequately to Post-EUO Requests

In this no-fault insurance coverage action the plaintiffs, State Farm Mutual Automobile Insurance Company and State Farm Fire & Casualty Company, sought a declaratory judgment that Garden Medical Care, P.C., had no right to receive payment for hundreds of no-fault claims for medical treatment, totaling approximately $312,000. State Farm claimed that defendant's claims for treatment were foreclosed by defendant's alleged failure to provide information and documents in response to discovery requests served by plaintiffs following defendant's examination under oath.

Garden Medical Care, a medical provided and assignee of injured persons eligible for no-fault coverage, submitted hundreds of no-fault bills for treatment provided in connection with numerous no-fault claims. In response, State Farm asked the defendant to appear for an EUO. Defendant’s principal appeared for an EUO in September 202 and, following the EUO, State Farm served demands seeking further information and documents. However, State Farm did not provide a copy of the EUO transcript, the demands provided to Garden Medical Care, or copies of defendant’s responses or objections to its discovery requests. State Farm alleged that it needed more information to evaluate the eligibility of the claims for reimbursement, which the defendant has refused to provide.  This included, among other things, financial records, bank records, profit and loss statements, and documents concerning examinations performed and billed by the defendant. State Farm contended that given defendant's alleged failure to comply sufficiently with the post-EUO verification requests, plaintiffs timely denied payment on all of the no-fault treatment bills at issue. Plaintiffs then brought this action for a no-coverage declaration with respect to those bills and moved for default judgment.

The court explained that a plaintiff moving for default judgment must demonstrate proper service, the defendant's default, and the facts constituting plaintiff's claim, pursuant to CPLR 3215[f]. The court determined that State Farm showed that it properly served the defendant and defendant has not appeared. However, the court held that State Farm had not provided proof of the facts constituting its claim. State Farm’s claim rested on the defendant’s failure to respond to post-EUO document demands, however, State Farm’s motion papers did not attach copies of the EUO transcript, plaintiffs' post-EUO demands, defendant's responses and objections to those demands, or defendant's document production. Therefore, the court held it could not assess the key question presented by plaintiffs' motion, which was whether defendant failed to respond adequately to post-EUO verification requests. As such, the court denied State Farm’s default-judgment motion.


07/13/23       State Farm Mut. Auto. Ins.. Co. et al. v. Herschel Kotkes, M.D., P.C.
United States District Court, Eastern District
Court Grants Insurer’s Motion for Preliminary Injunction to Stay Proceedings for No-Fault Benefits, Which Insurer Alleged Were Fraudulent

State Farm brought this action against Defendants alleging that Dr. Kotkes defrauded State Farm by submitting hundreds of fraudulent bills for no-fault insurance charges on behalf of insured patients who were involved in automobile accidents. State Farm alleged common law fraud and unjust enrichment, seeking damages for benefits paid under no-fault insurance policies to Kotkes, as well as a declaratory judgment establishing that it is not obligated to pay unpaid, pending claims submitted by Kotkes.

Under New York Law, an automobile insurer must provide no-fault insurance benefits to the individuals they insure ("insureds") for necessary healthcare expenses resulting from automobile injuries, for up to $50,000. No-fault insurers like State Farm may reimburse patients without requiring proof of the other driver's fault in an amount up to $50,000, including for necessary expenses incurred for medical or other professional health services. An insured may assign their claim to their provider, who then bills the insurers directly.

State Farm alleges that Kotkes, since at least 2017, has been systematically submitting fraudulent and misleading claims to State Farm. and that this pervasive fraud is visible when collectively observing the claims that Kotkes submitted to State Farm since 2017. Further, State Farm contends it is apparent that Kotkes has made identical diagnoses and prescribed nearly identical treatments for all of his patients, regardless of any individual characteristics such as age, medical history, physical condition and limitations, or responsiveness to conservative treatment. Therefore, State Farm asserted three causes of action: for common law fraud and unjust enrichment, under which it seeks damages for claims already paid to Kotkes, and for a declaratory judgment, under which State Farm seeks a judgment declaring that Kotkes is not entitled to reimbursement for claims submitted to State Farm that have not been paid to date and are unpaid through the pendency of this litigation. Kotkes moved to dismiss each cause of action of State Farm for failure to state a claim.

With regard to State Farm’s common law fraud claim, the court explained that under New York law, to state a claim for fraud, a plaintiff must demonstrate "(1) a material misrepresentation or omission of fact; (2) which the defendant knew to be false; (3) which the defendant made with the intent to defraud; (4) upon which the plaintiff reasonably relied; and (5) which caused injury to the plaintiff." Fin. Guar. Ins. Co. v. Putnam Advisory Co., LLC, 783 F.3d 395, 402 (2d Cir. 2015). Kotkes argues that State Farm fails to satisfy this heightened pleading standard and does not plead fraud with specificity because the complaint relies solely on "contrived" and "manipulated statistics" to support its allegations of fraud. However, the court disagreed and denied Kotkes motion to dismiss. Among other things, the court determined that State Farm adequately and plausibly alleged that Kotkes made fraudulent statements in submitting the claims at issue. State Farm alleged fraudulent knowledge and intent by showing Kotkes's motive and opportunity to submit fraudulent claims to take advantage of New York's no-fault insurance scheme. Therefore, State Farm clearly alleged that it relied on Kotkes's misrepresentations and was injured as a result. Kotkes also moved to dismiss State Farm's unjust enrichment count, which requires that a plaintiff establish (1) that the defendant benefitted; (2) at plaintiff's expense; and (3) that equity and good conscience require restitution. In this case, the court held that State Farm sufficiently alleged that Kotkes benefitted at State Farm's expense. The complaint sets forth detailed allegations as to how Kotkes received inflated payments as a result of the scheme to defraud State Farm. Accordingly, the motion to dismiss the unjust enrichment claim was denied.

State Farm moved for a preliminary injunction to (1) stay all pending collection arbitrations; (2) stay all current no-fault insurance collection actions in state court; and (3) enjoin Kotkes from commencing any additional arbitrations or state court collection proceedings— all until the resolution of this federal action. A party seeking a preliminary injunction must demonstrate (1) irreparable harm absent injunctive relief; and (2) either a likelihood of success on the merits, or a serious question going to the merits to make them a fair ground for trial, with a balance of hardships tipping decidedly in the plaintiff's favor.

Applying these factors, the court explained that a substantial number of courts in this district have awarded preliminary injunctions to insurers under similar circumstances to those alleged here. For example, irreparable harm occurs where an insurer is required to waste time defending numerous no-fault actions when those same proceedings could be resolved globally in a single, pending declaratory judgment action. As State Farm argued, viewed in isolation by an individual state court or arbitrator, a particular claim for reimbursement may seem facially legitimate—but it is only after viewing them all collectively that the fraudulent patterns emerge. However, were Kotkes to obtain a judgment in state court that it is entitled to reimbursement for the services provided to a particular patient, such a judgment would be res judicata for the purposes of this action. Further, inconsistent arbitral awards may have a similarly problematic impact on a future declaratory judgment. Accordingly, the court held the risk of inconsistent judgments that could effectively render unavailable a significant portion of the relief State Farm seeks was sufficient to demonstrate irreparable harm. Further, State Farm has established that there is a serious question going to the merits to make its claims a fair ground for litigation. State Farm's complaint alleges in detail Kotkes's extensive scheme of fraudulent activity, including providing systematized treatments unmoored from standards of medically necessary patient care.

Accordingly, the court granted State Farm's motion for a preliminary injunction in full. Specifically, the Court granted State Farm's request to stay pending state civil court proceedings and no-fault arbitrations against State Farm by Kotkes, and enjoined Kotkes from filing any new collection actions against Kotkes seeking no-fault insurance benefits, whether in state court or in arbitration proceedings, pending resolution of this declaratory judgment action, absent further order of the Court.


Ryan P. Maxwell

[email protected]


07/31/23       Cadaret Grant Co. v. Great American Ins. Co.
Eastern District of New York
Court Finds Plethora of Claims Documents Discoverable Despite Claimed Attorney-Client and Work-Product Protections

Cadaret Grant Co. sued Great American Ins. Co. (GAIC) seeking coverage for losses suffered by its clients at the hands of Cadaret employee, who was criminally charged for a fraudulent investment scheme in which Cadaret client funds were used for personal purposes. On April 18, 2018, Cadaret provided notice to GAIC of a potential loss as a consequence of Cadaret's settlement of several client claims. On April 8, 2019, Cadaret submitted an interim Proof of Loss (“POL”) to GAIC in the amount of $2,875.000, which it claimed as the covered losses that were justifiable at the time. Between May 2019 and May 2020, several additional interim POLs were submitted as well.

By letter dated April 22, 2021, GAIC denied coverage for Cadaret's claimed losses related to Pagartanis's conduct. Thereafter, on December 1, 2021, this matter was commenced. During discovery, documents sought from prior to April 22, 2021, were withheld due to claimed privilege. The individuals whose names appear on the documents included a claims professional working for GAIC, an attorney working as outside counsel for GAIC, and an attorney working for Cadaret.

The documents reveal that as early as April of 2019, GAIC had retained outside counsel to discuss Cadaret’s claims. In an email dated April 8, 2019, a senior claims professional at GAIC wrote to outside counsel advising that GAIC had yet to receive a POL from Cadaret. GAIC’s senior claims professional also advised counsel that Cadaret had been settling with many defrauded victims, and that he wanted to make sure that counsel was apprised of the background prior to GAIC's receipt of the POL's.

The bulk of the documents at issue were emails exchanged between GAIC’s claims professional and outside counsel between February 27, 2020 and February 12, 2021, showing counsel’s involvement in GAIC's investigation of Cadaret's claims, including GAIC’s transmission of information regarding Cadaret's claims to counsel and request that counsel draft, for Markey, correspondence to be sent under Markey's name to counsel for Cadaret.

The remaining documents at issue are an email transmitting a draft of GAIC's coverage position, a seventeen-page letter dated March 22, 2021, from outside counsel to GAIC containing his legal opinion regarding coverage, and two emails following that letter. The final documents at issue are those stating GAIC’s intent to forward the denial of coverage letter to Cadaret’s counsel and an email proposing dates and times for a call between the two to discuss.

Discussing attorney-client privilege in the liability insurance context, the EDNY notes that:

“Central to such privileged decisions is the issue of whether outside counsel is performing the role of a claims investigator, or that of an attorney offering legal advice. Documents reflecting claims investigation activities are subject to discovery even if those activities were performed by an attorney. * * * [T]he question is whether counsel is acting as an investigator of a claim (the job of a claims adjuster) or providing legal advice to a client. The latter class of documents is protected by the attorney client privilege; the former is not.”

The EDNY found that none of the emails exchanged prior to the March 22, 2021, denial letter were privileged. Many of these documents were “nothing more than transmittal emails that either refer to requests for information, or the forwarding or downloading of such information,” with the court providing examples. More importantly, however, the Court noted that “these first twenty documents reflect communications between [a] GAIC claims representative . . . GAIC outside counsel [], they demonstrate work performed by [outside counsel] as a claims investigator rather than as legal counsel. They reflect discussions … [that] culminate in typical requests for information regarding Cadaret's claims. Such documents reveal counsel working in an investigatory role.” Outlining numerous examples, the court found:

with respect to all of these documents, that [outside counsel] was acting as a claims investigator and not supplying legal analysis. Therefore, the Court holds that none of the first twenty documents in the privilege log (for which only the attorney-client privilege is claimed) are within the privilege. They must all therefore be produced.”

Various other documents were allegedly protected by attorney-client privilege, in addition to work product protections. The court addressed the standard for work product protections in the liability insurance context:

“For the work product doctrine to apply, the material at issue must have been prepared by a party or their representative ‘in anticipation of litigation. . . . Conversely, protection does not exist for documents that are prepared in the ordinary course of business or that would have been created in essentially similar form irrespective of the litigation. * * * [C]ourts have routinely held that documents created during any part of a factual investigation to arrive at a claim decision are prepared in the ordinary course of an insurer's business and are not protected by the work-product privilege. There may, however, come a point when an insurance company's activities shift from the regular and ordinary course of business to activities taken in anticipation of litigation . . . An insurer may demonstrate that it had reached this tipping point by presenting specific competent proof that it possessed a resolve to litigate’ when the documents were created.

When deciding questions regarding the prospect of litigation the court must bear in mind that it is the routine business of insurance companies to investigate and evaluate claims. Such companies may engage counsel on a routine basis, or only in cases involving large claims. The issue is not, however, the size of the potential claim but whether there is a prospect of litigation at the time that the document was generated. Facts relevant to deciding the claim of privilege include the date counsel was engaged and the date the claim was denied.” [Cleaned up].

For the last four documents, the court found only one that was protected from disclosure—"Unlike the documents above, this document shows Graziano's legal analysis and opinions. It contains legal advice and is therefore primarily legal, rather than investigatory in nature. It is covered by the attorney client privilege.” Still, the court noted that “[t]he document preceding this legal opinion is an email that is akin to a cover letter transmitting the legal opinion. It contains no legal analysis and is not privileged.” And the remaining documents, “although prepared after the March 22, 2021 letter, are not privileged,” because they merely addressed the scheduling of conversations and not any substantive legal analysis.

Maxwell’s Minute: This is an important area of the law that needs to be understood by all insurance practitioners. Merely assigning certain tasks to outside counsel does not preserve privilege. Rather, privilege is preserved when the attorney and client meaningfully convey confidential subject matter between one another, including legal inquiry and analysis. Certainly, claims materials generated prior to disclaimer may be privileged where legal assessments are sought, but not all pre-disclaimer materials are created equal. I will also caution that post-disclaimer materials are discoverable under the right circumstances, as was the case in this matter.

Have questions regarding best practices? Feel free to contact me and I would be happy to discuss the matter with you (confidentially, of course).


Patricia A. Rauh

[email protected]

On Parental Leave.


Scott D. Storm
[email protected]


06/21/23       Hanna v. Palisades Property & Casualty Ins. Co.
United States District Court, E.D. Pennsylvania
Questions of Fact Whether Insured Made Material Misrepresentations in Presenting their ALE Claim, Proven Through Evidence Extrinsic of the Complaint, Precludes a Motion to Dismiss (More Appropriately Submitted Later as a Summary Judgment Motion) but Claim for Bad Faith Dismissed

[Abridged].  Plaintiffs filed a Complaint alleging breach of contract and bad faith causes of action against Palisades. Plaintiffs contend Defendant improperly denied Plaintiffs payment of any and all losses related to the fire at the property. Defendant moves to dismiss Plaintiffs' claims due to Defendant's reasonable basis to deny coverage, including material misrepresentations throughout the coverage investigation.

Defendant's Motion to Dismiss is granted in part concerning Plaintiffs' bad faith claim and denied in part concerning Plaintiffs' breach of contract claim.

Plaintiffs a filed a Complaint containing two causes of action against Defendant: (1) breach of contract and (2) bad faith.  On June 5, 2022, a fire occurred at Hanna's property. The Policy covered alternative living expenses under the "loss of use section."  Plaintiffs then decided to temporarily move into a property owned by Plaintiff’s stepparents. 

Plaintiffs, through their public adjuster, IAB, forwarded a lease to Defendant for Plaintiffs' temporary housing.  Plaintiffs participated in an interview conducted by Defendant.  Plaintiffs allege they "reserved the right to make corrections to their statements after they received and reviewed the[interview transcripts."  Plaintiffs also submitted a "statement of loss" to Defendant related to Plaintiffs' insurance claim.  Plaintiffs later submitted written corrections to their earlier interviews with Defendant.  Defendant had not solicited any written corrections.  Plaintiffs contend these corrections concerned their temporary living situation, including that "they and their family resided at the stepfather's residence and, although plaintiff provided the stepfather with a check "for the ‘first month's, last month's rent and security deposit,' the stepfather had not deposited" the check.  Defendant then requested Plaintiffs provide "Examinations Under Oath".  Plaintiffs then provided written notice to Defendant that they were withdrawing their ‘Loss of Use' portion of the claim for additional living expenses."  "Defendant later denied payment of any and all losses related to the Fire Event." 

In support of Defendant's denial of coverage, Defendant avers Plaintiffs misrepresented material facts concerning their temporary living situation following the fire event to Defendant during the insurance coverage investigation. Thus, Defendant points to a provision in the Policy providing Defendant may deny coverage where Plaintiffs conceal facts or provide misrepresentations of material facts and circumstances "before or after a loss”.  Accordingly, Defendant contends they had a reasonable basis to deny Plaintiffs coverage, so (1) Plaintiffs' "bad faith" claim cannot survive, and (2) Plaintiffs' breach of contract claim should be denied based on Plaintiffs' alleged misrepresentations.  In support of its Motion to Dismiss, Defendant attaches several documents as exhibits to its Motion to Dismiss, including, inter alia, the Parties' homeowners policy declarations page, homeowners terms and conditions, Plaintiffs' proffered lease concerning temporary housing, transcripts of Plaintiffs' recorded statements to Defendant, and transcripts of the Plaintiffs' Examinations Under Oath. Defendant relies on these documents to support its averment "Plaintiffs have no claim under the insurance policy because of their material misrepresentations during the claims process; therefore Count I, asserting breach of contract must be dismissed."

"In determining whether a claim should be dismissed under Rule 12(b)(6), a court looks only to the facts alleged in the complaint and its attachments without reference to other parts of the record."  Nevertheless, "consideration of the content of documents to which a Complaint makes reference in deciding a Rule 12 motion is, of course, appropriate."  Nevertheless, relying on external documents outside of these narrow exceptions may lead a district court to "convert" a motion to dismiss by considering materials outside the pleadings and therefore "treating a motion to dismiss as a motion for summary judgment." 

Defendants' exhibits are not "integral to or explicitly relied upon in the complaint."  Accordingly, the Court will only consider "the facts alleged in the complaint and its attachments without reference to other parts of the record." 

"Pennsylvania law requires that a plaintiff seeking to proceed with a breach of contract action must establish ‘(1) the existence of a contract, including its essential terms, (2) a breach of duty imposed by the contract, and (3) resultant damages.'" Plaintiffs' allegations of breach of contract are sufficient at this stage. Plaintiff adequately alleges Plaintiff and Defendant entered into a contract in the form of an insurance policy.  And, assuming Plaintiffs' allegations are true and Defendant failed to provide coverage and/or adequately adjust Plaintiffs' claims relating to the fire damage, Plaintiffs sufficiently allege Defendant breached the contract at issue, resulting in damages.  At this stage, Plaintiffs' allegations concerning coverage under the Policy are taken as true. The mixed questions of fact and law raised by Defendant are better suited following discovery. Thus, dismissal of Plaintiffs' breach of contract claim is not warranted.

Plaintiffs also bring a claim of bad faith against Defendant. In sum, Plaintiffs allege Defendant acted in bad faith by, inter alia, "refusing and/or failing to evaluate and pay Plaintiffs' claim for losses covered under their insurance policy"; ‘having no reasonable basis for denying payment of all or part of the claimed losses"; and "failing to adopt and implement reasonable standards for investigation and handling of loss claims." Defendant contends Plaintiffs' bad faith clam should be dismissed "because Plaintiffs have failed to plead any facts that could support a finding that Defendant's denial of coverage was frivolous or unfounded."

Plaintiff seeks to recover under Pennsylvania statute 42 Pa. Cons. Stat. § 8371, "which provides a statutory remedy for bad faith conduct by insurers and allows courts to award interest, punitive damages, and court costs and attorney fees against the insurer." "District courts in the Third Circuit evaluate the sufficiency of bad faith claims using the Terletsky test, which requires a plaintiff to allege that the defendant insurer (1) did not have a reasonable basis for denying benefits; and (2) knew or recklessly disregarded its lack of a reasonable basis."  So, "applying the Terletsky test to different types of insurance coverage disputes, district courts have `routinely dismissed bad faith claims reciting only bare-bones conclusory allegations that are not accompanied by factual allegations sufficient to raise the claims to a level of plausibility required to survive a Rule 12(b)(6) motion to dismiss.'"  And "applying the plausibility standard to the bad faith claims arising in insurance coverage disputes, the Superior Court of Pennsylvania has specified that "bad faith must be proven by clear and convincing evidence and not merely insinuated." 

Here, Plaintiffs aver Defendant did not have a reasonable basis for denying them coverage under the Policy. In Plaintiffs' Response in Opposition to Defendant's Motion to Dismiss, Plaintiffs contend denial of their bad faith claim is not warranted because Plaintiffs did not make material misrepresentations during the claim investigation process.  Plaintiffs also contend "Defendant's post denial conduct" is sufficient to show a claim of bad faith because Defendant failed to reconsider its denial of coverage and did not provide further factual or legal support for its position.  In their Complaint, Plaintiffs also allege Defendant: "had no reasonable basis for denying payment of all or part of the claimed losses; forced Plaintiffs to file suit to recover such benefits; failed to adopt and implement reasonable standards for prompt investigation and payment of loss claims; failed to exercise the utmost good faith and discharge of its statutory and contractual duties to Plaintiffs; . . . and engaged in frivolous faulty and unfounded refusal to pay the losses."

Plaintiffs do not provide sufficient facts to support these allegations or otherwise plausibly show Defendant lacked a reasonable basis for the denial of coverage. In Plaintiffs' Complaint, they allege "a series of conclusory allegations" asserting Defendant unreasonably considered Plaintiffs' request for coverage and denied Plaintiffs' coverage.  Plaintiffs' conclusory language and "naked assertions of insurance bad faith . . . are not entitled to the presumption of truth for purposes of resolving Defendant's Motion to Dismiss and must be supported by factual allegations." 

Plaintiffs do not provide specific factual allegations beyond Defendant's allegedly unreasonable denial of coverage and Plaintiffs averments their statements do not warrant denial of coverage. And "courts in the Third Circuit share the common understanding that a plaintiff cannot base a bad faith claim on the defendant's refusal to pay."  Moreover, concerning Defendant's reasoning behind denying Plaintiffs' claim, "Pennsylvania courts apply an objective test to the reasonable basis question: as long as a reasonable basis for denying the claim exists, even if it is not the actual basis relied upon by the insurance company, bad faith has not occurred."  Here, Defendant submits it had "a well-reasoned basis for the denial of Plaintiff's claim based upon an investigation into the material misrepresentations made by Plaintiffs during the investigation of the claim." And Plaintiffs' Complaint and its attachments show that: (1) Plaintiffs provided written corrections to their earlier statements to Defendant, and (2) Defendant cites to the Policy's concealment or fraud provision in its explanation of the claim denial. Therefore, Plaintiffs' limited factual allegations do not show Defendant's acted in bad faith as "proven by clear and convincing evidence and not merely insinuated." 

06/20/23       Crawford’s Auto Center, Inc. v. State Farm Mut. Auto. Ins. Co.
Superior Court of Pennsylvania
Action by Shop Which Took Assignment of Twenty Insureds’ Claims Disputing the Amounts of Payment Dismissed Due to the One Year Contractual Suit Limitation Condition; Arguments of Unconscionability, Ambiguity and Waiver and Equitable Estoppel Fail

[Abridged].  Orders granting judgment on the pleadings in favor of State Farm in sixteen consolidated cases and sustaining State Farm's preliminary objections and requiring Crawford's to file separate complaints.

Crawford's initiated a single breach of contract action against State Farm asserting that twenty insureds had assigned their rights under their auto policies to Crawford's, and State Farm owed Crawford's payment for repairs it made to the insureds' vehicles.   State Farm filed preliminary objections to the first amended complaint asserting improper joinder of the twenty cases and the insufficient specificity of Crawford's pleading.  The trial court sustained State Farm's preliminary objections and gave Crawford's twenty days to refile its claims as separate actions. 

Crawford's then filed sixteen individual complaints against State Farm, attaching to each a sample State Farm policy and documents relating to the costs of its repairs and the assignments of rights from the insureds. 

State Farm filed a motion for judgment on the pleadings in each of the cases asserting that the suit limitation provision in the policy barred the claims.  Crawford's filed a brief in opposition in which it conceded that "the date of loss occurred over one-year prior to bringing this action," but argues that the court erred by granting judgment on the pleadings because although the insureds' policy with State Farm had a one-year suit limitation provision, the court denied Crawford's the opportunity to take discovery to explore four potential affirmative defenses to the enforcement of that provision. Crawford's combined issues assert that the trial court erred in granting judgment on the pleadings because questions of facts existed about the affirmative defenses of the unconscionability and ambiguity of the provision, and further asserts that State Farm's conduct may have implicated the affirmative defenses of waiver and equitable estoppel.

The court found that the policy included a one-year suit limitation provision whose interpretation raised a question of law and Crawford's failed to support its unconscionability claim with any legal authority. The court also stated that clear and unambiguous contractual terms must be given effect.  The case law generally holds that such provisions are valid and sustainable. 

Crawford's second, third, and fourth affirmative defenses assert, respectively, the ambiguity of the suit limitation provision, State Farm's waiver of the application of that provision, and equitable estoppel relating to that provision.

Crawford's did not assert the alleged ambiguities in the suit limitation provision in its pleadings or responses to State Farm at the trial court level, its Rule 1925(b) statement, or its statement of questions presented. Thus, Crawford's waived that claim, first raised on appeal. 

Crawford's next asserts the existence of issues of fact concerning its assertions of waiver and estoppel; as to both affirmative defenses it acknowledges its failure to provide "concrete factual allegations" to support the claims but says that it could not do so because it was not privy to the discussions between State Farm and its insureds relating to the underlying claims.  These claims too are unreviewable.

A party must preserve an affirmative defense of waiver in response to new matter.  The court found that State Farm raised the suit limitation provision as new matter, and Crawford's did not assert waiver in reply and thus waived that affirmative defense. 

As a fourth affirmative defense, Crawford's asserts equitable estoppel. As with the affirmative defense of waiver, a party must assert a claim of estoppel in response to new matter.  Crawford's failed to assert estoppel in response to the suit limitation provision and therefore waived its claim.  Moreover, Crawford's failed to exercise its duty of due diligence as an assignee to discover any alleged conversations between State Farm and its insureds and cannot defeat judgment on the pleadings by asserting that such conversations may have occurred. Therefore, Crawford's waived review of that claim as well. 

In addition to its four affirmative defenses, Crawford's additionally claims that the court erred by dismissing its complaint without leave to amend.  We note that the decision to grant or deny permission to amend is within the trial court's discretion.  Where it is clear that leave to amend would be futile, dismissal is proper.  Additionally, although amendment of a complaint is to be liberally allowed, a party must request the right to amend. Here, Crawford's did not request leave to amend its complaint. 

Crawford's advances one final assertion regarding affirmative defenses in its discussion of its first two questions presented. It argues that unknown or disputed facts existed because the record does not contain the specific policies State Farm had with the insureds.  Crawford's did not raise this claim in its Rule 1925(b) statement or its statement of questions presented and thus waived it. 

Even if reviewable, the claim lacks merit. As the court stated, the pleadings in the case included as to each claim the policy with the one-year suit limitation provision, the date of loss, and the date Crawford's commenced the actions.  Crawford's itself states that the language contained in all sixteen policies is the same, and that it limited the reproduced record to the lead docket.  Crawford's cannot argue on appeal that the sixteen policies may have contained differing language. Crawford's chose to attach the sample policy to its amended complaints and did not assert harm from the absence of the individual policies. Crawford's thus cannot on appeal oppose judgment on the pleadings on the basis that the individual insurance policies are not of record.

Katherine A. Fleming

[email protected]


07/20/23       CC 145 Main, LLC v. Union Mut. Fire Ins. Co.
New Hampshire Supreme Court
Kitty Litter Clogs Toilet – Resultant Water Damage Not Excluded Based On Ambiguity

CC 145 Main owns an apartment building. To protect this operation, CC 145 Main purchased a Union Mutual “Businessowners Coverage” insurance policy that includes “all risk” property insurance. The insured property sustained damage when a tenant poured cat litter down a toilet, clogging an interior pipe and causing water to overflow from a shower and toilet. The property required significant cleaning and repair, and tenants were required to temporarily relocate. CC 145 Main filed a claim with Union Mutual for water damage, which Union Mutual denied pursuant to a provision in the insurance policy excluding coverage for damage caused by “[w]ater that backs up or overflows or is otherwise discharged from a sewer, drain, sump, sump pump or related equipment.”

CC 145 Main sued for a declaration that the water exclusion did not apply to its claim. Union Mutual filed a motion for summary judgment, arguing that the damage at issue was caused by water that overflowed from “drains” within the meaning of the exclusion. CC 145 Main objected and filed a cross-motion for summary judgment. The trial court granted CC 145 Main’s motion and denied Union Mutual’s motion, concluding that it was unclear whether the word “drain” in the water exclusion applied to shower and toilet drains and, therefore, the water exclusion was ambiguous and must be construed in favor of CC 145 Main. It reasoned that “[i]nterpreting drain to mean literally any drain,” such as a shower drain, “would set this term apart from the others in the provision” — such as “sewer” and “sump pump” — which “are typically external features that are intended to carry water away from a property.”

On appeal, Union Mutual argued that the only reasonable interpretation of the exclusion is that it applies to water that overflows from toilets and shower drains. Union Mutual focused its argument on the term “drain,” arguing that this term unambiguously encompasses water overflowing from showers and toilets. The toilet that backed up and overflowed was connected to a drain, the drain is part of the system that the toilet relies on to flush away the waste, and, therefore, a toilet is “related equipment” to a drain. CC 145 Main countered that the relevant portion of the water exclusion is ambiguous when read in context.

The Supreme Court was satisfied that Union Mutual’s reading of the water exclusion was reasonable. However, it also believed that CC 145 Main presented a reasonable, alternative interpretation of the exclusion. CC 145 Main argued that context contained within the insurance policy limited the water exclusion’s applicability to water damage precipitated by off-premises circumstances or events. The other subsections of the water exclusion contemplated only causes of damage — flooding from any body of water, mudslide or mudflow, and groundwater “flowing or seeping” into the property — that, necessarily, originate outside the property and cause water to flow into it. The Supreme Court agreed that context could cause a reasonable insured to understand the exclusion in this way. Further, the water exclusion contained an example of a situation to which the exclusion applies: “An example of a situation to which this exclusion applies is the situation where a dam, levee, seawall or other boundary or containment system fails in whole or in part, for any reason, to contain the water.” The Supreme Court and the trial court found that the example would fortify a reasonable insured’s impression that the exclusion is intended to encompass water damage caused by events external to the property, and not water damage resulting from an internal pipe clogged by a tenant’s disposal of cat litter.

Union Mutual tried to distinguish cases in which there was contradictory policy language that provided coverage for damage arising from internal plumbing, but the Supreme Court was not persuaded. The Union Mutual policy explicitly provided coverage, under certain circumstances, for damage caused by “accidental discharge or leakage of water or steam as the direct result of the breaking apart or cracking of any part of a system or appliance . . . containing water or steam,” as well as damage from water that “leaks or flows from plumbing” as a result of frozen pipes. The Supreme Court reasoned that it would be odd to provide coverage for frozen and ruptured internal piping but not internal pipe failures that cause toilets to overflow. Since the Supreme Court believed there was a reasonable disagreement between the parties leading to at least two interpretations of the policy’s language, it concluded that the water exclusion did not preclude coverage for the kitty litter incident.


Evan D. Gestwick
[email protected]

07/27/23       American Transit Insurance Company v. Rutland Medical, P.C.
New York State Supreme Court, New York County
Seemingly Erroneous Arbitration Award Not So Erroneous After All

After being injured in a car accident, the Claimant submitted a no-fault claim with his auto insurer, American Transit. After the Claimant failed to attend his IME, American Transit denied the claim, and the Claimant sought arbitration.

During arbitration, the Claimant argued that American Transit did not specify the Claimant’s specific policy violation (i.e., his failure to attend his IME) in its denial letter, and that American Transit was therefore precluded from raising it at the time of arbitration. Recognizing a split in the law on this issue between the First and Second Departments, the arbitrator applied the law of the Second Department—that a carrier’s failure to specify the exact policy violation defense in its denial letter precludes it from raising it as a defense at arbitration—in awarding the Claimant the funds sought.

American Transit sought review of the arbitrator’s decision from a master arbitrator, who found that, while the First and Second Departments are indeed split on this issue, the Fourth Department follows the Second Department’s stance. In so finding, the master arbitrator affirmed the award. This action followed.

A Court can only vacate an arbitration award if it violates public policy, is irrational, arbitrary, or capricious, or exceeds an enumerated limitation on the power of the arbitrator. Where the arbitrator’s award offers even a “barely colorable justification,” it must be upheld.

In upholding the arbitrator’s award, the Court found that the arbitrator conducted a detailed review of the evidence, and that there was more than a “colorable justification” for the outcome. Key to the Court’s holding was that the law on this point is clearly not settled; for this reason, the Court wrote, the Court cannot find that the award is arbitrary and capricious as a matter of law.

Editor’s Note: What is interesting about this case is the fact that the New York County Supreme Court sits within the First Department—the very Department that maintains that the failure to include the specific policy defense within a denial letter does not preclude the carrier from raising it during an arbitration. Given the incredibly high burden on the party seeking to vacate an arbitration award, coupled with the arbitrator’s careful and thoughtful reasoning and analysis, the Court’s hands were tied on this one.


ON the ROAD with O’SHEA
Ryan P. O’Shea
[email protected]


07/25/23       GEICO v. Hernandez
New York State Supreme Court, New York County
My Car Was Stolen; Or Was It? Issue of Fact on Vehicle’s Use Results in Stay of Arbitration

GEICO petitioned to stay an arbitration regarding a car accident on July 26, 2022, involving Respondents Hernandez and Cruz. The Respondents filed a demand for arbitration with GEICO claiming they were hit by an uninsured vehicle. GEICO’s petition included proposed additional Respondents State Farm Automobile Insurance Company, Nagi Jackson, and Najia A. Jackson. However, Nagi Jackson and Najia A. Jackson are apparently the same person, Naji Jackson.

Ms. Jackson admitted she owned the vehicle involved in the accident, but that she left her car in Queens in April 2022, and that she now lives in California. Ms. Jackson’s affidavit further argued that she had no idea her car was involved in the accident until State Farm informed her on August 3, 2022. After being notified of the accident, Ms. Jackson then reported the vehicle stolen. She also insisted that she was not the driver nor was anyone driving the car with her permission.

State Farm acknowledged that it insured Ms. Jackson’s vehicle and that it was registered in California. State Farm claims that it was Ms. Jackson who informed them the car had been stolen, and thus, a plenary action was required against Ms. Jackson, where discovery would be demanded regarding the use of the car.

The NY Supreme Court found a framed issue hearing was appropriate. The court determined there were too many questions including why the car was in Queens while Ms. Jackson was in California, who did she leave the car with, who had permission to use it, where did she leave the car, did she ever plan to retrieve it, and most important in my eyes, who had the keys? However, the court found the most important fact is that Ms. Jackson did not report the vehicle stolen until after she found out about the accident.


08/02/23       Harleysville Ins. Co. et al. v. Estate of Otmar Boser
Appellate Division, Second Department
Email Exchanges Between Counsel did not Create Mutual Accord for Settlement Agreement

In February 2020, Harleysville commenced an action to enforce a purported settlement agreement. For background, the purported settlement arose out a 2017 wrongful death and bodily injury action sustained by Otmar Boser in a motor vehicle accident wherein, Mr. Boser was driving a motor vehicle insured by Harleysville, Mr. Boser died as a result of his injuries. In 2018, Ruth Boser, Mr. Boser’s wife, filed a demand for underinsurance arbitration and received an arbitration award of $950,000.

Harleysville moved to enforce the alleged settlement agreement, allegedly agreed upon in November 2019, rendering the arbitration award a nullity. The Estate cross-moved to enforce the arbitration award. The trial court ruled in favor of the Estate. Harleysville appealed. The Second Department affirmed the decision.

Looking to CPLR 2104, which provides “[a]n agreement between parties or their attorneys relating to any matter in an action, other than one made between counsel in open court, is not binding upon a party unless it is in a writing subscribed by him [or her] or his [or her] attorney or reduced to the form of an order and entered." The Appellate Division cited "An email that merely confirms a purported settlement is not necessarily sufficient to bring the purported settlement into the scope of CPLR 2104" (Teixeira v Woodhaven Ctr. of Care, 173 AD3d 1108, [*2]1109).

Harleysville’s argument was that an email exchange between the parties finalized the proposed settlement. Notably, the court found the email contained an additional item, requiring Harleysville to agree that the amount of $50,000 would not be set off against the settlement, and the Estate would receive a of $500,000, and thus, did not demonstrate a final written agreement of mutual accord. Additionally, the court noted that the agreement would be based on the understanding that no arbitration award had been reported and that counsel for the Estate intended to inform the arbitrator that no award was required, further evidencing that additional steps had to be taken to finalize the settlement.

Based on these findings, the court held that the agreement failed to satisfy the requirements of CPLR 2104, and thus, did not constitute a final agreement between the parties.



Robert P. Louttit

[email protected]


06/28/23       Senate Bill S07587
Requires the Registration of Bicycles with Electric Assist Used for Commercial Purposes; Provides Liability of Employers for Certain Violations

Senate Bill number S07587, and its Assembly companion Bill A078333, are making their way through New York’s Legislature. If passed, these Bills would amend the Vehicle and Traffic Law and the Administrative Code of the city of New York, in relation to registration and commercial operation of electric assist bicycles.

The Bills would require the registration of bicycles with electric assist used for commercial purposes; provides liability of employers for certain violation.

The purpose of the Bill is to require the registration and licensure of bicycles with electric assist which are used for commercial purposes, and directs the costs of violations relating to riding such bicycle on a sidewalk to the employer of commercial riders. The bill will place liability on employers for their employees’ violations.

While not directly related to the insurance industry, the registration of these vehicles and imposed liability for the employers of the electric assisted vehicles may provide an avenue for insurers to perhaps offer coverage for these vehicles in the event that bodily injury or property damage arises out of their use. We will continue to track this bill as it makes its way through New York’s Legislature.


Robert J. Caggiano
[email protected]


07/28/23       Burnett v. Allen et al.
Appellate Division, Fourth Department
Fourth Department Finds Plaintiff Failed to Meet Initial Burden on Cross-Motion for Summary Judgment to the Extent that He Claimed Serious Injury for Facial Scarring Under the Significant Disfigurement Category of § 5102(D)

Defendant Destini Allen appealed an Order from Supreme Court, Erie County, which denied her motion for summary judgment and granted cross-motion for summary judgment by the Plaintiff. Specifically, the Supreme Court’s granting of Plaintiff’s cross-motion included determinations that Plaintiff was not negligent, that Defendant Allen was negligent, and that Plaintiff sustained a serious injury under the significant disfigurement category of § 5102.

As an aside, other named defendants filed their own motion which was addressed in the underlying Order of the Supreme Court – who also filed separate appeal to the Fourth Department – but that appeal will not be discussed herein as it focused on findings of negligence and proximate cause.

By way of background, this matter stems from a motor vehicle accident which occurred on July 21, 2017, at an intersection in Lockport, NY. Plaintiff Robert Burnett was a passenger in a vehicle owned and operated by Defendant Allen, when it came into contact with a vehicle operated by Defendant Brian Smith, owned by Defendant J&L Janitorial Services, Inc. Among other injuries, Plaintiff Burnett alleged multiple puncture wounds to the right side of his face, resulting in facial scarring, due to being hit with shattered glass in the subject accident.

Relevant to the branch of Plaintiff’s cross-motion arguing he sustained significant disfigurement under § 5102, he submitted in support a signed affidavit with photographs of his face before and after the subject accident. 

On review, the Fourth Department found that the evidence submitted by Plaintiff in support were insufficient to meet the initial burden required demonstrating that he sustained a serious injury under the significant disfigurement category of § 5102. Specifically, the Fourth Department found the photographs did not establish as a matter of law that “a reasonable person viewing [his face] in its altered state would regard the condition as unattractive, objectionable or as the subject of pity or scorn.” Based on this finding, there was no further consideration about the sufficiency of Defendant Allen’s opposition. Accordingly, the Supreme Court’s Order was modified to deny this branch of Plaintiff’s cross-motion.


Heather A. Sanderson
Sanderson Law, Calgary, Alberta

[email protected]


07/18/23       Royal & Sun Alliance Ins. Co. of Canada v Co-Operators Gen. Ins. Co.
Alberta Court of King’s Bench
A Duty to Defend Application is to be Heard at the Outset of the Action, Unless there is a Substantial Factual Dispute and Contested Positions Regarding Such Things as the Existence or Essential Validity of the Policy or, Whether the Applicant is an Insured Under the Policy, or Whether the Applicant Obtained the Policy or Other Such Argument

Canmore, Alberta, nestled beneath the eastern slopes of the Rockies (which seem very immediate when one is walking the streets of the town), is a 20-minute drive from the east gates of Banff National Park.

Canmore thrived on coal from the time of its founding in the late 1800’s to 1979 when Canmore Mines Ltd. ceased operations. The town’s future seemed dismal until the 1988 Winter Olympic Committee decided that the Nordic events would be held in Canmore – the catalyst that developed Canmore into the tourist town that it is today.

Despite its current focus on tourism, Canmore remains a working town with full services catering to seasonal tourists as well as its permanent residents. An important part of those services is The Bow River Lodge which provides supportive living for Canmore’s seniors, as well as seniors throughout the Bow Valley.

In 2015 the Lodge was undergoing a significant re-development, replacing 43 living units and constructing an additional 20 units of senior housing for the community. But, as with most construction projects, it did not go smoothly.  The general contractor was APM Construction Services Inc. One fine day in June of that year, one of APM’s sub-contractors struck a live, pressurized methane gas line operated by Atco Gas and Pipelines Ltd., causing natural gas to escape. The escaping gas travelled underground, filling the basement of a nearby house where it found an ignition source. The resulting explosion blew apart that house and debris from that house damaged several others along 13th Street in the town, displacing families who lived on that street for about a year. The explosion was immense – it registered 1.1 on the Richter scale at the closest measuring point, which was 80 km away.

The explosion resulted in 13 separate legal actions that were filed in 2017, including more than 90 different plaintiffs and more than 20 defendants.

One of the lessons from the explosion is, never live on street called 13th Street, (or 13th Avenue for that matter). The other lesson is that when confirming additional insured status, don’t just rely upon certificates of insurance – demand production of the policy that is referenced in the certificate.

Royal & Sun Alliance Insurance Company (RSA) insured APM under a CGL. APM initially tendered the actions to RSA who accepted, subject to a reservation of rights, that it had a duty to defend APM.

One of APM’s subcontractors, DCR Construction Inc., has its own CGL policy with Co-operators General Insurance Company (CGIC).  DCR had received a certificate of insurance from a CGIC agent. The certificate stated that APM was an ‘additional insured’ on that DCR CGL policy. DCR forwarded the certificate of insurance to APM. APM claims it relied on this certificate to show DCR had named it as an additional insured. APM (more like RSA) demanded that CGIC admit that it had a duty to defend that it should contribute to the cost of its defence.

CGIC asserted that it did not owe APM a defence as:

  • Co-operators never received a request to add APM as an additional insured.

  • APM was never in fact added as an additional insured.

  • The certificate of insurance was issued for ‘information only’ and conferred no rights on APM or obligations on Co-operators.

  • DCR assigned its project obligations to another contractor, Ground Zero Grading Inc.

  • By the time of the explosion there was no longer any contract between APM and DCR, and therefore the certificate of insurance “was superfluous and had no effect.”

Citing the certificate of insurance signed by a Co-operators agent, RSA asked the Court of King’s Bench to issue a summary judgment that CGIC had a concurrent duty to defend to that of RSA and therefore a duty to contribute to APM’s defence costs.

Following a one-day hearing, which produced 95 paragraphs of written reasons, the Court held on July 18, 2023 that the duty to defend application should be heard at a full trial, concurrent with, or following the hearing of the underlying Canmore legal actions.

To say the least, this is an unusual order given that the Supreme Court of Canada has stated time and again that a duty to defend application is premised upon the pleadings rule and is to be heard at the outset of the underlying action.

This Court explained that there is Canadian precedent to order that duty to defend application should not be heard summarily in advance of the trial action but concurrent with the trial of the underlying action or following that trial.

The Court held that where there is a substantial factual dispute and contested positions regarding the existence or essential validity of the policy, whether the applicant is an insured under the policy, whether the applicant obtained the policy by misrepresentation, fraud or material-non disclosure, whether the applicant breached a statutory condition or condition of the policy, whether relief from forfeiture may apply, or whether the insurer may be estopped from denying the duty to defend, and when there is an absence of prejudice to the insured (or the insurer), the duty to defend application may not be heard summarily at the outset but following a full trial and sometimes the trial of the underlying action. Further, delaying the duty to defend application is appropriate when deciding the duty to defend application might require the court to make findings that would compromise, affect or determine live issues in the underlying action. Another situation that may prevent the duty to defend application from being heard at the outset of the underlying litigation is when for example,  a summary declaration may result in further disputes or litigation over the insurer’s proportionate share of the defence costs because only some of the claims in the underlying action are covered under the policy, or because there are more than one insurer contributing and equitable contribution principles are engaged, the insurer’s duty to defend may be limited and it may be impossible or difficult to allocate costs before the trial of the underlying action.

The situations which could prevent the duty to defend application from being heard at the outset are simply the ‘musings’ of this Court as the only issue preventing the hearing of the application in this case was CGIC’s assertion that APM had never become an additional insured under the CGIC policy which the court held was an issue of mixed law and fact.

With respect to that assertion, the Court found, based on the court record, that CGIC was bound by the issuance of the initial Certification of Insurance. However, there was insufficient fact to make a legal determination as to whether the certificate of insurance, on its own, conferred additional insured status upon APM as of the date of the explosion.  As APM was being defended and, the application was, in truth, whether CGIC should contribute financially to that defence, there was no urgency in hearing the duty to defend application and therefore no real prejudice to APM. Accordingly, the issue of whether CGIC should contribute to the defence could await the trial of the underlying action.

This decision reached a curious result.  Why did the Court not adjourn the application to permit additional fact and law to be placed before the court to determine the legal effect of the certificate of insurance?

It seems to me that the Court was simply not prepared to address that legal issue and found a reason not to.

In the meantime, the families who lived along 13th Street in Canmore at the time of the explosion are back in their homes and the Bow Valley Lodge is now into its second phase of reconstruction …. And, as is usually the case, the legal and insurance industry are stuck litigating the issue of who will, ultimately, bear the cost of that explosion that occurred eight years ago, which the residents of Canmore still talk about.

© Hurwitz Fine P.C. 2023
All rights reserved

Newsletter Sign Up