Volume XXV, No. 5 (No. 652)
Friday, August 18, 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.
Dear Coverage Pointers Subscribers:
Do you have a situation? We love situations. Greetings from the Land of the Blue Martinis.
New subscribers should know that the actual issue of Coverage Pointers is attached, this is our cover note.
For those of you looking for a robust review of coverage decisions in this issue, we are here to disappoint you! The courts remain in summer hiatus and very few decisions are coming from our state appellate courts in New York. I was so anxious to add a summary that I started writing up a subro case, but found out that Steve Peiper, equally as needy for a submission, beat me to it. Ahh well.
We welcome the new subscribers who learned about this publication in the FDCC CGL 101 – Primer presentation on Wednesday. We let you know, here, that presentation was scheduled and along with John Trimble, on behalf of the Federation of Defense & Corporate Counsel, we spent time around 700 people in attendance from virtually every state in the union. Our goal was to provide Federation Excellence to our members’ firms and companies, and we hope we succeeded
Being a subscriber to Coverage Pointers, you are always the first to know of continuing education programs.
Interested in the program but you were unable to attend? Grab some popcorn and set aside about an hour and fifteen minutes, because we taped the program and it’s available for rebroadcast (although we love doing the interactive programs, live):
Insurance Coverage 101: A CGL Primer on Vimeo
Welcome Josh Goldberg:
We continue to strengthen and broaden our coverage team. We are pleased to welcome Josh Goldberg to our Insurance Coverage Litigation, Business & Commercial Litigation and Labor and Employment Practice groups. He is attached to our Melville office. We have 17 full-time coverage lawyers in New York and Connecticut.
Josh brings nearly a decade of experience representing a leading carrier of for-hire motor vehicles, along with its insureds, in New York City and the Greater Metropolitan Area. Most recently, he served as the Deputy General Counsel and Corporate Counsel to the carrier’s risk management affiliate. As a result of Mr. Goldberg’s determination, he has been able to develop a broad range of knowledge, and experience, on a variety of matters, ranging from no-fault automobile insurance cases to employment disputes, including allegations of discrimination under both New York State’s Division of Human Rights and New York City’s Commission on Human Rights.
In addition, Josh has experience lobbying various governmental entities, such as the Taxi & Limousine Commission, the New York City Mayor’s Office, the New York State Legislature and Governor’s Office and has advised on compliance and regulatory matters.
He has advised and drafted numerous coverage position letters on varying grounds and acted as counsel defending disclaimers of coverage, in issues ranging from policy exclusions to lack of coverage.
Josh began his career by serving as Law Fellow to Hon. Sandra Sgroi (ret.) of the Appellate Division, Second Department. Following, he then joined his former employer’s No-Fault Litigation department, where he represented the carrier on thousands of No-Fault actions by providers to recover fees for services that were allegedly rendered. Mr. Goldberg has directly managed litigation calendars across New York City and Long Island with monthly monetary exposure in the millions of dollars.
We are delighted to have him with us.
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
- Fault Scheme
- Joint & Several Liability
- Non-parties on Verdict Forms Available
- Charitable Immunity and COVID-19 Immunity
- Premises Liability
B. Damages
- Damages Cap(s): General, Non-economic, Wrongful Death
- Charitable Immunity Caps
- Governmental Immunity Caps
- Paid vs Billed Medical Expense Allowed at Trial
- Punitive Damages Available — Limitations — Insurability
- Wrongful Death Damages
- Prejudgment and Post-Judgment Interest
C. Statute of Limitations (Personal Injury, Sexual Assault, Intentional Torts, and Breach of Contract)
D. Specific Topics/Issues
- Unnsured/Underinsured Motorist
- Medial/PIP Tort Thresholds
- Statutory Offers of Judgment/Settlement and Implications
- Obligation regarding Responding to Policy Limit Demands
- Risk Transfer & Relevant Contractual Indemnity Law
- Statutory Elder Abuse/Enhanced Remedies
- Insured’s Right to Independent Counsel Based on a Reservation of Rights
- Timeliness of Coverage Declinations/Reservation of Rights Letters, as well as the Filing of Declaratory Judgment Actions
- 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.
Newsletters:
We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:
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Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant, and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!). Please drop a note to Jody Briandi at [email protected] to be added to the mailing list.
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Labor Law Pointers: Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at [email protected] to subscribe.
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Products Liability Pointers: Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework, and governmental agencies. Contact Brian F. Mark at [email protected] to subscribe.
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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.
Shutting the Taverns -- 100 Years Ago:
Buffalo Courier
Buffalo, New York
18 Aug 1923
BURFEIND DIRECTS CAPTAINS TO BLOT OUT BLIND PIGS OR TAKE CONSEQUENCE
Police Chief in General Order Declares Buffalo a Wide-Open Community.
PRECINCT HEADS TOLD TO MAKE CENSUS OF RESORTS
Buffalo openly is violating the prohibition enforcement acts and the fourteen police captains in the city will have to see that it is stopped within three months or show cause why charges of neglect of duty should not be placed against them.
That is the gist of an opinion and order sent out last night over police wires to all precinct stations by direction of Police Chief John F. Burfeind.
Donovan Co-operates.
Issuance of the order came promptly after the chief had appeared yesterday before the federal grand jury. It was prepared in collaboration with col. William J. Donovan, United States attorney, and modeled after the order issued some days ago by Police commissioner Enright to the New York city policy.
Text of the order follows:
It is the duty of every police officer of the city of Buffalo to enforce the national prohibition act.
It is the intention of the chief of police to see that every officer under his command performs that duty.
It is the opinion of the chief of police, that the prohibition law (Volstead act) is being openly violated in many sections of the city.
In order that this law may be effectively endorsed by the police department of the city of Buffalo, the following procedure will be followed: Forms will be provided and will be issued to the captains of the various precincts. These forms will be filled out in accordance with directions that will be subsequently issued from these headquarters.
Wilewicz’ Wide-World of Coverage:
Under the weather this week.
Until next time,
Agnes
Agnes A. Wilewicz
First Amendment Under Attack – 100 Years Ago:
Buffalo Truth
Buffalo, New York
18 Aug 1923
THE GOVERNMENT AND THE PEOPLE
That the Department of Commerce has deemed it necessary to request Americans travelling abroad not to criticize the United States, its institutions and legislative and political methods to foreigners must come with something of a shock to stay-at-homes. Reports have been received in Washington that American prestige and commerce is being seriously injured by the tendency of Americans abroad to frankly and quite loosely criticize the at-home government.
Constructive criticism at home is desirable, but derogatory remarks concerning the government abroad result in the undermining of confidence in international and commercial relationships, which is anything but helpful. Admitting that our government, our institutions and officials are not all that they should be; that there is room for vast improvement, it should be recognized that a democracy is but the lengthened shadow of the people comprising it; that it represents fairly and accurately in its failures and accomplishments of the fitness or unfitness of the people to govern themselves, and that when we criticize such a government we criticize ourselves as one of its component parts.
Our task is not to stand and let fly verbal mud at that which is a reflection of ourselves, but to get earnestly to work and give the government under which we live and receive our support more of the attributes which we feel it should possess.
Barnas on Bad Faith:
Hello again:
The start of the NFL Preseason always feels like the beginning of the end of the summer to me. As a kid I remember sitting at Bills’ preseason games excited about football being back but dreading that when the real games rolled around, I would be back in school. Not a concern anymore, but I will miss summer when it goes.
Meanwhile, the Blue Jays are officially driving me insane, although I’m sure our readers who are Yankees and Mets fans will not be overly sympathetic. On the plus side, we have allowed the fewest runs in MLB this year. On the other side, we can’t score. It is stressful watching every game be close and tight in the late innings because they can’t score any runs or get any hits with runners in scoring position. Hopefully, the offense finds its groove in the last few weeks of the season and the team can make the playoffs.
After a string of rainouts, the HF softball team returns to action for our first playoff game of the season tomorrow. Wish us luck, as my continued employment may very well depend on it.
Brian
Brian D. Barnas
Regulating Opium – 100 Years Ago:
Buffalo Courier Express
Buffalo, New York
18 Aug 1923
BISHOP BRENT RENAMED ON LEAGUE OPIUM BOARD
Washington, D.C., Aug. 17 (A.P.)—Acting upon the recommendation of Secretary Hughes, President Coolidge has authorized the reappointment of Dr. Rupert Blue of the public health service, Representative Porter of Pennsylvania, chairman of the house foreign affairs committee, and Bishop Charles H. Brent of Buffalo, N. Y., as representatives of the United States on the league of nations committee having to do with the regulation of opium and other narcotics. At the White House it was said today the three delegates would attend the next meeting of the committee in Geneva.
Lee’s Connecticut Chronicles:
Dear Nutmeg Newsies:
Today was just one of those lawyer days. I’m sure you’ve all had them. You work feverishly, touching many matters, talk to seemingly all the associates and staff, comment, edit, revise, manage, wind up exhausting yourself and then see that you have barely any billable time. That was my today. Not sure where it went or what I actually accomplished, but I can tell you that I was very, very busy.
In this edition, we again revisit Connecticut UM/UIM. Our case deals with a wife driving a car owned by her husband insured under a separate policy, but still seeking UIM coverage. Although the court reaches the predictable result, it is interesting how the court got there. BONUS! case for those who’ve read this far. In Papantonakis v Vega, the Superior Court reminds us that just because there were more claimants than limits, that does not mean that UIM coverage is available. As Connecticut is an offset to limits state, as long as the tortfeasor’s limits are equal to or greater than the insured’s UIM limits, there’s no available UIM coverage. Here, each party had a 25/50 policy, but the plaintiff received less than the full limit because there were other claimants. The court, relying on established precedent, held that a tortfeasor is not underinsured when the limits of coverage are equal to the UIM insured’s limits.
Keep keeping safe,
Lee
Lee S. Siegel
Child Labor Problems – 100 Years Ago:
Star-Gazette
Elmire, New York
18 Aug 1923
ONE MILLION CHILD WORKERS.
More than one million American children between ten and fifteen years of age are engaged in gainful occupation, according to a Census Bureau report.
Statistical figures are cold uninteresting things, so let us put the matter in another way.
One million under privileged children destined to grow to be under privileged men and women, to recruit the ranks of the half-witted, the gunmen, the incompetent, and the criminal.
One million voters less capable of exercising the great function of the ballot because of poor equipment for reasoning power and decision.
One million dwarfed intellects to be the easy prey of prejudice, class consciousness and hatreds. Undersized minds that will fatten the purses of the crafty and the conscienceless.
One million prospects for the I. W. W's, the Bolshevik and all the rest of the half-baked theories of government.
One million people whose darkened minds will inevitably pull down the standard of art, music, drama, and life in all its ramifications.
One million children whose pitiable plight shames the boasted lay wisdom and the professional statesmanship of the United States of America.
One million little folk, at heart innocent of all these and other dire portents for their country, with a real and just grievance against the one hundred million who permit this immeasurable folly of child labor to continue.
Kyle's Noteworthy No-Fault:
Dear Readers,
It’s hard to believe that fall and football are already right around the corner, which didn’t occur to me until watching some of the Bills’ first preseason game last weekend. Always a bittersweet time of the year, as I look forward to football, hockey, and basketball starting up again. Of course, before we get there, there’s a softball season to finish up with playoffs starting this Thursday (assuming we can finally get in a game without a rain out) and hopefully continuing another week or two.
This week’s no-fault case arises out of a motor vehicle accident that occurred when a vehicle operated by State Farm’s insured collided with the Defendant, who was operating an electric wheelchair. State Farm disclaimed coverage on the basis that that the defendant’s injuries and medical treatment did not arise from the subject accident, as the insured and an eyewitness stated that the insured’s vehicle never made contact with the defendant. Rather, the vehicle stopped short of the defendant, who threw himself out of the wheelchair.
Until next time,
Kyle
Kyle A. Ruffner
[email protected]
Pestering the New President – 100 Years Ago:
Star-Gazette
Elmira, New York
18 Aug 1923
PESTERING THE PRESIDENT
Men who attain the Presidency are usually men of unusual vigor, or they would never reach that height in a world of competition. As a rule, they could probably take care of the duties of their office without undue strain, if it were not for two unnecessary burdens. One is office-seekers and the other is visiting tourists. The latter burden has hardly received the attention it deserves.
The President is regarded as the chief "point of interest" in Washington. Visitors cannot be blamed for wanting to see him and shake his hand. And a kindly, normal First Citizen naturally likes to indulge that passion when he can. It is a very human and very American thing to do. But the practice has been carried to an extreme that is tolerated in no other country and should no longer be tolerated in this.
The Presidency has its rights and obligations beyond the conception of the visitors who so lightly trip into the White House and line up to shake hands with greatness. It is not too much that every handshake takes out of a busy, hard- pressed Executive a little of the energy he needs for his big task, and every minute so spent, however graciously he may disguise that fact, is a minute he needs for work or recreation. If all the people who have been saying lately that the President’s job should be lightened would stop pestering him and needlessly taking his time, the most necessary part of the reform would be accomplished.
Ryan’s Federal Reporter:
Hello Loyal Coverage Pointers Subscribers:
My oldest is currently an orange belt in (kids) karate and, for whatever reason, has found his time at the dojo meaningful. He is enthusiastic when he’s there and has even begun to learn how “sparring” works. As I’ve said before, it is fascinating to me as a former athlete to see how sports are trained at a young age, specifically those sports that I never took part in myself. This latest step shows me that the forms the kids work on in class are just the beginning but have gone a long way in his ability to string together one technique after another. Forms are not practical, as “sparring” requires reading and reacting to what has come or will come, but these forms are useful in understanding what reactions are possible before they become necessary. With his protective gear now in hand (got it yesterday), things could get interesting…
My youngest is starting a new school soon, and I am excited for what’s to come for him as well. He is smart as a whip, and we are hopeful that his new school will give him an even better opportunity to expand his mind, not to mention meet new kids. What’s not to love about that?
This edition, my column shares a Coverage B case decided under the watchful eyes of the SDNY.
Until next time…
Ryan
Ryan P. Maxwell
Texas Sheriff Violence – 100 Years Ago:
The Brooklyn Daily Eagle
Brooklyn, New York
18 Aug 1923
SHERIFF ARRESTED IN TEXAS FLOGGING;
POLICE INTIMIDATED
Martial Law Area Spreads in Oklahoma – Troops Make Several Arrests.
Amarillo, Texas, Aug. 18 (By the Associated Press) – The Texas Rangers’ investigation of the flogging by five unmasked men of E. E. McDonald bridge worker, Wednesday night has resulted in five arrests. Under orders of Acting Governor Davidson, the fifth arrest was that of Sheriff Less Whitaker of Potter County last night.
Ranger Captain F. A. Hamer filed the charges which resulted in the sheriff’s arrest. The complaints charge conspiracy to commit a felony and alleging the sheriff to have been an accomplice in an assault with a prohibited weapon.
Whitaker and T. W. Sanford, charged jointly with him, were released under $5,000 bond.
Rauh’s Ramblings:
On parental leave.
Patty
Patricia A. Rauh
Pants, Six and a Half Bits – 100 Years Ago:
The Chat
Brooklyn, New York
18 Aug 1923
Men’s Work Pants
$1.66
Made to sell at a much higher price. You have the choice of several dark neat striped patterns, made of good heavy quality worsted materials. They will made ideal trousers for all around work wears
Sizes 32 to 42
H. Batterman Co.—Main Floor
Storm’s SIU:
Check back next edition for more interesting cases.
Scott
Scott D. Storm
Fruit Embargo – 100 Years Ago:
Middletown Daily Herald
Middletown, New York
18 Aug 1923
“We Have No Fruit”
May Be a Reality After November 4
NEW YORK, Aug. 18— “Yes, we have no bananas,” may be sung with the plaintive wail of reality after November 4. A general embargo on the importation of fruits and vegetables has been announced by Secretary of Agriculture Wallace.
Canada may continue to import. But the hand of the law halts shipments from South America, the banana land, Europe, Asia, Africa, Mexico, and Central America.
Fruit and melon flies, which are said to be destroying the crops of other climes, endanger American crops, the Department of Agriculture stated in making the ruling.
Fleming’s Finest:
Hi Coverage Pointers Subscribers:
Recently, the dog figured out how to open the fridge and ate a pizza, a tub of cheese, and an entire jar of mayonnaise. Very interesting combination. The dog is fine, the fridge has been child-locked, and his coat has never looked better.
This week features Fleming’s Finest’s first case from Wyoming. The Wyoming Supreme Court agreed that a two-year statute of limitations for acts, errors, or omissions in the rendering of professional services under WYO. STAT. ANN. § 1-3-107 applied to insurance agents. The Court also declined to extend Wyoming’s continuous care doctrine to insurance sales.
Catch you later,
Kate
Katherine A. Fleming
Amazing: An Eight Hour Workday – 100 Years Ago:
Mount Vernon Argus
White Plains, New York
18 Aug 1923
EIGHT HOURS IN STEEL INDUSTRY
When the announcement was made that the executive officials in the steel industry had agreed with President Harding to do away with the twelve-hour day, Mr. Gompers expressed doubts of their sincerity. He intimated they were fooling both the president and the public.
It is interesting, therefore, to note that this week saw the inauguration of the eight-hour day in a number of the largest steel mills in the country.
That the change would take time anybody with knowledge of the industry knows. An entire shift of men is required, and this means the employment of thousands of additional workers. How difficult it is to secure help in these days of labor shortage every employer of labor knows so it is to be hoped that even Mr. Gompers will withhold further judgment as to the 'sincerity of the steel men until they have had time to make their word good under prevailing conditions.
While the eight-hour day in this industry was certain to come, it was a movement of such great difficulty that President Gary, of the Steel Corporation, made the statement only a few months ago that the practical difficulties were so great that he did not then see how it could be accomplished. With Mr. Gary it was not a question of wanting men to work twelve hours a day, but it was the problem of getting help. So far as the profits of his company are concerned, he frankly said that the extra cost entailed in providing a new shift of men would be reflected in the price of the product to the public.
Advocates of the eight-hour day insist that increased efficiency on the part of those called upon the work fewer hours will be such as to largely eliminate any necessity for increasing prices. However, this may be, the fact remains that public opinion has come to be overwhelmingly opposed to excessive hours of labor; so, it may be assumed that the public is willing to pay any additional cost entailed by the eight-hour day.
Gestwick’s Greatest:
Dear Readers,
Football season is around the corner, and therefore, so is fantasy football season. Here at the Firm, we have two leagues: “The Premier Hurwitz Football League,” chaired by Brian Barnas, and “The Tier II HF Fantasy Football League,” led by yours truly. I’ve been admonished by the mighty powers that be for calling my league “HF Fantasy Football—” I just hope I don’t get whacked with a trademark infringement claim (does my homeowner’s policy have Coverage B? Does Coverage B even cover trademark infringement claims?)
Sorry to disappoint, but I don’t have a Coverage B case for you this week. Instead, I have one of those “no direct physical loss for COVID shutdown” cases you’ve read a hundred times—only mine is different. In this one, the insured amended its pleadings to allege that COVID particles had landed on and adhered to property within the business, in support of its position that direct physical loss had occurred. In rejecting this argument, the Court held that, even if true, the claim is really one for expenses incurred in cleaning the property and loss of income sustained because of the government mandated shutdowns.
That’s all for this week, see you in two.
Evan
Evan D. Gestwick
Will the New President Succeed? – 100 Years Ago:
The Times-News
Twin Falls, Idaho
18 Aug 1923
PRESIDENT COOLIDGE—WILL HE
MAKE GOOD?
President Coolidge has assumed the mantle of office and taken upon his shoulder the serious duties of the most important position in the world, following the sudden death of President Harding. Will Coolidge make good? That is the question in the mind of the public, in the mind of party leaders and in the mind of politicians.
Coolidge comes from conservative New England stock. There are no frills to the president. He is a conservative man and has the rare faculty of listening while others do the talking. President Coolidge’s record as governor of Massachusetts reflects to a great extent the character of the man. Coolidge was governor. No one else directed the affairs of state. He was a leader, quiet, but effective and direct. And the record that he made landed him in the seat of honor as president of the senate of the United States and vice president of his country. Death has opened the way for him to become the nation’s leader.
Will President Coolidge make good? We are inclined to the belief that he will. Why? Because of Coolidge’s early training and of his record as chief executive of one of the great states in the Union. Whether or not President Coolidge will made a record that will warrant his selection at the next republican national convention as candidate to succeed himself is quite another matter. Party leaders have peculiar ideas about their candidates. As politicians they want men who can win at the ballot box, who are magnetic and who can command the votes.
But irrespective of what the politicians demand in the qualifications of a presidential candidate, or what the leaders of the various political parties think, we believe, after making a close study of the record of Calvin Coolidge, that he is going to make good as president of the United States. —Capital News.
On the Road with O’Shea:
Hey Readers,
Sometimes we have rough mornings – I had one of those the other day. I woke up to a dog with a double ear infection who wanted to test my footspeed down my town’s sidewalk at 7 in the morning. On this jog I was made aware of a tree that had fallen in our driveway and got to experience the morning dew on the left side of my body as a hockey stop on wet grass wasn’t the smartest idea. Luckily, we both survived.
This week I had subrogation case from the Second Department where an insurer is seeking recovery for a motor vehicle accident against a municipality for an allegedly obstructed stop sign. The trouble is neither the insured nor his passenger remembered anything about the accident. And, when I wrote it up, I found that Steve Peiper had as well, so I gave him the honor of reporting.
Ryan
Ryan P. O’Shea
[email protected]
Were They Stealing Elections? – 100 Years Ago:
Alton Evening Telegraph
Alton, Illinois
18 Aug 1923
PROBE ELECTION FRAUDS
There should be a special grand jury impaneled, or the old grand jury called back by Judge Giliham of the Circuit court to inquire into the conduct of elections in Venice township where there is every Indication that the will of the voters was subverted by someone who, at some time, had access to the ballots and election returns and used a pencil to give votes to candidates who had not been voted for by the voters.
If what has been hinted at and what is charged in the election contest recount in the county court can he substantiated, and If Judge Overbeck makes findings that there was criminal tampering with the election returns in Venice township, there should be no hesitation about striking at the authors of the crime.
This is the first recount of ballots that has been held in the county. Workers of fraud in polls could feel perfectly easy about falsifying election returns as there was no going behind their official returns unless a contest was started. It is important for the public to know when and where their will is being subverted by corrupt officials. Tampering with the ballot is one of the worst offenses against the rights of the public that can be committed. It is through the ballot we have the power to secure redress for wrongs if courts fail us.
Louttit’s Legislative and Regulatory Roundup:
Hello All,
I hope everyone is continuing to enjoy their summer. Today’s column notes a Bill, that if passed, will find it a discriminatory practice if insurers cancel, refuse to issue, or renew, increase premium or restrict coverage based on that insured’s acceptance of lawful rental subsidies. We will keep an eye on this piece of legislation as it makes its way through the Senate.
Rob
Robert P. Louttit
Homewreckers Wanted – 100 Years Ago:
The Buffalo News
Buffalo, New York
18 Aug 1923
HELP WANTED, MALE
30 Men for housewrecking
60c per hour. 10 hours
per day. Apply
JOSEPH T. BROWN
505 Washington Street
Rob Reaches the Threshold:
Hello Readers,
I hope you are all enjoying the last few weeks of summer. Many of you may, like me, be shifting into football mode – with training camp and preseason games in full swing. This shift in focus was made easier for me given the sad state of my beloved Yankees. They are in last place, under .500, and freefalling to rock bottom. On the bright side, I’ll have more free time come October.
It seems that the Appellate Division is enjoying the fleeting days of summer, because there have been very few decisions dealing with Serious Injury since the last publication. That means, unfortunately, nothing to report for me.
See you all in two weeks.
Rob
Robert J. Caggiano
Tough Penalty for Robbing the Alms Box – 100 Years Ago:
The Buffalo Enquirer
Buffalo, New York
18 Aug 1923
A SENTENCE EASY TO REMEMBER.
WHO, remembers items recording robberies of church poor-boxes, recall items relating to what happened to the robbers?
Here is what happened to one robber of that sort—ten years in the county prison. The sentence was imposed by Judge Jamed Gay Gordon, Jr., of Philadelphia. Imposing sentence, the judge denounced the criminal who “defiles the House of God to rob the poor.”
Lest sentimentalists shiver at the sentence, it should be noted that the recipient was a confirmed criminal to whom any mercy would have been liberty to repeat that or commit some other crime.
Ten years in prison fixes the punishment of one poor-box robber in the public mind. It is historic.
North of the Border:
As I write this, search and recovery crews are searching for human remains in the ruins of Lahaina, Hawaii, following a devasting wildfire spread by hurricane force winds. Paradise lost. At the same time, the City of Yellowknife in Canada’s Northwest Territories is being evacuated as a wildfire is on that City’s doorstep. This summer our warming planet seems to be on fire.
This past weekend, our family gathered at a mountain resort near Invermere, British Columbia. There was a contained wildfire in the next valley over. Thanks to the efforts of wildland fire fighters from Australia and Canada, we were able to ignore it and enjoy a great weekend together.
This summer, many, many families do not have the luxury of enjoying a weekend together in the sun. The climate emergency is impacting how we live our lives.
My column discusses an interesting case from British Columbia that deals with whether Canadian courts can hear an insurance dispute over a policy issued in the United States where the American insured is doing business in Canada.
Until next time,
Heather
Heather A. Sanderson
Sanderson Law, Calgary, Alberta
Headlines from this week’s issue, attached:
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
- Just a few words of greeting from the old editor, no cases upon which to report (only about the fourth time in 25 years)
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
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Town’s Summary Judgment Motion Granted by Demonstrating that Plaintiff Could Not Demonstrate Proximate Cause
WILEWICZ’S WIDE WORLD of COVERAGE
Agnes A. Wilewicz
-
Check Back Next Time for the Latest from Around the Country
BARNAS on BAD FAITH
Brian D. Barnas
-
Issue of Fact on Reasonableness of Defendant’s Delay in Obtaining Medical Expert to Evaluate UIM Claim
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
-
Despite Ambiguity, No UIM Coverage for Driver of Non-insured Vehicle
KYLE'S NOTEWORTHY NO-FAULT
Kyle A. Ruffner
-
Default Judgment Action Brought by Insurer is Denied Due Failure to Submit Proof of Service of a Mandatory E-Filing Notice
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
-
No Personal and Advertising Injury Where Underlying Dispute Involving False Product Labels Did Not Constitute Commercial Disparagement
RAUH’S RAMBLINGS
Patricia A. Rauh
-
On Parental Leave
STORM’S SIU
Scott D. Storm
-
Check Back Next Edition for More Interesting Cases
FLEMING’S FINEST
Katherine A. Fleming
-
Court Finds Insurance Agents are Professionals for the Applicable Statute of Limitations and Declines to Extend the Continuous Care Doctrine to Insurance Sales
GESTWICK’S GREATEST
Evan D. Gestwick
-
Even When Contamination and Adherence of the COVID-19 Virus is Alleged, Still No Direct Physical Loss
ON the ROAD with O’SHEA
Ryan P. O’Shea
-
Insurer’s Subrogation Action Dismissed Where it Possessed No Evidence that its Insured Driver Could Have or Actually Observed an Obstructed Stop Sign
LOUTTIT’S LEGISLATIVE and REGULATORY ROUNDUP
Robert P. Louttit
-
Establishes Discrimination Where Insurers Exclude, Limit, Restrict or Reduce Coverage for Publicly Assisted Housing Accommodation due to Lawful Source of Income
ROB REACHES the THRESHOLD
Robert J. Caggiano
-
Nothing New on Serious Injury to Report. I’ll be Back in Two Weeks.
NORTH of the BORDER
Heather A. Sanderson
Sanderson Law, Calgary, Alberta
-
British Columbia Supreme Court Has Jurisdiction to Hear Dispute Brought Between American Insurers Concerning an American Policy
All the best to you and yours.
Dan
Hurwitz Fine P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in Connecticut.
In addition, Dan D. Kohane is a Foreign Legal Consultant, Permit No. 000241, issued by the Law Society of Upper Canada, and authorized to provide legal advice in the Province of Ontario on matters of New York State and federal law.
NEWSLETTER EDITOR
Dan D. Kohane
[email protected]
ASSOCIATE EDITOR
Agnes A. Wilewicz
[email protected]
COPY EDITOR
Evan D. Gestwick
[email protected]
INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
[email protected]
Steven E. Peiper, Co-Chair
[email protected]
Michael F. Perley
Agnieszka A. Wilewicz
Lee S. Siegel
Brian F. Mark
Scott D. Storm
Brian D. Barnas
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
FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
[email protected]
Michael F. Perley
Scott D. Storm
Brian D. Barnas
NO-FAULT/UM/SUM TEAM
Dan D. Kohane
[email protected]
Alice A. Trueman
APPELLATE TEAM
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
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
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
We are in the summer doldrums. There wasn’t a single appellate case involving insurance coverage decided by the New York appellate courts in the past two weeks. I was so desperate to include one, I started summarizing the Liberty Mutual v. Norton decision that Steve discusses in the next column, but he beat me to it.
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
08/16/23 Liberty Mut. Ins. Co. v. Norton
Appellate Division, Second Department
Town’s Summary Judgment Motion Granted by Demonstrating That Plaintiff Could Not Demonstrate Proximate Cause
Here’s an interesting subrogation claim where Liberty Mutual appears to have paid (presumably as SUM benefits) damages to its insured who was injured in a motor vehicle crash in the Town of Brookhaven. Liberty then commenced this subrogation action against the Town, among others, on the theory that the incident was caused by an obscured stop sign which did adequately alert the tortfeasor/driver to stop prior to entering the intersection.
The Town moved for summary judgment, and its motion was denied on a question of fact by the trial court. On appeal, the Second Department overturned the trial court’s ruling. In so holding, the Court noted the general duty that a Town has a duty to maintain roads in a reasonably safe condition. This includes the routine trimming of trees. Regardless of the maintenance activities, however, a party must also demonstrate that the Town’s failure to maintain safe conditions was a proximate cause of the incident.
On its motion for summary judgment, the Town argued that Liberty could not establish a proximate cause linkage between the incident and the allegedly obscured stop sign. In support of its position, the Town produced evidence that the injured driver, nor his passenger, had any memory of the collision, and no other witnesses could speak to whether the tortfeasor stopped at the intersection. Because any other evidence which could be offered by plaintiff would simply be speculation, the Court noted that Liberty could never meet its burden and dismissed the case accordingly.
WILEWICZ’S WIDE WORLD of COVERAGE
Agnes A. Wilewicz
[email protected]
Check back next time for the latest from around the country.
BARNAS on BAD FAITH
Brian D. Barnas
[email protected]
08/15/23 Simmons v. Liberty Mutual Fire Insurance Company
United States District Court, Eastern District of California
Issue of Fact on Reasonableness of Defendant’s Delay in Obtaining Medical Expert to Evaluate UIM Claim
Simmons was involved in a motor vehicle accident with Verdugo when Verdugo made a sudden left turn in front of her. Simmons sustained significant injuries, including a punctured left lung, fractured ribs, and a low back injury. Simmons was insured by Liberty under a policy with $250,000 in UIM coverage.
Simmons settled with Verdugo’s insurer for $100,000 and sent a letter to that Liberty pay $150,000. The demand letter alleged Simmons incurred $657,197 in damages because of the accident, itemized as follows: $104,197 in past medical expenses; $50,000 in future medical expenses; $250,000 in past general damages; and $250,000 in future general damages. The demand letter included medical bills totaling $104,197, including $91,289 for a hospital stay. The letter also included reports from Simmons’ doctors, including her pulmonologist who diagnosed lung problems most likely related to the accident.
Liberty Mutual requested additional information regarding Simmons’ medical condition. Liberty then rejected Simmons’ demand for the policy limits, advising that it had calculated Simmons’ medical expenses as $24,203. Thus, Simmons was not underinsured given the $100,000 settlement. Simmons later demanded arbitration of the UIM claim. Simmons later died from acute right lung pneumonia. 20 months after the UIM demand was made, an expert retained by Liberty who reviewed Simmons’ medical records opined that Simmons’ left lung injuries resolved after the accident and were unrelated to the right middle lobe pneumonia that caused her death.
Simmons's counsel issued another settlement demand for the $150,000 in remaining UIM policy limits. In response, Liberty offered to pay Plaintiff $27,355.10 in UIM coverage to resolve the claim based on a valuation of $100,000 in general damages and $27,335.10 in special damages. Plaintiff declined and the parties proceeded to arbitration on May 18, 2021.
The arbitrator issued an award of $852,000. The arbitrator adopted Plaintiff’s expert's conclusion that Simmons sustained a streptococcus infection following the accident that laid dormant for more than two years before becoming active and resulting in the pneumonia that caused her death. Following the arbitrator's award, Liberty paid the remaining policy limits of $150,000, plus $41,937.80 for arbitration costs, for a total payment of $191,937.80.
Plaintiff commenced a bad faith, breach of contract, and elder abuse action against Liberty. Liberty moved for summary judgment on the bad faith claim arguing there was a genuine dispute concerning value and no evidence of unreasonable delay. Liberty argued that it reasonably relied on its experts in declining to pay the full amount when demanded and paid it after arbitration.
The court found an issue of fact as to whether it was reasonable for Liberty to reject the initial settlement demand, which had included various medical reports and a report from Simmons’ pulmonologist. The court noted that the initial demand was rejected before an expert was consulted, and it found there was an issue of fact as to whether Liberty delayed unreasonably in retaining a physician to conduct an independent medical examination. The court determined that Liberty did not sufficiently explain the reasonableness of its conduct between the initial demand and when the expert doctor’s report was obtained.
The court also declined to dismiss the breach of contract claim on summary judgment. Liberty argued that it had paid the full policy limits after the arbitration award. However, the court concluded that Liberty’s potentially unreasonable delay in paying policy limits could give rise to both a breach of contract and bad faith claim. The court also declined to dismiss the elder abuse and punitive damages claims.
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]
08/10/23 Girardi v. CSAA Affinity Ins. Co.
Superior Court of the State of Connecticut, Middlesex
Despite Ambiguity, No UIM Coverage for Driver of Non-insured Vehicle
We return once again to the land of Connecticut UM/UIM. With so many auto cases, perhaps this is a message to our politicians that Connecticut needs better mass transit infrastructure to get the cars off the road. But we digress.
The plaintiff, Maria Girardi, was driving her Kia Sportage when she was in an accident with an underinsured driver. She sought coverage under her husband’s auto policy that only insured a Toyota Tacoma. Girardi agreed that if she was deemed the owner of the Sportage that she would not be entitled to coverage under the Tacoma’s policy. But, she claimed, she was not the owner of the Sportage; that the title, registration, tax statements and all other indicia of ownership were in her husband’s name.
Further, she argued, and the court agreed, that the term owner in the UIM endorsement is ambiguous. “The court finds that the defendant has not met its burden of proving that the plaintiff is an owner under the CSAA policy. The court agrees with the plaintiff that “owner” is not defined under the policy and thus it is ambiguous. Looking to the plain meaning of owner does not resolve the two different interpretations advocated by the parties.”
Despite the ambiguity, the court still found for the carrier under an alternative basis that the insured was occupying an owned car that was unlisted on the policy. The standard Connecticut UIM endorsement other insurance provision provides that: 2. Subject to Paragraph 1. above, with respect to bodily injury to an insured a. While occupying a vehicle owned by that insured, only the Uninsured/Underinsured Motorists Coverage applicable to that vehicle will apply, and no other policies or provisions of coverage will apply. Applying this language, the court held that, “[T]he plaintiff was an occupant of an owned vehicle that was not listed under the CSAA policy, the court agrees that summary judgment shall enter on this alternative basis.” Since the plaintiff's husband insured the Sportage under a different policy and not the CSAA policy, the other insurance provision precludes coverage.
This result tracks the Connecticut UIM statute. Section § 38a-336 (d) provides in pertinent part: “If any person insured for uninsured and underinsured motorist coverage is an occupant of an owned vehicle, the uninsured and underinsured motorist coverage afforded by the policy covering the vehicle occupied at the time of the accident shall be the only uninsured and underinsured coverage available.
KYLE’S NOTEWORTHY NO-FAULT
Kyle A. Ruffner
[email protected]
08/01/23 State Farm Mut. Auto. Ins. Co. v. Bronx Rehab. Med. & Physical Therapy, LLC et al.
Supreme Court, New York County
Default Judgment Action Brought by Insurer is Denied Due Failure to Submit Proof of Service of a Mandatory E-Filing Notice
This action arose out of a motor vehicle accident that occurred on January 14, 2022, when a vehicle operated by State Farm’s insured collided with Defendant Ridha Fellah, who was operating an electric wheelchair. State Farm’s policy provided coverage for any person who sustained personal injuries arising out of the use or operation of the insured vehicle and included uninsured, supplementary uninsured, and underinsured coverage.
Following the accident, Mr. Fellah sought medical treatment from the defendants named in the suit. State Farm, after receiving his claim for no-fault benefits related to the subject accident, undertook an investigation of the claim. Mr. Fellah appeared for an examination under oath where she, according to State Farm, failed to return an executed copy of his examination under oath transcript and presented questionable testimony that did not substantiate his version of the accident. For example, State Farm’s insured claimed he was making a right turn when Mr. Fellah entered the crosswalk five feet in front of him and, after the insured stopped his vehicle short of making contact, Mr. Fellah “fell out” of the wheelchair. A nonparty witness asserted that she saw the insured’s car stopped at the red light and when the light turned green Mr. Fellah attempted to cross in the crosswalk even though the insured had the right of way. Further, the witness stated the vehicle did not knock Mr. Fellah’s wheelchair over, rather, he threw himself out onto the ground.
Therefore, State Farm commenced this action on March 26, 2021, by filing a summons and complaint seeking a declaration that it owes no duty to pay the no-fault claims submitted by defendants in connection with the January 14, 2020, accident on two grounds. First, it is alleged that Mr. Fellah breached a condition precedent by failing to subscribe and return the EUO transcript. Second, it is alleged that there is no coverage because Fellah's injuries are not causally related to the January 14, 2020, accident. Lastly, State Farm sought a permanent stay of all arbitrations or lawsuits related to Fellah's no-fault claims.
As explained by the court, a motion for a default judgment must be supported with "proof of service of the summons and complaint [,] ... proof of the facts constituting the claim, [and] the default." CPLR 3215(f). The plaintiff must offer "some proof of liability ... to satisfy the court as to the prima facie validity of the uncontested cause of action." Feffer v Malpeso, 210 AD2d 60, 61 (1st Dept 1994). "The standard of proof is not stringent, amounting only to some firsthand confirmation of the facts" Id. A party in default is deemed to admit all traversable allegations in the complaint but does not admit the plaintiff's conclusion as to damages.
In this case, the court determined that State Farm had submitted affidavits of service that demonstrated it served the defendants appropriately. However, absent from each affidavit of service was proof of service of a mandatory notice of e-filing, as required under Uniform Rules for Trial Courts (22 NYCRR) § 202.5-bb(b)(3), which states, in relevant part, that personal service of initiating documents in an action commenced electronically "shall be accompanied by a notice, in a forth approved by the Chief Administrator, advising the recipient that the action is subject to electronic filing pursuant to this section." Therefore, the court held that State Farm failed to demonstrate that the requisite notice was served, and thus, the motion for a default judgment was denied.
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
08/11/23 Tzumi Innovations LLC v. Twin City Fire Ins. Co.
Southern District of New York
No Personal and Advertising Injury Where Underlying Dispute Involving False Product Labels Did Not Constitute Commercial Disparagement
Tzumi Innovations LLC procured commercial general liability insurance from Twin City Fire Ins. Co., which included coverage for “personal and advertising injury,” defined to include injury arising out of “oral, written, or electronic publication of material that…disparages a person’s or organization’s goods, products or services.”
While coverage was in place, a nationwide consumer class action was filed against Tzumi, alleging that during the COVID-19 pandemic, Tzumi “ma[de] false and misleading claims on the labels [and packaging] of” three of its products relative to their effectiveness for cleaning of household surfaces. The allegations accused Tzumi of an “intent to market the product as a surface disinfectant rather than a personal care product.” The class action, which settled in principle in November 2022, raised eight causes of action, including violations of New York General Business Law §§ 349 and 350; California's Unfair Competition Law, Consumer Legal Remedies Act, and False Advertising Law; Massachusetts General Law Chapter 93A, § 2; as well as common-law causes of action for breach of express warranty, fraudulent concealment, and unjust enrichment.
After a denial of coverage was issued, Tzumi filed this action and Twin City moved for partial summary judgment on the duty to defend. “The sole question at issue [was] whether the Proskin Complaint can be reasonably construed to allege a claim of commercial disparagement, which is the only definition of ‘personal or advertising injury’ that Tzumi invokes under the Policy in arguing for coverage.”
Understandably, the SDNY approached Tzumi’s theory of coverage with skepticism:
“Tzumi's theory of coverage—based on a somewhat contorted attempt to invoke the ‘disparagement’ definition of a ‘personal and advertising injury’ under the Policy—is that, ‘[b]y allegedly misleading customers into thinking Tzumi's products were EPA[-]certified for anti-microbial purposes and useful in cleaning surfaces when neither of those were true, Tzumi inevitably create[d] doubt as to the authenticity of the claims of similarly situated products, thereby disparaging its competitors.’ [citation omitted]. In other words, according to Tzumi, it allegedly ‘disparaged’ its competitors by ‘[c]reating a link between its products and competitors’ [products]’ through deceptive labeling ‘and subsequently undermining the credibility of all such products.’”
Dispelling Tzumi’s theory, the court notes that “the allegations focus solely on Tzumi's own products….” The only allegations concerning competitor products could not “be reasonably construed as disparaging or derogating the competitor products—they merely illustrate how Tzumi allegedly sought to promote its own products in a misleading fashion.”
Even if somehow the class had alleged that Tzumi disparaged “competitors by suggesting, through copycat labeling and physical proximity on store shelves, that the competitor products were not properly registered with the EPA, such a theory would fail under New York law.” And New York requires that “there must be ‘some identifying statement that compares the advertised product to those sold by competitors,’ even if the competitor's product is not expressly identified by name.” However, “Tzumi is not even alleged to have made ‘general statements of comparison’ about its competitors, let alone ‘specific assertions of unfavorable facts reflecting upon [a] rival product.’” This is true relative to the California and Massachusetts causes of action as well.
Accordingly, “personal and advertising injury coverage” (Coverage B for those in the back) was never triggered. In fact, even if we assume that it was, the Policy contains exclusions for injury arising out of publication by or directed by the insured with knowledge of falsity, as well as injury arising out of the failure of a product to conform with any statement of quality or performance made in the named insured’s advertisement or on its website. Express allegations place the class action entirely within these exclusions.
Maxwell’s Minute Entry: This case fell under Coverage B from the start. However, this is your friendly reminder that there are often lawsuits asserting off-beat torts like defamation and wrongful imprisonment, whether by name or not. Paint the allegations with a broad brush and do not forget to look into whether your commercial (or personal lines) policy schedules personal and advertising injury coverage or contains an exclusion of same. It is an easy mistake to make; one that could mean the difference between a covered and uncovered claim. Better to know now than later.
RAUH’S RAMBLINGS
Patricia A. Rauh
[email protected]
On parental leave.
STORM’S SIU
Scott D. Storm
[email protected]
Check back next edition for more interesting cases.
FLEMING’S FINEST
Katherine A. Fleming
[email protected]
08/10/23 Falkenburg v. Laramie Inv. Co., Inc.
Wyoming Supreme Court
Court Finds Insurance Agents are Professionals for the Applicable Statute of Limitations and Declines to Extend the Continuous Care Doctrine to Insurance Sales
Garret and Shelly Falkenburg contracted with Laramie Investment Company, Inc. (“Laramie”) and its owner and President, Brad Jackson, to obtain an insurance policy for their ranch and surrounding outbuildings. Jackson obtained a policy offer from Nationwide AgriBusiness Company (“Nationwide”) and sent the Falkenburgs an email with a summary of the draft policy. Jackson emailed the Falkenburgs and informed them that Nationwide had issued the policy, which was effective as of July 5, 2018. On July 28, the Falkenburgs’ home and Quonset hut were destroyed by a tornado. The Falkenburgs filed a claim with Nationwide. Nationwide denied coverage for the Quonset hut and its contents because the policy did not cover them.
On the two-year anniversary of the tornado, the Falkenburgs sued Laramie and Jackson for breach of contract, negligence, and “reasonable expectations.” The district court concluded that the statute of limitations had expired and granted summary judgment to Laramie and Jackson. The court determined that Jackson, as a licensed insurance agent, was a “professional” for the purposes of WYO. STAT. ANN. § 1-3-107. Under the statute, a cause of action arising from an act, error, or omission in the rendering of licensed or certified professional or health care services shall be brought within two years of the date of the alleged act, error, or admission. Thus, the Falkenburgs’ suit was subject to a two-year statute of limitations. The court concluded that the statute of limitations had begun to run from the date the policy went into effect, July 5, 2018. The court also rejected the Falkenburgs’ argument that the “continuous care doctrine” applied to toll the statute of limitations. The Falkenburgs appealed.
On appeal, the Falkenburgs argued that Jackson was not a “professional” within the meaning of the statute because insurance agents are not required to have any specific post-secondary education; however, the Wyoming Supreme Court has not required a one-year post-secondary education to qualify as a professional under the statute. Instead, the Court has looked into the plain language of the statute, state regulation of the occupation at issue, whether there are licensure or certification requirements for the occupation, and whether the act or service involves specialized knowledge. The Court found that Jackson qualified as a professional under the statute, reasoning that an insurance producer is a person required to be licensed under the laws of the state to sell, solicit, or negotiate insurance, including, but not limited to, agents and brokers. To obtain a license to produce insurance, applicants must be at least 18 years of age, demonstrate they have not committed an act resulting in the denial, suspension, or revocation of a license, successfully passed specific examinations, paid license fees, and provide the commissioner with fingerprints and other necessary information to complete a criminal background check. Moreover, the Falkenburgs’ expert witness opined that insurance agents are professionals and referred to selling insurance as a profession. Finally, the Falkenburgs relied on Jackson to procure the appropriate insurance for their situation by virtue of his profession. Accordingly, the Court concluded that the two-year statute of limitations applied to the Falkenburgs’ claims against Jackson.
Even if the two-year statute of limitations applied, the Falkenburgs contended that it began to run on the date of loss because Jackson had a continuing duty to verify that the policy was correct up until the tornado struck. The Court disagreed because the time for filing suit is governed by the date when the act, error, or omission occurs—not the date when the cause of action accrues. Here, the Falkenburgs’ claims were based on the failure to procure an insurance policy that covered the Quonset hut and its contents, and the professional act of procuring the insurance policy ended on its effective date. As a result, the running of the statute was not postponed by the fact that the actual or substantial damages did not occur until a later date.
Finally, the Falkenburgs argued that the statute of limitations was tolled by Wyoming’s continuous care doctrine since Jackson had the ability and duty to correct the omission of coverage for the Quonset hut until the tornado and continued to act as their agent after the tornado. The Court disagreed and declined to extend the doctrine, which applies to professional involvement in the same or related services after alleged malpractice and is not merely the continuity of a general professional relationship. In any event, even if the continuous care doctrine applied, the care in this case would have stopped being continuous on the day the insurance policy went into effect.
Accordingly, the Wyoming Supreme Court affirmed the district court’s decision because the two-year statute of limitations expired before the Falkenburgs’ filed their complaint, and the continuous care doctrine was inapplicable.
GESTWICK’S GREATEST
Evan D. Gestwick
[email protected]
08/10/23 William Vale Hotel, LLC et al. v. Fireman’s Fund Ins. Co. et al.
New York State Supreme Court, County of Kings
Even When Contamination and Adherence of the COVID-19 Virus is Alleged, Still No Direct Physical Loss
The plaintiff-insured sought recovery from the defendant, its commercial insurance carrier, for losses it sustained because of the government mandated shutdowns during the COVID-19 pandemic. This claim was denied on the grounds that the hotel did not sustain any direct physical loss or damage to its building or property; this lawsuit followed.
As my friend and colleague Ryan Maxwell has reported time and time again, courts all throughout the State of New York, and indeed, the country, have found that there is no business interruption coverage government-mandated shutdowns due to COVID-19 unless the business property sustained direct physical loss; in other words, businesses are not entitled to recover their revenue lost as a result of the government mandated shutdowns without some sort of actual physical loss. It was against this backdrop that the Court considered whether the allegation of physical damage to the Hotel, that respiratory droplets that were expelled from an infected individuals landed on and adhered to surfaces and objects within the hotel, fell within the required direct physical loss.
The plaintiff’s amended complaint, the operative pleading with respect to this decision, included an allegation that respiratory droplets that were expelled from infected individuals landed on and adhered to surfaces and objects within the hotel, causing structural change thereto. In holding that this additional allegation still did not allege any direct physical loss, the Court reasoned that this additional allegation essentially sought damages arising out of cleaning the property and the loss of income due to the government shutdowns and contamination of the property; not any direct physical loss, as required by the policy. The Court referred to prior cases, which have held that the virus’ inability to physically alter or persistently contaminate property renders it unable to cause direct physical loss or damage.
Editor’s Note: There you have it; even if the virus adheres to property within a business, no direct physical loss has occurred, because the virus can be cleaned. Thus, any allegation of direct physical loss arising out of contamination by COVID particles is not likely one for direct physical loss, since the claim may instead be treated as one for necessary cleaning of the property, not replacement.
ON the ROAD with O’SHEA
Ryan P. O’Shea
[email protected]
Shut out this issue. See you in two.
LOUTTIT’S LEGISLATIVE and REGULATORY ROUNDUP
Robert P. Louttit
[email protected]
08/04/23 New York Assembly Bill A07944
Establishes Discrimination Where Insurers Exclude, Limit, Restrict or Reduce Coverage for Publicly Assisted Housing Accommodation Due to Lawful Source of Income
Bill number A07944 is making its way through New York’s Legislature that, if passed, would amend New York’s executive law, and determine that those insurers that limit, exclude, or restrict coverage from landlords who accept rental subsidies is a discriminatory act.
If passed, it will amend section 296 of the executive law by adding a new subdivision 2-b.
The purpose of the Bill is to establish that the cancellation, refusal to issue or renew, increase in premium or restrict coverage based on the acceptance of rental subsidies is an unlawful discriminatory practice.
Unlike the Bill written about in our last column, this Bill, if passed, will have a direct impact on the insurance industry and in some instances, may force certain insurance companies to modify their underwriting practices. We will continue to track this Bill as it makes its way through New York’s Legislature.
ROB REACHES the THRESHOLD
Robert J. Caggiano
Nothing new on Serious Injury to report. I’ll be back in two weeks.
NORTH of the BORDER
Heather A. Sanderson
Sanderson Law, Calgary, Alberta
[email protected]
08/10/23 International Raw Materials Ltd. v. Steadfast Ins. Co. et al.
British Columbia Supreme Court Has Jurisdiction to Hear Dispute Brought Between American Insurers Concerning an American Policy
Trail, British Columbia, is a small city almost halfway between Vancouver and Calgary with a population of just under 8,000. It lies in a valley created by the Columbia River with the Monashee Mountains to the west and the Selkirk Mountains to the east. The natural beauty of the area takes one’s breath away – but only if one is prepared to ignore Trail’s Teck Cominco Smelter that is situated on the Columbia River approximately 10 miles (16 km) north of the border between British Columbia and Washington State.
This zinc lead smelter has been in continual operation since the late 1890’s. During World War II, this smelter produced much of the heavy water that was used in the Manhattan Project and continued to supply the United States with heavy water through to 1956.
But primarily the Teck Cominco Smelter is the largest integrated lead-zinc smelter of its kind in the world. Zinc ore is mined in nearby Rossland and processed at this smelter. Zinc smelting converts ores containing zinc into pure zinc. One of the main uses of zinc in industry is to galvanize (rust proof) iron and steel.
The by-products of the zinc smelting process are lead, silver and SO2 gas. The gas is further refined at the Teck Cominco plant into sulphuric acid which is primarily sold for use in fertilizer. International Raw Materials (IRM), which is based in Pennsylvania was a regular purchaser of the acid which it bought at the plant’s door and transported at its cost to the United States.
On April 10 and again on May 23, 2018, trucks loaded with sulphuric acid that were owned by Westcan Bulk Transport and insured and licensed in British Columbia left the Teck Cominco smelter bound for the United States under contract with IRM. Those trucks leaked sulphuric acid on the main highway through Trail. Over the two events, about 300 litres of sulphuric acid spilt over 22 km of highway.
Hundreds of people drove their vehicles through the dense, colourless, liquid, sulphuric acid. Most said it just looked to them that the pavement was wet.
The acid coated the under carriage of their vehicles and within weeks began to corrode brake lines and the steel frame.
Vehicle insurers were inundated with claims. Most, if not all of the affected vehicles were write-offs. Eleven insurers had most of the claims. In a ruling issued in May of 2020 those eleven insurers were permitted by the B.C. Supreme Court to proceed in their own names in separate lawsuits against Teck Metals Ltd., Teck Resources Limited, International Raw Materials, Westcan Bulk Transport, the Regional District of Kootenay Boundary, the City of Trail, Her Majesty the Queen in right of the Province of British Columbia as represented by the Minister of Transportation and Infrastructure and the Minister of Environment and Climate Change, and two truck drivers.
The defendants tendered the claims to their insurers. IRM held multiple pollution liability policies with Ironshore Specialty Insurance Company and Steadfast Insurance Company. Ironshore provided coverage under its policy and assumed IRM’s costs in defending the vehicle damage claims. Steadfast initially denied coverage, then later changed its position by claiming that its coverage was excess of Ironshore’s coverage.
In separate actions, IRM and Ironshore sued in the British Columbia Supreme Court. IRM requested a declaration that Steadfast was required to defend. Ironshore’s action claimed equitable contribution. Steadfast filed responses to each of the civil claims which disputed the court’s competence to hear these actions. That is not how one disputes jurisdiction in British Columbia.
After months of flailing with procedure, Steadfast finally got it right and filed the appropriate application to contest jurisdiction on the basis that both actions are disputes about the scope of coverage under a liability insurance contract that was entered into in the United States, by companies based in the United States. If the British Columbia courts have jurisdiction (which it disputed), then the United States is a more appropriate forum. Steadfast did not specify which state and which court would be more appropriate.
In reply, IRM and Ironshore stated that there is no choice of law clause in the Steadfast policy; Steadfast had attorned to the jurisdiction of the British Columbia courts by getting the procedure wrong; but, in any event, there is “a real and substantial connection” between the coverage actions and British Columbia as IRM was carrying on business in British Columbia and that is where the insurance disputes should be heard.
The essential facts that supported Steadfast’s argument is that in 2012, IRM’s office in Philadelphia, PA applied for a pollution liability policy from Steadfast who issued that policy from its Dover, Delaware office. The policy was then renewed and by then, Steadfast had become an Illinois company, with offices in Schaumburg, IL. Steadfast is not registered to do business in British Columbia. In short, the parties to the coverage dispute are American and the policies were issued in the United States offering worldwide coverage. The obligation to indemnify (if it exists) is an obligation that would be discharged in the United States. This coverage dispute has no connection, so argued Steadfast, with British Columbia.
Whether British Columbia has jurisdiction is to be determined “solely by reference” to Part 2 of the Court Jurisdiction and Proceedings Transfer Act (CJPTA) of B.C. Under that act the Court must determine whether there is “a real and substantial connection” over the matter under s. 3 of the CJPTA. Even where that question is answered in the affirmative, then under the second branch of the analysis the Court may decline to exercise its territorial competence on the basis that a court of another state is a more appropriate forum.
The CJPTA sets out a non-exhaustive list of circumstances in which a real and substantial connection is presumed to exist. One of them was whether the claim concerned business carried on in British Columbia. As to whether the insurance disputes (that of IRM and the Ironshore equitable contribution claim) had a real and substantial connection with British Columbia, the Court stated:
IRM has a good and arguable case for saying its claim against Steadfast concerns contractual obligations to be performed substantially in British Columbia. There is no dispute that the underlying claims arose from incidents that occurred in British Columbia, leading to claims filed in British Columbia. Considering the terms of the Steadfast policy and the facts alleged by IRM, there is an arguable case for saying that Steadfast had contractual obligations to IRM that ought to have been performed substantially in British Columbia. I am not convinced by Steadfast’s position that it could fulfill its contractual obligations by simply paying out funds in Delaware or Illinois for the purpose of indemnifying IRM’s insurable losses.
… Any associated restitutionary obligations owed by Steadfast to Ironshore as a co-insured would also arise substantially in British Columbia.
Following a significant discussion of the application of Vale Canada Limited v. Royal & Sun Alliance Insurance Company of Canada, 2022 ONCA 862, the Court concluded even accepting that Steadfast is an Illinois company, that the Steadfast policy was issued in Pennsylvania, Delaware, or Illinois, and that Steadfast was not registered or licensed for business in British Columbia, the facts alleged by IRM lead me to conclude that Steadfast was engaged in business that was “carried on in British Columbia”.
Alternatively, the court found that Steadfast had attorned to the jurisdiction of the British Columbia courts by filing a response to the civil claim.
Even though the British Columbia Court have jurisdiction over the insurance coverage disputes, the remaining issue was whether an unspecified American Court would be a more convenient jurisdiction to hear those disputes. The parties could not agree as to whether the law of British Columbia was the governing law on the obligation to indemnify. That issue had to await further argument and therefore it was a neutral factor in assessing whether British Columbia was a more convenient jurisdiction.
IRM’s claim against Steadfast is focused on recovery of IRM’s losses in connection with the vehicle damage actions. The amount of those losses is currently unknown because there is a potential dispute between IRM and one of the co-defendants, Westcan, as to whether Westcan has a contractual obligation to pay IRM’s legal fees in the vehicle damage actions.
Ironshore’s claim against Steadfast is focused on the share or proportion of IRM’s loss that must ultimately be borne by Ironshore and Steadfast respectively. And, since the amount of IRM’s loss in the vehicle damage actions has yet to be determined, there are potentially conflicting positions as to the amount of the loss to be apportioned between Ironshore and Steadfast.
The Court concluded that all of this auger for a process under which the same court that determines the scope or quantum of IRM’s loss in the vehicle damage actions should be tasked with determining the extent and limits of Steadfast’s responsibility for IRM’s losses, and the respective contributions of both Steadfast and Ironshore. Further, since there are potentially conflicting positions as to the scope and or quantum of IRM’s losses in the vehicle damage claims, there is a risk of conflicting decisions in different courts if the vehicle damage actions are determined in a separate jurisdiction from the claims regarding the extent and relative share of Steadfast’s responsibility for IRM’s losses.
In conclusion the Court stated:
the insurance policy that is at the heart of both actions provides “worldwide” coverage and does not contain any forum selection clause. Against that backdrop, there would not appear to be anything unfair about this Court maintaining jurisdiction over proceedings to determine the defendant’s responsibility to provide coverage for insurance claims arising out of underlying claims and events that occurred in this jurisdiction.
In terms of the overall public interest, none of the parties are located or resident in this jurisdiction, however the events and underlying court actions that are the subject of the claims against Steadfast originate in British Columbia. There is something to be said for the notion that all of the claims arising out of losses allegedly suffered in British Columbia should be determined in British Columbia.
I suspect that this will be appealed unless the parties can negotiate a resolution of the potential appeal. In the meantime, this judgment extends Vale holding that a coverage action on a worldwide liability policy that does not have a jurisdiction clause is likely to be heard in the Canadian province in which the underlying action arose, even if the policy was issued outside of Canada, even if the insurer in issue is not licensed in Canada.
In an ironic aside, IRM cancelled Westcan’s contract and in August of 2018 placed the contract with Trimac. A month later there was another sulphuric acid spill on the same highway but this time from a Trimac truck. Trimac’s contract was also cancelled. IRM is now transporting sulphuric acid with its own trucks and its own employees.
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