Volume XXVI, No. 15 (No. 688)
Friday, January 03, 2025
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.
I do love the time zone here. It’s 5:30 PM at home as I craft and send this note, but only 3:30 here. Still can get a bit of pool time in.
Happy New Year. Greetings from Scottsdale. It’s 75 degrees here right now. That ain’t bad. Watched the Peach Bowl yesterday, ASU-Texas -- yesterday afternoon – college football is a religion around here, It was tremendous game, going into double overtime.
Luckily, we have someone watching the home front in order to respond to my Ecobee thermometer warning that heat was not being generated by the furnace.
As we start the new year, we remind you of the firm and the individuals who provides this entertaining publication.
Hurwitz Fine P.C. is celebrating its 48th anniversary later this year, starting from a four-lawyer insurance defense firm to a 55+ lawyer regional and national insurance coverage, litigation, and transactional firm. We defend nursing homes, premises, professional liability, Labor Law, construction defect, commercial litigation, CGL, personal injury, personal and commercial auto claims, products, and all the rest. With lawyers located throughout New York State, including a half dozen or so on Long Island, and others in Rochester, Albany and elsewhere in New York, we also have lawyers resident in New Jersey and Connecticut.
We have a vibrant practice in the five boroughs, Long Island, Westchester, the Capital District, the North Country, the Southern Tier, Central and Western New York, Connecticut, New Jersey and all places in between. We consult on coverage nationwide and across the pond.
Coverage Pointers, and its sister publications, are here to educate.
We have a great editorial staff, with special thanks to Evan Gestwick who handles the final details in getting the article in place and our great contributors, each of whom submits a timely and relevant column and cover note: Steve Peiper, Lee Siegel, Kyle Ruffner, Ryan Maxwell, Scott Storm, Kate Fleming, Evan Gestwick, Ryan O’Shea, Rob Caggiano, Isabelle LaBarbara, Lexi Horton, and our Canadian correspondent, Heather Sanderson. Special thanks to our support staff – Donna Boice and Sarah McCandless, for their editorial assistance each and every issue.
These are superb professionals, each of them, and they make sure you have an issue in your mailbox on alternating Friday mornings.
Need a mediator for an insurance dispute? Coverage mediation is a thing!
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.
Try mediation.
Newsletters:
We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:
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Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!). Please drop a note to Jody Briandi at [email protected] to be added to the mailing list.
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Labor Law Pointers: Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at [email protected] to subscribe.
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Products Liability Pointers: Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies. Contact V. Christopher Potenza at [email protected] to subscribe.
- Medical & Nursing Home Liability Pointers. Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Elizabeth Midgley at [email protected] to subscribe.
Draining Drinkeries – 100 Years Ago:
Buffalo Courier Express
Buffalo, New York
3 Jan 1925
CHURCH COUNCIL
TAKES UP FIGHT
ON DRINKERIES
Complains against twenty places,
But mayor Schwab says he wants evidence
Soft drink license revocation proceedings in the mayor’s office yesterday disclosed that the Buffalo Council of Churches has recently complained to the police that there are at least twenty such places which are violating the law.
Joe Vath, dry squad leader, told about it. The mayor’s response was to the effect that the church council always seemed to be free with complaints while what he wants is evidence and not information.
Vath produced two bottles that he had picked up in his efforts to stop soft drinkeries from selling anything but soft stuff. The mayor wants the stuff analyzed as he is curious to know that chemical composition of the moonshine that it peddled at fifteen cents a shot.
Only one of eleven licenses were revoked by the mayor. Frank Lesnewski of No. 316 Frank Street lost his license after dry squad members testified that a woman in the place used vile language when she was caught selling booze.
Peiper on Property (and Potpourri):
Happy New Year.
We start this year off by looking at a final decision from 2024. In the Bacon, Jr. decision the Fourth Department rules that a subcontractor cannot be liable for a common law negligence unless they were supervising the means and methods of the injury producing incident. The court also appears to suggest that being alleged to have created a dangerous condition is insufficient, standing alone, to create a negligence claim. Extending this thread further, the Appellate Division ruled that Labor Law 200/Common Law Negligence claims should have been dismissed against a potentially implicated electrical subcontractor
What is strange, and frankly unsettling to us, is that in the next paragraph the Fourth Department then found a question of fact as to whether the subcontractor created the condition which caused the plaintiff to trip and fall.
Thus, creating a scenario where the cross-claiming defendant could seek contribution/indemnification, but the injured party had no right for a direct claim against the potentially responsible party. If plaintiff is able to demonstrate that the owner and/or general contractor had actual or constructive notice, this is a distinction without difference. The responsible owner and/or general contractor will be able to prosecute the crossclaim for common law indemnity/contribution, and if successful, shift exposure to the responsible subcontractor. If, however, plaintiff is unable to demonstrate notice was, or should have been, had by the owner and/or general contractor, then it will be out of luck. The common law claims against the owner/GC will be dismissed due to lack of notice, and any avenue to recover against the actual culpable party will have been precluded by operation of this decision.
To be candid, we had always assumed that a party who creates a dangerous condition on a work site resultingly creates a duty to the plaintiff. The Bacon, Jr. decision, at least for the time being, has us rethinking that logic.
That’s it for now, as we close out another abbreviated work week. See you in two weeks and stay warm in the meantime.
Steve
Steven E. Peiper
[email protected]
Lynching Losing – 100 Years Ago:
The Buffalo News
Buffalo, New York
3 Jan 1925
ILLEGAL as well as legal executions appear to be going out of style. The year 1924 saw 16 lynchings as against 83 in 1923.
Lee’s Connecticut Chronicles:
Dear Nutmeggers,
Wishing everyone a very healthy and happy 2025! Already eyeing a full docket, so it’s time to get back to work!
Lee
Lee S. Siegel
[email protected]
Priest v. Undertaker – 100 Years Ago:
Buffalo Courier Express
Buffalo, New York
3 Jan 1925
JURY RETURNS
GUILTY VERDICT
AGAINST CLERIC
Father Paul Kuznik convicted of hitting undertaker during row over burial.
PLEADED SELF-DEFENSE
Attorneys make motion for new trial; sentence imposed on Wednesday.
A jury yesterday in city court found the Rev. Paul Kuznik, pastor of the Holy Mother of Rosary, independent Polish Catholic church, guilty of assaulting Anthony Orlowski, an undertaker of No. 173 Stanislaus street but recommended leniency.
Attorney Henry Adsit Bull made a motion for a new trial on the ground that the verdict was against the weight of evidence. Judge Keeler denied the motion. He will impose sentence on Wednesday.
The undertaker went to the rectory at Sycamore and Sobieski streets on the night of December 7th on learning that the clergyman had said he would not allow him to conduct a funeral from his church because he was not a member.
Orlowski claims he was attacked without provocation when he demanded an explanation. Father Kuznik said he struck in self-defence when he believed the undertaker was about to attack him.
Ruffner’s Road Review:
Dear Readers,
I hope everyone had a great Christmas and New Year’s. It was nice to have some time off to relax and to spend time with family and friends for the holidays.
This week I have no new No-Fault decisions to report but do have one SUM case from Bronx County Supreme Court. The insurance company brought a motion to dismiss the SUM complaint of the plaintiff on the basis that the policy language required arbitration where there was a disagreement as to the amount owed under the SUM coverage. However, the court determined that the applicable Section of the Policy gave the insured the option, rather than a requirement, to arbitrate such dispute.
Kyle
Kyle A. Ruffner
[email protected]
Follow Up to Previous Story – 100 Years Ago:
Buffalo Courier Express
Buffalo, New York
8 Jan 1925
PRIEST FINED
FOR BEATING
UNDERTAKER
Rev. Paul Kuznik penalized after conviction on assault charge,
Judge Patrick J. Keeler yesterday imposed a fine of $25 upon the Rev, Paul Kuznik, pastor of an Independent Polish Catholic church at Sycamore and Sobieski streets. He was convicted a week ago by a city court jury, which recommended leniency, for assaulting Anothy Orlowski, an undertaker at No. 173 Stanislaus street.
Ryan’s Federal Reporter:
Hello Loyal Coverage Pointers Subscribers:
Cheers to 2025 and Happy New Year! Raise your hand if your resolutions have withstood the past two days? My goal this year is to spend more time in the kitchen for my family. Easy recipes for dads that don’t cook are welcome at my email address below. Send…help.
This edition, I have tackled a Coverage B case involving an interesting twist. Can an insured rewrite the underlying allegations in a Settlement Agreement in order to trigger a coverage obligation? You’ll just have to read and see. The answer may shock you (or not).
Until Next Time,
Ryan
Ryan P. Maxwell
[email protected]
Color Me Satisfied – 100 Years Ago:
Democrat and Chronicle
Rochester, New York
3 Jan 1925
WOMAN OFFICIAL
ENDS ARGUMENT
OVER HER GOWN
Albany, Jan. 2. – (By the Associated Press.) - Controversy over the color of the gown worn by Mrs. Florence E. S. Knapp on her first public appearance as secretary of state at the inauguration ceremonies yesterday was settled to-day when the new secretary informed a party of fifteen newspapermen that the dress was chiffon velvet of a peach hue.
Just a bit timid at receiving so large a group, Mrs. Knapp sent word that she would meet three of the men at a time, but the first three persuaded her to alter the ruling. As the other dozen marched into her office, the expected question was voiced:
“Mrs. Knapp, did you wear an orange or peach-colored gown yesterday and was it velvet or some other material?”
“It was peach-colored chiffon velvet,” the state’s first woman official replied with a laugh. “Please correct the impression that it was orange for I wouldn’t for the world have people believe I was so partial to Syracuse University as to wear its color at the inauguration.”
Her first impression of the state government, Mrs. Knapp added, was the spirit of good will and cooperation which was evidence yesterday and to-day.
“More Enjoyable than anything else in my experience yesterday,” she said, “aside from the sense of responsibility which I felt, was the fine spirit throughout the ceremonies – a splendid sense of cooperation, with no partisan lines drawn. I am sure that this will be a pleasant experience.”
Storm’s SIU:
Hi Team:
I hope you had a wonderful and memorable Christmas and Hanukkah with your family and friends. I did too.
One interesting case this week:
- Complaint in 1st-Party Property Litigation Dismissed Due Breach of the Two-Year Contractual Suit Limitation Condition Which Commenced on the Date the Water Leak First Occurred, Despite Allegations of Continuing Damage for Months. The Phrase “Direct Physical Loss or Damage” is Not Ambiguous.
Happy New Year! “You are never too old to set another goal or to dream a new dream” ~ C.S. Lewis.
Let’s Go Buffalo! We will talk again in two weeks…
Scott
Scott D. Storm
[email protected]
Say What? – 100 Years Ago:
The Buffalo Times
Buffalo, New York
3 Jan 1925
Mute Wife Must Cease
Nagging Deaf Husband
CHICAGO, Ill., Jan. 3. – Judge Morgan in the court of domestic relations issued an order that Mrs. D. Reynolds, a deaf and dumb wide, cease nagging her husband, who is a deaf-mute. The judge also ordered the husband to appear before him in court every day until a job can be found for him.
Mrs. Reynolds has caused the arrest of her husband because he was out of work and was planning to go to New York if relatives would pay his transportation. In court the deaf-mute wife kept the air agitated with her silent talk on her fingers, but it was plain even to the uninitiated that she was saying things.
Mrs. Edward Ingersoll, a relative, with whom the Reynolds have been living, said the deaf-mute wide was in the habit of making a constant fuss because her husband was contributing nothing to the support of her or their two children. Their son, who is thirteen years old, is an exceptionally bright fellow who can both hear and talk. The other boy, ten years old, is a deaf-mute.
The court ordered Reynolds to forget about his proposed New York trip and promised to find employment for him.
Fleming’s Finest:
Hi Coverage Pointers Subscribers:
Happy New Year! Hope you had a good holiday and New Year’s.
This week’s case comes from the Missouri Supreme Court. The court considered whether an insurer could intervene in an underlying wrongful death action to seek a stay while litigating coverage questions.
See you in a fortnight,
Kate
Katherine A. Fleming
[email protected]
Fined for What? – 100 Years Ago:
The Buffalo News
Buffalo, New York
3 Jan 1925
TWO FINED FOR JITNEYING.
Vitor Vitello, 27 years old, 324 Seneca Street, was fined $50 by Judge Maul for having Ford roadster H-censes on his Ford coupe. He says he bought the car for $150.
Using his automobile for his cost Warren W. Putnam, 233 Virginia street, a $25 tax. Charles Battaglia, 162 Trenton Avenue, paid a similar fine for jitneying.
Gestwick’s Garden State Gazette:
Dear Readers:
I hope everyone enjoyed their celebrations. Among my gifts was a food dehydrator. I attempted my first batch of beef jerky over the break, which turned out tasty, but a bit tough. Any fellow jerky makers out there are invited to share tips and/or recipes to my email address below.
The case I have for you this week is one of pure logic and common sense. You don’t see that every day anymore, so I thought I’d report on it. Essentially, the insured’s brother was going through a divorce, so the insured was nice enough to put him up for a period of time while he got back on his feet. Eventually, the brother got his own place, but still borrowed the insured’s vehicle occasionally. The brother was injured in a car accident while using the insured auto. After the responsible party’s carrier tendered its liability limits, the brother made an underinsured motorist claim with the insured’s carrier. The carrier denied coverage on the ground that the brother was not a “resident relative,” and in the alternative, that the insured never notified the carrier of the addition of his brother to the household. The Court held that either the brother was not a resident relative, or he was but it was never reported to the carrier, and that either way, there was no coverage for the loss. Makes sense to me.
Have a good two weeks and Go Bills!
Evan
Evan D. Gestwick
[email protected]
A Clear Slate – 100 Years Ago:
The Buffalo News
Buffalo, New York
3 Jan 1925
TWO CONFESS CRIMES
AND START YEAR RIGHT
CHICAGO, Jan 3. – A boy from San Francisco and a young man from Paterson, N.J., “started the News Year right” by confessing their misdeeds to police here.
Floyd Irvine, 18, of San Francisco, walked into police headquarters,
“I stole over $300 from a firm I was employed by in San Francisco,” he said. “I want to give myself up and get started right for the new year.”
He had hardly been placed in a cell when Prantice Hengelveld, 26, of Paterson, stumbled in.
“I’m wanted in Paterson for stealing an automobile,” he stammered. “I want to give myself up and get started right for the new year.”
He was given a cell adjoining Irvines.
O’Shea Rides the Circuits:
Hey Readers,
Happy New Year everyone -- I hope everyone enjoyed their celebrations.
This week I have a case from the Tenth Circuit regarding an insured’s attempt to circumvent the property damage portion of a builder’s risk policy. Essentially, the sole insured incurred no costs to repair a slab but still attempted to recoup repair costs as well as delay in construction costs.
Until Next Time,
Ryan
Ryan P. O’Shea
[email protected]
A “Blue” New Year – 100 Years Ago:
The Herald Statesman
Yonkers, New York
3 Jan 1925
PAINTING WASHINGTON BLUE
Residents of the District of Columbia have no ballot with which to defend themselves, so Senator Wesley L. Jones, of Washington State, has taken advantage of the situation to present a bill in Congress providing for the bluest sort of Sunday blue laws for the seat of the national government. Senator Jones is determined that District of Columbians shall neither work nor play on the Sabbath for his pet bill embraces both business and entertainment.
The population of the District of Columbia consists of private citizens, government employes and public officials. Against which group is the Jones bill aimed? Does Senator Jones propose to encroach upon the personal liberties of the private citizenry of the district without giving them a voice in the matter? Does he present the bill to discipline government employes at the capital, perhaps? Or would he imply that the President and the members of the Cabinet and of Congress are in need of Sunday restrictions? His purpose must rest between the latter two because, being a United States Senator, he must believe in representation in government and in the inalienable right of American citizens to govern themselves. If he does believe in forcing Sunday blue laws on the district he is not alone for the devout from far and near are said to have endorsed the bill.
Rob Reaches the Threshold:
Dear Readers,
Happy New Year! Similar to literally everyone else, I begin the new year with a resolution to (1) get in shape, and (2) eat better. This novel resolution is one I embark on with my twin brother, in order to maintain accountability. However, he runs marathons ... so I feel like this will be an uphill battle. Nevertheless, I hope to be able to report on my progress and results. Best of luck with your own respective resolutions!
To start 2025, we ease into our analysis of 5102(d) Serious Injury with a decision from the Second Department reminding plaintiffs of the importance of causal relationship opinions where there are expert reports claiming an injury is degenerative and preexisting in nature.
Hope you all enjoy the read.
Rob
Robert J. Caggiano
[email protected]
Lights, Camera, Divorce – 100 Years Ago:
Democrat and Chronicle
Rochester, New York
3 Jan 1925
Local
HUSBAND GRANTED DIVORCE FROM ROCHESTER WIFE.
Baltimore, Md., Jan 2. – (Special Dispatch to the Democrat and Chronicle) – Frederick P. Stieff, Jr., was granted an absolute divorce to-day from Mrs. Frances Helen Stieff, of Rochester, N.Y. by Judge Charles F. Stein in the Circuit Court here. Stieff told the court that his wife deserted him for a literary and dramatic career. He said that they were married in Detroit in December 1917, while he was in the army in the summer of 1921. He said Mrs. Stieff began to grow restless and declared that she wanted to follow a literary and dramatic career. On November 26th Stieff said she packed her clothes and left for her home in Rochester, leaving her child Frances Helen Stieff, Jr., now eight years old in his care. The court awarded custody of the child to Stieff, Though Mrs. Steiff’s home in in Rochester Stieff said she spend a good deal of time in New York seeking success via the bright lights, Mrs., Stieff did not contest the suit nor did she demand custody of the child in he answer to Stieff’s charges which she filed several days after he entered suit for divorce she asserted she did not believe he voluntarily filed the sit and that he had made no effort to bring about a reconciliation.
LaBarbera’s Lower Court Library:
Dear Readers:
Hope everyone had a happy and healthy holiday season. Wishing everyone good luck as we enter another year.
This week I report on a Bronx County case, denying an insurer’s motion for summary judgment in its entirety. The court found that the arbitration provision was at the option of the insured, and not mandatory. Further, based on Hanover’s failure to notice the injured party for an EUO or IME, the court allowed the litigation to proceed.
Isabelle
Isabelle H. LaBarbera
[email protected]
Sacco and Vanzetti were executed in 1927 – 100 Years Ago:
Buffalo Courier Express
Buffalo, New York
3 Jan 1925
CONVICTED MURDERER
IS ADJUDGED INSANE
Bridgewater, Mass., Jan 2 (A.P.) – Bartolomeo Vanzetti, convicted with Nicola Sacco of the murder of a paymaster and his guard in South Braintree, on April 15, 1920, was committed to the Bridgewater Hospital for the insane today. He had been adjudged insane by alienists who had him under observation since prison officials reported him acting strangely two weeks ago. The cases of Sacco and Vanzetti have attracted international attention as a result of radical demonstrations in their interest. Both still await sentence on the murder conviction.
Lexi’s Legislative Lowdown:
Dear Readers,
Happy New Year!
This week’s column addresses the recent veto of the “Grieving Families Act” by Governor Kathy Hochul.
Thanks for reading,
Lexi
Lexi R. Horton
[email protected]
[INSERT HEADLINE HERE] – 100 Years Ago:
The Buffalo News
Buffalo, New York
3 Jan 1925
DEAF, DUMB WIFE NAGGED
HIM, MUTE TELLS COURT
CHICAGO, Jan. 3. – Arraigned for non-support in the court of domestic relations today, Allison Reynolds, 56, a deaf mute, through an interpreter, accused his wife, Jennie, also a deaf mute of “continual nagging.”
His wife, he said, scolded him in the deaf and dumb sign language, because he did not make more money.
The judge continued the case, promising Reynolds a job and asking Mrs. Reynolds to be a little more lenient.
North of the Border:
Hard to believe that the calendar has turned over to 2025. But after a restful holiday spent with grandkids about, I’m ready to tackle January, which always seems to be the longest month of the year.
My column this week discusses an important trial level decision on material misrepresentation in the context of historical sexual abuse. Happy reading.
Heather
Heather A. Sanderson
Sanderson Law
Calgary, Alberta, Canada
[email protected]
Headlines from this week’s issue, attached:
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
- If an Insurer and Insured Are Unaware of an Accident at the Time a Policy Is Retroactively Canceled, It Will Not Cover an Accident That Occurred Prior to Cancellation. Ignorance Is Bliss
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
- No Labor Law 200 Claims Against Subcontractor, Even Though a Question of Fact Exists as to Whether It Created the Condition Causing the Loss; Indemnity Cross-Claims, However, Survive
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]
- Inconsistent Mailings Defeat Policy Cancellation
RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
[email protected]
- Court Denies Insurer’s Motion to Dismiss SUM Complaint, as Insured Had Option to Arbitrate Dispute but Was Not Required
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
- No Coverage For Personal and Advertising Injury Absent Disparagement Claim in the Underlying Complaint
STORM’S SIU
Scott D. Storm
[email protected]
- Complaint in 1st Party Property Litigation Dismissed Due to Breach of the Two-Year Contractual Suit Limitation Condition Which Commenced on the Date the Water Leak First Occurred, Despite Allegations of Continuing Damage for Months. The Phrase “Direct Physical Loss or Damage” Is Not Ambiguous.
FLEMING’S FINEST
Katherine A. Fleming
[email protected]
- Insurer Able to Intervene in Underlying Wrongful Death Action to Seek Stay While Litigating Coverage Questions
GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]
- Court Holds That Even if UIM Claimant Was a Resident Relative, Still No Coverage Due to the Failure to Notify the Insurer of the Change
O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]
- Reversal and New Trial Awarded to Insurer Where Trial Court Erroneously Instructs Jury Where Evidence Showed That Insured Never Incurred Repair Costs for Property Damage
ROB REACHES the THRESHOLD
Robert J. Caggiano
[email protected]
- Second Department Affirms Order Dismissing Complaint Against Defendants Where Plaintiff Submissions in Opposition to Summary Judgment Were Insufficient to Raise a Triable Issue of Fact on Whether She Sustained a Serious Injury Within the Meaning of Insurance Law § 5102(d)
LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]
- Insurer Motion to Dismiss Denied, Based on Plain Language of Arbitration Provision
LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]
- Governor Kathy Hochul Vetoes the Wrongful Death Expansion Legislation, Bills A9232B/S8485B
NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
[email protected]
- Court Voids Liability Policies After Finding that Material Non-Disclosure of History of Sexual Abuse Amounts to Civil Fraud.
We wish you health and prosperity in the new year.
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 and New Jersey.
In addition, Dan D. Kohane is a Foreign Legal Consultant, Permit No. 0119144, 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
Domenica D. Hart
Ryan P. Maxwell
Kyle A. Ruffner
Katherine A. Fleming
Evan D. Gestwick
Ryan P. O’Shea
Isabelle H. LaBarbera
Lexi R. Horton
FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
[email protected]
Michael F. Perley
Scott D. Storm
NO-FAULT/UM/SUM TEAM
Dan D. Kohane
[email protected]
Ryan P. O’Shea
[email protected]
Kyle A. Ruffner
[email protected]
APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]
Topical Index
Peiper on Property and Potpourri
Lee’s Connecticut Chronicles
Ruffner’s Road Review
Ryan’s Federal Reporter
Gestwick’s Garden State Gazette
LaBarbera’s Lower Court Library
Lexi’s Legislative Lowdown
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
12/24/24 New York Marine and Gen. Ins. Co. v Kookmin Best Ins. Co.
Appellate Division, First Department
If an Insurer and Insured Are Unaware of an Accident at the Time a Policy Is Retroactively Canceled, It Will Not Cover an Accident That Occurred Prior to Cancellation. Ignorance Is Bliss
The court properly granted Kookmin’s motion for summary judgment dismissing the complaint and denied plaintiffs' motion for summary judgment. It is undisputed that KBIC and its insured did not have notice of the accident forming the basis of the underlying action's negligence claim at the time that they agreed to retroactively cancel KBIC's insurance policy. The risk assumed by KBIC therefore never "fully matured into a responsibility" before KBIC and its insured retroactively cancelled their policy, so that cancellation was an effective ground to disclaim coverage to Decatur,
An insured and an insurer are, of course, free to agree upon the 'cancellation flat' of a binder before matured risk and, so long as the rights of no third party are affected . . . , there is no reason why an insured may not effectively cancel 'flat' even after the occurrence of an insurable accident". Contrary to plaintiffs' contention, the Court did not view the point at which a risk "matures" as being the same as the occurrence of an insurable accident. A retroactive cancellation of an insurance policy can be effective where neither the tenant nor the insurer's agent were aware of an accident that occurred the same day the cancellation was initiated.
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
12/20/24 Bacon, Jr. v. Shults Mgt. Group, Inc.
Appellate Division, Fourth Department
No Labor Law 200 Claims Against Subcontractor, Even Though a Question of Fact Exists as to Whether It Created the Condition Causing the Loss; Indemnity Crossclaims, However, Survive
Plaintiff sustained injury when he fell in the course of his employment at a construction site. The incident was allegedly caused when plaintiff tripped over an electrician’s pull string that had been tied to a doorknob. Defendant, Ahlstrom, served as the electrical subcontractor on the project. It moved to dismiss plaintiff’s claims sounding in Labor 241(6) and 200/common law negligence. It also moved to dismiss the crossclaims asserted by Kessel, the general contractor on the job site, which sought common law and contractual indemnification.
The Appellate Division ruled that Ahlstrom’s motion for summary judgment dismissing the Labor Law 241(6) and 200 claims, respectively. In reaching this determination, the court determined that Ahlstrom met its burden of demonstrating it did not have authority to supervise, direct, nor control the work of the plaintiff at the time of the incident.
Further, the court appears to hold that a subcontractor cannot be responsible under Labor Law 200 because it was not the owner or general contractor. Kessel argued that Ahlstrom, as the electrical contractor, created the condition upon which plaintiff fell (the electrician’s pull string), and, as such, it was responsible for the loss. The court, however, stated that under Labor Law 200 a subcontractor could not be held liable unless it controlled the plaintiff’s work and/or the area where the injury occurred. Neither, apparently, were true under the circumstances of this claim.
Ahlstrom’s motion dismissing the indemnity crossclaims, however, was denied. The court found that a question of fact existed as to whether Ahlstrom, in fact, created the defective condition. If it was negligent, it followed that common law and/or contractual indemnity obligations running in favor of Kessel may well follow.
As a final matter, the Court affirmed the trial court’s dismissal of Ahlstrom’s claim for spoliation. Apparently, the pull string was removed and discarded shortly after the incident. Here, because Ahlstrom was unable to demonstrate that Kessel’s foreman removed the string with a “culpable state of mind,” it followed that sanctions were inappropriate.
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]
12/24/24 Napolitano v. Ace American Ins. Co.
Supreme Court of Connecticut
Inconsistent Mailings Defeat Policy Cancellation
The Supreme Court reversed the Appellate Court, reinstating summary judgment for the insured. While the carrier complied with the statutory requirements to cancel the insured’s workers compensation policy, such compliance did not supplant the insurer's common law obligations when cancelling an insurance policy. Because the insurer sent inconsistent and confusing mailings, the attempt to cancel the policy was ineffective.
The insurance company sent two separate notices to the plaintiff dated April 5, 2018, one was a noncooperation notice and the other a cancellation notice. The noncooperation notice stated failure to comply with audit requests would result in cancellation, while the cancellation notice stated the policy was cancelled effective April 25, 2018. The plaintiff was later told by his insurance agent that he was "compliant at this time." The insured, later, received a notice acknowledging receipt of tax documents but stating that other outstanding documents needed to be provided by April 21. The insured did not provide the documents, relying on the broker’s statement that the policy was in compliance.
On May 29, 2018, the plaintiff's employee was injured and made a worker’s compensation claim. Ace denied coverage, claiming the policy had been cancelled effective April 25, 2018. A hearing found that the injury was compensable, that coverage was appropriately cancelled in compliance with the applicable statute by delivering notice to the Commissioner, and the Second Injury Fund settled with the worker for $225,000.
This suit followed, with the insured claiming that Ace was obligated to defend and indemnify it for the worker’s compensation claim and sought other breach of contract and bad faith damages. The trial court found for the insured, but the Appellate Court reversed, finding that the carrier’s compliance with the statutory requirements for cancellation indeed cancelled the policy.
The Supreme Court reinstated the trial court’s holding. The Court found that although the insurer satisfactorily complied with the statutory scheme it failed to comply with its obligation at common law to provide an unambiguous and unequivocal intent to cancel. It is well settled, the Court noted, that notices cancelling insurance policies must be "construed in favor of the insured . . . [and] be definite and certain," and "[a]ny uncertainty as to the meaning of a notice from an insurer to its insured must be resolved against the insurer and in favor of the insured." [Citations omitted.]
The Appellate Court incorrectly limited its analysis to whether there was a definite and certain notice of cancellation under § 31-348 and then applied that circumscribed inquiry to determine the contractual obligations between the plaintiff and the defendant. the Appellate Court concluded that, because the chairperson of the commission received only the cancellation notice, the notice of cancellation was definite and certain. “We conclude, instead, that, when a court considers whether notice of cancellation made under a workers' compensation insurance policy was sufficiently definite and certain, it must consider all relevant communications between the parties, rather than limit its analysis to the notice received by the chairperson under § 31-348.”
Looking at the body of communications from the carrier to the insured, the Court concluded that they were not objectively definite and certain. As a result, the Court reinstated the decision of the trial court finding coverage for the insured.
RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
[email protected]
12/23/24 Pedro Maldonado Martinez v. The Hanover Insurance Group
Supreme Court, Bronx County
Court Denies Insurer’s Motion to Dismiss SUM Complaint, as Insured Had Option to Arbitrate Dispute but Was Not Required
At the time of the subject motor vehicle accident, plaintiff was operating a vehicle owned by his employer, non-party United Building Maintenance Associates, and collided with a vehicle operated by Moussa Konita and owned by Sonkouna Djaguely, non-parties to this action. The plaintiff alleged he sustained a serious injury as a result of the accident.
The Djaguely vehicle was insured by State Farm with a $25,000/$50,000 policy limit and the United Vehicle was insured by defendant Hanover Insurance Company, which provided for $1,000,000 in supplementary uninsured/underinsured motorist coverage. The policy contained an arbitration clause which provided in relevant part in Section 11:
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If any insured makes a claim under this SUM coverage and we do not agree that such insured is legally entitled to recover damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the insured, or we do not agree as to the amount of payment that may be owing under this SUM coverage, then, at the option and upon written demand of such insured, the matter or matters upon which such insured and we do not agree shall be settled by arbitration [ . . . ], pursuant to procedures approved by the Superintendent of Financial Services for this purpose.
- If the maximum amount of SUM coverage provided by this endorsement equals the amount of coverage required to be provided by New York Insurance Law section 3420(f)(1) and New York Vehicle and Traffic Law Article 6 or 8, then such disagreement shall be settled by such arbitration procedures upon written demand of either the insured or us" [Policy at 100, SUM Endorsement § 11 (emphasis added)].
State Farm tendered its policy limit of $25,000, which plaintiff accepted in settlement of his claims against Konita and Djaguely. However, plaintiff asserted that the value of his injuries far exceeded $25,000 and demanded judgment of $975,000. Defendant brought this motion to dismiss, arguing that the arbitration clause in the SUM endorsement is incorporated into the Policy and is part of the terms and conditions of coverage, by which plaintiff as an additional insured was bound, and further argued that the endorsement in the Policy cannot be deviated from because it is statutorily prescribed. Therefore, Defendant asserts plaintiff cannot bring this action because he did not satisfy a condition precedent to litigation. Plaintiff argued in opposition that arbitration is not mandatory according to the plain language of the SUM endorsement and arbitration clause, and, rather, may be selected "at the option" of the insured when the insured and insurer disagree on the value of the claim
The court emphasized it is the policy of this State to interfere as little as possible with the freedom of consenting parties in structuring their arbitration relationship, as “it is for the court in the first instance to determine whether parties have agreed to submit their disputes to arbitration and, if so, whether the disputes generally come within the scope of their arbitration agreement". It was undisputed that the language of the Policy here was clear and unambiguous and, as such, must be enforced according to the plain meaning of its terms. As such, the Court agreed with the reading of the arbitration clause advanced by plaintiff, which clearly gave the insured the "option" to demand arbitration, but did not mandate it.
By contrast, the mandatory arbitration language found in section 11(b) of the endorsement only applies where the amount of SUM coverage in the Policy equals the statutory minimum. However, as the Policy provided for $1,000,000 in SUM coverage, more than the statutory minimum, section 11(a), rather than section 11(b), of the endorsement applies. Thereunder, plaintiff, as an insured, may choose to arbitrate, but is not required to do so. Lastly, concerning whether plaintiff satisfied conditions precedent to litigation, the court held that the Policy required plaintiff to submit to an EUO or IME as defendant may reasonably require, however, the Defendant provided no proof that it ever noticed an EUO or IME, or that plaintiff failed to appear as required.
Accordingly, the court denied the Defendant’s motion to dismiss and directed that it file and serve an answer within 30 days.
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
12/18/24 Tzumi Elecs. LLC v. The Burlington Ins. Co.
United States Court of Appeals, Second Circuit
No Coverage For Personal and Advertising Injury Absent Disparagement Claim in the Underlying Complaint
Tzumi Electronics filed suit against its insurer, The Burlington Insurance Company. Tzumi sought a declaratory judgment that a commercial general liability policy required Burlington to defend and indemnify Tzumi in an underlying consumer class action lawsuit alleging that Tzumi misrepresented the charging capacity of certain power bank devices that it sold. Burlington denied coverage because the complaint against Tzumi did not allege “disparagement” of any of Tzumi’s competitors and, in any event, various exclusions in the policy applied to bar coverage.
Under the Burlington policy, personal and advertising injury was defined in relevant part to encompass claims “arising out of . . . publication, in any manner, of material that . . . disparages a person’s or organization’s goods, products or services.” Tzumi asserted that the complaint’s reference to Cal. Civil Code §1770(a)(8) was an assertion of disparagement, because that statute allows consumers to seek damages for “[d]isparag[ement] [of] the goods, services, or business of another by false or misleading representation of fact.” The Second Circuit disagreed.
Finding for Burlington, the Second Circuit found, quoting language from the District Court’s original decision, that the underlying complaint’s included merely a “passing citation to the entirety of the California false advertising statute, as part of a longer list of general citations to the consumer protection statutes of eleven states.” It did not reference §1770(a)(8) directly, and the factual allegations within the complaint did not otherwise support a claim under that Section. Specifically, the misrepresentations alleged “did not include any assertions that reflected on competitor products and thus cannot support a claim of disparagement.”
While Tzumi additionally argued that a Settlement agreement supported its interpretation of the allegations, the recitals relied upon, “on their face simply reflect[ed] the way Tzumi interpret[ed] the allegations,” without magically modifying the unambiguous allegations into a disparagement claim that was never made. As the District Court had found, Tzumi had merely “sought to transmogrify the actual allegations made in the Underlying Complaint into something resembling a covered disparagement claim.”
Maxwell’s Minute: As Coverage B cases go, this one had an interesting twist regarding the Settlement Agreement. The Court was unwilling to accept the insured’s self-serving “interpretation” of the allegations as something they were not. This reminds me of a growing trend in the additional insured context, where some additional insureds have been permitted to plead themselves into coverage by way of mere self-serving third-party allegations. The difference here is that while an additional insured’s third-party claims may be true (triggering coverage) or they may be not (eliminating coverage), the interpretation of the allegations by the insured in this case was well off the scent and completely out of left field.
The federal courts are better at parsing the additional insured issue at the moment, approaching third-party allegations of a purported additional insured with at least some skepticism, requiring more than mere conclusory assertions to check coverage boxes.
STORM’S SIU
Scott D. Storm
[email protected]
03/18/24 Pizza on 23rd Corp. v. Liberty Mut. Ins. Co.
United States District Court, Southern District of New York
Complaint in 1st Party Property Litigation Dismissed Due to Breach of the Two-Year Contractual Suit Limitation Condition Which Commenced on the Date the Water Leak First Occurred, Despite Allegations of Continuing Damage for Months. The Phrase “Direct Physical Loss or Damage” Is Not Ambiguous
Plaintiff alleges breach of contract and a bad faith coverage denial. Defendant’s motion for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c) is granted.
Plaintiff sustained a water leak on July 1, 2020, causing damage to its business and personal property. On August 20, 2020, Defendant disclaimed coverage. Plaintiff alleges the water continued to damage the property at all times and including up to the time that it vacated the premises on May 12, 2021.
The Policy contains a contractual suit limitation condition:
Legal Action Against Us No one may bring a legal action against us under this insurance unless: a. There has been full compliance with all of the terms of this insurance; and b. The action is brought within 2 years after the date on which the direct physical loss or damage occurred.
The Complaint was filed on November 4, 2022. Plaintiff contends that the contractual limitation is ambiguous and must be construed in favor of the insured and that the time limitation should be calculated to accrue from May 12, 2021, not July 1, 2020.
The Plaintiff does not contend that the limitations provision is unenforceable. Instead, it argues that the policy language is ambiguous because the phrase, “direct physical loss or damage”, is not defined in the policy. After reviewing the law on ambiguity, the Court held that the phrase is not ambiguous. "A plain reading of ‘physical loss' connotes a destruction or elimination of property, whereas ‘physical damage' connotes tangible harm to property." [Citations omitted].
Plaintiff argued that the limitations provision is ambiguous as to when the limitations period begins to run. The Court said that “The Second Circuit has held, however, that a ‘policy requir[ing] any action to be brought ‘within two years after the date on which the direct physical loss or damage occurred’ contains ‘highly specific limitations language.’ Fabozzi v. Lexington Ins. Co., 601 F.3d 88, 92 (2d Cir. 2010)” [additional citations omitted]. "’Direct' and ‘physical' plainly modify both ‘loss' and ‘damage.' So, on its face, the provision unambiguously refers to a single date: the one on which the fire, storm, flood, or other physical event occurs." [Citation omitted].
The Complaint alleges that water began to leak into Plaintiff's business on July 1, 2020. The Court said that “In an obvious attempt to evade the policy's limitations provision, Plaintiff pleads that ‘the damage and/or loss resulting from the July 1, 2020, water leaks was continuous through May 12, 2021’…In so pleading, however, Plaintiff is merely acknowledging that the damage and loss results from a water leak that began on July 1, 2020”. Because "the [limitation] provision unambiguously refers to [the date]…on which the fire, or storm, or flood, or other physical event occurs" [citation omitted] the Policy's limitations period began to run on July 1, 2020”. The Court said that although there may have been continuing damage resulting from the water leak in the months that followed, the policy language "directly refer[s] to the physical event that gave rise to the claimed damages." Because the water leak causing the physical damage occurred on July 1, 2020, and the Complaint was not filed until November 4, 2022, Plaintiff's claims were time-barred under the policy.
FLEMING’S FINEST
Katherine A. Fleming
[email protected]
12/23/24 McCrackin v. Mullen
Missouri Supreme Court
Insurer Able to Intervene in Underlying Wrongful Death Action to Seek Stay While Litigating Coverage Questions
The decedent was shot and killed outside a pool hall. The insurer, Safeco, issued a homeowners insurance policy to Mullen’s grandmother, with whom he allegedly lived at the time of the shooting. The policy was in effect at the time of the decedent’s death. The state indicted Mullen for first-degree murder and armed criminal action for his alleged involvement. Mullen pleaded guilty to first-degree involuntary manslaughter and armed criminal action. McCrackin filed a wrongful death action against Mullen and three others, alleging they lured the decedent from the pool hall to ambush him. Mullen never requested that Safeco defend him in the wrongful death action and hired separate counsel. McCrackin sent Safeco a letter identifying Mullen as an insured under the homeowners policy and offered to settle the wrongful death claim against Mullen in exchange for Safeco’s agreement to pay the total liability coverage limits. Safeco declined and stated there was no coverage for intentional acts. McCrackin then sought leave to file an amended petition alleging Mullen negligently failed to warn the decedent of the danger posed by his accomplice. Safeco again advised there was no coverage for intentional and criminal conduct.
Safeco filed a declaratory judgment action in federal district court seeking a declaration of no coverage and that it had no duty to defend or indemnify Mullen. McCrackin moved to stay the case pending resolution of the criminal case. Next, McCrackin sought leave to file a second amended complaint alleging counts of negligence by participating in a prank and failure to warn. The federal court sustained the motion to stay.
Safeco moved to intervene in the wrongful death action to stay proceedings until the resolution of the declaratory judgment action. The circuit court overruled Safeco’s motion to intervene, finding Safeco lacked the right to intervene. The circuit court entered a judgment against Mullen for the decedent’s wrongful death and awarded McCrackin $16.5 million in damages. Safeco appealed.
The Missouri Supreme Court considered whether Safeco met the requirements to intervene as a matter of right in the wrongful death action for the limited purpose of seeking a stay. Under the relevant precedent, an insurer with a coverage question could seek intervention in the underlying tort action for the sole purpose of seeking a stay of the tort proceedings while coverage questions were litigated in a separate declaratory judgment action. The applicable law provides that upon timely application, anyone shall be permitted to intervene in an action when the applicant claims an interest relating to the property or transaction that is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant’s ability to protect that interest, unless the applicant’s interest is adequately represented by existing parties. Safeco contended it had an interest in the wrongful death action and was situated such that the disposition of the wrongful death action might as a practical matter impair or impede its ability to protect that interest as a potential defender of the claims against Mullen. McCrackin argued that the intervention-and-stay solution should not be followed, but the Court noted the procedures eliminate the risk of the insurer waiving control of the defense and preserves the insurer’s opportunity to defend against the tort action. McCrackin also argued that an insurance company does not have a direct interest in an underlying lawsuit between a claimant and a potential insured. However, the Court reasoned that Safeco stood to gain or lose from a judgment in the underlying action, and insurers have an interest in protecting their right to defend in the underlying action, creating the right to intervene to seek a stay while coverage questions are litigated. Since Safeco met the criteria for intervention, the Court held the circuit court erred in overruling the motion to intervene.
GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]
01/02/25 Wolyniec v. Giraldo et al.
New Jersey Appellate Division
Even if UIM Claimant Was a Resident Relative, Still No Coverage Due to the Failure to Notify the Insurer of the Change
Wolyniec was going through a divorce, and his brother was kind enough to put him up for about a month while he looked for somewhere else to live. Wolyniec moved in with his brother in January 2020. By February of that year, Wolyniec moved into an apartment of his own. Around the same time, he filed his 2020 tax returns, using his brother’s address. In July, after he had moved into his new apartment, Wolyniec was injured in a car accident in which he was driving his brother’s vehicle.
Giraldo was the driver of the car that injured Wolyniec. After Giraldo’s carrier paid Wolyniec its $25,000 liability limit, Wolyniec submitted a UIM claim with his brother’s auto carrier, Allstate. Listed on the Allstate policy were Wolyniec’s brother and his wife, and their respective vehicles. Their address (the one at which Wolyniec had stayed for about one month earlier in the year, and the one Wolyniec used on that year’s tax returns) was listed in the policy’s declarations.
The Allstate policy also provides coverage to “resident relatives,” defined as “a person who physically resides in [the insureds’] household with the intention to continue residence there.” The Allstate policy specifically requires that the insured notify Allstate whenever an operator becomes a resident of the insured’s household. Indeed, the Allstate policy includes a separate endorsement, titled “Duty to Report Policy Changes,” which provides that no coverage will be provided if any insured has made false statements, or concealed any material fact in connection with any claim for coverage.
Allstate denied coverage on the ground that Wolyniec was not a resident relative, since he did not reside at the address shown in the policy’s declarations on the date of the accident. In the alternative, Allstate’s denial letter explained that, if Wolyniec did meet the definition of a “resident relative,” coverage would be barred under the Duty to Report Policy Changes endorsement, since it was never reported that Wolyniec resided with the insureds.
The Court noted that either ground is dispositive of the claim—either Wolyniec was not a resident relative, and therefore did not qualify for coverage in the first instance, or he was a resident relative, and coverage was barred because the insureds never notified Allstate of this change.
O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]
12/23/24 Curtis Park Grp., LLC v. Allied World Specialty Ins. Co.
United States Court of Appeals, Tenth Circuit
Reversal and New Trial Awarded to Insurer Where Trial Court Erroneously Instructs Jury Where Evidence Showed That Insured Never Incurred Repair Costs for Property Damage
Curtis Park hired Milender White as the general contractor to construct mixed use buildings, four of which were to be supported by a single concrete slab, with parking beneath the slab. Milner White agreed to front the initial construction costs and potential repair costs. Curtis Park also had a right of non-reimbursement for the cost of repairing Milender White’s defective work from either negligence or failure to fulfill its contractual obligations.
Milender White subcontracted the slab construction to All Phase Concrete who subcontracted the rebar to Harris Rebar. Construction began in September 2016 and in December 2017 Curtis Park found excessive sagging the concrete. Curtis Park received an engineer’s report finding the slab’s construction was defective. Curtis Park then rejected the slab. Due to the parties’ agreement, Milender White fronted the repair cost. Prior to this, Curtis Park procured a builder’s risk policy from Allied World.
The policy’s only named insured was Curtis Park; and covered property damage defined as “direct physical loss or damage caused by a covered peril to 'buildings or structures' while in the course of construction, erection, or fabrication.” What it does not cover is “loss or damage consisting of, caused by, or resulting from an act, defect, error, or omission (negligent or not) relating to . . . design, specifications, construction, materials, or workmanship," but it does cover "damage caused by" "an act, defect, error, or omission" that "results in a covered peril."
In March 2019, Curtis Park filed a claim seeking recovery for the repair of the slab for hard costs (cost of repair) and soft costs (costs incurred by construction delay). Curtis Park never disclosed its engineer’s report regarding the cause of the sag. In August 2019, Allied World denied coverage finding defective construction caused the concrete to sag.
Later in December 2019, Curtis Park and Milender entered into a closeout agreement that they would pursue the claim against Allied World and would split the proceeds if successful. However, if the action were unsuccessful, then Curtis Park would still not have to reimburse Milender White.
In discovery, Allied World learned of the closeout agreement and the engineer’s report. Allied World moved to exclude all of Curtis Park’s hard cost evidence. The district court denied the motion and instructed the jury that even if subcontractors bore the cost of repair, Curtis Park could still recover. The jury found in favor of Curtis Park for its breach of contract and statutory bad faith claims. Allied World filed a motion for a new trial and renewed a motion for judgment as a matter of law. Both motions were denied, and Allied World appealed.
Looking at Colorado law, the court noted the general concept of policy interpretation; that plain unambiguous terms will not relieve a party from disadvantageous terms or give forced construction. Courts must look at the policy as a whole when interpreting the contract’s language. Also, Colorado employs the doctrine of reasonable expectations, meaning policies are read to the reasonable expectations of an ordinary purchasing the policy.
The Circuit Court found the policy did not provide coverage for the loss. Even setting aside the exclusion, other portions of the policy limited recovery. It noted a condition precedent to coverage was Curtis Park was to incur the costs and demonstrate that it, Curtis Park, was responsible for the costs. Indeed, Milender White and the respective subcontractors could not receive benefits under a policy which they are unnamed.
Looking at the policy dispositive terms; the court noted that Curtis Park must actually suffer a loss as a result of the damage. The policy also provided “Insurance under this coverage will not directly or indirectly benefit anyone having custody of [the named insured's] property.” Meaning, Curtis Park only, is the one who may receive the policy’s benefits. Other provisions also included that Curtis Park itself must actually pay for the repair under the Replacement Cost coverage.
In reading the policy as a whole, Curtis Park’s lack of any costs incurred and limiting language of the other provisions warranted reversal of the hard cost portion of the jury award. It also required a new trial on the soft cost portion of the claim due to the erroneous jury instructions given by the district court. It noted, Allied World’s affirmative defense of willful misrepresentation by withholding the engineer’s report could change the jury’s opinion. Also, the affirmative defense of the exclusion could bar the claim in its entirety had the jury been properly informed of the closeout agreement’s financial details.
ROB REACHES the THRESHOLD
Robert J. Caggiano
[email protected]
12/24/24 Ramos v. Jahar, et al
Appellate Division, Second Department
Second Department Affirms Order Dismissing Complaint Against Defendants Where Plaintiff Submissions in Opposition to Summary Judgment Were Insufficient to Raise a Triable Issue of Fact on Whether She Sustained a Serious Injury Within the Meaning of Insurance Law § 5102(d)
This case stems from a personal injury action where a vehicle owned and operated by Plaintiff, Elizabeth Ramos, was rear-ended by a taxi owned by Defendant Malysh Taxi, Inc., operated by Defendant Mirza S. Jahar, on July 2, 2028, in New York City, New York. As a result, the Plaintiff alleged injuries to her low back, right shoulder, and right knee – which require arthroscopic surgical intervention. She further claimed these injuries qualified as serious under multiple categories of Insurance Law § 5102(d).
Following discovery, Defendants moved for summary judgment arguing the complaint should be dismissed as Plaintiff failed to sustain such a serious injury. In support of their motion, Defendants submitted deposition testimony of the Plaintiff, an orthopedic IME report, and a radiologist IME report. In opposition, Plaintiff submitted medical records from multiple treating providers. The trial justice for the Supreme Court, Kings County, granted Defendants’ motion for summary judgment dismissing the complaint on the ground that the Plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) causally related to the subject accident. Plaintiff appealed.
On appeal, the Second Department agreed with the lower court’s decision. Specifically, the Defendants’ met their prima facie burden that the alleged injuries were degenerative in nature and not caused by the subject accident based upon the opinions from their IME experts. However, in opposition, Plaintiff failed to raise a triable issue of fact. Notably, Plaintiff’s treating experts failed to address the findings from the Defendants’ IME radiologist who opined that the alleged injuries were degenerative in nature.
Accordingly, the Second Department affirmed, with costs, the Order of Supreme Court, Kings County, dismissing the complaint on the ground that the Plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]
12/23/24 Martinez v. Hanover Ins. Group
New York State Supreme Court, Bronx County
Insurer Motion to Dismiss Denied, Based on Plain Language of Arbitration Provision
Plaintiff, Pedro Maldonado Martinez, sustained alleged bodily injuries in an automobile accident driving a car owned by his employer, United Building Maintenance Associates Inc. (“UBMA”). The UBMA automobile was insured by Hanover Insurance Group (“Hanover”). The Hanover policy provided for $1,000,000 in supplementary uninsured/underinsured motorist (“SUM”) coverage.
After Plaintiff recovered policy limits against the underlying tortfeasor, he sought additional SUM coverage from Hanover. Plaintiff filed suit, seeking $975,000 in SUM benefits from Hanover.
Hanover filed a pre-answer motion to dismiss the complaint, pursuant to CPLR §3211(a)(2). Hanover argued that the SUM endorsement, statutory proscribed by 11 NYCRR 60-2.3, had not been satisfied. Hanover alleges that because the Plaintiff has not submitted to an examination under oath, or an independent medical examination, it cannot maintain the lawsuit.
The arbitration clause within the Hanover policy provided that:
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If any insured makes a claim under this SUM coverage and we do not agree that such insured is legally entitled to recover damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the insured, or we do not agree as to the amount of payment that may be owing under this SUM coverage, then, at the option and upon written demand of such insured, the matter or matters upon which such insured and we do not agree shall be settled by arbitration [ . . . ], pursuant to procedures approved by the Superintendent of Financial Services for this purpose.
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If the maximum amount of SUM coverage provided by this endorsement equals the amount of coverage required to be provided by New York Insurance Law section 3420(f)(1) and New York Vehicle and Traffic Law Article 6 or 8, then such disagreement shall be settled by such arbitration procedures upon written demand of either the insured or us.
In opposition, Plaintiff asserts that based on the plain language of the SUM endorsement, arbitration may be selected “at the option” of the insured in certain circumstances. Further, Plaintiff alleges that Hanover has not requested or noticed Plaintiff for either an examination under oath (“EUO”) or an independent medical examination (“IME”).
The court agreed with the reading of the arbitration clause set forth by Plaintiff. The court analyzed both Section 11(a) and Section 11(b) of the endorsement together. Section 11(a) provided that demanding arbitration was an “option” for the insured. However, it did not require a mandatory demand of arbitration upon disagreement. In juxtaposition, Section 11(b) mandates arbitration, but only in situations where the maximum amount of SUM coverage under the Hanover policy is equal to the New York statutory minimum.
Here, the Hanover policy provided SUM coverage for $1,000,000. This limit is higher than the statutory minimum. As such, Section 11(a) of the SUM endorsement applies to this claim. Plaintiff has the option to demand arbitration, as the insured, but is not obligated and required to do so.
The court additionally looked toward the plain language of the policy, which requires that Plaintiff submit to an EUO or IME as Hanover may “reasonably require.” Here, Hanover could not provide any proof that Plaintiff had been noticed for either an EUO or IME.
The court held that the Hanover policy did not require Plaintiff to appear for an IME or EUO prior to commencing suit if neither had been demanded. However, the court did note that Hanover may exercise the right to conduct either an EUO or IME during the pendency of the litigation.
LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]
12/23/24 Veto of the Grieving Families Act, A9232B
New York State Assembly
Governor Kathy Hochul Vetoes the Wrongful Death Expansion Legislation, Bills A9232B/S8485B
On December 21, 2024, Governor Kathy Hochul vetoes Assembly Bill A9232-B, the legislations third attempt to pass a version of the “Grieving Families Act.”
This legislation attempted to amend the estates, powers and trusts law, in relation to payment and distribution of damages in wrongful death actions. The bill sought to expand the available economic or pecuniary losses, including damages for grief and anguish, available to “surviving close family members.”
Governor Hochul wrote, “[f]or the third year in a row, the Legislature has passed a bill that continues to pose significant risks to consumers, without many of the changes I expressed openness to in (the) previous round of negotiations.”
NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
[email protected]
12/20/24 John Doe v. Roman Catholic Episcopal Corp. of St. John’s
Supreme Court of Newfoundland & Labrador (Trial Level)
Court Voids Liability Policies After Finding that Material Non-Disclosure of History of Sexual Abuse Amounts to Civil Fraud
Forty years ago, or so, the Roman Catholic Church held a respected position of authority and moral influence in Newfoundland. But in 1988 that started to unravel. In September of 1988, Fr. James Hickey plead guilty to 20 charges of sexual assault, gross indecency, and indecent sexual assault dating to 1982-1988. The charges involved the sexual abuse of teenage altar boys when Fr. Hickey was priest on the Burin Peninsula and in the St. John’s area. He spent five years in prison and died in 1992. Within months of Hickey’s guilty plea, a scandal erupted over allegations of widespread abuse of children at Mount Cashel Orphanage in Newfoundland. The ensuing firestorm of criminal and civil prosecutions has placed the Roman Catholic Episcopal Corporation of St. John’s (RCEC St. John’s) into creditor protection as it liquidates its assets to meet its liabilities. News reports state that it has raised about $44 million to meet approximately $104 million in liabilities
The Background
One of the first civil claims arising from the abuse committed by Hickey was filed against the RCEC St. John’s in 1989. That action was settled with notice to Guardian Insurance Company who insured RCEC St. John’s under a CGL policy from 1980-1982. That policy was renewed through to 1985. Guardian refused to defend and indemnify on the basis that the RCEC St. John’s knew about Hickey’s abuse when the original policy was issued and subsequently renewed and in view of the non-disclosure of a material fact, the policy was void. To support this point, Guardian cited a report of the Winter Commission that was struck to investigate the allegations of abuse. That report suggested several senior clergymen knew of Hickey’s abuses as early as 1975. Eventually, Guardian concluded that its evidence against RCEC St. John’s was insufficient, and in 1992 signed a consent order agreeing to extend the benefit of the policy to RCEC St. John’s in relation to the 1989 settlement.
Guardian continued covering settlements until 2009, when it became aware of new evidence — testimony from a victim, a seminarian and a priest — further suggesting senior clergy’s knowledge of abuse went back at least to the 1970s. Guardian refused to pay a 2009 abuse settlement in light of this new evidence. RCEC St. John’s sued Guardian for coverage and in 2011, the Newfoundland Supreme Court ruled in favour of RCEC SR. John’s. Guardian appealed and in 2013, the Newfoundland and Labrador Court of Appeal held that the earlier consent order pertained to the single settlement, and it was both unfair and unjust to hold that Guardian was forever bound by that order. RCEC St. John’s appealed to the Supreme Court of Canada who refused leave to appeal.
Trial Judgment
In view of the Court of Appeal ruling, the coverage issue was allowed to proceed to trial which took place over several non-continuous days in 2023 and 2024. On December 20, 2024, the Newfoundland and Labrador Supreme Court issued its judgment holding that each of the policies issued by Guardian Insurance in the 1980s are void due to material non-disclosure that amounted to civil fraud.
St. John’s was specifically aware of the sexual misconduct of James Hickey as well as other clergy members assigned to the Archdiocese of St. John's. Guardian argued that if these allegations were found to be true, RCEC did not disclose this knowledge and the associated risk to the insurer at the time of commencement of the policies. The failure to disclose its knowledge of sexual misconduct by clergy members to the insurer was a material non-disclosure that rose to the level of material misrepresentation/civil fraud and voided coverage for any claim of indemnity. For its part, RCEC St. John’s admitted in an Agreed Statement of Fact that it did not disclose its knowledge that certain of its clerics were alleged to have committed acts of sexual abuse prior to obtaining the Policy in October 1980, or when it renewed the Policy each year up to and including 1985.
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