Coverage Pointers - Volume XXVI No. 19

Volume XXVI, No. 19 (No. 692)
Friday, February 28, 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.

Happy Birthday to my son, Jacob, who turns 40 years old today.

Lots of good stuff in this week’s issue – highlights at the end of this note.  Here are some other tidbits of interest.

DRI Insurance Roundtable – March 11-12, 2025, in Chicago, IL

 

 

I’m delighted to be a speaker at this year’s DRI Insurance Roundtable. There is still an opportunity to register!

Secure your Golden Ticket to this premier and exclusive opportunity to network and brainstorm with leaders of the insurance industry and defense bar. This program is designed to pair industry representatives with outside counsel on a one-to-one basis, allowing for maximum networking opportunities for all parties involved. Discuss and debate important and significant challenges facing the industry and forge synergistic relationships with your peers.

What to Expect during the Program:

• Participate in transparent discussions and debates addressing issues that shape the relationship between insurers and outside counsel.

• Explore how artificial intelligence is likely to impact privacy issues, the claims process, and defense lawsuits.

• Develop strategies for protecting the human equation and addressing mental health and wellness challenges in the insurance and legal industries.

Managing and growing insurer-outside counsel relationships to build the next generation of coverage professionals and outside counsel.

Expand Your Network By:

• Attending a networking reception, dinner dine-arounds, and breakfast with industry and outside counsel leaders.

• Sharing your knowledge and learning from others during interactive roundtable and lunchtime sessions.

Registering for the Insurance Claims and Coverage Institute which begins immediately after the Insurance Roundtable in Chicago

 

FDCC Winter Meeting

This issue comes to you in transit, as I am returning from the Federation of Defense & Corporate Counsel winter meeting in lovely Charleston, South Carolina.  Jody Briandi, our president and managing partner, and an FDCC Board Member, led a great panel on succession planning. There were other excellent CLE programs, great restaurants, and wonderful people.  It’s a great organization.  It was my 70^th consecutive meeting, and I was honored with a pair of beautiful Waterford martini glasses.  They will come in good use. For those who want to learn more about the FDCC or who may be interested in being considered for membership (vetting is a critical part of our membership criteria), you can either contact me or visit the website, www.thefederation.org. 

 

Dead Experts and Artificially Created Hallucinated Cases

If you don’t follow me on LinkedIn, you may have missed some robust discussions over the last week. Follow me on LinkedIn if you don’t already.

For those of you who follow me on LinkedIn, we had over 120,000 views and hundreds of postings on two topics over the last week,  The first was the Morgan and Morgan hallucinated, fake citations created by Artificial Intelligence and submitted to a Wyoming federal court in a motion in limine which led to sanctions which I considered light.  For the lawyer who submitted the seven imaginary cases, $3,000 and loss of pro hac vice status.  For the two lawyers who also signed the submission, $1,000 each.  My comment, when interviewed by national media, was a simple one: “The court had an opportunity here to send a message to lawyers in a way that would remind my colleagues around the country that artificial intelligence is not a substitute for real intelligence."

The second case involved a Texas federal judge’s motion for sanctions against by an attorney named Dick for allegedly submitting an affidavit from an expert who died about a year before he signed it. Here’s a link to the article that quoted me as delivering a simple message, “Even in Texas, dead men should not be signing affidavits.”

 

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:

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

   

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

   

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

   

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

 

Judge Decries Non-Religious Marriages – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
28 Feb 1925

Civil Marriages, Cosmetics
Are Scored By Judge Tierney

Ninety per cent of municipal ceremonies end in divorce court, he says: women try to improve God’s work

New York, Feb. 27 (A.P.) – Denunciation of civil marriage ceremonies and advocacy of religious rites as a sanction to marriage were made in court today by Supreme Court Justice Tierney, who declared that from many years’ experience on the bench he had found that 90 per cent of the marriages performed in the municipal building terminate in the divorce court before many weeks.

“I do not have any faith in these civil marriages,” Judge Tierney declared, when Mrs. Ruth Cantor appeared before him to ask divorce from Samuel Cantor, whom she married in the municipal building on August 3, 1923. They separated a year later.

“If you marry again,” Justice Tierney counseled her, “don’t forget to ask the blessing of God on your marriage and have a religious ceremony performed.”

Justice Tierney also lectured Mrs. Cantor for the use of Beautifying devices.

“What silly things women are when they are not satisfied with the beauty they were born with and try to change the harmony of their faces. God gave women beauty and when they try to undo it by giving their hair an unnatural color and penciling their eyebrows, they are trying in vain to improve on the work of the Great Artist.”

 

Peiper on Property (and Potpourri):

Sorry for my absence last week.  Although the column was quiet, I usually have something to say in this space.  At the time Our Editor went to print, I was securely locked inside an aluminum tube on my way home from Southern California.  I sent a note to be included, but the internet failed me.  Rather than getting to its intended destination, my weekly missive was left to flounder in my outbox. 

I was in Southern California after attending the IADC Mid-Year meeting where I had the pleasure of attending a number of very insightful programs.  In addition to substantive legal topics, I particularly appreciated the discussion on recognizing and addressing “burnout” among our colleagues.  We all, I’d posit, suffer from burnout from time to time.   For us Rust Belters, the lack of any basic sunshine from December to April only leads to the challenges of keeping a positive outlook and healthy mental hygiene.  It’s nothing, though, that a few days of sun out of the office can’t help but remedy.  When it is more serious, however, no trip to a beach will return us back to the factory setting.  So be aware of your health and take time for yourself.  A short-term investment in your well-being is far superior to the much more serious impact of neglecting the day-to-day pressures of our daily lives.

On a much more fun topic, I am currently in the midst of co-coaching a high school mock trial team with my partner, Jody Briandi.  Our fact pattern is a civil defamation case, and it has been a lot of fun helping our team learn basic evidence rules, craft openings, directs, crosses and closings. 

We’re 1-0 so far, but please if you have any suggestions or pointers, we would certainly welcome some assistance.

That’s it for this week.  See you in two more.

Steve
Steven E. Peiper
[email protected]

 

Immigration Isn’t So Bad – 100 Years Ago:

The Herald Statesman
Yonkers, New York
28 Feb 1925

AN ASSIMILATION
AT REO WORKS

Factory Employes Are Either
Native Or Naturalized Citizens And Every One Of
Them Speaks In English

Most recent immigration laws produced by the legislative mill of the United States have been condemned by many as acts liable to offend the people of other nations. At least in spirit, however, they are admitted to be worthy measure, for one of their chief aims is not to bar the foreign born from America, but to admit them only in such numbers as can be assimilated into American life.

Among the principal advantages to be gained by the people of foreign lands who come to this country are higher standards of living and greater opportunities for education. It seems though, that these advantages are gained only when the immigrants actually become a part of the American communities.

Where they band together in colonies, speak their native tongues, and continue to live according to the same standards they were accustomed to before setting out to find their new homes, the greatest of the advantages are lost to them.

It is true, however, that many of the immigrants have their greatest opportunity for contact with American customs and standards through their work, the companies they work for, and the men and women they work with. Unless, in places of employment, they learn to like American customs and the American ways of living, they are apt to never take kindly to the social forces that would make them Americans.

 

Lee’s Connecticut Chronicles:

Dear Nutmeggers:

It’s been a difficult two weeks – I had surgery, took a week off and then had another surgery. Both were minor procedures (no overnights required) and, most importantly, both resulted in clean bills of health. I’m feeling great and am back to work, keeping the world safe for insurance companies everywhere.

Lee
Lee S. Siegel
[email protected]

 

Who Can Imagine an Eight Hour Workday? – 100 Years Ago:

The Buffalo News
Buffalo, New York
28 Feb 1925

LAKE ENGINEERS TO HEAR
ABOUT 8-HOUR LAW

The proposed eight-hour work law for marine engineers will be explained to members of the Buffalo Marine Engineers’ Beneficial association by William S. Brown of Washington D.C., international president of the organization, at a special meeting Saturday night.

Marine engineers now work 12 hours a day. They want congress to limit their working time to eight hours. A bill to this end has been drawn for introduction at the next congress, according to William J. Garret, lake business manager of the association.

 

Ruffner’s Road Review:

Dear Readers,

While it has been just over ten years since I played hockey competitively, and I haven’t followed the Sabres closely in quite some time, the Four Nations tournament and two great USA v. Canada matchups have re-sparked my interest. I attended a nice comeback win this Tuesday, which has me (temporarily) excited to see if the Sabres can make an unlikely playoff push this year and even have the urge to get back on the ice myself.

I have two cases to report this week: In the first, the court granted a defendant’s motion to vacate a default judgment in a no-fault case, accepting law office failure as a reasonable excuse and a default judgment in an underlying declaratory judgment case, declaring the subject incident was the result of an intentional act and the insurer had no coverage obligation. In the next case, the court applied Second Department precedent in holding that the exhaustion of policy benefits did not preclude the insurer from having to render payment on an earlier claim that they denied if such denial was found to be improper or unsubstantiated.

Kyle
Kyle A. Ruffner
[email protected]

 

Huge Increase in RR Fares– 100 Years Ago:

The Buffalo News
Buffalo, New York
28 Feb 1925

8-CENT FARE STARTS
SUNDAY AT MIDNIGHT

The new eight-cent fare on lines of the International railway will go into effect at midnight Sunday. This announcement was made by President Tulley of the traction company, following a conference Ralph K. Robertson and Public Service Commissioner William R. Pooley.

At the conclusion of the conference President Tulley said he was sending the new tariff schedule to Albany by special messenger Saturday afternoon and hat it will be filed at the offices of the public Service commission at 7 o’clock.

Under the decision of the public service commission the increased fare rate could be put into effect 24 hours after the filing of application, but the traction company had decided to withhold the change until Sunday midnight, Mr. Tulley said.

In the operation of the new rate, passengers will be carried for one token plus one cent, until all tokens are exhausted, the traction company announced. The tokens then will be replaced by tickets, which will be sold for eight cents each, or two for 15 cents.

Assistant Corporation Counsel Robertson made an effort to confer with Mayor Schwab relative to the advisability of an immediate appeal from the fare increase order, but was informed the mayor was in Syracuse and would not return to this city until Monday.

 

Ryan’s Federal Reporter:

See you in two weeks.

Ryan
Ryan P. Maxwell
[email protected]

 

Be Careful Who You Date – 100 Years Ago:

Times Union
Brooklyn, New York
28 Feb 1925

BABB AWARD UPHELD
WITHOUT COMMENT

Appellate Division Endorses
$28,000 Verdict in Alienation Suit.

The Judgment of $28,000 recovered by Charles J. Babb, of 353 Linden avenue, against Clyde E. Black, a wealthy elderly manufacturer of knit wear, for the alienation of the affections of young Mrs. Ada Babb, wife of the plaintiff, was sustained yesterday by the Appellate Division.

The case was tried last March before Supreme Court Justic Carswell in Queens County and was one of the most sensational ever tried there. The jury brought in a verdict of $46,000 for Babb, which was reduced to $28,000.

Babb, a chemist, and his wife were married Aug. 17, 1918, and lived together four years. Babb testified that his wife did not leave him until after she met Black, who had taken up his residence around the corner from the Babb apartment at 1289 St. Johns place. Finally, Babb said, his wife left him and became an artist’s model. He said she refused to return to him and said he could not give her the “good times” Black could give her.

Babb contended that he was in moderate circumstances and that Black turned his wife’s head by lavishing money and luxuries on her. Mrs. Babb, a witness for Black, testified she lost her love for her husband before she became friendly with the elderly manuf. The Appellate Division wrote no opinion in upholding the judgment.

 

Storm’s SIU:

Hi Team:

Three case synopses for you this week:

• Homeowners Policy Does Not Cover Replacement Siding for Undamaged Portions of the Home, Even if New Siding on Damaged Portions Does Not Match Existing Siding.

• Complaint Demanding $70,000 in Damages for Breach of Contract and Unspecified Amounts for Attorney's Fees, Consequential Damages, Consequential Losses, and Punitive Damages, Does Not Satisfy the Jurisdictional Threshold of $75,000 for Federal Diversity Jurisdiction.

• Court Grants Insurer’s CPLR § 3211(a)(1) Motion to Dismiss Due to the Insured’s Breach of the Suit Limitation Condition.

Can’t wait for spring!  Busy week, back to work…

Let’s talk again in two weeks.

Scott
Scott D. Storm
[email protected]

 

It Only Took Another 23 Years – 100 Years Ago:

Brooklyn Eagle
Brooklyn, New York
28 Feb 1925

TALK ON PALESTINE.

William Mazer, who recently returned from nine months in Palestine, spoke on the significance of that place to the Jews at a meeting of Young Israel of Flatbush on Thursday evening at Coney Island Ave. and Ave. Y. Adolph Flam outlined plans for a new building for the organization.

 

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

Now that it is the end of February, we are so close to Spring! The weather has finally started to warm up, so I am looking forward to running more outdoors.

This week’s case from the Kentucky Supreme Court considered whether a minor child in the sole legal custody of one parent qualifies as a “resident relative” under the custodial parent’s insurance policy if the child is staying elsewhere at the time of an automobile accident. The court found the term ambiguous based on the facts of the case.

Catch you later,

Kate
Katherine A. Fleming
[email protected]

 

Eight Bit Theft Lands Two in Jail – 100 Years Ago:

Daily News
New York, New York
28 Feb 1925

JAIL FOR 2 IN $1 THEFT

Judge William Allen in General Sessions yesterday sentenced Rose Cohen, 27, of 740 Fox St, and Anna Brown, 30, of 640 Cauldwell Ave., Bronx, to the penitentiary for the theft of $1.

 

Gestwick’s Garden State Gazette:

Dear Readers:

I have returned from a very enjoyable trip to the Big Apple with my fiancé. I have been more times than I care to admit, usually on business. It was my fiancé’s first experience, though. She was mesmerized by the bright lights in Times Square, the allure of the Statue of Liberty, and the hustle and bustle of the city.

The case I have for you this week discusses whether an insurer’s refusal to consent to a settlement was reasonable. At first glance, some may think not. I encourage you to read the policy exclusion at play before reading anything else, and then decide for yourself (or, read it last—up to you). 

That’s it for two weeks. Take care in the meantime.

Evan
Evan D. Gestwick
[email protected]

 

GW Bridge in the Offing – 100 Years Ago:

Daily News
New York, New York
28 Feb 1925

Senate bill authorizing construction of four new bridges linking New York and New Jersey is passed by house and sent to President Coolidge for O.K. One span would cross Hudson, between Fort Lee, N.J., and point between 170^th and 180^th Sts.

 

O’Shea Rides the Circuits:

Readers,

I take issue with unprompted theoretical trade talk for Brady Tkachuk move to the Buffalo Sabres. The Sabres simply possess no assets for such a trade. Fingers crossed he is an Ottawa Senator for life.

This week I have a follow-up case from a previous edition. This case again looks to the 11^th Circuit’s interpretation of Florida Law and a policyholder’s attempt to incorporate a Florida state statute into all policies within the state.

Until Next Time …

Ryan
Ryan P. O’Shea
[email protected]

 

Trial Lawyers Chastised for Overcoats – 100 Years Ago:

Times Union
Brooklyn, New York
28 Feb 1925

O’Neill Flays Lawyers
Who Wear Overcoats
Trying Cases in Court

Lawyers who persist in wearing their overcoats while pleading cases in Brooklyn magistrate’s courts were severely criticized by Magistrate James T. O’Neill, in Gates avenue court yesterday, when he ordered two attorneys to remove their wraps.

“In my opinion, it is not in accord with the ethics of the legal profession for you attorneys to wear your overcoats while trying cases,” asserted the magistrate. “You are not showing the proper respect for the court. Some of you act here the same as you would on a street corner or in a club.

“Lawyers should realize that our police courts are in a measure more important than our higher courts, for it is here that people of the rank and file, many of them foreigners get their initial impression of American institutions.”

Magistrate O’Neill expressed the opinion that attorneys possessing reputations as “good lawyers” conduct themselves better in the courtroom than do some of the attorneys who are not so well known.

 

Rob Reaches the Threshold:

Dear Readers,

Although the last couple of days have been warmer in Western New York, I am sure ready for winter to end. Last week, I was lucky enough to find some sunshine in Florida, as I enjoyed attending a family member's wedding. While I sat in 75 degrees and sunshine hours before my flight back to snow-covered Buffalo, I contemplated life. Here's hoping we warm up in March for good. 

In the meantime, the Appellate Divisions have certainly warmed up, as there were multiple decisions on Serious Injury Threshold to comb over this time. I landed on writing about a decision out of the First Department, which contains a nice refresher on many points. 

Hope you all enjoy the read. 

Rob
Robert J. Caggiano
[email protected]

 

A Kiss is But a Kiss – 100 Years Ago:

The Brooklyn Daily Times
Brooklyn, New York
28 Feb 1925

Your Kisses Are Cheap

Dear Miss Chester:

I love a young man two years my senior. He told me he loved me and asked for a kiss which I gave him. It was because I love him. Now he does not look at nor speak to me. I love him. Kindly give me advice. He is always on the car when I come home.

I have met another young man whom I like very much but not half as much as the first. The last young man asked me to go to a party with him. He said it in a joking way. I asked him whose party. He said I knew her, but he would not say her name. I said I would tell him by Friday, so kindly give me advice as to what to do by then, also as to the one I love most.

                                                                        BROKEN LOVE

My Dear Broken Love:

You cheapened yourself when you made it easy for the young man to kiss you. Perhaps that is why he passed you by now. You have not yet realized, my dear Broken Love, that the things one treasures are the things for which one has to fight. Hold your kisses priceless and they will be treasured when it is time for you to give them. And I am old-fashioned enough to believer that you should give them only to the young man to whom you are engaged.

By all means if you know the girl who is giving the party and wish to attend it, go with the young man who asked you.

                                                          SUSAN CHESTER

                       

LaBarbera’s Lower Court Library:

Dear Readers:

Thankfully, the weather seems to have taken a turn here in Buffalo. What was snow for the past few months has quickly turned to rain. Before we know it, the Spring flowers will be blooming.

This week I will discuss a Bronx County Supreme Court case, dismissing an action based on a suit limitation provision contained in a homeowners insurance policy. The court found that the action was required to be brought within two years of the date of loss, using the statutory requirement to supersede the policy language, which was measured from the date of the property damage.

Until next time…

Isabelle
Isabelle H. LaBarbera
[email protected]

 

Overpaid, Even Then – 100 Years Ago:

Mount Vernon Argus
White Plains, New York
28 Feb 1925

“ALIBI” STATEMENTS

Washington, Feb, 28. – (INS) – While President Coolidge deliberated today over whether to approve congress’ raising its own salary from $7,500 to $10,000 a year, a veritable barrage of “alibi” statements flooded the Congressional Record.

 

Lexi’s Legislative Lowdown:

Dear Readers,

I am happy to be heading into March and hopefully some warmer weather!

This week we discuss a bill proposed that would allow for electronic delivery of certain notices in property/casualty insurance transactions.

Have a nice weekend!

Lexi
Lexi R. Horton
[email protected]

 

One Across – 100 Years Ago:

The Buffalo News
Buffalo, New York
28 Feb 1925

PUZZLE WIZARD IN JAIL,
PAL, STUCK, ASKS KEY

Fails, However, to Crash Four-letter Word Meaning Barrier.

A well-dressed young man walked into the Pearl street police station early Saturday morning and asked to be locked up in a cel with an acquaintance of his whom he knew only as “John,” so that they could work out a crossword puzzle together.

“I hear you have John locked up here,” he said. “He’s a shark at words and I want to finish the puzzle.”

Police declined to grant his request. They did not get his name. The police blotter showed that the only man named John who was locked up for the night was John Dwyer, 31 years old, who was arrested on a charge of passing a bad check at the Ford hotel, where he has been stopping. There being no crossword enthusiasts at the station, none bothered to inquire of Dwyer, as to his prowess with verticals and horizontals.

 

Domenica’s Diary on Bad Faith:

Dear Readers,

I spent a wonderful seven days since the last newsletter in beautiful Finland, chasing the Northern lights, visiting Santa’s house, snowmobiling, and sledding with dogs and reindeer in a peaceful, snowy village of log cabins and igloos.  Great memories and new friends were made.  

I have an interesting case for you this week. Read on to find out more.

Until next time,

Domenica
Domenica D. Hart
[email protected]

 

Big Bang Banks Bitty Bucks – 100 Years Ago:

The Buffalo News
Buffalo, New York
28 Feb 1925

TWO SAFES BLOWN AT
FALLS, ONT., $50 TAKEN

NIAGARA FALLS, Ont., Feb. 27. – The office to Smith Brothers, contractors, this city, was entered today by burglars, who blew the safe and took $50. The office of the Concrete Coal & Stone company, a short distance away, was also entered and the safe blown. It contained only books.

 

North of the Border:

Over this past weekend, I was briefly in Charleston, S.C. to attend the FDCC Board and Administrative Meetings and had an opportunity to catch up with several FDCC members including Dan. Great to see him in person. Unfortunately, I couldn’t stay for the Winter Meeting but had to return to my desk in Calgary.

This week’s article deals with whether an insured waives solicitor client privilege over legal advice shared with a broker during the placement of complex insurance for a complex project.

‘til next time.

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]

• Despite Unexcused Three Years Late Notice of Lawsuit, No Material Prejudice Established So Late Notice Defense Fails

 

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]

• Loss of Product During Third-Party Bankruptcy Covered by Policy

• Affidavit of General Counsel Does Not, by Itself, Erode Attorney/Client Privilege

• Counsel’s Questioning About Status of Subsequent Lawsuit Was Prejudicial to Plaintiff and Resulted in Mistrial

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]

• See you in two.

 

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
[email protected]

• Defendant Demonstrated Reasonable Excuse and Meritorious Defense Sufficient to Vacate Default Judgment

• Exhaustion of the Policy After Denial of Plaintiff’s Claim Did Not Preclude Later Payment of Claim Under Second Department Precedent

 

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]

• Nothing from me this edition. See you next time.

STORM’S SIU
Scott D. Storm
[email protected]

• Homeowners Policy Does Not Cover Replacement Siding for Undamaged Portions of the Home, Even if New Siding on Damaged Portions Does Not Match Existing Siding

• Complaint Demanding $70,000 in Damages for Breach of Contract and Unspecified Amounts for Attorney's Fees, Consequential Damages, Consequential Losses, and Punitive Damages, Does Not Satisfy the Jurisdictional Threshold of $75,000 for Federal Diversity Jurisdiction

• Court Grants Insurer’s CPLR § 3211(a)(1) Motion to Dismiss Due to the Insured’s Breach of the Suit Limitation Condition

 

FLEMING’S FINEST
Katherine A. Fleming
[email protected]

• Physical Presence Not Sole Controlling Factor Regarding Whether Minor Child Qualifies as a Resident Relative Under Parent’s Insurance Policy

 

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]

• New Jersey’s High Court Agrees to Hear Appeal of Intermediate Appellate Court Decision Holding an Insurer’s Refusal to Settle Was Reasonable in Light of Dual Capacity Exclusion

 

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]

• Insureds Try to Incorporate Statutory Interest Provision Into All Florida Policies, Circuit Court Rejects that Argument Because It Would Circumvent the Statute and Policy Terms Themselves

 

ROB REACHES the THRESHOLD
Robert J. Caggiano
[email protected]

• First Department Unanimously Affirms Order Which Granted Defendants’ Respective Summary Judgment Motions Dismissing Plaintiff’s Complaint on the Basis He Did Not Sustain Serious Injury Within the Meaning of Insurance Law § 5102(d) Where Plaintiffs Submissions in Opposition Failed to Raise Triable Issues of Fact 

 

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]

• Insured’s Action Dismissed Based on Suit Limitation Provision Superseded by Insurance Law §3404

 

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]

• Act to Amend Insurance Law to Allow for Certain Notices to Be Delivered by Electronic Means

 

DOMENICA’S DIARY on BAD FAITH
Domenica D. Hart
[email protected]

• Bad Faith Claim Against Insurance Broker Survives Motion to Dismiss

 

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
[email protected]

• An Insured Did Not Waive Solicitor Client Privilege over Legal Advice It Received Regarding the Insurance Requirements for a Complex Project when It Shared that Advice with a Broker Charged with Placing that Unique and Specialized Coverage.

 

Until next issue, our warmest regards.

 

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

Victoria S. Heist

 

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

Kohane’s Coverage Corner

Peiper on Property and Potpourri
Lee’s Connecticut Chronicles

Ruffner’s Road Review

Ryan’s Federal Reporter

Storm’s SIU

Fleming’s Finest

Gestwick’s Garden State Gazette

O’Shea Rides the Circuits

Rob Reaches the Threshold

LaBarbera’s Lower Court Library

Lexi’s Legislative Lowdown

Domenica’s Diary on Bad Faith

North of the Border

 

KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]

02/18/25       Wesco Insurance Company, Inc v. Kookmin Best Insurance Co.
Appellate Division, First Department
Despite Unexcused Three Years Late Notice of Lawsuit, No Material Prejudice Established So Late Notice Defense Fails

Wesco's ability to seek reimbursement from KBIC for the costs of defending any given claim turns on whether Wesco provided notice of that claim to KBIC within a reasonable time under all circumstances. Although justifiable ignorance of insurance coverage may excuse a delay in giving notice of an occurrence if it made reasonably diligent efforts were made to ascertain whether coverage existed. Wesco did not give notice to KBIC until more than three years after its insured, the underlying defendant building owner (owner), was served with the summons and furthermore, Wesco failed to establish what it did during that three-year period to uncover whether the owner had other insurance.

Nonetheless, despite the late notice, KBIC was not prejudiced because Wesco promptly began investigating and defending the owner and a codefendant commercial tenant from the onset of the underlying personal injury litigation and was fully prepared to share its information relating to its investigation and defense. Moreover, KBIC failed to point out "how Wesco's defense of the [underlying] matter materially prejudiced it".

However, under its plain policy language, KBIC is only required to provide excess coverage to the named insured and any additional insured only after Wesco's primary coverage has been exhausted but has no duty to defend or reimburse Wesco its defense costs.

Editor’s Note: The only problem I have with this decision is this statement: KBIC failed to point out "how Wesco's defense of the [underlying] matter materially prejudiced it”.  If notice is more than two years late, it would have been Wesco’s burden to prove that KBIC was not prejudiced, not KBIC’s proof to demonstrate that it wasn’t prejudiced.

 

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]

02/18/25       Endurance Am. Ins. Co. v. StoneX Commodity Solutions, LLC
Appellate Division, First Department
Loss of Product During Third-Party Bankruptcy Covered by Policy

It appears that defendant, StoneX, lost a certain amount of soybeans it had stored at a premises owned by non-party, Express Grain Terminals (“EGT”).  EGT, while in possession of the soybeans, filed for bankruptcy.  It is alleged that StoneX only recovered a portion of the beans in EGT’s possession, and a claim for damages was subsequently made under the Endurance policy.

Endurance denied the claim because it maintained that StoneX could not produce evidence of exactly how many/how much soy beans were lost.  StoneX maintained that reports from EGT showed that it held enough beans to cover StoneX’s inventory.  Importantly, an Endorsement to the Endurance policy provided that coverage would be triggered if the insured could provide receipts that proved the storage facility maintained sufficient quantity to cover the insured’s deposits. 

Endurance countered that there were not enough beans at the particular EGT warehouse.  The Appellate Division rejected this argument by noting that the Endorsement was not limited to one particular location but rather could be read to mean the quantity of beans in all EGT locations. 

Finally, the Court ruled that the date of loss was the date EGT filed for bankruptcy and was, thusly, dispossessed of its soybeans. 

Potpourri

02/13/25       Certain Underwriters v. NL Industries, Inc.
Appellate Division, First Department
Affidavit of General Counsel Does Not, by Itself, Erode Attorney/Client Privilege

Underwriters were served with an affidavit of defendant’s general counsel wherein counsel made various statements related to factual issues in the case.  In light of such disclosure, Underwriters made an application seeking to compel defendant to produce internal documentation related to statements presented by general counsel.  Essentially, Underwriters argued that the preparation of the affidavit constituted a waiver of attorney/client and/or work product privileges.

In affirming the trial court, the First Department noted that many of the statements were not even “legal” in nature but instead amounted to nothing more than factual assertions.  Further, if there were indicia of legal theory/work in the affidavit, Underwriters’ application failed to demonstrate that an “invasion of the privilege” was necessary. 

02/13/25       Drayton v. Putman Hospital Center
Appellate Division, Second Department
Counsel’s Questioning About Status of Subsequent Lawsuit Was Prejudicial to Plaintiff and Resulted in Mistrial

In a motion to set aside the jury’s verdict dismissing plaintiff’s cause of action, the Appellate Division found reversable error and remanded the matter back to the trial court for further proceedings. 

Plaintiff initially challenged that the jury verdict must be set aside as inconsistent with the facts adduced a trial.  However, where there was conflict testimony between plaintiff and a nurse who witnessed the accident, the Court ruled that it was within the jury’s province to determine which version of the events it believed to be accurate.  

Nevertheless, the trial was still irreparably harmed by the decision to permit defense counsel to question the plaintiff on a pending lawsuit wherein plaintiff was being sued for non-payment of a medical procedure.  Because there had been no finding of fault in that suit, only allegations, the court found that the line of questioning was of no probative value to the jury.  What is more, counsel’s further statement that plaintiff (or at least the veiled allusion to plaintiff) had accepted $250,000 in insurance proceeds to which he was not entitled was deemed overtly prejudicial.  On that basis, where the prejudice was caused by questioning that otherwise had no probative connection to the dispute at trial, the Court found reversible error.

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]

On the mend; be back in two weeks.

 

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
[email protected]

02/14/25       Trinity Med., P.C. a/a/o Lewi v. Nat’l Gen. Ins. Co.
Supreme Court, Appellate Term, Second Department
Defendant Demonstrated Reasonable Excuse and Meritorious Defense Sufficient to Vacate Default Judgment

Plaintiff commenced this action to recover assigned first-party no-fault benefits for services rendered to its assignor as a result of a motor vehicle accident. The summons and complaint were served on December 22, 2020, but defendant did not serve an answer. Therefore, the plaintiff applied for a default judgment, and mailed defendant a copy of the application, on October 28, 2021.

On November 17, 2021, the defendant moved, pursuant to CPLR 3012 (d) and/or 2001, to open its default and to compel plaintiff to accept its late answer on the grounds that defendant had a reasonable excuse for its delay in answering as well as a meritorious defense to the action. Defendant submitted the affidavit of an employee at defendant's attorney's office who was responsible for serving the answer, stating the answer was timely prepared but she failed to serve it, amounting to law office failure.  Defendant argued this failure should be excused by the Civil Court, as there was no evidence that it was willful or that plaintiff had been prejudiced by the default. As a meritorious defense, defendant asserted that the subject action was barred by res judicata or collateral estoppel pursuant to a declaratory judgment stating there was no duty to provide coverage for claims as the subject accident was the result of an intentional act.

Plaintiff cross-moved for summary judgment, arguing the defendant only provided vague details leading to the oversight in serving an answer and that mere neglect was not a reasonable excuse. Further, plaintiff argued the declaratory judgment did not have preclusive effect because it involved different parties and causes of action and was not fully litigated due to the default. However, the Civil Court granted the defendant’s motion to open the default. Plaintiff appealed.

On appeal, the court confirmed that in order to open its default and obtain an order compelling plaintiff to accept a late answer, defendant had to provide a reasonable excuse for the delay in answering and demonstrate a potentially meritorious defense to the action. The determination of what constitutes a reasonable excuse lies within the trial court's discretion, and courts may accept law office failure as a reasonable excuse (CPLR 2005) where there is a lack of evidence of willfulness or neglect. Here, the law office failure resulted from an isolated, inadvertent mistake, not from repeated neglect and plaintiff did not demonstrate any prejudice caused by defendant's default.

Defendant also demonstrated a potentially meritorious defense to the action, as the declaratory judgment was a conclusive final determination that defendant was not obligated to provide coverage or reimbursements for any and all no-fault related services submitted by plaintiff and plaintiff's assignor for the subject motor vehicle accident and, thus, the instant action should be barred by res judicata. Accordingly, the order vacating the default and compelling plaintiff to accept a late answer was affirmed.

 

02/13/25       N. Queens Surgical Ctr. a/a/o Armand v. Lancer Ins. Co.
Supreme Court, Appellate Term, Second Department
Exhaustion of the Policy After Denial of Plaintiff’s Claim Did Not Preclude Later Payment of Claim Under Second Department Precedent

In an action by a provider to recover assigned first-party no-fault benefits, the parties stipulated that: (1) plaintiff had established its prima facie case; (2) defendant had timely denied plaintiff's claim on the ground of lack of medical necessity; and (3) after defendant denied plaintiff's claim, the insurance policy limits were exhausted due to the insurer’s payment of claims it received after denying the claim at issue. The insurer’s sole argument at trial was that the insurance policy limits had been exhausted after denial of the subject claim. The District Court found in favor of plaintiff, holding the denial of claim based on medical necessity was not proper, awarding the principal sum of $7,582.15.

The insurer appealed, asserting, that it need not pay the claim at issue because, after the denial of this claim, subsequent payments exhausted the available coverage. However, the court applied Second Department precedent established in  Alleviation Med. Servs., P.C. v. Allstate Ins. Co., 55 Misc 3d 44 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2017]. In that case, the court interpreted the requirement in 11 NYCRR 65-3.8 [b] [3] that fully verified claims are to be paid in the order they are received also applies to claims that were denied, which implicitly declares the claim was fully verified. Therefore, the argument that an insurer need not pay the present claim because the subsequent payment of other claims exhausted the policy lacked merit. Therefore, the District Court’s holding was affirmed. 

In contrast, Harmonic Physical Therapy, P.C. v. Praetorian Ins. Co., 47 Misc 3d 137[A], 2015 NY Slip Op 50525[U] [App Term, 1st Dept 2015]) the Appellate Term, First Department, held that claims which are timely denied by an insurer do not hold a place in the priority-of-payment queue ahead of subsequently filed claims that were paid by the insurer, thus exhausting available coverage.

 

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]

Nothing from me this edition. See you next time.

 

STORM’S SIU
Scott D. Storm
[email protected]

01/30/25       Grote v. Am. Economy Ins. Co.
United States District Court, Eastern District of Pennsylvania
Homeowners Policy Does Not Cover Replacement Siding for Undamaged Portions of the Home, Even if New Siding on Damaged Portions Does Not Match Existing Siding

A windstorm caused a tree to fall on the Grotes' home, damaging some siding and possibly the roof.  The Grotes filed an insurance claim with AEIC under their homeowners policy.  AEIC agreed to cover replacement of damaged siding but not undamaged siding or the shingled roof.  The parties dispute whether the entire siding should be replaced and whether the roof was damaged.  The Grotes allege the replacement siding AEIC proposes for the damaged siding is not "of like kind and quality," or of "equivalent construction," so AEIC is required to replace all of the siding on the property.

The Court held that the policy does not cover replacement siding for undamaged portions of the home, even if new siding on damaged portions does not match existing siding.  The policy language clearly and unambiguously covers only damaged property and includes an exclusion for matching undamaged siding that AEIC "will not pay for the cost to replace and/or match any undamaged siding . . . due to any mismatch between the existing undamaged siding . . . and any new materials used to repair or replace the damaged siding . . . because of . . . obsolescence or unavailability of materials." Therefore, regardless of whether replacement materials are of "like kind and quality" or "equivalent construction," the Policy does not cover replacement siding on undamaged portions of the home. 

Other Pennsylvania courts have rejected similar arguments seeking coverage for undamaged portions to achieve matching, “because the language of the contract ‘clearly and unambiguously requires [the insurer] to pay the replacement cost of the part of the building damaged.’"  The Court said that “Reading the Policy to mandate the replacement of siding not damaged by the storm would allow the Grotes to ‘exploit their losses and use them as an opportunity to remodel their home at the insurer's expense’”.

However, there was an issue of fact whether the windstorm caused damage to the shingled roof, precluding summary judgment on that issue.  There is conflicting evidence from experts regarding whether the storm caused damage to the shingled roof, creating a factual dispute.

A public adjuster who possesses skill or knowledge greater than the average layperson may be qualified to opine on causation.

 

02/06/25       Deswert v. Travelers Commercial Ins. Co.
United States District Court, Northern District of New York
Complaint Demanding $70,000 in Damages for Breach of Contract and Unspecified Amounts for Attorney's Fees, Consequential Damages, Consequential Losses, and Punitive Damages, Does Not Satisfy the Jurisdictional Threshold of $75,000 for Federal Diversity Jurisdiction

Plaintiff owns property in New York and is a citizen of Pennsylvania.  Defendant Travelers is a citizen of Connecticut and issued a policy to Plaintiff.  The Plaintiff alleges a plumbing leak caused water damage to his property.  Count One of the complaint demands $70,000 in damages for breach of contract.  Count Two alleges that Defendant "engaged in bad faith claims handling" and "engaged in bad faith in the investigation and adjustment of the claim and improperly denied the claim." It seeks unspecified attorney fees, and unspecified consequential damages, consequential losses, and punitive damages.

In order to remove a case from state court to federal court based on diversity jurisdiction the removing party must establish that: (1) there is complete diversity of citizenship of the parties; and (2) the amount in controversy exceeds $75,000, exclusive of costs and interest.

Defendant's Notice of Removal describes the Complaint's allegations as follows:

Upon information and belief, Plaintiff seeks an amount in excess of $75,000. In addition to the $70,000 specified by Plaintiff for the first cause of action for breach of contract, Plaintiff seeks additional ["]consequential losses, consequential damages, and punitive damages" in relation to the second cause of action for bad faith. [Defendant] reasonably believes that the amount sought by Plaintiff for the second cause of action exceeds $5,000.

Generally, there is a rebuttable presumption that the face of the complaint is a good faith representation of the actual amount in controversy. However, this presumption may be rebutted when there is a legal certainty that the amount recoverable does not meet the jurisdictional threshold. “In a diversity case, if a court makes a face-of-the-complaint determination that the $75,000 amount in controversy cannot be recovered 'to a legal certainty,' the case is dismissed for lack of subject matter jurisdiction."  In addition, conclusory allegations and boilerplate pleadings are insufficient to establish the amount in controversy. 

The Court found that Count Two alleging bad faith is duplicative of Count One alleging breach of contract, as it does not allege violation of any duty independent of the insurance contract.  “[U]nder New York law, if ‘the basis of a party's claim is a breach of solely contractual obligations, such that the plaintiff is merely seeking to obtain the benefit of the contractual bargain through an action in tort, the claim is precluded as duplicative’”.  “Under New York law, because 'every contract contains an implied covenant of good faith and fair dealing,' a 'cause of action alleging a breach of good faith is duplicative of a cause of action alleging breach of contract.'"

As such, the Court held that there is a "legal certainty" that the $70,000 stated on the face of the Complaint does not exceed the $75,000 jurisdictional threshold.  The case was remanded to New York State Supreme Court for lack of subject matter jurisdiction. 

 

02/13/25       Aguasvivas v. Mtn. Val. Indem. Co.
Supreme Court, Bronx County
Court Grants Insurer’s CPLR § 3211(a)(1) Motion to Dismiss Due to the Insured’s Breach of the Suit Limitation Condition

Plaintiff purchased a homeowner's policy from defendant that insured his property in the Bronx.  On April 28, 2022, the property sustained damage from a fire.  The Plaintiff filed a claim, which defendant denied on February 2, 2023.  The Plaintiff commenced this law on July 3, 2024, alleging breach of contract and fraud.  The policy contained a condition requiring any action to be started within one year after the date of loss.

The court held that while the policy prescribed a one-year statute of limitations, Insurance Law § 3404 supersedes this with a mandatory two-year period for fire insurance claims.  The cause of action accrued on the date of the fire, so the plaintiff had until April 28, 2024, to file the lawsuit.  Since the lawsuit was filed on July 3, 2024, it was outside the two-year statute of limitations and, therefore, time barred.

The court rejected the plaintiff's argument that the policy language was ambiguous, finding that "date of loss" clearly referred to the date of the fire in the context of the policy.  In interpreting the phrase “date of loss”, the Court held that “while the policy does not define date of loss, to the extent that the policy, in relation to both dwelling and personal property coverage, states that it covers ‘direct loss . . . only if that loss is physical loss to property,’ it is clear that the date of loss referenced in section 11 is that prescribed by law, namely the date of the event giving rise to coverage under the policy, i.e., the date [the property] was damaged in a fire, such that plaintiff sustained a physical loss to portions of [the property]”.  The suit limitation condition also applied to the fraud cause of action. 

 

FLEMING’S FINEST
Katherine A. Fleming
[email protected]

02/20/25       Hill v. State Farm Mut. Auto. Ins. Co.
Kentucky Supreme Court
Physical Presence Not Sole Controlling Factor Regarding Whether Minor Child Qualifies as a Resident Relative Under Parent’s Insurance Policy

Hill suffered injuries and lost a pregnancy when her vehicle was struck by another car driven by a seventeen-year-old. The teen, pursuant to a family court order, was in the sole legal custody of his father for nine uninterrupted years prior to the collision. The mother had not been exercising custody. The teen’s driver’s license, court documents, and employment records listed his father’s address as his own, and he was listed as a dependent on his father’s income taxes. However, the teen had not been physically staying with his father for three months when the accident occurred. Instead, he had been staying at his aunt’s house or with friends. The accident occurred when the teen was driving his aunt’s vehicle as a permissive user.

Hill sued for damages from the collision. The coverage question was whether the teen qualified as a resident relative under the father’s policy with State Farm. The policy defined “resident relative” as one who “resides primarily” with the named insured. The policy did not define the terms “resident,” “resides” or “primarily.” In Kentucky, an unemancipated minor cannot be without a home or guardian. In order to determine whether there was coverage, the issue was whether residency as used in the insurance policy meant legal domicile or actual physical residence. The trial court granted summary judgment in favor of State Farm’s denial of coverage. The Court of Appeals affirmed, finding the policy’s language clear and unambiguous and reasoning that the teen was not living at his father’s house.

The Kentucky Supreme Court disagreed with the appellate court’s reasoning that physical presence was the controlling factor without considering the teen’s status as a minor or the family custody orders. The Court found the term “resident relative” was ambiguous under these circumstances. For the vast majority of the last nine years, the teen had lived with his father, and the other facts of the case created a strong argument that the teen was “primarily” residing with his father. Accordingly, the Court reversed and remanded.

 

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]

02/20/25       Mist Pharms., LLC v. Berkley Ins. Co.
New Jersey Supreme Court
New Jersey’s High Court Agrees to Hear Appeal of Intermediate Appellate Court Decision Holding an Insurer’s Refusal to Settle Was Reasonable in Light of Dual Capacity Exclusion

Last year, the New Jersey intermediate appellate court overturned a trial court ruling that found that an insurer’s refusal to settle an underlying action was unreasonable. The intermediate appellate court held that because the global settlement package represented the separate interests of several entities that were not insureds under the policy, the insurer’s refusal to settle the claim was reasonable in light of the policy’s dual capacity exclusion.

The underlying facts are these. Several “Mist” entities were sued by a company called CelestialRx, which alleged that Mr. Krivulka, a director of Akrimax Pharmaceuticals, engaged in a scheme of self-dealing which defrauded Celestial. Specifically, Celestial asserted that Krivulka inserted various other entities that he controlled and/or invested in (including Mist) as intermediaries in deals between Akrimax and other pharmaceutical companies. The “middlemen” in these deals would receive a cut of the revenue from the deal.

At the same time as serving as a director of Akrimax, Krivulka chaired Mist’s Board of Directors and held over 90% of Mist’s company. Krivulka also controlled other Mist entities other than Berkley’s named insured (which was only Mist Pharmaceutical).

Mist Pharm. had a directors and officers policy with Berkley, written on a claims made and reported basis. The policy contained a dual capacity exclusion, which provided that Berkley was not liable to make payment for claims based on any wrongful act of any “insured person” serving in their capacity as a director or officer of any entity other than an “insured entity.”

After the underlying action was commenced, Berkley issued a reservation of rights letter, explaining that coverage for Krivulka would be limited to claims against him in his capacity as chairman of Mist Pharmaceutical, and that there would be no coverage for claims arising out of his roles with any other entity. Since, according to Berkley, the vast majority of the claims against Krivulka were brought in his capacity as director of other non-insured organizations, it offered to contribute 10% toward defense costs.

The underlying action was eventually set down for mediation. Leading up to mediation, Berkley wrote to Mist again, highlighting the dual capacity exclusion. In response, Mist brought this declaratory judgment action, seeking coverage from Berkley.

While this DJ was pending, the parties to the underlying case continued their settlement negotiations. Eventually, Mist sought Berkley’s consent to settle and again asked for indemnification. In doing so, Mist expressed its opinion that because the underlying plaintiff sought joint and severally liability against the various defendants, the legal fees and expresses would be generally the same across all defendants. Berkley again refused the request, on the ground that more information was needed.

Months later, Mist reached a $12 million global settlement, agreeing to bear 25% liability (still without having obtained consent from Berkley). After Berkley refused to indemnify Mist for its share of the settlement, summary judgment motions were filed in the DJ.

The trial court ruled that Berkley was required to fund the settlements. In so holding, the trial court relied upon Fireman’s Fund Ins. Co. v. Sec. Ins. Co. of Hartford, 72 N.J. 63 (1976), which held that an insurer has a duty to not unreasonably without consent to settle. The trial court held that Berkley’s refusal to consent to the settlement was unreasonable under Fireman’s Fund because Mist’s allocation of the global settlement was in excess of the Berkley policy limit and was below the potential liability Mist faced. Appeal was taken.

The Appellate Division reserved the order of the trial court, on the ground that it never considered the application of the dual capacity exclusion. While the trial court was correct in that Mist’s allocation of the global settlement went beyond its policy limit and was below its potential liability exposure, and Berkley withheld consent to settle, the intermediate appellate court held that Berkley’s refusal to consent was still reasonable.

Among the factors considered by the intermediate appellate court was the fact that the global settlement represented the interests of multiple entities, most of which were not insured under the Berkley policy. Also, the intermediate appellate court found that Berkley reserved its right to rely upon its dual capacity exclusion from the very inception of the claim to the extent Krivulka was held liable in capacities other than those for which he was insured.

This past week, New Jersey’s high court agreed to review the decision of the intermediate appellate division. We will monitor the developments closely.

 

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]

02/21/25       Riley v. Heritage Prop & Cas. Ins. Co.
United States Court of Appeals, Eleventh Circuit
Insureds Try to Incorporate Statutory Interest Provision Into All Florida Policies, Circuit Court Rejects That Argument Because It Would Circumvent the Statute and Policy Terms Themselves

You may recall I previously discussed Safont v. State Farm Fla. Ins. Co. in the January 31, 2025. Well, this matter is a follow up to that decision that reiterates the core concept of insurance policies, a policy’s plain terms control the insurer’s obligations to an insured.

This matter involved a consolidated appeal of breach of contract actions brought against two insurers for the failure to pay interest on untimely payments. In 2017, Hurricane Irma damaged the insureds’ respective properties and each failed to agree on the damage in value in each case. The insureds each received an appraisal award which the insureds claim was paid in a timely manner, thus requiring Fla. Stat § 627.70131(5)(a)’s interest payment provision to apply.

In Safont and Tyler v. State Farm Fla. Ins. Co. the Appellate Court held that while Fla. Stat § 627.70131(5)(a) did not create a private right of action, a standalone provision to provide interest within an insurance policy does. The trouble for the Riley appellants is that the respective policies at issue contained no such standalone promise to pay interest. So, the Riley appellants attempted to incorporate the statute’s language into the policies themselves. For reference, the statute reads:

“Any payment of an initial or supplemental claim ... made 90 days after the insurer receives notice of the claim, or made more than 15 days after there are no longer factors beyond the control of the insurer which reasonably prevented such payment, which-ever is later, bears interest at the rate set forth in s.55.03. Interest begins to accrue from the date the insurer receives notice of the claim. The provisions of this subsection may not be waived, voided, or nullified by the terms of the insurance policy ... However, failure to comply with this subsection does not form the sole basis for a private cause of action. (emphasis added).

Notably, the statute itself states there is no private cause of action for a failure to comply with its obligations. The Appellants homed in on “this subsection may not be waived, voided, nullified by the terms of the insurance policy” to support their incorporation argument. They paired this language with Fla. Stat. § 627.418(1), which requires policies not in compliance with the State’s Insurance Code to be construed as if in full compliance with the code. While creative, the court found that position lacked legal merit.

In using the pair of statutes, the Court found that reasoning would render 627.70131(5)(a)’s bar on private actions superfluous. Indeed, § 627.418(1)’s compliance obligation applies only to policies in direct conflict with the Florida Insurance Code. Here, the policies in question did not conflict with the Code nor did the policies contain an interest provision at all.

 

ROB REACHES the THRESHOLD
Robert J. Caggiano
[email protected]

02/11/25       Krmic, et al v. Corrie, et al    
Appellate Division, First Department
First Department Unanimously Affirms Order Which Granted Defendants’ Respective Summary Judgment Motions Dismissing Plaintiff’s Complaint on the Basis He Did Not Sustain Serious Injury Within the Meaning of Insurance Law § 5102(d) Where Plaintiffs Submissions in Opposition Failed to Raise Triable Issues of Fact 

This case stems from a 2016 motor vehicle accident where a vehicle owned and operated by Plaintiff, Nikola Krmic, collided with a vehicle operated by Defendant Andrew J. Corrie, owned by Defendant Charlie Xavier Salamanca Roman. As a result of this accident, Plaintiff Nikola alleged an injury to his cervical spine. He claimed that these injuries met the Serious Injury Threshold under the following categories of Insurance Law § 5102(d): permanent consequential limitation of use, significant limitation of use, and 90/180 day. Plaintiff’s spouse, Ana Krmic, also joined the suit in a derivative nature claim loss of consortium.

Both Defendants made motions for summary judgment seeking to dismiss the complaint, arguing that the injured Plaintiff did not sustain a serious injury as alleged. In support of these motions, Defendants submitted an expert radiologist report and IME neurologist report. The Supreme Court, Bronx County, granted both Defendants’ motions and dismissed the complaint – prompting appeal by Plaintiffs.

On review, the First Department agreed with the lower court’s findings. Specifically, Defendants’ expert radiologist opined that findings in post-accident imaging were degenerative and preexisting, and thus not causally related to the subject accident. The IME neurologist also opined as to similar findings. Further, although the IME neurologist found certain range of motion limitation of plaintiff’s cervical spine during the exam, the physician highlighted that Plaintiff’s own reviewed medical records in months after the accident showed plaintiff to have normal range of motion. The First Department found these submissions sufficient to meet the prima facie burden for Defendants on their motions, subject to Plaintiffs’ ‘significant’ and ‘permanent’ § 5102 claims.

In opposition, Plaintiffs did not raise a triable issue of fact. Notably, Plaintiffs only submitted one piece of evidence which was in admissible form – a report of a consulting orthopedic surgeon the injured Plaintiff only once, six years after the accident. The First Department found such an exam too far removed from the subject accident to raise an inference that any limitations were causally related to the collision. Additionally, that physician did not reconcile why any limitations at that time differed from Plaintiff’s normal range of months closer to the accident or the degenerative findings. Lastly, it was noted that the lack of causation defeats the ‘90/180 day claim’ – but nevertheless Plaintiff testified that he returned to work as a cleaner two weeks after the accident.

Accordingly, the First Department unanimously affirmed the Order of Supreme Court, Bronx County, granting Defendants’ respective motions dismissing the complaint on the grounds that Plaintiff Nikola Krmic’s injuries did not meet the serious injury threshold of Insurance Law § 5102(d).

 

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]

02/13/25       Aguasvivas v. Mountain Val. Indem. Co.
New York State Supreme Court, Bronx County
Insured’s Action Dismissed Based on Suit Limitation Provision Superseded by Insurance Law §3404

Wanny Aguasvivas brought an action against Mountain Valley Indemnity Company (“Mountain Valley”) on July 3, 2024, asserting fraud and breach of contract. The plaintiff had purchased a homeowners insurance policy. The property covered under the policy was damaged by a fire on April 28, 2022. On February 2, 2023, Mountain Valley denied coverage, after plaintiff appeared for an examination under oath.

Mountain Valley made a pre-answer motion to dismiss based upon documentary evidence. The policy contained a Suit Limitation provision, which stated:

Suits Against Us. No action can be brought unless the policy provisions have been complied with and the action is started within one year after the date of loss.

Case law in New York is clear, where the parties set down their agreement in writing, the clear, complete document should be enforced according to its terms. Courts refrain from interpreting agreements in a manner that implies something not included by the parties. If a contract is not reasonably susceptible to multiple meanings, the court is not free to alter it.

It is well-settled in New York that parties to an insurance policy can agree to a shorter limitation of actions than that provided in the general Statute of Limitations. However, it is important to note the requirements under statutory law Insurance Law §3404, which governs policies providing coverage for fire damage. Insurance Law §3404 states:

[n]o suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twenty-four months next after inception of the loss.

The statutory language cited above represents the shortest period parties may contract amongst themselves to limit when lawsuits may be brought. As such, courts in New York interpreting suit limitation provisions will use the statutory limitation cited above, to supersede the language of fire damage policies attempting to shorten the period for a time less than two years. The Mountain Valley policy did not abide by the statutory requirements, and therefore, the court looked to the statute to supersede the plain language of the policy, to comply with New York law.

The court additionally discussed the date where the cause of action begins to accrue based on the language of the policy.  Under an insurance policy a claim for breach of contract begins to accrue on the date of the loss.  Here, both causes of action in the complaint, regarding fraud and disclaiming coverage for the loss, stem from Mountain Valley’s failure to provide coverage for a fire which occurred on April 28, 2022.

In this case, the plaintiff commenced the lawsuit on July 3, 2024. However, the date of the fire loss was April 28, 2022. Since Mountain Valley’s evidence conclusively established that the action was not commenced for two years and three months after the loss, it was time-barred. As such, the action was dismissed in its entirety.

 

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]

02/28/25        New York Senate Bill S3352
Act to Amend Insurance Law to Allow for Certain Notices to Be Delivered by Electronic Means

Introduced on January 8, 2025, Bill S3352 seeks to amend insurance law and the vehicle and traffic law to allow electronic delivery of certain notices.

The Bill seeks to amend Insurance Law § 3458 (b) to allow for any notice of document required under this chapter to be delivered by paragraph (C) of Section Three Hundred of the Vehicle and Traffic Law in a property/casualty insurance transaction may be delivered by electronic means so long as it meets the requirements of Article three of the state technology law.

Further, Section 313 of the Vehicle and Traffic Law would be amended to include:

(C) An electronic notice that complies with section three thousand four hundred fifty-eight of the insurance law shall be sufficient for the purposes of this section.

 

DOMENICA’S DIARY on BAD FAITH
Domenica D. Hart
[email protected]

02/19/25       Frydman v. Endurance American Insurance Company
Appellate Division, Second Department
Bad Faith Claim Against Insurance Broker Survives Motion to Dismiss

The plaintiff commenced this action to recover amounts due and payable under an insurance policy. The plaintiff alleged that the policy was fully paid for but never delivered to him.

Alliant Insurance Services, Inc. (“Alliant”), is the successor to Crystal & Company, the insurance broker that allegedly was supposed to obtain a policy from the defendant Endurance American Insurance Co.  (“Endurance”) The plaintiff asserted causes of action to recover damages for breach of contract and breach of the implied covenant of good faith and fair dealing.

The broker, Alliant, moved to dismiss the cause of action pleading breach of the implied covenant of good faith and fair dealing insofar as asserted against it.

The implied covenant of good faith and fair dealing embraces a pledge that neither party shall do anything that will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract and is breached when a party acts in a manner that deprives the other party of the benefits of the contract. For a complaint to state a cause of action alleging breach of an implied covenant of good faith and fair dealing, the plaintiff must allege facts which tend to show that the defendant sought to prevent performance of the contract or to withhold its benefits from the plaintiff.  Here, the plaintiff alleged facts tending to show that Alliant's predecessor sought to prevent performance of an agreement with the plaintiff or to withhold the benefits of that agreement from the plaintiff.

Any claim for breach of contract or breach of the covenant of good faith and fair dealing accrued on the date of the breach. Accepting the allegations in the amended complaint as true, the plaintiff requested a copy of the operative policy by email on October 23, 2016. He alleged that he did not receive a response to that email. The statute of limitations for the breach of the covenant of good faith and fair dealing is six years. The plaintiff first asserted its claims against Alliant in September 2022, less than six years after the alleged breach.

 

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
[email protected]

02/14/25       Irving Shipbuilding Inc. v. Beazley Syndicates AFB 2623
Nova Scotia Supreme Court
An Insured Did Not Waive Solicitor Client Privilege Over Legal Advice It Received Regarding the Insurance Requirements for a Complex Project When It Shared That Advice with a Broker Charged With placing That Unique and Specialized Coverage

In 2014, the Government of Canada committed to the acquisition of six Arctic and Offshore Patrol Ships (AOPS) for the Royal Canadian Navy. Designated the Harry DeWolf - class in honour of Vice-Admiral Harry DeWolf, a Canadian wartime naval hero, the vessels are being delivered through the AOPS project, under the National Shipbuilding Strategy. Five of the ships have been built and delivered and the sixth is on schedule for delivery in August 2025. Irving Shipbuilding Inc. (ISI) was appointed as the prime contractor to build these new vessels.

The negotiations that led to the issuance of this contract to ISI began in 2011. At that time, Beazley issued a ‘made-to-order’ insurance policy for the AOPS project. The policy was put in place with the assistance of ISI’s broker, Integro.

ISI had a dispute with a sub-contractor, Odense Maritime Technology (OMT), and that entity’s design subcontractor that went to arbitration. OMT defended and counterclaimed. Beazley funded OMT’s defence and counterclaim but refused to pay ISI’s claim expense to launch its claim. Beazley also refused to pay the costs incurred by ISI to defend the OMT counterclaim.

As a result of the arbitral proceeding, OMT was ordered to pay about C$170 million in damages to ISI. Both OMT and ISI sought coverage under the Beazley policy. Beazley stated that its liability to pay was limited to $25 million. Both ISI and OMT disputed this position. That dispute gave rise to this coverage action.  This decision does not explain the basis of that dispute, rather, it deals with whether ISI rightfully claimed solicitor client privilege over documents and correspondence between itself and its broker during the negotiation and drafting of the policy.

Both ISI and Beazley agreed that those documents and that correspondence was relevant to the coverage dispute.  The issue was whether ISI waived any solicitor client privilege and common interest privilege over the documents when it shared them with the broker.

Privilege Was Waived

ISI’s internal counsel and its external counsel, Stewart McKelvey/McCarthy Tétrault, received and reviewed the Government of Canada’s strict and specialized instructions for the insurance to be placed on the AOPS project. ISI shared that legal advice with its broker, Integro. ISI claimed that “it brought Integro into the tent” so that Integro, who had a common interest with ISI in placing the policy, could understand the insurance requirements. Therefore, solicitor client privilege was not waived.

For its part, Beazley argued that ISI's lawyers never provided legal advice to the insurance brokers, nor did the brokers provide any legal advice to ISI. Further, any privilege was waived when it was disclosed to a third party.

The Court’s Decision

Much of this very long and involved judgment is dedicated to a useful discussion of solicitor client privilege and common interest privilege.  The court then discussed the role that Integro played in placing this insurance with Beazley.

The court stated that Integro was to broker a very specific type of insurance coverage for the Project, one which met the Canadian Government’s specifications in every aspect. In some instances, it had to negotiate directly with Beazley on ISI’s behalf, as Beazley acknowledges. To do so, Integro needed complete familiarity with the legal advice that ISI had received, so that it could understand whether what was under discussion met the Government’s exacting specifications.  In addition, Integro advised ISI’s lawyers in advising ISI throughout the period of time that the Policy was being negotiated and drafted.  Specifically, the Court stated:

“The purpose, or role being fulfilled by Integro throughout the time interval relevant to the generation of the documents and communications at issue was essential to the operation of the solicitor-client relationship of ISI and its internal and external counsel. It required that this advice be made available to Integro. Further, the specialized nature of the Policy necessitated the very integrated and cohesive roles shared by ISI, Integro, and all of the legal counsel involved, as the Policy was negotiated and implemented with Beazley.  Such cooperation was needed not only to obtain the Policy, but to manage and maintain it in accordance with ISI’s needs.”

In view of this unique relationship, ISI established, on a prima facie basis: first, that the communications between itself and its counsel with respect to its insurance requirements are privileged and second, that this privilege was not waived when the information respecting that advice was provided either by ISI personnel to those of Integro, or when particulars of that advice were discussed by ISI’s counsel directly with Integro personnel, or, thirdly, when personnel of Integro, or those of ISI, discussed that advice amongst themselves.

In the eyes of the Court, Beazley failed to demonstrate that the privilege should be disregarded. However, the door was left open for Beazley to demonstrate that privilege ought to be disregarded if further information is obtained from the discovery process.  In the meantime, Beazley must pay ISI’s court costs to respond to its motion for production.

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