Coverage Pointers - Volume XXVI No. 23

Volume XXVI, No. 23 (No. 696)
Friday, April 25, 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, New Jersey, 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.

We welcome a slew of new subscribers from our PLRB presentation on Risk Transfer and the two presentations to a national carrier (totaled about 375 attendees) on New York Coverage Protocols and Writing a Coverage Letter in New York.

We always welcome the opportunity to offer educational programming.

Any Given Saturday, my new pal in Lexington Kentucky, is a 21-year-old horse that was born in 2004 and raced in 2007. He was sired by Distorted Humor out of the A.P. Indy mare Weekend In Indy. He was trained by Todd A. Pletcher and raced for , and was bred in Kentucky, United States by [Add Data]. Any Given Saturday has raced at Aqueduct, Belmont Park, Churchill Downs, Monmouth Park, Tampa Bay Downs with wins at Belmont Park, Monmouth Park, Tampa Bay Downs. His stakes wins include wins in the 2007 Brooklyn Handicap (G2), 2007 Haskell Stakes (G1), and the 2007 Sam F. Davis (LS). 

Greetings from Lexington, where I’m attending the 84^th Annual Meeting of the Association of Defense Trial Attorneys, the ADTA.  Great to be among so many friends and colleagues.  Looking forward to tasting some good Kentucky bourbon and visiting a classic Kentucky horse farm.  On Thursday, along with my colleague, Megan Coluccio, from Baker Sterchi in Seattle, we are presenting a program entitled “Masters of Marketing”.

Hurwitz Fine P.C., in collaboration with the Harmonie Group’s Medical Malpractice Committee, is proud to present a 50-State Wrongful Death Compendium. This compendium provides a primer for each state that answers the following questions: what is the state's statutory language, who can recover and what can be recovered, and what is the state's statute of limitations for a wrongful death action.  Our own Chris Potenza spearheaded the project for the Harmonie Group.

The Harmonie Group's Wrongful Death Compendium provides a primer for each state that answers the following questions: what is the state's statutory language, who can recover and what can be recovered, and what is the state's statute of limitations for a wrongful death action. Entries are updated as of March 2025.

Click here to view this resource.

Disproving a “Grave Injury”

Often a problem to fight against in an underlying Labor Law action against an employer, because of a potential conflict of interest that may preclude defense counsel from moving to dismiss a claim with unlimited coverage, another court has crafted a remedy for the Employers Liability carrier – a separate declaratory judgment action.  See my discussion of the NGM decision in this week’s issue.

 

Coverage Mediator

Give Me a Call – 716-849-8942

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

A growing percentage of my practice has been a mediator (and sometimes as an arbitrator) in insurance coverage, commercial, personal injury, and other disputes.  With a robust national client base, I am regularly called on by friends and colleagues from around the country, folks who know me and trust me, to help resolve disputes.  Often, particularly in mediated matters, I know the insurers and lawyers on both (or several) sides of the dispute.  Since they all trust me as a fair dealer, they feel comfortable in having me try to help close the file (and avoid precedent).  Just pick up the phone, 716.849.8942 or send an email to [email protected]  and I’ll try to help.

 

What are the benefits of coverage mediation?

Time and Cost Efficiency

• Mediation is generally much faster and more cost-effective than traditional litigation:

• The process can typically be completed within weeks, compared to months or years for court cases.

• It avoids expensive court fees, attorney costs, and other litigation-related expenses.

Control and Flexibility

• Parties have more control over the outcome in mediation.
• They can actively participate in crafting solutions tailored to their specific needs and circumstances.
• There is flexibility to explore creative resolutions that may not be available through court proceedings.

Confidentiality

• Mediation proceedings are typically confidential, which offers several benefits:
  • Parties can discuss sensitive matters openly without fear of public disclosure.
  • It avoids the publicity and public record associated with lawsuits and trials.

Relationship Preservation

• The less adversarial nature of mediation can help maintain or improve relationships between parties.
• It fosters open communication and collaboration.
• This can be especially valuable in disputes involving ongoing business relationships.

Risk Mitigation

• Mediation helps alleviate some of the risks associated with litigation.
• It avoids precedent that may provide unfortunate results for parties – or for the industry – in the future.
• It offers a compromise-based approach, reducing the "all-or-nothing" risk of a court decision.
• Even if unsuccessful, the process can provide valuable insights into the strengths and weaknesses of each party's position.

Empowerment and Communication

• Mediation empowers parties in ways that litigation often doesn't.
• Clients have a more active role in the process and outcome.
• It provides a forum for parties to tell their stories and feel heard4.

While mediation isn't suitable for every situation, these advantages make it an attractive option for resolving many insurance coverage disputes efficiently and effectively.

 

LinkedIn

For those who need to keep up to date on insurance coverage between issues of Coverage Pointers, we’re happy to help.  Just follow me on LinkedIn and we’ll keep you up to date. I’m easy to find – my linked in name is (ready for this unusual and unexpected name):  Kohane (now there’s a shock)  and you can find me here:   https://www.linkedin.com/in/kohane/

 

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.

 

 

Women Don’t Vote – 100 Years Ago:

Buffalo Post
Buffalo, New York
25 April 1925

WOMEN IN POLITICS AND THE HOME.

Carrie Chapman Catt, president of the National American Woman Suffrage Association, wants to know why more women don’t vote. “Why aren’t there more women in the Legislature? Why aren’t women more effective in politics?” She asks.

Mrs. Catt is asking a question that women generally can answer if so inclined. Most women have no interest in politics. Their inclination and tastes lead them elsewhere. It is true that many of them wanted the ballot, just as a little boy wants a toy that is out of his reach. But when they got it they cast it aside as something of no values: Some women go to the polls with a clear understanding of what they are voting for and so cast an intelligent ballot. But how many of them let their husbands or brothers or fathers tell them what to do?

A woman’s taste is not to be regulated by law. She is not going to interest herself in politics if politics has no appeal to her. The club women and those who make a study of politics are relatively few compared with the total number.

But Mrs. Catt makes a mistake if she thinks that because women take no direct interest in the campaigns of the day they are not “effective in politics.” John Garibaldi Sargent, the new Attorney General, spoke to the members of the association upon they very topic and pointed out how immensely influential the mother is in the home in shaping the mind of the child and making potentially a good citizen of him.

“The women of America,” said Mr. Sargent impressively, “will make or break the nation by what they teach their children before the age of ten.” There is no objection to women taking an active part in politics and in governmental affairs, provided they do not neglect that far more important sphere of activity and usefulness, the rearing of children in the home.

The duties that nature has imposed upon women are far more important than those which have been thrust upon her by law.

 

Peiper on Property (and Potpourri):

Dear Readers,

We’ve all had them.  Your author still laments a particular decision from the Appellate Division where the Court simply refused to acknowledge, address, or even reference, dispositive language in an SUM dispute.  Troubling, indeed, when the same Court, reading the same language, and analyzing the same argument, reached an entirely different conclusion six months later. 

That said, on the whole, the Appellate Division renders thoughtful, well analyzed, opinions weekly.  Disagreement with a decision does not, necessarily, mean the Court (wherever it sat) was wrong.  It’s a hard position, and deciding appeals by its very nature leaves one party disappointed in the decision. 

On occasion, though, we come across decisions that leave us scratching our heads.  This month we have such a decision.  While we cannot believe that the Third Department intended to find an ambiguity in otherwise clear language because of where an Endorsement was placed in the policy, a casual reading of Catskill Barbeque could lead one to that conclusion.  The Court appears to have fixated on the fact that an Endorsement changing coverage referenced in a Supplemental Declarations Page was not found until 73 pages later.   One could read the opinion to suggest that where there is a span of pages between interacting policy provisions an ambiguity is created.   

It is humbly submitted that contracts are contracts, and the Court of Appeals has dictated for decades that no court should strain to find ambiguity where it is not apparent on the face of the document.   If this decision is to be believed on its face, it upends decades of precedent.  Some BOP forms are nearly 50 pages long on their own.  Is the Appellate Division suggesting that an Endorsement, found immediately after the primary policy form, is ambiguous because of a span of 50 pages?  What gap, then, is permissible?

In reading the decision closely, however, you do see what the Court appears to have been driving at.  Apparently, the carrier involved conceded that a portion of the Endorsement in question did not apply.  The carrier then, however, argued another portion of the same Endorsement in controversy did, in fact, apply.  If there is ambiguity, it is at least plausible that it is found in the wording, or application, of the Endorsement.  We can appreciate that distinction, and hope this is what the Court meant. 

If, however, one can manufacture ambiguity by arguing it does not need to apply an Endorsement because it is hard to find in the policy, we are in a very strange new world.  As noted above, if we’re counting pages of a contract, and not analyzing the language employed therein, we have collectively lost the plot.   I’ll assume this one is an anomaly and hope I don’t see it show up in my next summary judgment motion. 

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

Steve
Steven E. Peiper
[email protected]

 

“To Be Your Contractually Wedded Wife …” – 100 Years Ago:

Buffalo Post
Buffalo, New York
25 April 1925

Marriage Contract Arranged By
Parents Not Binding, Court Rules

New York, April 25 (A.P.) – A contract of marriage made before a rabbi by the parents of a boy and girl is not binding upon either minor, Brooklyn Supreme Court Judge Fabor has ruled.

As a result of this ruling, made yesterday, a $25,000 breach of promise suit brought by Edna Popofsky 19, of Oskaloosa, Iowa, against Harry A. Finkelstein, 25, of Brooklyn, has been dropped.

Miss Popofsky and Young Finkelstein were formally matched by their parents, an agreement having been signed in September 1921, between the respective parents and before a rabbi here. The marriage was to have taken place September 6, 1933, but young Finkelstein, at that time, refused to go through with it because, he said, the families had quarreled since the signing of the agreement. Miss Popofsky promptly brought suit.

Though he would not honor as legal the agreement to marry, Judge Faber granted the girl $8,500, given to Finkelstein as dowry money at the time the agreement was signed.

 

Lee’s Connecticut Chronicles:

Dear Nutmeggers:

Well, if you’ve been following the saga of our renovation project, I can report that it is OVER! The work is done, the furniture delivered, and now all that’s left for us to do is learn to live in it. It took longer than we thought it would, it cost more than we budgeted, but the result is stunning. Now, we get to enjoy it all to ourselves for all of the next three weeks, until the college kids come home for the summer and ruin it.

On the litigation front, we report on two additional CUTPA pleading cases, again noting the varied standard across the state but confirming that generic, boilerplate allegations will not survive a motion to strike. However, the same allegations will make out a common law bad faith cause of action.

Until next time, keep keeping safe.

Lee
Lee S. Siegel
[email protected]

 

Whiskey Talks, Nobody Walks – 100 Years Ago:

Dunkirk Evening Observer
Dunkirk, New York
25 April 1925

BATTLING BROTHERS
TAKEN BEFORE JUDGE

Moonshine Started War Between
Relatives Costing One $5 and
The Other $10 Fine.        

Filled with moonshine which made them forget the fact that they were brothers, Steve and George Olyowski, both of 193 East Second Street started a fight with each other which eventually led them to jail and police court. Steve is older and bigger than George, so he got the better of him in the battle. George, seeking to be avenged, called the cops with the result that the two spent the remainder of the night in the Fredonia jail.

This morning the brothers pleaded not guilty to disorderly conduct; the charge preferred against them by Officer Clifford. Judge Anthony Johnson found them guilty, however, and as they have been a source of trouble lately. Steven drew a fine of $25 and George one of $10. Both fines were paid and the defendants released.

 

Ruffner’s Road Review:

Dear Readers,

Still anxiously waiting for Spring weather to arrive. Hopefully it warms up soon before golf and softball seasons begin. In the meantime, it’s a great time of the year for sports with NHL and NBA playoffs underway, even without any team in particular to root for since Pittsburgh and Buffalo aren’t involved (obviously I am accustomed to the latter with the Sabres).

I have one no-fault case this week, where the court considered the insurer’s summary judgment motion on the basis of their founded belief the alleged accident was intentional and the failure of multiple claimants to cooperate with the investigation. In the second case, the court determined that the insurer could seek subrogation from a Gentlemen’s club, based on alleged allegations of Dram Shop laws, for payments made due to an accident caused by a drunk driver.

Kyle
Kyle A. Ruffner
[email protected]

 

Death Penalty for 15-Year-Old Boy – 100 Years Ago:

The Buffalo News
Buffalo, New York
25 April 1925

DEATH FOR A BOY OF 15?

Shall a boy of fifteen suffer the death penalty?

This question arises out of the conviction of Willie Cavalier by a jury in a Pennsylvania court of the murder of his grandmother. He was sentenced by the judge to die in the electric chair. The jurors, who returned the verdict, have petitioned the judge to have the boy examined by a lunacy commission. He, however, will neither reconsider his judgement nor appoint a commission.

The crime of which this boy was convicted was cold blooded and brutal. He killed his grandmother to get possession of a small sum of money. At that time, he was fourteen years old. The law does not regard a boy of this age as a competent and responsible person. This is true with respect to all civil commitments – as of his labor, property, what not. How, then, can he fairly be held responsible in this instance, and to the extent of paying for his offense with his life? Of course, he should be punished, and with all the severity consistent with the requirements for the proper safeguarding of society, Bu that should not take him to the electric chair.

Editor’s Note:  The sentence to death was upheld by the state’s highest court but eventually commuted to life imprisonment by the Board of Pardons of the Commonwealth of PA, five days before his scheduled electrocution.  He died of pulmonary tuberculosis in prison, at the age of 30.

 

Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers:

Another Little League season is upon us as this Saturday is officially park clean-up day at Central Amherst Little League. My oldest will be playing baseball by next week (weather permitting). No word yet on the shape of the fields, but at this time of year—they’re wet, without question.

This edition I have summarized a recent Southern District of New York decision involving Article III Standing relative to an alleged breach of an insurance policy by paying benefits to an insured’s lienholder, rather than directly to the insured. The court addresses just what it means to constitute an “injury in fact” in the context of a first-party insurance claim involving payments made to a third-party, rather than the insured directly, and precisely how such an injury might be redressed by the Court in the future.

Until next time,

Ryan
Ryan P. Maxwell
[email protected]

 

Pretty Good Salvage – 100 Years Ago:

The Buffalo News
Buffalo, New York
25 April 1925

INSURANCE CO. GETS
STOLEN MACK GEMS

Held by City, They Satisfy
$25,000 Judgment – Policy
Already Paid Owners

In a friendly suit growing out of the theft of valuable jewelry from the Delaware avenue home of Norman E. Mack, several months ago, judgment of $25,000 was taken by the Federal Insurance company of New York, Thursday, against Mayor Schwab, Police Chief Zimmerman, and Police Property Clerk James Mack. The judgment was advised and accepted by Assistant Corporation Counsel Andrew Ronan, in order that the insurance company might be protected in its title to a string of pearls recovered by the Cleveland police and surrendered to the insurance company through the office of Property Clerk James Mack. The insurance company has previously paid Mr. Norman E. Mack the full amount of a policy covering the loss of the jewels.

Part of the Mack jewels were recovered from men arrested in a Cleveland jewelry store. They denied having stolen the jewels, declaring they had won them in a crap game. The Cleveland police gave a Buffalo detective custody of a string of pearls which were brought to this city and placed in charge of Property Clerk Mack.

The insurance company having paid for the loss of the pearls asked the city authorities to surrender them to their representatives. Some question of law had arisen in the Ohio courts however, which it was feared might later involve title to the pearls, so Corporation Counsel Ronan advised insurance company lawyers to take judgment against the city for the value of the jewels. The judgment was satisfied Friday when the jewels were surrendered to the agents of the company.

 

Storm’s SIU:

Hi Team:

I hope you had a wonderful Easter and found all your Easter eggs!  Four cases this week:

• Material Misrepresentations in the Application; and the Mere Intention to Reside in the Premises in the Future is Insufficient to Satisfy the Policy's "Residence Premises" Requirement.

   

• Issue of Fact Whether the Plaintiffs' Misrepresentations Regarding their Additional Living Expense Claim Were Material to the Insurer’s Investigation.

   

• Case Transferred from the Southern District of New York to the District of Connecticut as the Locus of Operative Facts for this Fraud Case is Connecticut, Not New York.

   

• Court Granted Insurer’s Motion to Amend its Answer to Include an Additional Affirmative Defense Based on Breach of the "Concealment, Misrepresentation or Fraud" Condition of the Policy.

See you in a fortnight.

Scott
Scott D. Storm
[email protected]

 

Wondering if the Stats Have Changed – 100 Years Ago:

The Buffalo News
Buffalo, New York
25 April 1925

WOMEN ABSENT FROM
WORK MORE THAN MEN

BALTIMORE, April 23. – That women employees lose over twice as much time as men employes is shown by a research conducted by Harry W. Hepner of Syracuse university, to be reported in the next issue of the Journal of Personnel Research.

A large industrial concern in considering the equalization of salaries for their men and women office employees made an investigation of the relative amount of absence of men and women. It was found that over a period of three months the female employes lost over six per cent of their working time by absence while only slightly two per cent was lost by the male employes. Both sexes worked under exactly the same office conditions. As a result of the study this particular company decided that their salaried women employes did not deserve the same pay as men even when they hold the same kind of positions.

One interesting sidelight developed by the investigation was the fact that absence for both men and women was less on pay days than on other days. In one case 50 employes were absent on the day before pay day and only 6 on pay day. 

 

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

Hope you have been having a lovely Spring! As predicted, the weather has been warming up. I went for a run over the weekend and was surprised to see our cherry blossoms are not in bloom yet. Like the rest of us, maybe this warm weather is just what they need to reach their full potential.

This week’s case from the Iowa Supreme Court considers whether consumer fraud is an occurrence and constitutes property damage under a CGL policy.

Catch you later,

Kate
Katherine A. Fleming
[email protected]

 

A Polite and Appreciative Burglar – 100 Years Ago:

The Buffalo News
Buffalo, New York
25 April 1925

ODD BURGLARY INSURANCE
WORKS AFTER 7 YEARS

NEW YORK, April 24. – Alfred Bohm, a retired Brooklyn business man, has found his unique burglary insurance effective after seven years.

Bohm, fearing that burglars would break into his summer bungalow, at Grand View, in Rockland County, N.Y., and wreck its furnishings during the winter months when the colony is deserted, had left a $50 bill on the library table each fall. With the bill he has left a note reading:

“If you succeed in breaking in please accept this $50 and depart at once. Do not damage the furniture. There are no valuables in the house. Thanks. Alfed Bohm.”

For seven years the bill was not disturbed. But when Bohm visited the bungalow this year it was gone, nothing had been disturbed, and across the face of his note was scrawled a simple “Thanks.”

 

Gestwick’s Garden State Gazette:

Dear Readers:

I had a wonderful week away in Hilton Head, with trips to Charleston, Savannah, and Atlanta, with my fiancé and my soon-to-be in-laws. And it seems that I have brought the beautiful sunshine back to Buffalo with me! To make it even better, lacrosse playoffs are starting this weekend, with our Buffalo Bandits taking on the San Diego Seals. The Blue Jays are in action (albeit not too hot as of late), and spring is in the air. What a wonderful time of year it is.

I have a case for you this week discussing the proper procedure by which to cancel an auto insurance policy in the State of New Jersey. Read on for a cautionary tale.

That’s it for this week, see you in two.

Evan
Evan D. Gestwick
[email protected]

 

They Won the Right to Vote – 100 Years Ago:

Democrat and Chronicle
Rochester, New York
25 April 1925

FIRST SUFFRAGE
GROUP DISBANDS

Pressing Miss Anthony’s
Claim to Hall of Fame
Niche is Urged

Washington, April 24. – The National Women Suffrage Association has formally ended its life of nearly seventy-five years devoted to the fight to obtain the vote for women. Mrs. Carrie Chapman Catt, president of the Association, presided at a meeting of its officers and other suffrage leaders, called here yesterday for the formal disbanding of the organization through which Susan B. Anthony and other suffrage pioneers started before the Civil war the movement which achieved its goal with the adoption of the Nineteenth amendment five years ago.

Addressing the meeting, Mrs. Catt urged more fighting spirit among women in politics.

“They say that women generally are disappointed in politics, that they don’t get the fun out of it that men do, because they haven’t got the fighting spirit,” Mrs. Catt said.

Tribute to the memory of Susan B. Anthony was paid in an address by Miss Helen M. Gardner, and Mrs. Raymond Brown asked women to urge the suffrage pioneer’s right to recognition for the Hall of Fame after the necessary lapse of twenty-five years from her death, which will be in 1931.

 

O’Shea Rides the Circuits:

Hey Readers,

Who has already mowed their lawn? Not this guy. Law-mowing and edging flower beds are on the agenda for this weekend. That and hopefully a playoff win from the Ottawa Senators.

This week I have a case regarding a pharmacy’s professional liability claim from the Sixth Circuit. It looks like the business did not properly coordinate its insurance. And no one read the professional liability policy.

Until Next Time,

Ryan
Ryan P. O’Shea
[email protected]

 

What Time is it? – 100 Years Ago:

Times Herald
Olean, New York
25 April 1925

Daylight Saving
Law Mixed Affair

NEW YORK, April 25. – More clocks the country over will be turned ahead one hour tomorrow morning, at 3 o’clock. When daylight saving time goes into effect for five months, then any other year since the world war when it was started, the merchants’ association estimated today.

New York city will be governed entirely by the hypothetical April to September time meridian, this being made mandatory by city ordinance.

This will accordingly embrace all business institutions within the city limits, and accounts for the principal financial and commodity markets, such as the stock consolidated, curb, cotton, coffee, sugar and produce exchanges.

The radius will be even wider than merchants’ association said because the Federal Reverse banks both here and at Buffalo, announce they will keep the new time, opening and closing an hour earlier, morning and evening.

 

LaBarbera’s Lower Court Library:

Dear Readers:

Hope everyone had a lovely Easter with friends and family. For Easter, my present included packets of Morning Glory Seeds. For those who know my boyfriend, Morning Glory vines are his worst nightmare. After asking every summer to add some to our backyard, this year I finally get my wish. I cannot wait to get them planted. In other news, I was pleasantly surprised to learn that my college roommate would be moving to Buffalo. Looking forward to having her close by again.

This week I have an interesting case brought by the National Football League and NFL Enterprises LLC against a variety of insurance carriers regarding an underlying action alleging conspiracy between the NFL and DirecTV. Hope you enjoy the read.

Until next time …

Isabelle
Isabelle H. LaBarbera
[email protected]

 

She’s Not My Mom, She’s My Wife! – 100 Years Ago:

The Afro-American
Baltimore, Maryland
25 April 1925

Mistaken Relationship

An elderly woman stood before the bar of justice in the Western Police Station Friday morning. A young man stood on the opposite side of the rail. The judge set in his accustomed place and looked knowingly at the pair.

“What’s the charge?” asked his honor.

The woman brushed away an unshed tear and informed the magistrate that the charge was non-support. “I hate to do it Georgie,” she said, “but I cannot live off nothing and you think I am able to work.”

The magistrate scowled at the robust young man, “Why don’t you work?” he blurted, “You are well and strong! How can you be so heartless as to neglect the poor old woman?”

“But your honor,” interrupted the young man,

“Not a word,” said the judge, casting a glance of sympathy at the woman who tucked a strand of gray hair under her hat.” “Sarah Hardman, where do you live?”

“222 Bowers Court. Judge, I don’t want to be hard of George, I think he will do right if you tell him.”

“That’s all right,” said the judge, “but I have no pity for a man who won’t support his dear old mother.”

“She’s not my mother,” interrupted George, “that’s my wife.”

The judge was so surprised he dismissed the case without further comment.

 

Lexi’s Legislative Lowdown:

Dear Readers,

This weekend I am beginning to prepare a section of my yard for a wildflower garden. I am not sure my fiancé is thrilled about losing some of the grass, but I am looking forward to testing my green thumb this summer!

This week we discuss a proposed bill that would prevent automobile insurers from cancelling or non-renewing policies during the pendency of disputed claims.

Lexi
Lexi R. Horton
[email protected]

 

Whipping the Defendant into Shape? – 100 Years Ago:

Brooklyn Eagle
Brooklyn, New York
25 April 1925

Magistrate Would Whip
Wife Beater at the Post

Magistrate Brown in the Flatbush Court today expressed a desire for the return of the days of the whipping post.

“And I’d like to take a slash at you myself,” he told Raymond Rodriguez, 31, of 23 Lefferts pl., who was before him to be sentenced on the charge of his wife, Winifred, that he had struck her in the face. A report of a probation officer showed that Mrs. Rodriquez, a frail, slim girl, had been working since their marriage and supporting husband and his child by a first marriage.

“You are a brute,” the Court declared. “And I am only sorry that I cannot deport you.” He placed him on probation for a year not to see or communicate with his wife.

 

Domenica’s Diary on Bad Faith:

Dear CP Readers,

It’s late April and finally feeling like spring!  We are hopefully done with the big coats for a while.  Enjoy the blooming of the season … truly one of my favorite times of the year. 

This week I bring you a case that is a cautionary tale against getting too comfortable relying on Courts’ general leanings towards dismissing bad faith claims and suits against insurers.

Domenica
Domenica D. Hart
[email protected]

 

Wonder Whether She Married Him Anyway – 100 Years Ago:

Times Herald
Washington, District of Columbia
25 April 1925

ADVICE TO THE
LOVELORN

By Beatrice Fairfax
Taking a Great Risk

DEAR MISS FAIRFAX:

I am desperately in love with the dearest man in the world. But my parents don’t wish me to marry him. All they have against him is that he drinks.

He says if I marry him I can reform him. What would you advise me to do? ANXIOUS

Unless he reforms you haven’t a chance in the world for a happy married life with him. Thousands of drunkards do reform, thanks to the Giver of all Good. But wait until your own particular man has reformed before you marry him. If you can’t stop him from drinking now you’ll never in the world be able to stop him after you’re married to him.

Listen to your father and mother – put the man on probation – and see. That’s your only fighting chance for happiness.

 

North of the Border:

I am about to embark on my spring ritual: Heading to Toronto for the Canadian Defence Lawyers’ Insurance Coverage Symposium. In my opinion, this is where anyone interested in Canadian insurance coverage needs to be. It is clearly the case that others agree with me as the event is sold out. Again.

In the spirit of 4/20—whether you call it ‘Four Twenty,’ or just the world’s chilliest holiday—this week’s column (by cosmic coincidence) dives into yet another cannabis case.

Until next time.

Heather
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
[email protected]

 

Purity Juries No More – 100 Years Ago:

Buffalo Courier
Buffalo, New York
25 April 1925

Banton to Ignore
Future Verdicts
Of “Play Juries”

System Lapses into Disuse
After Brief Activity

New York, April 25. – The play jury system, under which juries drawn in the district attorney’s office from a selected list of playgoers reviewed productions which were complained of as immoral, apparently has lapsed into disuse after a clean bill of purity to three productions alleged to be obscene, it was learned today.

District Attorney Banton, who prophesied failure for the experiment, is believed to have been dissatisfied with the results. He asserted when he agreed to give the play jury system a trial that the play jury seemed the only escape from “political censorship.” “That it may prove unsatisfactory is a probability.” He was quoted as saying, “But I believe in giving it a fair trial.”

Banton today asserted that his attitude toward a production which he regards as a violation of the law has never changed, and that if he is given evidence now which he regards as proving immorality within the meaning of the law he will place the matter before a grandy jury, regardless of the verdict of a play jury.

 

Headlines from this week’s issue, attached:

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

• New Trend Continues. Employer’s Liability Carrier Establishes, in Declaratory Judgment Action, That Underlying Plaintiff Did Not Sustain a “Grave Injury” and Therefore Has No Duty to Defend Underlying Third-Party Action
• Additional Insured Coverage to Contractor Only Available if There Is a Written Subcontract.  Court Defines Subcontractor and Discusses Horizontal Exhaustion Rules.  Court Embraces Horizontal Exhaustion

 

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

• Thousands Flee - Third Department Finds Apparent Question of Fact on Enforceability of an Endorsement Because it is Hard to Find in the Policy

 

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

• What Is Failure to Procure Insurance?
• Another Court Grapples With the CUTPA Pleading Standard
• Boilerplate Allegations Do Not Satisfy CUTPA Pleading Standard

 

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

• Insurer’s Motion for Summary Judgment Granted as to Claimant’s That Failed to Attend an EUO
• Insurer Permitted to Seek Subrogation Under Dram Shop Act for Payments Made Due to Accident Caused by Intoxicated Driver

 

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

• Satisfaction of Lien Through Payment of Insurance Directly to Lienholder Instead of Insured at Less Than Full Value of Loss Is a Redressable Injury

 

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

• Material Misrepresentations in the Application and the Mere Intention to Reside in the Premises in the Future Is Insufficient to Satisfy the Policy's "Residence Premises" Requirement

• Issue of Fact Whether the Plaintiffs' Misrepresentations Regarding Their Additional Living Expense Claim Were Material to the Insurer’s Investigation

• Case Transferred from the Southern District of New York to the District of Connecticut as the Locus of Operative Facts for this Fraud Case Is Connecticut, Not New York

• Court Granted Insurer’s Motion to Amend its Answer to Include an Additional Affirmative Defense Based on Breach of the "Concealment, Misrepresentation or Fraud" Condition of the Policy

 

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

• Consumer Fraud Not an Occurrence Under CGL Policy

 

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

• New Jersey Appellate Division Adheres to Strict Statutory Requirements in Cancellation of Automobile Policies

 

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

• No Coverage for Professional Liability Claim Under CGL Policy Based on Exclusion and No Coverage Under Professional Liability Policy Based Amended Definition of Claim

 

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

• Partial Summary Judgment Granted to Insured Based on Declaration That Claim Was Deemed First Made During 2014-2015 Policy Period, and Not Excluded by Pending and Prior Litigation Exclusion

 

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

• Bill to Prohibit Cancellation, Non-renew or Conditional Renewal of Automobile Insurance When Dispute as to Pending Claim Exists

 

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

• A Bad Faith Lawsuit Looms Over a Carrier a Decade after Its Failure to Tender Policy Limits Despite a Shooting Case That Presented Potentially Clear Adverse Liability and Financial Exposure of a “Ticking Time Bomb”  within Months of the First Notice of Loss

 

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

• A Criminal Act Exclusion in a Liability Policy That Excludes “Bodily Injury" or "Property Damage" Caused by Any Intentional or Criminal Act or Failure to Act by Any Person Insured by this Policy, Requires the Insurer to Prove that the Injury or Damage in Issue Was Caused by the Criminal Act, Even Though the Insured Did Not Intend the Injury or Damage

 

See you at home.

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

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

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]

04/16/25       NGM Insurance Company v. MGC Design & Construction Corp.
Appellate Division, Second Department
New Trend Continues. Employer’s Liability Carrier Establishes, in Declaratory Judgment Action, That Underlying Plaintiff Did Not Sustain a “Grave Injury” and Therefore Has No Duty to Defend Underlying Third Party Action

On November 24, 2017, Guichay, an employee of MGC Design & Construction Corp. (“MGC”) allegedly was injured when he tripped and fell while working at a construction site. Guichay sued Barr and IE Construction Management, LLC (“construction manager”), Thereafter, Barr commenced a third-party action against MGC, and the construction manager commenced a second third-party action against MGC (hereinafter together the underlying third-party actions), each seeking, among other things, indemnification in the underlying action.

MGC's insurer, the plaintiff, NGM Insurance Company, initially provided MGC with a defense in the underlying third-party actions. The plaintiff, however, reserved its right to seek a judgment declaring that it is not obligated to defend or indemnify MGC if the plaintiff determined that Guichay did not suffer a "grave injury" within the meaning of Workers' Compensation Law § 11(1).

On July 17, 2020, MGM  commenced this action against, among others, MGC and the construction manager for a judgment declaring that the plaintiff is not obligated to defend or indemnify MGC or any other entity in the underlying action and the underlying third-party actions. MGM convinced the court that the underlying plaintiff did not sustain a grave injury and won its motion.

The construction manager argued that discovery may lead to relevant evidence on the issue of the defendants' liability, or that facts essential to opposing the motion were exclusively within the knowledge and control of the plaintiff.  The Second Department rejected that argument -- the mere hope or speculation that sufficient evidence to defeat a motion for summary judgment may be uncovered during the discovery process is insufficient to deny the motion.

The construction manager did not meet its burden of establishing that further discovery might lead to relevant evidence or that facts essential to justify opposition to the motion were exclusively within the knowledge and control of the plaintiff.

An insurance carrier can be relieved of its duty to defend if it establishes, as a matter of law, that there is no possible factual or legal basis on which it might eventually be obligated to indemnify its insured under any policy provision. Workers' Compensation Law § 11 unambiguously shields employers from liability to third parties for contribution and indemnity except in limited circumstances," one of which is where the employee has sustained a "'grave injury'". In the absence of such proof, contribution and indemnification claims become extinguished by statute.

A "grave injury," as defined by Workers' Compensation Law § 11(1) includes, inter alia, "an acquired injury to the brain caused by an external physical force resulting in permanent total disability." "A 'permanent total disability' requires a showing that the injured employee is no longer employable 'in any capacity'" .  Here, the NGM  demonstrated its prima facie entitlement to judgment as a matter of law declaring that it is not obligated to defend or indemnify MGC or any other entity in the underlying action and the underlying third-party actions.

Editor Note:  Normally, the issue of the existence of a “grave injury” is left for the underlying personal injury action.  There have now been a couple of cases where the employer’s liability carrier, charged with defending the employer in claims seeking common law contribution or indemnity based on “grave injury,” attach the question in a separate declaratory judgment action.

 

04/15/25       Zurich American Ins. Co. v. Alterra America Ins. Co.
Appellate Division, First Department
Additional Insured Coverage to Contractor Is Only Available if There Is a Written Subcontract. Court Defines Subcontractor and Discusses Horizontal Exhaustion Rules. Court Embraces Horizontal Exhaustion

Alterra does not owe coverage to Baroco on the basis that Baroco did not enter a written contract with its subcontractor (Alterra’s insured_ Fine Line Carpentry & Renovations Inc. (“Fine Line”) as required for coverage under Alterra's Insurance Requirement endorsement. Zurich's argued that Fine Line was not Baroco's subcontractor.

The Court adopted the definition of "subcontractor" "as one who assumes performance of some part of the contract, so that labor or other service, and not merely the furnishing of materials, is involved" .

Alterra's obligation to provide additional insured coverage to RC Dolner is on an excess basis upon exhaustion of Zurich's policy because of the horizontal exhaustion rule). Zurich's argument that this issue is not ripe until a determination as to whether RC Dolner is entitled to contractual indemnification is unpersuasive.

Even if there is a subsequent finding that RC Dolner is entitled to indemnification from Baroco, the court still properly declared that Alterra's obligation is to provide additional insured coverage to RC Dolner on an excess basis upon exhaustion of Zurich's. The horizontal exhaustion is inapplicable where contractual indemnification entitlement has already been determined.

 

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

04/24/25          Catskill Barbeque, LLC v. Mid-Hudson Coop Ins. Co.
Appellate Division, Third Department
Thousands Flee - Third Department Finds Apparent Question of Fact on Enforceability of an Endorsement Because it is Hard to Find in the Policy

Plaintiff’s property sustained a covered fire loss, and coverage was accepted without incident by Mid-Hudson.  Along with the damages to the property, Catskill also submitted a business interruption claim in excess of $2,000,000.  Although the claim was covered under the policy, and coverage accepted, Mid-Hudson indicated that per the terms of the policy coverage was limited to only $175,000.  Catskill sued, and this opinion resulted

On motion, Mid-Hudson submitted the policy which contained, as relevant, a Supplemental Declarations Page that provided business interruption coverage for up to 12 months.  No sublimit was contained on the Declarations Page.  Nevertheless, Mid-Hudson also produced an Endorsement to the business interruption coverage which provided that any previous coverage was deleted, and coverage was otherwise limited to 3 months and $175,000.  There is no dispute, apparently, that the policy submitted by Mid-Hudson was true and accurate, and otherwise in admissible form.  Nevertheless, for reasons we haven’t been able to discern, the trial court denied Mid-Hudson’s motion to dismiss.

On appeal, the Third Department noted that the operative Endorsement was found 73 pages after the Supplemental Declarations Page.  In addressing this issue, the Appellate Division provided “[o]n the whole, it cannot be said that the policy -- insofar as it pertains to lost business income – is clear and unambiguous on its face, particularly when considering the fact that that some of the coverage language is buried deep within the lengthy contract, far removed from where such coverage is originally identified.”  The Court went on to note that Mid-Hudson did not explain why it could not have simply noted the limitation on business interruption on the Supplemental Declarations Page. 

In perhaps a final saving sentence, the Court also noted that Mid-Hudson apparently conceded that the Supplemental Declarations Page controlled the term of coverage (i.e., 12 months, as opposed the 3 months provided in the Endorsement).  As such, the Court appeared to be noting the inconsistency in Mid-Hudson’s position, then, that the temporal limitation in the Endorsement did not apply but the monetary limit did.

If this is the basis for the holding, we can understand refusing to grant the motion but it’s still a reason    It is not clear, however, that this is the reason for the decision.

Peiper’s Point  - Let us start this discussion by assuming a rational basis for this decision.  If there is an inconsistency in how the Endorsement was applied to the Supplemental Declarations Page, we can see how there might be a question of fact on ambiguity.   Indeed, one could understand the Court’s point that picking and choosing which provision of an Endorsement is triggered leads to confusion.  Ok.  We get that point.  We do not understand the argument that the contract (THE CONTRACT!!!!) is too confusing because it is too long.  What 73 pages has to do with the enforceability of accepted terms and conditions is not clear from the Court, but it appears to be suggesting that if the Endorsement was included closer to the Supplemental Declarations Page maybe Mid-Hudson would have prevailed.  Respectfully, this is difficult logic to accept.

And, further, the fact that Mid-Hudson could have simply altered the coverage in the Supplemental Declarations Page does not otherwise void the plain and ordinary meaning of contractual language.  Feasibility is not a substitute for enforceability.  If the Endorsement is unclear, on its face, the Court should simply have said so.  Whether it could have been written differently, or placed in the policy differently, on placed on a different form, should have utterly no consequence on the enforceability of the language.   

Editor’s Note:  Would 70 pages be too far away?  50?  30?  10?  Sheesh.

 

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

04/09/25       Chromik v. Cmty. Res. Inc.
Superior Court of Connecticut, Waterbury    
What Is Failure to Procure Insurance?

Following the death of a foster child, the State of Connecticut tendered its defense and indemnity to Community Resources, Inc. which contracted to provide such services to the State. The contract documents required that CRI obtain CGL and professional liability coverage and that the State be added as an additional insured on the CGL policy. The CGL carried denied coverage to the State and the State brought a cross-claim against CRI for contractual and common law indemnification and for the failure to provide a defense. The State moved for summary judgment and CRI objected.

Initially, the court found that CRI’s acceptance of the State’s defense required the denial of that prong of the State’s motion. It did not matter that it was the insured and not the insurer paying for the defense.

Significantly in our world, the court denied the motion for failure to procure. It was evident that CRI purchased the insurance policies delineated in the contract and named the State as an AI on the CGL policy. The State’s motion focused on the failure of CRI to procure “appropriate” or “proper” insurance, however, no such qualifier was found in the contract documents. [It also hurt the State’s case that it failed to make the policies part of the summary judgment record.] “It is clear that the insurance company refused the State's demand for insurance coverage, however the State has not established that no genuine issues of material fact exist concerning whether or not CRI breached the contract in this regard.” The mere fact that the carrier denied coverage to the State did not mean, ipso facto, that CRI had breached its obligation to procure the insurance set forth in the contract.

While the court further denied the part of the State’s motion for breach of the duty to indemnify, it is unclear from the opinion whether there has been an award of damages against the State for which CRI refused to indemnify. It would seem to us that this claim was premature.

 

04/01/25       Smith v. Am. Strategic Ins. Corp.
Superior Court of Connecticut, Fairfield        
Another Court Grapples With the CUTPA Pleading Standard

 Here we go again. Another motion to dismiss (or strike in Connecticut parlance) statutory bad faith claims under CUTPA. This time the plaintiff claims that the insurer failed to pay a first-party water damage claim and, of course, tacked on causes of action for common law and statutory bad faith.

The court spilled a lot of ink before it struck the CUTPA claim (but let stand the common law bad faith claim). Noting “the variability in the approach by” Connecticut trial courts as to the level of specificity an insured must have in setting forth a CUTPA cause of action, the court launched into a detailed discussion of the balancing act between requiring a level of pleading specificity that is unfair to an insured against allowing mere conclusory allegations which amount to no standard at all.

Requiring a high level of specificity of prior incidents seemingly imposes an unreasonable burden on a claimant, the court observed. “A strict requirement of specific assertions of other instances of improper engagement in a similar practice would impose a pre-suit obligation on a plaintiff to identify other instances of improper conduct, without benefit of discovery.” But the court cautioned that allowing a plaintiff to merely cite other similar claims invites a level of circularity, especially if none of the cases have been decided in favor or the claimant. “Allowing an assertion of an unfair practice without any burden other than to type the words is tantamount to no burden to allege/assert a factual basis for the claim.”

So, how to balance the two sides in order to reach a fair pleading standard? The court believed that Judge Devine, in Labonne v. Hingham Mutual Fire Insurance Co., 2014 Conn. Super. LEXIS 4573, 2014 WL 2597802 (Super. 2012), got it right.

In this court's view, a plaintiff can satisfy the 'general business practice' requirement in one of two ways: (1) the plaintiff can comply with the strict line of cases by citing multiple specific instances of the insurance company engaging in similar misconduct with other claimants, or (2) the plaintiff can allege facts related only to his or her isolated claim if a reasonable inference can be drawn therefrom that the insurer's conduct "toward the plaintiff was part of its general business practices—in other words, the court must be able to reasonably infer that if the insurance company committed this misconduct against the plaintiff, they likely commit it regularly against other claimants as well. Therefore, even if a plaintiff cannot plead specific instances of similar prior misconduct by the insurer, circumstantial evidence of a general business practice derived from the insurer's handling of the plaintiffs isolated claim is sufficient to withstand a motion to strike." (Footnotes omitted.) Labonne, 2014 Conn. Super. LEXIS 4573 at *14-15.

Applying the test laid out in Labonne, the court struck the CUTPA claim. The court found that the complaint did not assert any prior violations by the carrier and did not provide any factual allegations upon which one could make a reasonable inference of an unfair practice.

The court quite wisely summed it up this way: “The mere fact of a denial is insufficient to allow an inference of an unfair practice, for the somewhat obvious reason that at least some claims rightfully might be denied, outright.”

Read on for the same result on the same basic pleading.

 

04/07/25       Rodko v. Am. Strategic Ins. Corp.
Superior Court of Connecticut, Ansonia-Milford
Boilerplate Allegations Do Not Satisfy CUTPA Pleading Standard

More or less the same facts as above and, not surprisingly, the same result.

Here, the covered property became uninhabitable due to toxic dust resulting from a flooring project, resulting in direct physical loss of and damage to the covered property, claimed the homeowners. ASIC, the plaintiffs claim, refused to timely adjust and/or pay the plaintiffs for remediation, repairs, and/or replacements of the covered property and its contents and failed and refused to pay the full insurance benefits. [At first blush, this does not even remotely sound like a covered cause of loss, but we digress.]

The plaintiffs sued for breach of contract and common law and statutory bad faith. ASIC moved, like it did in the case above, the strike the bad faith counts. This court allowed what, in our opinion, amounts to nothing more than boilerplate allegations to substitute for the required specificity of pleading.

The predicate factual claims to support the CUTPA cause of action included:

• refusing to pay the plaintiffs' claims without conducting a reasonable investigation;

• a failure to conduct an investigation based upon all available information;

• failing to attempt in good faith to effectuate a prompt, fair and equitable settlement of the plaintiffs' claim in which liability has become reasonably clear;

• wrongfully, willfully, and wantonly and with reckless indifferencefailing to pay the required proceeds of said insurance to the plaintiffs; and

• a general business practice of deceptive practices.

While these allegations were adequate to establish a common law cause of action, the court found that they were too vague and conclusory to meet the CUTPA pleading standard. “[T]he plaintiffs in the present case do not go further than "merely [establishing] multiple acts of misconduct relating to a single insurance transaction." Therefore, the motion to strike the third count of the complaint is granted.”

 

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

04/07/25       State Farm Fire and Casualty Company v. Active Care Chiro
Supreme Court, New York County
Insurer’s Motion for Summary Judgment Granted as to Claimants That Failed to Attend an EUO

After the subject motor vehicle accident, involving three occupants, bills from medical providers were submitted to State Farm, which investigated the incident and determined there was a strong possibility that the collision was an intentional act or that the alleged injuries of the Claimants did not arise from the accident. During the investigation, one claimant failed to appear for his EUOs on two or more occasions, another left in the middle of an EUO and did not return for another one or return her subscribed copy of the transcript, and another appeared for his EUO but did not return a subscribed copy of the transcript. In subsequent arbitration hearings on behalf of providers, multiple arbitrators held that State Farm had not established that the Accident was fraudulent.

State Farm brought this action against numerous providers seeking declaratory judgments that it owes no duty to pay the No-Fault benefits and claims of the defendants in relation to the Accident. The insurer argued it is entitled to summary judgment based on its fraud defense and the failure of claimants to cooperate with the investigation. Defenses raised by the medical providers included 1) the fraud defense is collaterally estopped; 2) there was no evidentiary proof of claimants’ failure to return for an EUO; and 3) the failure to return subscribed EUO transcripts is not a valid No-Fault defense.

With regards to the provider’s estoppel argument, based on prior arbitration hearings, State Farm argued there was not an identity of parties or issues between the hearings and this case and, in New York prior arbitration awards may be given preclusive effect in a subsequent judicial action. The court determined the result of those hearings raised an issue of fact that would bar summary judgment but did not preclude State Farm from bringing this motion, as it advanced other theories of why they do not have to provide No-Fault coverage for the Accident not addressed in arbitration. State Farm also asserted one claimant failed to complete her duly scheduled EUOs and another failed to appear for his duly scheduled EUO. Appearance at a duly scheduled EUO is a condition precedent to No-Fault coverage. Contrary to the providers argument, the court held that a failure to appear at an EUO may be established by submitting transcripts of the EUOs.

For the third claimant, State Farm sought summary judgment based on the failure to return subscribed EUO transcripts. A failure by a claimant to return a subscribed transcript is a violation of a condition precedent to coverage, however, the court determined the request for a return of the subscribed transcript was only sent to claimant’s counsel, not the claimant himself. Therefore, the motion for summary judgment was denied as to this claimant. Accordingly, the court held that State Farm had no duty to pay any no-fault benefits with respect to the claims of the two claimants who failed to attend an examination under oath and otherwise denied the motion.

 

04/16/25       Drive New Jersey Insurance Company v. RT Hospitality
Appellate Division, Second Department
Insurer Permitted to Seek Subrogation Under Dram Shop Act for Payments Made Due to Accident Caused by Intoxicated Driver

Drive New Jersey Insurance Company provided automobile insurance to Ironbound Fitness LLC, which owned the insured BMW. An individual who was visibly intoxicated after being served alcohol at Atlantis Gentleman's Club drove the BMW with two passengers and was involved in an accident in which all occupants were injured, and the vehicle was damaged. Drive Insurance paid out a total of $507,595.48 in medical payments for the occupants and for vehicle damage, then sued Atlantis Gentleman’s Club as subrogee of Ironbound Fitness under the Dram Shop Act to recover these payments.

The Dram Shop Act, General Obligations Law § 11-101(1), provides "[a]ny person who shall be injured in person, property, means of support, or otherwise by any intoxicated person, or by reason of the intoxication of any person, . . . shall have a right of action against any person who shall, by unlawful selling to or unlawfully assisting in procuring liquor for such intoxicated person, have caused or contributed to such intoxication." A Plaintiff may recover for personal injuries if there was a reasonable or practical connection between an illegal sale of alcohol and the plaintiff’s injuries. However, the Dram Shop Act does not create a cause of action for one injured as a result of their own intoxicated condition.

The court explained that the purpose of subrogation is to allocate responsibility for a loss to the party who should bear it, rather than allowing a wrongdoer to escape liability simply because the insured had insurance coverage. This allows an insurer to seek recovery from third parties whose wrongdoing caused a loss the insurer must reimburse. While Atlantis argued the Dram Shop Act did not expressly provider for subrogation, the court held there was no support in the statute for this argument, determining that allowing subrogation under the Dram Shop Act was consistent with public policy and the purpose of equitable subrogation. Therefore, subrogation did not improperly shift liability onto dram shops and was not precluded under the Dram Shop Act.

Here, Drive Insurance alleged that the individual responsible for the accident was visibly intoxicated at the time that Atlantis sold her alcohol. Accordingly, the Supreme Court properly determined that Drive Insurance was entitled to assert, as subrogee, a cause of action pursuant to the Dram Shop Act against Atlantis to recover payments made for medical payments and property damage. Therefore, the Appellate Division affirmed the order of the Supreme Court, which had denied the defendant's motion to dismiss Drive Insurance's cause of action under the Dram Shop Act.

 

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

04/14/25       Narcisse v. Progressive Cas. Ins. Co.
United States District Court, Southern District of New York
Satisfaction of Lien Through Payment of Insurance Directly to Lienholder Instead of Insured at Less Than Full Value of Loss Is a Redressable Injury

Plaintiffs brought a class action individually, and as representatives of insureds in New York who made claims to Progressive Casualty Insurance Company for the loss of a totaled vehicle. In settling claims, Progressive had allegedly used valuation reports that applied an allegedly deceptive adjustment, a "Projected Sold Adjustment" ("PSA"), to reduce the actual cash value payable to the totaled vehicle's lienholder. It was further alleged that the plaintiffs had outstanding debt on their vehicles and owed more on their auto financing than they received in insurance benefits, such that all compensation paid by Progressive for the plaintiffs' benefits went directly to the totaled vehicles' lienholders.

Finding that it held Article III Standing at the threshold pleading stage, which is required for a district court to have subject matter jurisdiction, the SDNY noted that  "the irreducible constitutional minimum of standing consists of three elements. . . . The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Only the first two elements were at issue.

Here, the Amended Complaint alleges that Progressive paid less on Narcisse's claim than the parties had bargained for, and that Progressive thereby breached the insurance contract with [Plaintiffs], which is itself an “injury in fact” because Narcisse allegedly sustained a “deprivation of the full benefit of what that plaintiff bargained for,” regardless of whether “the benefits would accrue to third parties” such as lienholders.

This injury in fact is redressable by way of either compensatory or nominal damages. Plaintiffs injuries could eventually be redressed by awarding contractual benefits to which the participant is entitled, i.e. compensatory damages, or alternatively nominal damages due to Progressive’s purported completed violation of her contractual rights.

 

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

03/17/25       Kahan v. Hyundai Mar. & Fire Ins. Co., Ltd.
Supreme Court, Kings County
Material Misrepresentations in the Application and the Mere Intention to Reside in the Premises in the Future Is Insufficient to Satisfy the Policy's "Residence Premises" Requirement

The court granted Hyundai’s motion to dismiss the plaintiffs' complaint. Plaintiffs purchased property in Brooklyn and obtained homeowners insurance from Hyundai.  In the insurance application the plaintiffs attested that the premises: (a) was owner occupied, (b) was not a "[d]welling that is vacant or unoccupied," (c) was not a "[d]welling that is under renovation, remodeling or major repair," and (d) was not a "[d]welling without an operational smoke alarm". In addition, plaintiffs signed the section titled "Owner Occupancy" in which they confirmed that the "dwelling is owner occupied". 

Hyundai's investigation found that the premises was vacant, and not owner occupied, at the time plaintiffs completed the application, the premises was undergoing renovations at the time of the fire, the plaintiffs admitted to its investigators that they never resided in the home prior to and during renovations, and the premises did not have an operational smoke alarm.

The Personal Lines Manager asserted that Defendant does not issue homeowners policies for any property that is not owner occupied, or which is vacant or unoccupied. Along with his affidavit, Hyundai submitted its underwriting guidelines which include as "ineligible exposures," a property that is "under renovation, remodeling or repair where permit is required by law" or "vacant or unoccupied for more than 30 continuous days after policy issuance". Since Plaintiffs made material misrepresentations, the policy was rescinded and all premiums paid were refunded.  Even if the policy was not void ab initio, Hyundai contends that coverage is barred as a matter of law because Plaintiffs did not reside at the premises on the date of loss.

The court held that Hyundai was entitled to dismissal of the plaintiffs' complaint because the plaintiffs did not reside at the premises on the date of loss.  The plaintiffs' mere intention to reside at the premises in the future was insufficient to satisfy the policy's "residence premises" requirement.  The Second Department has consistently found that a disclaimer of coverage is proper where the insureds did not live at the covered property on the date of loss.

The court found the plaintiffs' occasional visits and intent to reside there in the future insufficient to meet the policy's "residence premises" requirement. The court distinguished this case from the Court of Appeals decision in Dean v. Tower Insurance, where the homeowner had a much more substantial presence on the property.  The homeowner in Dean alleged that he was at the subject property at least five days a week, he would eat at the house every day, and he slept there on several occasions. Thus, the Court of Appeals found "issues of fact as to whether [the homeowner's] daily presence in the house, coupled with his intent to eventually move in with his family, is sufficient to satisfy the insurance policy's requirement.”

To establish its right to rescind an insurance policy, an insurer must demonstrate that the insured made a material misrepresentation. A misrepresentation is defined as a false statement as to past or present fact, made to the insurer by the applicant for insurance, at or before the making of the insurance contract as an inducement to the making thereof. A misrepresentation is material if the insurer would not have issued the policy had it known the facts misrepresented. Even innocent misrepresentations, if material, are sufficient to allow an insurer to defeat recovery under the insurance contract.

To establish materiality as a matter of law, the insurer must present documentation concerning its underwriting practices, such as underwriting manuals, bulletins, or rules pertaining to similar risks, which show that it would not have issued the same policy if the correct information had been disclosed in the application. Conclusory statements by insurance company employees, unsupported by documentary evidence, are insufficient to establish materiality as a matter of law.

 

03/31/25       Hanna v. Palisades Prop. & Cas. Ins. Co.
United States District Court, Eastern District of Pennsylvania
Issue of Fact Whether the Plaintiffs' Misrepresentations Regarding Their Additional Living Expense Claim Were Material to the Insurer’s Investigation

Plaintiffs' home was damaged by fire, rendering it uninhabitable.  Palisades argued that the plaintiffs knowingly made false statements in their initial recorded interviews pertaining to their Additional Living Expense claim, including who was living with them and details about their lease agreement.  The plaintiffs voluntarily corrected these misstatements 29 days later, before giving examinations under oath.  They later withdrew the ALE claim.  Palisades continued to investigate the claim for 4 months after receiving the corrections before ultimately denying coverage.

Pennsylvania courts have long held that a violation of the fraud and concealment provision of an insurance policy serves as a complete bar to the insured's recovery under the policy, effectively voiding it.  An insurance company may refuse payment to an insured who violates the Concealment or Fraud provision of their policy where the insured has: (1) made a false representation, (2) knew the representation was false when they made it, and (3) the misrepresentation was material to the risk being assured.

Pennsylvania courts have repeatedly held that when an insurance company denies coverage based on alleged material misrepresentations made in the submission of the claim it need only prove that the insured made material misrepresentations in violation of the fraud and concealment provision by a preponderance of the evidence, proving the elements of falsity, knowledge, and materiality. This is the proper standard in the context of post-loss investigations, whereas the standard for proving material misrepresentation in the context of insurance applications is clear and convincing evidence.

The Court found Palisades has established the elements of falsity and knowledge by a preponderance of the evidence, and no reasonable jury could find for plaintiffs on this issue.

The question of materiality is generally considered one of fact and law, but if the facts are so obviously important that reasonable minds cannot differ on the question of materiality, then the question becomes one that the court can decide at the summary judgment stage. A misrepresentation is material if a reasonable insurance company, in determining its course of action, would attach importance to the facts misrepresented, and specifically in the context of a post-loss investigation, if the fact concerns a subject relevant and germane to the insurer's investigation as it was then proceeding. A misrepresentation is also material if it may be said to have been calculated either to discourage, mislead or deflect the company's investigation in any area that might seem to the company, at that time, a relevant or productive area to investigate.

While the plaintiffs knowingly made false statements, there is a genuine factual dispute about whether these misrepresentations were material to the insurance company's investigation.  The misrepresentations did not concern how the loss occurred or relate to policy conditions.  The insurance company continued its normal claims adjustment process after receiving the corrections.  A reasonable jury could find that the statements were not material to the investigation, so summary judgment is not appropriate on this issue.

 

04/10/25       Gordon v. State Farm Fire & Cas. Co.
United States District Court, Southern District of New York
Case Transferred from the Southern District of New York to the District of Connecticut as the Locus of Operative Facts for This Fraud Case Is Connecticut, Not New York

The court granted State Farm's motion to transfer the case to the United States District Court for the District of Connecticut from the Southern District of New York under 28 U.S.C.S. § 1404(a).  The locus of operative facts for the case is Connecticut, not New York. 

The plaintiff purchased a policy from State Farm in Connecticut to cover the jewelry.  While traveling in California, his jewelry was allegedly stolen.  State Farm denied the claim alleging fraud.  The plaintiff filed suit in New York.

28 U.S.C.S. § 1404(a) allows a district court to transfer a case for the convenience of parties and witnesses to any other district or division where it might have been brought if doing so is in the interest of justice. The court evaluates a potential transfer pursuant to § 1404(a) in two steps. First, the court must ask whether the case might have been brought in the proposed transferee district. An action might have been brought in the forum to which the movant seeks to transfer it if subject matter jurisdiction, personal jurisdiction, and venue would have been proper in the transferee court at the time of filing.

If the threshold inquiry is satisfied, the court proceeds to the second step and determines whether a transfer is appropriate. In doing so, the court considers the following factors to determine whether to grant the requested transfer: (1) the convenience of witnesses; (2) the convenience of the parties; (3) the locus of operative facts; (4) the availability of process to compel the attendance of the unwilling witnesses; (5) the location of relevant documents and the relative ease of access to sources of proof; (6) the relative means of the parties; (7) the forum's familiarity with the governing law; (8) the weight accorded to the plaintiff's choice of forum; (9) trial efficiency; and (10) the interest of justice, based on the totality of circumstances. The list of factors is not exhaustive. There is no rigid formula for balancing these factors, and no single one of them is determinative. Weighing the balance is essentially an equitable task left to the court's discretion. District courts have broad discretion in deciding, on a case-by-case basis, whether to transfer the venue of a given litigation based on notions of convenience and fairness.

A plaintiff's choice of forum is presumptively entitled to substantial deference.  The plaintiff's choice of forum is entitled to substantially less deference here than usual because he resides in Connecticut, not New York.

In determining the locus of operative facts, a court must look at the site of the events from which the claim arises. For a breach of contract action, the court must consider (1) the location where the contract was negotiated or executed, (2) where the contract was to be performed, and (3) where the alleged breach occurred.

Trial efficiency and the interests of justice favor litigating the case in the jurisdiction with the strongest connection to the facts.  The court determined that Venue is proper in Connecticut as the plaintiff resides there and a substantial part of the events took place there.  The insurance policy was issued in Connecticut by a Connecticut agent.  The policy contains Connecticut-specific language.  State Farm's claim denial letter was sent to the plaintiff’s Connecticut address.  Although not definitively ruled by the court, Connecticut state law likely governs the underlying insurance contract dispute. The locus of operative facts is Connecticut, as the contract was formed there, and the alleged breach occurred there.  No witnesses or evidence are located in New York.  Transfer will not significantly inconvenience the parties.

03/31/25       BR 10th St. Partners LLC v. Seneca Specialty Ins. Co.
Supreme Court, New York County
Court Granted Insurer’s Motion to Amend Its Answer to Include an Additional Affirmative Defense Based on Breach of the "Concealment, Misrepresentation or Fraud" Condition of the Policy

10th Street reported a fire loss to Seneca.  Seneca inspected the property and found no evidence of a fire. There are conflicting reports about whether the sprinkler activation was due to a fire/smoke condition or a malfunction.

Seneca paid 10th Street the $250,000 sublimit coverage for water damage.  10th Street claims it is entitled to at least an additional $1,481,242.18 for building repairs, water remediation, and lost rent.

The court granted Seneca's motion to amend its verified answer to include the additional affirmative defense.  The court found that 10th Street failed to show that Seneca's proposed amendment was palpably insufficient or patently devoid of merit.  Both parties presented some evidence supporting their positions, so the court could not conclude that Seneca's defense was without merit.

The court rejected the application of Insurance Law § 3420(d)(2) because this provision only applies to death and bodily injury claims, not property damage claims.

 

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

04/18/25       Dostart v. Columbia Ins. Grp.
Iowa Supreme Court
Consumer Fraud Not an Occurrence Under CGL Policy

A jury awarded the Dostarts compensatory and exemplary damages on their claims of consumer fraud against their general contractor and its owner. In the underlying action, the Dostarts sued the general contractor and owner for failure to complete construction of their custom-built, single-family residence. Columbia Insurance Group provided a commercial general liability insurance policy to the general contractor, defended under a reservation of rights, and declined to indemnify the judgment under the CGL policy. The Dostarts were unable to collect directly from the general contractor and owner, and the judgment remains unsatisfied.

The Dostarts commenced a direct action against Columbia for payment of the unsatisfied judgment. Columbia moved for summary judgment. In its motion, Columbia argued that consumer fraud was not accidental in nature and thus not a covered “occurrence,” the consumer fraud did not cause property damage, consumer fraud falls within the CGL policy’s intentional acts exclusion, and the CGL policy excluded punitive or exemplary damages. The district court granted the motion for summary judgment with respect to exemplary damages, but it determined that fact questions existed as to whether consumer fraud was an “occurrence” under the CGL policy, the jury’s award was for “property damage,” and the intentional acts exclusion applied.

The Iowa Supreme Court granted Columbia’s interlocutory appeal and transferred the case to the court of appeals. The court of appeals affirmed and noted there was no evidence in the record about the underlying dispute beyond the verdict form and relevant jury instructions.

On Columbia’s application for further review, the Iowa Supreme Court concluded that the record provided the facts needed to establish that the consumer fraud involved in the underlying action was not a covered “occurrence” under the CGL policy and that the alleged harm did not include covered “property damage” a defined in the policy. Reasoning by analogy based on case law involving claims for the repair of defective workmanship, the Court concluded that damages to complete construction of the very property the general contractor was hired to construct was not physical injury to tangible property contemplated by the CGL policy. Since the Court concluded that the consumer fraud was not an “occurrence” and that the underlying judgment was not for “property damage,” it did not consider whether any exclusions applied.

As a result, the Court vacated the court of appeals decision, reversed the district court order, and remanded the case for entry of summary judgment in favor of Columbia.

 

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

04/21/25       Marc Feder DMD, PC et al. v. N.J. Manufacturers Ins. Co.
New Jersey Superior Court, Appellate Division
New Jersey Appellate Division Adheres to Strict Statutory Requirements in Cancellation of Automobile Policies

On July 20, 2020, Marc Feder was driving an automobile registered to his business when he rear-ended another vehicle. Feder made a claim under his auto policy with the defendant, who denied the claim on the basis that his auto policy had been cancelled seven months prior for non-payment of policy premiums. Feder challenged the adequacy of the defendant’s notice of cancellation of the policy, and this action followed.

As the Court noted, insurers must comply with strict statutory requirements when cancelling auto insurance policies. N.J.S.A. 17:29C-10 governs the cancellation of auto policies issued within the State of New Jersey. That statute has two distinct requirements, providing that no cancellation (or refusal to renew) an auto insurance policy shall be effective unless: (a) it is either (i) sent by certified mail, or (ii) if sent by regular mail, the insurer obtains a date stamped proof of mailing showing the name and address of the insured from the post office at the time of mailing; and (b) the insurer retains a duplicate copy of the mailed notice, certified to be a true copy. N.J.S.A. 17-29C-10(a-b).

As the Court explained, New Jersey case law has expounded upon the types of evidence that is sufficient to establish compliance with each part of the statute. New Jersey courts have noted that subsection (a) can be satisfied either by a certified mailing or by the insurer’s obtaining of a date-stamped certificate of mailing from the post office. Another appellate court found that while a “master list” of cancellation letters that an insurer brought to the post office for mailing was insufficient to comply with subsection (a), but that a certificate of mailing issued by the post office to show that each piece of mail was indeed mailed out would be sufficient.

New Jersey courts that have analyzed compliance with subsection (b) have ruled that this subsection is the “sine qua non” of an effective cancellation, and that non-compliance with that subsection can almost never be forgiven. These courts have explained that the requirement of the insurer to retain a duplicate copy of the mailed notice is meant to ease the carrier’s proof of mailing burden by providing a simple, expedient, and effective alternative to relying on the carrier’s standard business practices in sending cancellation notices.

The defendant (“NJM”) contended that after Feder went into arrears on his policy premium, it sent him a final request for payment on November 30, 2019. According to NJM, this correspondence was sent to Feder’s home address (the one he maintained on file with NJM) with a warning that if payment was not received within seven days from the date of that letter, his policy would be cancelled.

After no payment was received from Feder, NJM issued a notice of cancellation on December 13, 2019, to the same address. The December 13, 2019, correspondence advised that payment of the amount owed ($378.00) would keep the policy current. In support of the present motion, NJM submitted a certification from the employee that accounted for the mail on December 13, 2019. That employee testified that on that day, each piece of mail listed on the register (147 pieces) was accounted for and was then taken to the post office by another NJM employee. As part of its motion, NJM submitted a proof of mailing obtained from the post office on that same day, reflecting payment for mailing of 147 pieces of mail on behalf of NJM.

In opposition to the motion, Feder made three arguments on why NJM’s cancellation of his policy was ineffective: (1) NJM did not establish that Feder actually received the notice of cancellation; (2) NJM did not comply with part (a) of the cancellation statute; and (3) NJM did not comply with part (b) of the cancellation statute.

The Court rejected Feder’s first argument—that NJM did not establish that Feder actually received the notice of cancellation. New Jersey courts have long held that actual receipt of the notice of cancellation is not required in order for the notice to be effective, provided that the statutory proof of mailing has been satisfied.

The Appellate Division also held that NJM complied with subsection (a) of the statute, since the certifications and exhibits submitted in support of NJM’s motion showed that NJM sent the notice via regular mail and obtained a proof of mailing from the post office.

However, the Appellate Division held that NJM failed to comply with subsection (b) of the statute, and that the policy’s cancellation was therefore invalid. Subsection (b) requires the insurer to provide a duplicate copy of the mailed notice, certified to be a true copy. While NJM provided a copy of the notice of cancellation bearing a typewritten certification, that certification was unsigned and undated. Therefore, as the Court reasoned, NJM’s submission fell short of the standard articulated in subsection (b). The Court reasoned further that none of the certifications made by the NJM employees (the mailroom employee and in-house claims counsel) explained either how the certified copy was made or obtained, nor did either of them attest to any routine practices of the company concerning them. New Jersey courts have held that the duplicate copy required by subsection (b) be a true copy contemporaneously certified with the preparation and mailing of the original; not at any later point in time.

The Appellate Division affirmed the holdings of the trial court that NJM was not required to prove that Feder actually received the letter and that NJM complied with subsection (a) of the statute but vacated the ruling of the trial court that NJM also complied with subsection (b) of the statute. The Appellate Division remanded the case back to the trial court for further proceedings on the issue of a true certified copy of the notice of cancellation.

 

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

04/14/25       Singh, Rx, PLLC v. Selective Ins. Co. of S.C.
United States Court of Appeals, Sixth Circuit
No Coverage for Professional Liability Claim Under CGL Policy Based on Exclusion and No Coverage Under Professional Liability Policy Based Amended Definition of Claim

SRX is a pharmacy that possessed a general liability policy with Selective and a professional liability policy with American Casualty. Janssen, a Johnson & Johnson subsidiary, sued SRX in the Eastern District of New York for the alleged sale of counterfeit Janssen branded HIV medication. Both Selective and American denied the claim.

Selective’s asserted the alleged trademark infringement suit did not involve a bodily injury, property damage, or personal and advertising injury. And also argued the policy’s exclusions for failure to render medical services, along with intellectual property claims applied to terminate coverage. American Casualty denied coverage because its policy covered claims only brought by natural persons.

The appellate court found the Selective policy did not provide coverage for Janssen’s claims. But not because of the scope of coverage, instead the court focused on the professional services exclusion. Michigan law broadly interprets professional liability exclusion to encompass acts reasonably related to the overall provision of professional services. The alleged procurement and sale of counterfeit medication implicated SRX’s professional services because it is a pharmacy. SRX asserted the procurement and sale was merely administrative, but the court disagreed. It reasoned that conduct triggered a pharmacist’s specialized knowledge to select drugs for specific conditions.

SRX’s American Casualty professional liability policy also failed to provide coverage. The policy’s coverage applied to professional liability arising out of any act, error, or omission in providing professional services that results in injury or damages. Included within the policy’s list for covered claims was intellectual property. However, the policy contained an endorsement that amended the definition of “claim” to apply to natural persons only.

Since Janssen is a company and not a natural person, the American Casualty policy did not provide coverage. SRX contested that Michigan law requires the use of the more specific definition in the base policy. Indeed, under Michigan Law where two contractual terms conflict, the more specific term controls. But the endorsement at issue deleted and replaced the base policy’s definition of “claim.” Thus, only a single contractual term defined “claim,” and it applied to natural persons only. The court also rejected an illusory coverage argument since natural persons routinely make professional liability claims.

 

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

04/03/25       National Football League v. U.S. Specialty Ins. Co.
Supreme Court of the State of New York, New York County
Partial Summary Judgment Granted to Insured Based on Declaration That Claim Was Deemed First Made During 2014-2015 Policy Period, and Not Excluded by Pending and Prior Litigation Exclusion

The National Football League and NFL Enterprises LLC (“NFL Insureds”) brought a declaratory judgment action against U.S Specialty Insurance Company, Freedom Specialty Insurance Company, Starr Indemnity & Liability Company, Ironshore Indemnity Inc., and Everest National Insurance Company (the “Insurers”). The questions posed to the court involve whether the Insurers owe the NFL Insureds coverage under a 2014-2015 D&O insurance policy in connection with a 2015 antitrust litigation suit filed involving their Sunday Ticket product (“Sunday Ticket Litigation”).

The Sunday Ticket Litigation concerned certain agreements between the NFL Insureds and DirecTV executed in 2009, 2013, and 2014. In the agreements, the NFL Insureds granted DirecTV the exclusive right to distribute out-of-market packages of NFL Sunday games, and control over the composition, pricing, and marketing of such subscription packages. In June 2015, the NFL Insureds and DirecTV were named as defendants in a number of antitrust lawsuits alleging that licensing contracts that giving DirecTV exclusive rights to distribute out-of-market NFL games violated antitrust laws. The Sunday Ticket Litigation alleged violations of the Sherman Act, insofar as the agreements allowed the NFL and DirecTV to charge supercompetitive monopoly prices.

In the coverage action, the NFL Insureds made a partial summary judgment motion, seeking (1) a declaration that the Sunday Ticket litigation is a Claim first made during the 2014-2015 policy period; (2) declaring that the Claim is not excluded by Pending and Prior Litigation exclusions; and (3) dismissing various affirmative defenses made by the Insurers defendants.

The NFL Insureds had a claims-made D&O insurance policy with National Liability & Fire Insurance Co. (the “Primary Policy”). In addition, the NFL Insureds had five layers of excess coverage. Each excess policy implicated in the declaratory judgment action followed form to the Primary Policy.

The Insurers’ policies only provided coverage for a Claim, “first made against the Insured Person during the Policy Period for a Wrongful Act and reported to the Insurer as required by this Policy.” A Claim was defined as, “proceeding against an Insured, which shall be deemed first made upon…the service of a complaint or similar pleading upon the Insured.”

The Primary Policy contained  a condition related to Related Wrongful Acts, which was defined as “all Wrongful Acts that are logically or causally connected by any fact, circumstance, situation, event, transaction, cause or series of related facts, circumstances, situations, events, transactions, or causes.” The condition identified that if a Claim involved the same or related wrongful acts, the claim is first deemed made at the earliest date on which any claim was first made or reported. The Primary Policy additionally contained a Pending and Prior Litigation clause, which stated that the insurer was not liable to make a payment for claims alleging, arising out of, based upon, or attributable to, pending or prior litigation.

The Insurers allege that the Sunday Ticket Litigation has origins in a 1997 class action lawsuit filed against the NFL on behalf of consumers who purchased the NFL Sunday Ticket. The 1997 class action lawsuit alleged that in 1994, the NFL Defendants offered a package for purchase of all regular season Sunday afternoon games to residential and commercial satellite dish owners, which induced consumers to enter into an agency agreement. According to the allegations, the NFL and DirectTV entered into an agreement, where DirecTV and other satellite distributors acted as authorized agents of the NFL to sell and distribute NFL Sunday Ticket packages, and were compensated based on commission on all sales of the packages. It was alleged that the NFL determined the pricing and composition of the packages, and had control over the advertising, marketing, and promotion. It was alleged that the football clubs contracted and agreed to restrict output of broadcasts of their games, agreed to jointly sell broadcast rights to purchasers of satellite television at supra-competitive pricing, and agreed to allocate amongst themselves the proceeds of the sale in violation of the Sherman Acts. As a result, the 1997 Plaintiffs paid extremely higher prices to view all NFL Sunday afternoon games. The 1997 litigation ultimately settled in October 2021.

However, the NFL Insureds assert that the Pending and Prior Litigation exclusion is not applicable, because the 1997 Litigation and the Sunday Ticket Litigation are not a single claim under the policies at issue.

The Court began their analysis by looking only at the plain language of the policies and comparing the allegations in the 1997 Litigation and Sunday Ticket Litigation.

The Court identified that while Related Wrongful Acts is defined rather broadly in the policies, there must be a relatedness and a sufficient factual nexus. The Court noted that the 1997 Litigation was filed 18 years prior to the Sunday Ticket Litigation, which is sufficient to show that the claims were temporally separate.

Second, the Court made note that the claims do not involve the same transactions. The 1997 Litigation focuses on the NFL Insureds and the NFL teams conspiracy to sell broadcast rights to DirecTV. However, the Sunday Ticket Litigation challenges a separate agency agreement between the NFL Insureds and DirecTV. The Court acknowledges that the Sunday Ticket Litigation references a conspiracy between the NFL and the NFL teams but instead focuses its grounds for relief on the DirecTV agreements.

The Court wrote that even if the wrongdoings complained of in both actions were part of a larger scheme to eliminate competition, this alone is insufficient to combine otherwise distinct claims.

Based on this analysis, the Court granted the NFL Insureds partial motion for summary judgment and declared that the Sunday Ticket Litigation was a “Claim” first made during the 2014-2015 policy period and was not excluded by the Pending and Prior Litigation exclusions within the policies.

 

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

04/25/25       New York Senate Bill S3776
New York State Senate 
Bill to Prohibit Cancellation, Non-renewal, or Conditional Renewal of Automobile Insurance When Dispute as to Pending Claim Exists

Senate Bill S3776, introduced on January 29, 2025, seeks to amend insurance law § 3425 to prohibit an insurer from cancelling or refusing to renew or condition its renewal of automobile insurance policies solely on the bases that there is a pending complaint filed by the insured, or that a claim filed by the insured with the insurer is in dispute.

The justification for the bill provides that currently § 3425(f) allows insurers to non-renew up to two percent of their non-commercial motor vehicle policies per year. Insurers have abused this two percent provision by using it in cases where insureds have disputed claims or filed complaints with DFS. The legislation seeks to prevent such conduct to allow consumers to openly dispute claims.

The Bill provides:

    AN ACT to amend the insurance law, in relation to prohibiting an insurer from cancelling or refusing to renew or condition its renewal of auto-mobile insurance policies in certain cases.

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

   Section 1.  Section 3425 of the insurance law is amended by adding a new subsection (t) to read as follows:

   (T) No insurer shall cancel or refuse to renew  a  policy  covering  a private passenger automobile, or to condition its renewal upon change of limits or elimination of any coverages solely on the basis that a claim filed by the insured with the insurer is in dispute, or that a complaint by the insured against the insurer resulting from the disputed claim is pending with the department.

 

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

04/18/25       Kinsale Ins. Co. v. Pride of St. Lucie Lodge 1189, Inc.
United States Court of Appeals for the Eleventh Circuit
A Bad Faith Lawsuit Looms Over a Carrier a Decade After Its Failure to Tender Policy Limits Despite a Shooting Case That Presented Potentially Clear Adverse Liability and Financial Exposure of a “Ticking Time Bomb”  Within Months of the First Notice of Loss

On Sunday, March 1, 2015, the Pride of St. Lucie Lodge 1189, Inc. (the "Lodge") was being used a as a club and bar while hosting a social event. A fight broke out on the dance floor around 1:00 am, March 2^nd, between two groups of female guests at the Lodge. They were removed from the Lodge  through  separate exits. The groups congregated in the Lodge's back parking lot and the fight continued, resulting in Tanya Oliver being shot in the forehead 10 to 15 minutes later. She died from her injuries the following year. The Estate of Oliver sued the Lodge in August 2016 on a theory of negligent security. Kinsale Insurance Company was the insurer for the Lodge. After the conclusion of the trial in August 2019, a jury found the Lodge liable for Oliver’s injuries and awarded damages exceeding $3.3 million, far exceeding Kinsale’s $50,000 policy Assault and Battery sublimit.

Prior to the Estate’s suit, filed on August 5, 2016, The Estate sent Kinsale a Letter of Representation in November 2015. Kinsale assigned the claim investigation to a Senior Claims Examiner who described the claim as "a shooting in the rear parking lot of insured property arising out of an argument that began inside the club." The examiner read two local news articles about the shooting. The articles both stated that Oliver had been shot in the head in the early hours of Monday, March 2, 2015, after two assailants fired from vehicles. Articles also said that Oliver remained in critical condition in the ICU after being shot. On December 2, 2015, Kinsale received a detailed police report from the night of the shooting with the description that Oliver was found “unconscious but breathing in the front passenger’s seat of the vehicle after having suffered a gunshot wound to her forehead.”   Mount Vernon Fire Insurance Company, the Lodge’s liquor liability carrier, retained an independent investigation. Mount Vernon shared the factual results of the investigation as it progressed with Kinsale. The initial report, on December 30, 2015, detailed the events of that night. A month later, Kinsale’s examiner put a January 30, 2016, article in the claims file containing a statement, which the examiner underlined in red, that Oliver remains unable to speak or walk after she was shot in the head earlier that year. On July 5, 2016, Oliver died from her injuries. On August 5, 2016, the Estate filed suit against the Lodge for negligent security. Six days after receiving the complaint, Kinsale tendered its $50,000 Assault and Battery sublimit to the Estate (Kinsale had a general liability limit of $1,000,000). The Estate rejected the tender. After trial, the jury verdict in August 2019 found 70% liability on the Lodge with the final judgment of over $3.3 million.

In February 2021, Kinsale filed an action in the United States District Court for the Southern District of Florida seeking a declaratory judgment that the policy’s $50,000 Assault and Battery sublimit applied. The Lodge and the Estate countersued for common law bad faith pursuant to Florida law. They alleged Kinsale breached its duty of good faith by failing to make a settlement offer within the policy limits before the Estate's suit was filed. The District Court granted summary judgment to Kinsale based upon a finding that Kinsale had no duty to initiate settlement negotiations because, viewed in the light most favorable to the non-moving parties, no reasonable jury could find that this was a case of "clear liability." This Appeal followed.

The Court of Appeals disagreed with the District Court, finding that a jury should decide the bad-faith issue. Pursuant to Florida law, an insurer is held to the standard of a “reasonably prudent person” meaning it should use the same degree of care and diligence as a person of ordinary care and prudence should in its own business. Although the totality of circumstances must be analyzed, reasonable diligence and ordinary care are material  in the determination of bad faith. That determination is an objective one, based on what the insurer at  the time knew or reasonably should have known. This Court looked at the facts that liability was potentially clear in this case and the injuries were so serious that a judgment in excess of the policy limits was likely. The Court recognized that where substantial injuries and potential liability of the insured is obvious, failure to offer policy limits constitutes bad faith even if there is no assurance that the action can be settled. The financial exposure to Kinsale was a “ticking time bomb” and any delay in making an offer could be viewed by a factfinder as evidence of bad faith.

Although Kinsale argued that there was evidence uncovered during the investigation that made liability unclear as a matter of law, the Court dismissed that argument. The Court focused on facts in the record. The Lodge, a private clubhouse for fraternal organization, operates as a club and bar on weekends between 6:00 p.m. and 2:00 a.m. The Lodge is staffed by a bartender and “a couple of security guys to help manage the crowds." The Lodge has no paid employees, and the security personnel are volunteers, which helps them secure membership at the Lodge. At least one fight had occurred on the Lodge's property since January 2015, less than two months prior to the shooting . The Lodge's rear parking lot was dark and unmonitored. The Lodge's leadership had previously expressed concerns about the volunteer security guards’ practices, as well as the parking lot. The Court also focused on the security guards’ actions in escorting the groups of women outside. At least one of the security guards admitted he was aware that the best practice was not to let the two conflicting groups outside together. It is also unclear if the security guards saw the initial fighting outside and did nothing.

In addition to the above,  one of the appellant’s expert witnesses’ reports described Kinsale’s file notes and correspondence from November 23, 2025, to December 3, 2015, to  have presented a case where negligent security premises liability is clear. The expert opined that the facts with which Kinsale was presented amounted to a  classic case of bar liability and the failure to appreciate the Lodge’s  exposure as a seven-figure verdict was “inexplicable.”  Another expert opined that based on what Kinsale knew, there was nothing else that would have been necessary to know for a determination that the $50,000 policy sublimit should have been offered.

The Court  reversed and remanded the District Court’s grant of summary judgment stating that “All told, a jury could reasonably find Kinsale acted in bad faith in failing to tender its policy limits prior to the Estate” filing suit.

 

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

04/14/25       McGregor et al. v. Wawanesa Mutual Insurance Company
Alberta Court of King’s Bench
A Criminal Act Exclusion in a Liability Policy That Excludes “Bodily Injury" or "Property Damage" Caused by Any Intentional or Criminal Act or Failure to Act by Any Person Insured by This Policy, Requires the Insurer to Prove That the Injury or Damage in Issue Was Caused by the Criminal Act, Even Though the Insured Did Not Intend the Injury or Damage

The Alberta Court of King’s Bench issued a judgment on a homeowners’ insurance claim arising from an explosion and fire in a detached garage owned and insured by Mr. McGregor, of Calgary, Alberta. On October 6, 2017, Mr. McGregor was an owner of a single-family residence located on Pinemill Road. That evening, Mr. McGregor was using butane to make cannabis oil in his garage, when a lit cigarette ignited the butane fumes, causing an explosion and fire. The fire, directly caused by the illegal production process, resulted in significant damage to the garage and injuries to Mr. McGregor and two visitors. At no point had Mr. McGregor disclosed to his insurer that he would be producing cannabis oil on the property.

Following the incident, Mr. McGregor pled guilty to criminal charges under s. 436(1) of the Criminal Code of Canada for causing bodily harm by fire and under section 4(1) of the Controlled Drugs and Substances Act for the unlawful possession of cannabis.

The central legal issue in this case was whether the homeowners’ insurer was obligated to defend and indemnify Mr. McGregor in a lawsuit brought by one of the injured visitors and provide indemnity to Mr. McGregor for the property damage caused by the explosion and fire.

This scenario, with its dangerous shed, injured guests, and the ever-present Mr. McGregor, brings to mind the classic tale of Peter Rabbit. In Beatrix Potter’s story, Peter, despite his mother’s stern warnings, sneaks into Mr. McGregor’s Garden—a place already notorious for peril, as Peter’s father had previously met a grim fate there. Like the visitors to Mr. McGregor’s garage, Peter finds himself in sudden danger after venturing where he ought not to go. He loses his shoes and jacket in a frantic escape, is chased into a tool shed, and narrowly avoids capture by the ever-watchful Mr. McGregor.

Both stories serve as cautionary tales about the risks of entering forbidden territory—whether it’s a fenced garden or a garage where cannabis oil is being processed—and the unexpected consequences that can follow. If Peter, after being injured in Mr. McGregor’s shed, demonstrates that he had legal personality and was able to bring a claim against Mr. McGregor, the question of whether the homeowner’s insurer of the fictional Mr. McGregor would be required to defend and indemnify is a discussion for another day.

But in this real-world instance, this Mr. McGregor was facing an uphill fight for insurance coverage … the property portion of the policy excluded loss or damage caused by or resulting from the intentional or criminal acts; there was also a marijuana exclusion that read “loss or damage arising directly or indirectly from the growing, cultivating, harvesting, processing, manufacturing, distribution or sale of any drug or narcotic or illegal substance, whether or not "you" have knowledge of such activity”; the liability portion excluded “bodily injury" or "property damage" caused by any intentional or criminal act or failure to act by any person insured by this policy.”

The issue of entitlement to insurance coverage was heard by summary trial. At the outset of the trial, Mr. McGregor withdrew his claim for property damage. The claim of entitlement to liability coverage remained.

The insurer argued that the bodily injury claims were caused by Mr. McGregor's criminal acts and are therefore excluded. They argue that it is irrelevant to inquire if he had any intention of causing the fire and the resulting injuries. Alternatively, the insurer argued that Mr. McGregor’s failure to disclose the illegal and dangerous production of cannabis oil is both a material misrepresentation and a material change in risk which, together or separately, voids the liability coverage.

Counsel for Mr. McGregor argued that the criminal act exclusion is not applicable as the insurer has not established Mr. McGregor subjectively intended to cause the fire or any harm to Mr. Coffin. Further, section 533 of the Alberta Insurance Act states that a contravention of the criminal law itself will not render unenforceable a claim for indemnity except where the contravention was committed by the insured with the intent to bring about the loss or damage. Therefore, it was argued that Mr. McGregor is entitled to a defence and possible indemnity for the Coffin Action.

The issue before the court was whether an unintentional criminal act is excluded under the Policy. Put another way, to apply the exclusion, is the insurer required to prove that the insured committed a criminal act; that the loss or damage for which coverage is being claimed was caused by that criminal act; and that while committing that criminal act, the insured intended that injury or damage?

The Court held that Section 533(2) of the Insurance Act protects an insured's right to indemnity in cases where a criminal act is committed without the intention to cause the loss or damage. But it also permits an insurer to provide otherwise and exclude the claims for indemnity for loss caused by any criminal act, whether the act was intentional or not. That is what the insurer did in this case.  The criminal act exclusion excludes claims arising from bodily injury or property damage caused by any criminal acts that are committed by the insured.  The language of the exclusion is disjunctive: An act of an insured that causes injury is clearly excluded when it is either an intentional act, or a criminal act. Therefore, it is irrelevant that the insured did not intend the injury or damage that arose from the criminal act.  The exclusion will apply if the insurer proves that the criminal act was the cause of the injury.

In this case, Mr. McGregor plead guilty to a charge under the Criminal Code that he caused a fire that resulted in injury to Mr. Coffin and Mr. McIntosh. Therefore, the Court concluded “In light of this admission, the essential facts necessary to trigger the exclusion exist and relieve the ...[insurer]… of its obligations to indemnify…[Mr. McGregor).”  As the criminal act exclusion applied, the Court did not find it necessary to consider whether the liability coverage was rendered void as a result of a misrepresentation or a failure to disclose a material change in risk.

 

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