Coverage Pointers - Volume XXVI No. 24

Volume XXVI, No. 24 (No. 697)
Friday, May 9, 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.

For those who subscribe to the New York Law Journal, you’ll find an article co-authored with Jeff Steinberg, in today’s issue, on the subject of the necessity of offering tail coverage when E&O policies are rescinded.  Only a coverage nerd can embrace that subject.  I’d include the article here, but the NYLJ folks have strict rules on reprints

Once again, this issue of Coverage Pointers is chock full of interesting and timely cases on all kinds of subjects.  For our newer subscribers, and as reminder for the long-time regulars, the full issue of CP is attached as a pdf.  This is what we call our “coverage note” or, affectionately, “Dear CP” in office parlance.

This is the official start of summer.  My wife and I have moved back to our home in Canada, where we will be staying for about six months.  I make the international commute to my office in Buffalo four days a week, and the travel time, including clearing customs, is about 17 minutes.  As someone who grew up in Crown Heights, Brooklyn, in a three-story walk up, four blocks from Ebbets Field, this view is slightly more appealing.  Anytime you’re in Western New York or Southern Ontario, please stop by and join us at the Land of the Blue Martinis, aka Crescent Dreams, in Fort Erie, Ontario, on the north shore of Lake Erie..

 

 

Chief Justice Roberts in Buffalo

The United States District Court for the Western District of New York is celebrating its quasquicentennial anniversary (that’s 125 in people years).  As part of its celebration, Chief Justice Roberts traveled to Buffalo and sat down at a “fireside chat” with his former classmate, USDJ Lawrence Vilardo, for an hour discussion that covered many interesting parts of his life.  A Buffalo native (until the age of 10), he disappointed the audience by revealing that he is a Bears fan (rather than a Bills fan). He was presented with a Josh Allen jersey, with the number 17 (also reflecting that he is the nation’s 17^th Chief Justice).  I had the opportunity to listen to his remarks, made to a sold-out audience.

With a responding ovation, Chief Justice John Roberts did emphasize the importance of judicial independence:

“The judiciary is a coequal branch of government, separate from the others with the authority to interpret the Constitution as law, and strike down, obviously, acts of Congress or acts of the president.”

He expressed the role of the judiciary to “decide cases but, in the course of that, check the excesses of Congress or the executive.”

 

Training – Stay Tuned!

So many of you have attended one or more our Zoom training courses of the last few years, and they will be continuing.  But I am really excited to advise you that several member of our coverage team will be offering a wide variety of Zoom training programs on a number of different subject areas from first party property to commercial and personal auto, to employers liability coverage, and much, much more.  Watch this space for the dates of these Lunch and Learn programs.  Lucky for you, you’ll hear from a number of our coverage gurus who are much more interesting than the old professor.

Finally, as I craft this note on Thursday evening, I lift a glass to my dad on his birthday -- gone from this Earth 45 years ago, at age 62, he would have been 107 today.  My parents were immigrants, having escaped Nazi Germany, both ending up in Palestine where they met and wed.  My older sister was born in Haifa.  When my mother was pregnant with , they emigrated to New York, and I was born five months later.  They naturalized some years after I was born.  That makes me a birthright citizen, one of many, who relies on the United States Constitution for citizenship.

 

Need a mediator for an insurance dispute? Coverage mediation is a thing!  Subject matter expertise may be useful.

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

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

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

Try mediation.

 

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.

 

Mandatory Car Insurance Under Consideration – 100 Years Ago:

Buffalo Post
Buffalo, New York
9 May 1925

Compulsory Automobile Bonding

Among the proposals made as a result of the situation created by the prevalence of automobile accidents in the United States that of requiring all automobiles to carry liability insurance is often suggested. Probably more than half of the automobile drivers of the country are already protected, and the persons injured by automobiles operated by these drivers have some recourse.

The number of automobile accidents is large, to be sure, but proportionally not so large as it was a decade ago. The ratio if accidents to the number of cars in use is declining steadily – partly because traffic is more efficiently handled, partly because roads are better, partly because the equipment of cars has been improved and partly because motorists and pedestrians alike have profited somewhat from a long campaign of education designed to reduce the number of accidents.

In 1925, automobile fatalities were 24 to every ten thousand cars; and there has been a lower rate each succeeding year, until in 1923 the number of fatalities to ten thousand cars was only 10.3. The actual number of accidents has not declined to the same degree because the number of cars registered each year surpasses that of the preceding year. In 1924, automobile fatalities declined 13 per cent, as compared with 1923, in Baltimore although 22 per cent more cars were registered. In Battle Creek fatalities were cut 27 per cent, though there were 12 per cent more cars are use; and in Memphis County 47 er cent, though 28 per cent more cars were registered. Similar figures are reported from many other cities.

The problem presented by traffic accidents is national and should be attacked on a national scale. Secretary Hoover declared at the Highway Safety Congress in Washington last December that few states have driven toward sufficient personal accountability for recklessness, and Thomas B. Donaldson, former insurance commissioner of Pennsylvania, said that too little thought had been given to the idea that improved police protection was required for safety when roads are improved.

 

Peiper on Property (and Potpourri):

Less controversy this week in the Courts.  We do suggest that you take a minute, though, to review the interesting subrogation case reported in our column.  Where there is notice of a potential subrogation right, the First Department has explained that the carrier’s subrogor cannot unilaterally destroy subrogation rights just because it cuts its own deal with the tortfeasor.  Rather, the subrogee’s rights prevail even in the face of a Release which seemingly protects the tortfeasor from future legal jeopardy. 

That’s it for this week on a substantive law front.  On a more personal note, May 8^th also marks, or much of world, Victory in Europe Day.  On this date, 80 years ago, at 10:43 local Berlin time, remaining German “officials”  ordered “all German military naval and air authorities and to all forces under German control to cease active operation at 23:01 CET.”  And so, with that, the great war came to an end.  The numbers of the war are, to this day, staggering.  An appalling 70 to 85 million people died as a direct result of the conflict, with half of those deaths directly related to civilian casualties.  It is estimated that over 127 million people were mobilized to fight, and 16.4 million Americans answered the call to duty.  Of those 16.4 million, only about 60,000 are still with us to stand as a testament to the bravery of the men and women who contributed so much. 

Whether or not the day should be recognized formally in the United States is up for debate, but the sacrifice of so many should not be.  And, with that, we certainly take a moment to recognize those that gave so much for so much.

That’s it for now.  See you in two weeks.   

Steve
Steven E. Peiper
[email protected]

 

Free Insurance with Purchase of a Car – 100 Years Ago:

The Daily Freeman
Kingston, New York
9 May 1925

Free Insurance
Here Next Week

Kingston Dealers Used Car Exchange
Will Giver Purchasers of Used Cars
A Free Accident Insurance Policy

Next week will be free insurance week as the Kingston dealers Used Car Exchange at 256 Clinton Avenue. Manager Burt has decided to give all purchasers of used cars at the Exchange a free accident insurance policy with any car purchased during the week. This novel feature protects the owner against accident caused either by your own or another car.

This insurance is particularly interesting to the purchaser who buys on time payments. The policy can be so arranged that in case of accident the insurance payments will apply to the car payments this insuring the time payments of any car purchased during the week.

The policy pays varied sums from $5 for doctor’s bill if not disabled to $1,000 for loss of life or two limbs or one eye and one limb or two eyes. Loss of one limb pays #500 and one eye $350. In addition, there is a payment of $25 per week for 26 weeks in case of total disability. Half this amount if partially disabled for four weeks, an indemnity for hospital services of $15 a week for four weeks and a similar amount for nurse fees if not confined to a hospital. In addition, there is provision of $100 emergency expenses.

 

Lee’s Connecticut Chronicles:

See you in two weeks.

Lee
Lee S. Siegel
[email protected]

 

Anything but Booze – 100 Years Ago:

Buffalo Courier
Buffalo, New York
9 May 1925

“FOOD DRUNKARDS”
LATEST OUTGROWTH
OF PROHIBITION ACT

Western Doctor Says increase in Diabetes Due to
Alcohol Craving.

Sacramento, Calif., May 8 ( By the Associated Press). – “Food drunkards” who appease their craving for alcohol by eating rich foods containing a great amount of sugar, have replaced the heavy drinkers of pre-Volstead days and as a result diabetes is claiming hundreds of new victims, Dr. Richard F Tomlin of San Francisco declared in an address today before the convention of the California State Homeopathic Medical Society.

 

Ruffner’s Road Review:

Dear Readers,

I am looking forward to the start of both softball and golf leagues this week – hopefully I still remember how to swing a club after a long winter…

In our first case this week, the court granted a default judgment in the insurer’s declaratory judgment action against no-fault claimants and medical providers, as the insurer submitted sufficient proof of the default and facts demonstrating its claim. Next, in a petition to stay an Uninsured Motorists arbitration, the court sided with the insurer, as there was no agreement between the claimant, who was not insured under the policy, and the insurer to arbitrate the subject claim.

Until next time,        

Kyle
Kyle A. Ruffner
[email protected]

 

Diamond Widow – 100 Years Ago:

Buffalo Courier
Buffalo, New York
9 May 1925

“DIAMOND WIDOW”
GOES TO HOSPITAL

‘Obsession’ Prompts Woman’s
Story, Say Police

IDENTIFIED AS CANADIAN’S WIFE

Police say they have shattered the story told by Mrs. Gordon Meyers, formerly of No. 444 Pearl Street, who still insists she is the widow of Joseph Diamond, Brooklyn, recently executed at Sing Sin for his part in slaying two bank messengers in a Brooklyn robbery.

Following the investigation by New York police and a check-up by Captain Hildebrand in Buffalo, authorities say the story of Mrs. Meyers was prompted by a mental obsession, the result of a weakened physical condition and highly nervous state.

Yesterday, after being arraigned in City court before Judge Keeler the woman was committed to the City hospital for treatment. She is suffering from a wound in her abdomen which required 100 stitches after an operation in Bellevue hospital, New York city.

Captain Hildebrand’s investigation revealed, police say, the woman was married to Gordon Meyers, No. 54 Queen Street, St. Catharine’s Ont., on November 1, 1916, at Niagara Falls. The name of Meyers’s marriage license is Louise McLean. The latter told the marriage license clerk she was born in Scotland, the daughter of Hugh McLean. Meyers yesterday told reporters the woman was his wife and had lived in St. Catherine’s, Ont., before marriage.

 

Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers:

I took my oldest son this past week to Rick Lancelloti’s School of Baseball for a batting lesson. I was a student myself, once upon a time, as a participant in the school’s batting cage hitting league (yes, line drives in batting cages can be the premise to an entire league of competition). My son is eight and, while he was reserved at first, he picked up a few key ingredients to a better swing, which he implemented during batting practice for his house team the other day—the only player hit a ball out of the infield in the air. Dad picked up a lifetime of coaching points too, and we are looking forward to the next one soon.

My youngest son has fallen in love with Minecraft and, while he began his journey as many do (in creative mode), I convinced him last week to try out survival mode. While I understand the draw of having access to all the blocks at once, there is a certain poetry to finding resources yourself and it is by far my favorite style of play. There is a learning curve, of course, but he took off running. He has since returned to creative mode, but it won’t take much convincing for him to launch his survival mode world up again next time.

Our baby girl is now two months old and hitting all the benchmarks. We have graduated from the adjusted growth chart for six-week preemies because, well, it does not make sense to reference that chart when you are excelling on the normal chart. A healthy, happy baby. And a little cutie pie to boot!

This edition of my column discusses two different issues arising in the context of diversity jurisdiction and a district court’s continued duty under the Constitution to ensure that it has Article III jurisdiction. Both issues were solved, albeit in different ways. One court retained jurisdiction, while the other did not.

Until next time,

Ryan
Ryan P. Maxwell
[email protected]

 

Good to Know – 100 Years Ago:

Ledger-Star
Norfolk, Virginia
9 May 1925

Junior’s Question

Dear Miss Fairfax:

We are two girls of thirteen and we read your column every night. Please answer some questions for us.

1.  Is it proper for a girl of thirteen to play “post office” and “wink?”

2. Should a girl or boy speak first when meeting on the street?

3. Should a girl answer a note a boy has written here?

4. How can you let a boy know you like him without telling him so?

JUST THIRTEEN.

1. If the games are played as I knew them, yes.

2. A girl should speak first.

3. She should show the note to her mother and take her mother’s advice.

4. The best way is not to let him know. He’s too apt to think so anyhow.

 

Storm’s SIU:

Hi Team:

One case this week:

• The Court, Rather than an Umpire, is the Correct Adjudicator for Interpreting the Meaning of the Appraisal Award.

I had the privilege today of attending Dan Kohane’s “N.Y. Disclaimer Training” that he was presenting to an insurer.  It’s an extremely informative and invaluable 90 minutes which you should consider for your claims professionals.  They will learn so much!

Busy week, gotta run.  Talk to you again in two.

Scott
Scott D. Storm
[email protected]

 

Mixed Races Cause More Problems Than Mixed Drinks – 100 Years Ago:

The Buffalo News
Buffalo, New York
9 May 1925

BLAMES CRIME IN U.S.
ON MIZING OF RACES

English Judge Says Drinking Here Will Disappear.

Building up of the right principles in youth through boys’ and girls’ organizations is responsible for the marked decrease of juvenile crime in England, Judge Frederick Burris, chairman of the magistrates of the Juvenile court of Bristol, England, said Friday. Judge Burris is making a tour of the United States to study the juvenile courts and probation systems here. He visited Buffalo courts Friday. 

Much of American crime is due to the mixing of the races and to the comparative youth of the country, the judge believes. With the education of parents and the instilling of proper principles in children through organization which teach discipline and self-respect, he believes a reduction in crime will come.

Judge Burris is favorable impressed by the probation system here, believing it ultimately will go far towards correcting the situation. “I have never known a man to be reformed by being sentenced to prison,” he remarked. The judge is puzzled about prohibition. He believes that the drinking that is done because of bravado and in a spirit of defiance will disappear.

 

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

On Wednesday, a few of us attended the WDNY’s 125th anniversary celebration, including a “fireside chat” with Chief Justice Roberts of the Supreme Court. It was a very exciting opportunity to learn more about the Supreme Court.

In this week’s case, the Arizona Supreme Court considered the meaning of the phrase “in connection with your business” regarding an employee’s use of a “non owned” “covered auto” as described in an auto policy. The court also looked at the enforceability of a contingent agreement.

HF softball starts this week. Catch you later,

Kate
Katherine A. Fleming
[email protected]

 

A Buck for a Bride – 100 Years Ago:

The Buffalo News
Buffalo, New York
9 May 1925

CLERK TRUSTS GROOM
FOR COST OF LICENSE

DETRIOT, May 8. – Marriage licenses at nothing down and $1 when the intended groom gets his pay envelope Saturday became an accomplished fact here today.

Garfield Bean, 25, appeared before Thomas F. Farrell, county clerk, and asked if he could get a marriage license and pay for it tomorrow.

“I don’t mind trusting you,” said Mr. Farrell, “but why are you getting married when you haven’t even a dollar for the license?”

“Personally, I would just as soon wait a while.” Bean said, “but my girl has her mind set on being married tonight.”

The license was issued, Josephine Fein, 18, being named as the bride.

“I’ll be back here the first thing Saturday with the dollar,” was Bean’s parting promise.

 

Gestwick’s Garden State Gazette:

Dear Readers:

It has surely been a busy two weeks, with not much to report. Apparently, the New Jersey courts were quiet on topics of insurance coverage, as I have nothing noteworthy to share with you this time around. Hopefully this means double cases for you next time.

See you in two weeks.

Evan
Evan D. Gestwick
[email protected]

 

Such a Deal – 100 Years Ago:

The Buffalo Times
Buffalo, New York
9 May 1925

$5,000 Accident Insurance Policy
To Be Issued by Buffalo TIMES

A $5,000 accident insurance policy has been secured by the Buffalo TIMES for its readers. The policy can be had simply by ordering THE TIMES and the payment of a $1 newspaper registration fee.

The policy pays ten dollars a week for 15 weeks if the policy holder is injured in a fare paying vehicle, private automobile, horse drawn vehicle, passenger elevator, or if the holder should be injured by a storm tornado, burning building or falling wall, or if struck by an automobile while walking.

The death benefits are $5,000 if the policyholder is killed while riding in a streetcar, train or steam-driven vehicle in which he is riding as a passenger, and $1,000 if he is riding in a private automobile or taxicab or horse-drawn vehicle.

In addition, if a pedestrian is killed while crossing a street by being struck by a moving vehicle a payment of $1,000 will be made.

The Buffalo TIMEs has secured thousands of these policies from the North American Accident Insurance Company, the oldest and strongest exclusive Accident Insurance Company in the United States of its old and new readers. 

 

O’Shea Rides the Circuits:

Readers,

Apparently, there is a firm softball team, and the first game is this week. I guess I was omitted from that group chat. Poor joke aside, I am looking forward to this weekend as the weather looks to break. Saturday looks like a fine burger and dog day. Maybe even some smoked chicken wings or duck. I’ll keep you posted on how that situation developed in the next issue.

This week I have a longer read from the Fifth Circuit that involves the application of the Auto Exclusion and the triggering date for property damage. As a preface, the facts involve sugar contaminating a concrete mixture that later caused the slab to manifest cracks.

Until Next Time,

Ryan
Ryan P. O’Shea
[email protected]

 

Make America Safe Again – 100 Years Ago:

The Buffalo News
Buffalo, New York
9 May 1925

SHOPLIFTER CONVICTED

ALBION, May 8. – After a two days’ trial the jury returned a verdict late Thursday convicting Mrs. Joesphine Yacano of Buffalo of stealing a hat from the millinery store of Mrs. Alethea Volk in Main Street. Judge Frederic M. Thompson Jr. sentenced Mrs. Yacano to six months in Monroe count penitentiary.

The jury returned a verdict of not guilty against Pilis Carawana and his wife, Marie Carawana. All three claimed to reside at 633 Genesee Street, Buffalo, which is said to be the residence of the mother of Mrs. Yacana. Pilis and Marie Carawana were re-arrested in court upon a warrant sent here from Gasport N.Y., charging grand larceny. A Gasport clothier is said to be the complainant in that case.

This will be taken to Niagara County tonight and furnish bail for their release for an adjourned date to be set by the justice at Gasport.

 

LaBarbera’s Lower Court Library:

Dear Readers,

Looks like I might have bit off a bit more than I could chew. I joined a men’s soccer league for the summer. I was excited to make my debut, but after a whole five minutes, I hobbled off the field with a torn MCL and meniscus. Looks like it is stopwatch duty only for me these next eight weeks.

This week I have two cases from the New York Supreme Court, one in New York County, another in Kings. First, I will discuss the application of a Designated Coverage Endorsement. Next, we move on to discuss the application of a choice of law and forum selection clause.

Until next time…

Isabelle
Isabelle H. LaBarbera
[email protected]

 

A Bunch of Rummies – 100 Years Ago:

The Daily Freeman
Kingston, New York
9 May 1925

Rum Doings at
Canadian Border

Daring Skippers of Niagara Booze
Armada Prepare to Run the
Contraband Through Lines of the

Coast Guard and Custom Service

Buffalo, N.Y., May 9. – Two hundred thousand dollars’ worth of Canadian booze, bought and paid for by Buffalo bootleggers, stands sidetracked in the Canadian National railroad freight yard at Welland, Ontario, awaiting arrival of the rum armada to bear it across the boundary line.

Thirteen Fleet rum cruisers, commanded by the most daring skippers of the Niagara booze fleet have been chartered to run the contraband through the lines of the American coast guard and customs service. Four of the cutters are due in Welland today. Canadian representatives and a syndicate expect to send them back to Buffalo heavily laden before the day is over.

 

Lexi’s Legislative Lowdown:

Dear Readers,

My dog’s favorite hobby is digging holes in the backyard. Unfortunately for me, it won’t stop raining, so this is starting to become part of our daily routine. I am hoping that the weather will clear up and the yard will dry out soon. I am not sure how many more daily baths I can handle.

This week we discuss Senate Bill S7576 related to powered bikes and storage batteries.

Thanks for reading,

Lexi
Lexi R. Horton
[email protected]

 

I Guess a Hat is Worth More than a Purse – 100 Years Ago:

The Buffalo News
Buffalo, New York
9 May 1925

PURSE SNATCHER FINED
AND SENTENCED TO PEN

Charged with snatching a purse containing $65 from Mary Forbes 1576 Hamburg Turnpike, Michael O’Grady, 28 years old, 1472 South Park Avenue, was fined $30 and sentenced to 60 days in the penitentiary by Judge Monaghan in Lackawanna City court Friday.

 

North of the Border:

This comment may appear to be totally random, but Canadians have just come out from the other side of a federal Canadian election.  We heard political commentators speak about ‘bellwether’ ridings; where political tendencies match in microcosm those of a wider area, such that the result of an election in the former region might predict the eventual result in the latter.

I have, of course, also heard the word used in litigation managed through the MDL process in the United States. In MDL cases, it is not practical to prepare every case for trial. Several matters are, therefore, selected as ‘bellwether cases’ and prepared for trial. Those cases are then settled or tried, and the results are used to shape the process for addressing the remaining cases.

I was curious as to the etymology of the word “bellwether”. So, I asked Siri who asked ChatGPT, who directed me to a Wikipedia page.

I learned that “bellwether” has its origins in sheep herding. The term derives from the Middle English belle-weder, which referred to the practice of placing a bell around the neck of the lead wether (the castrated male sheep who is the ‘alpha’ in the flock). A shepherd could then note the movements of the animals by hearing the bell, even when the flock was not in sight.  So, the bellwether is the leader, not the follower.

So, be a bellwether, not a sheep.

Until next time.

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

 

Headlines from this week’s issue, attached:

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

• Rhode Island Choice of Law Applies to Bad Faith Claim, Where Insured Is Resident of New York and Policy Issued There, Under Center of Gravity Approach
• Party Is Entitled to Change Its Mind After Original Settlement Offer Is Rejected
• Additional Insured Endorsement Which Required Written Contract, Did Not Require Privity to Trigger AI Coverage

 

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

• Knowledge of Potential Subrogation Rights Precludes Party from Relying on Release from Insured/Subrogor
• Underwriting Guidelines Do Not “Unequivocally” Forbid Insured Risk

 

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

• See you in two weeks.

 

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

• Declaratory Judgment Issued in Favor of Insurer, Due to Default of Medical Provider Defendants and Claimants
• Petition to Stay Arbitration Granted as No Agreement to Arbitrate the Respondent’s Claim Existed

 

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

• District Court Maintains Jurisdiction Over Insurance Dispute Following Uncontested Dismissal of Non-Diverse, Second-Layer Excess Insurer  
• District Court Without Jurisdiction Over Insurance Dispute Due to a Failure to Establish the Domicile of Individual Members of Plaintiff LLC  

 

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

• The Court, Rather Than an Umpire, Is the Correct Adjudicator for Interpreting the Meaning of the Appraisal Award

 

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

• An Employee Operates a Non-Owned Auto “In Connection with Your Business” When Using the Vehicle While Engaged in the Employer’s Business

 

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

• No coverage cases out of New Jersey this week; see you in two weeks

 

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

• Sugar Contamination in Vehicle Constituted “Use” of Automobile and Contamination Was First Instance of Property Damage, Not When Construction Defect Manifested

 

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

• Court Held Pothole Repair Did Not Classify as Landscaping Gardening, and Commercial General Liability Policy Did Not Provide Coverage Based on Business Description Limitation Endorsement
• Causes of Action Sounding in Texas Substantive Law Dismissed, Based on Forum Selection and Choice of Law Clause Within Property Policy

 

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

• Senate Seeks to Set Requirements for the Sale, Lease, and Rental of Powered Bicycles and Mobility Devices

 

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

• Exclusionary Words “Alleging, Arising Out Of, Based Upon or Attributable to, or in Any Way Involving, Directly, or Indirectly, Sexual Misconduct,” Apply to Remove the Obligation to Defend an Otherwise Covered Claim, if, Wholly or in Part, Sexual Misconduct Gave Rise to That Underlying Claim

 

That’s all there is and there is no more. See you in another fortnight

 

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

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

North of the Border

 

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

 

05/06/25       Zurich American Insurance Co. v. Providence Capital LLC
Appellate Division, First Department
Rhode Island Choice of Law Applies to Bad Faith Claim, Where Insured Is Resident of New York and Policy Issued There, Under Center of Gravity Approach

The insured, Providence’s second counterclaim pleads a violation of Rhode Island General Laws § 9-1-33, entitled "Insurer's bad faith refusal to pay a claim made under any insurance policy," and alleges plaintiff's bad faith handling of a claim in connection with property damage to a showroom. Zurich, in an affirmative defense, alleged that the Rhode Island General Laws do not apply to this action.

The court determined that Rhode Island rather than New York applied. Under New York's "center of gravity" or "grouping of contacts" approach to choice of law questions in contract cases, Rhode Island has "the most significant relationship to the transaction and the parties. Providence Capital, the primary insured, is domiciled in Rhode Island, the place of contracting, and the policy covers many Rhode Island locations of Providence Capital's affiliate companies (id.). Providence Capital's domicile also weighs in favor of applying Rhode Island law, as Providence Capital affiliates are named insureds and are spread across several states, and the action therefore involves liability insurance covering multistate risks.  In such a case, the state of domicile is the appropriate source of applicable law. Furthermore, the governmental interests at issue, taken in the aggregate, support applying the law of Providence Capital's domicile.

 

05/02/25       Garlow v. Cunningham
Appellate Division, Fourth Department
Party Is Entitled to Change Its Mind After Original Settlement Offer Is Rejected

This was a lawsuit arising from a collision between a motorcycle operated by plaintiff and a vehicle operated by defendant. The defense sought to enforce a “purported settlement agreement.

Defendant's insurance carrier offered to settle both the personal injury claim and the property damage claim for $100,000. The adjuster from the insurer sent a proposed release to plaintiff. Plaintiff signed the release but deleted all language referencing his property damage claim and inserted the clause "other than property damage." In other words, the release signed by plaintiff and returned to defendant's carrier was limited to his personal injury claim.

The insurer rejected that change.

A few months later, the parties settled the property damage claim for just over $7,000. The adjuster subsequently sent plaintiff another release in the amount of $100,000, but plaintiff refused to sign that release or a stipulation of discontinuance.

Defendant thereafter moved for an order enforcing the purported "settlement," contending that the modified release signed by plaintiff constituted a stipulation under CPLR 2104.

Not surprisingly, the court rejected that attempt.  The plaintiff had changed his mind and there was no enforceable settlement.  In response to the original offer of $1,000,000 to settle both claims, the plaintiff rejected the offer and counter offered to settle only the bodily injury claim.  That was rejected by the adjuster.

So, there was no agreement, and the offer was off the table.  Buyer’s remorse does not recreate an agreement that had been rejected.

 

04/29/25       Catlin Insurance Company v. Colony Insurance Company
Appellate Division, First Department
Additional Insured Endorsement Which Required Written Contract, Did Not Require Privity to Trigger AI Coverage

Sandy Clarkson is entitled to additional insured coverage under Colony's primary and excess policies issued to defendant Kingstone Builders Inc.

Colony's additional insured endorsement states: "Who Is An Insured is amended to include as an additional insured the person(s) or organization(s) shown in the Schedule [stating "All persons or organizations as required by written contract with the Named Insured"], but only with respect to liability for 'bodily injury' . . . caused, in whole or in part, by: 1. [Kingstone's] acts or omissions; or 2. The acts or omissions of those acting on [Kingstone's] behalf."

The "plain and ordinary meaning” of Colony's additional insured endorsement extends coverage to Sandy Clarkson because Sandy Clarkson was an organization required by written contract with Colony's named insured, Kingstone, to be named as an additional insured.

The written contract is the Kingstone subcontract with McAlpine, which requires Kingstone to name Sandy Clarkson and McAlpine as additional insureds. This endorsement's language is sufficiently broad to require coverage here despite there being no contract between Sandy Clarkson and Kingstone

The contract does not require that it be an agreement between Kingstone and Clarkson, only that there be a contract with Kingstone and “someone” requiring Clarkson to be named as an additional insured.

Colony's duty to defend is implicated because the allegations of the underlying complaint raise a reasonable possibility of coverage. Given Colony's policy, the duty to defend is on a primary and noncontributory basis with Catlin's coverage. As Colony's duty to defend on a primary basis has been triggered, plaintiffs are also entitled to reimbursement of defense costs.

It is premature to rule on indemnification, which must await a determination of liability in the underlying personal injury action.

 

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

05/01/25          State Farm Fire & Cas. Co. a/s/o K&B Global Corp. v. Moving & Storage, Inc.
Appellate Division, First Department
Knowledge of Potential Subrogation Rights Precludes Party From Relying on Release From Insured/Subrogor

In this matter, State Farm paid a fire loss that originated in an adjoining warehouse that was occupied by Moving & Storage.  Moving & Storage was insured by Selective at the time of the loss.  At the time State Farm paid the claim, it informed its insured, K&B, that it believed Moving & Storage was the responsible party.  State Farm also noted that Selective was Moving & Storage’s insurer. 

We are further advised that in addition to the claim with State Farm, K&B also pursued payment from Selective.  The resolution of that claim resulted in a Release being issued by K&B in favor of Selective in 2021. In the Release, K&B purportedly agreed to also release claims that could have been commenced by any of K&B’s other insurers (i.e., State Farm).  When State Farm eventually commenced a subrogation action, Moving & Storage immediately moved for summary judgment on the basis of the K&B/Moving & Storage settlement and release. 

The trial court granted the application, and the instant appeal ensued.  In reversing, the Appellate Division noted that State Farm raised triable issues of fact that Selective (and Moving & Storage) knew or should have known about State Farm’s prospective subrogation rights.  If the alleged tortfeasor (and its insurer) were aware of the subrogation possibility, unilateral actions  of insured/payee cannot destroy the subrogation claim.  Because there was some evidence that all parties were aware that State Farm was involved in the claim, and likely would be making a subrogation claim, Moving & Storage had not met its burden. The matter was remanded to the trial court for further proceedings on whether knowledge of the State Farm subrogation right was known before or after the Release was signed. 

 

04/25/25          Kearse v. Allstate Veh. and Prop. Ins. Co.
Appellate Division, Fourth Department
Underwriting Guidelines Do Not “Unequivocally” Forbid Insured Risk

Allstate denied and disclaimed coverage to plaintiff due to an alleged material misrepresentation.   To prevail on a material misrepresentation defense, the carrier must come forward with evidence that “unequivocally” would have declined to accept the risk if there had been no misrepresentation during the application process.  In the matter at hand, the Court found that there were questions of fact as to whether the underwriting guidelines specifically forbid the risk as underwritten.  Further, the affidavit of a representative from Allstate was also insufficient to demonstrate that the alleged misrepresentation was material in that Allstate would not have underwritten the risk had there been no misstatement in the application. 

 

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

See you in two weeks.

 

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

03/18/25         Hereford Ins. Co. v. Advanced Life Services, Inc, et al
Supreme Court, New York County
Declaratory Judgment Issued in Favor of Insurer, Due to Default of Medical Provider Defendants and Claimants

The insurer in this declaratory judgment action alleged that the claimant defendants were passengers in the insured vehicle when it was struck by another vehicle, leading to a number of no-fault claims. Hereford moved for a default judgment pursuant to CPLR 3215 against the medical providers named in this action which allegedly provided treatment to the claimant defendants.

The court indicated that an application for a default judgment must be supported with proof of service of the summons and complaint, proof of the facts constituting the claim, proof of the default. In addition to furnishing proof of service, the plaintiff must offer some proof of liability to satisfy the court as to the prima facie validity of the uncontested cause of action. There, the insurer provided proof of service on the defaulting parties and submitted an affidavit of its no-fault claims supervisor in support of its motion.

The evidence submitted by the insurer in support of its motion indicated, among other things, that the Medical Provider Defendants have submitted thousands of dollars in No-Fault claims as the alleged assignees of the Claimants. The legitimacy of the claims was questionable as the alleged incident was a hit and run loss and the injuries appeared to be exaggerated compared to the severity of the accident, given one claimant treated far more extensively than the other. The insurer argued the circumstances surrounding the collision raised a strong possibility that the alleged injuries of the Claimants and any subsequent treatment by the Medical Provider Defendants were not causally related to the collision. Further, only one of the claimants appeared for an examination under oath, and her testimony raised further issues as to the legitimacy and medical necessity of the alleged medical treatments. Accordingly, Hereford denied all no-fault claims on the basis that the collision did not arise from an insured event.

Based on the defendant’s failure to file any opposition, and the insurer’s support for its meritorious position, the court granted the default judgment against the non-answering defendant’s, holding Hereford had no duty to pay the claims arising from the subject incident.

 

04/24/25       Matter of GEICO v. Liriano
Appellate Division, First Department
Petition to Stay Arbitration Granted as No Agreement to Arbitrate the Respondent’s Claim Existed

The Supreme Court had denied the insurers petition to permanently stay arbitration, dismissed the proceeding, and directed GEICO and respondent Rosa Pons De Liriano to proceed to arbitration. On appeal, the Appellate Division unanimously reversed the lower court, granted the petition, and permanently stayed the arbitration.

Even if not timely under CPLR 7503 (c), the petition, the court held the petition should stay should have been granted under the "no agreement to arbitrate" exception. Respondent De Liriano was not a party to any arbitration agreement permitting arbitration of her claim for uninsured motorist benefits under the policy issued by GEICO to nonparty Senasqueris Matos, the named insured. The court explained that GEICO's Supplementary Uninsured Motorists Coverage endorsement defined "insured" to include the named insured and his spouse and the relatives of either the named insured or his spouse. "Relative" was defined as a person related to the named insured who resides in his household. However, GEICO established that De Liriano was not an insured because, although she resided with the named insured, she was not his relative by either blood or marriage.

Therefore, there was never an agreement between De Liriano and GEICO to arbitrate. The court cited to Matter of Allstate Ins. Co. v Marke, 121 A.D.3d 1107, 1108 (2nd Dept 2014), where the Second Department similarly held “Since the respondent was not an insured under the SUM endorsement of the policy, no agreement to arbitrate her claim existed, and the 20-day period of limitations set forth in CPLR 7503 (c) did not apply.”

 

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

 

05/05/25       Catlin Ins. Co. v. Champ Constr. Co.
United States District Court, SDNY
District Court Maintains Jurisdiction Over Insurance Dispute Following Uncontested Dismissal of Non-Diverse, Second-Layer Excess Insurer  

In conjunction with a motion to dismiss for lack of subject-matter jurisdiction, defendant, Navigators Insurance Company, filed an affidavit and additional documentation showing that its principal place of business is in Hartford, Connecticut—the same as the plaintiff, Catlin Insurance Company—rendering the parties non-diverse under 28 U.S.C. §1332. That can be a real problem in federal court and district courts are sticklers for jurisdiction (Constitutionally speaking, of course).

Not to worry. Relying upon Federal Rule of Civil Procedure 21, Catlin conceded the lack of diversity but asked that Navigators alone be dismissed from the action as a dispensable party. Intrigued, and by Order to Show Cause, the SDNY asked the parties why it “should not dismiss Navigators without prejudice, preserving diversity jurisdiction.” No objections came and thus there was no argument that Navigators—a second-layer excess insurer for the insured defendant, which had two primary insurers and a first-layer excess insurer—was indispensable under Federal Rule of Civil Procedure 19. Thus “rendering a judgment in Navigators' absence will not prejudice the remaining defendants, and no defendant has argued it will.”

Navigators dismissed; the case can proceed.

Maxwell’s Minute: Obviously, I am kidding about being sticklers. District courts have an independent obligation to determine whether subject matter jurisdiction exists over a case under Article III of the Constitution.

A copy of this decision is available upon request.

 

04/25/25       1225 Randall Ave. LLC v. Hiscox Ins. Co. Inc.
United States District Court, EDNY
District Court Without Jurisdiction Over Insurance Dispute Due to a Failure to Establish the Domicile of Individual Members of Plaintiff LLC  

Did I mention district courts are sticklers for jurisdiction under the Constitution? While the SDNY in Catlin above found diversity, the EDNY in this one did not.

On December 5, 2024, 1225 Randall Avenue LLC filed suit in Nassau County Supreme Court, seeking a declaratory judgment that Hiscox Insurance Company Inc. is obligated to indemnify 1225 Randall Avenue in a separate state court action. 1225 Randall Avenue served the Complaint on Hiscox Insurance Company Inc. on January 7, 2025, and Hiscox removed the matter to the EDNY.

Thereafter, the EDNY issued an Order to Show Cause why the matter should not be remanded to Nassau County Supreme Court for lack of subject matter jurisdiction. Specifically, while the amount in controversy exceeded the $75,000 threshold for diversity jurisdiction under 28 U.S.C. §1332 and Hiscox had established that it was a citizen of Illinois, the Notice of Removal

“failed to establish 1225 Randall Avenue's citizenship because: (1) ‘the Complaint does not allege the identity of all members of [1225 Randall Ave] or the citizenships of those members’ and (2) ‘the Notice of Removal's allegations as to [1225 Randall Avenue's] members' citizenship are made “upon information and belief.” ' "

In response, Hiscox provided the EDNY with, among other things, a

“document written in Hebrew, which [Hiscox] represents is a record from the Israeli Corporations Authority that ‘identify[ing]’ the members of Leviyor Investments, LLC ("Leviyor Investments"), which, in turn, is a member of 1225 Randall Avenue (Israeli Corporations Authority Record . . . [and also] identifies 1225 Randall Avenue's members as individuals Tamir Gayr, Erez Dasa, and Hillary Segal and the limited liability company, Leviyor Investments, whose members are Yoav Levinson, Gili Levinson, and Iris Levinson (the "Levinsons"). (Citation omitted). The Response represents that Gayr, Dasa, and Segal are ‘citizens of New York’ and that the Levinsons are citizens of Israel.”

The EDNY also noted that 1225 Randall Avenue filed a Corporate Disclosure Statement representing that:

"[t]he members of 1221 [sic] Randall are: Tamir Gayr, a citizen of the State of New York"; "Hilary Segal, a citizen of the State of New York"; "Erez Dassa, a citizen of the State of New York"; and "Leviyor Investments Ltd., an Israeli  limited liability company whose members are all residents of Israel."

Not impressed, the EDNY found that Hiscox, as the party asserting jurisdiction, failed to carry its burden to establish 1225 Randall Avenue’s citizenship for purposes of diversity jurisdiction. To that end, Hiscox was required to establish that each individual member of 1225 Randall Avenue LLC was diverse from Hiscox and failed to sufficiently do so. While Hiscox established the identities of the 1225 Randall Avenue, it was unable to satisfy the EDNY as to the location of their individual citizenships.

The EDNY initially took issue with Hiscox’s reliance upon an untranslated Hebrew-language document relative to the members of Leviyor Investments. But even accepting Hiscox’s representations regarding the document’s contents, the EDNY also noted that the document merely, in conclusory fashion, states that the Levinsons are citizens of Israel. An email exchange with 1225 Randall Avenue’s counsel that was also submitted in support highlights this point, since that exchange makes clear that the Levinsons merely “reside” in Israel, which is insufficient to establish a member’s domicile for jurisdictional purposes. Specifically, domicile is more than just a residence, but rather “the place where a person has his true fixed home and principal establishment, and to which, whenever he is absent, he has the intention of returning.

Unsatisfied, the EDNY remanded the matter to Nassau County Supreme Court.

Maxwell’s Minute: Hiscox unfortunately “fell victim to one of the classic blunders—the most famous of which is ‘never get involved in a land war in Asia’—but only slightly less well-known is this:” never remove a matter involving an LLC until you have obtained sufficient evidence as to the identity of the individual LLC-members and their domicile (not just residence). “Inconceivable!”

At the end of the day, the case is certainly not over and there are worse fates than remand. After all, “[t]here's a big difference between mostly dead and all dead. Mostly dead is slightly alive.”

#ThePrincessBridePuns

I jest, but it could happen to you very well if you are not careful.

A copy of this decision is available upon request.

 

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

04/29/25       Pilgrim Cathedral of Harlem Inc. v. Harleysville Worcester Ins. Co.
United States District Court, S.D. New York
The Court, Rather Than an Umpire, Is the Correct Adjudicator for Interpreting the Meaning of the Appraisal Award

Plaintiff owned a property insured by Defendant that was damaged by a burst pipe.  The parties disagreed on the value of the loss and submitted the dispute to appraisal.  An Appraisal Award was issued listing $520,644.11 for "Dwelling" and $173,378.62 for "Mitigation/Drying".  Defendant paid $520,644.11 total, while Plaintiff claims it is owed $694,022.73.

Defendant reads the Appraisal Award to award a total of $520,644.11, construing the $173,378.62 for "Mitigation/Drying" as a line item included within the $520,644.11 total. Plaintiff reads the Appraisal Award to award a total of $694,022.73, construing the $173,378.62 for "Mitigation/Drying" to be an additional component of the award on top of the portion of the award that represents the cost to replace the other damage to the dwelling. 

The question concerns who should resolve the instant dispute as to the meaning of the Appraisal Award: an umpire or the Court.   Defendant argues that "[u]nder the plain terms of the Harleysville Policy, this dispute should be submitted to an umpire."  Plaintiff responds that the appraisal has concluded, and the award delivered by the appraisers must now be enforced by the Court. The Court found the Plaintiff to have the better argument.  The court denied Defendant's motion to compel appraisal and stay the litigation.

Pursuant to Section 7601 of the New York Civil Practice Law and Rules, appraisal agreements are to be enforced by the same methods as arbitration agreements. 

The Court held that the dispute concerns interpretation of the appraisal award, not valuation of the loss, so it falls outside the scope of the policy's appraisal clause.  Interpretation of an appraisal award is a legal question for the court, not a factual dispute for appraisers.  The court must interpret the award based on its language and the record before the appraisers, not post-award statements.  After issuing the Appraisal Award, the appraisers are divested of the authority to amend it or to opine upon its interpretation.

Under New York law, an appraisal may only decide a limited set of factual disputes, including the actual cash value, the replacement cost, the extent of the loss or damage and the amount of the loss or damage which shall be determined as specified in the policy. If an appraisal remains within the limits prescribed by statute, and if the panel substantially complies with the terms of the submission, the court may modify or vacate the award only on a showing of fraud, bias, or bad faith.

The interpretation of an appraisal award is a purely legal issue that cannot be determined by an appraisal, which is limited to factual disputes over the amount of loss for which an insurer is liable.  An appraisal is not appropriate to resolve a dispute where the dispute concerns a matter other than the computation of the amount of loss. An appraisal is appropriate not to resolve legal questions, but rather to address factual disputes over the amount of loss for which an insurer is liable. 

There is a well-established rule that arbitrators may not be deposed absent clear evidence of impropriety. While arbitrators may be deposed regarding claims of bias or prejudice, courts have refused to permit parties to depose arbitrators or other judicial or quasi-judicial decision-makers regarding the thought processes underlying their decisions.

Absent an agreement by the parties to the contrary, once arbitrators have finally decided the submitted issues, they are functus officio, meaning that their authority over those questions is ended. Even after rendering an award, an arbitrator retains limited authority to correct a mistake which is apparent on the face of the award. The exception for mistakes apparent on the face of the award is applied to clerical mistakes or obvious errors in arithmetic computation. 

Because the instant case raises a question of law as to the proper reading of the Appraisal Award, the Court is the correct adjudicator.   The further question of how to interpret the Appraisal Award—including whether the award is ambiguous and whether any ambiguities can be resolved through examination of the language of the award and of the record before the appraisers—remains for future proceedings.

               

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

04/29/25       Cravens v. Montano
Arizona Supreme Court
An Employee Operates a Non-Owned Auto “In Connection With Your Business” When Using the Vehicle While Engaged in the Employer’s Business

On the date of loss, Montano, an employee of Casas Custom Floor Care, LLC, was scheduled to arrive at the company’s main yard, receive his assignment for the day, and travel in a work vehicle to the assigned jobsite. Montano was late and borrowed his mother’s truck. After work, while Montano driving to the main yard to correct his time sheet. He ran a red light and collided with Ms. Cravens’s vehicle, killing her.

Ms. Cravens’s husband (“Cravens”) sued Casas and Montano, alleging Montano negligently caused the wrongful death of his wife and that Casas was vicariously liable for Montano’s actions. Cincinnati Indemnity Company insured Casas under an auto policy, which extended coverage to Montano if he, in part, was using a “covered auto” “in connection with” Casa’s business.

Cincinnati defended Casas in the lawsuit but issued Montano a reservation of rights letter disputing its obligation to defend or insure him. Cincinnati argued that it was not required to provide coverage for Montano unless at the time of the accident he was driving in the course and scope of his employment for the business. Cincinnati refused coverage absent a court finding that Montano satisfied this condition. The superior court granted summary judgment in favor of Casas on the respondeat superior claim.

After Cincinnati reserved its rights, Montano and Cravens entered into a Morris Agreement. A Morris Agreement is named after a seminal Arizona case. The insured agrees with the plaintiff for judgment to be entered against it—only to be collected against the insurance policy proceeds—and to assign its rights under the policy. 

Before Montano and Cravens filed this stipulated judgment with the court, Cincinnati intervened in the case, seeking a declaration that it had no duty to indemnify Montano and challenging the stipulated judgment as unreasonable. Cravens argued that Cincinnati breached its contractual obligation to indemnify Montano by denying coverage. Cravens moved for summary judgment on the coverage issue. The superior court agreed with Cravens that Montano had used his mother’s vehicle in connection with the business at the time of the accident. Cincinnati moved for summary judgment on the enforceability of the agreement. The superior court found the Morris Agreement was reasonable and enforceable. The appellate court affirmed the lower court’s rulings on coverage and the Agreement.

On appeal, the Arizona Supreme Court considered the meaning of the phrase “in connection with your business” as it relates to an employee’s use of a “non-owned” “covered auto.” Cincinnati argued that “in connection with your business” meant that an employee must be using a vehicle in the course and scope of employment at the time of the accident. Cravens argued that “in connection with your business” meant an association, link or relationship between the vehicle’s use and the business at the time of the accident even if the relationship with the business falls short of the necessary showing to establish liability under respondeat superior. The court concluded that both interpretations were reasonable based on the policy’s language, but the court rejected both parties’ interpretations.

Since Cincinnati explicitly used “course of employment” language elsewhere in the policy, the court assumed that the insurer intended a meaning other than acting within the course and scope of employment. However, the court did not want to broaden coverage by merely requiring an association, link, or relationship to the business. The court considered case law from other jurisdictions requiring a correlation between an employee’s vehicle use and a business purpose that falls short of scope of employment but exceeds a mere association, link, or relationship. The court held that an employee operates a non-owned auto “in connection with your business” when using the vehicle while engaged in the employer’s business. To qualify, an employee’s use of a vehicle must be directly involved with, or in furtherance of, an employer’s business purpose but does not include a routine commute to or from an employer’s office. The court also held that a contingent Morris agreement is enforceable if it otherwise meets the substantive requirements of such agreements to ensure against fraud, collusion, unfairness, or unreasonableness.

Accordingly, the court vacated the appellate court’s coverage ruling, affirmed the ruling concerning the Morris agreement, reversed the superior court’s judgment, and remanded for further proceedings.

 

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

New Jersey courts were quiet this week—hopefully, that means double cases for us next time around.

 

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

05/01/25       Clear Blue Spec. Ins. Co. v. Landrieu Concrete & Cement Indus., LLC
United States Court of Appeals, Fifth Circuit
Sugar Contamination in Vehicle Constituted “Use” of Automobile and Contamination Was First Instance of Property Damage, Not When Construction Defect Manifested

A R&J employee mistakenly delivered a sand mixed with sugar mixture to a concrete plant owned by Landrieu. Landrieu used the sand-sugar mixture to produce defective concrete. The concrete failed to properly cure and had to be removed as well as replaced. Landrieu filed a claim with R&J’s commercial general liability carrier, Clear Blue. Clear Blue denied coverage applying the Auto Exclusion. Landrieu filed suit challenging the denial, among other claims. For purposes of this review, we look at the court’s approach to the Auto Exclusion.

The pertinent Auto Exclusion contained the typical language seen in general liability polices reads:

"[P]roperty damage" arising out of the ownership, maintenance, use or entrustment to others of any . . . "auto" . . . owned or operated by or rented or loaned to any insured. Use includes operation and "loading or unloading".

Same policy contained the usual definition of “physical damage,” that reads:

1. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or

2. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the "occurrence" that caused it.

The district court reasoned the Auto Exclusion applied for three reasons. First was that the damage occurred in the back of the truck when the sugar contaminated the sand. Second, was the lack of maintenance by R&J due to improper cleaning of the truck bed and the loading and unloading of the sand. Third and finally, R&J’s actions use of the vehicle caused the loss.

Landrieu contested that the property damage occurred the moment the concrete slabs cracked and failed to cure. Not when the sugar contaminated sand. Landrieu looked to Louisiana Law’s manifestation theory doctrine. Meaning that in the context of a construction defect case, the accident occurs when the defect manifests itself.

While Landrieu was correct that the weight of Louisiana authority holds the manifestation theory is the appropriate lens to determine the initial occurrence of property damage. The appellate court noted there is a lack of uniformity and have indeed found the theory inappropriate under certain facts.

The court identified the seminal case on the issue, Korossy v. Sunrise Homes, Inc., qualified its holding by stating ”under the facts of these cases.” It also looked at Orleans Parish School Board v. Scheyd, Inc., which reasoned that although the policy states property damage must occur during the policy period, the policy does not say the damage must become noticeable during the policy period. The court further quoted Scheyd’s reasoning that the manifestation theory is appropriately applied where there is no credible proof of when the damage actually occurs.

With that said, the court looked to Barry Concrete, Inc. v. Martin Marietta Materials, Inc. Which contained highly similar facts wherein sugar also contaminated a concrete mixture caused the slab to crack. That court reasoned that the failure to properly clean out the trucks constituted use and the continuous mixture of the sugar with the concrete aggregate was the continuous, repeated exposure. Thus, the sugar contamination was the “occurrence” of “property damage.” In applying Barry Concrete, the court determined the sugar contamination in the R&J vehicle was when the “property damage” occurred.

The appellate court rejected Landrieu’s argument that no “use” of the vehicle occurred. It did so by reiterating that the contamination occurred in the vehicle. It also dismissed Landrieu’s argument that washing a vehicle did not constitute “maintenance.” The court noted the term maintenance was not limited in the policy. And Bolin v. Safeco Insurance Cos., found periodic washing of a vehicle constituted maintenance.

Landrieu’s final contention is that there was no “property damage” because there was no physical damage to the sand, there was no loss of use. Clear Blue noted that one does not deal in single grains of sand, but rather large quantities. And one would expect if that large quantity of sand was not fit for its intended use, then a loss of use occurred. The court agreed and again applied Barry Concrete to determine the inability to apply to the sand to its intended purpose constituted a “loss of use” and thus, “property damage.”

 

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

05/02/25       Security Natl. Co. v. Lynch Outdoor Servs. LLC
New York State Supreme Court, New York County
Court Held Pothole Repair Did Not Classify as Landscaping Gardening, and Commercial General Liability Policy Did Not Provide Coverage Based on Business Description Limitation Endorsement

Security National Insurance Company (“Security National”) issued a commercial general liability insurance policy to Lynch Outdoor Services LLC (“Lynch”), providing coverage for Lynch’s business, which was described on the Declarations page as “Landscaping Gardening.” The policy contained an endorsement, which identified that coverage was limited to the business description included in the Schedule. The endorsement contained a description of what was included within, “Landscaping Gardening” and what was specifically not included.

In March 2021, Courtney Jackson (the “Claimant”) commenced an action against Lynch for injuries sustained in a trip-and-fall. The Claimant alleged that the accident was caused by Lynch’s failure to maintain and repair the property in a reasonably safe and suitable condition and repair. The Claimant alleges she tripped over a pothole, which resulted in bodily injuries.

Lynch filed a claim with Security National seeking coverage. Security National disclaimed coverage, and issued a courtesy defense, subject to a resolution of the coverage dispute through a declaratory judgment action. Security National brought the instant action to determine whether the policy, providing coverage for Lynch’s Landscaping Gardening, applies to provide coverage for the Claimant’s claims.

The court determined that the clear language of the policy does not provide coverage for the specific maintenance work that is alleged to have caused the Claimant’s claims. The Security National policy contained an endorsement that coverage is limited to landscaping gardening work, and did not include coverage for pothole repair. The court identified that landscape and gardening work cannot be deemed to include pothole repair, nor can maintenance and gardening be deemed to include pothole repair.

As such, the court found that Security National has no duty to defend or indemnify Lynch in the underlying personal injury action.

 

04/21/25       Preferred Hosp. Leasing Muleshoe, Inc. v. Starr Surplus Lines Ins. Co.
New York State Supreme Court, Kings County
Causes of Action Sounding in Texas Substantive Law Dismissed, Based on Forum Selection and Choice of Law Clause Within Property Policy

Preferred Hospital Leasing Muleshoe, Inc. (“PHLM”) filed an action to recover damages from Starr Surplus Lines Insurance Company (“Starr”) under a property insurance policy after five properties located in Texas were damaged as a result of hail, wind, and rainstorm.

Both parties were domiciled and incorporated in the State of Texas. However, the policy contained a choice of law and forum selection clause identifying that any suit, action, or proceeding against Starr, must be brought solely and exclusively in a New York state court or a federal district court sitting within the State of New York. The laws of the State of New York shall solely and exclusively be used and applied in any such suit, action, or proceeding, without regard to choice of law or conflict of law principles.”

PHLM asserted fourteen theories of damages, in addition to a cause of action for breach of contract. Of note, PHLM asserted causes of action rooted in both Texas and New York law. 

Starr moved to dismiss all causes of action other than the breach of contract claim asserted under New York law. PHLM did not oppose the arguments seeking dismissal of NY General Business Law §349, Breach of the Duty of Good Faith and Fair Dealing under New York law, and New York Insurance Law §2601. As such, the causes of action were dismissed by the court, without opposition.

In addressing the motion for summary judgment, to dismiss all causes of action under Texas Law, the court began its analysis under New York common law rules.

Under New York common law, matters of procedure are governed by the law of the forum. Substantive law falls to a choice of law analysis, and thus the courts must apply a contractual choice of law to substantive issues only. As such, New York courts do not engage in any conflicts analysis where the parties include a choice-of-law provision in their contract.

Here, the forum selection and choice of law clause evidenced an unambiguous intent to apply New York substantive law. As such, the court found that there are no triable issues of fact concerning PHLM’s causes of action under substantive law, and they must be dismissed.

Accordingly, the Court dismissed all causes of action, besides that sounding in New York law for breach of contract.

 

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

05/09/25        New York Senate Bill S7576
New York State Senate
Senate Seeks to Set Requirements for the Sale, Lease, and Rental of Powered Bicycles and Mobility Devices

Senate Bill S7576, which was referred to Consumer Protection on April 22, 2025, seeks to set requirements for the sale, lease, and rental of powered bicycles, powered mobility devices, and storage of batteries for such devices.

S7576 would add a new section 391-ee to the general business law that would require that all sales of powered bikes, powered mobility devices, and storage batteries must be certified by an accredited testing laboratory with the safety standards established with the fire department. 391-ee would require a certification logo to be displayed on all bikes, batteries, and mobility devices.

The Bill provides that each violation would result in a civil penalty. The first violation would result in a zero-dollar fine, each violation after, within two years of the first, would result in a civil penalty of not more than $1,000.

 

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

The content of this column also appears in the ‘Liability & Insurance,” a monthly newsletter focusing on Canadian coverage and published by Heather Sanderson.  Contact her for a subscription.

05/01/25       Crandall University v. AIG Insurance Company of Canada
New Brunswick Court of Appeal
Exclusionary Words “Alleging, Arising Out Of, Based Upon or Attributable to, or in Any Way Involving, Directly, or Indirectly, Sexual Misconduct,” Apply to Remove the Obligation to Defend an Otherwise Covered Claim, if, Wholly or in Part, Sexual Misconduct Gave Rise to That Underlying Claim

Moncton, New Brunswick, is a city known for its educational institutions, including Crandall University, which has evolved from its origins as Atlantic Baptist University to offer a range of degree programs. In 2015, Crandall hired Dr. John G. Stackhouse, Jr., a prominent Canadian theologian, as a Professor of Religious Studies and Dean of Faculty Development. At the time, Stackhouse was a well-regarded author and speaker, somewhat of a media maven, known for his expertise in theology, ethics, and the history of Christianity. He previously held a tenured position at Regent College in Vancouver.

In March 2023, an Instagram profile named “dobettercrandall” surfaced, alleging incidents of harassment linked to a specific professor at Crandall University. In response, Crandall hired labour lawyer, Joël Michaud, K.C., to conduct a workplace investigation, which concluded in November 2023. Based on the investigation's conclusions, Crandall decided to terminate Stackhouse who had been on leave since July 2023. Stackhouse sued Crandall, claiming that Crandall terminated his employment without just cause; that the investigation was flawed, and that the university wrongfully damaged his reputation and that he is wrongly accused of any form of sexual harassment. Dr. Stackhouse’s wife later joined her husband’s action, adding privacy-related torts to the claims.

Crandall’s defence stated that they were aware of Stackhouse’s inappropriate language with female students prior to March 2023 and that he had promised to change his behaviour. The investigation revealed that Stackhouse’s behaviour did not improve. A student provided 78 concerning emails from Stackhouse, many with sexual references. Stackhouse admitted the emails were inappropriate. Additionally, the defence claimed Stackhouse began a romantic relationship with a student while married and failed to disclose a previous investigation at Regent College during his hiring. Crandall asserted it had just cause to terminate Stackhouse, and that the termination aligned with Crandall’s Christian values.

Crandall held a “Not-For-Profit Risk Protector” insurance policy issued by AIG. The exclusion, titled “SEXUAL MISCONDUCT AND CHILD ABUSE EXCLUSION (D&O AND EPL COVERAGE SECTIONS),” was invoked by AIG to deny a duty to defend the Stackhouse wrongful dismissal claim. That exclusion read in part: “the Insurer shall not be liable to make any payment for Loss in connection with any Claim(s) (including but not limited to any derivative or representative class actions) made against any Insured(s) alleging, arising out of, based upon or attributable to, or in any way involving, directly or indirectly any Sexual Misconduct…”. "Sexual Misconduct" is defined to mean “… any licentious, immoral or sexual behavior, sexual abuse, sexual assault, or molestation intended to lead to or culminating in any sexual act against individual(s).”

The Trial Decision

Various arguments that the exclusion was ambiguous were advanced, but Crandall’s principal argument at trial was that the exclusion only applies when the institution and its insured agents are accused of sexual misconduct.

The trial judge disagreed and held that the exclusion unambiguously reflected an intention to exclude claims that involve indirect sexual misconduct. She concluded that the Stackhouse claims, including those of Mrs. Stackhouse, advanced such indirect claims and concluded that AIG correctly denied a duty to defend the action.

Crandall appealed to the New Brunswick Court of Appeal.

The Appeal Decision

On appeal, Crandall again argued that the exclusion was ambiguous. It was alleged that the ambiguity arose because the policy covered wrongful termination arising from the undefined term "sexual harassment" but excluded wrongful dismissal arising directly or indirectly from the defined term "sexual misconduct." That definition did not include “sexual harassment.” Crandall argued that the failure to include “sexual harassment” in the definition of “sexual misconduct” rendered the exclusion unclear and ambiguous.

The trial judge rejected this assertion, stating that the plain and ordinary meaning of "sexual harassment" is a form of sexual behavior, which falls under the broad definition of "sexual misconduct" as "immoral and sexual behavior". The judge concluded that the definition of "sexual misconduct" in the exclusion inherently includes "sexual harassment". The Court of Appeal agreed with the trial judge.

Finally, the Court of Appeal had no difficulty holding that the Stackhouses’ claims arise indirectly from the defined term “sexual misconduct.” The appeal decision discusses the level of connection required between a claim and the basis for exclusion in insurance policies. Words denoting a "strong connection" between the claim and the basis for exclusion, are "based upon or arising from". Some exclusion clauses use language that connotes a weaker or less direct connection, such as "arising out of or in connection with". In Crandall's case, the Sexual Misconduct Exclusion uses the phrase "in any way involving, directly or indirectly." This broad language reflected an intention to exclude claims with even a weak connection to sexual misconduct. The Stackhouses’ claim assert that sexual misconduct did not occur, and therefore Crandall did not have cause to dismiss Dr. Stackhouse. As a result, the trial judge’s determination that the Stackhouses’ claims arose “indirectly from the sexual harassment of a student by Dr. Stackhouse” cannot be disputed. Therefore, the Court of Appeal concluded that the trial judge correctly interpreted the claims as involving indirect sexual misconduct within the meaning of the exclusion.

Conclusion

The New Brunswick Court of Appeal dismissed Crandall University's appeal, affirming the application judge's interpretation of the Sexual Misconduct Exclusion meaning that AIG was not obligated to defend Crandall. The appeal was dismissed with costs of $2,500 awarded to AIG.

It is troublesome that at trial and on appeal the Statement of Defence was referred by both Courts in order to provide context to Crandall’s demand for a defence. The duty to defend is to be determined solely on the basis of the allegations against the insured party claiming a right to a covered defence. The additional context or colour offered by the refence to the defence was not required and ought to have been an appealable error.

There is limited precedent in New Brunswick for a court in a duty to defend application to look beyond the allegations against the insured to determine if the policy mandates a defence. In Royal & Sunalliance Insurance Co. of Canada v. Thorne 2003 NBCA 61, the insured punched an opposing player with a closed fist during a rec-league hockey game. That player sued the insured. The issue before the Court of Appeal was whether a CGL insurer, whose policy contained an intentional act exclusion with a self-defence exception, was required to defend. The claim against the insured alleged an intentional act with negligence in the alternative. The allegations of negligence were clearly derivative of the intentional act and subsumed within the allegation of intentional act. The insurer denied a duty to defend. The insured, Thorne, brought a duty to defend application supported by his own affidavit that explained that he acted in self-defence. That Court held that it was proper to admit that affidavit into evidence in the duty to defend application:

• The pleading against Thorne did not contain any explanation as to why hethrew the punch; the Court stated “one would not expect that the element triggering coverage, namely justifiable self-defence, would percolate from the allegations set out in the pleadings issued against the insured. Logically, assertions in support of self-defence will surface only in pleadings formulated by the insured.”

• Normally, the duty to defend cannot be determined on the basis of self-serving pleadings issued by the insured which can slant the allegations so they trigger the duty to defend; however, in the case of justifiable self-defence, if one were to rely solely on the claim against the insured, that insured would be deprived of a defence until self-defence was proven at trial; at that point the insured could apply for reimbursement of the defence costs; the defence agreement under the policy is not a ‘incur the cost and we will pay you later’ contract: “Few insured are capable of bearing, on an ongoing basis, the expense of competent legal representation. In any event, the Policy imposes a "duty to defend", not a conditional post-trial obligation to reimburse defence costs incurred by the insured.”

The insurer in Thorne was obligated to defend.

In a subsequent decision, Michaud v. Sécurité Nationale compagnie d'assurance, 2021 NBCA 39, the same Court evidenced an intention to restrict Thorne to its peculiar facts and the policy wording in issue as it refused to admit extrinsic evidence explaining the insured’s conduct in a duty to defend application. The decision in Crandall, cracks open that door once again, suggesting that ancillary pleadings can add context or colour to the allegations against the insured and are peripherally relevant to a duty to defend application. Doing so allows a duty to defend application to creep towards a trial within a trial – a situation that must be avoided.

At the end of the day, it seems that even if the process was flawed, the decision that AIG did not owe a defence to Crandall was correct, as the policy clearly excludes indirect allegations of the defined term “sexual misconduct” and those indirect allegations were present in the Stakehouses’ action against Crandall. 

It took no small amount of courage on the part of the Crandall Board of Governors to terminate a professor who was once touted as a leading light that elevated Crandall’s academic star. Value-based termination carries risk as it can demonstrate how far an employee strayed from the corporate values while under that company’s supervision. Apparently, Regent College in Vancouver went the non-disclosure route when it terminated Stackhouse to avoid that negative publicity. Crandall’s decision to publicly terminate Stackhouse means that the case is being litigated in the courts of New Brunswick and in the court of public opinion.

 

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