Coverage Pointers - Volume XXVI No. 25

Volume XXVI, No. 25 (No. 698)
Friday, May 23, 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.

HF Coverage Pointers header

Dear Coverage Pointers Subscribers:

A close-up of a flag

AI-generated content may be incorrect.

 

Do you have a situation? We love situations.

This newsletter is a labor of our firm’s love of its subscribers.  Every two weeks, your editors, all of those who submit columns and letters, set aside time to help you keep abreast of the developments in the field on Insurance Law, not only in New York, but in Connecticut, New Jersey and jurisdictions around the United States and Canada. Without their commitment to you, this publication would not be in your mailbox, like clockwork, for the past 26 years.

A special thank you to Evan Gestwick.  Evan is so dedicated to this publication and makes certain that the cats are rounded up each issue, that editing takes place both for this letter and the attached newsletter, and, particularly when I am on the road, as I am today, takes the laboring oar to bring you this publication.  Thank you, Evan, for all you do.

 

Virtual Training Programs to be Announced Shortly

I am really excited about this new development in our office.  Many of you have attended the CLE and CE training we’ve provided over the years.  But more is coming, on a variety of topics about which we have received requests for help.  Our coverage team is working on a schedule of topics, perhaps once a month, which will be offered to our subscribers, friends, and clients.  We’ll be covering property insurance, trucking issues (MSC-90 questions), New York coverage training, risk transfer, and so much more. Our subscribers will be the first to learn about it and be able to reserve space for these virtual “lunch and learns.”  Watch this space.

 

A large white building with a dome

AI-generated content may be incorrect.

I am in the nation’s capital, this week, working with my friends on the PLRB Claims Conference Planning Committee, helping to design next year’s program that will be taking place March 22 – 25, 2026, at the Gaylord National Resort & Convention Center.  We were scheduled to be here five years ago, and, in fact, the Planning Committee made it in on Friday, but then the pandemic led to the last moment cancellation.  For us, it was the beginning of our 18-month confinement, making it home just in  time to lock ourselves in our house.  That was the view from the plane’s window as we were coming in to land a Reagan National.

 

Victoria’s Vision on Bad Faith

We are pleased to introduce Victoria Heist as our newest columnist, covering the bad faith beat. As most of our regular readers know, it is rare that a New York appellate decision considers bad faith issues in New York and even rarer that an appellate court finds an insurer liable for bad faith (how about not since 1998 in New York?). Victoria will corral New York cases and those from around the country and keep you up to date, on a state and national level, on developments on this important topic.

 

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 have respect reached a stalemate on a coverage dispute?  Look, we know each other.  We know that.  We don’t want to litigate every coverage disagreement.  Why?   Because the position we oppose today may be the one we advocate tomorrow.  Face it.  We all understand that.

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

My partners, Mike Perley and Ann Evanko, are also available to help resolve other challenges.

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

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/

 

Need a Mediator or Arbitrator, Give a Call:

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 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.

 

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.

 

New Building for Lloyds – 100 Years Ago:

The Buffalo News
Buffalo, New York
23 May 1925

KING HONORS LLOYDS

LONDON, May 23. – The king and queen, accompanied by Prince Henry, drove in semi-state today to Leavenhall Street where their majesties laid the cornerstone for a new building for Lloyds, the great British shipping, banking, and insurance firm.

 

Peiper on Property (and Potpourri):

We highlight an interesting decision from the First Department this week.  Plaintiff commenced a lawsuit against, in essence, the parent insurance company.  Of course, a lawsuit seeking to confirm coverage via breach of contract must be commenced against the company that actually issued the paper.  Here, that was a subsidiary company.  When counsel realized the mistake, a Supplemental Summons and Amended Complaint was immediately prepared and served.  The problem for counsel was that the service of the Supplemental Summons was now beyond the two-year suit limitations period. 

On motion to compel acceptance of the Supplemental Summons, the Appellate Division noted that because the parent corporation (and, therefore, the subsidiary corporation) was on notice of the accident, there was no prejudice.  The Court then deemed the Supplemental Summons and Amended Complaint timely nunc pro tunc.  While counsel avoided dismissal in this instance, the case does underscore the need to identify the entity that actually issued the policy.  That party, as outlined by the Appellate Division, is the party against whom relief is sought. 

That’s it for the substantive update this week. As we trundle toward what appears to be a wet and unseasonably cool Memorial Day Weekend in our corner of the Country, we will make the best of what the weather gives us.  My annual pressure washing marathon can wait until next week.  Best wishes to all for a safe and relaxing weekend. 

Steve
Steven E. Peiper

[email protected]

 

Home Remedy for Worms? – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
23 May 1925

How to
Keep Well

By. Dr. W. A. Evans

B.M.G. writes: I read an article about pinworm in your column, and I want to tell you a simple remedy that has helped me.

The child should not eat any bread for one month. During this month he should take the following every morning: Garlic cut into small pieces and boiled in a little water for a quarter of an hour and then mix with milk. At 12 o’clock during the night she should take the garlic again (cold or warm). At noon she should take a strong dose of castor oil. Do before eating. Repeat daily for three days. Then wait four days and repeat. Continue this plan for one month exactly so it will never come back. I have had pinworms myself during sixteen years and now I am 22 and do not suffer.

REPLY

In case repeatedly used enemas of quassia tea or salt solution do not cure it is necessary to take other treatment.

The advice to eat sparingly of sweet and starchy foods is regarded as good. The use of worm medicines by mouth in such difficult cases is also approved of.

I do not know how efficacious garlic is as a worm medicine.

 

Lee’s Connecticut Chronicles:

 

Dear Nutmeggers:

It’s been a sad time for my family the past few weeks. My mother was in an accident and, well, she didn’t survive. Luckily, she was her stubborn self, hanging on long enough for her three sons, brother, and husband to assemble by her side. At the end it was peaceful, yet heartbreaking. She was 84 years old. I am hit hardest by the finality of it all—knowing that there are no more conversations, visits, or sharing of her grandchildren’s achievements. The best I can say is that, while she dealt with difficult medical issues, she was in our last conversation the most upbeat she had been in a while. There's definitely some cruel irony there.

But life and insurance coverage go on. This week we watch one Connecticut court grapple with issues of contractual indemnity coverage. The court should have taken Dan Kohane’s risk transfer seminar.

Until next edition, keep on keeping safe.

Lee
Lee S. Siegel

[email protected]

 

Spousal Abuse – 100 Years Ago:

Daily News
New York, New York
23 May 1925

WIFE, A PRISONER
FIVER YEARS, FREE;
HUSBAND ON BAIL

Mrs. Kitty Spatolla, the young Irish wife of Anthony Spatolla, 60, Newark gardener, yesterday enjoyed her first day of freedom since her marriage five years ago, while her jealous husband was held in $500 bail for grand jury. Every day of their married life Spatolla had beat her with a club she charged.

Her plight was discovered by women social workers who found her in a two-room apartment at 158 7th Ave., Newark, the door padlocked, and the windows barred with heavy boards. Mrs. Spatolla said she had never been outside the place since her marriage, that her husband bought her clothing and had given her just five cents in five years.

 

Ruffner’s Road Review:

Dear Readers,

NBA and NHL playoffs are both at the halfway point, and we are onto the conference championships. I don’t have a team still alive in either, but have gravitated towards rooting for the Minnesota Timberwolves, another team that hasn’t had much success in recent years/decades, which is relatable as a Buffalo sports fan.

I have two cases this week from the world of no-fault. In the first, the insurer moved for summary judgment and in enjoin numerous medical billing actions arising out of the subject motor vehicle accident and denial. The court held against the insurer on both counts, as the insurer did not sufficiently establish its fraud defense nor a basis for the equitable relief sought. In the second case, the court held that the underlying arbitrator appropriately applied collateral estoppel and upheld a Master Arbitration award in favor of the medical provider, as the insurer’s IME report was insufficient to disclaim the subject medical bills based on medical necessity.

Kyle
Kyle A. Ruffner

[email protected]

 

Egad. What Will They Think of Next? – 100 Years Ago:

The Chat
Brooklyn, New York
23 May 1925

WOMEN AS JURORS IS PLEA
AT WEST FLATBUSH LEAGUE

SYDNEY M. GTTESMAN MAKES
IMPASSIONED ADDRESS AT
MONTHLY MEETING

SCORE JUDGES ATTIDUDE

Says Fair Sex Would Not Be Moved
By Sentiment – Men Too Often
Shirk Responsibilities

Advocating the advisability of the passage of legislation making possible the serving of women as jurors to obviate the necessity that often arises when litigation must be stopped for the want of the necessary number of talesmen, Sydney M. Gottesman, downtown lawyer and potential County Court candidate from the westerly part of Flatbush League in an address given before them in the Beverly Presbyterian Church, East 8th street and Beverly road, on Tuesday evening of last week.

Gottesman also took occasion to score the judges of both the Supreme and County Courts who make it a practice of punishing those who serve as jurors by publicly denouncing the verdict in their presence and striking their names from the jury lists so as to disqualify them from further jury duty.

 

Ryan’s Federal Reporter:

Nothing from me this time. See you in two.

Ryan
Ryan P. Maxwell

[email protected]

 

Oh No! Not That! – 100 Years Ago:

The Ithaca Journal
Ithaca, New York
23 May 1925

Wrote Love Notes: Locked Up.

Norwich, May 23. – Hobbies are hobbies and penchants; but don’t get caught learning to write love letters.

Wilson A. Eccleston, 55, an inmate of the county almshouse, got caught attempting to ferret out the mysteries pf captivating amorous epistles from a book. He was adjudged insane and has been ordered committed to the Binghamton State Hospital.

Eccleston was examined twice at the Norwich Memorial Hospital, where he underwent two operations. It was revealed that he had formed the habit of sitting on verandas engrossed in edifying books on how to write love letters. It is charged that he was also addicted to prowling about homes.

 

Storm’s SIU:

Hi Team:

One case to report this edition:

  • Insurer Granted Judgment on Breach of Contract Claim Against Corporate Insured for Unpaid Premium but Precluded from Piercing the Corporate Veil to Recover Against Corporate Officers as it Failed to Show that They Used Their Domination Over the Corporation to Commit Fraud Against the Insurer and that They Intended to Injure It. 

Having played lacrosse, I’m Cheering on the Bandits against Saskatchewan in game three of the NLL finals Saturday!  If they win, they will be the second team in league history to win three consecutive championships as well as the first NLL team to win seven championships overall.  Let’s go Bandits!

B-O-X, B-O-X, to the box, to the box, to the box, box, box, WOOOO!

See you next edition,

Scott
Scott D. Storm

[email protected]

 

Maids are Too Important – 100 Years Ago:

Daily News
New York, New York
23 May 1925

No Divorce for Maids on
Employers’ Testimony.

Cincinnati, O., May 22. – Notice was served today that no more divorces would be granted to servants when their employer’s testimony was the chief factor in the case.

Charles W. Hoffman, nationally known divorce judge, refused such a decree today.

“Without reflecting upon the employers’ honesty,” Hoffman said, “a women will do almost anything to keep her servants. Maids are too hard to get—and keep.”

 

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

This week’s case from the West Virginia Supreme Court considers whether an insurer has to offer underinsured motorist coverage for non-owned vehicles under a commercial automobile policy providing liability coverage for particular owned vehicles and a class of non-owned vehicles.

In other news, I became an auntie this week with the arrival of my niece. Very happy for her parents as they begin this exciting new stage of their lives.

Catch you later,

Kate
Katherine A. Fleming

[email protected]

 

Don’t Spend it All in the Same Pace – 100 Years Ago:

The Buffalo News
Buffalo, New York
23 May 1923

ACTION IS DEFERRED ON
PAY RAISE FOR JURORS

Action by the finance committee of the board of supervisors on the proposal of Supervisor Clergy to increase the pay of jurors from $3 to $5 a day and pay jurors from the towns actual mileage instead of the eight cent a mile allowance, was deferred Friday until budget time in December. It is estimated the cost of putting the resolution into effect will be $100,000/ There is no money available at this time.

 

Gestwick’s Garden State Gazette:

Dear Readers:

I have been down for the count with a nasty stomach bug, but that’s not going to stop me from writing to you to share the latest on New Jersey coverage action. I hope I am better by Saturday, so I can see my Buffalo Bandits take on the Saskatchewan Rush in Game 3 of the NLL finals. If the Bandits win, it will be their third consecutive league championship, and their seventh overall.

This week’s case explores the less-talked-about second prong of New Jersey’s serious injury threshold. To me, it seems that every time I read or hear about a serious injury threshold case, the question is always whether the claimant met one of the categories of a serious injury. Not this case. The question before the Court was whether plaintiff was able to show that the aggravation of her pre-existing medical conditions was proximately caused by the subject accident. Read on for the full discussion.

See you in two weeks (hopefully with another Bandits championship in hand!)

Evan
Evan D. Gestwick

[email protected]

 

200 Years Ago, Today – 100 Years Ago:

The Philadelphia Inquirer
Philadelphia, Pennsylvania
23 May 1925

Insurance against Damage from
FIRE

The trustees of “The Fire Association of Philadelphia,” incorporated by an Act of the Legislature of Pennsylvania, for the purpose of Insuring houses and other buildings, Insure on the most reasonable terms, either perpetually or for a limited period.

On this Association, which is composed of twenty-six Fire Companies, possessing Apparatus, Engines and Hose of very great value, for the extinguishment of fires, the principal security of the city from conflagration depends.

The funds obtained by insurance are designed, first, for the payment of  losses to the insured; and secondly, a part of the interest arising from their investment, may be applied for keeping the Fire Apparatus in good order.

For these purposes, the public confidence has hitherto been extended to the Association to an unprecedented extent, and the trustees respectfully solicit a continuation of the public patronage for public benefit.

Applications for Insurance may be made to either of the Trustees, or at the Office, No. 241, Arch Street.

 

O’Shea Rides the Circuits:

Readers,

Some of you may have heard the collective groan of a city’s championship hopes to flee before its eyes. Indeed, I speak of Toronto and its beloved Maple Leafs. I may be a pariah amongst my fellow Western New Yorkers as an Ottawa Senators fan, both Sabres fans and I both delight in the Maple Leafs misfortune. There is nothing more cherished than a Maple Leafs defeat in the playoffs. Particularly when Leafs fans force one of their most skilled players off the team this coming summer.

This week I have a decision from the Fifth Circuit involving a proof of loss issue. The decision looks to what establishes a “sworn” statement.

Until Next Time,

Ryan
Ryan P. O’Shea

[email protected]

 

Women are Merely Cats – 100 Years Ago:

The Birmingham Post
Birmingham, West Midlands, England
23 May 1925

A NOVELIST’S UTTERANCE ON
WOMEN.

“JUST CATS – BUT CHARMING AND ADORABLE.”

“I sound a great clarion call to every man to put the women back in their place, said Mr. Gilbert Frankau, the novelist, who debated on Thursday that “Woman is a less moral animal than man,” before members of the To-morrow Club at the Central Hall, Westminster.

“Women,” he declared, “are just cats – with no morality.”

“I am going to tell you why I hate you all,” he told his female audience. “Women have no civic conscience, brain power, poise, or anything else. It is a very profound truth that most women have no character at all. The just token of morality is to love your work, and you all hate washing up, sweeping, dusting, and household accounts. No woman is happy unless she is spending money. Most of you are rotten mothers. But you are charming, beautiful, and I adore you. Your only reason for existence is that you are mothers and mates. You bring us into the world and keep us moderately happy while we are there.”

The character of Agnes in David Copperfield was what he called a good woman. She was the sort of woman a man could look up to. Yet if ever there was a cat, she was one as regarded Dora, the modern woman rushed about a tennis court putting man to shame with her furious drives. Where was the glory of her hair? In the wastepaper basket.

“Woman has sharpened her weapons for the sex war,” he said, “and is trying to drive out the lords of creation from their original position as her protectors. Woman is a dangerous animal. She was kept under bars b our ancestors, then under lock and key, and then under petticoats. She has broken the padlocks and defied petticoats, and now she is claiming equality with the finest creature ever made.”

Mrs. Cecil Chesterton, in opposition, said that the trouble with her sex was that woman’s morel sense was too largely developed. Many women made a fetish of washing-up and, although they loved to buy a new hat, they would rather pay the rent.

 

LaBarbera’s Lower Court Library:

Dear Readers:

Last year, the deer ate all of my outdoor plants within twenty-four hours of planting. Over the past few months, I spent hours researching. Which plants were deer resistant? Which scents deterred deer from grazing? This year, I planned to scatter deer resistant plants, along with strongly scented lavender to keep the deer away. Unfortunately, the deer were not deterred. Sadly, they have already eaten every single flowering plant which I added to the yard (yes – even the lavender).

This week I have a case hot off the press. Evan Gestwick of our office represented ERIE Insurance Company in a petition to stay SUM arbitration brought in Suffolk County. The court ultimately found that SUM coverage had not been triggered, based on the liability limits of the tortfeasor being higher than the insured’s own bodily injury limit. Accordingly, the Court granted ERIE a permanent stay of the SUM proceedings. Congratulations to Evan on the win!

Until next time... 

Isabelle
Isabelle H. LaBarbera

[email protected]

 

Scopes Trial to be Broadcast – 100 Years Ago:

Buffalo Courier
Buffalo, New York
23 May 1925

EVOLUTION TRIAL
TO BE BROADCAST

Dayton, Tenn., May 22. – Every word uttered in the courtroom in the trial of J.T. Scopes, arrested on the charge of teaching evolution in a public school in violation of the state’s newly enacted law, will be broadcast through loudspeakers so that all who wish may hear. The trial will begin about the middle of June.

William Jennings Bryan, who will take the part in the prosecution, wired the state’s attorneys today that he would come here to confer with them regarding the case when he completes his present speaking engagements.

 

Lexi’s Legislative Lowdown:

Dear Readers,

I am looking forward to spending the long Memorial Day weekend in Martha’s Vineyard before heading to Monticello to attend NYIA’s 2025 Annual Conference.

This week we discuss S5342 which would permit the use of telematic devices for auto insurers in New York.

Thanks for reading,

Lexi
Lexi R. Horton

[email protected]

 

Victoria’s Visions on Bad Faith:

Dear Readers,

Very excited to officially make my Coverage Pointers debut after being a long-time reader.

This Memorial Day weekend/week is a busy one. Bridal shower Saturday followed by an evening flight to JFK, Beyoncé concert Sunday, then getting back on a plane to go to Norfolk, Virginia, to visit my sister and attend her medical laboratory science white coat ceremony.

Have a great Memorial Day weekend,

Victoria
Victoria S. Heist

[email protected]

 

Such a Deal! – 100 Years Ago:

Buffalo Courier
Buffalo, New York
23 May 1925

A black and white advertisement for a cruise ship

AI-generated content may be incorrect.

North of the Border:

The world beyond our borders churns with relentless upheaval—Gaza remains trapped in devastating conflict while diplomatic efforts strain toward an elusive ceasefire in Ukraine, trade wars flare with the specter of renewed tariffs, and political rhetoric swirls around provocative notions of territorial expansion.

Yet within the intimate radius of daily life, a different rhythm persists. A grandson approaches his third birthday with all the wonder that milestone brings, while his cousin prepares to celebrate two years of discovering the world around her. The earth itself offers its own gentle counterpoint to global chaos as winter's grip finally loosens, and the last threat of frost retreats enough to allow hands to return to the ancient, soul restoring act of planting. Hope and healing often begin in the most personal spaces, where new life takes root and children mark time not in news cycles but in birthday cake and the love of family.

My article this week describes a unique builders’ risk policy that has a unique result.

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]

  • Indemnity Ordered Under Indemnity Agreement but Not for Indemnitee’s Own Negligence, under GOL 5-322.1

  • Until Indemnity Obligations are Resolved, too Early to Dismiss Claims Based on Anti-Subrogation Rules
  • Billion Dollar Pro Se Claim Against Liability Insurer Dismissed where Claimant has No Privity

 

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

  • Amended Complaint to Name the Correct Underwriting Company Deemed Timely Filed and Served Nunc Pro Tunc

  • Failure to Update Business Address with Secretary of State is Insufficient to Excuse Default

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

  • Court Considers Application of Various Exclusions to Both CGL Coverage and Contractual Liability Coverage

 

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner

[email protected]

  • Insurer Failed to Establish Fact or Founded Belief of Non-Accidental Loss as a Matter of Law

  • Court Finds Collateral Estoppel was Properly Applied to Arbitration, Denies Insurer’s Motion to Vacate Award

 

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell

[email protected]

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

 

STORM’S SIU
Scott D. Storm

[email protected]

  • Insurer Granted Judgment on Breach of Contract Claim Against Corporate Insured for Unpaid Premium but Precluded from Piercing the Corporate Veil to Recover Against Corporate Officers as it Failed to Show that They Used Their Domination Over the Corporation to Commit Fraud Against the Insurer and that They Intended to Injure It

 

FLEMING’S FINEST
Katherine A. Fleming

[email protected]

  • Statute Does Not Require Commercial Automobile Insurance Policy Insuring Certain Owned Vehicles and a Class of Non-Owned Vehicles for Liability Protection to Offer the Named Insured Underinsured Motorist Coverage for the Class of Non-Owned Vehicles

 

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick

[email protected]

  • Verbal Threshold Not Satisfied Absent a Showing of Proximate Cause

 

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea

[email protected]

  • Unnotarized Sworn Statement in Proof of Loss that Also Fails to Comply With 28 U.S.C. 1746’s Perjury Requirements is Invalid Under Standard Flood Policy

 

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera

[email protected]

  • SUM Arbitration Permanently Stayed as Tortfeasor’s Liability Coverage was Greater than Respondent’s Bodily Injury Limits

 

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton

[email protected]

  • S5342 Seeks to Permit the Use of Telematics or Usage-Based Insurance for Private Passenger or Commercial Automobile Insurance Policies in Certain Circumstances

 

VICTORIA’S VISION ON BAD FAITH
Victoria S. Heist

[email protected]

  • Supreme Court (Lower Cout) Finds Insurer Failed to Act in Good Faith and Fair Dealing After Employing “Wait-and-See" Strategy in Claims Handling

 

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada

[email protected]

  • Depending Upon the Wording, a “Mere” Supplier May Be Entitled to Coverage Under a Builders’ Risk/Course of Construction Policy

 

Enjoy the long weekend.

Remember why we celebrate.

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

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

Victoria’s Vision on Bad Faith

North of the Border

 

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

 

05/22/25       Skydaniuk v. ESRT Empire State Building, LLC
Appellate Division, First Department
Indemnity Ordered Under Indemnity Agreement but Not for Indemnitee’s Own Negligence, Under GOL 5-322.1

The First Department found that a fall down a stationary escalator was a Labor Law 240(1) claim and summary judgment should have been granted to the Supreme Court properly denied Denko’s motion for summary judgment dismissing The owner and GC brought a third party action for contractual indemnity and failure to procure against the plaintiff’s employer, Denko. The subcontract between Denko and the general contractor required Denko “[t]o the fullest extent permitted by law . . . to indemnify” defendants for all claims “arising out of or in connection with or as a result of or as a consequence of the performance of the work to be undertaken by” Denko.

Plaintiff was performing work on its behalf at the time he was injured. Thus, Denko failed to establish that the indemnification provision was not triggered. Denko failed to establish that it met its insurance procurement obligations of obtaining coverage for ESRT and DGC, as the insurance policy it offered to address that issue was improperly submitted in reply.

However, Denko is not required to indemnify the GC’s own negligence, which has yet to be determined (see General Obligations Law § 5-322.1].

 

05/22/25       Sarante v. Courtlandt Development, LLC
Appellate Division, First Department
Until Indemnity Obligations Are Resolved, too Early to Dismiss Claims Based on Anti-Subrogation Rules

Courtlandt, the premises owner, contracted with defendant AB Capstone to be its general contractor for the construction project. AB Capstone subcontracted with Gold Lion to reinforce the building’s structure with steel beams. Plaintiff alleges that he was injured while hoisting a heavy steel beam from the basement to the first floor using a chain block pulley system owned by his employer, Gold Lion.

The elevated metal poles of the hoist system collapsed injuring plaintiff.  The court properly granted plaintiff partial summary judgment on his Labor Law § 240(1) claim.

As to Courtlandt’s third-party claims for contractual indemnification against Gold Lion, the court properly denied defendants summary judgment on their contractual indemnification claims against Gold Lion and properly denied Gold Lion’s motion for summary judgment dismissing those claims.

Courtlandt  did not  demonstrate that Gold Lion’s insurance carrier insures them. In its subcontract, Gold Lion agreed to defend and indemnify defendants for claims or losses arising directly or indirectly from Gold Lion’s negligence, recklessness, and willful misconduct in the performance of its work. According to the subcontract and the coverage letter from Gold Lion’s insurance carrier, defendants are not additional insureds at the present time.

In the letter, the carrier agreed to defend defendants based on the “potential for coverage” and further reserved its right to deny coverage for indemnification should there be a determination that Gold Lion is not liable for the loss. “As a rule, an insurer that has paid a claim on behalf of any insured who is only vicariously liable for the loss is entitled to recover the amount paid by way of indemnity from the wrongdoer.  The right to indemnity “arises by operation of law when the insurer makes payment to the insured” (id. at 294). Therefore, defendants’ right to indemnification has not been vested.

Furthermore, given that Gold Lion’s sole argument is based on the mere future possibility of the anti-subrogation rule’s application, the court also properly denied summary judgment dismissal of the claim based on the carrier’s uncertain duty to defend or indemnify defendants.

The court properly denied Gold Lion’s motion for summary judgment dismissing defendants’ third-party claims for failure to procure excess insurance to satisfy the coverage amount required by the subcontract. Gold Lion failed to refute the affidavit of its owner that the company was not covered by the necessary excess insurance on the date of plaintiff’s accident.

 

05/19/25       Cincinnati Ins. Co. v. Kan. State Univ. Found.
United States District Court for the District of Kentucky
Billion Dollar Pro Se Claim Against Liability Insurer Dismissed Where Claimant Has No Privity

OK, I had little else on which to report, so I searched low and high for a decision.
The Cincinnati Insurance Company, Inc. seeks a declaratory judgment that it is not obligated to defend or indemnify Kansas State University Foundation (“KSUF”) in a lawsuit filed by Forrest L. Geist. In the underlying lawsuit, Mr. Geist alleged that KSUF and others misappropriated trade secrets because Kansas State University’s 105 initiative had copied his business plan for a statewide network of 105 ag-tech campuses.
Earlier, the District Judge dismissed Mr. Geist’s claims against KSUF which was affirmed on appeal.

Plaintiff and KSUF stipulated to dismiss without prejudice all claims between them under Rule 41(a)(1). Mr. Geist did not sign the joint stipulation of dismissal without prejudice, so the Court directed the Clerk to reopen the case as to plaintiff’s claims against Mr. Geist. 

Cincinnati asked the Court to dismiss the complaint against Mr. Geist under Rule 41(a)(2), noting that it included Mr. Geist as a defendant in this case because he could have an interest in the outcome of the declaratory judgment action. The Court has held that plaintiff met its duty to defend KSUF in the underlying lawsuit.  Because KSUF prevailed in the underlying action, Mr. Geist cannot establish that he has any interest in this declaratory action between Cincinnati Insurance and KSUF.

Mr. Geist asserted that Cincinnati Insurance’s policy did not prohibit his counterclaim for some one billion dollars, which remains until he settles or the Court resolves the claim. Contrary to Mr. Geist’s assertion, he has not asserted a counterclaim for money damages. In any event, Mr. Geist does not explain how he can assert a contractual claim against Cincinnati Insurance under a policy which it issued to KSUF. As an injured party and absent a judgment against KSUF, Mr. Giest cannot assert a direct claim against Cincinnati Insurance. 

 

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

Property

05/14/25          Sealey v. National Gen. Ins. Co.
Appellate Division, Second Department
Amended Complaint to Name the Correct Underwriting Company Deemed Timely Filed and Served Nunc Pro Tunc

Plaintiff previously secured a homeowner’s policy, CastlePoint.  In 2015, plaintiff’s coverage was changed from Castlepoint to MIC General Insurance Company (“MIC”).  This was a decision made not by plaintiff, but by Castlepoint and MIC’s parent corporation, National General.  In July of 2017, plaintiff received further communication from National General which stated, “welcome to National General.”  That letter also accompanied a policy of insurance that was issued on MIC General paper.  On March 15, 2018, plaintiff sustained a water loss to her premises, and MIC denied coverage.  Later, National General issued a second letter further denying the claim on behalf of MIC. 

Plaintiff commenced suit on March 11, 2020, against National General only.  The matter was duly served on National General in July of 2020.  Thereafter, in November of 2020, plaintiff filed a Supplemental Summons and Amended Complaint seeking to pursue coverage not from National General, but rather from MIC who had issued the actual policy under which coverage was sought.  MIC received the Complaint and immediately moved to dismiss pursuant to the two-year suit limitation clause.  Plaintiff, in turn, moved to have the Amended Complaint deemed timely served or, in the alternative, deemed the complaint served nunc pro tunc.

In review, the Court noted that a motion to cure a misnomer should be granted where (1) there is evidence that the correct defendant was aware of the suit and (2) there is no prejudice to the correct defendant if the lawsuit proceeds.  In essence, the Court ruled that there was no prejudice to MIC as it was aware the suit was filed referencing the MIC policy number and the date of loss.    

 

Potpourri

05/15/25          State Farm Mut. Automobile Ins. Co. v. Torres-Jimenez, M.D.
Appellate Division, First Department
Failure to Update Business Address With Secretary of State Is Insufficient to Excuse Default

Plaintiff moved to vacate a default judgment obtained by State Farm.  Plaintiff’s motion failed where, as here, he could not establish an actual “lack of notice.” 

Defendant argued that he had not received notice because he did not regularly check mail at the location given to the New York Secretary of State.  However, he was unable to establish that the address did not belong to him or that he could not receive mail at that location.  Further, he did not establish that the address on file with the Secretary of State was incorrect or no longer valid.  Finally, he provided no indication of what his procedures were for handling mail sent to the address in question to explain his delay in appearing. 

On this Record, the Court found that defendant could not excuse his failure to appear, and the motion to vacate was denied. 

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

05/07/25       Utica First Ins. Co. v. E&J Pro. Painting, LLC
Superior Court of Connecticut, Hartford
Court Considers Application of Various Exclusions to Both CGL Coverage and Contractual Liability Coverage

In a dispute between Utica First and its putative additional insured, Stellar Painting, known by its trade name CertaPro, the Court examined various coverage exclusions implicated by an accident to an employee.

CertaPro solicited painting jobs and subcontracted part of the work to E&J. The subcontract required E&J hold it harmless for all claims. “In the event a claim is made against [CertaPro] by an employee of [E&J], [E&J] hereby waives its immunity, if any, as a complying employer under applicable workers’ compensation law, to the extent that such immunity would otherwise prohibit [E&J’s] indemnification of [Stellar] for any claim made by [E&J’s] employees against [CertaPro].” The subcontract also required E&J to name CertaPro as an additional insured.

An E&J employee claimed that he was injured on a job and sued the homeowner. The homeowner sued CertaPro for common law indemnification and the employee amended the complaint to include CertaPro as a defendant. CertaPro then sued E&J for contractual indemnification and failure to procure.

The actions were tendered to Utica First, which timely denied coverage. Utica First then brought this declaratory judgment action seeking to enforce the Cross Liability Exclusion, the Employee Bodily Injury Exclusions, the Workers’ Compensation Exclusion, and the Contractual Liability Exclusion. Let’s see how it made out.

Cross Liability Exclusion

The provision reads: “‘We’ do not pay for ‘bodily injury’ . . . to an ‘insured.’” The dispute was whether the exclusion bars contractual liability as well as bodily injury. Utica First contended that the plaintiff was an insured and the exclusion eliminates all coverage related to his claim for bodily injuries. CertaPro contended that the exclusion clearly only applies to bodily injury and does not apply to its rights under the contractual liability coverage. It posited that the underlying claims against it were not for bodily injury but rather for indemnification, which are economic losses.

The court found that the genesis of the contractual claims is the bodily injury claim to an insured, i.e., the injured employee. “Based on the caselaw discussed above and the language of that amended third-party complaint against E&J [buy CertaPro], the cross liability exclusion bars the bodily injury coverage provided by the policy.” The court granted Utica First summary judgment as to both E&J and CertaPro under the exclusion.

The cross liability exclusion bars coverage for CertaPro under the commercial liability coverage for bodily injury. It does not apply, however, the court concluded to the contractual liability coverage. 

Employee Bodily Injury Exclusion

The Utica First policy contained a typical employee injury exclusion, regardless of the capacity the insured is sued. The exclusion was not found to be applicable to CertaPro as an additional insured, because it was not the employer. The court relied on the severability clause to defeat the carrier’s argument that the exclusion applies where the ‘insured’ is liable either as an employer or in any other capacity. The exclusion also failed as to E&J because of the insured contract exception.

The Workers’ Compensation Exclusion

Although the exclusion applies to bar any bodily injury coverage for E&J, the exclusion does not apply to CertaPro, the court wrote. There were no allegations that CertaPro had a workers’ compensation policy that paid benefits to the employee for his bodily injuries. “Applying the separate interests clause to this exclusion, as this court must do because it uses the language “the insured,” the court finds that it does not bar coverage for  [CertaPro] for these claims.”

Contractual Liability Exclusion

This one the court made quick work of, finding that it did not apply to claims of negligence, in addition to the insured contract exception.

Insured Contract Liability Coverage

In addition to the commercial liability coverage for bodily injury, Utica First’s policy provided a supplemental coverage called contractual liability coverage. As relevant, that coverage provision states:

1. ‘We’ cover ‘bodily injury’ . . . liability which is assumed under the following contracts or agreements:

. . .

f. any part of any other contract of agreement relating to the conduct of ‘your’ business ... under   which ‘you’ assume tort liability to pay ‘damages’ because of ‘bodily injury’ .... Tort liability means a liability that would be imposed by law in the absence of any contract or agreement.

The court held that there was no coverage to CertaPro for the homeowners’ claim. “The evidence also demonstrates that there was no contractual provision requiring [CertaPro] to assume tort liability behalf of the Ganeshes. Therefore, the contractual liability coverage does not apply to the[ir] against [CertaPro].” Further, the court noted that you and your only mean the named insured, not the additional insured.

However, the court held that there is the potential for a defense for E&J for CertaPro’s claims under the insured contract provision.

A copy of this opinion is available upon request.

 

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner

[email protected]

05/12/25             Lancer Ins. Co. v. Thompson
Supreme Court, Nassau County
Insurer Failed to Establish Fact or Founded Belief of Non-Accidental Loss as a Matter of Law

The Plaintiff insurer moved for Motion for Summary Judgment against numerous Healthcare Provider Defendants, seeking a declaration that (1) the subject incident was not a covered event; (2) the Individual Defendants made material misrepresentation of fact in the presentation of the claims; and (3) multiple claimants violated the applicable policy of insurance and the No-Fault Regulation by failing to submit to an Examination Under Oath.

The insurer contended that the Defendants engaged in a staged motor vehicle accident. The Plaintiff conducted examinations under oath (“EUO”) for the defendants involved in the subject motor vehicle incident and argued the EUO testimony raised significant questionable conduct associated with no fault motor vehicle fraud. The insurer took into consideration EUO testimony which established that that the occupants of the subject vehicle were unrelated and apparently did not know one another prior to the accident but sought medical treatment at the same clinic and retained the same personal injury attorney. Further, the Plaintiff also sought summary judgment on claims made by other Defendants involved in the incident based upon their alleged failure to appear for EUOs.

The court found the EUO testimonies did not conclusively establish that the encounter between the two motor vehicles was intentional or non-accidental, and while raising “red flags”, the EUO testimony did not rise to the level of establishing a non-accidental loss as a matter of law. The accident was reported to the police and was documented in a police report, and there was no independent corroborative evidence presented to the Court, such as through eyewitnesses or others with actual knowledge of the accident, which tends to prove that the motor vehicle encounter herein was an intentional loss.

With respect to the defendants who failed to appear for EUOs, the court stated the No-Fault Regulation provides there shall be no liability on the part of the no-fault insurer if there has not been full compliance with the conditions precedent to coverage. Thus, defendants’ failure to attend the EUOs is a violation of a condition precedent to coverage that may vitiate the policy. (Hertz Corp. v Active Care Med. Supply Corp., 124 AD3d 411 , 411 [1st Dept 20 I 5]). However, an insurance company employee without personal knowledge that a claim form had been mailed to a provider and who makes conclusory representations as to the company’s office practices cannot establish as a matter of law that the insurer followed office practices geared to ensure the likelihood that denial of claim forms were always properly addressed and mailed. Accordingly, the court held the insurer failed to establish that its denial of claims for no-fault insurance medical payments was in fact timely mailed to the medical providers in conformity with no fault regulation.

Therefore, the court held the insurer did not establish a basis for equitable relief in the form of enjoining and staying numerous medical billing actions in multiple different Civil Courts within the five boroughs. The court explained that each individual dispute is subject to establishing compliance with the no fault regulations regarding denial and the processing of claims, including but not limited to the proof of proper and timely mailing of the NF-10 denial of claim forms. Additionally, while the EUO testimonies raised “red flags” regarding possible motor vehicle insurance fraud, the insurer did not sufficiently establish the claimants’ participation in staging a motor vehicle accident. As such, the insurer’s summary judgment motion, as well as their claim for injunctive relief in staying the medical providers’ claim, were denied.

 

05/02/25       Am. Trans. Ins. Co. v. Corona Chiropractic, PC
Supreme Court, New York County
Court Finds Collateral Estoppel Was Properly Applied to Arbitration, Denies Insurer’s Motion to Vacate Award

The insurer issued an automobile policy with a no-fault endorsement to its insured Sam Jalilov, which was in effect when non-party Maria Rodriguez was involved in a motor vehicle accident. After the accident, Rodriguez sought treatment from the respondent medical provider, which sought reimbursement for services rendered. The claim was denied by the insurer based on an independent medical examination, and the parties proceeded to arbitration. The arbitration was decided by in favor of the provider and the award was upheld by a Master Arbitrator.

The arbitrator based the award on the doctrine of collateral estoppel, finding that the medical necessity of the treatment had already been determined in another arbitration between the insurer and provider, where it was found that the IME defense was insufficient based on contemporaneous medical records that showed Rodriguez needed further medical treatment. Therefore, payment was owed on the bills denied solely based on the IME. In this matter, the insurer argued that collateral estoppel was not applied correctly and asked this Court to vacate the arbitration.

In the context of no-fault arbitrations, an arbitrator’s decision will not be vacated where it is rationally. In this case, the court found that the master arbitrator’s affirmance of the lower arbitrator’s award was not irrational, nor did it ignore binding law. Further, the court found that collateral estoppel principles apply to awards in arbitration just as they do to adjudications in judicial proceedings, and that in this case the principles of collateral estoppel were properly applied.

Collateral estoppel applies when (1) the issues in both proceedings are identical, (2) the issue in the prior proceeding was actually litigated and decided, (3) there was a full and fair opportunity to litigate in the prior proceeding, and (4) the issue previously litigated was necessary to support a valid and final judgment on the merits. The litigant seeking the benefit of collateral estoppel must show that the decisive issue was necessarily decided in the prior action against a party, or one in privity with a party, while the party to be precluded bears the burden of demonstrating the absence of a full and fair opportunity to contest the prior determination.

Here, there was no dispute that the dispositive issue in both proceedings was identical, whether the insurer’s IME report provided sufficient basis to disclaim the subject medical bills related to the claimant’s chiropractic treatment. Further, the court confirmed that the issue in the prior arbitration was litigated and decided and there was no dispute that the parties had a full and fair opportunity to litigate the issues in arbitration, as the validity of the IME defense was central to the arbitration decision. The insurer relied on the same IME report to disclaim coverage for medical bills from Respondent in both arbitrations.

Accordingly, due to the identical issues, and the identical parties, the court found no basis to vacate the Master Arbitration award. Accordingly, the insurer’s petition to vacate the award, rendered in favor of Corona Chiropractic, PC in the amount of $3,576.74 was denied.

 

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

Nothing from me this time. See you next time!

 

STORM’S SIU
Scott D. Storm

[email protected]

05/16/25       Arch Specialty Ins. Co. v. Payne
United States Court of Appeals, Second Circuit
Insurer Granted Judgment on Breach of Contract Claim Against Corporate Insured for Unpaid Premium but Precluded From Piercing the Corporate Veil to Recover Against Corporate Officers as It Failed to Show That They Used Their Domination Over the Corporation to Commit Fraud Against the Insurer and That They Intended to Injure It

Plaintiff-Appellant Arch Specialty Insurance Company appeals from a judgment entered by the USDC, EDNY, which the 2nd Circuit affirms.  Arch alleged that Hewannora Construction, Inc. failed to pay $1,247,950.03 in premium, taxes, and fees.  Arch sought to pierce Hewannora’s corporate veil and hold Payne, Williams, and Campbell liable. The district court granted a default judgment on Arch’s breach of contract claim against Hewannora and dismissed Arch’s veil-piercing claims against Payne, Williams, and Campbell because Arch had “failed to set forth facts supporting piercing of the corporate veil in connection with its claim for breach of contract”.

On appeal, Arch argues that the district court “erred in concluding that the corporate veil should not be pierced as to Payne and Campbell.” 

“Under New York law, holding a corporate officer or owner personally liable for a wrong the corporation committed requires piercing the corporate veil.”  “The concept of piercing the corporate veil is a limitation on the accepted principles that a corporation exists independently of its owners, as a separate legal entity, that the owners are normally not liable for the debts of the corporation, and that it is perfectly legal to incorporate for the express purpose of limiting the liability of the corporate owners.” 

“Generally, a plaintiff seeking to pierce the corporate veil must show that: (1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) ... such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff’s injury.” 

“While complete domination of the corporation is the key to piercing the corporate veil, especially when the owners use the corporation as a mere device to further their personal rather than the corporate business, such domination, standing alone, is not enough; some showing of a wrongful or unjust act toward plaintiff is required.” 

Arch alleged that Campbell, Payne, and Williams “exercised complete domination over Hewannora” and “used Hewannora’s funds for their personal use.”  The district court was “concerned” that Arch had failed to allege a basis for veil piercing because “no allegations of fraud have been made.”  In response Arch submitted a declaration that offered no facts concerning Campbell and Williams. The district court acted within its discretion by construing Arch’s failure to show cause as to Campbell as a “concession that no claim exists” against him. 

Nor did the district court err in declining to hold Payne liable. Arch argues that “significant discrepancies and inaccuracies” on Hewannora’s applications for coverage “combined with Payne’s repeated misuse of the Hewannora Business Accounts for personal purposes” warranted piercing Hewannora’s corporate veil. But Arch failed to show that Payne “used the corporation in a manner intended to injure Plaintiff.” 

Arch speculates that Payne intentionally misrepresented information in order “to ensure a significantly lower premium obligation on his part,” but the district court found that there was “no evidence” to support this allegation.  Rather, at the close of discovery, he only facts noted by Plaintiff are those which relate to Payne’s withdrawal of funds from the Hewannora account for his personal expenses.”  And these facts did not support the finding that Payne intended to injure Arch.   It is Plaintiff’s position that the withdrawals of less than $15,000 over a two-year period by Payne justify piercing the Hewannora corporate veil and finding Defendants Payne and Campbell personally liable for $1,247,950.03. The district court did not err in concluding that Arch failed to show that Payne used his domination of Hewannora to commit a fraud against Arch.

 

FLEMING’S FINEST
Katherine A. Fleming

[email protected]

04/29/25       Erie Ins. Prop. & Cas. Co. v. Cooper
West Virginia Supreme Court
Statute Does Not Require Commercial Automobile Insurance Policy Insuring Certain Owned Vehicles and a Class of Non-Owned Vehicles for Liability Protection to Offer the Named Insured Underinsured Motorist Coverage for the Class of Non-Owned Vehicles

Cooper was injured in a car accident while riding as a passenger in Huffman’s vehicle. At the time of the accident, Cooper and Huffman were both employees of Pison Management LLC en route to a job site. Because Cooper’s injuries and resulting damages exceeded the at-fault driver’s insurance limits, Cooper sought underinsured motorist coverage (UIM) under Pison’s commercial auto policy issued by Erie.

The policy provided liability coverage for two particular vehicles owned by Pison as well as a class of non-owned vehicles associated with 1-25 employees, including vehicles owned by Pison’s employees while being used in Pison’s business. The policy provided UIM coverage for the owned vehicles, and there was no option to purchase UIM coverage for the class of non-owned vehicles. The parties agreed that Huffman’s car fell within the class of non-owned vehicles under the policy.

Erie denied Cooper’s claim for UIM coverage based on the policy’s terms and commenced a declaratory judgment action in the federal district court for a declaration of no UIM coverage. Cooper counterclaimed for a declaration that Erie violated the relevant statute by not providing Pison with the opportunity to elect UIM coverage for the class of non-owned vehicles.

Cooper argued that the statute required Erie to offer UIM coverage for every vehicle it insured for liability protection under the policy and that as a passenger in a covered, non-owned vehicle, Cooper qualified as an insured who was entitled to that coverage. Because Erie failed to make an offer, Cooper argued that UIM coverage existed by operation of law to cover him as a passenger. Erie argued that there is no statutory requirement to offer UIM coverage to a named insured for vehicles the named insured does not own. Erie reasoned that the purpose of UIM coverage is to protect the named insured and permissive users of the named insured’s vehicle from underinsured drivers. Erie represented that Pison’s purpose in purchasing liability coverage for the class of non-owned vehicles was to provide Pison with protection from vicarious liability claims resulting from its employees’ operation of their personal vehicles while used in Pison’s business.

On summary judgment, the district court awarded judgment in favor of Cooper, holding that the statute requires that an insurer make a commercially reasonable offer of UIM coverage to all vehicles covered by a liability policy, including the class of non-owned vehicles. Erie appealed to the Fourth Circuit.

Finding no controlling precedent, the Fourth Circuit certified the following question to the West Virginia Supreme Court: Does West Virginia Code § 33-6-31 require an insurer, who issues a commercial automobile insurance policy to a named insured providing liability coverage for particular owned vehicles and a class of non-owned vehicles, to offer underinsured motorist coverage for the class of non-owned vehicles?

The West Virginia Supreme Court answered in the negative and held that where a commercial automobile insurance policy insures certain owned vehicles and a class of non-owned vehicles for liability protection, the relevant statute does not require the insurer to offer to the named insured underinsured motorist coverage for the class of non-owned vehicles. The court noted that UIM coverage is first-party coverage, so the coverage follows the person and not the vehicle. When a tortfeasor is underinsured, the claimant recovers third party liability benefits from the tortfeasor’s insurance and supplements this recovery with the UIM benefits available through their own insurance policy. Determining whether a person is an insured person is the first step to determine if they are entitled to UIM coverage. Since Cooper was not using a named insured’s owned vehicle with consent, he did not meet the statutory definition of an insured in order to be entitled to UIM coverage caused by the negligence of an underinsured motorist. 

 

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick

[email protected]

05/15/25       Zavis v. New Jersey Mfg. Ins. Co.
Superior Court of New Jersey, Appellate Division
Verbal Threshold Not Satisfied Absent a Showing of Proximate Cause

The plaintiff was riding as a front seat passenger of a vehicle that was t-boned. After settling her third-party claim with the tortfeasor, the plaintiff made an underinsured motorists claim with her own auto carrier, NJM. NJM denied plaintiff’s UIM claim on the basis that the plaintiff had neither alleged nor otherwise established that the T-bone collision was the proximate cause of her injuries. The lower court granted NJM’s motion for summary judgment, reasoning that the plaintiff was required to provide a comparative analysis of her pre-accident and post-accident medical conditions. This appeal followed.

On appeal, the plaintiff argued that because she did not allege aggravation of any pre-existing injuries, she was not required to produce a comparative medical analysis of her pre and post-accident medical conditions. However, as NJM pointed out, the plaintiff’s treating medical physician opined that the plaintiff sustained aggravation of pre-existing asymptomatic degenerative changes, which would likely cause accelerated degeneration of plaintiff’s spine, progressive stiffness, loss of function, and pain. Because the plaintiff’s physician found aggravation of a pre-existing injury, NJM argued, a comparative medical analysis was required.

New Jersey law provides that personal automobile policies can be purchased either with or without the “limitation on lawsuit option.” If an insured purchases a policy with the “limitation on lawsuit option,” the insured must satisfy the “verbal threshold” in order to qualify for non-economic damages. To satisfy New Jersey’s verbal threshold, the insured must show that: (1) they sustained a permanent injury and that, within a reasonable degree of medical probability, the injuries will not return to normal function even with further medical treatment; and (2) their injuries were proximately caused by the defendant’s negligence.

Plaintiff’s treating physician opined that she sustained serious and permanent bodily injuries that would not return to normal functionality within a reasonable degree of medical probability, in satisfaction of the first prong. However, plaintiff never submitted a comparative medical analysis, comparing her pre-accident condition with her post-accident condition. Therefore, the Court held, plaintiff could not establish that the worsening of her injuries was proximately caused by the tortfeasor, barring plaintiff’s UIM claim.

 

 

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea

[email protected]

05/01/25       Woodland Villas v. Wright Nat’l Flood Ins. Co.
United States Court of Appeals, Fifth Circuit
Unnotarized Sworn Statement in Proof of Loss That Also Fails to Comply With 28 U.S.C. 1746’s Perjury Requirements Is Invalid Under Standard Flood Policy

Woodland Villas is a condominium association that possessed several Standard Flood Insurance Policies (SFIPs) issued by Wright. In August 2021, Hurricane Ida caused flood damage to several buildings insured by Wright through Woodland Villas. Upon notice, Wright inspected and adjusted each loss. The losses reached about forty percent of the policy limit. Wright disbursed the funds in November 2021.

In February 2022, Woodland Villas sought additional compensation. Woodland Villas submitted a report prepared by a Louisiana registered architect that opined Woodland Villas entitled up to sixty percent of the policy limit. The architect’s report included a subject line entitled Sworn Statement in Proof of Loss. The architect signed the report and affixed his seal on the document. Thus, Woodland Villas’ submitted this report as its sworn statement in proof of loss.

The Fifth Circuit affirmed the grant of Wright’s motion for summary judgment. As with most insurance policies, the Wright SFIP contained a proof of loss condition. The material part of the condition provided: “send [the insurer] a proof of loss, which is your statement of the amount you are claiming under the policy signed and sworn to by you[.]” Wright argued that although the report was signed and bore the architect’s seal, it was unsworn. This is because the report lacked a declaration that the insured guaranteed the truth under the penalty of perjury. And in the alternative, the report was unnotarized.

The court looked to a prior unpublished opinion, Clark v. Wright National Flood Insurance Co., and applied its reasoning. Clark found a statement in proof of loss was unsworn due to the lack of under penalty of perjury used in a statement as permitted under 28 U.S.C. § 1746. Since the architect’s report lacked notarization and alternatively failed to comply with § 1746’s “penalty of perjury” requirement, Woodland Villas’ sworn statement in proof of loss was invalid. 

Author’s Note: The Clark court looked to 28 U.S.C. § 1746’s declaration exception as “sworn” was not defined in the SFIP. Thus, something to consider is whether an insured has complied with § 1746, or whether your jurisdiction similarly recognizes an unnotarized statement made under the penalty of perjury constitutes a “sworn statement.”

 

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera

[email protected]

05/13/25       Erie Ins. Co. v. Hector Rodriguez
Supreme Court of the State of New York, County of Suffolk
SUM Arbitration Permanently Stayed as Tortfeasor’s Liability Coverage Was Greater Than Respondent’s Bodily Injury Limits

ERIE Insurance Company (“ERIE”) brought a special proceeding pursuant to CPLR § 7503(c), to stay an arbitration demand made by Hector Rodriquez (the “SUM claimant”), seeking supplementary uninsured motorist (“SUM”) benefits. ERIE argued that SUM coverage was unavailable, because the tortfeasor’s liability limits were greater than the SUM claimant’s bodily injury limits.

The special proceeding arose out of an October 25, 2021, motor vehicle accident, in which the SUM claimant was operating a truck insured under an ERIE garage automobile policy, which had bodily injury limits of $1,000,000 and SUM benefits of $500,000 per person. The tortfeasor had a primary policy providing $250,000 in bodily injury limits, and an umbrella policy with a $1,000,000 per occurrence limit.

The SUM claimant commenced an action against the tortfeasor, and ultimately settled the claim, receiving $250,000 from the tortfeasor’s underlying policy, and $750,000 from their umbrella policy.

Under New York Insurance Law 3420(f)(2)(A), supplementary uninsured/underinsured motorists insurance shall provide coverage, in any state or Canadian province, if the limits of liability under all bodily injury liability bonds and insurance policies of another motor vehicle liable for damages are in a lesser amount than the bodily injury liability insurance limits of coverage provided by any such policy.

Here, the tortfeasor had an automobile liability policy with $250,000 bodily injury limits, as well as an umbrella policy with $1,000,000 per occurrence limits. Meanwhile, the insured, and SUM claimant, had only a policy containing bodily injury liability limits of $1,000,000.

Accordingly, the court held that SUM coverage was not available, because SUM benefits were never triggered.

Accordingly, the court granted ERIE’s motion and held that the SUM claimant was permanently enjoined from arbitrating any alleged entitlement to SUM benefits under the ERIE policy.   

 

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton

[email protected]

05/23/25       New York Assembly Bill S5342
New York State Senate
S5342 Seeks to Permit the Use of Telematics or Usage-Based Insurance for Private Passenger or Commercial Automobile Insurance Policies in Certain Circumstances

On February 20, 2025, S5342 was introduced and referred to insurance. The bill seeks to define telematics and usage-based insurance and to provide for a consent-based framework for the use of telematics or usage-based insurance for automobile coverage in New York. This would include permitting insurers to offer incentives for participating in certain risk management programs through the use of telematic devices.

This would allow insurers to track individual driving habits of motorists. Telematics can provide drivers with detailed information about their driving habits and provide suggestions for improvements. The use of these devices can improve driving habits and ultimately lead to a reductio in accidents. Further, the use of telematics could allow insurers to offer discounts to drivers whose behavior is safer than other drivers.

 

VICTORIA’S VISION ON BAD FAITH
Victoria S. Heist
[email protected]

04/07/25         Wing On Realty, Inc. v. DB Insurance Co., Ltd. (US Branch)
Supreme Court, New York County
Supreme Court (Lower Court) Finds Insurer Failed to Act in Good Faith and Fair Dealing After Employing “Wait-and-See” Strategy in Claims Handling

Wing On Realty, Inc. (“Wing On”) is the owner of a three-story building at 5702 8th Avenue, Brooklyn, New York (the “Premises”). DB Insurance Co., LTD (“DB Insurance”) issued a property insurance policy to Wing On for the Premises. On September 15, 2019, a fire occurred at the Premises, and Wing On hired a contractor to conduct emergency repairs. Wing On submitted a claim of $18,000 to DB Insurance for the emergency repairs, which DB Insurance paid.

Later, DB Insurance retained an engineer and field adjuster to assess the Premises, who found that the Premises suffered fire damage, including charred joists, but ultimately, the full extent of the damage could not be determined due to the first-floor tenant’s repairs of the ceiling. After Wing On offered their first-floor tenant a rent reduction to access the unit, Wing On hired a contractor and architect to assess the Premises’ condition. Wing On’s contractor removed the drywall in May 2020 and replaced the joists in September 2020. The contractor’s invoice stated the repairs were due to rot, corrosion and/or fire damage.

In September 2020, Wing On sent a demand letter to DB Insurance seeking reimbursement for damages for lost rent and remediation by the contractor. DB Insurance did not reimburse Wing On nor deny the claim. Wing On then initiated this lawsuit and moved for summary judgment against DB Insurance, including, inter alia, causes of action for good faith and fair dealing.

The New York County Supreme Court granted in part and denied the motion in part. Importantly, the Court granted Wing On summary judgment on the ground of good faith and fair dealing, holding DB insurance employed a “wait-and-see” strategy in handling the claim. The Court found the DB Insurance policy covers loss of business income during a period of restoration, which included the lost rent from vacant units after the loss, and DB Insurance did not reimburse Wing On for the loss nor issue a disclaimer letter. The Court found an issue of fact as to damages under DB Insurance’s breach of the covenant of good faith and fair dealing, specifically as to the apportionment of Wing On’s damages related to DB Insurance’s failure to adjust the claim in good faith, compared to the damage that was attributed to long term wood rot. DB Insurance filed a notice to appeal the decision to the Appellate Division, First Department on May 2, 2025.

 

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.

04/28/25       Fluid Hose & Coupling Inc. v. Allianz Global Risks U.S. Insurance Company, et al
Ontario Superior Court (trial level)
Depending Upon the Wording, a “Mere” Supplier May Be Entitled to Coverage Under a Builders’ Risk/Course of Construction Policy

In June of 2020, a 36-storey residential apartment building was under construction near the Sheppard & Yonge subway station in North York, Toronto. On June 8 water began leaking from an HVAC cabinet on the 32nd floor. The source of the leak was traced to a half inch ball valve in the water supply line for the heat pump in unit 3201.

Ball valves are usually controlled by a handle and enable easy shut off-of the line for maintenance and repair. This particular ball valve had broken in half, opening the water line, causing water to flow down to the ground floor. The repair costs for the resulting damage were estimated at about $420,000.

The water damage was reported to Allianz who had issued a builders’ risk /course of construction policy for the project under which the owner developer, Riocan and the general contractor, PCL were the named insureds. Allianz paid for the repairs and initiated a subrogated claim against several parties, including the ball valve supplier, Fluid Hose.

Fluid Hose brought this application for a declaration that the subrogated claim cannot proceed against it as it is a sub-contractor as defined in the Allianz builders’ risk policy and, therefore, an unnamed insured.

As is almost the norm, the project consisted of layers of contracts. In the belief that a picture is worth a thousand words and that there is no time and no space for a thousand words, the project broke down as follows:

A diagram of a construction company

AI-generated content may be incorrect.

Allianz argued that Fluid Hose was a mere supplier and therefore did not meet the definition of sub-contractor under the policy.

The Court heard that two years before the water leak, Sigma had issued a Purchase Order to Fluid Hose for 5,000 ball valves that had to meet Sigma’s specifications. That purchase order did not refer to this project. That was normal, as Fluid Hose customarily provides ball valves to Sigma. Fluid Hose confirmed Sigma’s order and in turn ordered the valves from a Chinese manufacturer.

The day before Sigma’s order of 5,000 ball values, Omega confirmed a previous quote with HTS to supply 728 heat pumps requiring 728 ball values. Of the 5,000 valves that Sigma ordered, 728 were for this project. Fluid Hose was not told that some of the ball valves that it was supplying were for this project.

Without looking at the policy, these facts strongly suggest that Fluid Hose is a “mere” supplier and would not normally be considered an unnamed insured under most builders’ risk policies. But the Allianz policy is not “most” builders’ risk policies.

The Allianz policy contained the following key definitions:

A close-up of a document

AI-generated content may be incorrect.

The policy also specified that “property insured” included:

The definitions of contractor and sub-contractor are unique. Historically, builders’ risk policies issued in Canada limit sub-contractors to those “engaged in the construction of the Project” and exclude “suppliers whose sole function is material delivery”. This policy defined a sub-contractor to include any corporation (Fluid Hose) entering into a contract to supply materials in connection with the project (the Sigma Purchase Order) if that contract is, in turn, derived through a contract to supply materials in connection with the project (the contracts between Omega, HTS and Malfar).

Fluid Hose argued that the wording was broad enough to cover any party within the material supply chain for the project. In essence, the Application Judge agreed stating “the word “derived” is indeed broad and can extend to suppliers of subcontractors, such as Fluid Hose” as long as the supply of materials was “in connection with the project”.  The judge continued stating that “[t]his phrase is also broad and inclusive. It is not limited to those who are “part of the construction process itself” but includes suppliers who are “collateral to that process” so long as the supply contract is “in connection with the project.”“

The Court noted that this is consistent with the broad wording of the “property insured clause” which includes property “owned by the Insured or in which the Insured has an insurable interest” and “property of others used or to be used in, a part of, or incidental to the construction operations.” RioCan “clearly” had an “insurable interest” in the HVAC units; indeed, it purchased them. The ball valves were an integral and essential part of those units which, in turn, were integral and essential to the building. An additional indication of the broad scope of the Policy is found in s. 7(d) dealing with “miscellaneous unnamed property” which states: “This Policy is extended to insure property of every description used or to be used in, part of, or incidental to the construction operations.”

Finally, the Court noted that this broad interpretation is in keeping with the purpose of the policy which is to provide broad coverage to project participants. If the action continues, Fluid Hose will be alleging faulty installation of the ball valve caused the failure meaning that project participants up the chain will be involved in the litigation. The policy is designed to protect project participants from this exposure.

The Court dismissed Allianz’ argument that this interpretation does not make commercial sense as it means that any party that supplied material to the project would be considered a contractor/sub-contractor. The Court stated that Fluid Hose meets the definitions and is entitled to the protection of the policy:  “if an insurer is prepared to provide a very broad policy, as it has done here, and which it presumably priced accordingly, it must live with the consequences.”

Fluid Hose was therefore successful and awarded partial indemnity costs of $37,500 regarding this coverage application and $12,337.80 in costs for defending the subrogated claim, all of which were payable by Allianz.

Comment

The wording considered in this judgment is unique and therefore the finding is unique. However, it stands as a cautionary tale when it comes to interpreting nonstandard builders’ risk policies. I suspect an appeal will be in the offing.

 

© Hurwitz Fine P.C. 2025
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