Volume XXVI, No. 4 (No. 677)
Friday, August 2, 2024
A Biweekly Electronic Newsletter
As a public service, Hurwitz Fine P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York and Connecticut appellate courts and Canadian appellate courts. The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers.
In some jurisdictions, newsletters such as this may be considered Attorney Advertising.
If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at [email protected] or call 716-849-8900.
You will find back issues of Coverage Pointers on the firm website listed above.
Dear Coverage Pointers Subscribers:
Do you have a situation? We love situations.
We welcome Lexi Horton and Lexi’s Legislative Lowdown, our newest columnist. She will follow “doings” in Albany, both legislative and regulatory. Delighted to have her on our team and our editorial staff.
Greetings from Toronto and the Federation of Defense & Corporate Counsel Annual Meeting. Our Managing Partner, Jody Briandi, was a star of this year’s Annual Meeting!
Jody Briandi was selected, from 26 substantive law section chairs, as the outstanding Section Chair of the year and was awarded the John Appleman Award. Was that not enough? Nah.
Each year, the FDCC honors the Substantive Law Section Chair who has made the most outstanding contribution to the advancement of the FDCC's educational goals through the work of his or her Section. Presented annually since 1984, the award carries the name of the late John Alan Appleman, a distinguished and widely recognized insurance law scholar who served as President of the Federation from 1950 to 1952. The recipient is chosen by the President based on the recommendation of the Chair and Vice Chairs of the Projects and Objectives Committee.
For the past two years, Jody has served as the Section Chair of our Law Practice Management Section, generally a two-year appointment. At the request of our new president, she will now serve an almost unprecedented third term in that position.
Is that not enough? Nah. There’s more.
As of today (Friday), at the FDCC Business Meeting, Jody was elected to the Board of Directors of the FDCC! What a wonderful and well-deserved honor.
August 20 Risk Transfer Training – Via Zoom – 1:00 Eastern
Since our last issues another 140 spots have been claimed for our program. There are only 60 57 spots left of 1000 set aside for this program on August 20th at 1:00 EST.
My friend and colleague, John Trimble from the Indianapolis firm Lewis Wagner, and I are once again presenting our highly popular Zoom program – the Risk Transfer Primer.
In this program, we will cover how claim professionals and lawyers should respond to tender requests for additional insured status under policies or trade contract indemnities. We’ll explain how to evaluate tenders from various parties, including owners, general contractors, and landlords.
The interactive presentation offers a systematic approach to handling tenders of defense under additional insured provisions and trade contract indemnity/hold harmless clauses. We’ll discuss the protection of additional insureds, contractual indemnitees, and named insureds, including the insured contract exception to the contractual liability exclusion. Additionally, we’ll review the often-overlooked Supplementary Payments provisions of the CGL policy, and much more!
Join us for this comprehensive and practical training opportunity. It’s a “Lunch and Learn” session, so you can gather in a conference room or eat at your desk. Expect it to last about 75-90 minutes, with time for Q&A. Sorry, we cannot offer CE or CLE credit, but we can provide a valuable continuing education program.
Registration is easy. Simply send an email to me at [email protected] or to John at [email protected].
Which is harder? Finding a Four Leaf Clover, a Unicorn, or Proving Lack of Cooperation?
Look at the Fourth Department decision reported in my column today. I think it may be easier to walk to the moon than prove that an insured failed to cooperate. Thousands flee.
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 who 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 certified by the Court and on the WDNY Mediation Panel as are Mike and Ann.
Try mediation.
Newsletters:
We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:
-
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.
Divorce A’Go Go– 100 Years Ago:
The Atlanta Journal
Atlanta, Georgia
2 Aug 1924
11 Divorces Per hour,
Fulton Court’s Record
An average of more than eleven divorce verdicts per hour were awarded in Fulton superior court this week by the jury disposing of the July divorce calendar, which included nearly 300 cases.
The jury considered cases approximately 18 hours and granted 204 verdicts. The regular five-hour sessions were held Monday, Tuesday, and Wednesday, the calendar being concluded after three hours Thursday.
Judge John D. Humphries heard the cases three days during the disposition of the docket, while Judge George L. Bell presided the other day.
Peiper on Property (and Potpourri):
Scary case this week in Property. If a carrier is aware of a secured creditor/interest holder in insured property, the carrier must then include said interest holder as a payee on the settlement check. If payment is made without addressing the independent rights of the interest holder (as mortgagee, or otherwise), the carrier can be labile for payment of 100% of the settlement amount to the otherwise jilted creditor. This results in a situation where the carrier ends up paying the same loss twice. Once to the named insured, and again to the additional insured/mortgagee. A situation you DO NOT want to be in.
We also have a bone to pick with the Kolli v. Kaleida case in the third-party column. The Court, in contravention of longstanding appellate law, took a primary policy (Kaleida’s self-insurance plan) and applied it on a ratable sharing basis to a pure excess level policy (HPIC’s policy). In so holding the Court ignored the well-worn principle that a true excess policy never applies on the same level as a primary policy. To do so, distorts the entire meaning of priority of coverage.
Regardless of the language, a primary level policy always must exhaust before moving, vertically, to the next, pure excess, level. Here, the Court found that the Kaleida Self Insurance Plan was excess to another primary level policy. While that is debatable given those policies “other insurance” clauses, at best then the Kaleida Plan should have followed the exhaustion of the primary policy. At no moment, can a primary policy jump into the excess layer for purposes of priority of coverage. This is clearly at odds with other Appellate Courts across the state, and, frankly, with the Fourth Department’s own precedent.
We recognize that effectively analyzing priority of coverage disputes can be a difficult task. If anyone has any questions on this issue, we would be delighted to provide you with some training on the topic.
That’s it for this week. Enjoy the remainder of Summer, and back to school shopping right around the corner.
Steve
Steven E. Peiper
[email protected]
A Sobering Jury – 100 Years Ago:
The Columbus Telegram
Columbus, Nebraska
2 Aug 1924
DRUNK OR SOBER?
JURY OUT TWENTY
HOURS CAN’T AGREE
Court Offers to Accept 5-to-1
Verdict in Humphry Case,
But Deadlock Continues
Bulletin
At 2:45 P.M. today, Judge Gibbon discharged the jurors, being finally convinced that they could not reach an agreement. At that time, they were divided three for conviction and three for acquittal. They had been out practically 21 hours.
Was Joseph Boesch, Humphrey, drunk or sober on the evening of Jul 24?
The state says he was intoxicated. The defense says he was not. Six good men and true, compromising a jury in county court, don’t know what to say about it.
That is, they don’t know what to say collectively: though individually they’ve probably said a lot about it since the case was submitted to them for decision shortly before 6 p.m. yesterday.
For more than 20 hours - with a few hours off for sleep after 11 o’clock last night – the six jurors have been emulating the example of the recent democratic convention. They’ve been deadlocked.
At noon today County Attorney Walter for the state, Attorney August Wagner, representing the defense, and County Judge Gibbon agreed they’d accept a five-sixths verdict, if five of the jurors could agree. The judge hid himself in the county board room where the deadlocked jurors were holding forth and queried as to the state of the division. “Five to one,” he was told. “We’ll accept a verdict on the basis of five to one,” the judge told them. “Alright,” a juror suggested, “let’s take one more ballot, then.” The ballot was taken. The new alignment count was four to two! The five-sixths verdict had been blocked. Shortly thereafter the jurors sent word to Judge Gibbon that they believed it to be absolutely impossible for them to arrive at a verdict, but the judge at the instance of counsel for the defense, decided to hold them to the job awhile longer. Members of the jury are R. C. Regan, E.M. Blore, John Stubblefield, Ed. Randall, James Politis and J. W. Gans.
Barnas on Bad Faith:
Hello again:
The Hurwitz Fine softball regular season is winding down with only two games left on the schedule. We are a respectable 6-4 on the season, but we are in a tight race for the playoffs with two difficult opponents remaining on the schedule. We are going to need a strong finish if we hope to make the playoffs and find our elusive first playoff game win.
Meanwhile, the Blue Jays still have two months left of their regular season, but it is over for all intents and purposes. The last interesting thing left for the season was the trade deadline, which passed on Tuesday. It looks like we did pretty well with some of the prospects we were able to acquire, but I am skeptical that running it back with a lot of the same core is going to produce different results in 2025. It is going to be a long rest of the summer watching them play. Football season cannot get here soon enough.
Brian
Brian D. Barnas
[email protected]
What is a Canned Heat Drunk? – 100 Years Ago:
The Buffalo Times
Buffalo, New York
2 Aug 1924
Canned Heat Jags
Are on Increase
St. CATHERINES, Aug. 2. – Jim Monk and Haris Blith, two canned heat drunks were the first to get the benefit of the increased penalty for drunkenness. Yesterday afternoon in police court they were fined $10 or 30 days, instead of 10 days, which had hitherto been the vogue. The police say the number of canned heat drunks is rapidly increasing, due to the fact that the cans can be bought easily in any hardware store. Its jelly makes a pretty fair alcoholic drink.
Lee’s Connecticut Chronicles:
Dear Nutmeg Newsies:
Busy week from the courts, we report on three pretty meaty decisions. I guess the judges are clearing their cases for August recess. It was an even busier week hosting the family at the beach. Every bedroom was fully occupied, and some of the couches, too. It’s always fun to have a family visit, and even funner when they go back home. With an empty house, I can finally get back to work.
See you in two weeks.
Lee
Lee S. Siegel
[email protected]
One-Armed Thief Pockets Shirts – 100 Years Ago:
The Buffalo Times
Buffalo, New York
2 Aug 1924
One-Armed Thief
Steals Falls Wash
NIAGARA FALL, Aug 2. – Edward Winkler of No. 1509 Elmwood Avenue reported to the police yesterday that a one-armed thief stole two silk shirts and eight handkerchiefs from a clothesline in the back yard of his home. Members of Winkler’s household say they saw the one-armed man sneaking away with the loot.
Kyle's Noteworthy No-Fault:
Dear readers,
Hard to believe August is already here – summer continues to fly by, with softball and golf season starting to wind down in the final stretch before playoffs. Also have been trying to catch as much of the summer Olympics as possible and am especially looking forward to golf and track starting up soon.
This week’s no-fault case involves an insurer’s motion to vacate an arbitration award granted in favor of the medical provider. The insurer argued that the default judgment entered in its favor in a declaratory judgment action against the provider and injured party, stating it had no duty to pay no-fault claims, rendered the arbitrator’s decision incorrect as a matter of law. The court agreed, granting the petition to vacate the award.
Until next time,
Kyle
Kyle A. Ruffner
[email protected]
Border Problems with Canada – 100 Years Ago:
The Buffalo News
Buffalo, New York
2 Aug 1924
5,000 WAITING
IN TORONTO TO
CROSS BORDER
New Immigration Regulations Cause No Little Concern in Canada – Naturalized Citizens Barred by Quota Law
TORONTO, Aug 2 – United States immigration regulations, amended to affect Canada, which have been in operation since the first of July, are causing considerable inconvenience and some apprehension here.
In Toronto alone a waiting list of 5000 men, women and children daily faces the American consulate seeking to know if there is any possibility of the quota being relaxed so that they can cross the border without a year’s delay. At other centers there is similar congestion.
But these waiting lists are not Canadian born guardians. Many of them are Britishers and a goodly proportion are Continental Europeans. Against all of them the American quota law now applies even if they are naturalized Canadian citizens.
But against the Canadian born the quota law does not apply. He is as free, or almost as free as ever to cross the border and become an American citizen whenever he wishes.
The new law is recognized in Canada as a legitimate device on the part of the United States to stop side-door admission through Canada. Moreover, its continued exemption of the Canadian born from the quota law is flattering to local pride.
Ryan’s Federal Reporter:
Ryan
Ryan P. Maxwell
[email protected]
Wedding Blues – 100 Years Ago:
The Buffalo News
Buffalo, New York
2 Aug 1924
Indian Bridegroom Sends
Serenaders to Hospital
Buckshot Instead of Firewater Greets Merrymakers Welcoming Happy Couple to Tuscarora Reservation
Indian customs, old and new, clashed on the Tuscarora reservation, near Niagara Falls last night and as a result five members of a party of 25 young braves, who serenaded Wesley Patterson and his bride, Alta Printup on their return from their wedding trip, were shot, one seriously.
Charles Bissell, 18 years old, is in a serious condition in Saint Mary’ hospital, Niagara Falls, with buckshot wounds in his face, neck and breast. Herbert Printup, 19 years not, not related to the bride, was shot I the face and shoulder and Edmund Jonathan was shot in the face. The latter two were allowed to go home after treatment at the hospital. Two other Indians, less seriously injured, were attended by physicians at the reservation.
When Patterson returned from his honeymoon trip last night, a party of 25 Indians gathered at his home and serenaded the couple. According to ancient tradition, Patterson was then to come forth and present the party with some token, preferably a quantity of firewater. Patterson, who it seems is too modernized to believe in ancient traditions, emerged from the house armed with a shotgun and presented the serenaders with a charge of buckshot instead of the usual liquids. This broke up the party. No action has yet been taken by the police.
Storm’s SIU:
Hi team:
Just getting back and catching up after an awesome vacation in Spain, France and Italy. So only one interesting case this edition:
- The Disparity Between the Appraisal Award the Insured’s Appraiser's Estimate Alone Cannot Lead to a Conclusion that the Appraisal Must Have Been a Product of Bias, Corruption or Partiality; and the Insured May Not Contest the Appraisal Award in a Factual Hearing.
Have a great two weeks until the next edition.
Scott
Scott D. Storm
[email protected]
Gas War– 100 Years Ago:
The Buffalo News
Buffalo, New York
2 Aug 1924
ANOTHER CONCERN CUTS
GAS PRICE TO 15 CENTS
Following the cut to 15 cents in the price of gasoline made by the Larkin and the A. J. Haefner independent companies, an announcement comes this morning that Herman’s garage, 409 Niagara street, is selling gas at 15 cents a gallon.
The Standard Oil company’s price remains at 19 while the lowest of the other companies is 18.
Editor’s Note: That’s $2.66 a gallon in 2024 dollars.
Fleming’s Finest:
Hi Coverage Pointers Subscribers:
Hope you are also enjoying watching the Olympics. Incredible achievements by the athletes, and it’s nice to see different sports getting the recognition they deserve. However, as I watched the triathletes dive into the Seine, I could not help but wonder: is the river really clean enough?
This week’s case comes from the Massachusetts Supreme Judicial Court. The SJC looked at whether “surface waters” would include rainwater that accumulates on a roof under Massachusetts law. Water accumulated on a building’s roof and caused interior water damage. The SJC concluded that in this context, the term was ambiguous, noting “surface waters” was not defined in the policy, and case law is split on the issue.
Stay cool and see you in a fortnight,
Kate
Katherine A. Fleming
[email protected]
Golfers Insulted – 100 Years Ago:
The Buffalo News
Buffalo, New York
2 Aug 1924
Miniature Golf Course Boon
For the Fat, Lazy and Others
Nine Holes on Plot 100 Feet Square at Crescent Club Embodies All Hazards Found on Regular Links.
FAT AND LAZY GOLFERS to who the long hikes between tees are an abomination and a sweat and with no prospect of gurgling refreshment at the 19th hole will doubtless envy members of the Crescent A. C. of Brooklyn, who cavort around a miniature course on a lot 100 feet square and where from a dozen or twenty of the non-hikers can disport themselves with no terrifying warnings of “Fore!” to disturb their equanimity. While this course, which is one of nine holes, looks at first glance to be simple and childlike and more fitted for a great aid to the improvement of their short game. Each of the holes is laid out to present the hazards that confront a golfer on a regular course and to eliminate the many dubbed shots that are played by the average golfer when making short approaches from either side of regular green. This little course gives one plenty of practice with mashie, mashie-niblick, niblick and putter.
Total Length of the baby links is 186 yards, 2 feet instead of yards, and the course was designed by Edward H. Driggs, whose son Edmund H Driggs Jr., New York State amateur champion, will soon defend his title here in Buffalo.
Gestwick’s Garden State Gazette:
Dear Readers:
If you know me, you’ll know I go crazy for the Olympics. Summer, winter, doesn’t matter. Something about watching all the sports that aren’t normally on TV and watching the best in the world compete at them, is quite enjoyable to me. However, I will say that they should really consider adding a “don’t try this at home” disclaimer when they air some of these gymnastics routines…
What if an Olympics employee was driving some athletes to a competition, in a van owned by the Olympics Committee, and was struck by a tortfeasor whose bodily injury liability limit exceeded the UIM limits of the Olympic Committee’s policy? If the Olympics are ever held in New Jersey, the Committee better watch out. Read on to find out why.
Evan
Evan D. Gestwick
[email protected]
Student Intelligence Tests– 100 Years Ago:
Telegraph-Forum
Bucyrus, Ohio
2 Aug 1924
INTELLIGENCE TESTS
The Chicago Federation of Labor backed by the Chicago Teacher’s Federation condemns intelligence tests for children. They have been much in vogue since the World War. Their report says in part: “To place the suggestion of inferiority in the thought of a little child is in itself outrageous and to do this through an alleged ‘scientific’ system in the public schools which shows more than 40 per cent error is a crime against childhood and ought to be prohibited by law.”
The first wave of enthusiasm for any new scientific or medical treatment usually leads to excesses which common sense impels people to deplore in a brief time. Their indignation results in the pendulum swinging back to normal and society derives permanent benefits from the new discovery. So, it is with the intelligence tests. In the cases of delinquents and of children who are not quite up to par, they are of value since they form a basis for helpful treatment. They are valuable too in cases where a child lags behind other children in the classroom and the intelligence tests prove that his seeming mental incapacity is merely a rebellion against standardization and school-room rote; that his mind is just as keen as the mind of any other child.
In such cases the intelligence or mental alertness tests are good but unless a stabilizing influence is soon brought to hear on the system, it is doubtful whether the harm done to children who fail to pass the intelligence tests of children of their own age is compensated by the benefits of the system.
O’Shea Rides the Circuits:
Hey Readers,
I am back in WNY after an extended European vacation to Portugal to celebrate my recent nuptials. It was not without its bumps as a flight cancellation resulted in a 24-hour travel day with an 8-hour layover enjoying the scenic sights of the Frankfurt Airport. Other than that slight issue, my wife and I enjoyed great views, great food, and great experiences in Porto and Lisbon.
This week I have a quick read from the Fifth Circuit regarding Payment of Loss language in an auto policy. An insurer paid for the total loss of a vehicle but omitted the sales tax from the settlement. But the relevant provision specifically included sales tax for loss payments. The insurer succeeded in dismissing the claim based on Texas’s statutory tax scheme.
Ryan
Ryan P. O’Shea
[email protected]
Say It Ain’t True, Bronco Billy – 100 Years Ago:
The Item
Sumter, South Carolina
2 Aug 1924
BRONCO BILLY
ARRESTED ON
BIGAMY CHARGE
Also Charged With Violation of the Man White Slavery Act. Arrested in Camden on federal Warrant. Alleged That He Has Several Other Wives.
Word was received here his morning that Broncho Billy Verne, who was last week arrested in Sumter and then released under habeas corpus proceedings, was rearrested in Camden at about 10:30 this morning. Yesterday a deputy United States marshal came from Columbia to Sumter looking to the cowboy, but he had already left. Word was then sent out to all nearby towns to arrest him if he was found. It seems that Billy and the woman who was with him left Sumter yesterday afternoon in a cut down Ford and proceeded to Bishopville. They left there this morning and were arrested as soon as they entered Camden. The warrant upon which he is being held charges him with bigamy and violation of the Mann White Slavery Act. It is alleged that Verne, who claims is an Indian, has already married two women this year. It is not yet known where he will be taken for trial, whether he will be taken back to Milledgeville, Georgia, where his present wife hails from, or tried somewhere in this state.
Rob Reaches the Threshold:
Hope everyone is enjoying the end to their summer. No interesting cases to report on this week. See you in two.
Rob
Robert J. Caggiano
[email protected]
Racism Isn’t New – 100 Years Ago:
Buffalo Courier
Buffalo, New York
2 Aug 1924
WHITE DOMINION
DOOM OF NEGRO
GARVEY ASSERTS
New York, Aug. 1, - A plea for negro nationalism and a warning that the negro had nothing to hope for in countries dominated by white race marked an address delivered before a meeting of negroes in Carnegie hall tonight by Marcus Garvey, president general of the Universal Negro Improvement association.
“The negro wants a nation,” Garvey declared. “Why shouldn’t we be nationally freed and unfettered? The American nation in a short while will not be large enough to accommodate two competitive rivals, one black and the other white.”
Garvey said it was as futile for the negro to demand the political equality guaranteed by the American constitution as to seek social equality.
“Races and peoples are only safeguarded when they are strong enough to protect themselves, and that is why we appeal to the 400,000,000 negroes of the world to come together for self-protection and self-preservation. We do not want what belongs to the great white race or the yellow race. We want only those things that belong to the black race. Africa is ours. To win America we will give up America, we will give up our claims in all other parts of the world. We will give up the vain desire of having a seat in the white house, of having a seat in the house of lords in England for the opportunity of filling these positions in a country of our own.”
Garvey referred to the attainment of important governmental and other positions by negros in America and the British West Indies and asserted that his organization had made this possible.
LaBarbera’s Lower Court Library:
Dear Readers:
Gearing up for a sunny and relaxing trip to the Land O’ Lakes Region of Ontario. I am ready to enjoy some fishing, swimming, and boating. I am equally as excited for a weekend full of pizza bread, cheese curds, and all-dressed chips.
This week I am reporting on a New York County decision discussing a long-term water seepage claim.
Until next time…
Isabelle
Isabelle H. LaBarbera
[email protected]
Butts Butt Heads – 100 Years Ago:
The Spokesman-Review
Spokane, Washington
2 Aug 1924
SAYS HUSBAND IS BOOTLEGGER
Mrs. Butts Sue J. H. Butts for Divorce
OKANOGAN, Wash., Aug. 1 – Delia Butts, Tonasket, has begun action for divorce against Joseph H. Butts. They were married on October 9, 1906, and have four children.
Mrs. Butts alleges failure to support and that he was compelled to do a man’s work in the harvest field and assist Butts in felling the timber used for household wood and cutting it into stove lengths with a crosscut saw. She accuses Butts of using abusive language and calling her vile names and complains that he choked her into insensibility and threatened to kill her.
The final paragraph in a long list of accusations is that Butts has been engaged in illicit liquor transactions and she has been forced to take the children out of the way of drunken men he brought to the house. Mrs. Butts asks for $25 a month for the support of the children.
Lexi’s Legislative Lowdown:
Dear Readers,
I am pleased to be joining Coverage Pointers and taking over the column on all things New York Legislation. I hope that everyone enjoyed the beautiful summer weekend—mine was filled with sunshine and ice cream, my favorites!
My very first column talks about lithium-battery legislation. Coincidentally, I have been seeing more news about fires caused by these batteries. I did a google search and found that the Fire Department of New York reported that in 2023, 267 fires were attributed to lithium-ion batteries. The Institute for Energy Research believes that the increase in lithium-ion battery related fires can be attributed to a lack of regulation and safety testing for devices, hazardous charging practices, and bikes and scooters of questionable origins that do not meet standards.
This legislation directly responds to these safety concerns.
Thanks for reading, see you in two weeks!
Lexi
Lexi R. Horton
[email protected]
Artificial Intelligence Advises Top News of 100 Years Ago:
I asked my Artificial Intelligence program what happened on August 2, 1924, and it told me:
On August 2, 1924, notable American writer James Baldwin was born in Harlem, New York. Baldwin became an influential essayist, novelist, and playwright, known for his works addressing race relations, sexuality, and religion in America. His most acclaimed works include "Go Tell It on the Mountain" and "The Fire Next Time".
North of the Border:
I write this from the 2024 FDCC Annual Meeting, taking place in Toronto. As usual, it has been a hectic, wonderful week, exchanging news and information regarding the practice and catching up on the lives of my FDCC friends. The week has been full and rewarding.
My contribution this week is a brief mention of an important Ontario Court of Appeal decision regarding a breach of the notice provision of a claims made and reported policy. Enjoy.
Heather
Heather A. Sanderson
Sanderson Law, Calgary, Alberta
[email protected]
Headlines from this week’s issue, attached:
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
- Refusal of the Insured to Cooperate With the Insurer Is Insufficient to Prove Lack of Cooperation. Thousands Flee.
- Health Care Company’s Hospital Self Insurance Plan Is Considered Insurance for Purposes of Priority of Coverage Analysis
- Framed Issue Hearing Ordered on Question of Whether Alleged Uninsured Vehicle Was Really Stolen or Whether Insurer of That Vehicle Was Responsible Because Keys Left in the Vehicle
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
- Failure to Issue Settlement Check to All Parties With a Secured Interest Results in Carrier Paying the Same Loss Twice
BARNAS on BAD FAITH
Brian D. Barnas
[email protected]
- Payment of Full Appraisal Award Plus Statutory Fees and Interest Barred Bad Faith Claim Where Insured Identified No Other Independent Damage Caused by Insurer
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]
- No Coverage Where Insured Was Uncooperative in Own Defense
- Malpractice Coverage Precluded by Prior Knowledge Exclusion
- Discrimination Claims Against Board of Ed. Fall Within School Board Exclusion
KYLE'S NOTEWORTHY NO-FAULT
Kyle A. Ruffner
[email protected]
- Court Grants Insurer’s Motion to Vacate Arbitration Award, as Default Judgment Had Been Entered Against the Medical Provider and Injured Party
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
- Family time – see you in two weeks.
STORM’S SIU
Scott D. Storm
[email protected]
- The Disparity Between the Appraisal Award and the Insured’s Appraiser's Estimate Alone Cannot Lead to a Conclusion That the Appraisal Must Have Been a Product of Bias, Corruption or Partiality; Insured May Not Contest the Appraisal Award in a Factual Hearing
FLEMING’S FINEST
Katherine A. Fleming
[email protected]
- Rainwater That Lands and Accumulates on either a Building's Second-Floor Outdoor Rooftop Courtyard or a Building's Parapet Roof Does Not Unambiguously Constitute "Surface Waters" Under Massachusetts Law
GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]
- Underinsured Motorist Benefits Not Available in New Jersey if Tortfeasor’s Bodily Injury Liability Limits Are Greater than UIM Limits
O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]
- Payment of Sales Tax Does Not Apply to Actual Cash Value Payment of Auto Claim Where State’s Statutory Framework Applies to Retail Sales Only
ROB REACHES the THRESHOLD
Robert J. Caggiano
[email protected]
- Fourth Department Affirmed, in Relevant Part, A Decision Denying Summary Judgment for either Party on the Issue of Whether Plaintiff Was Required to Establish He Suffered Serious Injury Under Insurance Law § 5102 Where There Remained a Question of Fact Whether a Tractor Involved in the Subject Collision Met the Criteria to Be Defined as a “Motor Vehicle” Under Insurance Law § 5104(a)
LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]
- Summary Judgment Granted in Direct Action Brought by Insurer Based on Long-Tail Water Damage Claim
LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]
- Legislation Relating to Lithium-Ion Batteries
NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
[email protected]
- The Failure to Comply With a Notice Provision in a Claims Made & Reported Policy Is Non-Compliance With an Essential Condition Precedent to Coverage Such That There Can Be No Relief From the Forfeiture of That Coverage
That’s all for now.
Again, special congratulations to Jody Briandi for her well deserved recognition and successes.
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. 000241, 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
Brian D. Barnas
Ryan P. Maxwell
Kyle A. Ruffner
Katherine A. Fleming
Evan D. Gestwick
Ryan P. O’Shea
Isabelle H. LaBarbera
Lexi R. Horton
FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
[email protected]
Michael F. Perley
Scott D. Storm
Brian D. Barnas
NO-FAULT/UM/SUM TEAM
Dan D. Kohane
[email protected]
Kyle A. Ruffner
APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]
Topical Index
Peiper on Property and Potpourri
Barnas on Bad Faith
Ryan’s Federal Reporter
Gestwick’s Garden State Gazette
LaBarbera’s Lower Court Library
Lexi’s Legislative Lowdown
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
07/26/24 Merchants Preferred Ins. Co. v. Campbell
Appellate Division, Fourth Department
Refusal of the Insured to Cooperate With the Insurer Is Insufficient to Prove Lack of Cooperation. Thousands Flee.
Merchants brought this action seeking a judgment that it had no duty to defend or indemnify Junior M. Campbell, d/b/a JMC Quality Air (“JMC”), and Gerald Bremmer (“Bremmer”) n a personal injury action commenced against them in Florida by Charleus. This arose from a Florida car accident which occurred in 2017 when JMC employee Bremer driving a JMC-owned vehicle struck the Charleus vehicle.
Nine days after the accident Charleus provided notice of the Merchants of the accident and then sued the case in February 2019.
Neither JMC nor Bremmer notified plaintiff of the accident or the lawsuit, and both refused to discuss the accident with Merchants. In May 2020, Merchants disclaimed coverage to JMC based on the insured's failure to cooperate with the investigation of the claim and defense of the personal injury action. Plaintiff disclaimed coverage to Bremmer the following month on the same ground. The disclaimers were made after the personal injury action in Florida had been placed on the trial calendar. Merchants had been defending both JMC and Bremmer up to that point of the litigation.
New York law applies to the dispute because the policy was issued in New York, the insured was in New York, and the vehicle was usually garaged in New York.
Prejudice to the carrier is required in Florida when seeking to deny coverage for breach of the cooperation clause; it is not required in New York.
The court first found that Insurance Law did not govern the timeliness of the disclaimer § 3420 (d) (2), which only applies to New York State accidents.
However, the court found that Merchants did not establish a lack of cooperation.
The burden has been described as "a heavy one indeed" requiring the carrier to establish "(1) that it acted diligently in seeking to bring about the insured's cooperation, (2) that its efforts were reasonably calculated to obtain the insured's cooperation, and (3) that the attitude of the insured was one of 'willful and avowed obstruction.'
The court concluded that although plaintiff established that JMC and Bremmer did not meaningfully respond to inquiries regarding the subject accident, their inaction is not enough on its own to allow plaintiff to avoid its coverage obligations. The evidence fails to establish, as a matter of law, that plaintiff acted diligently in seeking the cooperation of JMC and Bremmer, that its efforts were reasonably calculated to obtain their cooperation, and that the attitude of JMC and Bremmer was one of willful and avowed obstruction.
We conclude that "the nonaction of the insured, which is the only factual basis in this case, cannot in this instance be escalated into a finding of willful and avowed obstruction, especially in cases where an innocent accident victim would be deprived of their source of payment because a liability carrier claims that its assured has failed to cooperate.
Editor’s Note: Failure to respond to insurer’s request for cooperation is not lack of cooperation? What is a carrier to do? Hold a gun to the insured’s head? Sheesh.
07/26/24 Kolli v. Kaleida Health
Appellate Division, Fourth Department
Health Care Company’s Hospital Self Insurance Plan Is Considered Insurance for Purposes of Priority of Coverage Analysis
Plaintiff, and his insurer MLMIC, commenced the instant action seeking coverage for Dr. Ventkateswara Kolli under Kaleida’s Self Insurance Plan. The matter arose from a medical malpractice claim where Dr. Kolli was providing treatment as a “on-call” physician at a hospital operated by Kaleida. When Dr. Kolli and the hospital were later sued for malpractice, a dispute arose as to Dr. Kolli’s rights to coverage under the Kaleida plan.
Kaleida argued that Dr. Kolli’s coverage, if at all, was limited to only those instances where he did not retain the right to bill patients directly. Because here it was undisputed that Dr. Kolli did, in fact, bill the particular patient in question for treatment rendered, Kaleida reasoned it had no obligation to afford coverage for the claim. The Appellate Division rejected Kaleida’s argument by noting that nothing in the Kaleida Self Insurance Plan precluded Dr. Kolli from receiving coverage for claims arising out of treating patients “as part of his on-call duties pursuant to his employment agreement.”
The Appellate Division also rejected Kaledia’s argument that it was not provided with timely notice of the claim. In reaching its conclusion, the Court noted that Kaleida was aware of the claim when it received a copy of the Complaint. Further, there was nothing in the Self Insurance Plan which required Dr. Kolli, himself, to provide notice of the claim to Kaleida.
The Appellate Division followed by denying Kaleida’s argument that its Self Insurance Plan was “not insurance” and thus not obligated to share with other policies issued by Medical Liability Mutual Insurance Company (“MLMIC”) and Health Professionals Insurance Company (“HPIC”). The plan, as written, protected physicians against malpractice claims and required physicians to report potential claims. As such, it qualified as “other insurance policy or equivalent coverage” as defined by the MLMIC policy issued directly to Dr. Kolli.
Having determined that Dr. Kolli was insured under the Kaleida Self Insurance Plan for this loss, and having determined that the Self Insurance Plan operated as traditional insurance, the Court next moved on to a priority of coverage analysis. As an initial matter, the Court determined that HPIC was excess of the coverage provided by MLMIC because its policy was written to be specifically excess of MLMIC’s primary policy.
The Court also concluded that Kaleida’s coverage was also excess of MLMIC’s policy because the Kaleida’ self-insurance plan specifically stated “physicians ‘shall be assumed to be maintaining primary medical practice insurance.” In the court’s eyes, then, it meant that it was excess over the MLMIC policy.
The court finally decided that the HPIC excess policy, and the Kaleida Self Insurance Plan were co-excess insurers and need to contribute on a ratable basis to any portion of the settlement which exceeded MLMIC’s coverage.
07/24/24 Palisades Insurance Company v. Tappin
Appellate Division, Second Department
Framed Issue Hearing Ordered on Question of Whether Alleged Uninsured Vehicle Was Really Stolen or Whether Insurer of That Vehicle Was Responsible Because Keys Left in the Vehicle
This was an Article 75 proceeding to permanently stay an uninsured motorist arbitration.
On August 9, 2020, Tappin, was operating a Palisades-insured vehicle insured by the petitioner when it was involved in a collision at an intersection in Brooklyn. A vehicle owned by Forde and insured by Liberty Mutual Insurance Company (“Liberty”) allegedly ran the traffic signal at the intersection and collided with another vehicle that then collided with Tappin's vehicle.
The occupants of the Forde vehicle fled the scene, leaving the vehicle behind. Liberty denied Tappin's claim for coverage on the ground that the Forde vehicle was driven by an unauthorized person at the time of the collision. Thereafter, Tappin filed a demand for uninsured motorist arbitration with the petitioner, and the petitioner commenced this proceeding pursuant to CPLR article 75 to permanently stay arbitration of the claim or, in the alternative, to temporarily stay arbitration pending a framed-issue hearing, for joinder of the proposed additional respondents, which include, among others, Forde and Liberty Mutual, and to direct the respondent, inter alia, to produce certain records. Forde and Liberty Mutual opposed the petition, asserting that the Forde vehicle had been stolen at the time of the accident and, therefore, was not insured.
Here, the documents submitted by the Palisades demonstrated the existence of sufficient evidentiary facts to establish a preliminary issue justifying a temporary stay. By submitting Liberty disclaimer letter, Palisades proved the existence of a policy of insurance covering the Forde vehicle at the time of the accident.
Palisades also established that several hours after the accident, an operator of the Forde vehicle reported to the police that she had parked the vehicle on the street, that she may have left the key fob inside of the vehicle, that she could not remember locking the vehicle, that the key was missing, and that the vehicle was missing when she returned to the street in the morning. Vehicle and Traffic Law § 388(1) creates a presumption that a driver uses a vehicle with the owner's express or implied permission, which may be rebutted only by substantial evidence sufficient to show that the vehicle was not operated with the owner's consent. In addition, Vehicle and Traffic Law § 1210(a) provides, in relevant part, that no person in charge of a motor vehicle "shall permit it to stand unattended without first . . . locking the ignition [and] removing the key from the vehicle, . . . provided, however, the provision for removing the key from the vehicle shall not require the removal of keys hidden from sight about the vehicle for convenience or emergency." "When a violation of Vehicle and Traffic Law § 1210(a) is established, the victim of a vehicular theft can be held liable to those who suffer injury as a result of the thief's negligence.
The documents submitted in support of the petition raised triable issues of fact as to whether the Forde vehicle was stolen, whether the key fob was left in the Forde vehicle at the time of the theft, and whether the disclaimer of coverage by Liberty Mutual was proper under the circumstances. Accordingly, the Supreme Court should have conducted a framed-issue hearing on those issues.
Editor’s Note: So, if the fact finder establishes that key fob was left in plain view and taken by an unauthorized user, the vehicle would still be considered stolen, and the driver would have no coverage. However, the owner would be liable under Section 1210. If so, as the named insured, that liability would be covered under the auto policy (we suppose), accordingly the vehicle would not be uninsured, and the UM carrier would have the matter permanently stayed. Thanks to Roy Mura, counsel for Palisades, for spending a few minutes with me discussing the court’s decision.
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
07/26/24 Gibson v. Farm Credit East, ACA
Appellate Division, Fourth Department
Failure to Issue Settlement Check to All Parties With a Secured Interest Results in Carrier Paying the Same Loss Twice
Mr. Gibson’s farm was insured under a policy issued by Farm Family. In July of 2019, Mr. Gibson’s premises was damaged due to a fire loss. At that time, Mr. Gibson also reports substantial loss to livestock maintained at the farm. Coverage was eventually accepted by Farm Family, and two payments in the amount of $163,313.03 and $122,400 were issued.
The first payment, for damage to the property, was issued to both Gibson and Farm Credit (who held a secured interest on the property). The second payment for livestock loss, totaling $122,400, was issued directly to Gibson. Although Farm Family knew that Farm Credit also had a secured interest on the livestock, Farm Family did not issue the check to both Gibson and Farm Credit as joint payees.
Farm Credit eventually claimed that irrespective of payments made to Gibson, it was entitled to payment for the loss of the livestock. On summary judgment, the trial court agreed and noted that Farm Credit was entitled to a sum to be determined at trial. The Appellate Division largely affirmed the trial court’s Order, but noted there was no need for a trial. The damages were undisputed, and, as such, Farm Family was directed to issue payment of $122,400 to Farm Credit. This was the case even though it issued the exact same amount in a previous check to Gibson.
BARNAS on BAD FAITH
Brian D. Barnas
[email protected]
07/30/24 Knopp v. State Farm Lloyds
Court of Appeals, Fifth District of Texas at Dallas
Payment of Full Appraisal Award Plus Statutory Fees and Interest Barred Bad Faith Claim Where Insured Identified No Other Independent Damage Caused by Insurer
The Knopps’ home was damaged by hail on March 24, 2019. The home was insured by State Farm. State Farm investigated and found some hail damage, but it determined other areas of the roof were not damaged by hail. State Farm estimated the damage to the roof to be $8,800.71. The total payable amount was $3,525.49, after reductions for depreciation and the policy's deductible.
The insureds disagreed. State Farm retained an engineer to perform a second inspection. After the inspection, State Farm continued to deny coverage for certain areas of the roof, but it enclosed payment of $2,713.30 for additional labor expenses.
More than a year later, a roofing company sent a letter to State Farm indicating the roof was extremely difficult to repair and recommending additional repairs. State Farm spoke with the manufacturer and two roofers who indicated the roof could be repaired in accordance with the prior estimate.
The Knopps invoked the appraisal clause. On January 20, 2021, the appraiser determined the amount to replace the roof was $96,195.04 in replacement cost value and $91,475.77 in actual cost value. The award stated it was not a determination of coverage. State Farm received the award on January 28, 2021, and on February 9, 2021, it informed the insureds it would not pay to replace the roof because the damage was not caused by hail or wind. State Farm did pay an additional $2,550.86 for a minor roof repair.
On May 27, 2021, the Knopps sent a notice letter to State Farm indicating it had breached the insurance code and acted in bad faith. State Farm responded on July 11, 2021, denying any obligation to make an additional payment. The lawsuit was filed on August 11, 2021. After the suit was filed, State Farm paid the balance of the actual cash value set by the appraisal award. It also paid statutory interest and attorneys’ fees related to alleged violations of the insurance code. State Farm then filed a motion for summary judgment on the claims for breach of contract, bad faith, and violation of the insurance code.
The court dismissed the breach of contract claim. The Knopps argued that State Farm was obligated to pay the appraisal award on demand and the contract was breached when it did not pay it immediately. The court disagreed, noting that there was no obligation to pay the award on demand. An appraisal award is binding as to the amount of damages, but not the contractual obligation to pay. The court also held that the full payment of the award discharged the obligation under the policy and disposed of the breach of contract claim.
The bad faith claim was dismissed also. The only actual damages the Knopps were seeking were for lost policy benefits, which were paid. The Knopps argued they were entitled to statutory bad faith damages because of the increased market cost of repair since the date of the award. Texas law recognizes the possibility that in denying a claim the insurer may commit an act so extreme that would cause injury independent of the policy claim. However, such damages must be truly independent of the policy benefits. The Knopps claimed damages were for actual cost of repair, and the policy provides for actual and necessary costs of repair. Accordingly, the insureds had not proved independent damages and the statutory bad faith claim was dismissed.
Finally, the court held that payment of the full amount of the appraisal award plus statutory interest and fees barred a claim pursuant to the Prompt Payment of Claims Act.
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]
07/23/24 Valentin v. U-Haul Co. of Connecticut
Superior Court of Connecticut, Waterbury
No Coverage Where Insured Was Uncooperative in Own Defense
Vasquez rented a vehicle from U-Haul. While driving the truck, she got into an accident with Valentin. The rental agreement between Vasquez and the defendant stipulated that U-Haul would provide Vasquez with liability coverage while she operated the U-Haul vehicle. Valentin sued Vasquez and a default was granted, with judgment entered for $49,345.55. Valentin sued U-Haul for breach of the duty defend Vasquez, and common law and statutory bad faith.
Because U-Haul is self-insured, the court deemed it to be an insurer. “[S]elf-insurers are treated as the equivalent of commercial insurers under our statutory scheme. Pursuant to General Statutes § 38a–363 (b), ‘[i]nsurer’ or ‘insurance company’ includes a self-insurer ... as provided by section 38a–371,” the court wrote.
Notwithstanding this important finding, the court granted U-Haul summary judgment, holding that the company did not breach the duty to defend. Here, Vasquez was, as a matter of law, determined to be uncooperative in her own defense. “In the present case, it is undisputed that Vasquez refused to participate in her own defense. Both parties have submitted evidence clearly stating that Vasquez could not be located, and the plaintiff has submitted evidence showing that Vasquez had become completely unresponsive to the defendant's attempts to communicate.”
The court rejected the plaintiff's argument that this was immaterial and unsubstantial. “Conduct on the part of an assured which makes it impossible for the insurer to get in touch with him in the face of an impending trial, although diligent search is made for him, could rarely, if ever, be regarded as an unsubstantial or immaterial failure to co-operate.” (Citations omitted). The court also pointed out that there was no evidence that U-Hail failed to make diligent attempts to locate Vasquez.
07/22/24 Evans & Lewis, LLC v. Nat’l Liability & Fire Ins. Co.
Superior Court of Connecticut, Danbury
Malpractice Coverage Precluded by Prior Knowledge Exclusion
The court found that no coverage was owed under a legal malpractice policy where the insured had pre-policy inception knowledge of the claim but failed to disclose it on its insurance application.
The plaintiff, a Bethel, Connecticut law firm, represented Damesha Moore. In January 2022, the firm filed an application for malpractice coverage with NFLI. On the application, the firm was asked if, in the past five years, “Is the firm or any attorney for whom coverage is sought aware of any act, error, omission or incident reasonably expected to result in a claim or suit made against them.” The firm answered, “No.” The firm also responded that it had not been involved in grievance arising out of the rendering of legal services.
The policy provided that it would defend the firm against claims first made during the policy period, but only if, “no insured knew or reasonable should have known of any same or related wrongful act, legal service, fact, circumstance or adverse outcome that might result in a claim.”
It turned out that the answers were false. Moore, on October 25, 2021, filed a grievance against the firm, asserting that it was negligent in handling her foreclosure/bankruptcy matter. This was more than two months before the firm completed the insurance application. The firm opposed the grievance, submitting a signed statement on November 29, 2021; recounting that, “Mrs. Moore called me after the law date had run and title vested in the Bank, claiming not to be aware of the same. She threatened to take steps to grieve me, and sue me, with respect to her case. She claimed that I was the cause of her losing her home.... I informed her, during this conversation, that she still had the option of filing a Chapter 7 Bankruptcy .... She declined to take that option and insisted that I prepare a motion to reopen the foreclosure judgment.” (Emphasis added by the court.) The grievance complaint was dismissed on December 19, 2022, before the application for insurance was submitted.
Moore sued the firm in September 2022, during the policy period. NFLI denied coverage and the firm commenced this action soon after.
On cross-motions, the court focused on the policy’s prior knowledge exclusion, applying the two-part subjective-objective analysis test. “[A]sking first, whether the insured had actual knowledge of a suit, act, error or omission, a subjective inquiry; and second, whether a reasonable professional in the insured's position might expect a claim or a suit to result, an objective inquiry.”
The facts, especially Moore’s threats to sue the firm, clearly constituted subjective knowledge of facts and circumstances that might result in a claim. Turning to the objective prong, the court found that a reasonable professional might expect a claim. The filing of a grievance, the court wrote, would alert a reasonable attorney to the possibility that the client might bring a malpractice claim.
The court was unpersuaded by the dismissal of the grievance prior to the submission of the insurance application. “At oral argument, the plaintiffs contended in part that the Committee's dismissal of Moore's grievance complaint proved that there was no merit to the complaint thereby essentially vitiating any potential or actual misrepresentation on their part in the application process. However, it is not the merits of the grievance complaint that is an issue with respect to coverage under the policy. It is the fact that the complaint existed at all at the time the application was. submitted that is critical to the determination of the defendant's obligation to cover the claim.”
07/18/24 Town of Enfield v. Travelers Indemnity Co.
Superior Court of Connecticut, Hartford
Discrimination Claims Against Board of Ed. Fall Within School Board Exclusion
The court granted Travelers summary judgment, finding that the underlying discrimination claims brought by the plaintiff in her capacity as a member of the Enfield Board of Education fell within the Employment Practice Liability and Public Management Liability coverage parts’ school board exclusion
In an underlying federal court matter, Hernandez sued the Enfield Board of Education claiming that, as a member of the Board, she was denied a reasonable accommodation for her claimed disabilities. Enfield timely tendered the complaint, and Travelers denied coverage. Enfield brought this suit, alleging breach of the duty to defend, unjust enrichment, a declaration of coverage. Cross-summary judgment motions followed.
Travelers argued that there is no coverage based on identical the Board Exclusions in the EPL and PEML coverage parts. The policy provides that the insurance does not apply to:
a. Boards, Commissions, or Governmental Units or Departments
“Employment loss” arising out of any activities or operations of the following boards, commissions or governmental units or departments: ….
(6) Schools or school districts; or ….
Travelers argued that the provisions unambiguously preclude coverage for employment loss arising out of operations and activities of school boards and school districts. Enfield argued that because both the Town and the School Board are named insureds on the declarations page there is an ambiguity. Travelers countered that the common policy declarations page is modified by the policy endorsement which provides that the Board is not a named insured with respect to the EPLI and PEML coverage.
The court agreed with Travelers, finding that a plain reading of the endorsement indicates that only the CGL coverage part applies to the Board of Education. The Town’s attempt to argue ambiguity because the term Board was not defined was unavailing.
The court also granted Travelers summary judgment under the CGL coverage part, finding that the underlying action did not allege an occurrence and that it contains a discrimination and EPL exclusion. The court found that the exclusion clearly precludes coverage.
KYLE’S NOTEWORTHY NO-FAULT
Kyle A. Ruffner
[email protected]
07/15/24 Country-Wide Ins. Co. v. Quick Docs Med. PLLC
Supreme Court, New York County
Court Grants Insurer’s Motion to Vacate Arbitration Award, as Default Judgment Had Been Entered Against the Medical Provider and Injured Party
Country-Wide Insurance Company insured a motor vehicle involved in a collision, which caused injury to one of the vehicle's occupants, Jean Bastien. Mr. Bastien sought medical services from the Respondent medical provider, who submitted the resulting bills to Country-Wide. The insurer requested Mr. Bastien appear for an Examination Under Oath, but he did not appear. A second notice was mailed but Mr. Bastien again failed to appear. The insurance company commenced suit against the provider and injured party, both of whom failed to appear, leading to the entry of a default judgment. The medical provider filed a demand for arbitration, and the arbitrator awarded the provider $2,907.94, holding there were questions of fact relating to the mailing of the insurer’s examination under oath notices. A Master Arbitrator affirmed the award. Country-Wide commenced this action seeking to vacate this award.
To confirm or vacate an arbitration award, parties must bring a special proceeding pursuant to Article 75 of the CPLR within 90 days of the delivery of the award. Further, it is well settled that judicial review of arbitration awards is extremely limited and an award must be upheld when the arbitrator offers “even a barely colorable justification for the outcome reached.'" Wien & Malkin LLP v. Helmsley-Spear, Inc., 6 N.Y.3d 471, 479, (2006). A court may vacate an arbitration award only if it violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator's power. Further, the standard of review in Article 75 proceedings depends on the amount awarded by the arbitrator. Judicial review of a master arbitrator's award is limited to the grounds set forth in CPLR article 75 unless the award is $5,000 or more, in which case the entire dispute is subject to a de novo review. Where the amount in contention does not exceed $5,000.00, courts grant deference to the findings of the arbitrators. Only when review has basis in an enumerated ground in CPLR § 7511 or the court finds that the arbitration award is a result of arbitrary or capricious determinations by the arbitrators may the court interject.
Here, the arbitration award did not exceed the $5,000.00 limit. As such, the Court was bound by the factual determinations of the arbitrators and review of the motion to vacate the award was limited to the bases enumerated in CPLR § 7511. The insurer contended that the arbitrators' awards are incorrect as a matter of law, and that the arbitrators lacked subject matter jurisdiction to determine the present issue as the insurer had previously been granted default judgment in the underlying matter. "An arbitration award may be vacated as barred by the preclusive effect of a judgment or settlement entered in prior litigation." Tokio Marine & Fire Ins. Co. v. Allstate Ins. Co., 778 N.Y.S.2d 315 (2nd Dept. 2004); see also Country-Wide Ins. Co. v. NYC Cmty. Med. Care, PC, 2021 NY Slip Op 30156(U) (N.Y. Cty. Sup. Ct. 2021). "Ordinarily a default judgment in a declaratory judgment action will have res judicata effect barring any action [or arbitration] to recover no-fault benefits." Country-Wide Ins. Co. v. Avalon Radiology, PC, 2017 NY Slip Op 30606(U) (N.Y. Cty. Sup. Ct. 2017).
Country-Wide’s motion to enter default judgment was granted on January 17, 2018, and the respondent did not seek to vacate the decision. However, the respondent demanded arbitration approximately two months after the decision and argued in this action that vacatur of a master arbitrator's award requires an error or misapplication of the law. However, the court determined that to refuse vacatur in the present matter would be to render an order of the court meaningless. The decision granting default judgement stated that "[Petitioner] owes no duty to Defendants Jean Bastien ... and Quick Docs Medical, PLLC, to pay No Fault claims submitted in relation to the June 6, 2016, loss...." In other words, the court there had already determined, legally, that respondent's failure to appear precluded recovery. Therefore, the court held that to allow the respondent to recover would be to grant immunity from the law and the courts.
Accordingly, the court held the arbitrators' determination was inapposite to the final determination of the court and incorrect as a matter of law. Accordingly, the court granted Country-Wide’s petition, and the awards rendered in favor of the medical provider were vacated.
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
Family time – see you in two weeks.
STORM’S SIU
Scott D. Storm
[email protected]
07/03/24 Zarour v. Pacific Indemnity Co.
United States Court of Appeals, Second Circuit.
The Disparity Between the Appraisal Award and the Insured’s Appraiser's Estimate Alone Cannot Lead to a Conclusion That the Appraisal Must Have Been a Product of Bias, Corruption or Partiality; Insured May Not Contest the Appraisal Award in a Factual Hearing
Plaintiffs appeal from the district court's judgment confirming an insurance appraisal award against Defendant and dismissing the action. The Zarours commenced this lawsuit against Pacific, their insurer, in connection with damage caused to their home by Superstorm Sandy in October 2012. The amended complaint alleged breach of contract, breach of the implied covenant of good faith and fair dealing, and bad faith on the part of Pacific for its failure to cover damage caused to their home.
In June 2015, Pacific moved for summary judgment as to certain of the Zarours' claims, and to compel an insurance appraisal pursuant to the terms of the Zarours' insurance policy. In July 2015, the district court dismissed the Zarours' demands for consequential and punitive damages, as well as their claim for breach of the implied covenant, and granted Pacific's motion for an appraisal, staying the case pending that appraisal. Following an initial appraisal in 2016 (the "2016 Appraisal"), the district court ordered a second appraisal in 2017 (the "2017 Order") on the issue of mold damage, which ultimately occurred in 2022 (the "2022 Appraisal"). The district court subsequently granted Pacific's motion to confirm the appraisal award in the total amount of $115,507, consisting of (1) the award issued by the appraisal panel in the amount of $110,490.20 based on the 2016 Appraisal and (2) the award issued by the appraisal panel in the amount of $5,016.80 based on the 2022 Appraisal to cover the additional cost of mold damage to the home. After confirming the appraisal awards, the district court dismissed the case.
On appeal, the Zarours argue that the district court erred in confirming the 2022 Appraisal award for mold damage because: (1) the disparity between the appraisal award and the Zarours' appraiser's estimate raises an inference of bias or bad faith; (2) the appraisal panel did not properly investigate the presence of mold as instructed in the 2017 Order; and (3) the district court did not provide the Zarours with an opportunity to contest the appraisal award in a factual hearing.
We review the district court's interpretation of New York law in confirming an insurance appraisal award de novo. In so doing, "it is our job to predict how the New York Court of Appeals would decide the issues before us."
New York law allows courts to order an appraisal to "determine 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" and provides that the appraisal "shall proceed pursuant to the terms of the applicable appraisal clause of the insurance policy and not as an arbitration." N.Y. Ins. Law § 3408(c). "An appraisal determination should be upheld in the absence of fraud, bias or bad faith." The Appellate Division has further specified that, in order to set aside an appraisal, such a showing must be made by "clear and convincing" evidence.
The Zarours provided no evidence—let alone clear and convincing evidence—that the 2022 Appraisal was the result of fraud, bias, or bad faith. Instead, their primary argument appears to be that the disparity between the appraisal award of $5,016.80 for mold damage and the Zarours' appraiser's estimate of $731,317.03 "leads to a conclusion that the signed appraisal must have been a product of bias, corruption or partiality." As the district court noted, allowing the disparity with an appraiser's estimate, as opposed to the case proved, to serve as a basis for rejecting a final appraisal award "would create perverse incentives for the party opposing the appraisal in the first place." In particular, "[t]hat party could simply select an appraiser that would generate a vastly inflated or deflated appraisal value that the other appraiser could not possibly agree with, leading to the rejection of any reasonable appraisal valuation."
Here, the Zarours retained as their appraiser an architect who was not a certified appraiser, and his estimate of mold damage (1) was based on the assumption that mold was present rather than an actual investigation for mold, (2) initially included both damage from mold and wind-driven rain but did not change when the district court limited the scope of the 2022 Appraisal to mold alone, and (3) ultimately appears to have been based on an estimate generated by Simon Zarour himself. Thus, given the weaknesses in the Zarours' appraisal, its rejection does not provide clear and convincing evidence of "fraud, bias or bad faith." Indeed, any rational inference of bias or bad faith is further undermined by the fact that the neutral umpire, independently of the parties, hired a mold specialist to assist in reviewing the parties' submissions. In short, even if we applied a disproportionality standard, we would be unpersuaded that the architect's estimate constitutes proof sufficient to overturn the insurance appraisal in this case because that estimate does not represent "the case proved."
The Zarours also argue that the appraisal panel did not properly investigate the mold condition as instructed in the 2017 Order. However, they provide no basis for us to conclude that the appraisal panel failed to follow the procedures set forth in their insurance policy, in violation of N.Y. Ins. Law § 3408. Instead, the Zarours and Pacific each selected an appraiser. The appraisers in turn selected an umpire, each provided their conclusion as to the loss amount, and, following their disagreement as to the loss amount, submitted their differences to the umpire, at which point the final amount was determined, pursuant to the policy, based upon the agreement of the umpire and Pacific's appraiser. As the Zarours concede throughout their briefs on appeal, their challenge to the award solely concerns the methods the appraisers used, not their compliance with the procedure laid out in the policy.
Nor do the Zarours point to facts that support their assertion that the award did "[n]ot compl[y]" with the 2017 Order. The 2017 Order required the "appraisal panel to reopen the appraisal to determine if, and to what extent, plaintiffs have suffered losses under the Policy due to mold damage," which was precisely the subject of the 2022 Appraisal based on the parties' extensive submissions to the panel. In the absence of any evidence of "fraud, bias or bad faith," or that the appraisers failed to follow the procedure laid out in the insurance policy, there is no basis to disturb the appraisal panel's valuation of the mold damage to the Zarours' home.
Finally, the Zarours' argument that the district court did not provide them with an opportunity to contest the appraisal award in a factual hearing is similarly unavailing. Nothing in New York caselaw or the Zarours' insurance policy granted them a right to re-litigate the appraisal award in a factual hearing before the district court; to the contrary, "reservation of these issues for future litigation would have rendered the appraisal meaningless." In any event, the Zarours fail to point to any additional evidence they would have presented at an evidentiary hearing to support their position. Thus, the absence of any such hearing regarding the appraisal process before the district court does not provide grounds to vacate the appraisal award.
FLEMING’S FINEST
Katherine A. Fleming
[email protected]
07/23/24 Zurich Am. Ins. Co. v. Med. Props. Trust, Inc.
Massachusetts Supreme Judicial Court
Rainwater That Lands and Accumulates on either a Building's Second-Floor Outdoor Rooftop Courtyard or a Building's Parapet Roof Does Not Unambiguously Constitute "Surface Waters" Under Massachusetts Law
A severe thunderstorm and heavy rain caused damage to a hospital, owned by Medical Properties Trust, Inc. (“MPT”) and leased to Steward Health Care System LLC (“Steward”). MPT and Steward sought coverage from their insurers. Due to the storm, there was an extensive accumulation of ground water and flooding of the basements of the hospital’s buildings. Rainwater also accumulated on the rooftop courtyard of one building and the parapet roof of two buildings. The rain seeped through the roofs and rooftop courtyard, causing interior water damage.
The insurers had lower coverage limits for damage to properties caused by “flood,” defined as “[a] general and temporary condition of partial or complete inundation of normally dry land areas or structure(s) caused by [] [t]he unusual and rapid accumulation or runoff of surface waters.” The parties agreed that damage to the basements was due to surface water and thus fell within the sublimits for damage caused by flood. The parties disagreed whether the water that accumulated on the roofs was also surface water. The insurers argued that substantially all the damage was caused by flood because the rainwater on the roofs was also surface water. MPT and Steward argued that the plain meaning of “surface waters” is waters on the surface of the earth or water at ground level, and the flood provision refers to water on the ground or moving from a body of water or watercourse on the surface of the earth. It boiled down to whether water that accumulates on any surface is “surface waters” or only water that accumulates on the surface of the earth.
The United States District Court for the District of Massachusetts held that the term “surface waters” in the policies' definition of “flood” included the rainwater accumulated on the rooftop courtyard and the parapet roofs of the hospital and granted partial summary judgment to the insurers. Recognizing that her resolution of this legal issue involved a controlling question of law for which there is substantial ground for difference of opinion, the judge allowed an interlocutory appeal pursuant to 28 U.S.C. § 1292(b). On appeal, the First Circuit certified the following question to the SJC:
“Whether rainwater that lands and accumulates on either (i) a building's second-floor outdoor rooftop courtyard or (ii) a building's parapet roof and that subsequently inundates the interior of the building unambiguously constitutes ‘surface waters’ under Massachusetts law for the purposes of the insurance policies at issue in this case?”
The SJC concluded that the meaning of “surface waters,” and the definition of “flood” under the policies, was ambiguous in the context of rainwater accumulation on roofs. Neither the specific policy language nor the insurance policy as a whole directly addressed whether surface water includes rainwater accumulating on the surface of a roof. The court noted that the case law across the country is divided on the issue with no consensus position. Because there were conflicting interpretations of the term “surface waters,” the court resolved the ambiguity in favor of the policy holder. The SJC concluded that the definition of “surface waters” does not include the rainwater that landed and accumulated on the rooftop courtyard and parapet roofs in this case, or at least it did not unambiguously include such accumulation of water on a roof.
Accordingly, the SJC’s answer was that rainwater that lands and accumulates on either a building's second-floor outdoor rooftop courtyard or a building's parapet roof does not unambiguously constitute “surface waters” under Massachusetts law for the purposes of the policies at issue in this case.
GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]
08/01/24 Chiaccheri v. Zurich American Insurance Company
District of New Jersey
Underinsured Motorist Benefits Not Available in New Jersey if Tortfeasor’s Bodily Injury Liability Limits Are Greater than UIM Limits
The Plaintiff was operating his employer’s vehicle when he was struck by a non-party tortfeasor. The tortfeasor’s automobile liability carrier, GEICO, offered its $100,000 bodily injury liability limit to the Plaintiff to settle the claim, which Plaintiff accepted. The Plaintiff then sought Underinsured Motorist benefits (“UIM benefits”) from his employer’s automobile carrier, Zurich. The Plaintiff contended that his $15,000 UIM benefits limit should be reformed to match the policy’s $2,000,000 covered autos liability limit. This lawsuit followed.
The Zurich policy contained an Uninsured/Underinsured Coverage Endorsement, providing that Zurich would pay all sums the insured is legally entitled to recover from the owner or driver of an “underinsured motor vehicle.” However, the New Jersey Split Uninsured and Underinsured Motorists Coverage Limit Endorsement, known as a “step-down” provision, modifies this to limit Zurich’s payment of UIM benefits to $15,000 per person, or $30,000 per accident.
The Court noted the key distinction between uninsured motorist coverage and underinsured motorist coverage under New Jersey law. The former must be included in every policy of insurance, and if policy provisions are more restrictive than what is mandated by the statute, they are liable to be stricken. However, while the latter must be offered to the insured by an insurance carrier, it need not be accepted by the insured.
Noting that this case is one of underinsured motorist coverage, the court turned to whether the tortfeasor’s vehicle was “underinsured.” The endorsement provided that a vehicle was “underinsured” when the sum of liability limits under all bodily injury policies available to the tortfeasor is less than the underinsured motorist coverage limit under the UIM claimant’s policy. That is, to prevail on a UIM claim in New Jersey, the UIM claimant’s UIM limits must exceed the tortfeasor’s bodily injury liability limits.
Zurich’s position was that, since the Claimant’s UIM limits were less than the tortfeasor’s bodily injury liability limits, no UIM coverage was available. The Claimant’s position, again, was that the UIM limits should be reformed to match the Zurich policy’s $2,000,000 bodily injury limit, on the ground that the step-down provision within the UIM endorsement was unenforceable due to public policy considerations.
N.J. Stat. Ann. 17:28-1.1(f) provides that UIM benefits available to an employee of a corporate named insured under a motor vehicle liability policy shall not be less than the UIM limits available to the corporate named insured itself. Importantly, the UIM limits available to the named insured and its employees alike under the Zurich policy was $15,000. The court therefore held that the plaintiff was not entitled to reformation of the UIM limits, since the UIM limits as written did not contravene the statute or public policy.
Without the UIM limits being reformed to match the $2,000,000 bodily injury liability limits, it remained true that the UIM limits available to the plaintiff were less than the bodily injury liability limits available to the tortfeasor. Thus, the Court agreed with Zurich, that no UIM coverage was available.
Editor’s Note: It works differently in New York, where Insurance Law 3420(f)(2) requires the SUM claimant’s bodily injury limits to be greater than the tortfeasor’s bodily injury liability limits. In New Jersey, the comparison is between the UIM claimant’s UIM limits and the tortfeasor’s bodily injury limits, while in New York, it’s a comparison between competing bodily injury limits.
O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]
07/24/24 Taylor v. Root Ins. Co.
United States Court of Appeals, Fifth Circuit
Payment of Sales Tax Does Not Apply to Actual Cash Value Payment of Auto Claim Where State’s Statutory Framework Applies to Retail Sales Only
Taylor purchased a personal auto policy from Root. She filed a claim and Root determined the vehicle to be a total loss and elected to pay her the vehicle’s actual cash value of $22,750 in exchange for its title. No sales tax was paid by Root. Taylor then filed a putative class action suit for Root’s failure to pay her the sales tax of $1,421.88 in violation of the Texas Prompt Payment of Claims Act (“TPPCA”).
The relevant policy provisions read:
Limit of Liability
-
Our limit of liability for loss will be the lesser of the:
-
Actual cash value of the stolen or damaged property less the deductible; or
2. Amount necessary to repair or replace the property with other property of like kind and quality less the deductible.
Payment of loss
We may pay for loss in money or repair or replace the damaged or stolen property. We may, at our expense, return any stolen property to:
-
You; or
-
The address shown in this policy.
If we return stolen property we will pay for any damage resulting from the theft. We may keep all or part of the property at an agreed or appraised value.
If we pay for loss in money, our payment will include the applicable sales tax for the damaged or stolen property. We may settle any loss with you or the owner or lienholder of the property. (Emphasis Added).
Notably, the Payment of Loss language includes the applicable sales tax. Based on that language, Ms. Taylor filed a breach of contract action and a violation of the TPPCA due to Root’s omission of sales tax on its settlement payment. Root moved to dismiss the claims and deny Taylor’s request for leave to amend her complaint. The district court agreed with Root and dismissed the action.
The parties agreed Texas law applied as Taylor was a Texas resident. In reliance on the Payment of Loss language, Taylor looked to the amount of applicable sales tax under Texas law, which is 6.25% of every retail sale of a motor vehicle sold in the state. However, she agreed that the State was not due any amount because of Root’s payment.
The Circuit Court reasoned that the policy’s plain language requires payment of the applicable sales tax only and no sales tax was applicable. This is because the Texas tax statue applies only to retail sales, not a loss settlement. Taylor further conceded that the Fifth Circuit held in a 2020 case that actual cash value, which is the equivalent of fair market value, does not include taxes and fees payable to the purchase of a replacement vehicle. The court rejected Taylor’s reliance on authority from other districts because those matters involved different statutory schemes and provided no insight into Texas law.
For the same reason, the court rejected Taylor’s argument that Root violated the TPPCA by failing to timely pay the sales tax. Simply because Root owed no sales tax, it could not have violated the TPPCA for not providing funds the insurer did not owe.
ROB REACHES the THRESHOLD
Robert J. Caggiano
[email protected]
07/26/24 Durkee v. Sanchez-Rodriguez et al
Appellate Division, Fourth Department
Fourth Department Affirmed, in Relevant Part, A Decision Denying Summary Judgment for either Party on the Issue of Whether Plaintiff Was Required to Establish He Suffered Serious Injury Under Insurance Law § 5102 Where There Remained a Question of Fact Whether a Tractor Involved in the Subject Collision Met the Criteria to Be Defined as a “Motor Vehicle” Under Insurance Law § 5104(a)
Plaintiff appealed, and Defendants cross-appealed, from an Order of Supreme Court, Genesee County, which denied, in relevant part, Plaintiff’s motion and Defendants’ cross-motion for summary judgment seeking to dismiss the complaint on the grounds that Plaintiff did not sustain serious injury pursuant to Insurance Law § 5102(d). Notably, the branches of the parties’ respective motions focused on the threshold issue of whether Plaintiff was even required to establish that he suffered a serious injury as defined by Insurance Law § 5102(d).
By way of background, this matter stems from an incident where a vehicle operated by Plaintiff Charles L. Durkee, Sr., collided with the rear end of a manure spreader being towed by a tractor operated by Defendant Martin Sanchez-Rodriguez. The tractor and manure spreader were owned by Defendants Zuber Farms and Zuber Farms, LLC – and those entities were owned, in part, by Defendant Eric O. Zuber. Defendant Martin-Sanchez was working within the scope of his employment for the Zuber Farms Defendants at the time of the collision. The subject accident occurred at night, and Plaintiff collided with the tractor and manure spreader just after cresting a hill on a roadway. Neither the tractor nor manure spreader had operational tail lights or reflectors.
On review, specific to the threshold issue of whether Plaintiff need establish he suffered a serious injury as defined by § 5102(d), the Fourth Department found the underlying court properly denied the branches of the parties’ respective motions. In its analysis, the Fourth Department cited Insurance Law § 5104(a) which states, “In any action by or on behalf of a covered person against another covered person for personal injuries arising out of negligence in the use or operation of a motor vehicle in [New York], there shall be no right of recovery for non-economic loss, except in the case of a serious injury.” However, the definition of “motor vehicle” in § 5102 does not encompass a “tractor and . . . attached [equipment] . . . being used exclusively for agricultural purposes, [and therefore] the serious injury threshold requirement is not applicable.” [citations omitted]. Given this backdrop, the Fourth Department held that a question of fact remains to whether the manure spreader and tractor were being used exclusively for agricultural purposes.
Accordingly, the Order of the Supreme Court, Genesee County, which in relevant part denied Plaintiff’s motion and Defendants’ cross-motion for summary judgment on the issue of whether Plaintiff need prove he suffered a serious injury as defined by § 5102 (d) was affirmed.
LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]
07/22/24 AIG Prop. Cas. Co. v. Harleysville Worcester Ins. Co.
New York State Supreme Court, New York County
Summary Judgment Granted in Direct Action Brought by Insurer Based on Long-Tail Water Damage Claim
AIG Property Casualty Company (“AIG”) brought a direct action against Harleysville Worcester Insurance Company (“Harleysville”) pursuant to Insurance Law § 3420, to enforce satisfaction of a default judgment obtained against Harleysville’s insured, Martack Heating and Air Conditioning (“Martack”).
The direct action stemmed from a water damage claim that was reported in September 2013 by AIG’s insured, Joseph Edelman and Pamela Keld (the “Edelmans”). AIG reimbursed the Edelmans for damages. During the investigation, AIG determined that the water damage had damage was the result of long-term leakage from the HVAC system installed by Martack.
AIG commenced a subrogation action against Martack. AIG placed Martack’s insurer, Harleysville, on notice of the subrogation action. Harleysville disclaimed coverage on the ground that the loss occurred after the Harleysville policy had been cancelled. A default judgment was obtained against Martack.
In the direct action, AIG argued that coverage is not triggered when the loss is discovered, but rather when the property damage occurs. In opposition, Harleysville argued that the date of discovery was the date of the occurrence for the underlying water damage claim.
AIG produced two experts who opined that the water damage had been ongoing for seven years. Over the seven years, structural damages began to develop due to prolonged and continuous water infiltration. Based on the continual damages, the court concluded that coverage was triggered at the time of the injury, rather than at the time the injury is discovered.
Moreover, the plain language of the subrogation complaint alleged that the damage was caused by a series of ‘numerous water leaks’ occurring over a period of several years. The court pointed to Harleysville’s own claim notes, which indicated that Harleysville had contemplated assigning defense counsel under a reservation of rights, to determine the date of loss.
During the seven years, Harleysville provided coverage to Martack for six years and three months. Accordingly, the court concluded that since the Harleysville policy had been implicated in a long-tail claim, Harleysville is entitled to a pro-rata allocation of damages based on time spent insuring the risk.
The court ordered that AIG is entitled to a monetary judgment of $1,572,340.91, plus statutory interest, costs, and disbursements from Harleysville.
LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]
07/29/24 New York Senate Bills S154F, S7760A, and S7744D
Legislation Relating to Lithium-Ion Batteries
Acts to amend General Obligations Law to include legislation regarding lithium-ion batteries and electronically assisted bicycles, scooters, etc.
On July 11, 2024, Governor Kathy Hochul signed into law various legislation impacting lithium-ion batteries.
S154F, an act to amend the general business law, to require that any person, firm, partnership, corporation, etc., shall not sell lithium-ion batteries for use in a bicycle, moped, or “micromobility devise” (electronic scooter, skateboard, unicycle) unless they are certified by an accredited testing laboratory.
This bill will take effect on October 9, 2024.
S7760A, an act to amend the general business law, to require that charging cords for bicycles, mopeds, and micromobility devises with electric assist have a red tag attached that states that users should unplug the cord when not in use.
This bill took effect immediately on July 11, 2024.
S7744D, an act to amend the general business law, requiring that devices and bicycles with electronic assist include a notice that reads, “NOTICE: Always yield to pedestrians and follow traffic laws. Riding on the sidewalk may be illegal; consult local laws.”
This bill will take effect on January 7, 2025.
The above amended statutes seek to alleviate some of the dangers that arise out of the use of lithium-ion batteries and electronic bicycles, scooters, etc. Hopefully, we will see a decrease in accidents involving these electronically assisted devices and fires caused by lithium-ion batteries.
NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
[email protected]
07/22/24 Furtado v. Lloyd’s Underwriters
Ontario Court of Appeal
The Failure to Comply With a Notice Provision in a Claims Made & Reported Policy Is Non-Compliance With an Essential Condition Precedent to Coverage Such That There Can Be No Relief From the Forfeiture of That Coverage
On July 22, 2024, Justice Thornburn who addressed the FDCC in plenary session at the opening of the 2024 Annual Meeting in Toronto on July 28, 2024, has issued an important decision on the appeal of an issue of late reporting of claims and relief from forfeiture as a consequence of the breach of that condition.
Very briefly, this case concerned the lack of notice of a circumstance under a claims’ made directors’ and officers’ policy and whether relief from forfeiture of insurance coverage is available. At first instance, the application judge held that the insured failed to report the circumstance, breaching a condition precedent of a claims-made policy, and as it is a condition precedent, relief from forfeiture of insurance coverage is not available. The Court of Appeal agreed with the application judge but in so doing discussed the obligation to report under occurrence policies and claims made policies.
The Court of Appeal recognized that the triggering event for occurrence policies is whether the occurrence took place within the policy period, not whether notice of the claim was given during the policy period. Occurrence policies therefore provide coverage for incidents that took place during the policy period, regardless of when the claim is brought. If the late reporting prevented the liability insurer from exercising its contractual right to investigate and control the claim, then that actual prejudice is such that relief from forfeiture ought not to be granted.
Claims-made policies on the other hand, focus on when the claim is made against the insured, not when the negligent or injurious occurrence took place. Coverage is triggered by a claim that is both made and reported to the insurer during the policy period. The wording of a claims-made and reported policy makes clear that the making and reporting of a claim are the triggering events for coverage. It follows that the failure to comply with a notice provision constitutes non-compliance with an essential condition of coverage such that there can be no relief from forfeiture. The insured is in breach of a condition precedent as to coverage and is therefore disentitled from claiming coverage. To allow otherwise would be akin to allowing coverage in an occurrence policy where the accident took place after the policy period. As notice in this case breached that condition precedent, the insured was disentitled to coverage.
© Hurwitz Fine P.C. 2024
All rights reserved
