Coverage Pointers - Volume XXVI No. 5

Friday, August 16th, 2024

Volume XXVI, No. 5 (No. 677)
Friday, August 16, 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.

 

HF Coverage Pointers header 

Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations. Our latest issue of CP is attached.

It’s the mid-summer at our appellate courts, so the decisions are few and far between (and that will be the case until mid-September).  This happens every year.

However, there are two cases surely worth reading – a very interesting “additional insured” case, with policy language limiting coverage for the additional insured to derivative liability.  In other words, an additional insured endorsement that did not provide the additional insured with coverage for its own negligence.  You’ll find that case in my column.  Then there’s an insurance procurement case in Steve’s column. Ahh, you’ll also find the answer to the question, “if sex in a car leads to an STD, does it arise out of the use and operation of a motor vehicle?” in Ryan O’Shea’s column

Our Peers Believe we Belong in Best Lawyers in America

Hurwitz Fine is proud to have 30 lawyers recognized in the 2025 editions of The Best Lawyers in America® and the Best Lawyers: Ones to Watch® in America.

Congratulations to 30 of the firm’s attorneys who have been selected by their peers for inclusion in the 2025 edition of The Best Lawyers in America®. Among this list, eight Hurwitz Fine attorneys were named to the Best Lawyers: Ones to Watch in America® list.

In addition, Dan D. Kohane was also named as “Lawyer of the Year” in Buffalo for Insurance Law. “Lawyer of the Year” honors are awarded annually to only one lawyer per practice area in each region with extremely high overall feedback from their peers, making it an exceptional distinction.

The attorneys named to the 2025 edition of The Best Lawyers in America®, the year they were first recognized, and the practice areas in which they were honored are as follows:

 

Eight Hurwitz Fine attorneys were also named to the “Ones to Watch” list:

 

Risk Transfer Program on August 20th, 1:00 Eastern.

Our program is fully subscribed.  We have over 1000 signed up to attend our Risk Transfer Primer.  We do have a wait list which will be filled as others advise of an inability to attend.  Drop me a note at [email protected].

 

Risk Transfer Presentation Announcement

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.

 

Your choice: Pay $10 or Five Days in the Slammer – 100 Years Ago:

The Farmingdale Post
Farmingdale, New York
16 Aug 1924

AUTOMOBILE CASES
BEFORE JUDGE CARL

          Village Justice George Carl, Sr., and Village Officer Arthur Powell are having busy days guarding the safety of the community these days. Motor car violations of law are very frequent.

          Among the cases this week was that of Albert Miller of Brooklyn charged with wickless driving through the village last Sunday. He was fined $10 which he refused to pay. Thereupon Judge Carl gave him five days in jail as an alternative. Upon reaching the jail, however, he changed his choice and paid the Sheriff the $10 and went home.

          Another case comes up tonight. Duffy Moedelok who lives near the brickyard, was summoned for speeding on Thursday.

 

Peiper on Property (and Potpourri):

Despite a sleepy August calendar for the Appellate Courts, we do have an interesting decision out of the Second Department this week.  In Titov, the Court addressed an interesting question on the intersection of “active” negligence and GOL 5-322.1.  The Court, specifically, dismissed two indemnity claims against third-party defendants on the basis that the indemnity clauses at issue did contain “savings” language. 

Because there was a question of fact as to the negligence of the purported indemnitee, Fulton, the Court ruled that the indemnity claims could be dismissed.  There is a nuance in this decision which could be easily overlooked, so kindly give us your attention for a few minutes. 

The application of 5-322.1 is not absolute where there is no saving language.  Indeed, in Brooks v. Judlau Contracting, the Court of Appeals wrote that there is no prohibition from a party being indemnified under a contract without “fullest extent” language so long as the party was not negligent.  So, if a party may still be indemnified despite broad language in the trade contract, how does the Second Department grant dismissal here? 

The answer is in the status of the companion tort claims.  The Titov matter involved a slip and fall, and, thus, engendered two causes of action.  The first based in Labor Law 241(6), and the second asserted Labor Law 200/Common Law Negligence Claims.  The existence of the Labor Law 241(6) claim meant it was possible for Fulton to be liable for damages to plaintiff even though it was not negligent; but rather statutorily liable.  Under the case law in Brooks v. Judlau Contracting, it was theoretically possible for Fulton to still achieve indemnity.  And, accordingly, one would think that the indemnity claim should have survived on a question of fact.

Here, however, the Labor Law 241(6) claim was dismissed as part of the same motion practice.  At that time, then, the only exposure to Fulton was under Labor Law 200/Common Law Negligence.  This means that Fulton’s only exposure had to have been borne from its own negligence.  There is no longer statutory/status liability in play.  Accordingly, the only way Fulton owes money is directly connected to its active negligence.  Because it cannot be indemnified for its active negligence, it can have no indemnifiable loss.   

The bottom line is that the indemnity claims were properly dismissed, but not exclusively due to GOL 5-322.1.  They should have been dismissed because Fulton cannot present a claim for indemnity that is not directly connected to its own negligence and that is not indemnifiable. 

There is another interesting aspect of this case too, and it comes out of the discussion related to the insurance procurement obligations of PMB.  The Court noted that PMB was in compliance even though it procured AI coverage for “ongoing operations” only.  Because PMB, apparently, “ceased operations” prior to the loss, its carrier denied coverage to Fulton.  Had, however, the clause required CGL coverage for both ongoing and completed operations, respectively, there may well have been a basis for a failure to procure claim. 

The practice point is that a party is only required to buy what the contract asks for. If you want comprehensive coverage for a jobsite, the AI procurement clause must ask for both ongoing and completed operations coverage. 

Steve
Steven E. Peiper
[email protected]

 

Carry Bag or Die – 100 Years Ago:

The Buffalo News
Buffalo, New York
16 Aug 1924

REFUSAL TO CARRY BAG BRINGS DEATH TO ONE

Youth in Hospital With Bullet Wounds – Girl is Dead

          PINEVILLE, KY., Aug 16. – Because he refused to carry her suitcase on the road to Harlan, Lucy Waggoner, 18 years old, is dead and Freeman Wilson, 17, is in a hospital here suffering with bullet wounds inflicted by the girl, according to a statement made by Wilson.

          Wilson said that he and two companions were going into Pine Mountain late Wednesday and that the game came along carrying a bag. He had a .45 and a 32.-caliber pistol, he said, and handing one of them to one of his companions, offered to carry the suitcase for Miss Waggoner. When they reached a fork in the road, Wilson said he returned the suitcase to the girl.

          This apparently angered her, Wilson said, and she began shooting at him. She fired four shots, two taking effect in his legs. As he fell, he said, he fired once, the bullet striking the girl between the eyes, killing her.

          According to word received here today from Harlan, a murder charge has been placed against Wilson, and his two companions held for questioning.

 

Barnas on Bad Faith: 

Hello again:

Lee and I had the pleasure of presenting a CLE for the New York State Bar Association on A Litigator’s Guide to Bad Faith yesterday afternoon.  Thank you to those of you who attended.  If anyone has any suggestions or ideas on other insurance-related topics that they would like to see CLEs’ on from the NYSBA Torts Insurance and Compensation Law Committee, please do not hesitate to send me an email.

I am happy to report that Hurwitz Fine softball is back in the playoffs, although we only snuck in as the 7th seed this year.  We have a big matchup against the heavily favored District Attorney’s Office tonight.  As the manager, I am starting to feel a little heat from upper management and the fans.  I am not sure that the fanbase is going to tolerate a fourth consecutive first round playoff exit.  Hopefully, we can pull off the upset and emerge victorious, or this may be my last note to you as the skipper. 
See you in two weeks.

Brian
Brian D. Barnas
[email protected]

 

Sticker Stick Driver – 100 Years Ago:

The Buffalo News
Buffalo, New York
16 Aug 1924

WINDSHIELD “STICKERS”
CAUSE DRIVERS ARREST

BERKELEY, Cal. Aug 16. – Fred de Mert is under arrest for having “stickers” on the windshield of his automobile. This is the first arrest under a new city ordinance which holds that “stickers” obstruct the view of the driver.

 

Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

Does anyone remember way back during the last century when August rolled around and the courts were closed, attorneys were on vacation, and nothing happened? Me too, and I miss those days. It was a chance to get away without worrying and to catch up on cases too long neglected by the latest whack-a-mole emergency. Of course, we were punished post-Labor Day when every judge wanted every case to move at lightning speed. But at least we were rested and prepared because we understood the cycle of the calendar. I guess those days are long gone. Now, August is just like any other month, providing no respite.

At least the courts keep working. This edition we have a good reminder of the rules surrounding the application of res judicata in a case where the insured lost coverage but argues that the carrier made misleading post-cancellation statements.

Keep keeping safe.

Lee
Lee S. Siegel
[email protected]

 

National Women’s Party Endorses – 100 Years Ago:

The Buffalo News
Buffalo, New York
16 Aug 1924

PARTY TO ENDORSE
BEST FITTED WOMEN

WESTPORT, N.Y., Aug. 16. – The National Women’s party would endorse for congress and do its utmost to elect all women nominees, irrespective of their political affiliations who seem qualified to sit in congress and who will support the equal rights amendment and the general feminist program, under a resolution presented for adoption at the party’s annual convention here today.

It was learned that Miss Doris Stevens, wife of Dudley Field Malone, would probably decline the party’s nomination for congress to represent the 31st district. Mrs. Stephen H. Pell of New York and Ticonderoga has already refused to accept the nomination.

 

Kyle's Noteworthy No-Fault:

Dear Readers,

I definitely got my fill of watching the Olympics this year – especially enjoying the swimming, track, marathons, and basketball. In other sports news, football season is finally back underway, and HF softball heads into the playoffs this week looking to avoid another first round exit.

In this week’s no-fault case, the medical provider brought suit against the insurer, State Farm, due to the denial of no-fault benefits to the injured party. State Farm moved for Summary Judgment on the basis that its verification requests tolled the 30-day period to pay and deny, and the denial was therefore timely because the medical provider failed to comply with its verification requests within 120 days.

Kyle
Kyle A. Ruffner
[email protected]

 

Spooning?  Don’t You Dare! – 100 Years Ago:

Buffalo Courier
Buffalo, New York
16 Aug 1924

THEY LOVED THE PARK
AND EACH OTHER; COP
HOOKS ‘EM; PAY $10

          Anthony Catalno no. 438 North Street and Sara A. Buscaglia, no. 1200 Michigan Avenue, pleaded guilty before Judge McLaughlin in city court yesterday to staging a “spooning party” in Delaware park.

          Each was fined $5.

          The girl did not appear, but Catalano said he wished to plead guilty for his companion and paid both fines.

          A patrolman told the court that he had warned the couple, but they did not heed his words.

 

Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers:

Where do these summers go? My oldest is finishing up his third year of summer camp this week and then it’s off to second grade. My youngest is finishing up his first summer camp (it’s day care, but we couldn’t leave him out of all the fun). But fall baseball is starting up, and I’ll consider that an extension of the summer months. Or will it just result in a logistical nightmare? I’ll let that one sit for a second…

This edition of Ryan’s Federal Reporter summarizes a recent Second Circuit Summary Order finding that a letter demanding settlement was sufficient notice of a claim to trigger an insured’s duty to notify its insurer. While that letter constituted a claim, timeliness of notice remains unresolved and will await further proceedings at the district court level.

Until next time…

Ryan
Ryan P. Maxwell
[email protected]

 

Fascism May Bring Down European Peace – 100 Years Ago:

Buffalo Courier
Buffalo, New York
16 Aug 1924

SEES IN FASCISM
BIG MENANCE TO
EUROPEAN PEACE

Prof. S. B. Fay Gives Reasons Behind Italian Movement.

         Williamstown, Mass., Aug. 15. – “Fascism is a serious menace to the peace of Europe,” Professor S. B. Fay of Smith College told a roundtable at the institute of Politics today.

          He declared that both fascism and bolshevism, had continued to depend on violence and the efficiency of a small minority, but differed in that fascism was intensely nationalistic while bolshevism had allowed the component parts of the old Russia either independence or local self-government on a federalistic basis.

          “A rapidly increasing population which cannot be absorbed in Italy herself has been chiefly instrumental in keeping alive and even accentuating Italy’s ambitions to become a great colonial power dominating the Mediterranean,” Professor Fay continued.

          “Italy cannot absorb her surplus population by turning the men into factories as did Germany in the end of the last century, because she lacks the material resources ever to become a great industrial nation. Nor is it possible that she absorbs the population on her land which is already full, nor is the United Sates longer available.”

 

Storm’s SIU:

Hi Team!

I love these summer nights, sitting outside, watching baseball as I review cases and write my section of Coverage Pointers.  Tonight, the Dodgers are losing to the Brewers.

Uh oh, the Erie County Fair.  As a kid it was always the death knell to summer and the precursor of the dreaded start of school.  But the fried dough is fantastic!

Two PA cases this week:

  • The "Regular Use" Exclusion Does Not Violate the MVFRL and is Valid and Enforceable.  Subject vehicle was Available for "Regular Use" of the Insured at the Time of the Accident as it had Been Loaned to her for Unqualified Use While her Vehicle Needed Repair. 

  • A Contractual Provision Limiting the Time for Commencement of Suit on a Property Insurance Contract to One Year is Reasonable and Enforceable.  However, Here at the Pleading Stage Bad Faith Allegations are Minimally Sufficient to Show that Defendant Did Not Have a Reasonable Basis for Denying Insurance Coverage and That Defendant Knew or Recklessly Disregarded its Lack of Reasonable Basis in Denying the Claim.

I look forward to talking with you again in two weeks.

Scott
Scott D. Storm
[email protected]

 

Leopold and Loeb Found Sane– 100 Years Ago:

Buffalo Courier
Buffalo, New York
16 Aug 1924

SANE, RESPONSIBLE,
SWEAR TWO MORE
STATE ALIENISTS

Experts Concur in Opinions
Given By Colleagues
For Prosecution

ONE CITES CHANG IN SLAYERS’
ATTITUDE DURING TRIAL

          Chicago, Aug. 15. – Sane and fully accountable for their acts. That was the verdict today of the state’s alienists who examined Nathan Leopold, Jr., and Richard Loeb after the college youths had killed Robert Franks.

Two More Testify

          Dr. Rollin T. Woodyatt and Dr. H. Douglas Singer were the alienists to give their testimony today. Doctors Hugh T. Patrick and Archbald Church testified yesterday.

          Dr. Singer, it developed had been making observations of Leopold and Loeb during the progress of the trial.

          “I have observed that the boys are free, smooth and natural in their movements,” Dr. Singer told Judge John R. Caverly. “There has, however, been somewhat of a change in their attitude in the last two weeks.”

          The defendants are growing more serious; they appear now to realize that it is not all a joke, that they may have to answer with their lives for killing the little schoolboy, in the opinion of Dr. Singer.

Editor’s Note: Nathan Freudenthal Leopold, Jr., and Richard Albert Loeb were infamous Chicago murderers of 1924, who confessed to the kidnapping and murder if  14-year-old Robert (Bobby) Franks for an “intellectual” thrill. Pleading guilty, the men were defended in a bench trial by famed lawyer Clarence Darrow, who secured them life imprisonment rather than execution

 

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

Tragically, the Olympics have concluded, so we can no longer choose from a plethora of sports to watch at all hours. Something to look forward to in 2026.

This week’s case from the California Supreme Court looked at whether coverage for virus-related damage was illusory in the context of COVID-19 business losses. Unsurprisingly, the Supreme Court disagreed that coverage was illusory based on the clear and unambiguous policy language. Some fun cases cited in the opinion.

See you in a fortnight,

Kate
Katherine A. Fleming
[email protected]

 

Presidential Scandals – 100 Years Ago:

The Oneonta Star
Oneonta, New York
16 Aug 1924

COOLIDGE’S OIL
SCANDAL STAND
UNDER ATTACK

Senator Walsh Says Republicans
Affect to Regard Misdeeds
Of Associates as Matter
Of Course

PRAISES WHEELER

States Work of Driving From Office
“Member Notoriously Unfit” Act of Especial Worth to Country

          Helena, Mont., Aug. 15. – The attitude of President Coolidge toward the oil disclosures was assaulted in strong terms here tonight by Senator Thomas J. Walsh, of Montana, prosecutor of the Senate oil committee and chairman of the Democratic National Conventions.

          The President, he declared, is giving no thought to the more serious moral aspects of the oil scandal now that he has turned the evidence over to government counsel.

          This senator’s condemnation of Mr. Coolidge’s attitude, delivered in the course of an address opening the Democratic campaign in Montana, was followed by a tribute to John W. Davis as “a fitting choice to lead a fight for clean government,” of proven ability and “progressive in thought and action.”

          To the candidacy of Senator LaFollette, the speaker made no direct reference, but he paid a tribute to his colleague, Senator Burton K. Wheeler, the LaFollette candidate for the vice presidency, for his services as prosecutor f the senate Daugherty committee.

 

Gestwick’s Garden State Gazette:

Dear Readers:

I enjoyed having some family in town last weekend. We took my cousin’s one-year-old to the Buffalo Zoo for some fun in the sun. Her favorite animal was the polar bear. The way she squealed when she saw it made us buy her a stuffed one from the gift shop, which she did not let go of for the entire rest of her time here. Who knows, she’s probably still holding onto it as I write this.

Wildly less cute than that, news broke this morning that Matt Milano will also miss the better part of this season for the Buffalo Bills. Tore his bicep in training camp on Tuesday. If you don’t follow, Milano is our best linebacker (when healthy), and was injured fairly early during last season when he broke his leg and missed the remainder of the season. I swear, the Bills are cursed.

Back to reality now. This week, I have a case from the Third Circuit Court of Appeals, of which New Jersey is a part. A claims professional may wonder, “if my insured notifies me, for the first time, of a suit against it only after it takes a nuclear verdict of $70.1 million, I can disclaim for late notice, right? I mean, how prejudicial to my right to step in and defend the case.” And they would be correct, although not finished with their analysis. Read on to find out what’s missing, and the headache this omission can cause.

Enjoy the sunshine!

Evan
Evan D. Gestwick
[email protected]

 

Up for a Cup of Coffee – 100 Years Ago:

Charles Dewey "Lefty" Jamerson (January 26, 1900 – August 4, 1980) was a relief pitcher in Major League Baseball. Listed at 6' 1", 195 lb., he batted and threw left-handed.

A native of Enfield, Illinois, Jamerson was a player whose major league career, statistically speaking, was only slightly different from that of Red Bluhm, Eddie Gaedel, or Moonlight Graham. On August 16, 1924, Jamerson pitched for the Boston Red Sox against the St. Louis Browns at Fenway Park. In one inning of work, he allowed two runs on one hit and three walks for an 18.00 earned run average. He did not have a decision. After that, he never appeared in a major league game again. He then played for the Pittsfield Hillies of the Eastern League from 1925 to 1927 and the Hartford Senators of the Eastern League in 1926. He also played for the Hartford Blues of the National Football League in 1926.

After his playing career ended, he served as the head football coach at the University of Memphis in 1942 and at Davidson College from 1948 to 1949.[1]

Jamerson died in Mocksville, North Carolina, at the age of 80.

 

O’Shea Rides the Circuits:

Hey Readers,

The Olympics are over, and football is set to begin. In true Buffalo fashion, the Bills already suffered a loss with Matt Milano suffering a biceps tear. In other news, I have been confronted with a domestic dilemma. Do I purchase a new car – I drive a 2013 bucket at this point, or save for a new home? In a spirited debate, I presented my case to my marital jurist for a new vehicle. It was a cold bench, with a swift judgment entered against me. Looks like I will be house hunting again.

This week I have a reader submitted case from Mr. John M. Reeves in Missouri regarding the “use” of an automobile that resulted in the transmission of a disease. The Eighth Circuit had to consider whether an injury sustained in a romantic rendezvous constituted the “use” of automobile. Let’s just say the automobile lacked a causal relationship to the injury.

Until next time …

Ryan
Ryan P. O’Shea
[email protected]

 

Corruption a Campaign Issue– 100 Years Ago:

Press and Sun-Bulletin
Binghamton, New York
16 Aug 1924

Democrats Will Make
‘Corruption’ Leading
Issue in Campaign

League of Nations Will Not Be Used as Party Rallying Cry Despite Davis’ Sympathetic Attitude in his Acceptance Speech

FEAR DECISION MAY BE THROWN INTO HOUSE

By MARK SULLIVAN

          Washington, Aug. 16 - It might have been expected that Davis’s acceptance speech would give rise to one line of discussion which, in fact, has hardly arisen at all. Davis’ references to the League of Nations were pretty sympathetically whole-hearted. To be sure, he made it very clear that it is note his purpose to try to carry America into the League of Nations, nor to be as daring as Wilson was in making commitments in the field of foreign affairs, before getting in advance the formal and complete support of the American people as a whole.

          Davis said: “Neither have I at any time believed, nor do I now believe, that the entrance of America into the league can occur, will occur, or should occur until the common judgement of the American people is ready for the step. We waited for this judgement to ripen in order that we might enter the war. I am content, if need be, to wait until it speaks for the agencies of peace.”

                    

Rob Reaches the Threshold: 

Dear Readers,

We interrupt the usual baseball talk in this column to bring you a different sports update – ‘cause football is almost back. Growing up in the NYC area, some of my best sport memories include watching my New York Football Giants take down Tom Brady (twice). However, since moving full time to the Western New York area, I’ve come to really respect the passion of Bills Mafia. As the Bills have been in training camp and recently started preseason games, you can just feel the energy in the area. In Josh Allen We Trust.

This week we examine a Decision from the Second Department where the Appellate Division’s review disagreed with the lower’s court’s opinion on the strength of evidence needed to create a triable issue of fact on whether Plaintiff sustained serious injury under multiple categories of Insurance Law Section 5102(d).  

Please enjoy the read.

Rob
Robert J. Caggiano
[email protected]

 

What’s in a Name? – 100 Years Ago:

Press and Sun-Bulletin
Binghamton, New York
16 Aug 1924

MOST OF THEM PREFER THEIR HUSBAND’S NAME

          We have never seen anything very momentous in the Lucy Stone League. As you may be aware, this league exists for the purpose of informing married women that they may continue to use their maiden names if they so desire.

          The comptroller general of the United States has just ruled that married women in the government service must sign their husband’s name if they wish to produce a legal signature.

          The women of the Lucy Stone organization say he is wrong. They declare that the law permits a woman (or a man either, we should suppose) to choose the name she wishes to use.

          If it doesn’t, the law can be changed to grant such a right to those who want it. Apparently very few women do want it.

          The women who keep their maiden name are really taking their father’s name. Why not their mother’s name?

          And, in case a married woman keeps her maiden name, what name will her children take? They must be given some “family” name before they are old enough to choose one for themselves. Should this be their father’s or their mother’s name or why not the name of their father’s or their mothers’ mother? Should all the children in a large family have the same “family” name or should each child have a different name?

          A logical application of this theory leads to absurdity. And that probably is why most women don’t think it is worth taking seriously.

 

LaBarbera’s Lower Court Library:

Dear Readers:

I took a trip to Boston last weekend. We spent our days on the beach, and the nights watching the planes fly overhead into Logan Airport. My sister had an app showing the location of each incoming plane. Out of the dozens of planes we watched come in, I only correctly guessed the location of one (with a few hints of course). While we were gazing at the planes, the puppy was enjoying her time munching on the sand and pebbles.

This week I am reporting on a New York County case where the court was faced with four motions to reargue. In a surprising turn of events, the court granted leave for reargument on each motion, reversing its previous denial of the summary judgment. This case is particularly interesting, as it deals with a large array of different insurance coverage disputes.

Until next time…

Isabelle
Isabelle H. LaBarbera
[email protected]

 

Canadians Slowly Ending Prohibition – 100 Years Ago:

The Buffalo Commercial
Buffalo, New York
16 Aug 1924

N.F. LIQOUR BILL
GOES TO GOVERNOR

          ST. JOHN’S N.F. -  Aug. 16. – Newfoundland’s new bill governing the sale of alcoholic beverages is ready for the governor’s signature. As soon as this has been attached, it will go into effect, replacing the prohibition act which has been in effect since 1915. The legislative council gave the bill final passage last night.

          The act allows the purchase of a bottle of spirits a day by any one person and gives to hotels the right to supply guests with beer and wines.

 

Lexi’s Legislative Lowdown:

Dear Readers,

I am gearing up for a reunion weekend with my eight college roommates in Newport, RI. I am looking forward to exploring a new city, enjoying the beach, and lots of fun!

This week’s column addresses the proposed amendments to §§ 202.67 and 207.38 which would require the disclosure of financial agreements in wrongful death and personal injury cases involving an infant or incapacitated persons. It was interesting to read the public statements on this proposed legislation, and I am eager to see what happens with this in the future.

Enjoy.

Lexi
Lexi R. Horton
[email protected]

 

Take Advantage of Women?  Jail for You – 100 Years Ago:

The Buffalo News
Buffalo, New York
16 Aug 1924

SOB-STORY GRAFTER IS
SENT TO PENITENTIARY

Francis Kelly, Who Worked
Fake on Buffalo Woman,
Caught in Erie.

          Francis Kelly, alias Richard Torrence, who yesterday was sentenced to a six-months’ term in the Monroe county penitentiary at Rochester for obtaining money under false pretenses, will be brought to Buffalo on completion of his term and will be arraigned here on a similar charge. It is charged Kelly obtained $25 from a prominent West side woman and $10 from the Salvation army by making fraudulent statements.

          The trail of Kelly’s activities extends over a period of six years and throughout the eastern section of the country, according to charity workers. His story was that of a sister in distress because of her misplaced trust in a man. Kelly, himself a former charity worker and a student of medicine, told such a plausibly and heart-rending story that few could resist his appeal for money, it I said.

          His downfall in Buffalo came when the woman who had given him $25 went to a West side apartment hotel to comfort the sister and found her to be a mythical person. Kelly left town after police had been on his tail for several days and went to Erie, where he was arrested at the request of the Rochester authorities.

 

North of the Border:

I am still in the glow from a terrific week of CLE and plain fun at the 2024 edition of the FDCC Annual Meeting that was held in Toronto at the Royal York Hotel. It is inspiring and invigorating to be among the members, exchanging ideas and catching up on life’s events. Our next major gathering will be at the 2025 Winter Meeting in Charleston, South Carolina, at the end of February. I am already looking forward to it.

My column this week is an interesting appeal decision from a case that I reported on in November that interprets a pollution liability policy. Enjoy.

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

 

Headlines from this week’s issue, attached:

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

  • Using the Term “To the Extent That Such Additional Insured Is Held Liable for Your Acts or Omissions” in an Additional Insured Endorsement Limits Coverage to Derivative Liability

  • Under Virginia Law, Auto Policies Can Be Rescinded for Misrepresentations, but Here, the Insurer Did Not Prove a Misrepresentation

 

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

  • Lack of Savings Language Prohibits Indemnity Claims; Insurance Procurement Obligations Met Where a Policy is Procured Despite Later Denial of AI Status 

BARNAS on BAD FAITH
Brian D. Barnas
[email protected]

  • Timeliness of UIM Claim Evaluation an Issue for the Jury on Bad Faith Claim

     

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

  • Insured Free to Litigate Carrier’s Post-Cancellation

     

KYLE'S NOTEWORTHY NO-FAULT
Kyle A. Ruffner
[email protected]

  • Court Grants Insurer’s Summary Judgment Motion, as Insurer’s Verification Requests and Denial Were Determined to Be Timely

 

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

  • Letter Advising Insured of Intent to Pursue Legal Action Constituted Claim Requiring Timely Notice of Same to the Insurer 

 

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

  • The "Regular Use" Exclusion Does Not Violate the MVFRL and Is Valid and Enforceable.  Subject Vehicle Was Available for "Regular Use" of the Insured at the Time of the Accident as It Had Been Loaned to Her for Unqualified Use While Her Vehicle Needed Repair

  • A Contractual Provision Limiting the Time for Commencement of Suit on a Property Insurance Contract to One Year Is Reasonable and Enforceable.  However, Here at the Pleading Stage Bad Faith Allegations Are Minimally Sufficient to Show That Defendant Did Not Have a Reasonable Basis for Denying Insurance Coverage and That Defendant Knew or Recklessly Disregarded Its Lack of Reasonable Basis in Denying the Claim

 

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

  • No Coverage for COVID-19 Financial Losses. Illusory Coverage Doctrine Inapplicable to Clear and Unambiguous Language  

 

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

  • Carriers Disclaiming Coverage for Late Notice Must Show Breach of the Policy’s Conditions, and a Likelihood of Appreciable Prejudice. To Show Appreciable Prejudice, Carriers Must Show an Irretrievable Loss of Substantial Rights and a Likelihood of Success in the Underlying Defense

 

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

  • Transmission of STD Does Arise Out of Use of Automobile

 

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

  • Second Department Reversed the Decision Granting the Branch of Defendant’s Summary Judgment Which Was for Summary Judgment Dismissing the Complaint on the Ground that Plaintiff Did Not Sustain a Serious Injury Pursuant to §5102(d) Where Plaintiff Properly Raised an Issue of Fact

 

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

  • Upon Reargument Court Reverses Four Prior Decisions Involving a Host of Coverage Issues Including Additional Insured Status, Reimbursement of Past Fees, Rescission, and an Insured Cast in a Defensive Posture

 

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

  • Proposed Legislation to Amend §§ 202.67 and 207.38 to Require the Disclosure of Litigation Financial Agreements in Wrongful Death and in Certain Personal Injury Actions

 

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

  • A Condition Precedent to Coverage that a Pollution Event be “Detected by any Person” Within 720 Hours of its Commencement Begins When There is Subjective Understanding That a Covered Event Has Occurred

 

We will see many of you on Tuesday at our Risk Transfer program.  Enjoy the summer, it’s going by quickly.

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

Kohane’s Coverage Corner

Peiper on Property and Potpourri
Barnas on Bad Faith

Lee’s Connecticut Chronicles

Kyle’s Noteworthy No-Fault

Ryan’s Federal Reporter

Storm’s SIU

Fleming’s Finest

Gestwick’s Garden State Gazette

O’Shea Rides the Circuits

LaBarbera’s Lower Court Library

North of the Border

 

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

08/14/24       Donadic, Inc. v.  Utica Mutual Insurance Company
Appellate Division, Second Department
Using the Term “To the Extent That Such Additional Insured Is Held Liable for Your Acts or Omissions” in an Additional Insured Endorsement Limits Coverage to Derivative Liability
Important case to read.

Donadic, as general contractor, and Apollo as subcontractor, entered into a written contract under which Apollo agreed to perform certain work at a construction project site. Pursuant to the contract, Apollo agreed to obtain additional insured coverage for Donadic. Utica issued an insurance policy to Apollo. The policy included an additional insured endorsement, which provided, inter alia, that an entity was an additional insured only "[t]o the extent that such additional insured is held liable for your acts or omissions arising out of and in the course of ongoing operations performed by you or your subcontractors for such additional insured."

On October 17, 2013, Papadakis, an employee of Apollo, allegedly was injured at the project site when he fell while walking on a plank that was set over newly poured concrete. Papadakis commenced an action in the Supreme Court, Queens County, entitled Papadakis v 1000 Park Owners Corp., (the “Underlying Action”), alleging negligence and violations of the Labor Law. Utica provided a defense to the general contractor, Donadic in the Underlying Action. However, Utica disclaimed coverage after the Court in the Underlying Action dismissed a third-party cause of action for contractual indemnification asserted by the plaintiff against Apollo upon a determination that there was no evidence that the alleged accident was caused by any negligent act or omission of Apollo.

Thereafter, the Donadic’s insurer settled the remaining claims in the Underlying Action by paying $450,000 on behalf of the plaintiff to Papadakis and then commenced this action for a judgment declaring that Utica was obligated to defend and indemnify the general contractor in the Underlying Action.

Here, contrary to the plaintiff's contention, the language of the additional insured endorsement covered only the plaintiff's vicarious liability for the acts of Apollo, and since the court in the underlying action determined that Papadakis's alleged accident was not caused by any negligent act or omission of Apollo, the Supreme Court properly denied the plaintiff's motion, among other things, for summary judgment on the complaint, properly granted the defendant's cross-motion for summary judgment declaring that Utica has no obligation to defend, indemnify, or provide additional insured coverage to the plaintiff in connection with the Underlying Action, and properly declared that the defendant has no obligation to defend, indemnify, or provide additional insured coverage to the plaintiff in connection with the Underlying Action.

Editor’s Note:  I do note that the AI endorsement had language more limiting that that the CG 20 10.  It limited coverage to the extent that the additional insured was held liable for the acts or omissions of the named insured.  The CG 20 10 extends coverage if named insureds acts or omissions cause the accident.

Editor’s Note:  Sherri Pavloff earns a coveted “atta lawyer”.

 

08/07/24       Peak Property and Casualty Insurance Corp. v. Rodriguez
Appellate Division, Second Department
Under Virginia Law, Auto Policies Can Be Rescinded for Misrepresentations, but Here, the Insurer Did Not Prove a Misrepresentation

In August 2020, Rodriguez applied for automobile insurance from the plaintiff for his vehicle, which was registered in Virginia. In the application, Rodriguez represented, among other things, that his vehicle would be garaged at the location in Virginia listed on the automobile insurance policy for more than 50% "of the time." Based on that information, Peak issued Rodriguez a six-month automobile insurance policy, commencing on August 1, 2020.

On December 6, 2020, Rodriguez’s vehicle was involved in an accident. Peak, in investigating the claim, discovered that in December 2020, Rodriguez was living in New York. So, Peak started this lawsuit, in New York, seeking a determination that the policy should be rescinded for material misrepresentations made in the policy application.

Note: if this case were being decided under New York law, rescission would not be permitted, retroactively, even for material misrepresentations, under the Teeter doctrine.

Under the circumstances of this case, Virginia law, rather than New York law, governs the issue of whether there has been a material misrepresentation that would render the policy void ab initio. "In the context of liability insurance contracts, the jurisdiction with the most significant relationship to the transaction and the parties will generally be the jurisdiction which the parties understood was to be the principal location of the insured risk . . . unless with respect to the particular issue, some other [jurisdiction] have a more significant relationship." "In the case of a noncommercial vehicle, which is by its nature mobile, the principal location of the insured risk is the place where the vehicle is to be principally garaged."

Here, since the policy was issued in Virginia to Rodriguez, who purportedly was a resident of Virginia, for a vehicle that was registered in Virginia and was to be principally garaged in Virginia, Virginia law applies.

Under Virginia law, an insurance company contesting a claim on the basis of an insured's alleged misrepresentation that would render the policy void ab initio must establish, "by clear proof, two facts: (1) that the statement on the application was untrue; and (2) that the insurance company's reliance on the false statement was material to the company's decision to undertake the risk and issue the policy."

The insurer failed to demonstrate that Rodriguez made an untrue statement on the application. In support of its motion, the plaintiff submitted statements from insurance investigators who spoke with Rodriguez purportedly as to his admissions. In those statements, Rodriguez claimed he lived in Virginia for two months before moving back to New York, and it was within that period that he procured automobile insurance for the vehicle, which was not necessarily inconsistent with his statement that he resided in Virginia at the time the application for automobile insurance was made or that the vehicle would be garaged at the location in Virginia listed on the policy for more than 50% "of the time."

                                                                            

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

08/14/24       Titov v. V&M Chelsea Prop., LLC
Appellate Division, Second Department
Lack of Savings Language Prohibits Indemnity Claims; Insurance Procurement Obligations Met Where a Policy Is Procured Despite Later Denial of AI Status 

The underlying facts derive from a workplace slip & fall, and the resulting Labor Law claims.  We’ll leave the Labor Law analysis to our colleagues on the 12th Floor of our office, but we will tackle the insurance procurement/indemnity issues.  As is relevant to that analysis, the Court found a question of fact as to whether defendant, Fulton, was liable for an alleged defective condition on the stairs where underlying plaintiff fell.

At the time of the motions, Fulton moved for summary judgment against third-party defendant NYCHVAC for contractual indemnification.  NYCHVAC, in turn, moved for summary judgment dismissing Fulton’s indemnity claims.  The Court, noting that the Fulton/NYCHVAC indemnity clause did not employ “fullest extent” savings language, and contemplated Fulton’s indemnity for its own negligence, found that the clause violated General Obligations Law 5-322.1, and accordingly dismissed the claims against NYCHVAC. 

For the same reasons, the Court also dismissed Fulton’s claims for contractual indemnification against another entity, PMB.  The Fulton/PMB clause mirrored the clause employed in the Fulton/NYCHVAC contract.  And, again, without “savings language,” the provision was deemed void under New York law.

In addition to indemnity claims, Fulton also asserted failure to procure insurance causes of action against both NYCHVAC and PMB.  When NYCHVAC produced a copy of an insurance policy that complied with the terms of the Fulton/NYCHVAC contract, the Appellate Division noted that there was no basis for Fulton’s claims.  

Further, with regard to the insurance procurement obligations of PMB, the Court also noted that PMB produced a policy that sufficiently met the obligations identified in the Fulton/PMB contract.  In so holding, the Court noted that the insurer to PMB’s denial, based upon the fact that PMB had “ceased operations” at the jobsite prior to the incident, did not impact the fact that PMB had procured insurance, as required, under the trade contract.

PMB did not escape unscathed, though, as the Court reversed the trial court when it ruled that a question of fact existed as to PMB’s own potential negligence in failing to remove debris and maintain a safe workplace.  Because PMB’s negligence remained at issue, the Court reinstated common law contribution claims and Fulton’s claims that PMB breached its contractual obligation to “maintain a safe workplace.”

 

BARNAS on BAD FAITH
Brian D. Barnas
[email protected]

08/09/24       Stewart v. American Family Mutual Insurance Company
United States District Court, District of Colorado
Timeliness of UIM Claim Evaluation an Issue for the Jury on Bad Faith Claim

Mr. Stewart and American Family had a dispute over the payment of UIM benefits.  The policy provided UIM benefits with limits of $100,000 per person and $300,000 per accident.  Mr. Stewart settled with the at-fault driver's insurance company for $25,000.  Stewart submitted medical bills to American Family as part of his UIM claim, and American Family made payments of the undisputed medical expenses incurred.  However, it did not resolve the claim for the $100,000 UIM limit in response to Stewart’s policy limit demand. American Family did not include damages for future medical expenses, pain and suffering, impairment, general damages, inconvenience, emotional stress, or impairment of quality of life in its evaluation. [Plaintiff initiated this lawsuit on April 6, 2023, and on April 13, 2023, American Family agreed to tender the remainder of the available policy limits to Mr. Stewart.

Mr. Stewart’s lawsuit against American Family alleged breach of contract, unreasonable delay or denial of insurance benefits in violation of Colorado Revised Statutes § 10-3-1115 and -1116 (“statutory bad faith”), and common law bad faith.  Both parties moved for summary judgment.

The Court denied Stewart’s motion for summary judgment on bad faith liability.  Mr. Stewart claimed that American Family failed to conduct a reasonable investigation of his claim after receiving all the available information to complete its investigation.  He appears to take this position due to the fact that American Family, just weeks after it valued Plaintiff's claim at $32,277.55, agreed to pay him the full policy limits.  However, the Court found no legal authority showing that evidence that American Family paid the full policy limits after Plaintiff filed this lawsuit is sufficient, by itself, to demonstrate bad faith on the part of American Family.  Moreover, while Stewart argued that American Family’s delay in resolving the claim was unreasonable, American Family argued that it was reasonable to hold off on conducting a full evaluation because Mr. Stewart was still receiving medical treatment.

The Court also denied American Family’s motion for summary judgment.  American Family argued it was entitled to summary judgment because it acted reasonable in evaluating and handling the claim.  However, the court found that “Defendant’s belief that it acted reasonably is insufficient to entitle it to summary judgment … the reasonableness of American Family’s conduct must be decided by the jury.”  The Court concluded that the plaintiff was not required to identify a specific industry standard governing when a UIM adjuster is required to prepare a full claim evaluation to demonstrate unreasonableness.

 

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

08/13/24       The Grotto, Inc. v. Liberty Mut. Ins. Co.
Appellate Court of Connecticut
Insured Free to Litigate Carrier’s Post-Cancellation

Reversing the trial court, the Appellate Court reinstated the plaintiff’s claim against Liberty alleging that the insurer made negligent misrepresentations and violated CUTPA/CUIPA, finding that an earlier finding of no coverage was not res judicata to these claims.

Liberty provided workers compensation insurance to Grotto. Prior to a traumatic injury to a Grotto employee, Liberty cancelled the policy for Grotto’s failure to provide self-audits. The issue of the cancellation was litigated before the Workers Compensation Commissioner, the Compensation Review Board, and the Appellate Court, resulting in a final finding that Liberty had properly cancelled the policy and provided the appropriate notice to Grotto.

In affirming the decision of the board, this court reasoned that, “[b]ecause Liberty [Mutual] was not required to notify Grotto before cancelling its workers’ compensation policy, the only pertinent issue with respect to the effectiveness of Liberty [Mutual's] cancellation is whether Liberty [Mutual's] electronic notice to the NCCI pursuant to § 31-348 was sufficient in light of the requirements of § 31-321. We conclude that Liberty [Mutual's] electronic notice to the NCCI was sufficient.” Id. at 708, 260 A.3d 1228.  

Grotto commenced this plenary action. Liberty moved for and won summary judgment, arguing that the action was barred by the doctrine of res judicata. The trial court rejected Grotto’s argument that the action did not involve the issue of coverage but only Liberty’s post-denial conduct. The Appellate Court, however, was more sympathetic. 

Reversing, the Appellate Court held that Grotto had no adequate opportunity to litigate the non-coverage matters fully (which is the third prong in a four-part res judicata test). Grotto argued that Liberty provided it with misleading and conflicting communications as to whether coverage was still in place. This issue was not litigated in WC. Further, the Appellate Court held that Grotto could not have brought these claims in WC as they are outside of its limited jurisdiction.

Significantly, the Appellate Court reasoned that the Supreme Court’s instruction in Powell v. Infinity Ins. Co., 282 Conn. 594, 922 A.2d 1073 (2007), which the trial court relied upon, was not applicable to these facts. In Powell, the Supreme Court held that res judicata barred the insured/plaintiffs’ claims of bad faith, breach of contract, and violations of CUTPA/CUIPA because those claims grew out of the same transaction or nucleus of facts implicated in the prior contract action for uninsured motorist benefits. This case, the court stated, was strikingly dissimilar because Grotto could not and therefore did not have the opportunity to litigate its negligent misrepresentation and CUTPA/CUIPA claims.

 

KYLE’S NOTEWORTHY NO-FAULT
Kyle A. Ruffner
[email protected]

07/15/24       Titan Diagnostic Imaging Serv.’s Inc. a/a/o Colon v. State Farm Mut. Auto Ins. Co.
Civil Court of the City of New York, Richmond County
Court Grants Insurer’s Summary Judgment Motion, as Insurer’s Verification Requests and Denial Were Determined to Be Timely

State Farm moved for Summary Judgment on the basis that the medical provider failed to comply with its verification requests within 120 days, asserting that the bill in question was untimely and properly denied. The provider opposed the motion, arguing that the insurer did not timely pay or deny the claim.

An insurer has 30 days from receipt of a completed application to pay or deny a claim for No-Fault insurance benefits. 11 NYCRR §65-3.8. This period may be extended by a timely demand by the insurance company for further verification of a claim. 11 NYCRR §65-3.5(b) provides that subsequent to the receipt of verification forms, any additional verification required by the insurer to establish proof of claim shall be requested within 15 business days. Pursuant to 11 NYCRR §65-3.5(c), "the insurer is entitled to receive all items necessary to verify the claim directly from the parties from whom such verification was requested". The no-fault regulation further provides that if any requested verifications have not been supplied to the insurer 30 days after the original request, the insurer must, within 10 days, follow up with the party from which verification was requested. An insurer is not required to pay or deny a claim until all demanded verification is provided.

An Examination Under Oath of the injured party was conducted on August 12, 2021. Eight days after the EUO, State Farm sent a verification request to Plaintiff and followed up on September 23, 2021, due to an inadequate response. Ultimately, on December 30, 2021, Defendant issued a denial for the claim because Plaintiff had failed to respond adequately to the verification requests within 120 days of the initial request. Plaintiff argued that the insurer denied the bill in excess of 30 days after receipt, which was July 30, 2021. However, the court determined that the time to pay or deny was tolled from August 20, 2021, by way of the verification letter sent by the insurer. Further, the insurer properly sent a follow up request and then, on December 30, 2021, the claim was denied after Plaintiff failed to provide the requested verification within 120 days.

While the plaintiff argued that the insurer’s time was not tolled from the post-EUO verification requests. the court held that because the first verification requested after the EUO was timely, the 30-day limit was tolled at the time of the verification, August 20, 2021. Therefore, the requested verifications and denial by Defendant were proper and timely. Accordingly, the court granted the insurer’s motion for Summary Judgment and dismissed the Plaintiff's complaint.

 

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

08/15/24             Match Group, LLC v. Beazley Underwriting Limited
Second Circuit Court of Appeals
Letter Advising Insured of Intent to Pursue Legal Action Constituted Claim Requiring Timely Notice of Same to the Insurer 

Match Group sued to enforce an insurance policy issued by Beazley Underwriting Limited providing coverage for expenses related to a lawsuit filed by product-development consultant John Mellesmoen. Prior to the underlying lawsuit, John Mellesmoen’s attorneys sent a letter to Match Group’s subsidiary advising Match Group of Mellesmoen’s intent to pursue legal action unless a settlement was reached. The issue before the Second Circuit was whether this letter constituted a “claim” within the meaning of the insurance policy. It did, rendering Match Group’s notice of claim untimely as a matter of law.

The Beazley Policy defined claim as “written demand received by any Insured for money or services, including the service of a suit or institution of arbitration proceedings” or “a threat or initiation of a suit seeking injunctive relief.” And the Second Circuit noted that it generally has found previously that “a claim is an assertion by a third party that in the opinion of that party the insured may be liable to it for damages within the risks covered by the policy” and further that “[a]n assertion of possible liability, no matter how baseless, is … all that is needed to trigger a notice of claim provision.”

The Second Circuit found that while no sum certain was demanded in the letter, it undoubtedly indicated that claims existed entitling Mellesmoen to compensation and damages, which could be resolved by settlement or lawsuit. By failing to provide timely notice after this letter was received, Match Group breached its obligation to provide timely notice to Beazley.

While Match Group alternatively argued that notice provided to its broker two days after Mellesmoen filed suit was timely, it wasn’t (or was it?). The Beazley policy required notice within the coverage period, which closed on August 20, 2016. The broker did not provide Beazley with notice until August 22, 2016. However, Match Group noted that under New York General Construction Law § 25, there is an extension of time for contractual performance where the date of required performance falls on a weekend. While Beazley argued that this statutory provision is either inapplicable entirely, or otherwise inapplicable on account of the time of day notice was ultimately provided, the Second Circuit merely decided that because the district court had not considered the issue, remand was an appropriate remedy at this juncture.

 

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

08/06/24       Burton v. Progressive Advanced Ins. Co.
United States Court of Appeals, Third Circuit.
The "Regular Use" Exclusion Does Not Violate the MVFRL and Is Valid and Enforceable.  Subject Vehicle Was Available for "Regular Use" of the Insured at the Time of the Accident as It Had Been Loaned to Her for Unqualified Use While Her Vehicle Needed Repair

Affirms the District Court's order granting summary judgment to Progressive.  Frisbie was driving her brother's Tahoe—which he was letting her use while her Civic was out of commission—when she caused a car accident that injured Burton. At the time of the accident, Erie Insurance insured her brother's Tahoe, while Progressive insured Frisbie's Civic. Progressive's policy provided $250,000 in liability coverage, subject to certain terms and conditions. In relevant part, the policy excluded "bodily injury or property damage arising out of the ownership, maintenance or use of any vehicle owned by [the policyholder] or furnished or available for [the policyholder's] regular use, other than a covered auto for which [the policy] has been purchased." Frisbie reported the accident to Erie, who reported it to Progressive. After investigating, Progressive concluded that the Tahoe "was furnished and available for [Frisbie's] regular use" and therefore excluded from liability coverage.

Burton and her husband sued Frisbie for negligence in state court, where Erie defended Frisbie. Following a bench trial, the Burtons were awarded a $320,871.30 verdict, $100,000 of which was paid by Erie. Frisbie then assigned her rights to pursue any claims against Progressive to the Burtons. The Burtons subsequently sued Progressive, giving rise to the instant case.

In moving for summary judgment, the Burtons made two arguments. First, citing the Pennsylvania Superior Court's decision in Rush v. Erie Exchange and the Western District of Pennsylvania's decision in Evanina v. First Liberty Ins. Corp., they argued that Progressive's "regular use" exclusion is unenforceable because it limits the scope of liability coverage required by the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL). Second, they argued that even if the exclusion is enforceable, it did not apply because Frisbie's use of the Tahoe was only temporary as it would stop when her Civic was repaired. The District Court disagreed on both counts and awarded summary judgment to Progressive. 

The Burtons raise the same two arguments on appeal. They fail here as they did before the District Court.

First, while this appeal was pending, the Pennsylvania Supreme Court reversed the Superior Court's decision in Rush, holding that the "regular use" exclusion in underinsured motorist coverage does not violate the MVFRL and is valid and enforceable. As a result, the Burtons' argument as to why Progressive's "regular use" exclusion is unenforceable rests entirely on what is no longer good law.

Second, we agree with the District Court that Frisbie's use of her brother's Tahoe was "regular use" excluded from liability coverage under Progressive's policy. Pennsylvania courts have unanimously concluded that the term "regular use" is unambiguous and defined as "a principal use as distinguished from casual [,] incidental. . . [or] occasional" use. It is immaterial that Frisbie planned to stop using her brother's Tahoe once her Civic was back up and running. What matters is that Frisbie was the Tahoe's principal operator while it was on loan to her. It is undisputed that her brother gave her unqualified use of the car. She kept it at her house full-time and used it on a near-daily basis to get to work, run errands, and the like. Given these undisputed facts, the District Court correctly concluded that the Tahoe was available for Frisbie's "regular use" at the time of the accident, and as a result, barred the Burtons from recovering against Progressive.

 

07/30/24       Hudson v. Economy Fire & Casualty Co.
United States District Court, W.D. Pennsylvania.
A Contractual Provision Limiting the Time for Commencement of Suit on a Property Insurance Contract to One Year Is Reasonable and Enforceable.  However, Here at the Pleading Stage Bad Faith Allegations Are Minimally Sufficient to Show That Defendant Did Not Have a Reasonable Basis for Denying Insurance Coverage and That Defendant Knew or Recklessly Disregarded Its Lack of Reasonable Basis in Denying the Claim

Hudson initiated the present action on June 15, 2023, by filing a complaint against Metropolitan Property and Casualty Insurance Company.  The caption was subsequently amended, replacing MetLife with the proper insuring entity, Economy Fire & Casualty Company, as Defendant.

This case arises out of a fire that occurred at the Plaintiff's home on October 14, 2020. The fire originated in the east wall of the first floor and allegedly caused extensive smoke damage.  The Subject Property had previously sustained secondary damage from a house fire that occurred at a neighboring home in May 2020. At the time of the May 2020 incident, Plaintiff did not have an insurance policy in effect that covered the loss and damages. Thereafter, Plaintiff obtained a home insurance policy through Defendant, which was in place at the time of the October 2020 fire.

According to Plaintiff, the damage from the October 2020 fire was much more extensive than the damage caused by the May 2020 incident.  On or about April 29, 2021, Plaintiff engaged an independent adjuster, Finnicum, who generated a damage loss estimate for the Subject Property rendering a replacement cost value of $75,635.98. On or about June 15, 2021, Defendant obtained its own loss estimate from Major Loss Adjuster Souder, regarding the damage caused to the Subject Property by the October 2020 fire. According to Souder, the damage was estimated at a replacement cost value of $4,565.01, an actual cash value of $3,946.09, and a net claim value of $2,946.09.

On August 13, 2021, Finnicum wrote a letter to Defendant's counsel stating the estimate provided by Mr. Souder is grossly understated. He asked to meet at the loss site to adequately review the damages to allow clarification of the claim; this however has been refused. He provided side by side photos of undamaged portions of the home after the May loss and visibly damaged after the October loss. He claimed MetLife failed to evaluate the claim objectively alleging bad faith in claim handling.

After submission of Finnicum's letter, Plaintiff issued an Agreement for Submission to Appraisers to Defendant's counsel on or about February 10, 2022, for the purpose of obtaining a separate appraisal. Defendant rejected this Agreement. As a result, Plaintiff filed the instant lawsuit to recover monetary damages for breach of contract (Count I) and bad faith (Count II).

On September 7, 2023, Defendant filed a motion to dismiss the complaint, arguing that Plaintiff's breach of contract claim is barred by the one-year suit limitation provision contained in Plaintiff's insurance policy with Defendant, and that Plaintiff's allegations fail to state a cognizable bad faith claim.

Defendant argues that application of the suit limitation provision bars Plaintiff's breach of contract claim as untimely because the present action was not filed within one year of the claimed loss that occurred on October 14, 2020. The Court agrees.

The general statute of limitations for a breach of contract claim under Pennsylvania law is four years. 42 Pa. C.S. § 5525. Under Pennsylvania law, however, "the parties to a contract may validly limit the limitations period to a shorter time `which is not manifestly unreasonable.'" In this regard, Pennsylvania courts and federal courts applying Pennsylvania law have routinely upheld contractual limitations periods of one year as reasonable.

Nonetheless, Plaintiff argues in his response that "the suit limitation language cited by the Defendant is not enforceable per other qualifying provisions of the Policy." Specifically, Plaintiff cites a provision in the Policy entitled "Conformity to Law" which states that "[t]he terms of this policy that conflict with the laws of the state in which the insured premises are located are amended to conform to those laws." Relying on this provision, Plaintiff argues that the Policy's suit limitation provision "conflicts with Pennsylvania law" and must be amended to conform to the four-year statute of limitations prescribed by Pa. C.S. § 5525. This argument is ill-founded.

Pa. C.S. § 5501(a) expressly provides that "[a]n action, proceeding or appeal must be commenced within the time specified in or pursuant to this chapter unless, in the case of a civil action or proceeding, ... a shorter time which is not manifestly unreasonable is prescribed by written agreement, (emphasis added). As established by the foregoing litany of cases, a contractual provision limiting the time for commencement of suit on an insurance contract to one year is reasonable and enforceable under Pennsylvania law. Thus, Plaintiff's breach of contract claim will be dismissed as untimely.

The Pennsylvania Superior Court has defined bad faith in the context of an insurance coverage dispute as:

any frivolous or unfounded refusal to pay proceeds of a policy; it is not necessary that such refusal be fraudulent. For purposes of an action against an insurer for failure to pay a claim, such conduct imports a dishonest purpose and means a breach of a known duty (i.e., good faith and fair dealing), through some motive of self-interest or ill will; mere negligence or bad judgment is not bad faith.

"`To prevail in a bad faith insurance claim pursuant to [42 Pa. C.S.A.] Section 8371, a plaintiff must demonstrate, by clear and convincing evidence, (1) that the insurer did not have a reasonable basis for denying benefits under the policy and (2) that the insurer knew or recklessly disregarded its lack of a reasonable basis in denying the claim.'" However, "[a] complaint does not state a bad faith claim upon which relief can be granted where the bad faith claim is based only on `bare-bones conclusory allegations' of bad faith." 

Here, Defendant argues that Plaintiff's claim essentially amounts to a dispute as to the value of the claimed loss, which does not rise to the level of bad faith conduct. Defendant argues further that "[b]ad faith claims against an insurer will not be supported simply based on evidence that the insurer performed a short review or a brief investigation of the damage site in order to calculate the final value on a claim," thus implying that Plaintiff's bad faith claim is primarily based upon the brevity of Defendant's investigation/review of Plaintiff's damage claim. However, this is not the case. In fact, Plaintiff does not even make any allegations as to the length or duration of Defendant's investigation. Rather, Plaintiff alleges that the investigation by Defendant's adjuster, Souder, was not reasonable or adequate because he "fail[ed] to reasonably evaluate or review the photographs, video footage and damage estimates in [Defendant's] possession," which were provided by Plaintiff's independent appraiser, Finnicum. Indeed, Plaintiff, through quoted portions of Finnicum's letter to Defendant, has alleged that such "evidence has been ignored."

Thus, the Court finds that Plaintiff's allegations are minimally sufficient to show that Defendant did not have a reasonable basis for denying insurance coverage and that Defendant "knew or recklessly disregarded its lack of reasonable basis in denying the claim" at the pleading stage.

 

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

08/08/24       John’s Grill, Inc. v. The Hartford Financial Serv. Group, Inc.
California Supreme Court
No Coverage for COVID-19 Financial Losses. Illusory Coverage Doctrine Inapplicable to Clear and Unambiguous Language  

A restaurant in San Francisco suffered substantial financial losses during the COVID-19 pandemic. The restaurant sought compensation from its property insurer. The restaurant alleged that when physical droplets containing COVID-19 land on or otherwise attach to surfaces, the virus renders those surfaces and the immediate surrounding area unusable because there is substantial risk of people getting sick, transmitting the infection, or dying. The policy provided business income coverage in the event that direct physical loss or damage to property caused a suspension of business operations.

The insurer denied coverage on various grounds, including that the loss or damage claimed did not fall within the insurance policy’s “Limited Fungi, Bacteria or Virus Coverage” endorsement. The denial letter also cited the policy’s requirement of direct physical loss or damage to property. The Limited Fungi, Bacteria or Virus Coverage endorsement generally excludes coverage for any virus-related loss or damage that the policy would otherwise provide, but it extends coverage for virus related loss or damage if the virus was the result of certain specified causes of loss, including windstorms, water damage, vandalism, and explosion. Here, the COVID-19 virus did not result from a specified cause of loss.

The restaurant argued the limitation was unenforceable because it renders the policy’s promise of virus-related coverage illusory. Specifically, the restaurant argued that the specified cause of loss limitation was absurd, outrageous, and impossible to satisfy because the specified causes are not the kinds of things that cause a virus. The trial court disagreed, believing it was not a stretch of the imagination to conclude that some of the specified causes of loss could cause fungi damage or a virus. On appeal, the Court of Appeal agreed with the restaurant and held that the promise of coverage was illusory because the restaurant had no realistic prospect of benefitting from the virus-related coverage as written. The appellate court invalidated the specified cause of loss limitation and allowed the restaurant’s claims for virus-related losses or damage to proceed.

The California Supreme Court concluded the appellate court erred by declining to enforce the clear and unambiguous specified cause of loss limitation. The endorsement provides virus-related coverage if the virus results from certain specified causes of loss. The restaurant admitted that it could not satisfy the specified cause of loss limitation. The Supreme Court rejected the restaurant’s argument regarding the illusory coverage doctrine. Even assuming some version of the doctrine may exist under California law, the Court concluded that an insured must make a foundational showing that it had a reasonable expectation that the policy would cover the insured’s claimed loss or damage. Such a reasonable expectation of coverage is necessary under any assumed version of the doctrine. However, the restaurant did not show a reasonable expectation of coverage for its pandemic-related losses. Based on the policy language, the restaurant could not have had an objectively reasonable expectation when it obtained the policy that the policy would provide coverage for all virus-related loss or damage regardless of the cause. Thus, the restaurant did not show that the policy created the illusion of coverage that rendered any contrary policy language unenforceable. The Court noted that even with the specified cause of loss limitation, there was still a realistic prospect for virus-related coverage. Accordingly, the Court reversed and remanded.

 

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

08/09/24       GEA Mech. Equip. U.S., Inc. v. First St. Ins. Co. et al.
United States Court of Appeals, Third Circuit
Carriers Disclaiming Coverage for Late Notice Must Show Breach of the Policy’s Conditions, and a Likelihood of Appreciable Prejudice. To Show Appreciable Prejudice, Carriers Must Show an Irretrievable Loss of Substantial Rights and a Likelihood of Success in the Underlying Defense

The Thorntons brought a tort action for bodily injury against GEA Mechanical Equipment in 2017. During the course of that action, the parties engaged in substantive settlement discussions, where the Thorntons made an opening demand. GEA rejected the opening demand and made a counteroffer. The Thorntons then walked away from the settlement table, dubbing GEA’s counteroffer as “paltry.” The tort action eventually went to trial, resulting in a nuclear verdict of $70.1 million. The parties settled for less than the verdict thereafter, but the settlement amount was still greater than the Thorntons’ initial demand.

GEA didn’t notify its insurers about the tort action until one day before GEA commenced this declaratory judgment action against them, claiming a right to be indemnified against the settlement reached in the tort action. The defendants (GEA’s primary and excess liability carriers) immediately disclaimed coverage on the grounds that GEA had breached the late notice conditions within the respective policies.

Under New Jersey law, insurance carriers disclaiming coverage for bodily injury claims on the basis of late notice must show: (1) that the insured breached the insurance contract’s notice provision; and (2) a likelihood of appreciable prejudice. The District Court ruled on the parties’ cross-motions for summary judgment, and held that GEA breached the policies’ notice provisions, and that the insurers were appreciably prejudiced in that they were deprived of an opportunity to defend the tort action until after a verdict and settlement had already taken place. This appeal followed.

In New Jersey, there is a separate test applicable to the second prong of the late notice test.  To show a “likelihood of appreciable prejudice,” an insurer must show: (1) an irretrievable loss of substantial rights; and (2) a likelihood of success in the underlying defense.

The Appellate Court recognized that the insurers irretrievably lost their right to defend the case and participate in meaningful settlement negotiations. However, the Circuit Court noted that the District Court failed to consider the insurer’s likelihood of success, had they enjoyed the opportunity to step in and defend GEA. The Court noted that, to make this showing, a carrier typically needs to show that it could have settled the case for less money, or tried the case to a lower verdict. The Appellate Court remanded the case back to the District Court for further consideration of this issue.

Editor’s Note: Though the linked decision does not say, I read the briefs submitted in this appeal and learned that the tort action was an asbestos exposure case, brought within the State of Florida. The insurers’ brief notes that the $70.1 million verdict was “the largest asbestos verdict in the history of the State of Florida by a large margin.” If this statement is true, then what was so hard about determining whether the carrier could have achieved a lower verdict? Probably nothing. The Appellate Court is a court of review, not a court of first instance. If the District Court wholly failed to consider the issue, then the Appellate Court’s hands were tied. Unfortunate outcome, but probably the right decision.

 

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

08/02/24       GEICO v. M.O., et al
United States Court of Appeals, Eighth Circuit
Transmission of STD Does Arise Out of Use of Automobile

Brauner passed HPV to M.O. during a rendezvous in Brauner’s vehicle, which was insured by GEICO with a $1 million limit. The pair had an ongoing relationship and a year after their vehicular liaison, M.O. was diagnosed with HPV. She then threatened Brauner with a suit and demanded the policy limit from GEICO. M.O. claimed that Bauner negligently failed to inform of her his HPV positive status or failed to take steps to prevent M.O. from contracting the disease. GEICO denied the claim and commenced a declaratory judgment action against the pair in the District Court of Kansas.

In the meantime, Brauner settled his claim with M.O. pursuant to Missouri state statute, Mo. Rev. Stat. § 537.065. That statute permits insureds to settle claims with plaintiffs by agreeing the claimant may collect the settlement funds from the insurer. The settlement contained such language and agreed to have an arbitrator decide the issue. The arbitrator awarded M.O. $5.2 million. GEICO appealed the award, which made its way to Missouri Supreme Court, who vacated the award confirmation, remanded the action to state court, and permitted GEICO to intervene to contest the award.

During this series of events, the coverage action was transferred to the Western District of Missouri. After which GEICO moved and received a grant of summary judgment, which found sexual activity did not constitute the “use” of an automobile. M.O. and Brauner appealed. Their chief argument was a semicolon in the policy’s insuring grant created an ambiguity. The provision reads:

[W]ill pay damages which an insured becomes legally obligated to pay because of:

  1. bodily injury, sustained by a person, and;
  2. damage to or destruction of property, arising out of the ownership, maintenance or use of the owned auto or a non-owned auto.

Their chief point was the semicolon separated the coverage, meaning only property damage needed to arise out of the use Brauner’s vehicle and thus, the bodily injury coverage stood alone. The Circuit Court rejected the argument noting that Kansas state law requires review of the policy as a whole, not single words. In reviewing the policy as a whole, then the question is what a reasonable person in the insured’s position would understand the policy to mean. In doing so, the court reasoned that despite the awkward language, no reasonable person would interpret the policy in such a way, instead coverage for bodily injuries must arise out of the ownership, maintenance or use of an auto.

M.O. and Brauner alternatively argued the HPV transmission arose out of the use of the vehicle. The pair relied on a Kansas Supreme Court case that found an accidental shooting injury arose out of the use of an automobile. In that case, the injured party was removing a shotgun from a vehicle during a hunting trip. The Eighth Circuit noted Kansas law requires some causal connection between the use of the vehicle and the injury. Citing Kansas law, it noted that even if one were injured while using a car as a shelter, there would be no coverage if the use of the vehicle is so remote from the negligence that there was no causal relationship between the use of the car the injury sustained.

The court noted the hunting injury involved a vehicle  that was being used to transport the hunters, the engine was running at the time of the accident, the plaintiff was driving the vehicle, and intended to drive the vehicle further. Here, Brauner’s vehicle was not being driven, its engine off, and not being used to transport anyone. Instead the negligent act was Brauner’s failure to alert M.O. of his HPV positive status or his failure to take adequate measures to prevent the transmission of HPV.  The court found this was similar to the shelter analogy because such injury could have happened anywhere. It noted this claim was similar to Farm Bureau Ins. Co. v. Evans, 637 P.2d 491, 494 (Kan. Ct. App. 1981), where an insured used his vehicle as a shelter to light a firework and injured another person. Since M.O. and Brauner could have copulated anywhere, there was no causal connection from the vehicle to the injury. For this reason, the Court affirmed the grant of summary judgment.

 

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

08/14/24       De Castillo v. Reado
Appellate Division, Second Department
Second Department Reversed the Decision Granting the Branch of Defendant’s Summary Judgment Motion Requesting Dismissal of the Complaint on the Ground That Plaintiff Did Not Sustain a Serious Injury Pursuant to §5102(d) Where Plaintiff Properly Raised an Issue of Fact

Plaintiff appealed from an Order of Supreme Court, Nassau County, which granted, in relevant part, the branch of Defendant’s 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).

By way of background, this matter stems from a motor vehicle accident on November 5, 2019, where a vehicle operated by Plaintiff Marisol Ramos De Castillo collided in an intersection with a vehicle operated by Defendant Charity Reado. Following the subject accident, Plaintiff commenced this lawsuit alleging injuries to her neck, back, and left knee. Further, she claimed that her injuries met the requisite Serious Injury Threshold under § 5102(d) via the following categories: permanent loss of use; permanent consequential limitation of use; significant limitation of use; and/or the “90/180 day” category.

In the underlying decision, Supreme Court, Nassau County, summarily held that Plaintiff failed to meet either the permanent loss of use or 90/180 day, based upon a lack of any evidence to support that either she suffered a “total loss of use” of a body organ/member/function/system or that she was curtailed in her usual activities “to a great extent rather than some slight curtailment” in the relevant period following the accident. Therefore, the Supreme Court focused the analysis on the permanent consequential limitation of use or significant limitation of use categories of § 5102(d). 

In support of her motion, Defendant submitted an obtained IME report, Plaintiff’s examination before trial transcript, and an unsworn letter from a local medical provider who stated that no treatment records of the Plaintiff could be found. The Supreme Court found, mostly citing the IME report, that Defendant met her prima facie burden to prove Plaintiff did not sustain a “serious injury” under the above claimed categories of § 5102(d). In opposition, Plaintiff submitted unsworn MRI reports for her neck/back/left knee and narratives and sworn affirmations from two treating physicians who examined her twice, respectively (both examined her once in 2020 and once in 2022). As the MRI reports were unsworn and not otherwise admissible, the court did not consider them. Regarding her treating physician reports and affirmations, the court held that these were insufficient to create a triable issue of fact to defeat summary judgment as the reports did not provide contemporaneous qualitative evidence of what restrictions (if any) Plaintiff had, nor did the physicians explain the gap in treatment. Accordingly, the Supreme Court granted summary judgment for the Defendant dismissing the complaint in its entirety.

On review, the Second Department initially agreed that the Defendant met her prima facie burden via the aforementioned supporting evidence demonstrating Plaintiff did not sustain a serious injury under the permanent consequential limitation of use or significant limitation of use categories of § 5102(d). However, the Second Department did find Plaintiff did raise a triable issue of fact as to whether she suffered serious injuries to her neck and back under these threshold categories. Specifically, the Court found, contrary to the Supreme Court’s decision, that that the Plaintiff was not required to submit contemporaneous quantitative measurements to raise a triable issue of fact. Moreover, the Second Department found that Defendant had failed to establish, prima facie, that the Plaintiff’s alleged neck and back injuries were not caused by the subject accident. Based on this finding, the burden did not shift to the Plaintiff, and therefore she was not required to raise a triable issue of fact as to causation or to explain any gap in treatment.

Accordingly, the Order of the Supreme Court, Nassau County, which granted the branch of Defendant’s summary judgment motion dismissing the complaint on the ground that Plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) was reversed, with costs, and the matter was remitted back to the trial court for determinations on outstanding branches of the summary judgment motion not previously considered.

 

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

07/15/24       Burlington Ins. Co. v. Mordini Estates Inc.
New York State Supreme Court, New York County
Upon Reargument Court Reverses Four Prior Decisions Involving a Host of Coverage Issues Including Additional Insured Status, Reimbursement of Past Fees, Rescission, and an Insured Cast in a Defensive Posture

A claimant sustained an alleged trip and fall injury outside a store owned by Mordini Estates Inc (“Mordini”), which was leased to Parrilladas Sunrise Bar Corp. (“Parrilladas”). After an action was commenced, Mordini was provided a defense by their insurance carrier, Burlington Insurance Company (“Burlington”). Burlington brought a declaratory judgment action seeking rescission of the policy issued to Mordini, based on an alleged material misrepresentation on the application for insurance. Burlington also sought a declaration that Mordini’s insurer, Utica First Insurance Company (“Utica”), was obligated to reimburse Burlington for past defense costs because Parrilladas was an additional insured under the Utica policy.

While the declaratory judgment action was pending, the court in the underlying action dismissed the claimant’s complaint, based on evidence that the claimant tripped over a stump on the sidewalk owned by the City of New York. The court found that Mordini and Parrilladas were not liable for the claimant’s alleged injuries.

Each party moved for summary judgment. The court denied the requested relief of each respective party, finding that there were issues of fact across the board. Upon reargument, the court reversed the previous denials, based on both misapprehended facts and the law presented in the prior motion.

The court first addressed the motion for summary judgment by each insurer, Burlington and Utica. The court had previously denied each motion, finding that there was an issue of fact as to whether Mordini was an additional insured under the Utica First Policy, because the underlying court found that neither Mordini nor Parrilladas caused the claimant’s injuries.

Upon reargument, the court noted that the ultimate resolution of the underlying action was irrelevant with respect to Utica’s duty to defend Mordini as an additional insured. Pointing to established case law that an insurer is required to defend no matter how groundless, false or baseless a suit may be. The court turned to the plain language of the Utica Policy and the underlying action complaint. Upon reargument, and the misapprehended law and facts, the court granted Burlington’s summary judgment motion to find that Parrallidas was an additional insured under the Utica policy.

Additionally, the court analyzed the Other Insurance provisions within the Utica and Burlington policies to find that coverage to Mordini under the Utica is primary. The Burlington policy provided that coverage is excess over “[a]ny other primary insurance available to you…for which you have been added as an additional insured.” The Other Insurance provision in the Utica policy states that additional insured coverage “is primary except as provided under paragraph 5.c.” Since none of the referenced exclusions within the Utica policy applied, the court found that Utica had an obligation to reimburse Burlington for the defense costs incurred in the defense of Mordini.

The court next addressed Parrilladas’ motion for reargument, arguing it was entitled to summary judgment dismissing all claims and crossclaims asserted against it, in relation to contractual indemnity obligations under the lease between Mordini and Parrilladas.

The court acknowledged it had overlooked facts in the matter originally submitted. The court analyzed the express language of the additional insured endorsement of the Utica policy, as iterated above, to find that Mordini was expressly listed as an additional insured under the Utica policy. Accordingly, Parrilladas’ motion for summary judgment was granted, entitling it to a declaration that it was not contractually obligated to defend Mordini in the underlying action, nor reimburse Burlington or Mordini for defense costs incurred.

Lastly, the court addressed Mordini’s motion for summary judgment, seeking dismissal of Burlington’s claims against it. Burlington had sought a declaration that the policy was rescinded, based on a material misrepresentation regarding the vacancy of the risk location. In the application, Mordini represented that the property had been vacant, despite having executed a lease with Parrilladas.

The court found that it overlooked both facts and caselaw demonstrating the Burlington was estopped from pursing rescission. The court determined that Burlington was aware of the lease agreement between Mordini and Parrilladas for over three years prior to seeking rescission and chose not to act. Mordini submitted evidence, including Burlington’s claim file, which contained knowledge of the lease agreement three years prior to the disclaimer and rescission. When Burlington received notice of the lease three years prior, it produced a reservation of rights letter, which references the lease but did state that a material misrepresentation had been made. The court found that Burlington did not act promptly in rescinding the policy, by waiting over three years to rescind the policy.

Additionally, the court granted Mordini’s portion of the motion seeking attorney’s fees incurred in the defense of the declaratory judgment action. The court found that since Mordini was cast in a defensive posture by Burlington, and prevailed on the merits, it is entitled to recover attorneys’ fees in defending against the declaratory judgment action.

 

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

08/14/24        Proposed Amendments to 22 NYCRR §§ 202.67 and 207.38
Proposed Legislation to Amend §§ 202.67 and 207.38 to Require the Disclosure of Litigation Financial Agreements in Wrongful Death and Certain Personal Injury Actions

The proposed amendments to 22 NYCRR §§ 202.67 and 207.38 seek to require the disclosure of information relating to litigation financial agreements in certain cases. Litigation financial agreements are arrangements through which an entity agrees to cover all or a portion of non-litigation expenses of a party with repayment contingent on the outcome of the case.

Some argue that these agreements allow parties to maintain lawsuits that they could otherwise not afford to pursue. On the other hand, there are concerns about the exorbitant interest rates and fees that reduce the recovery of injured parties and burden possible settlements.

The Advisory Committee on Civil Practice has recommended revisions to 22 NYCRR §§ 202.67 and 207.38 that would require the disclosure of litigation financing agreements in all applications seeking leave to compromise a (1) wrongful death action, or (2) a personal injury action involving an infant or a judicially declared incapacitated person.

The language proposed by the committee is intended to be broad enough to encompass not only financing agreements or attorneys’ fees but also other financial agreements that can impact that recovery of plaintiffs, including, financial arrangements with physicians or other medical providers.

Public statements to the proposed amendments can be found here: Public Statements on Proposed Amendments.

Amendments to § 207.38 which governs applications for leave to compromise a claim for wrongful death or personal injuries or both.

  1. Amending 207.38(b), which outlines information required for a petition for leave to compromise, to include:

“(9) the terms and documentation of any interest or any other fees charged to the personal representative of the decedent, or any person entitled to take or share in the proceeds of the settlement and any contingency or deferred payments agreement, and any money borrowed against anticipated settlement proceeds.”

2. Amending 207.38(d), which outlines information to be set forth in a supporting affidavit of the attorney for the petitioner, to include:

“(d) … Such affidavit or affirmation also shall set forth and provide documentation of the terms of any interest or other fees charged to the infant or incapacitated person, any contingency or deferred payments agreements and any money borrowed against anticipated settlement proceeds.”

Amendments to § 202.67 Infants’ and Incapacitated Persons’ Claims

  1. Amendment to (a)(7), to include:

“Attorneys representing the petitioner may not charge or receive interest on disbursements without the express approval in the court order. “

  1. Amendment to (b), adding:

“… and shall set forth and provide documentation of the terms of any interest or other fees charged to the infant or incapacitated person, any contingency or deferred payment arrangements pertaining, and any money borrowed against anticipated settlement proceeds.”

  1. Amendment to (d), adding:

“Such affidavit or affirmation also shall set forth and provide documentation of the terms of any interest or other fees charged to the infant or incapacitated person, any contingency or deferred payment agreements and any money borrowed against anticipated settlement proceeds.”

  1. Amendment to (f), adding (9), (10), (11), and renumbering former (9) to (12):

[(f) delineates the information to be set forth in a petition seeking the expenditure of settlement funds which have been set aside for an infant’s benefit.]

(9) a statement detailing the relationships, if any, among the direct or indirect recipients of such expenditures;

(10) a statement that no other entitlement, benefit or fund is available to pay the proposed expenditures;

(11) any other facts material to the application, including but not limited to the complete terms and conditions of any agreement for litigation funding and fee arrangements.

 

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

08/13/24       Paramount Resources Ltd v Chubb Ins. Co. of Canada
Alberta Court of Appeal
A Condition Precedent to Coverage That a Pollution Event Be “Detected by Any Person” Within 720 Hours of Its Commencement Begins When There Is Subjective Understanding That a Covered Event Has Occurred

Reasons for judgment in an appeal of a decision reported in the November 24, 2023, edition of this newsletter (Vol. XXV, No. 12) was released August 13, 2024. Using first principles of insurance coverage interpretation, the Alberta Court of Appeal reversed the Alberta Court of King’s Bench decision which had held that coverage had been wrongfully denied.

A commonly found provision in commercial pollution incident coverage is that the leak, spill, etc. must be “detected by any person” within a set period after it occurred that is usually defined in hours. The policy in issue contained such a clause. The issue before the court was how “detected by any person” is to be interpreted in this battle between titans over C$11 million: Paramount Resources Ltd. (a well-financed and lucrative oil and gas company) and Chubb Insurance Company of Canada.

Paramount and ConocoPhillips jointly own the Resthaven gas plant and facility near Grande Cache, Alberta. Conoco was the operator of the plant and a pipeline that transported low vapour pressure condensate from the gas plant to sales tanks.

In the spring of 2016, Conoco bought new and improved meters to test for condensate loss in the pipeline. The pipeline went out of service on April 14, 2016; the meters were installed three days later; tested April 20, and the pipeline was put back into service on April 21.

On April 30, Conoco became aware of pressure anomalies reported by the new meters. Tests were done and all tests failed. Conoco staff believed that this was due to a malfunction of the new meters. However, that was not the case. The meters were right. The pipeline started to leak on April 21, 2016, the day it went back into service.

Conoco personnel who were physically checking the pipeline right of way discovered the leak on June 9, 2016. Paramount was notified. Paramount notified its pollution liability insurers and accused Conoco of gross negligence in the operation of the Resthaven facility.  On that basis, Paramount refused to pay its one-half share of the cleanup costs, which were about C$24 million. That dispute settled during arbitration and Paramount paid C$11 million to Conoco and claimed that amount from its insurers.

Paramount was the insured under a tower of pollution liability coverage. Chubb was lead on the primary. That primary policy contained a condition precedent to coverage which read “that such emission, discharge, release or escape is detected by any person within 720 hours after commencement of such emission, discharge, release or escape.”

Paramount and Chubb stated in an agreed statement of fact that the leak began April 21, 2016. The policy required detection by May 20, 2016.  Detection occurred June 9, 2016, and therefore, the Court of Appeal reversed the trial/application judge and held that on the plain language of the provision, when read with the facts, there was no coverage for the event.

Paramount argued that Conoco had enough objective information by May 20, 2016, to conclude that a leak had occurred. Chubb replied saying that the condition requires subjective information:  That a person subjectively concludes or is actually aware that a release occurred or is occurring.

The Court of Appeal held that:

  • The trial/application judge was wrongly swayed by industry practice and standards when he held that:

“detected” means knowledge by the person concerned of credible information that, in the mind of a person of ordinary prudence, would provide reasonable grounds to believe that an emission, discharge, release or escape of pollutants may have occurred or be occurring. Reasonable grounds to believe is not speculation nor is it as high as the balance of probabilities. In the case of a pipeline, it is information that would normally require the pipeline under industry practices or CSA Standard Z662 to be shut in pending resolution of the anomalous information.”

  • The Court of Appeal saw no reason to stray from the plain and ordinary meaning of those words. The leak was detected on June 9, 2016, well after the 720-hour period had expired.

  • There was no reason to refer to the industry standards as the policy does not refer to them.The trial judge erred by going beyond the language of the contract to incorporate regulatory provisions that the parties could have incorporated but did not.

  • The trial judge’s interpretation increases the likelihood of needing a third-party to adjudicate when a person of “ordinary prudence” had “reasonable grounds to believe” a release occurred.

  • The trial judge’s interpretation exposes the insurer to a risk that it did not bargain for and renders the 720-hour clause in the endorsement meaningless.

Paramount has 60 days to seek leave to appeal from the Supreme Court of Canada.

 

© Hurwitz Fine P.C. 2024
All rights reserved

Newsletter Sign Up

 

 

Headquarters

The Liberty Building
424 Main Street, Suite 1300
Buffalo, New York 14202

P: 716-849-8900 F: 716-855-0874

Long Island Office

575 Broadhollow Road
Melville, New York 11747

P: 631-465-0700 F: 631-465-0313

Albany

P: 518-641-0398

Additional Offices

Albion | Amherst | Hartford, CT | Niagara-Falls | Rochester | Utica

Make a Payment Logos