Coverage Pointers - Volume XXVI No. 9

Volume XXVI, No. 9 (No. 682)
Friday, October 11, 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. I received four calls in the last two weeks, where the caller started out with “I have a situation,” or “I know you love situations”.

We certainly don’t love the situation in Florida.  We pray for our friends and colleagues who are in harm’s way or were required to relocate or are recovery from injury or damage.

On a personal note, I am appalled by those who cannot set aside politics to come together in emergencies.  That doesn’t help anyone.

Not a lot out of the courts over the past two week, as post-summer decisions begin to be released.

We send our best wishes for the upcoming holidays.  I for one, along with 13 in the family, will be celebrating Thanksgiving in my Canadian home.

 

Canadian Thanksgiving – Page 2 – JattDiSite.com            Happy Indigenous Peoples Day Columbus Stock Vector - Illustration of ...

 

An Aroma of Bad Faith out of the First Department

There is a rare bad-faith case out of the First Department that I introduce in my column and Brian Barnas deconstructs in his column.  After you read the summaries, I have linked the oral argument of the appeal in my column, and it is something you might want to review

Child Victims cases trouble the courts when insurance (or lack of it) is in issue.  Perhaps I am wrong, but it seems, lately, that courts bend over backwards to try to find coverage for defendants sued in child victims’ cases – even more so than in other kinds of cases.  Take a look at the one case in my column, again, reprises and expanded in Brian’s.

I don’t like the signal’s being sent by the court but be aware of them.  The court even suggested that Bi-Economy, a first party “consequential damages case” might apply to liability insurance involving a child victims’ claim.  Unlike the business interruption claims in Bi-Economy, there was no discussion about the expectations of the insured when purchasing liability coverage many years ago (and it was expectation of the insured in the business-interruption contact, that helped drive the Bi Economy decision.

For those who don’t remember Bi-Economy, here is a link to our February 21, 2008 edition of CP where we discussed that decision when it was first rendered.  The discussion is about three quarters away down the issue.

Remember, it has been 26+ years since a state appellate court in New York has affirmed a bad faith finding against an insurer.  This case did not affirm a verdict, but it allowed the claims to proceed.

My son rents an apartment in town and he and his wife applied for renters insurance,  He received a binder, in exchange for a $132 premium.  He had asked for $100,000 in liability insurance.  He sent me the binder which provided him with $100,000,000 in coverage.

What’s a few extra zeroes among friends.

Hurwitz Fine Earns Midsize Mansfield Certification – Demonstrating a Commitment to DEI in Leadership Roles

Hurwitz Fine P.C. is proud to announce that we have earned Midsize Mansfield Certification “Plus” status for the 2023 – 2024 year. This 12-month certification, in partnership with Diversity Lab, tracks and measures our commitment to achieving greater diversity in leadership roles.

This marks the second time Hurwitz Fine has received this prestigious national recognition, reflecting our ongoing dedication to fostering an inclusive workplace and promoting equity within the legal profession.

Mansfield is a year-long, structured certification process that we’ve committed to since 2021 to ensure all talent at our firm has a fair and equal opportunity to advance into leadership. The focus is on opening the door wider and ensuring that opportunities for advancement are transparent and inclusive for everyone. By asking that at least 30% of our talent pools considered for leadership roles consist of underrepresented groups and that our advancement processes are transparent, Mansfield creates a level playing field for all.

To achieve our “Plus” designation, we voluntarily provided data to Diversity Lab to show our progress and outcomes of our efforts to broaden talent pools and increase the visibility of our advancement processes. This transparency allows us and Diversity Lab to track progress and to identify areas with continued opportunities for improvement.

Through Mansfield Certification:

  • We have committed to implementing transparent, clear, and easily accessible advancement processes and leadership role descriptions at the firm.
  • We consider a broad slate of individuals for leadership roles and advancement opportunities.
  • We participate in monthly workshops to learn from peer firms and experts and work collectively to make forward progress.
  • We have taken a new step in building our culture of inclusivity for individuals with disabilities through participating in Mansfield’s Disability Inclusion Commitments.
  • We seek equitable participation from diverse backgrounds in client pitches and request for proposal teams.

“We are incredibly proud to once again earn Midsize Mansfield 'Plus' Certification for 2023 – 2024,” said Hurwitz Fine President/Managing Partner Jody E. Briandi. “Since committing to the Mansfield process in 2021, we have worked diligently to ensure that every member of our team has a fair and transparent path to leadership. This certification reflects our continued dedication to fostering diversity and inclusion across the firm, ensuring that opportunities for advancement are accessible to all. Our 'Plus' designation further demonstrates the progress we've made, and we're committed to continuing these efforts as we build a more inclusive legal profession.”

 

Estate Planning for Artists – a WNY Live Program:

Join Hurwitz Fine Estate Planning Attorney Melissa Pezzino who will be speaking on the topic of estate planning for art collectors and artists. It will be a very informative program!

 

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.

 

Protecting Feuding Spouses – 100 Years Ago:

The Buffalo News
Buffalo, New York
11 Oct. 1924

Divorce Seekers in Paris
To Rest Briefly Behind Bars

Court House Workers Install Iron and Steel Gates to Keep Estranged Pair Separated

PARIS, Oct. 10. – Divorce seekers in Paris henceforth will have to make a short sojourn behind bars and under lock and key. On the second floor of the Paris court house workers are installing iron and steel gates – built along the lines of cell doors – at the entrances of waiting rooms where the men and women await their turn to appear before the judge.

According to French law, when suit is entered for divorce, the judge in a final effort at conciliation summons before him both husband and wife. This is known as the meeting “in extrimis.”

Two waiting rooms, separated by a corridor have in the past sheltered respectively women and men until their particular case was reached. The corridor, however, proved woefully inadequate to separate the estranged pairs, as daily some wife could not resist the temptation of crossing over to the men’s waiting room and telling her husband what she thought of his behavior. Sometimes it was the husband who invaded the woman’s room and in bitter terms reproached the unfaithful spouse.

The result was continuous disputes and often blows. Many a husband left the court house bearing the marks of madam’s fingernails and several women departed with hair disheveled, and headgear torn.

From now on, husbands and wives desirous of severing the matrimonial tie will be ushered into the rooms, and the steel gates locked behind them, to be released one by one when their names are called.

 

Peiper on Property (and Potpourri):

The Rockefeller University case reviewed by our partner, Brian Barnas, is troubling. Pardon my brief take on the nuances of that case, and why I find it problematic. 

Let’s start, first, with the bedrock principle that a third-party insurance policy serves as, in part, “litigation insurance.”  As such, a carrier’s duty to defend is so broad that it can be triggered by allegations in a Complaint that are “groundless, false or fraudulent.”  With that obligation, however, the carrier’s policy reserves the right to assume and control its insured’s defense.  That includes, generally, litigation strategy and when/how to engage in settlement. 

The carrier’s duty is to avoid exposing its insured to financial jeopardy beyond the scope of the policy (whenever possible).  It is not bad faith for a carrier to refuse to settle a claim just because the insured so demands it.  Nor should it be.  Along the same lines, it is not bad faith if the carrier elects to settle a case and the insured vehemently opposes it (absent, of course, a consent to settle clause). 

While admittedly at the pleadings stage only, the Rockefeller University case potentially lays the foundation to erode the carrier’s control over the defense. 

The Court should not be blending, as warned by the majority in Bi-Economy Food Markets, bad faith jurisprudence with consequential damages. Yet, that appears to be what the Appellate Division has done here. 

Consequential damages are only recoverable in New York where there has been a breach, and the insurer recognized, at the time of the contracting, that a particular type of breach may expose the insured to additional damages which could reasonably be foreseen.  That analysis, even at the pleading stage, is absent in the Court’s decision.  By accepting the possibility that an insurer’s litigation strategy, while not in and of itself exposing the insured to excess damages, could lead to consequential damages, the Court has perhaps unwittingly opened a door it did not intend

It certainly merits closer scrutiny as the matter proceeds in discovery.

Steve
Steven E. Peiper

[email protected]

 

Navy Boys Attend KKK Meetings – 100 Years Ago:

Buffalo Courier
Buffalo, New York
11 Oct. 1924

NAVY INVESTIGATES
CHARGE OF ORDER
TO AID KU KLUX

Board Enquires Into Story Petty Officers Commanded to Attend Meeting.

New London, Conn., Oct. 10. – A special naval board sat on the U.S.S. Chewink, at the submarine base here today, in what is said to be the first official Naval enquiry into alleged connection of enlisted men in activities of the Ku Klux Klan.

It is charged that Chief Electrician’s Mate Joseph J. Capdeville, Chief Electrician’s mate John L. Hess, and Chief Machinist’s Mate Roy T. Johnson, who are at the base, attended a Klan ceremonial at Chesire, Conn., on July 12, and that while there in uniform they carried clubs, served as traffic officers for Klansman’s car and drove away persons who were not members, and who had sought to attend.

It was further alleged that when the petty officers were asked by what authority they were there and performing traffic duty, they replied that they had been sent by their commanding officer and were doing duty by his orders.

It is understood that the matter was called to the attention of the navy department by the Rev Timothy M. Crowley, pastor of St. Mary’s Star of the sea church here. The naval board of four members was under orders from Secretary Wilbur, and after its session the papers were forwarded to Washington. The finding was not made public.

Captain King, commandant at the base, has stated that he is not a member of the Klan and did not order any of the men to attend or do duty at the ceremonial. The matter before the board did not include alleged membership of the three petty officers in the Klan but as to the charges that they attended the ceremonial under orders.

 

Barnas on Bad Faith:

Our thoughts and prayers go out to everyone who is in Florida and in the path of Hurricane Milton as well as those still dealing with the impact from Hurricane Helene.  We are off to Charlotte this weekend for my cousin’s wedding.  Looking forward to celebrating the bride and groom.

Brian
Brian D. Barnas

[email protected]

 

Psychiatrists F/K/A Alienists – 100 Years Ago:

The Buffalo News
Buffalo, New York
11 Oct. 1924

Alienist Testimony
By Dr. Frank Crane

 

The fatuity of expert testimony was again demonstrated in the Leopold-Loeb-Frank case.

One lawyer said there are three kinds of liars; plain liars, fancy liars, and expert witnesses.

The very fact of paying in witness makes his testimony of doubtful value.

Witnesses should be called in, if necessary, by the court and they should be paid by neither side so as not to influence their opinion. As a matter of course no side would select and pay for a witness unless they were assured of the nature of his testimony in the first place.

It is doubtful whether, in any serious case, expert testimony has been of any value or assistance in ascertaining the truth and it has often been of assistance in obscuring it.

Let the court employ expert witnesses if necessary and let their opinions be impartially given. Then they will be worth something. As it is at present they are worth nothing. Expert testimony on one side of the case can always be balanced by expert testimony on the other side.

Unfortunately, it is the instinct of Anglo-Saxons to settle their disputes by some sort of conflict. The idea of the impartial tribunal is not acceptable to our race. The two parties in litigation set up lawyers to fight each other, the judge is the umpire only and the spectators are the witnesses.

The result of the trial is not determined by the facts in the case but by the ability of the lawyer.

The French system is different. The accused person is examined independently by the judge of instruction before he goes to trial. There is something to be said in favor of that.

 

Lee’s Connecticut Chronicles:

Dear Nutmeggers:

We’re going to have to be brief this edition, as I’m writing up against deadline with a stern editor peering around the corner. Last week we joined with friends to celebrate the start of the Jewish High Holy Days in Toronto. This week, Jill and I celebrated our first wedding anniversary, returning to the scene of the crime. The staff at the hotel could not have been any nicer, treating us just as well as they had the year before. Now, it’s time to fit in a couple of weeks of work in a handful of days, as Yom Kippur approaches. To all who observe, may you have a meaningful fast.

Keep keeping safe.

Lee
Lee S. Siegel

[email protected]

 

Court Chastises Jury for Verdict – 100 Years Ago:

Daily News
New York, New York
11 Oct. 1924

SLAYING JURY HIT
FOR FREEING GIRL

When a Newark, N.J., jury acquitted Miss Mary Bruno, 22, of 193 Hunterdon St., that city, on a charge of slaying Carmine Merino, Judge Edwin McCaffrey rebuked the jurors, calling the verdict a grave miscarriage of justice. Miss Bruno eloped with Merino to Buffalo, N.Y., where she became a mother, and then he returned to his wife. Miss Bruno followed. Merino was found dead in her furnished room with three bullet wounds.

 

Ruffner's Road Review:

Dear Readers,

Hard to keep up with all the sports news this time of the year, with hockey underway (and the Sabres off to an unsurprisingly slow start), playoff baseball and, of course, football with the Bills also in the middle of a slump. Happy Fall!

Two cases this week.  The first involves a petition to stay an uninsured motorist arbitration. I also have a no-fault case, where the insurer sought to disclaim benefits based on two coverage defenses, a “founded belief” that the incident did not arise out of an insured accident and the failure of the claimant to satisfy a condition precedent to coverage by failing to sign their EUO transcript.

Kyle
Kyle A. Ruffner

[email protected]

 

Catwoman Convicted – 100 Years Ago:

Daily News
New York, New York
11 Oct. 1924

WOMAN CONFESSES
IN DOUBLE KILLING

Little Rock, Ark., Oct. 10. – After twenty hours’ questioning by police, Mrs. Winona Green, 23, of Pueblo, Colo., today confessed killing both her husband’s parents. J.R. Green, father-in-law, was found dead in the yard of his home in Little Rock. He had been shot. Mrs. J. R. Green disappeared while en route to Pueblo with her daughter-in-law.

Editor’s Note:  This wasn’t the last we heard of this murderer.  See next story.

 

Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers:

Busy broadcasting weekend ahead of me as I’ll be on the call for Daemen Women’s Volleyball versus the Wilmington Wildcats on Friday night at 7pm (you can watch the action live and free on the ECC Network here.) Then, I’ll return to the Gallagher Center in Lewiston, New York, for a pair of MAAC contests as Niagara University hosts Fairfield and Sacred Heart on Saturday and Sunday. Those matches are both at 1pm on ESPN+ (available to ESPN+ subscribers here and here).

This edition of my column tackles an interesting defense costs issue. Two carriers, five policies, defense obligations, but no finding relative to the proper allocation between them. The EDNY fixes that pretty quickly.

Until next time,

Ryan
Ryan P. Maxwell

[email protected]

 

Catwoman Goes to Jail, Again –  Note Previous Story:

Hope Star
Hope, Arkansas
25 Mar 1954

Cat Woman Sentenced to Life.

SALINAS, Calif. – A 53-year-old paroled Arkansas murderess yesterday was sentenced to life imprisonment by a California judge who said she was lucky to have escaped the gas chamber.

Mrs. Winona Green Freeman was sentenced by Judge Henry Jorgenson for the murder of Harold Jonassen, 78, last Nov. 25. The jury recommended the life sentence.

“The court emphatically disagrees with the jury and can find no mitigating circumstances in the murder,” said Judge Jorgenson.

Mrs. Freeman said she shot Johnassen accidentally while she and the wealthy rancher were target shooting.

She came to California after being paroled in Arkansas from a murder conviction in the death of her father-in-law.

 

Storm’s SIU:

Hi Team:

It’s put up or shut up for the Dodgers tonight against the Padres.  In the event of a loss, I’ll shift to cheering on the Mets. 

One case this week:

Summary Judgment is the "Put Up or Shut Up Time" for the Nonmoving Party, and Unity Church has Simply Not Put Up Any Evidence from Which a Reasonable Jury Could Conclude that the Water Infiltration to its Roof was Preceded by Wind Damage Creating Coverage Under its Policy with Church Mutual.

Talk to you again in two…

Scott
Scott D. Storm

[email protected]

 

God’s Insurance Policy – 100 Years Ago:

News-Democrat
Paducah, Kentucky
11 Oct 1924

WILLIAMS SELLS
GOD’S INSURANCE

Will Prevent Loss By Fire After Death, Says Evangelist

A life insurance policy with God that insures for eternal life, one that pays rich dividends every moment in peace and happiness, that insures against shipwreck on the waters of life or the river of death was presented by Howard S. Williams, Mississippi evangelist, to more than four thousand men and women in the gospel tent last night.

“I want to insure you tonight with God’s life insurance policy,” he declared.

The service was dedicated to the men of the insurance profession, and more than a hundred life insurance men were in the audience, Special seats were reserved for them. Mr. Williams said at the opening of his service that he wanted to show men and women how they could meet the conditions of an application for God’s life insurance policy which they would “cash in” after death.

Mr. Williams paid tribute to the profession of the insurance men and declared that the service they rendered humanity is a noble one.

 

Fleming’s Finest:

Hi Coverage Pointers subscribers:

This edition, we have another unsurprising COVID case. The Alaska Supreme Court concluded that the presence of the virus at an insured property is not direct physical loss of or damage to property, and operational restrictions imposed by the pandemic-related governmental orders do not constitute direct physical loss of or damage to property.

See you in a fortnight.

Kate
Katherine A. Fleming

[email protected]

 

A Movie About Heroic Insurance Agents? – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
11 Oct 1924

Scene from
“The Reckless Age.”

“The Reckless Age,” film version of Earl Derr Biggers’ story, “Love Insurance,” and Reginald Denny’s latest Universal starring vehicle, comes to the Olympic Sunday, October 12, for the entire week. It is a lively story of comic complications surrounding the attempt of an insurance agent to protect the policy of a client who has taken a policy against failure to wed a rich fiancée, filled with a rapid-fire series of alternate thrills and laughs.

A sensational fight, staged in Denny’s best style, a chase in a speeding auto that adds further thrills, and a daring kidnaping are interspersed among hilarious difficulties resulting from a threatened breach of promise suit, a bogus claimant to a title and the faked theft of a noble-man’s ancestral pearls. Ruther Dwyer is seen as the heiress. Others in the cast are Hayden Stevenson, William Austin, May Wallace, and John Stepling. Scenes depicting a Florida playground for millionaires were reproduced for this production.

 

Gestwick’s Garden State Gazette:

Dear Readers:

As Sabres season is officially underway, I’ve decided to purchase tickets to tonight’s home opener. It will surely be a nostalgic feeling, with Lindy Ruff back behind the bench. Welcome home, Lindy.

No noteworthy New Jersey cases to report on this week. Back in two!

Evan
Evan D. Gestwick

[email protected]

 

We All Scream for Ice Cream – 100 Years Ago:

The Buffalo News
Buffalo, New York
11 Oct 1924

Dolly Madison’s Gift

American business owes a big debt to Dolly Madison. She made ice cream popular and fashionable in the United States. So far as the records can be traced, ice cream first was made by an English confectioner in London during the American Revolution. It was introduced into the United States by a Philadelphia caterer named Bosion in 1800, but never became really popular until Mrs. Madison, as mistress of the White House, has it served at state dinners over which she presided in 1817. – By N.A.

 

O’Shea Rides the Circuits:

Readers,

As the Bills’ season predictably spirals downward, I shift focus to Canada’s winter pastime. Specifically, eyeing a team that says it represents Canada’s capital but plays in a suburb over 20 minutes away (sounds eerily similar to the Bills). Unlike the Bills offseason, the Ottawa Senators made a splash in acquiring Linus Ullmark who is a familiar face in Western New York. I would like to say I am cautiously optimistic for the Senators’ playoff chances, but that would not be an honest statement.

This week I have a quick read from the Third Circuit involving res judicata and claim forfeiture. While not addressing coverage issues per se, it does provide some guidance on procedural pitfalls.

Until Next Time,

Ryan
Ryan P. O’Shea

[email protected]

 

Mayor Undercover Vice – 100 Years Ago:

The Buffalo News
Buffalo, New York
11 Oct 1924

MAYOR AS “BUM”
VISITS REDLIGHT

Found Five Places Running Full Blast and Result Was Appointment of Roche, He Announces.

Disguised as “bum,” Mayor Schwab made a tour of the tenderloin and found five places running wide open, he told City hall reporters Saturday.

This was done before the demotion of General Lieutenant McDonald and is the reason behind the naming of Lieutenant Austin J. Roche to McDonald’s place as general lieutenant, the mayor declared.

The mayor said he was solicited at five places in the tenderloin. He gave the addresses of the houses. These places were being run continually and on systematic hours, he said, and could have been closed.  He discovered the places easily and when he saw the conditions he made up his mind he wanted Lieutenant Roche to wipe them out.

Demands co-operation

Co-operation from the heads of the police department, including both the chief and captains, will be insisted upon in the work of cleaning up the tenderloin, the mayor asserted.

The tour made by Mr. Schwab in the guise of a “bum” was cloaked in secrecy, not even “the family or my private secretary knowing where I was going.” He explained to reporters. He was unaccompanied.

Lieutenant Austin J. Roche called at the mayor’s office Saturday morning to straighten out a few remaining tangles connected with his recent appointment as a general lieutenant by Mayor Schwab over Chief Zimmerman’s head. Lieutenant Roche said that he had expected that Patrolman Simon J. Callinan would be promoted to the rank of detective but that the promotion wasn’t noted on the list given out Friday. It was understood that he talked this subject over with the mayor although he would neither affirm nor deny that he had. He said that he had reached a satisfactory understanding regarding how he will work and what men will be with him.

 

Rob Reaches the Threshold: 

Dear Readers,

We are in the midst of one of the best times of the year, especially in Western New York. The weather is getting brisk and there is plenty of fall activities to do around this area. However, none of that particularly matters since the real focus is October Playoff Baseball. As I write this, my beloved Yankees are up 2-1 on Kansas City -- while across town the Mets look to be the team of destiny. I am not getting any hopes up, but at the time of our next installment I hope I can write about a dream scenario I dare not speak of yet.... 

It seems like the Second Department is the only division up and running, as this week we review another decision which examines whether or not multiple plaintiffs raised triable issues of fact as to whether they suffered serious injury under Insurance Law Section 5102(d). The Supreme Court, Kings County, did not think so -- but take a look at the article to see if the Second Department agreed. 

I hope you all enjoy the read.
Go Yankees. 

Rob
Robert J. Caggiano

[email protected]

 

Another Judge, Another Rebuke – 100 Years Ago:

The Buffalo News
Buffalo, New York
11 Oct 1924

JUDGE REBUKES JURY
WHICH ACQUITS NEGRO

Judge Noonan in County court rebuked a trial jury for bringing in a verdict of acquittal for Alfred E. Smith, a negro. Smith was arrested by Lieutenant Ryan and Patrolman Kumpf of the Sycamore testified Smith drew a revolver and fired at them when they attempted to get him under arrest. Ryan swore he knocked the revolver from Smith’s hand, making the bullet strike the sidewalk.

“This verdict goes to show me that you haven’t much regard for the Buffalo police department,” declared Judge Noonan after the jury had returned its verdict.

 

LaBarbera’s Lower Court Library:

Dear Readers:

Dog sitting this weekend. Once again, we will be outnumbered in the people to dog ratio in our house. Hopefully, everything goes smoothly.

It has been a slow few weeks in the trial courts. I have nothing to report on this week, but hopefully will have a few next time around. 

Until next time…

Isabelle
Isabelle H. LaBarbera

[email protected]

 

Thieving Toddlers? - 100 Years Ago:

Buffalo Courier
Buffalo, New York
11 Oct 1924

QUESTION KINDERGARTENERS IN
MYSTERIOUS $2,000 ROBBERY

Detectives of Louisiana Street station yesterday questioned ten pupils of Public School No. 34 in Hamburg Street, in searching for a pocketbook containing two diamond rings valued at $2,000, stolen Thursday noon from the desk of Miss Grace Sheehan, teacher of the kindergarten class. Statements were taken from the children, but nothing was learned, police say, that would aid them in the investigation.

It was first thought by police that a sneak thief entered the school during the lunch hour. Investigation disclosed it would have been impossible for a thief to enter the school unnoticed, because teachers stand at all doors of the building watching the children in the school yard during the lunch hour, Miss Sheehan’s desk in the class room also is visible from the teachers’ dining room. Other children will be questioned today.

Editor’s Note:  For the “rest of the story,” see below.

 

Lexi’s Legislative Lowdown:

Dear Readers,

My best friend, who moved to Boston after graduation, is coming to visit this weekend. I am looking forward to an overdue celebration of her recent engagement!

This week’s column discusses the recent bill signed by the governor that amends insurance law as it relates to supplemental spousal liability insurance. The amendment changes Section 3420(g) to require that supplemental spousal liability insurance is an opt-out endorsement only for individuals who indicate on the application for insurance that they have a spouse.

Have a wonderful weekend!

Lexi
Lexi R. Horton

[email protected]

 

The Real Culprit – See Previous Story:

The Buffalo News
Buffalo, New York
8 Dec 1924

$1,800 STOLEN
RING IS TRACED
TO PATROLMAN

Witnesses in Capelli’s Trial Before Mayor Officers of Police Department – Man Accused Denies Wrongful Intent in Retaining Ring.

Witnesses before Mayor Schwab Monday in the trial of Patrolman August Capelli of the motorcycles police, charged with unlawful possession of an $1800 ring stolen from Miss Grace Sheehan, a teacher in Public School 34, testified the policeman had declared he had taken no ring from the box sent by messenger to the Franklin street station, and that later he had admitted possession of the ring but said he has taken it because he “thought someone was kidding him.”

The ring was taken to police headquarters in a box by a messenger boy, who said a man on West Eagle street had given it to him with instructions to deliver it to the police.

Detective Captain John Murphy noted the box was addressed to Miss Sheehan and he declined to receive it. Next the boy presented the box to Lieutenant Harry Conry on duty in police headquarters and that official also declined to accept it and sent the boy to Desk Lieutenant Ormand Sullivan in the Franklin street station. Lieutenant Sullivan said he placed the box behind the desk and that it was taken to the reserve room by Patrolman Carrig.

Later the policeman informed Lieutenant Sullivan that the box contained a ring and that Patrolman Capelli had taken it. Lieutenant Sullivan found the patrolman in the reserve room playing dominoes, so he testified, and asked him if he had taken a ring from the box.

According to Lieutenant Sullivan the policeman said he had found no ring in the box.

“That’s all there was in it,” he said and pointed to some bits of blue paper, according to Sullivan.

Several days later Detective Sergeants Burns and Mahany assigned to the case, found that the ring has been stolen by five-year-old tots in the school and had been hidden in a vacant lot and then taken to the home of one of the children.

 

North of the Border:

We returned from a fabulous week in Portugal – three days in Lisbon and three days in the Algarve. We really enjoyed ourselves. It was what we needed and a perfect celebration. Calgary is now descending towards winter with shorter days and yellowing leaves, but when the winter doldrums set in, I will gaze at my photos of the sea stacks, fragile rock arches and hidden caves of the Algarve coast and feel instantly warmer.

My column this week discusses a case that defines ‘settlement’ in a homeowners’ policy.

Enjoy!

Heather
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada

[email protected]

 

Headlines from this week’s issue, attached:

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

  • First Department Lets Bad Faith Claims Stand

     

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

  • Common Law Negligence Claim Only Precludes Indemnity Claims on GOL Grounds; Fees and Costs are Still Recoverable

 

BARNAS on BAD FAITH
Brian D. Barnas

[email protected]

  • Plaintiff Stated a Claim for Bad Faith and Consequential Damages Related to Insurers’ Handling of CVA Claims

     

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

  • Water Damage Coverages Ambiguous

     

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

  • Petition to Stay Arbitration Denied As Petitioner Failed to Establish Preliminary Issue to Justify Stay

  • Insured’s Failure to Verify EUO Transcript Constitutes Failure to Comply with a Condition Precedent to Coverage

 

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell

[email protected]

  • Defense Costs are ‘In For a Penny, In For a Pound,’ Regardless of How Many Pennys One Insurer is in for Compared to Another

 

STORM’S SIU
Scott D. Storm

[email protected]

  • Summary Judgment is the "Put Up or Shut Up Time" for the Nonmoving Party, and Unity Church has Simply Not Put Up Any Evidence from Which a Reasonable Jury Could Conclude that the Water Infiltration to its Roof was Preceded by Wind Damage Creating Coverage Under its Policy with Church Mutual

 

FLEMING’S FINEST
Katherine A. Fleming

[email protected]

  • Neither the Presence of COVID-19 Nor Operating Restrictions Constitute Direct Physical Loss of or Damage to Property

 

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick

[email protected]

 

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

[email protected]

  • Common Law and Statutory Bad Faith Claims Barred by Res Judicata When Claimant Failed to Amend Complaint in Prior Breach of Contract Action

ROB REACHES the THRESHOLD
Robert J. Caggiano

[email protected]

  • Second Department Reversed the Decision Granting Defendants’ Summary Judgment Motion Dismissing the Complaint on the Ground that Plaintiff Did Not Sustain a Serious Injury Pursuant to §5102(d) Where Plaintiff Raised Triable Issues of Fact

 

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera

[email protected]

  • Nothing to Report this Week

 

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton

[email protected]

  • A Bill to Amend Insurance Law to Provide as it Relates to Supplemental Spousal Liability Insurance

 

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

[email protected]

  • The Excluded Peril of Settlement is Earth Movement Caused by the Passive, Gradual, and Naturally Occurring Loss of Moisture Over Time in Soils Surrounding Insured Property that Can Suddenly Manifest Itself in Cracked Pipes and Cracked Foundation Walls

 

Happy Canadian Thanksgiving.  Enjoy Indigenous People’s Day and/or Columbus Day,  Stay safe and dry.

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
[email protected]

 

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

Ruffner’s Road Review

Ryan’s Federal Reporter

Storm’s SIU

Fleming’s Finest

Gestwick’s Garden State Gazette

O’Shea Rides the Circuits

Rob Reaches the Threshold

LaBarbera’s Lower Court Library

Lexi’s Legislative Lowdown

North of the Border

 

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

10/03/24       Rockefeller University v. Aetna Cas. & Sur. Co.
Appellate Division, First Department
First Department Lets Bad Faith Claims Stand

This serves as a preview of Brian’s review of this decision, below.  I wanted to emphasize the importance of reading it, and the decision he’s attached.

I am not reporting on this case, as it falls within Brian Barnas’ excellent column below and my link is to his summary.  However, I want you to pay careful attention to it.

As long-time readers of this newsletter will remember, in the 26 years we have been publishing Coverage Pointers, we have NEVER reported on a bad faith verdict against an insurer that has been upheld by a state appellate court.  Why?  Because the last state appellate court to uphold a bar faith FINDING against an insurer, handed down that decision on June 11, 1998, and our first issue of CP was published on July 8, 1999, a year later.

The Rockefeller University decision does not break that streak, but it is one of the few decisions over the years that allows a cause of action for extra contractual liability to proceed.

It cites to the first-party Bi-Economy “consequential damages” case and suggests that it might apply to liability policies.  It speaks to General Business Law §349 claims and allows those to proceed as well.  It does not change the Pavia standards for bad faith and does not establish any newer or revised approach to bad faith in New York.

All that being said, it sends up warning flares …

Here is the link to the oral argument: https://youtu.be/bsPpJLq84ms?list=PLSfH-NopovE_jhdTVQKIwSl-RFoNwsJ1N&t=6960

 

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

10/03/24       Newman v. NYC Housing Authority
Appellate Division, First Department
Common Law Negligence Claim Only Precludes Indemnity Claims on GOL Grounds; Fees and Costs Are Still Recoverable

The Housing Authority was named as a defendant in a Labor Law action and commenced a third-party action against Triple H for contractual indemnification.  The contract between the Housing Authority and Triple H provided indemnity would be found when injury resulted from “the Work of Triple H in performance of the contract.”  Here, there was no question that plaintiff’s occurred while he was in the course of performing duties of Triple H under the contract. 

However, plaintiff’s injuries were caused as a result of defect on premises.  The Court reasoned that because Triple H was not the owner of the property, nor did it create the hazard, it was under no duty to warn of the dangerous condition.  The result of which meant that if the Housing Authority was responsible for plaintiff’s injuries, it was the direct result of the Housing Authority’s own negligence.  Because, under GOL 5-322.1, a party to a construction contract cannot be indemnified for its own negligence, it followed that the Housing Authority’s attempt to shift exposure for bodily injuries to Triple H via the trade contract was prohibited. 

Nevertheless, the Court noted that the GOL only precludes a party from being indemnified for damages “arising out of bodily injury to persons.”  It does not, however, apply to claims for reimbursement of legal fees and/or other related litigation costs.  Accordingly, the Housing Authority was entitled to recover costs and expenses because the same were within the scope of the contemplated indemnity clause and not otherwise subject to GOL 5-322.1 protections. 

Peiper’s Point – We like good lawyering.  And this was excellent legal work by all sides.  Triple H’s counsel gets an A+ for recognizing that the only exposure the NYCHA would ever face would be tied directly to its own negligence.  And, thus, its own exposure would be prophylactic of its indemnity claim. 

On the flip side, nice pivot by counsel to NYCHA who recognized something that, admittedly, I never did.  The GOL does not apply to the economic costs of litigation.  As a result, defense costs and expenses were rightly pursued and recovered.

Great, creative work all the way around on this one.   

 

BARNAS on BAD FAITH
Brian D. Barnas

[email protected]

10/03/24       Rockefeller University v. Aetna Cas. & Sur. Co.
Appellate Division, First Department
Plaintiff Stated a Claim for Bad Faith and Consequential Damages Related to Insurers’ Handling of CVA Claims

The plaintiff stated a cause of action for breach of the implied covenant of good faith and fair dealing.  The cause of action for breach of covenant arose out of the ways in which defendant insurers allegedly frustrated the purpose of the policies at issue, including the failure to promptly resolve claims stemming from the 2019 Child Victims Act; ignoring plaintiff's requests for copies of decades-old policies; failing to issue coverage decisions; refusing to pay any settlement of the underlying claims; refusing to properly investigate the underlying claims; and pressuring plaintiff to discontinue this action.

The court also concluded that the damages sought in the breach of implied covenant claim were not duplicative of those sought in the breach of contract claim, as the consequential damages arising from the former claim may differ from those sought in the latter claim.  Plaintiff argued that defendant insurers' wait-and-see scheme over the past half-decade placed great financial strain on it, resulting in the self-funding of over $700 million in settlements and defense costs from the limited unrestricted portion of its endowment, lost investment opportunities and endowment income, additional debt, increased debt service costs, and attorney's fees to enforce plaintiff's rights in this action.

Additionally, the complaint sufficiently alleged facts demonstrating defendant insurers' gross disregard of plaintiff's interests as required to state a claim for breach of the implied covenant of good faith and fair dealing.  Plaintiff's complaint sufficiently alleged that defendant insurers' wait and see strategy and claims handling practices were employed to limit defendants' financial exposure, in gross disregard of plaintiff's interests. As such, the Supreme Court properly denied defendant insurers' motion to dismiss the fourth cause of action.

The plaintiff also stated a cause of action for violation of the General Business Law 349.  Plaintiff pleaded independent injury by alleging that defendant insurers violated the statute by engaging in a deceptive wait-and-see strategy that has damaged plaintiff and potentially other policyholders, sexual abuse survivors, and the insurers' investors.  The court rejected defendants' argument that the action merely presented a private contractual dispute between sophisticated parties without the "consumer-oriented" impact necessary to sustain a section 349 claim.

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

09/30/24       Chima Enterprises v. Chubb National Ins. Co.
United States District Court, District of Connecticut
Water Damage Coverages Ambiguous

The District Court denied, in part, the carriers’ motion to dismiss finding the commercial property policy’s water damage coverage to be ambiguous. The court, however, dismissed causes of action against the non-writing insurance companies together with the claims of common law and statutory bad faith.

Chima owns a commercial building in Hamden, Connecticut. Its tenants, approximately 30 hair salons, complained that following rooftop work by AT&T the toilets and sinks were backed up and not functioning. Chima hired plumbers to address the problems and ultimately discovered that “trash, bottles, aluminum cans, caution tape, multiple electrical/telecom wires, and other items of debris stuffed in the rooftop plumbing drainpipes” near the cell tower where AT&T had worked. Due to the depth of the pipes and total number of wires, Roto Rooter could not remove the blockage.

Days later, there was a catastrophic breakage of a pipe, flooding the building with black water and sewage. The carriers’ estimated the cost of repair at almost $540,000. Chima requested a $100,000 advance to making repairs but claimed that the carriers never responded. Sworn proof of loss and later repair estimate totaled $1.8 million.

Ace Fire, the writing company, denied coverage on the basis of the policy’s water exclusion. The covered water damage section of the insurance policy provided:

e. Water Damage, Other Liquids, Powder Or Molten Material Damage

If loss or damage caused by or resulting from covered water or other liquid, powder or molten material occurs, we will also pay the cost to tear out and replace any part of the building or structure to repair damage to the system or appliance from which the water or other substance escapes…..

The policy defined water damage to mean:

c. Water damage means:

(1) Accidental discharge or leakage of water or steam as the direct result of the breaking apart or cracking of any part of a system or appliance (other than a sump system including its related equipment and parts) containing water or steam; and

(2) Accidental discharge or leakage of water or waterborne material as the direct result of the breaking apart or cracking of a water or sewer pipe that is located off the described premises and is part of a municipal potable water supply system or municipal sanitary sewer system, if the breakage or cracking is caused by wear and tear.

The policy also excluded coverage for damage caused by “water that backs up or overflows from a sewer, drain, sump, simp pump or related equipment;” together with a $15,000 sewer endorsement.

The Court, finding for the insured, refused to dismiss the breach of contract claim. Ace Fire argued that the blockage in the building’s sewer lines was the cause of the loss, which was unambiguously excluded from coverage by the sewer exclusion. The insured argued that the policy provides a three-layered approach to water damage: 1) the Water Damage provision, 2) the Water Exclusion, and 3) the Water Endorsement. Chima claimed that the disintegration of the pipes was covered by the policy’s water damage part and not excluded.

Interestingly, the insured argued that the sewer back up exclusion applies to applies to sewage and drainage systems external to a building's internal plumbing. The Court agreed, finding that the policy’s water coverage was ambiguous and subject to discovery. “Plaintiffs’ reading of the insurance policy, that an internal blockage and pipe break are covered as long as they are not related to natural or weather-related forces, is a reasonable one. Additionally, common definitions of “sewer” and “sump pump” refer to systems designed to move water and waste in and out of a building, rather than within a building.”

The Court also found support in decisions from other jurisdictions. “Moreover, other courts have found that clogging in interior pipes, rather than sewer lines is not unambiguously excluded in insurance policies with the same or similar language. See CC 145 Main, LLC v. Union Mutual Fire Ins. Co., 306 A. 3d, 1252, 1257 (N.H. 2013) (“Far from settling the issue, the few courts that have been called upon to interpret exclusions identical or nearly identical to the one before us have reached different results.”) (collecting contradictory cases). In CC 145 Main, LLC v. Union Mutual Fire Insurance Company, the New Hampshire Supreme Court found an identical set of provisions to be ambiguous when applied to “cat litter [poured] down a toilet, clogging an interior pipe.” Id. at 1254. The court found the Plaintiff's interpretation that the Water Exclusion was limited to “water damage precipitated by off premises circumstances or events” to be reasonable. Id. at 1256; see id. at 1257 (“It would seem odd to an insured—as it did to the trial court—that a policy providing coverage for frozen and ruptured internal piping would not also provide coverage when an internal pipe fails in a manner that causes a toilet to overflow.”).”

 

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner

[email protected]

10/02/24       Matter of GEICO v. Enriquez
Appellate Division, Second Department
Petition to Stay Arbitration Denied as Petitioner Failed to Establish Preliminary Issue to Justify Stay

The respondent was struck by another vehicle while driving which, in the police report, was described as an e-bike. The respondent sought uninsured motorist benefits under her Government Employees Insurance Company policy and demanded arbitration. The insurer commenced this proceeding pursuant to CPLR article 75, seeking to permanently stay arbitration or temporarily stay arbitration pending a framed-issue hearing, arguing that the respondent's vehicle was struck by an e-bike, which is not a motor vehicle as defined in Vehicle and Traffic Law § 125. In an order dated January 9, 2023, the Supreme Court, inter alia, denied those branches of the supreme court denied the petition and the insurer appealed.

The court explained the relevant legal standard as follows: The party seeking a stay of an arbitration has the burden of showing the existence of sufficient evidentiary facts to establish a preliminary issue which would justify the stay. The burden then shifts to the party opposing the stay to rebut the prima facie showing. If a triable issue of fact is raised, the Supreme Court must determine it in a framed-issue hearing. However, the court determined that an uncertified police accident report did not constitute admissible evidence, absent a proper foundation for its admissibility.

Therefore, the petitioner failed to sustain its initial burden of showing the existence of sufficient evidentiary facts to establish a preliminary issue that would justify the stay. In support of its allegation that the respondent's vehicle was struck by an e-bike rather than a car, the petitioner only submitted an uncertified police accident report, providing no other evidence. Thus, the court held that the petitioner failed to submit sufficient evidentiary facts to substantiate the claim that the vehicle that struck the respondent's vehicle was not a motor vehicle as defined in Vehicle and Traffic Law § 125.

Accordingly, the court held that the Supreme Court properly denied those branches of the petition to permanently stay arbitration or, in the alternative, to temporarily stay arbitration pending a framed-issue hearing.

 

09/30/24       Hereford Insurance Company v. 21 Century Chiropractic Care
Supreme Court, New York County
Insured’s Failure to Verify EUO Transcript Constitutes Failure to Comply with a Condition Precedent to Coverage

The Plaintiff insurer sought to disclaim no-fault benefits arising from a car accident involving two of the defendants, the claimants, who sought treatment with various medical providers, including the defendants. The insurer denied coverage based on a "founded belief defense and because Claimants failed to subscribe their EUO transcripts.”

The defendants sought summary judgment on grounds that the insurer already arbitrated no-fault reimbursement against one of the non-moving defendants, and the arbitrator awarded the reimbursement because the insurer failed to support its founded belief defense. The moving defendants argued that the finding of the arbitrator is entitled to collateral estoppel and res judicata. The moving defendants also sought to exclude the failure to subscribe to EUO defense because the insurer did not raise it in the arbitration.

Plaintiff cross-moved for summary judgment on the ground that failure to sign an EUO transcript constitutes a violation of a condition precedent to coverage. The plaintiff further argued that the defendants’ motion was without merit as none of the moving defendants were parties to the earlier arbitration, and because the failure to subscribe defense was not brought in any arbitration, there was no preclusive effect.

First, the Court declined to apply the doctrines of collateral estoppel and res judicata to Plaintiff's failure to subscribe cause of action, as the defense was not raised in prior arbitrations and therefore there had been no determination on the merits of that claim. Moreover, in order for the doctrines to apply, there must be identical parties, which was not the case here.

Next, the court rejected the defendants' argument that the founded belief cause of action contradicted the failure to subscribe cause of action. An insurer can maintain a founded belief defense while simultaneously seeking to disclaim coverage for failure to comply with a condition precedent to coverage.

In considering the plaintiff’s coverage defense, the Court held that failure to subscribe to EUO testimony violates the conditions to coverage. In this case, the insurer met its prima facie burden of showing Claimants' failure to subscribe through the affidavit of Joronda McBurnie, a no-fault adjuster employed by Plaintiff and the production of multiple letter requests to Claimants and their attorney seeking verification of their EUO transcript with a warning that failure to do so will result in denial of their claim. It was undisputed that the EUO transcripts were never executed in the allotted time period, despite same being provided to the Claimants and their counsel. Therefore, the court held the insurer was entitled to disclaim reimbursement to the defendants based on treatment provided to Claimants whose coverage was denied.

Therefore, the insurer’s motion for summary judgment against the Moving Defendants on its cause of action to disclaim coverage based on Claimants' failure to subscribe was granted.

 

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

10/03/24       Roldan v. City of New York v. Lexington Ins. Co. et al.
United States District Court, E.D.N.Y.
Defense Costs are ‘In For a Penny, in for a Pound,’ Regardless of How Many Pennies One Insurer is in for Compared to Another

This case involved a prior order of the EDNY granting partial summary judgment to the City of New York against co-third-party defendants, Lexington Insurance Co. and Philadelphia Indemnity Insurance Co., finding that each insurer owed defense obligations to the City. However, Lexington later informed the court that the parties “could not resolve how the City's defense costs should be allocated.” Resolving the dispute”—at least for now—” the EDNY found that “Lexington and Philadelphia must equally bear the City's defense costs.”

Although I find federal procedural issues fascinating, with the EDNY concluding that because its order was nonfinal, it may “be revised at any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and liabilities,” the substantive issue here was most important. Finding support for its holding from a 2001 SDNY decision, Reliance National Insurance Co. v. Royal Indemnity Co., the EDNY found, as the SDNY before it found, that “‘[u]nder New York law each insurer has an equal and unlimited duty to defend’ and that such obligation is ‘separate and broader than their obligation to indemnify, making each wholly and equally liable for the costs of insureds’ defenses.’” Accordingly, “‘both [Lexington] and [Philadelphia] have equal and unlimited duties to defend [the City]’ here,” since an insurer cannot defend only part of the action.

The EDNY did not buy Philadelphia’s “time on the risk” allocation method. Specifically, Philadelphia argued, as I might have in its shoes, that “Lexington has a duty to defend under four policies, and Philadelphia has a duty to defend under one policy, [and] that Lexington should pay 80% of the City's defense costs and Philadelphia should pay 20%” on that basis. This was a “contrived proposal,” in the EDNY’s words, which was inconsistent with its prior Order. Since each of the five policies required the carriers to “defend the entire action,” it followed that “that is the end of the story.” Philadelphia’s citation to cases dealing with the issue of indemnification did not help, since “the Court explicitly did not deal with that issue” in its prior Order.

Putting aside all of the above, the EDNY did also mention that the proposed 80/20 split of the defense costs was inherently unfair because “[a]lthough the Court found just one Philadelphia policy triggered, it made clear that it did not reach the rest of the at-issue Philadelphia policies merely because the City's position was “‘confused and confusing,’ and it certainly never found that there was no duty to defend under the other Philadelphia policies.” The EDNY found that deciding otherwise would result in an impermissible “windfall based on ‘imprecision in the parties’ briefing’ on summary judgment.”

Accordingly, the EDNY amended the prior judgment to indicate that “Philadelphia and Lexington shall bear the costs of the City's defense equally.”

Maxwell’s Minute: We have taken the position the EDNY adopted many times before but surely understand the other side of it. But remember that a compromise on this position that results in less than 50/50 split of the defense of a mutual insured may be preferable to no split at all. That determination should be made on a case-by-case basis, as it is largely fact and timeline dependent.

 

STORM’S SIU
Scott D. Storm

[email protected]

09/11/24       Unity Church of God in Christ of York v. Church Mut. Ins. Co.
United States District Court, M.D. Pennsylvania
Summary Judgment Is the "Put up or Shut up Time" for the Nonmoving Party, and Unity Church Has Simply Not Put up Any Evidence From Which a Reasonable Jury Could Conclude That the Water Infiltration to Its Roof Was Preceded by Wind Damage Creating Coverage Under its Policy with Church Mutual

The Unity Church alleges it suffered a sudden and accidental direct physical loss, specifically, that wind damage to the roof of the Church allowed rainwater to leak into the sanctuary of the Church. Unity Church alleges breach of contract and that it is owed for damaged property in the amount of $115,113.09.  Church Mutual asserted a counterclaim for a declaratory judgment that the water damage to the Church was outside the policy's coverage because the damage was caused by rain.

The "insured bears the initial burden to make a prima facie showing that a claim falls within the policy's grant of coverage, but if the insured meets that burden, the insurer then bears the burden of demonstrating that a policy exclusion excuses the insurer from providing coverage if the insured contends it does."

The relevant policy provision is: 

CAUSES OF LOSS — BROAD FORM

...

A. Covered Causes of Loss

When Broad is shown in the Declarations, Covered Causes of Loss means the following:

4. Windstorm or hail, but not including: ...

c. Loss or damage to the interior of any building or structure, or the property inside the building or structure, caused by rain, snow, sand or dust, whether driven by wind or not, unless the building or structure first sustained wind or hail damage to its roof or walls through which the rain, snow, sand or dust enters;...

At issue is the cause of the loss: whether it was caused merely by rain leaking into the internal structure of the Church, and thus outside the policy's coverage, or whether it was caused by rain leaking into the Church after first sustaining wind damage to its roof, in which case the loss is covered.

Church Mutual makes three arguments in favor of its motion for summary judgment, that: (1) Unity Church failed to provide any expert testimony that the water damage to the Church was preceded by wind damage; (2) lay witness testimony and documentation establishes that the Church had pre-existing roof damage, water infiltration issues, and no evidence of storm damage; and (3) its own expert engineer concluded that the damage was not from wind damage, but rather water ponding on the roof of the Church.

In support of its arguments, Church Mutual points to deposition testimony of Unity Church's own witnesses as evidence that the Church had pre-existing roof damage and water infiltration issues.  In addition, Hezekiah Ford of Ford Electrical Services, which performed some repair work to the interior of the Church, testified that the problem was a clogged drain on the roof, testifying, "the water had nowhere to go, so it was coming through the roof and coming into the church sanctuary area."

Troy Smith, Vice President of Double D Roofing, a roofing company which often donated its services to Unity Church, testified that the company inspected the hatch area of the roof two days prior to the loss, and performed repairs on the hatch area including "reflashing," recaulking, and raising the hatch by four inches.  Mr. Smith testified that he believed water entered the Church around the roof hatch "because the roof hatch was pretty low to the plane of the roof."  He did not notice any obvious signs of storm damage.

Church Mutual also provides documentary evidence supporting the fact that any damage to the roof was not caused by storm damage. Unity Church leased some of its space to a daycare, Sunshine Christian Daycare, which submitted its own insurance claim to Erie Insurance for a loss due to water damage. Erie Insurance had the roof inspected by a company, Ladder Now, which took pictures of the roof and concluded that there was no evidence of storm-related damage to the roof and that any water infiltration was instead caused by normal deterioration or by wind-driven rain.  Church Mutual's own inspector, Timmothy Ramer of GS4, concluded there was no evidence of storm or wind-related damage that would allow water to enter the Church.

Lastly, Church Mutual hired an expert to draft a report, structural engineer Russell Daniels, P.E., who concluded that deterioration or defects in the roof system allowed water to pond on the roof. Mr. Daniels opined that the 3.28 inches of rain that fell was the source of the water infiltration because that volume of water exceeded the capacity of the roof drains. Further, Mr. Daniels analyzed peak wind speeds during the relevant time period and concluded that none of the wind speeds would have been sufficient to damage the Church's roof.  In his professional engineering opinion, the water infiltration to the Church was not caused by wind damage.

Unity Church responds by raising purported material factual disputes, challenging the opinion testimony of the lay witnesses, and calling into question the credibility of Church Mutual's expert. Specifically, Unity Church points to Pastor Bowman's testimony that the roof damage was caused by a storm and that water subsequently infiltrated the Church and "completely messed everything up." Double D Roofing subsequently repaired the hatch area of the Church's roof, and it was only after these repairs that the roof was inspected by Ladder Now, Mr. Ramer, and Mr. Daniels, making their observations inconclusive as to the cause of the water infiltration. Further, Church Mutual argues that Mr. Smith and Mr. Ford's testimony, and the report from Ladder Now, offer expert opinions from witnesses unqualified to make those conclusions. Lastly, Unity Church argues that Mr. Daniels' expert report is neither credible nor conclusive.

After a careful review of the parties' arguments and the record, the court finds no genuine dispute of material fact with respect to causation of the water infiltration. Even agreeing with Unity Church that Mr. Smith, Mr. Ford, and the insurance inspector from Ladder Now are not qualified as experts to make a conclusion as to the cause of the water infiltration pursuant to Federal Rule of Evidence 702, the same argument undermines its only witness supporting that the water infiltration was preceded by wind damage, Pastor Bowman. While Pastor Bowman testified that the damage was caused by a storm , this description of the alleged cause of the water infiltration is from a lay witness testimony and is lacking in specificity where the insurance policy excludes damage from wind-driven rain but covers rain damage that is preceded by wind damage. In other words, testimony that the water infiltration was caused by a "storm" is not helpful where the insurance policy makes a distinction between different categories of storm damage, covering one type and not another. Further, Pastor Bowman testified that the problem area of the roof was the hatch area, which, after repairs by Double D Roofing, stopped leaking. There is nothing in the record to suggest that the hatch area was damaged by wind.

Moreover, Church Mutual submitted an expert report wherein the expert structural engineer concluded that it would not have been possible, even with peak winds during the relevant time period, to damage the roof and that instead the damage was caused by water pooling on the Church's roof. Unity Church has not provided any expert witness to rebut this conclusion.

Summary judgment is the "put up or shut up time" for the nonmoving party, and Unity Church has simply not put up any evidence from which a reasonable jury could conclude that the water infiltration was preceded by wind damage.  Church Mutual's motion for summary judgment will be granted. Unity Church has raised no genuine dispute of material fact as to the causation of the water infiltration to the Church and the water infiltration damage is not covered by its insurance policy with Church Mutual.

 

FLEMING’S FINEST
Katherine A. Fleming

[email protected]

09/27/24       Baxter Senior Living, LLC v. Zurich Am. Ins. Co.
Alaska Supreme Court
Neither the Presence of COVID-19 Nor Operating Restrictions Constitute Direct Physical Loss of or Damage to Property

Zurich issued a policy to an assisted living facility. In response to the COVID-19 pandemic, the facility received governmental recommendations to protect residents. Abiding by the recommendations restricted usual operations and required purchasing additional supplies. Zurich provided a Notice of Conditional Renewal stating that the provision regarding suspension of operations resulting from a government response to a threat of the spread of a communicable disease would be removed effective September 2020. Coverage for loss of business income would no longer be available. Prior to the removal of coverage, the facility filed a claim for loss of business income. Zurich denied the claim.

The facility sued Zurich for breach of contract, alleging that the pandemic, the presence of the virus, and the governmental directives and order caused loss of use of its property, loss of income, and extra expenses. The complaint includes a bad faith claim based on the denial of coverage. Zurich removed the case to federal court and moved to dismiss because the facility failed to allege direct physical loss of or damage to property. Zurich also argued that the policy contained a “microorganism” exclusion, and that no public official or governmental authority prevented access to the premises.

The district court certified two questions to the Alaska Supreme Court:

(1) Under Alaska law, can the presence of the COVID-19 virus at an insured property constitute “direct physical loss of or damage to” the property for the purposes of a commercial insurance policy?

(2) Under Alaska law, can operating restrictions imposed on an insured property by COVID-19 pandemic-related governmental orders constitute “direct physical loss of or damage to” the property for the purposes of a commercial insurance policy?

The Alaska Supreme Court answered “No” to both questions. The court began its opinion by noting that a vast majority of federal courts and a majority of state courts have dismissed COVID-19 business interruption claims with prejudice. Nearly all state supreme courts have concluded that neither COVID-19 operating restrictions nor the presence of the virus constitute direct physical loss of or damage to property. The court had never previously defined the phrase “direct physical loss of or damage to” property for the first time, but it agreed with other state courts in concluding that “direct physical loss” and “direct physical damage” have different meanings. The court concluded that “direct physical loss” requires some physical alteration of the property or a deprivation of possession, and mere loss of use is insufficient. Since neither the presence of the virus nor the operating restrictions physically altered the property or deprived the facility of possession, they did not cause “direct physical loss” to the property. Similarly, the court concluded that “direct physical damage” also requires physical alteration to the property. Comparing the virus to water on a plastic sheet, the court concluded that the presence of the virus does not constitute “direct physical damage” because the virus does not physically alter the property and merely attaches to it.

The court rejected the facility’s other arguments as misunderstanding or misrepresenting policy language.

 

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick

[email protected]

Nothing particularly noteworthy about which to write this time around. See you in two!

 

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

[email protected]

10/03/24       Gordon v. LM Gen. Ins. Co.
United States Court of Appeals, Third Circuit
Common Law and Statutory Bad Faith Claims Barred by Res Judicata When Claimant Failed to Amend Complaint in Prior Breach of Contract Action

The Gordons procured a Liberty auto policy that included underinsured motorist coverage (“UIM”) with a $100,000 UIM limit. Mr. Gordon sustained serious injuries in a motor vehicle accident and with Liberty’s authorization settled the suit for $15,000, the full amount of coverage the tortfeasor possessed. The Gordons’ attorney then demanded the full amount of the UIM coverage. Liberty “denied coverage” and “low balled” the Gordons, which forced them to bring suit.

The Gordons asserted a breach of contract claim and a claim entitled “Bad Faith” that alleged Liberty violated its fiduciary, contractual and/or statutory duties of good faith and fair dealing in violation of Pennsylvania law. Liberty moved to dismiss the bad faith claim, which was granted without prejudice. The Gordons did not amend their complaint and proceeded to trial on the remaining breach of contract claim. The jury awarded the Gordons $660,000, but because the policy limit was $100,000, the district court reduced the verdict to that amount.

After the first action, the Gordons commenced a second lawsuit against Liberty again asserting bad faith in violation of Pennsylvania law with the same allegations as the first action. The district court dismissed the complaint on res judicata grounds or in the alternative, for failure to state a claim. The Gordons appealed.

The Third Circuit affirmed the district court’s holding. Noting that res judicata under Pennsylvania law applies to claims actually litigated or claims that could have been litigated, and that the res judicata turns on the essential similarity of the underlying events giving rise to the various legal claims. Res judicata applied because both actions involved the same parties, statutory bad faith claims, stem from the same coverage denial, and the claim brought in the first action was finally and validly adjudicated on the merits when the Gordons declined to amend the complaint in regard to the dismissed bad faith claim.

On appeal, the Gordons argued that the bad faith claim was independent and did not become ripe until the jury rendered its verdict in the first action. The Court of Appeals disagreed because all bad faith claims arose the moment Liberty denied UIM benefits. Since the Gordons admitted Liberty denied coverage and refused to pay their claim, the bad faith cause of action was ripe when the first action was filed. The court also rejected the theory that the second action also contained a common law contractual bad faith claim. The first action contained only statutory bad faith allegations with no mention of common law violations, thus the court reasoned the Gordons forfeited their contractual claim.

Even if the claim was not forfeited, res judicata still barred the claim because the first action contained a breach of contract claim. The claim that proceeded to a jury verdict. And an action for breach of the implied covenant of good faith and fair dealing must be prosecuted as a breach of contract claim, as the claim does nothing more than imply the contractual obligations themselves. Finally, even assuming the bad faith claim was not encompassed by the breach of contract claim, the bad faith claims still accrued at the same time as the statutory bad faith claim. Because both are based upon the same facts that gave rise to the first action. Thus, the common law bad faith claim could have been litigated in the first action.

 

ROB REACHES the THRESHOLD
Robert J. Caggiano

[email protected]

10/09/24       Aziz, et al v. Friendly Transit, Inc., et al
Appellate Division, Second Department
Second Department Reversed the Decision Granting Defendants’ Summary Judgment Motion Dismissing the Complaint on the Ground that Plaintiff Did Not Sustain a Serious Injury Pursuant to §5102(d) Where Plaintiff Raised Triable Issues of Fact

By way of background, this matter stems from an incident on June 5, 2018, where Plaintiffs Salma Aziz and Sabrina Aziz alleged personal injury after the vehicle owned and operated by Salma Aziz collided with one vehicle owned by Defendant Friendly Transit Inc. and operated by Defendant AbdulMajeed N. Malahie, and another vehicle owned and operated by Defendant Claudius L. Campos. As a result, Plaintiff Salma Aziz alleged injuries to her cervical spine, lumbar spine, right hip, right knee, and headaches. Plaintiff Sabrina Aziz, a passenger in the Aziz vehicle, alleged injury to her lumbar spine, cervical spine, thoracic spine, right shoulder, and right knee. Both Plaintiffs alleged serious injury under the following categories of Insurance Law § 5102: death, dismemberment, significant disfigurement, fracture, permanent consequential limitation of use, significant limitation of use, and ‘90/180’.

Before the trial court in Kings County, Defendants moved for summary judgment to dismiss the complaints arguing neither Plaintiff suffered serious injury pursuant to § 5102(d). In support, Defendants submitted examination before trial transcripts from both Plaintiffs, radiological review reports from an independent physician for both Plaintiffs, and a report of an IME physician who examined both Plaintiffs. In opposition, Plaintiffs submitted a physician affirmation from Plaintiff Sabrina Aziz’s treating provider, medical records for Sabrina Aziz, and an affidavit from Sabrina Aziz. The Supreme Court, Kings County, granted summary judgment finding that neither Plaintiff suffered serious injury. Plaintiffs appealed.

On review, the Second Department first agreed that Defendants demonstrated, prima facie, that neither Plaintiff suffered serious injury under the permanent consequential limitation of use or significant limitation categories of § 5102(d). Notably, Plaintiffs argued Defendants’ experts’ reports were deficient as they were electronically signed – but this argument was rejected as such signatures are sufficient under State Technology Law §§ 302(3), 304(2). However, contrary to the lower court, the Second Department found that Plaintiffs raised triable issues of fact whether Plaintiff Salma Aziz sustained serious injury to the lumbar region under the permanent consequential limitation of use and significant limitation of use categories. Additionally, Plaintiffs submissions created an issue of fact whether Plaintiff Sabrina Aziz sustained a serious injury under these categories to her right knee. Lastly, it was found that Defendants failed to establish, prima facie, that these aforementioned respective injuries were not caused by the subject accident.

Accordingly, the Second Department unanimously reversed the Order of the Supreme Court, Kings County, which granted summary judgment in favor of Defendants, as Plaintiffs sufficiently raised triable issues of fact as to whether they sustained serious injury under Insurance Law § 5102(d).

 

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera

[email protected]

Nothing to report this week.

 

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton

[email protected]

10/09/24         New York Assembly Bill A9407A
New York State Assembly
A Bill to Amend Insurance Law to Provide as it Relates to Supplemental Spousal Liability Insurance

On September 27, 2024, the governor signed into law an amendment to Insurance Law § 3420 subsection (g) by making such coverage an opt-out endorsement only for insureds that indicate on an application for insurance that they have a spouse. This requires that an insured, who has indicated they have a spouse, to opt-out in writing if they decline and refuse supplemental spousal coverage.

This further requires that upon issuance, renewal, or amendment the insurer notify the named insured who has indicated that they have a spouse, in writing, that such policy will include supplemental spousal liability insurance unless the named insured declines and refuses such insurance in writing.

The bill will become law on February 27, 2025, and will apply to policies issued, renewed, or modified after such date.

 

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

[email protected]

09/27/24       Swaine, et al v. Intact Insurance Company
Manitoba Court of King’s Bench
The Excluded Peril of Settlement Is Earth Movement Caused by the Passive, Gradual, and Naturally Occurring Loss of Moisture Over Time in Soils Surrounding Insured Property That Can Suddenly Manifest Itself in Cracked Pipes and Cracked Foundation Walls

Winnipeg, Manitoba, is often maligned for its winters that come with feet of snow and temperatures that seem colder than Mars, but once endured, summer does come to Winnipeg. And, when it does, all the snow and cold is forgotten. Summer days are warm and long, but the city’s amazing tree canopy provides a much-needed cooling effect.

That tree canopy is on full display in the old south Winnipeg neighbourhood of River Heights which has been the backdrop of movie sets (think the film version of Margaret Laurence's book "The Stone Angel" featuring Ellen Burstyn as well as several Hallmark Christmas movies).

Developed just after the first World War, and particularly during the 1920’s and early 1930’s, the streets are lined with a canopy of majestic elms and behind them one finds elegant, two-storey, single family homes, modestly set back from the street.  Once you have jogged and cycled through the streets of the community one can find fabulous eateries and pubs on the commercial street to sit awhile.

Frederick and Catherine Swaine bought a two-storey home in River Heights in 1975.  Their house had been built in 1929 and sometime thereafter, a two-storey addition with attached garage was added. In 1983 they discovered that the northeast corner of the house had dropped about three inches. On the advice of a structural engineer, the footings of the house were excavated, and concrete piles were placed to support the house. All was well until September of 2017.

While the Swaines were away at their cottage, a person who was checking the house found a burst pipe in the addition. The Swaines immediately notified their all-risk homeowners’ insurers, Intact Insurance Company. The adjuster for Intact found both water and structural damage. Coverage for this damage was denied based on the following exclusions:

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Shortly thereafter, Intact advised the Swaines that they had received a legal opinion that the water damage would be covered in view of an exception to Exclusion 13, but Intact maintained its denial of the structural damage.

The Swaines hired a civil engineer with experience in structural engineering, Fred Kemp, who recommended additional piles and braces for the house which were installed at a cost of $125,000.

Two years after the 2017 loss, the Swaines told Intact that the structural damage was the result of a sinkhole – a sudden event – not settling. Intact denied that a sinkhole caused the damage. Acting for themselves, the Swaines sued Intact for coverage and the case went to trial.

As the trial judge stated, “the parties agree that the earth under the plaintiffs’ house moved, giving rise to the loss, but they disagree on how, why, and how quickly that movement occurred.”

The Swaines called Fred Kemp to give evidence. He stated that initially, he believed that the structural damage at the Property was caused by settling of the residence over time, which is typical of houses in Winnipeg.  He also stated that in the River Heights area of Winnipeg in particular, houses will often dip or slope towards the street because moisture is drawn away from the house by trees on the boulevard, and that this issue can be exacerbated by traffic vibrations from the street. Then in 2019, after the remedial work was completed, Mr. Swaine asked him to consider the cause of the loss and provided him with a number of articles on the concept of subsidence, of which he was not aware previously.  Mr. Kemp then conducted an additional review and determined that subsidence was the only possible cause of the loss.

Intact called a geotechnical engineer to give evidence. The engineer concluded that the massive root systems of the 50-foot trees near the Swaines house have drawn moisture from the clay soils due to drought conditions causing the soils to shrink and settle. This settlement caused the structural damage. Intact also called a structural engineer to give evidence. He testified that the wood framed home was sitting on a concrete foundation wall, which in turn was on strip footings rendering it sensitive to loss of moisture content in the clay soil due to the presence of trees.  The structural damage, he concluded was not due to a sinkhole but due to settlement.

Weighing the evidence, the trial judge found that the plaintiffs led Fred Kemp towards the concept of subsidence and asked him for a report reflecting that conclusion, which impacts both the impartiality and independence of his opinion, and diminishes the weight that the court can attach to his opinion. The court accepted the opinion of Intact’s experts that the structural damage was, on a balance of probabilities, caused by soil desiccation – loss of moisture over time - and a resultant loss of foundation support.

The court found no ambiguity in Exclusion 13. Quoting from an Alberta Court of Appeal judgment, Exclusion 13 was meant to exclude damages for passive, gradual, and naturally occurring events, and that this interpretation was consistent with the reasonable intentions of the parties.  In other words, the exclusion clause applied to naturally occurring settlement, but not settlement that occurred due to an unexpected, fortuitous event.  The court stated, “given the almost inevitable nature of settlement, it is understandable that an insurer would intend to exclude it and that an insured would not expect such naturally occurring settlement to be covered.” Exclusion 13 applied.

The Swaines argued that Intact handled the claim in bad faith and on that basis alone they are entitled to reimbursement of the costs to conduct the structural repairs. The Court dispatched that argument stating:

That Intact:

  1. handled the claim promptly, treated the Swaines with respect; considered the claim carefully, and with regard to the relevant factors;

  2. when the Swaines challenged the denial of coverage, the claim was reviewed by multiple individuals with the defendant’s hierarchy, including the Coverage Committee, a claims consultant, and the Ombudsman;

c)     in April 2018, Intact changed its position with respect to the water damage and extended coverage to the Swaines, which confirms that Intact continued to consider the merits of the claim on an ongoing basis;

d)     Intact conducted itself in a transparent manner by, among other things, sharing with the Swaines the legal opinion that it obtained with respect to coverage;

e)     Intact communicated with the Swaines on an ongoing basis from September 2017 until March 2019, when its counsel advised the Swaines that its denial of coverage was final, and that the defendant would not entertain any further submissions on the subject.  Intact was not required to continue to communicate with the plaintiffs ad infinitum.

The court concluded that the Swaines’ real complaint is that the defendant denied the claim, despite their efforts to convince Intact otherwise:  “Although I appreciate that the plaintiffs were frustrated by the denial of coverage, the reality is that none of the steps taken or not taken by the defendant amounted to bad faith and there is no basis for that aspect of the plaintiffs’ claim.”

The Swaines’ claim was dismissed. The Swaines are required to pay Intact its court costs. If no agreement can be reached, the parties were invited to apply to the court to have costs assessed.

According to “Reddit” many homeowners in beautiful, central River Heights have experienced subsidence and settlement issues due to the stately trees pulling moisture from the soil over years of drought. There are no government programs to assist. The only solution is to re-mortgage the property and get on with repairs. Intact handled this claim appropriately and are entitled to their hard-fought win.

 

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