Volume XXVII, No. 19 (No. 718)
Friday, February 27, 2026
A Biweekly Electronic Newsletter
As a public service, Hurwitz Fine P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York, New Jersey, and Connecticut appellate courts and Canadian appellate courts. The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers.
In some jurisdictions, newsletters such as this may be considered Attorney Advertising.
If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at [email protected] or call 716-849-8900.
You will find back issues of Coverage Pointers on the firm website listed above.
Dear Coverage Pointers Subscribers:
Do you have a situation? We love situations.
And we love them all over New York and New England. As a reminder, with the addition of our three newest partners, HF now provides Insurance Coverage counsel and handles litigation in the following states:
New York
Connecticut
New Jersey
Massachusetts
New Hampshire
Rhode Island
Vermont
In addition, as a foreign legal consultant, I am authorized to provide counsel on New York and federal law in the Province of Ontario.
Indeed, if you are looking for a mediator to help resolve complex coverage disputes, risk transfer issues, or commercial or personal injury matters, just drop me an email at [email protected]
We welcome the new subscribers who joined after listening to Ryan O’Shea’s UM/SUM presentation. So you know, this is our cover letter. The issue of Coverage Pointers is always attached a pdf to our cover letter. Enjoy.
Greetings from the FDCC Winter Meeting in Scottsdale. All kinds of exciting programs going on that we want to talk about. You want continuing education? Your friends at Hurwitz Fine provide it for free.
Before I do so, I want to remind you to review a poorly constructed First Department opinion in my column where the court misconstrues exclusions with coverage limitations. At some point, in the future, the Court will recognize its mistake, we hope. In our cover note, you’ll also learn about “petting parties,” which were in style a century ago.
Coverage Pointers University
Registration is Open for our Fourth Program
Presented by Evan Gestwick
Across the George Washington Bridge:
Key Differences in New York and New Jersey’s Auto Insurance and Bad Faith Laws
March 19, 2026
Via Zoom
Join Insurance Coverage Attorney Evan Gestwick as he discusses the key differences between New York and New Jersey Insurance Law. This seminar will detail the different bad faith standards between the two states, timing requirements of disclaimer letters, recent changes to auto coverage requirements and their implications, and reviews the required language in Reservation of Rights letters. This primer acts as an assistive tool in identifying and distinguishing some of the most common points of confusion between states and includes practical insight on the implications of such differences.
For more information and to register, click here.
Beyond Avoidance: Preparing for the AVOID Act’s Transformation of Third-Party Practice in New York
March 27, 2026
Via Zoom
Like it or not, as of April 18, New York’s law governing third-party practice will change significantly as the AVOID Act becomes effective. Claims for contribution and indemnity asserted in a third-party action must now be commenced within 90 days of service of the defendant’s answer—or they may be lost and unable to proceed as part of the underlying lawsuit.
While this legislation was primarily aimed at NYS Labor Law/construction accident claims, its impact will be felt across the litigation spectrum, including products and premises liability claims. They will also require early, strategic decision-making by insurers and litigants regarding risk transfer, tenders, additional insured status, and indemnity obligations.
David Adams, Hurwitz Fine’s Labor Law Chair, and Dan Kohane, the firm’s Insurance Coverage Chair, will team up to provide a practical and strategic roadmap for navigating the procedural and coverage challenges that parties and insurers will confront in actions commenced after the effective date.
For more information and to register, click here.
Litigation Strategies – Removing Cases to Federal Court
April 16, 2026
Via Zoom
After that, our Retail & Hospitality team will be back on April 16th to host “Litigation Strategies: Removing Cases to Federal Court,” where we will focus on navigating the removal of civil actions from state court to federal court. This webinar will focus on the legal bases for removal, key procedural requirements and timing considerations, and the strategic advantages federal court can offer. Attendees will gain practical insight into how removal can serve as more than a procedural step—it can be a meaningful litigation advantage.
For more information and to register, click here.
For those who need to keep up to date on insurance coverage between issues of Coverage Pointers, we’re happy to help. Just follow me on LinkedIn and we’ll keep you up to date. I’m easy to find – my linked in name is (ready for this unusual and unexpected name): Kohane and you can find me here: https://www.linkedin.com/in/kohane/
Need a Mediator or Arbitrator, Give a Call:
A growing percentage of my practice has been a mediator (and sometimes as an arbitrator) in insurance coverage, commercial, personal injury, and other disputes. With a robust national client base, I am regularly called on by friends and colleagues from around the country, folks who know me and trust me, to help resolve disputes. Often, particularly in mediated matters, I know the insurers and lawyers on both (or several) sides of the dispute. Since they all trust me as a fair dealer, they feel comfortable having me try to help close the file (and avoid precedent). Just pick up the phone, 716.849.8942 or send an email to [email protected] and I’ll try to help.
Newsletters:
We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:
- Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!). Please drop a note to Jody Briandi at [email protected] to be added to the mailing list.
- Labor Law Pointers: Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at [email protected] to subscribe.
- Products Liability Pointers: Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies. Contact V. Christopher Potenza at [email protected] to subscribe.
- Medical & Nursing Home Liability Pointers. Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Elizabeth Midgley at [email protected] to subscribe.
Petting Parties, a No-No – 100 Years Ago:
The Houston Post
Houston, Texas
27 Feb 1926
Ten Commandments’
To Bar Petting Party
Used in Priest’s War
COALVILLE, England, Feb. 26. --Father Joseph Degen has started another offensive in his one-man war against the petting party. Carrying on his campaign to make Coalville black in name only, he has formulated the following "ten commandments" for the girls in his parish:
1 - Do not, parade with an all-dressed-up-and-nowhere-to-go air waiting to take a walk with the first nice looking boy who speaks to you.
2 - Always tell your mother where you are going and with whom, and return home on time.
3 - Do not accept gifts of clothing, jewelry or money from men. Indebtedness creates an obligation.
"Hot Blood Enough”
4 - Do not let boys treat you to intoxicants. The hot blood which courses through the veins of youth is stimulant enough.
5 - Avoid demoralizing dances where there is little or no attempt at supervision, or where couples are permitted to hang about in obscure corners outside the premises.
6 - Beware of the "something-for-nothing" type of man, who offers you a joy ride in his car – especially if you know nothing more about him than that he has a Charlie Chaplin moustache and scented hair.
7 - Hockey, lacrosse, tennis and dancing are healthier forms of excitement than street flirtations.
Beware of Flirts.
8 - Beware of the man who, after an acquaintanceship of only 10 minutes wants to put his arm around your waist. Do not make yourself cheap, even to a duke's son.
9 - If you have found a really decent boyfriend be true to him and don't flit like a butterfly from one to another. Take him home and introduce him to your folks.
10 - Do not expect to go through life attired in silk and chiffon, waited on hand and foot and never doing any hard work. Few men can afford to keep luxurious and expensive fashion plate. You must be useful as well as ornamental.
Peiper on Property (and Potpourri):
Steve
Steven E. Peiper
[email protected]
What is a “Petting Party” – 100 Years Ago:
A “petting party” was a social gathering popular among teenagers and young adults in the 1920s, especially in the United States, where couples would engage in romantic or sexualized behavior such as kissing and fondling (“petting”) in a semi-private group setting.
The term became widely used during the Jazz Age, a time when traditional social norms were loosening and young people were pushing boundaries around dating and sexuality.
Key Features:
- Usually involved unsupervised teens or young adults
- Often took place in homes, parked cars, or secluded areas
- Focused on kissing and physical affection, not necessarily intercourse
- Reflected changing attitudes about courtship and morality
Petting parties were part of the broader cultural shift of the 1920s — alongside flappers, jazz music, and more relaxed dating customs — that concerned many parents and religious leaders at the time.
Lee’s Connecticut Chronicles:
Dear Nutmeggers,
Snow, snow, and then to add insult to injury there was more snow. First there was the freezing, sub-zero, pipe-bursting cold, then came the snow measured not in inches but in feet. So far, it’s been almost four-and-half feet of snow, and winter is not done yet. While my Buffalo colleagues might shrug this off as just a bad weekend, this has been a calamitous winter for us Southern New Englanders. Seasonal affectation disorder is setting in. I’m not sure we can take much more of this. Luckily, we only have to survive another two weeks and then it’s off to sunny Florida, where temperatures should approach 80°. I’m assuming we’ll be able to dig out by then.
We report on one somewhat interesting case in this edition. The easy part for the district court was the application of the prior publication exclusion – this is no surprise to experienced coverage counsel. The bigger take away, from my perspective, is the little space given but the big effect of the insureds’ waiver argument. The insureds claimed that because the carrier did not disclaim on the basis of the exclusion, that it could not rely on the exclusion. The court stated that there was no support under Connecticut law for the proposition – and then quickly moved on. Contrast this with, for example, New York’s Ins. Law § 3420(d)(2) which requires that an insurer promptly (i.e., within 30 days) disclaim coverage or waive the disclaimer (for bodily injury or death claims).
While of course carriers strive for completeness in issuing coverage letters, at least in Connecticut missing even a vital policy provision is not fatal to the ultimate coverage outcome.
Until next time, keep keeping safe.
Lee
Lee S. Siegel
[email protected]
The Argument Against Compulsory Auto Coverage – 100 Years Ago:
Finger Lakes Times
Geneva, New York
27 Feb 1926
ENCOURAGING THE IRRESPONSIBLE
Ohio has been “exposed” to a proposal for compulsory automobile liability insurance backed by a state fund. Thus would the state be launched in the insurance business a most complicated undertaking, and especially so under political management.
Why put the state into the business. Probably for no real reason except to build up the political machinery of government and hasten the day of socialistic control.
The law proposed in Ohio would charge each motorist $10.00, in addition to license fees, for a state insurance policy to protect the public. Of course, the fee is an arbitrary amount and not based on any law of reason or experience, but with the tax-payer to fall back on, mistakes in estimated expense for state undertakings make little difference.
The theory of compulsory insurance as a means of creating responsibility such persons now feel, it is probable they would be all the more careless and “let the state pay the bill.” Thus accidents would be increased rather than prevented.
Ryan’s Federal Reporter:
Hello Loyal Coverage Pointers Subscribers:
My wife sent my oldest son and I on an adventure to start this week. We flew to Tampa Bay on Sunday and caught the Blue Jays hosting the Mets for Spring Training on Monday. Some beach walks and restaurants were enjoyed, as was the Clearwater Aquarium on Tuesday before our flight back. Even in 50 degree weather, there is nothing quite like palm trees to brighten the lives of Buffalonians for a day or two.
This edition, my column tackles a grammar lesson taught by none other than the Second Circuit Court of Appeals. Who doesn’t want to learn more about the proper interpretation of embedded disjunctive lists and their limiting clauses.
Until next time,
Ryan
Ryan P. Maxwell
[email protected]
What was an Undesirable Alien a Century Ago? – 100 Years Ago:
Arizona State Miner
Wickenburg, Arizona
27 Feb 1926
VICE AND VISCOUNTESSES
Vera, Countess of Cathcart, held at Ellis Island, and for a time denied admission to the United States because of "moral turpitude," growing out of a notorious affair she had in the watering places of continental Europe, the less said about which the better, is disgusted with our immigration regulations. We're too particular. Usually a "holier-than-thou" attitude is sanctimonious hypocrisy. But in this case. when a British noblewoman, so-called, or any other noblewoman, becomes notorious for her escapades, she may well expect to be questioned as to her moral fitness to enter this country to be lionized by a certain class of title-worshipers. But there is, no question about the reasonableness of the Countess' complaint that her partner in the romantic adventures, who later married another woman and entered this country without question, had no more right to be admitted than she. "What is sauce for the goose is sauce for the gander," according to the Countess' code, and she is right. But we should watch carefully the character of the people we admit to our shores. They might go to Hollywood and teach some of those folks naughty tricks.
Storm’s SIU:
Hi Team:
Several interesting cases for you this edition:
- The 2nd Circuit Affirmed the Ruling that a Disclaimer Based on a Multi-Unit Exclusion was Untimely Under § 3420(d)(2) Issued 93 Days After Tender and 43 Days After the Reservation of Rights.
- Insurer’s DJ Action Seeking Determination that Service Provider's Failure to Comply With Verification Requests Renders Claims Non-Compensable Falls Within the Mandatory Arbitration Provision of § 5106(b).
Service Provider's Filing of State Court Collection Actions Seeking Payment of Individual Invoices, Without Litigating Verification Issues, Did Not Constitute Waiver of Its Right to Arbitrate Verification-Based DJ Action.
- Any Unambiguous Term of a Contract of Insurance is for the Court to Construe and No Witness May Offer Testimony at Variance with the Court's Construction.
- Where an Insurer Faces Hundreds of Individual State Court Collection Actions that Could Obscure an Alleged Fraudulent Scheme and Have Preclusive Effect on a Federal RICO Action, the Insurer Demonstrates Irreparable Harm Sufficient to Support a Preliminary Injunction Staying Those State Proceedings, Falling Within the 'Expressly Authorized' Exception to the Anti-Injunction Act.
- Insurance Rescission Actions Affecting Additional-Insured Status Can Trigger Intervention Rights for Other Insurers with Exposure in Underlying Tort Suits.
Sick of winter yet? At least baseball is starting, even though it’s preseason, it’s a sign of Spring. Hope exists for sunny days ahead.
Be well until our next edition!
Scott
Scott D. Storm
[email protected]
The News of Her Impending Demise Were Premature. She Lived Another 11 Years, Passing in 1937 – 100 Years Ago:
The Charlotte Observer
Charlotte, North Carolina
27 Feb 1926
Mrs. Van Landingham Improving
The hundreds of friends of Mrs. Ralph Van Landingham will rejoice to learn that she continues to improve after having been confined to the hospital and to her home for the past month and a half.
Mrs. Van Landingham was able to take a short ride last Sunday and has been out several times this week. She expects to be able to attend part of the sessions of the state D.A.R. conference in session here next week.
Fleming’s Finest:
Hi Coverage Pointers Subscribers:
I have a bone to pick with the groundhog about the snow, but it looks like it will start warming up after this weekend just in time for Spring. Looking forward to the local St. Patrick’s day race coming up and spending some time outside.
This edition’s case from the Texas Supreme Court concerns the interpretation of the term “windstorm” in a homeowners insurance policy and how a tornado fits into that interpretation. While not all windstorms contain tornadoes, a tornado is a windstorm.
See you in a fortnight,
Kate
Katherine A. Fleming
[email protected]
Utica Mutual and Insurance – 100 Years Ago:
The Buffalo News
Buffalo, New York
27 Feb 1926
THE COST OF HUMAN LIFE
Human life – how precious! How infinitely precious, when it is gone!
In face of the thought that YOU may be responsible for the taking of human life, it seems almost sacrilegious to speak of your own protection in such a case. Yet you must think of it, prepare against the possibility. No car owner can afford to drive without Automobile Insurance.
When insuring you naturally want sounds insurance and you want low cost insurance. Utica Mutual can give you both. No stock automobile insurance company in New York State can offer better protection. And being a mutual company its automobile policy holders get back profits in dividends. These dividends to automobile policy holders in the past nine years have never been less than 20% of premiums.
Gestwick’s Garden State Gazette:
Dear Readers:
I hope everyone is staying warm in the cold and snow. I have a fun indoor activity in mind: tune in March 19 at 1:00 p.m., perhaps with a blanket and next to a fireplace, for a seminar on the key differences between New York and New Jersey Insurance Law, presented by yours truly. Hopefully the blankets and fireplaces are less of a necessity by then, but who knows. This one-hour presentation will focus on: (1) estoppel/waiver and timing issues in issuing disclaimers and reservation of rights letters; (2) how to prepare a proper disclaimer/reservation of rights letter—and what to “name” them, exactly; (3) minimum financial responsibility limits in the auto world; and (4) key no-fault differences.
The case I have for you this week got bungled in my humble opinion. To be a “pollutant,” as used in an insurance policy, the substance has to be traditionally environmental in nature, right? Well, only if the term “pollutant” was used in an exclusion, rather than in the grant of coverage, as of this past week.
That’s it. See you in two weeks, and hopefully on March 19.
Evan
Evan D. Gestwick
[email protected]
US v. Mexico Argue - Even Then – 100 Years Ago:
The Buffalo News
Buffalo, New York
27 Feb 1926
U.S. – MEXICAN
DISPUTE GOES ON
IN MILDER TONE
Exchanges Continue, But
Kellogg Finds Calles Can be
Relied Upon to Go Slow in
Applying Alien Land
Laws-Prospects Brighten.
WASHINGTON, Feb. 26. – The acute feeling between the governments of Mexico and the United States has been superseded by a sentiment of pronounced friendliness in the controversy over the petroleum land laws. While the exact formula for a solution has not yet been found, the spirit of approach to a settlement is better today than it has been since the new land laws were passed by the Mexican congress in December.
Secretary Kellogg has found that in dealing with the Mexican government the latter can be relied upon to see that international obligations as well as a spirit of comity requires an examination of every internal act in the light of external effects.
O’Shea Rides the Circuits:
Dear Readers,
Thanks for all those who attended last week’s presentation. I hope it was helpful and you learned a few nuances of NY SUM Coverage. In other news, one of my dogs elected to lick his leg raw. So, now we get to spray Vetericyn on him three times a day.
I have a quick unpublished decision concerning the interpretation of North Carolina law.
Until Next Time,
Ryan
Ryan P. O’Shea
[email protected]
Don't Spend These Daily Wages All in the Same Place – 100 Years Ago:
The Buffalo Times
Buffalo, New York
27 Feb 1926
1926 Factory Wages
Better Than in 1925
ALBANY, Feb. 27. – The present year opened with slightly better average wages being paid to factory workers than in 1925. A survey of industrial wage rates for January, made public by the State Department of Labor showed. The average wage for factory employees, the statement indicated, was $29.05 for January, a continuance of the record wage last December. The figure is 75 cents more than the average wage for January 1925.
Practically all industries are paying higher average wages than at the beginning of 1925, according to the report.
LaBarbera’s Lower Court Library:
Dear Readers:
Making a trip out to Rochester this weekend to help my brother move. He has helped me four times in the past, so it is about time I return that favor.
This week I have a short, simple, and straight-forward construction defect case (yes, I know, this is somewhat of an oxymoron to most). In this New York County case, the court issued a declaration that various insurers, owed no duty to defend a general contractor, finding that the construction defects did not constitute “property damage” caused by an “occurrence.”
Until next time…
Isabelle
Isabelle H. LaBarbera
[email protected]
Daylight Savings Time Controversy – 100 Years Ago:
The Buffalo News
Buffalo, New York
27 Feb 1926
ROCHESTER is again debating the question of daylight saving. The Monroe county metropolis really has done nothing to deserve the new time.
Lexi’s Legislative Lowdown:
Dear Readers,
It is almost March and that means we are getting closer and closer to warm weather and I can’t wait.
This week we discuss the Governor’s signing of a Bill related to litigation funding.
Thanks for reading,
Lexi
Lexi R. Horton
[email protected]
What Would Happen 100 Years Later? – 100 Years Ago:
The Buffalo News
Buffalo, New York
27 Feb 1926
ANTI-LYNCHING
BILL IS DOOMED
IN THIS SESSION
Coolidge, Anxious to Get Rid of
Congress, Failed to Include
Measure in His Program and
G.O.P. Fears Democratic
Threats of Filibuster.
WASHINGTON, Feb. 27. – The threat of the anti-lynching bill no longer hands over congress because the White House “spokesman” has not listed it among the “essential” pieces of legislation which he would like to see disposed of before an early adjournment of the national legislation is taken.
The president, as a matter of fact, never has indicated through the “spokesman” or otherwise that he favors such a drastic measure as the pending bill, which would transfer all criminal cases growing out of lynching to the Federal courts and would impose a fine of $10,000 upon any county in which a lynching occurred, The measure also describes three or more persons as a “mob.”
President Coolidge has urged upon congress that the negro be given “full liberty and equality under the law,” but such “liberty and equality” would seem to be already guaranteed under the constitution.
The anti-lynching bill has been threatened as a reprisal against the southern Democrats who voted to shut off debate on the World court. It has been said that a majority of senators favor the bill which could easily be rushed through the House. But without cloture there has been no chance to bring the measure to a vote in the upper chamber.
Victoria’s Vision on Bad Faith
Dear Readers,
This week’s case involves a decision from the Eastern District of Pennsylvania, discussing the sufficiency of an insured’s bad faith allegations against an insurer in handling its first party claims.
Have a good weekend,
Victoria
Victoria S. Heist
[email protected]
In Favor of Open Meetings – 100 Years Ago:
Buffalo Courier
Buffalo, New York
27 Feb 1926
Public Business Publicly Done.
The school board is entrusted with the administering of the largest sum of money appropriated for any single department of the city government. It functions apart from the city council. Because of this large trust and this independence of action, the board is under heavy responsibility to the people whose agent it is. To meet this responsibility fully and fairly it would seem that the board could adopt no wiser course than to hold open meetings, not some of the time but all the time. Public business publicly arrived at is not likely to go far wrong. The school board members owe it to the people and to themselves to adopt and adhere to this policy.
Shim’s Serious Injury Segment
Hi Readers,
Hope our readers in the lower New York area have been well since our last issue following the tremendous snowstorm. For those of you ready to usher in warmer weather, the good news is that it’s beginning to melt away as the temperature has spiked to the mid-40s this week. I know that I am in the minority saying this, but I have enjoyed the cold weather and snow this winter. Nevertheless, I am also looking forward to some warm weather outdoor activities as spring approaches.
This week I have shared a case decided by the Kings County Supreme Court granting a defendant’s summary judgment with respect to the plaintiffs’ 90/180 category under Insurance Law § 5102(d) but denying defendant’s motion on all other grounds.
See you in the next issue!
Stephen
Stephen M. Shimshi
[email protected]
Sweet Revenge – 100 Years Ago:
Buffalo Courier
Buffalo, New York
27 Feb 1926
Woman Victim
Beats Alleged
Bandit in Court
New York, Feb. 26 (AP) – Before police could interfere, Mrs. James Tierney’s fast left hook, powerful right swing and vigorous thumping reduce Moe Harris to a very tame “bad man” in Flatbush court today. Harris was recognized by the woman as the man whom she alleged held her up recently and robbed her of $200.
Facing the court with his eyes blackened and his nose swollen, Harris was held in a total of $10,000 bail on charges of burglary and possession of burglar’s tools.
Mrs. Tierney, after finishing her onslaught in the court-room, said:
“If he hadn’t a gun when I first met him I’d have beaten him up the same way. All gunmen are cowards.”
North of the Border:
The recent “best-on-best” men’s hockey tournament at the Milano Cortina Olympics delivered the purest form of the sport we’ve seen in years — fast, physical, and fiercely competitive. Nearly every game in the quarter and semifinals was decided by the slimmest of margins, culminating in a gripping gold medal final between Canada and the United States. After two periods spent almost entirely in the American end, Canada seemed poised for victory. But in the end, it was the American goaltender who stole the show, backstopping his team to a three-on-three overtime win that was as heartbreaking for Canadians as it was exhilarating for fans of the game.
What transcended the result, though, was the shared passion and national pride on display from every team.
A few hours after that gold medal was decided, I found myself in a community arena in Calgary, watching my five-year-old grandson play in a U7 hockey tournament. Somewhere in that U7 tournament, I could imagine future members of Canada’s 2042 or 2046 Olympic teams just beginning their own journeys. But what pushed that thought aside was the fact that the love of hockey that had captivated the world was alive on that small sheet of ice. The excitement was contagious — every player chasing the puck with wide-eyed enthusiasm — for the sheer love of the game. As I was leaving, I noticed a trophy case dedicated to Cale Makar, who once played in that very rink — his photos from his own U7 days proudly displayed.
Standing there, it struck me that this is where it all begins. From local rinks to the Olympic stage, the heart of hockey beats the same everywhere — in the love of the game and the joy it inspires, generation after generation.
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]
- SUM Subrogation Carrier had Right to Intervene in Personal Injury Action to Recover SUM Benefits Paid, with Claim Relating Back to Commencement of Personal injury Lawsuit
- First Department Confuses Limitation of Coverage in AI Endorsement with Exclusions and Improperly Applies Insurance Law §3420(d)(2), Thousands Flee
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
- Release of Property Damage Claims Only May Not Extend to Companion ALE Claims
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]
- Prior Publication Exclusion Bars Coverage, Even if Not Raised in Denial Letter
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
- Additional Insured Coverage Extends Due to Application of the Series-Qualifier Canon In Conjunction With The Rule of the Last Antecedent
STORM’S SIU
Scott D. Storm
[email protected]
- The 2nd Circuit Affirmed the Ruling that a Disclaimer Based on a Multi-Unit Exclusion was Untimely Under § 3420(d)(2) Issued 93 Days After Tender and 43 Days After the Reservation of Rights
- Insurer’s DJ Action Seeking Determination that Service Provider's Failure to Comply With Verification Requests Renders Claims Non-Compensable Falls Within the Mandatory Arbitration Provision of § 5106(b), and Service Provider's Filing of State Court Collection Actions Seeking Payment of Individual Invoices, Without Litigating Verification Issues, Did Not Constitute Waiver of Its Right to Arbitrate Verification-Based DJ Action
- Any Unambiguous Term of a Contract of Insurance is for the Court to Construe and No Witness May Offer Testimony at Variance with the Court's Construction
- Where an Insurer Faces Hundreds of Individual State Court Collection Actions that Could Obscure an Alleged Fraudulent Scheme and Have Preclusive Effect on a Federal RICO Action, the Insurer Demonstrates Irreparable Harm Sufficient to Support a Preliminary Injunction Staying Those State Proceedings, Falling Within the 'Expressly Authorized' Exception to the Anti-Injunction Act
- Insurance Rescission Actions Affecting Additional-Insured Status Can Trigger Intervention Rights for Other Insurers with Exposure in Underlying Tort Suits
FLEMING’S FINEST
Katherine A. Fleming
[email protected]
- Policy Deductible Applicable to Covered Losses Caused by Windstorm or Hail Applied to Damage Caused by a Tornado
GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]
- Court Finds Pollution Coverage Grant Triggered in the Absence of a Traditionally Environmental Pollutant. Thousands Flee
O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]
- North Carolina Interprets All-Risk Policies As Providing Coverage To Damage Caused By More Than One Cause, Even Where One Cause Is Excluded
LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]
- Court Issues Declaration that Commercial General Liability Insurers Owe No Duty to Defend or Indemnify or Indemnify Construction Defect Claim, Finding No “Property Damage” Caused by an Occurrence
LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]
- Governor Signs Bill S8808 Related to Consumer Protections and Contract Requirements in Connection With Litigation Funding
VICTORIA’S VISION ON BAD FAITH
Victoria S. Heist
[email protected]
- Pennsylvania Court Dismisses Insured’s First Party Bad Faith Claims
SHIM’S SERIOUS INJURY SEGMENT
Stephen M. Shimshi
[email protected]
- Kings County Supreme Court Grants Defendant’s Motion for Summary Judgment on the Basis that Plaintiff Did Not Sustain a “Serious Injury” With Respect to Claims Under the 90/180 Category but Denies Defendant’s Motion as to All Other Categories
NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
[email protected]
- Alberta Court Slashes $137K Costs Claim Against Intact and RSA
All the best from our team to yours. Spring is right around the corner.
Dan
Hurwitz Fine P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in Connecticut and New Jersey.
In addition, Dan D. Kohane is a Foreign Legal Consultant, Permit No. 0119144, issued by the Law Society of Upper Canada, and authorized to provide legal advice in the Province of Ontario on matters of New York State and federal law.
NEWSLETTER EDITOR
Dan D. Kohane
[email protected]
ASSOCIATE EDITOR
Evan D. Gestwick
[email protected]
INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
[email protected]
Steven E. Peiper, Co-Chair
[email protected]
Michael F. Perley
Agnieszka A. Wilewicz
Lee S. Siegel
Brian F. Mark
Scott D. Storm
Ryan P. Maxwell
Katherine A. Fleming
Evan D. Gestwick
Ryan P. O’Shea
Isabelle H. LaBarbera
Lexi R. Horton
Victoria S. Heist
FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
[email protected]
Michael F. Perley
Scott D. Storm
NO-FAULT/UM/SUM TEAM
Dan D. Kohane
[email protected]
Ryan P. O’Shea
[email protected]
APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]
Topical Index
Peiper on Property and Potpourri
Lee’s Connecticut Chronicles
Gestwick’s Garden State Gazette
LaBarbera’s Lower Court Library
Lexi’s Legislative Lowdown
Victoria’s Vision on Bad Faith
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
02/18/26 Steward v. Brooklyn Pier 1 Residential Owner, LP
Appellate Division, Second Department
SUM Subrogation Carrier had Right to Intervene in Personal Injury Action to Recover SUM Benefits Paid, with Claim Relating Back to Commencement of Personal injury Lawsuit.
Steward was injured when he was hit by a vehicle at a construction site where he was working. In 2019, he sued various defendants who owned the property or were involved in the construction project. In 2020, following an arbitration proceeding, the plaintiff was awarded $775,000 in supplementary uninsured/underinsured motorists benefits from nonparty Utica Mutual Assurance Company (“Utica”) based upon coverage from an insurance policy held by his employer.
That gave Utica a subrogation right under its policy. So, in April 2022, Utica moved for leave to intervene in the action for the purpose of asserting a cause of action for subrogation.
Utica's subrogation cause of action was timely under the relation-back doctrine. An action to recover damages for personal injuries is generally subject to a three-year statute of limitations (see CPLR 214[5]; However, the relation-back doctrine, which is codified in CPLR 203(c), permits a party to interpose a claim or cause of action that would otherwise be time-barred. A party may be permitted to intervene and to relate its claim back if the proposed intervenor's claim and that of the original [plaintiff] are based on the same transaction or occurrence. Surely so here.
Also, the proposed intervenor and the original [plaintiff] must be so closely related that the original[plaintiff's claim would have given the defendant notice of the proposed intervenor's specific claim so that the imposition of the additional claim would not prejudice the defendant.
Here, Utica's subrogation cause of action is not time-barred, as it merely seeks reimbursement for coverage tendered for the plaintiff's personal injuries. This cause of action arises out of the same occurrence that gave rise to the plaintiff's causes of action and includes the same questions of liability related to the accident. It is, therefore, similar enough to the plaintiff's causes of action that the defendants were thereby placed on notice of the insurer's claim.
Since the action involves the disposition or distribution of, or the title or a claim for damages for injury to, property and the person may be affected adversely by the judgment, Utica has a right to intervene.
Here, Utica's cause of action for subrogation has common questions of law and fact with the plaintiff's causes of action, as Utica concedes that the proposed complaint "mirrors, in all respects, the complaint in the within suit." By intervention, Utica stands in the shoes of the plaintiff. Utica would be bound by the judgment in this case, and, without intervention, its interests are not represented. Further, there would be no prejudice to the defendants, as intervention would not cause delay, a need for additional discovery, or motion practice.
Editor’s Note: An atta-lawyer awarded to our friend, Sherri Pavloff of Stonberg, Hickman & Pavloff. When I see her next week at the FDCC Winter Meeting, I’ll ask her whether the jury will know of Utica’s status in the case. I trust not.
02/17/26 New Gold Equities Corp., v, AmGuard Insurance Co.
Appellate Division, First Department
First Department Confuses Limitation of Coverage in AI Endorsement with Exclusions and Improperly Applies Insurance Law §3420(d)(2), Thousands Flee
New Gold was the owner of the property located at 1 West Fordham Road, and leased the premises to non-party Sweetie Angels of New York, Inc., (“Sweetie”) the primary insured under the relevant insurance policy. Jenkins, plaintiff in the underlying action, claims that he was injured in September of 2019 when he was walking on the sidewalk in front of the premises and fell due to a sidewalk defect.
Jenkins sued New Gold, Sweetie, and Sweetie’s neighbor. New Gold brought this action claiming that AmGuard had a duty to indemnify it in the underlying tort action pursuant to an additional insured endorsement contained in the insurance policy. The endorsement provides coverage to plaintiff "only with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to" the primary insured.
The first question the court dealt with was whether AmGuard timely disclaimed coverage to plaintiff under Insurance Law § 3420. To disclaim coverage under Insurance Law § 3420(d)(2), an insurer must "give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant." Additional insureds are entitled to the same protections as the named insured, including timely notice of disclaimer.
The failure to comply with section 3420(d) will preclude denial of coverage based on a policy exclusion or breach of policy condition.
The court found that New Gold, who is specifically listed as an "additional insured" in the relevant policy — established that defendant failed to timely disclaim coverage as required by Insurance Law § 3420 (d). AmGuard was on notice of the underlying personal injury action, which was filed in December of 2019, and which had named plaintiff as a defendant. It retained counsel to defend the primary insured in the underlying action. New Gold then submitted a tender letter to the insurer shortly after the underlying action was filed, in January of 2020. The insurer did not disclaim coverage as to plaintiff until nine months later, in September 2020.
The court noted that the policy plainly indicates that New Gold, as owner, is an additional insured, and that insurer has the obligation to indemnify it, albeit with certain conditions. While we are aware that the failure to disclaim cannot create coverage where "none existed" in the first place, these are not the circumstances here.
The court never identified the exclusion it claimed was the basis for New Gold’s reliance – perhaps because it was not relying upon an exclusion. Indeed, it was relying upon a limitation of coverage in the additional insured endorsement, which has long been held NOT to be an exclusion, but a limitation on the grant of coverage.
The court found New Gold is not seeking the creation of coverage, but rather a declaration as to the coverage to which it is entitled under the plain terms of the policy. Further, unlike the cases that AmGuard relies upon, it did not establish before Supreme Court that plaintiff did not fit within the policy's coverage terms.
The court failed to recognize that AmGuard argued that the sidewalk accident did not arise out of that part of the premises leased to the tenant and if that were true, the coverage grant would not be triggered.
Editor’s Note: Here is the problem with the decision. Surely 3420(d)2) would preclude reliance upon an exclusion or breach of policy condition. But, as the court correctly held a failure to timely disclaim cannot create coverage where none exists.
Yes, New Gold was named as an insured, but not for every possible lawsuit against it,
…. but only with respect to liability arising out of the ownership, maintenance, or use of that part of the premises leased to [Insured] and shown in the Schedule.
As there has been no determination in the underlying suit, or elsewhere, that the accident arose out of the ownership, maintenance, or use of that part of the premises leased to [Insured] and shown in the Schedule, the court should not have granted a determination on indemnity. There was no denial based on an exclusion.
An additional insured endorsement with a limited grant of coverage is not an exclusion and 3420(d)(2) does not apply to it.
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
02/24/26 Day v. Plumbers Shop & Assoc. LLC
Appellate Division, First Department
Release of Property Damage Claims Only May Not Extend to Companion ALE Claims
The claim arises from a large water loss involving plaintiff’s property. Settlement of the water loss was reached with the accompanying Release providing “any and all property damage claims which [have] or hereafter may accrue on account of or in way growing out of any and all known and unknown, foreseen property damage.”
Later, after settlement was negotiated and relieved, plaintiff also sought recovery for additional living expenses incurred during loss mitigation. Because the Release only impacted rights related to “property damage,” it was not explicitly to be applied to companion, but independent, claims for ALE. As such, the ambiguity in the drafting of the document precluded defendant from dismissing the claim for failure to state a cause of action.
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]
02/19/26 Norbury Partners LP v. Con’t. Cas. Co.
United States District Court, Connecticut
Prior Publication Exclusion Bars Coverage, Even if Not Raised in Denial Letter
The district court awarded judgment to Continental, finding that there was no duty to defend or indemnify Coverage B allegations because the offending conduct was first published prior to the policy period.
The declaratory judgment plaintiffs were sued in an underling action by their former employer, Compass, for allegations that they violated their non-disclosure agreement, used prohibited confidential information, and violated non-competition provisions of their employment contract when they formed Norbury Partners. In the underlying action, Norbury was accused of deploying an investment strategy that Compass had spent years developing, and even plagiarized Compass's private placement memorandum in Norbury's marketing brochure. Plaintiffs allegedly caused Compass's demise by propounding the misimpression that Compass's successes were attributable to the Norbury team, and that Norbury was Compass's corporate continuation.
The underlying lawsuit, commenced in New York, asserted multiple causes of action for breach of contract, unfair competition, unjust enrichment, misappropriation of trade secrets, and breach of fiduciary duty. Norbury tendered the suit to Continental under its CGL coverage, coverage was denied, and this suit followed, with both parties filing cross-motions for judgment on the pleadings.
The court applied the following operative allegations to the CGL coverage: (1) Compass employed the Norbury principals until they resigned in May 2020; (2) the employment agreements restricted them from competing with, hiring employees from, and soliciting clients from Compass for a period after their employment; (3) the employment agreements contained non-disclosure provisions protecting Compass's confidential commercial information; (4) Norbury was formed in May 2020; (5) in August 2020 Norbury solicited Compass's prospective and current investors; and (5) to succeed in this solicitation, Norbury used Compass's trade secrets without authorization, most particularly its record of success and investment strategies.
Norbury argued that the allegations triggered the AI/PI coverage because Compass claimed that the insureds disparaged and/or defamed Compass and that they used Compass's advertising idea and infringed upon Compass's slogans insofar as they allegedly plagiarized Compass's in Norbury’s marketing materials.
The court was skeptical of the argument, noting that pleadings did not allege that Plaintiffs spoke ill of it. On the contrary, the allegations essentially were that Norbury falsely claimed Compass's successes, misleading market players into believing that Norbury was the continuation of Compass. “Far from defaming or disparaging Compass, these allegations appear to tout its performance…” The court also held that the insured took the allegation of plagiarism out of context in order to extrapolate an entirely new claim which “nowhere actually is asserted in” the underlying action.
The court, however, accepted for purpose of its ruling that these predicate facts somehow alleged slanderous behavior which would trigger AI/PI grant of coverage. “[I]f there is any defamation and/or disparagement alleged in the underlying complaints, it is only as implied by Compass's allegation that Plaintiffs solicited Compass clients by representing to them that Norbury is continuing Compass's investment strategy using Compass's former team. Thus, any defamation and/or disparagement necessarily is alleged only where solicitation is alleged.”
These claims, nevertheless, did not create coverage for the breach of contract causes of action and, in any event, would otherwise be excluded by the breach of contract provision. Therefore, if coverage exists, the court wrote, “it must be predicated upon one or more of the commercial tort claims (unfair competition, unjust enrichment, and misappropriation of trade secrets in the New York action; and unjust enrichment and the two CUTPA claims in the Connecticut action).”
The only allegations of solicitation took place in August 2020, before the commencement of the policy on October 6, 2020. “Therefore, each allegation occurred before the policy period, and thus any claim dealing with defamation and/or disparagement is not covered by either policy. Plaintiffs attempt to argue that the relevant conduct occurred both before and during the policy period but even presuming that solicitation and any attendant disparagement/defamation continued into the policy period, that claim would be excluded by the First-Publication Exclusion, since the policies still would look back to the August 2020 conduct in order to determine coverage.”
The same reasoning applied to the plagiarism of Compass’ marketing materials, as the alleged first use took place in July 2020, and months before the commencement of coverage.
The insureds argued that Continental waived these defenses by not raising them in their denial letters. The court rejected the argument, stating that there is no authority for the proposition that a denial of an insurance claim must lay out every possible exclusion for coverage, or that a court is restricted to considering only the specific exclusions cited in such a letter.
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
02/12/26 Reidy Contracting Group, LLC et al. v. Mt. Hawley Ins. Co.
Second Circuit Court of Appeals
Additional Insured Coverage Extends Due to Application of the Series-Qualifier Canon In Conjunction With The Rule of the Last Antecedent
A ceiling collapsed at a construction site, injuring three workers employed by Vanquish Contracting Corp., a subcontractor for a demolition project at 160 Lexington Avenue, New York. Reidy Contracting Group was the general contractor that hired Vanquish and as a condition of their arrangement, Reidy required Vanquish to procure insurance, including excess coverage, which would protect Reidy as an additional insured. Vanquish procured primary coverage through Endurance American Specialty Insurance Company and excess coverage through Mt. Hawley Insurance Company.
Mt. Hawley disclaimed coverage to Reidy contending that Reidy is not an additional insured under its policy and that its Employers Liability Exclusion bars coverage.
The Mt. Hawley policy defined insured as “any person or organization qualifying as an insured person under the terms of the underlying insurance.” The underlying Endurance policy included an additional insured endorsement that provided as follows:
Any entity required by written contract . . . to be named as an insured is an insured but only with respect to liability arising out of [Vanquish’s] premises, "[Vanquish’s] work" for the additional insured, or acts or omissions of the additional insured, in connection with their general supervision of "[Vanquish’s] work" to the extent set forth below.
The additional insured endorsement additionally included a limitations clause, which further provided that the insurance does not apply to:
- "Bodily injury" or " property damage" occurring after:
- All work on the project (other than service maintenance or repairs) to be performed by or on behalf of the additional insured(s) at the site of the covered operations has been completed; or
- That portion of "[Vanquish’s] work" out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project.
- "Bodily injury" or "property damage" arising out of any act, omission or negligence of the additional insured(s) or any of their "employees" or "temporary workers", other than the general supervision of work performed for the additional insured(s) by [Vanquish].
Whether additional insured coverage extended to Reidy hinged upon whether the modifying language “in connection with” modified the entirety of the additional insured coverage grant or merely the last item in the list. Mt. Hawley argued the former, while Reidy and its insurer, Merchants, advocated for the latter. The Second Circuit agreed with Reidy and Merchants.
The coverage grant itself consists of two disjunctive lists. First, “[Reidy] is an insured only with respect to liability arising out of [Vanquish’s] premises, [Vanquish’s] work for [Reidy], or acts or omissions of [Reidy][.]” However, second, the last item on that list (“acts or omissions”) is itself a disjunctive list, creating two layers of disjunction in the single sentence.
Pursuant to the rule of the last antecedent, “[a] limiting clause or phrase . . . should ordinarily be read as modifying only the noun or phrase that it immediately follows.” However, the series-qualifier canon provides that “‘[w]hen there is a straightforward, parallel construction that involves all nouns or verbs in a series,’ a modifier at the end of the list ‘normally applies to the entire series.’” When a comma is included as it is here, the Second Circuit explained that it “generally applies the series-qualifier canon in lieu of the last antecedent rule.” Here, however, the Second Circuit confronted nested disjunctive lists and, on that basis, the Second Circuit determined that both syntactic canons work in tandem because that “reading [] comports with the most natural construction of the contract, as confirmed by the agreement viewed as a whole.”
Viewing the agreement as a whole, the Second Circuit noted that the limiting clause below the additional insured coverage grant explains in one bullet point that the policy does not cover bodily injuries arising “out of any act, omission, or negligence” of an additional insured “other than the general supervision of work performed for the additional insured(s) by [Vanquish].” But two separate bullet points limit coverage when “all work on the project” performed “on behalf of the additional insureds” at the site has been completed and when Vanquish’s work—“out of which the injury . . . arises”—has been “put to its intended use” by entities “other than another contractor or subcontractor engaged in performing operations for a principal as part of the same project.”
Thus, this limitations clause “places durational limits on injuries at the site and from Vanquish’s work and then, separately, places restrictions on injuries arising out of Reidy’s acts and omissions other than its supervision of Vanquish. Each bullet point in the Limitations Clause thus corresponds to a separate category in the Coverage Grant,” and the “overall structure strongly suggests that the phrase ‘in connection with’ does not modify the entire Coverage Grant, but only the nested disjunctive phrase, ‘acts or omissions’ of the additional insured.”
Continuing, the Second Circuit noted that Mt. Hawley’s proposed reading would also “defeat[] the main object of the purchased [additional insured] coverage” because “the purpose behind additional insurance in the construction industry is to apportion the risks inherent in hiring a subcontractor,” with the general contractor seeking protection for claims of both “contributory negligence and ‘vicarious responsibility for [a] subcontractor’s negligence.’” Mt. Hawley’s reading “would fail to protect Reidy against ‘contingent liability for damage resulting from operations performed by its [sub]contractor’ outside of Reidy’s supervision.”
Turning to the Employers Liability Exclusion, the policy excluded coverage for injury to “[a]n ‘employee’ of any insured arising out of and in the course of . . . Employment by the insured . . . .” While Mt. Hawley argued that this exclusion applies to Reidy for the injuries sustained by Vanquish’s employees since both are insureds and the exclusion applies to employees of “any insured,” the Second Circuit found the exclusion ambiguous and susceptible to an alternative meaning advocated for by Reidy. Specifically, while Mt. Hawley argued that “the phrase ‘[e]mployment by the insured’ refers to the immediate antecedent, ‘any insured,’” the Second Circuit found that another reasonable alternative interpretation—one that precludes application of the exclusion to Reidy—is that the use of “the insured” in the exclusion, when paired with the policy’s Separation of Insureds provision allows an interpretation limiting application of the exclusion to merely the employer of an injured employee. Here, since the injuries sustained by Vanquish’s employees were not sustained in the scope of their employment for Reidy, the exclusion would have no application to coverage for Reidy.
While Mt. Hawley argued that reliance upon the Separation of Insureds provision cannot render the exclusion’s use of “any insured” a nullity, the Second Circuit clarified that it was applying the Separation of Insureds provision to the exclusion’s use of “the insured” when describing the employment relationship referenced. Construing the ambiguity against Mt. Hawley, the Second Circuit found that the exclusion was inapplicable to the facts requiring coverage for Reidy.
Maxwell’s Minute: Circuit Judge Menashi dissented on the Employer’s Liability Exclusion issue and would have held on the basis of “the straightforward contractual language” that:
An ordinary reader of this sentence would understand that “the insured” refers back to “any insured.” So “the insured” denotes whichever of the insureds—Vanquish or Reidy—oversees the employee who suffered bodily injury. Because the injured employees here are employees of Vanquish, “the insured” refers to Vanquish.
It is not every day we get a nine page dissent in a coverage matter so, if you’re into that sort of thing, it might be worth a read.
STORM’S SIU
Scott D. Storm
[email protected]
02/19/26 Midvale Indemnity Co. v. Zuniga
United States Court of Appeals for the Second Circuit
The 2nd Circuit Affirmed the Ruling that a Disclaimer Based on a Multi-Unit Exclusion was Untimely Under § 3420(d)(2) Issued 93 Days After Tender and 43 Days After the Reservation of Rights
In New York, insurers must move swiftly when a tender reveals potential policy exclusions. A reservation-of-rights letter does not toll § 3420(d)(2); the insurer must timely disclaim and must be prepared to prove that any delay was tied to a prompt, diligent, and necessary investigation.
Publicly available sources that readily confirm an exclusion’s applicability undercut claims that extended investigation was needed; unexplained or poorly documented investigations will not justify delay as a matter of law.
Zuniga was hurt while working on construction of a new residential building in Brooklyn. D&G Construction NY Inc. was the general contractor, RM Construction and Development Corp. was Zuniga’s employer (subcontractor), Arevalos Construction Corp., was another subcontractor and Midvale’s named insured.
Midvale insured Arevalos. D&G was treated as an additional insured for purposes of this declaratory judgment action by Midvale’s stipulation. Midvale’s disclaimer relied on a “Multi-Unit and Tract Housing Residential Exclusion” in Arevalos’s policy.
Oct. 4, 2021, D&G tendered defense/indemnity to Arevalos and Midvale. Nov. 23, 2021, Midvale issued a reservation-of-rights letter referring to the Multi-Unit Exclusion. Jan. 5, 2022, Midvale disclaimed coverage based on the Multi-Unit Exclusion—93 days after tender and 43 days after the reservation of rights. The next day Midvale filed this federal declaratory judgment action seeking no duty to defend or indemnify Arevalos, D&G, or RM.
RM and Arevalos defaulted; Midvale obtained a default judgment against them on the exclusion. The court noted, however, that Zuniga and D&G could still argue Midvale’s disclaimer was untimely under § 3420(d)(2).
The court recognized the exclusion’s text could preclude defense, but held Midvale’s disclaimer was untimely “as a matter of law” under § 3420(d)(2) because Midvale had enough information on October 4, 2021, to know the site and ascertain via publicly available records that the project was multi-unit; and Midvale’s two-month “investigation” was undescribed and unsupported by evidence, and did not justify the delay. Even assuming the investigation’s duration was justified, Midvale also failed to justify the additional delay from receipt of an investigator’s report on December 9, 2021, to the January 5, 2022, disclaimer.
Under § 3420(d)(2), for New York accidents, an insurer must give written notice of disclaimer “as soon as is reasonably possible,” measured from when the insurer first learns of the grounds for disclaimer. The insurer bears the burden to justify any delay; unjustified delays can be untimely as a matter of law (e.g., an unexplained 48-day delay is untimely).
Investigations can excuse delay only if the insurer shows the investigation was prompt, diligent, thorough, necessary, and that the delay was reasonably related to performing that investigation; each ground for disclaimer requires prompt notice and cannot be excused by investigating other grounds.
The October 4, 2021, tender obligated Midvale to promptly assert any known basis for disclaimer, including the Multi-Unit Exclusion. Even if Midvale lacked every detail at that moment, it had the site location and enough information to begin—and promptly complete—a reasonable investigation.
The district court correctly noted that public records and online map searches showed the site was a multi-unit building; the approved permit application for 10 dwelling units was obtainable from public NYC records subject to judicial notice. Against that backdrop, Midvale failed to show its three-month delay was reasonably tied to a proper investigation.
Midvale asserted it investigated but did not describe what was done or submit the investigator’s report, falling short of its burden to justify delay. New York authority holds conclusory references to investigations, without specifics, do not excuse delay; the court applied those principles and agreed with the district court that Midvale’s disclaimer was untimely as a matter of law.
01/29/26 State Farm Mut. Auto. Ins. Co. v. Navar Pharmacy
United States District Court for the Eastern District of New York
Insurer’s DJ Action Seeking Determination that Service Provider's Failure to Comply With Verification Requests Renders Claims Non-Compensable Falls Within the Mandatory Arbitration Provision of § 5106(b), and Service Provider's Filing of State Court Collection Actions Seeking Payment of Individual Invoices, Without Litigating Verification Issues, Did Not Constitute Waiver of Its Right to Arbitrate Verification-Based DJ Action
Defendant is Emuna Inc., doing business as Navar Pharmacy, a health care provider that submitted first-party no‑fault claims to State Farm for services rendered to persons injured in covered auto accidents.
State Farm filed a federal declaratory judgment action seeking a ruling that Emuna’s claims are non‑compensable due to alleged noncompliance with verification requests. Emuna moved to compel arbitration under N.Y. Ins. Law § 5106(b) and the Federal Arbitration Act (FAA) and to dismiss the case. State Farm opposed, arguing Emuna waived arbitration by filing several state-court collection suits on related bills.
Emuna submitted first-party no‑fault reimbursement claims to State Farm. State Farm issued verification requests under 11 N.Y.C.R.R. Part 65, including requests for supporting documentation and EUO notices. State Farm alleges Emuna did not comply and that noncompliance is a failure of a condition precedent to coverage, rendering the claims non‑compensable.
Before this suit, Emuna filed several civil court collection actions seeking payment of specific unpaid no‑fault bills from State Farm. State Farm asserted those bills are at issue here. The record did not show that verification/EUO issues were raised or adjudicated in those collection matters.
The Complaint was under the Declaratory Judgment Act and N.Y. C.P.L.R. § 3001. Emuna moved to compel arbitration and dismiss under Rules 12(b)(1), (3), (6), the FAA, and § 5106(b). State Farm opposed, citing Morgan v. Sundance and arguing Emuna waived arbitration by litigating collection suits in state court. Emuna replied that the collection cases were limited to invoice payment and did not litigate verification/eligibility, so were not inconsistent with arbitration.
The court independently confirmed that the FAA applies and that a valid agreement to arbitrate exists. Emuna’s claims are first‑party benefit claims, and the policies at issue contain arbitration clauses; assignments carried the arbitration right to Emuna. Even if a clause were absent, § 5103(h) would supply one by law. Because automobile insurance policies affect interstate commerce, the FAA governs. Having found a valid agreement and an interstate commerce nexus, the court was required to compel arbitration. The dispute—compliance with no‑fault verification obligations and EUOs—falls squarely within § 5106(b)’s scope as a matter relating to liability for first‑party benefits under the no‑fault scheme.
Emuna indicated its intent to compel arbitration about one month after State Farm filed the complaint, which weighed against finding waiver and contrasted with longer delays cited in Doyle and other cases.
The state-court suits were simple collection actions at early stages, focused on payment of individual invoices and not on verification/EUO compliance. They did not involve “prior litigation of the same legal and factual issues” and therefore were not inconsistent with Emuna’s right to arbitrate this verification dispute. The court analogized to authority distinguishing simple collection or eviction proceedings from later, distinct claims, and found any factual overlap immaterial where the legal issues differ. On this record, Emuna had not acted inconsistently with an existing right to arbitrate, so waiver was not established under Morgan/Doyle.
The motion to compel arbitration granted. Because neither party requested a stay under FAA § 3, the court dismissed the action with prejudice rather than staying it. The court emphasized that questions about verification/EUO compliance are assigned to arbitration by § 5106(b), and Emuna’s prior collection suits did not change that result.
No‑fault verification disputes—including document-production and EUO compliance issues tied to liability for first‑party benefits—are within § 5106(b)’s mandatory arbitration framework; where the policy includes an arbitration clause and the dispute implicates first‑party benefits, the FAA applies and the court must compel arbitration.
Standard for motions to compel arbitration mirrors summary judgment; the court considers admissible evidence and draws reasonable inferences for the non‑movant. Arbitrability requires (1) a valid agreement to arbitrate and (2) the dispute’s falling within its scope. If both are satisfied, the court must compel arbitration.
New York Insurance Law § 5106(b) mandates that insurers provide claimants the option to arbitrate any dispute involving liability for first‑party benefits, and courts in New York treat such disputes as subject to binding arbitration under simplified procedures approved by DFS. The New York Court of Appeals and Second Circuit have recognized the mandatory nature of this arbitration option under the no‑fault scheme.
Filing routine state-court collection actions on individual invoices does not, without more, waive the right to arbitrate a later, distinct dispute over verification obligations. Courts will look for inconsistent litigation conduct on the same legal and factual issues; mere factual overlap is insufficient.
Waiver of the right to arbitrate turns on whether a party acted inconsistently with that right; relevant factors include time elapsed before invoking arbitration and the extent of litigation conduct. Courts assess these factors contextually and resolve doubts in favor of arbitration, consistent with Morgan, Doyle, and Second Circuit precedent.
01/29/26 Touchmark Horel Group, LLV, v. Mt. Hawley Ins. Co.
United States District Court, S.D. New York
Any Unambiguous Term of a Contract of Insurance is for the Court to Construe and No Witness May Offer Testimony at Variance with the Court's Construction
Touchmark's motion in limine is granted to the extent that any unambiguous term of a contract of insurance is for the Court to construe and no witness for either party may offer testimony at variance with the Court's construction.
02/03/26 Gov’t Emps. Ins. Co. v. Bhargav Patel
United States Court of Appeals, Second Circuit
Where an Insurer Faces Hundreds of Individual State Court Collection Actions that Could Obscure an Alleged Fraudulent Scheme and Have Preclusive Effect on a Federal RICO Action, the Insurer Demonstrates Irreparable Harm Sufficient to Support a Preliminary Injunction Staying Those State Proceedings, Falling Within the 'Expressly Authorized' Exception to the Anti-Injunction Act
GEICO brought a federal RICO and related New York law action in the E.D.N.Y., alleging a fraudulent scheme exploiting New York’s no‑fault system and seeking damages for paid claims and a declaratory judgment that it need not pay pending unpaid claims. The district court granted a preliminary injunction staying more than 600 parallel state-court and arbitral collection proceedings initiated by Defendants and enjoining new filings until the RICO case proceeds.
GEICO alleges that from Aug. 2019 to Apr. 2023 Defendants submitted about $3.4 million in no‑fault benefits claims for medically unnecessary, excessive, experimental, illusory, and sometimes unprovided treatments, including claims listing Dr. Patel as the treating provider when services were performed by independent contractors or not at all; GEICO also alleges forged patient signatures and kickback‑based referral arrangements via third‑party “brokers”. GEICO seeks to recover amounts it paid (at least $711,000) and to avoid paying roughly $2.2 million in pending, unpaid claims. After GEICO filed suit, Defendants filed approximately 605 collections actions (mostly in New York state court, plus a small number of arbitrations) seeking more than $2.675 million on claims GEICO had disputed or denied.
The district court found GEICO showed irreparable harm, serious questions going to the merits, and a balance of hardships tipping decidedly in its favor. It reasoned that (1) hundreds of parallel proceedings created a real risk of inconsistent judgments and (2) the fragmented, expedited nature of no‑fault collections would obscure GEICO’s alleged overarching fraudulent scheme and impede full relief in the federal case. The court also held it had authority under the Anti‑Injunction Act’s “in aid of jurisdiction” exception to enjoin the state proceedings.
The grant of a preliminary injunction is reviewed for abuse of discretion; the Anti‑Injunction Act question is reviewed de novo. The 2nd Circuit panel found no abuse of discretion and affirmed, concluding the injunction did not violate the Anti‑Injunction Act in light of the court’s recent decision in State Farm Mutual Automobile Insurance Co. v. Tri‑Borough NY Medical Practice, P.C., 120 F.4th 59 (2d Cir. 2024).
The court agreed that the pendency of hundreds of rapidly moving state actions and arbitrations created imminent, non‑speculative risks of inconsistent outcomes and would likely obscure the alleged “global and intertwined” fraud if GEICO were forced to litigate defenses piecemeal. The court emphasized that expedited no‑fault arbitrations allow minimal discovery and can be resolved in minutes, and that even state‑court cases are narrowly framed around individual bills—an ill‑suited forum for proving complex, scheme‑level fraud. It further noted the potential preclusive effect of state and arbitral outcomes in federal court, increasing the risk to GEICO’s ability to obtain complete relief in the RICO case. GEICO’s harms thus exceeded mere litigation expense and supported preliminary relief.
The court endorsed the district court’s assessment that the balance of hardships favored GEICO and that GEICO raised at least “serious questions” going to the merits sufficient for the injunction sought, given the scale and nature of the alleged scheme and the difficulty of addressing it within the constraints of the no‑fault collections framework. The public interest in orderly adjudication of complex fraud claims also supported interim relief. These determinations were intertwined with the irreparable harm analysis and the structure/purpose of New York’s no‑fault regime, which is designed for speed and efficiency—not to resolve elaborate fraud and RICO claims years later.
In regard to the Anti‑Injunction Act (AIA), 28 U.S.C. § 2283, the All Writs Act permits federal courts to issue orders in aid of jurisdiction, but the AIA generally bars injunctions against state proceedings subject to three exceptions: (1) expressly authorized by Congress, (2) necessary in aid of jurisdiction, or (3) to protect or effectuate judgments.
Although the district court relied on the “in aid of jurisdiction” exception, the Second Circuit affirmed on the “expressly authorized” exception based on State Farm. State Farm holds that where hundreds of purportedly meritless state‑court collections proceedings allegedly further a RICO violation, a federal court’s injunction to prevent and restrain such violations is “expressly authorized” by RICO (18 U.S.C. § 1964(a)) and thus falls within the AIA’s first exception. The panel found no material distinction between State Farm and this case and therefore concluded the preliminary injunction did not violate the AIA.
The Second Circuit affirmed a preliminary injunction staying more than 600 state‑court and arbitral collection proceedings that Defendants had initiated against GEICO and enjoining new filings, concluding that the district court did not abuse its discretion in finding irreparable harm and serious questions on the merits, and that, under State Farm, RICO “expressly authorizes” such relief within the Anti‑Injunction Act’s first exception. The merits of GEICO’s RICO and state‑law claims remain to be adjudicated in the district court; the Second Circuit’s decision addresses only interim relief and AIA authority.
01/27/26 Accelerant Spec. Ins. Co. v. Big Apple Designers, Inc.
United States District Court for the Eastern District of New York
Insurance Rescission Actions Affecting Additional-Insured Status Can Trigger Intervention Rights for Other Insurers with Exposure in Underlying Tort Suits
In this federal insurance-coverage declaratory judgment action brought by Accelerant against its insured Big Apple, the court resolved a motion by Houston Casualty Company (HCC) to intervene. HCC sought intervention as of right under Rule 24(a)(2), or, alternatively, permissive intervention under Rule 24(b)(2). The court granted intervention and allowed HCC to assert its proposed counterclaims against Accelerant.
Intervenor defendants previously admitted were M&R Construction Group, Inc. (M&R) (a defendant in at least one underlying action) and its insurer Continental Indemnity Company (Continental). HCC was the primary insurer for certain owners/general contractors involved in one of the underlying construction-injury suits.
Accelerant seeks a declaration that its policies issued to Big Apple are invalid and impose no duty to defend or indemnify Big Apple in multiple pending New York state personal-injury actions arising from construction projects during the policy period. Accelerant issued a November 27, 2023, disclaimer letter asserting the policies are void ab initio due to alleged material misrepresentations in Big Apple’s application. Despite the disclaimer, Accelerant has been providing Big Apple a defense in the underlying suits subject to the terms of the disclaimer. Prior to the disclaimer, Big Apple had been named as a defendant in twelve personal-injury suits. Accelerant’s complaint pleads: (1) breach of policy via application misrepresentations and a declaration of no obligation; (2) rescission and declaration that the policies are void ab initio; and (3) unjust enrichment.
One of the underlying suits is Jessica Alexandra Abarca Fajardo v. Archer 1 LLC, Shorewood Real Estate Group LLC, and M&R Construction Group Inc. (the “Fajardo Action”), a New York Supreme Court case in New York County. The Archer entities impleaded Big Apple and also impleaded Accelerant, seeking additional-insured coverage under the Accelerant policies based on Big Apple’s contractual obligations. HCC insures the Archer entities. HCC asserts Big Apple was M&R’s subcontractor and that the subcontract requires Big Apple to defend and indemnify the Archer entities, who qualify as additional insureds under Accelerant’s policies. Accelerant refused the Archer entities’ tender, citing rescission due to Big Apple’s alleged misrepresentations, so HCC has been providing the Archer entities’ defense. The Archer entities filed a state-court declaratory judgment action against Accelerant. Against this backdrop, HCC moved to intervene in the federal case to protect its interests in avoiding rescission and securing additional-insured coverage/contribution from Accelerant.
The issues presented were whether HCC satisfied Rule 24(a)(2) for intervention as of right by showing: (1) a timely motion; (2) a direct, substantial, legally protectable interest in the subject of the action; (3) that disposition of the action may impair or impede its ability to protect that interest; and (4) that its interest is not adequately represented by existing parties. Alternatively, whether permissive intervention under Rule 24(b)(2) should be granted in the court’s discretion, considering judicial economy and the risk of inconsistent judgments.
The court found HCC satisfied all four Rule 24(a)(2) elements. Permissive intervention was granted in the alternative. Even if intervention as of right were unavailable, permissive intervention would be appropriate to promote efficiency and avoid inconsistent outcomes between this federal action and the state declaratory action brought by the Archer entities.
HCC moved less than two weeks after the court granted M&R and Continental’s intervention. Discovery was far from complete. The court cited the flexible timeliness standard and found no prejudice to existing parties, while denial would prejudice HCC.
HCC has a direct, substantial, legally protectable interest because it insures the Archer entities who claim additional-insured status under the Accelerant policies; if the policies are rescinded or declared void, HCC would bear the entire burden of defense/indemnity for the Archer entities. That interest would be impaired by a judgment here voiding coverage. The court relied on its prior intervention ruling for Continental and supporting authority recognizing insurers’ direct interests in rescission disputes that could shift defense/indemnity burdens to them. Thus, prongs (2) and (3) were satisfied.
While HCC shares the same ultimate objective as Big Apple, M&R, and Continental (avoiding rescission and maintaining coverage), HCC rebutted any presumption of adequate representation. The court found HCC’s interests differ in meaningful ways because HCC is providing coverage for a different underlying action (the Fajardo Action) and thus faces distinct exposure and issues. The court cited authority that insurers can meet the minimal burden of showing inadequacy when other insurers in the case may have different policies or insureds. The court concluded existing parties would not adequately protect HCC’s specific interests related to Fajardo, satisfying prong (4).
Even if as-of-right intervention were questionable, the court would allow permissive intervention because a federal judgment on the validity/coverage of the Accelerant policies would be res judicata as to HCC, thereby avoiding duplicative litigation in the pending state declaratory action and preventing inconsistent judgments between courts. The court noted that after granting M&R and Continental’s intervention, no flood of additional intervenors followed, undermining Accelerant’s concern about a “sprawling” dispute. Judicial economy and efficiency strongly favored HCC’s participation.
HCC’s motion to intervene is granted, and HCC may assert its proposed counterclaims against Accelerant. The case proceeds with HCC as an intervenor alongside M&R and Continental, while Accelerant’s rescission and declaratory claims continue against Big Apple.
Insurance rescission actions affecting additional-insured status can trigger intervention rights for other insurers with exposure in underlying tort suits. The court applied Rule 24(a)(2) pragmatically, focusing on concrete litigation stakes (who bears defense and indemnity) rather than formal identity of interests among insurers.
The court also emphasized efficiency and preclusion concerns to support permissive intervention, recognizing that parallel state declaratory proceedings could create duplication and risk inconsistent outcomes if HCC were excluded from the federal action resolving policy validity and coverage issues central to its obligations in the Fajardo Action.
Editor’s Note: CP’s own Evan Gestwick handled this case for M&R and Continental, having first moved to intervene to assert rights to additional insured coverage on behalf of the former, and right to reimbursement of past defense costs on behalf of the latter.
FLEMING’S FINEST
Katherine A. Fleming
[email protected]
02/13/26 Privilege Underwriters Reciprocal Exchange v. Mankoff
Texas Supreme Court
Policy Deductible Applicable to Covered Losses Caused by Windstorm or Hail Applied to Damage Caused by a Tornado
A tornado damaged the insureds’ home, and then it likely rained for a couple of minutes. The damaged property was covered by a homeowners policy issued by Privilege Underwriters Reciprocal Exchange, but the insurer only paid a portion of the claim on the basis that the tornado qualified as a windstorm. As a result, the insurer maintained that the claim was subject to the policy’s “Windstorm or Hail Deductible.” The policy did not define “windstorm.” The insureds sued for breach of contract, alleging the damage was not caused by a windstorm. The parties cross-moved for summary judgment that turned on the interpretation of “windstorm.” The insureds argued that “windstorm” denotes a peril distinct from a tornado. By contrast, the insurer argued that “windstorm” is a broad term for a storm with strong and violent wind, which encompasses a tornado. The trial court agreed with the insurer, but the court of appeals reversed, concluding that the “Windstorm and Hail Deductible” was ambiguous because “windstorm” was undefined and subject to more than one reasonable interpretation. The court of appeals was persuaded by the insureds’ argument that dictionary definitions, media coverage, and various statutory provisions indicate that “windstorm” could mean “a storm with damaging winds that may or may not be accompanied by precipitation, but [which] does not include a tornado.”
The Texas Supreme Court looked to the plain meaning of “windstorm” and noted that dictionary definitions are markedly consistent, the common thread being a storm with violent, strong winds but little or no precipitation. The insurer emphasized the strong violent wind in the definition, and the insureds focused on the precipitation aspect. The Texas Supreme Court found that a tornado falls within the definition of a windstorm as the definitions confirmed the key feature of a tornado is the violent, rotating wind. While some tornadoes occur amidst broader weather events, the Texas Supreme Court reasoned that the classification of the accompanying weather event in which a tornado forms has no bearing on whether the tornado itself is a windstorm. Having considered the dictionary definitions of “windstorm,” as well as the term’s usage in other statutes and case decisions, the Texas Supreme Court held that the common, ordinary meaning of “windstorm” in an insurance policy unambiguously includes a tornado. As a result, the damage to the property was caused by a type of windstorm, and the claim was subject to the “Windstorm or Hail Deductible.”
GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]
02/19/26 Oak Knoll Sch. of the Holy Child v. Utica Nat’l Ins. Grp.
District Court of New Jersey
Court Finds Pollution Coverage Grant Triggered in the Absence of a Traditionally Environmental Pollutant. Thousands Flee
The school found broken glass embedded in its grass sports field and made a claim for its clean-up with its insurance company. The relevant coverage grant provided, in part, “[W]e will pay your expense to extract ‘pollutants’ from your land.” “Pollutants” were defined as “any solid [ . . . ] irritant or contaminant, including [ . . . ] waste.”
Utica denied coverage to the School on the basis that the coverage grant was not satisfied. Specifically, Utica took the position that glass was not a traditionally environmental pollutant, as generally required by New Jersey law to fall within the provided definition of a “pollutant.” This suit followed.
The School’s rebuttal to Utica’s denial of coverage was that the broken glass was a solid that irritated and contaminated its property and therefore fell under the policy’s definition of a “pollutant.”
The Court began its analysis by noting the lack of any controlling New Jersey Supreme Court decision as to whether broken glass counts as a “pollutant.” This, the District Court noted, requires a court to predict how the New Jersey Supreme Court would rule if confronted with such an issue. In turn, this analysis requires, in order: (1) consideration of lower-court decisions; (2) how other bodies of law treat the legal issues in play (i.e., the law of other states); (3) how the law addresses analogous issues (i.e., whether courts have considered whether other, similar substances qualify as a “pollutant;” and (4) the general legal principles underpinning New Jersey jurisprudence.
As to the first two considerations, the District Court noted that neither the law of any lower court in New Jersey, nor any other state, had specifically decided whether broken glass qualifies as a “pollutant.” As to the third consideration, the Court noted a general split in authority on analogous substances.
On the fourth consideration, the Court noted that, under New Jersey law, clauses in insurance contracts that extend coverage as to be interpreted broadly and liberally, while other clauses that exclude coverage are subject to narrow interpretation. Here, the issue is with the grant of coverage—an extension of coverage—which the Court ruled is entitled to broad interpretation. The Court also noted the canon that insurance policies are to be interpreted according to their plain and ordinary meaning, discernable by a review of an ordinary dictionary. The Merriam-Webster dictionary, the Court noted, defines “contaminant” as “something that contaminates.” In turn, “contaminate” is defined as “to make unfit for use by the introduction of unwholesome or undesirable elements.” Here, the Court ruled that the broken glass was an “undesirable element” in the field, and that its “introduction” made the field generally “unfit for use.” Thus, the Court held that broken glass meets the policy’s definition of a “pollutant,” and that the grant of coverage was therefore triggered.
Interestingly, Utica raised the argument that, generally, to be a “pollutant” under existing New Jersey jurisprudence, the substance must be “traditionally environmental” in nature. Artificial substances, like glass, generally do not constitute a traditional environmental pollutant, Utica argued.
In support of this position, Utica cited to the oft-cited decision in Nav-Its, Inc. v. Selective Ins. Co. of Am. In Nav-Its, the Supreme Court ruled that the term “pollutant,” as used in a pollution exclusion, but be limited to “traditional environmental pollution.” Utica argued that “pollutant,” as seen in the policy’s insuring agreement (defined the same way as in the policy at issue in Nav-Its) would be interpreted the same way.
The Court disagreed. The Court pointed out that when the current pollution exclusion was approved by insurance regulators, the insurance industry made the representation that it was designed to eliminate coverage for gradual environmental degradation and government-mandated cleanup expenses. Here, the District Court held that, per Nav-Its, the pollution exclusion would govern in that context, but no further.
Because the point of the exclusion and resulting definition of the word “pollutant” was made clear to regulators when the amended pollution exclusion was approved, the District Court reasoned, Utica cannot now apply the same definition in the context of a grant of coverage.
Editor’s Note: We will keep an eye out for an appeal of this one.
O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]
02/19/26 Wake Chapel Church, Inc. v. Church Mut. Ins. Co.
United States Court of Appeals, Fourth Circuit
North Carolina Interprets All-Risk Policies As Providing Coverage To Damage Caused By More Than One Cause, Even Where One Cause Is Excluded.
Wake Chapel owned and operated a church that contained two buildings, a Life Enrichment Center, and the Sanctuary. Both buildings were covered under an all-risk policy issued by Church Mutual. The policy included exclusions for loss or damage caused by or resulting from rust, corrosion, decay, deterioration, hidden or latent defect, or any quality in the property that causes it to damage or destroy itself.
After a December 2018 snowstorm, Wake Chapel discovered scrapes on the Sanctuary’s roof. Wake Chapel hired Hogan as an engineer to inspect the roof. Church Mutual’s own engineer Rigsby also inspected the roof. Hogan concluded that the snow caused the scratches. Rigsby determined the scratches were inconsistent with snow and sliding ice. Church Mutual then denied coverage for the claim on the basis there was a lack of evidence that the snow caused direct physical loss to the roof.
North Carolina law applied, which utilizes different causation standards contingent on the type of policy at issue. For “all-risk policies” North Carolina holds that coverage extends when damage results from more than cause, even though cause is excluded.
The Circuit Court affirmed the jury’s determination in favor of Wake Chapel. Hogan’s testimony was that the snow and ice caused the loss. Hogan also stated that while the entire roof lacked coating, it behaved well enough on one part of the roof and poorly on the other, which Hogan attributed to the snowstorm. Since the exclusions apply only when the damage is wholly caused by an inherent defect, the exclusion does not apply. As for damage occurring prior to the policy period, the court found there was evidence that supported the jury finding. Particularly the fact that Church Mutual inspected the Sanctuary in 2013 and an outside contractor inspected the roof quarterly, supported Wake Chapel’s claim it was unaware of the damage prior to the snowstorm. Thus, the court affirmed the damages of $1.1. million in ACV to repair the roof.
LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]
01/29/26 Structure Tone, Inc. v. Scottsdale Ins. Co.
New York Supreme Court, New York County
Court Issues Declaration that Commercial General Liability Insurers Owe No Duty to Defend or Indemnify or Indemnify Construction Defect Claim, Finding No “Property Damage” Caused by an Occurrence
Structure Tone, Inc. ( "Structure Tone”) filed a declaratory judgment action, seeking a declaration that certain insurance policies issued by Scottsdale Insurance Company (“Scottsdale”), State National Insurance Company (“State National”), and Harleysville Worcester Insurance Company (“Harleysville”) owe a duty to defend in an underlying construction defect claim.
The underlying claim involved a lawsuit alleging property damage arising out of a substantial construction project occurring at the underlying plaintiff’s property in Manhattan. In the underlying action, the plaintiff alleges that the tenant had major alterations done to the property, which led to such severe damages. As a result of the defects, the property was demolished and rebuilt.
The general contractor, Structure Tone, tendered the claim to various subcontractors’ carriers, including State National, Scottsdale, and Harleysville.
State National denied the tender, identifying that its insured was solely responsible for cross wall bracing under the first floor of the property, which was not the cause of the alleged damages at issue. Further, State National identified that even if Structure Tone were an additional insured, as the general contractor, all damages at issue constituted faulty workmanship, and did not constitute property damage caused by an occurrence.
Scottsdale and Harleysville issued similar denials, identifying that there was no property damage caused by an occurrence.
On summary judgment, plaintiff argued that the damages alleged in the complaint go beyond allegations of solely faulty work product.
In deciding Structure Tone’s motion, and the insurers cross-motion, the court’s primary focus was whether the damage alleged in the underlying action constituted an occurrence under New York law.
The court began the analysis by emphasizing that there is no “occurrence” under a commercial general liability policy where faulty construction only damages the insured’s own work. Further, the court highlighted that faulty workmanship of subcontractors hired by the insured does not constitute “property damage” caused by an “occurrence,” because the entire project qualifies as the general contractor’s work.
Looking at the underlying complaint, the court found that the only fair reading of the complaint reveals that the pleading seek relief solely in relation to damages arising out of the work itself. Specifically, it is alleged that substandard work caused “damage to the property.” The underlying plaintiff alleges that the “improper excavating, underpinning, shoring, bracing and/or stabilizing” caused structural instability, causing “significant damage” evidenced by second floor cracking.
The court ended the analysis by acknowledging commercial general liability policies do insure faulty workmanship, if the work product causes bodily injury or property damage, but only to something other than the work product itself.
Based on the nature of the construction project at the loss location, the court held that the underlying case solely seeks damages from the faulty workmanship to the subject of the construction project.
The court found that the efforts to seek additional insured coverage under its subcontractors’ commercial general liability policies were not permitted under New York law. As such, the court denied Structure Tone’s motion for summary judgment, and issued a declaration that Scottsdale, State National, and Harleysville have no duty to defend or indemnify Structure Tone for the underlying action.
LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]
02/27/26 New York Assembly Bill S8808
New York State Assembly
Governor Signs Bill S8808 Related to Consumer Protections and Contract Requirements in Connection With Litigation Funding
On February 13, 2026, the Governor signed Bill S8808 to amend the litigation funding act to promote consumer protections and provide contract requirements related to litigating funding contracts.
The bill provides, in part, financing companies recovery will be limited to 25% of the gross proceeds of the consumer’s legal claim. Further, the consumer will have a ten-day right of rescission, allowing the consumer to cancel the litigation funding contract without penalty or further obligation within ten business days after the date the consumer receives the payment form the litigation funding company if the full payment amount is returned to the litigation funding company. The bill further provides that litigation finance companies must be registered with the Department of State.
VICTORIA’S VISION ON BAD FAITH
Victoria S. Heist
[email protected]
02/11/26 Shurelds v. Safeco Ins. Co. of Am.
United States District Court, Eastern District of Pennsylvania
Pennsylvania Court Dismisses Insured’s First Party Bad Faith Claims
In this case, Shurelds purchased a landlord protection policy from Safeco for his property in Philadelphia. During the policy period, Shurelds' tenant abandoned the property and left unauthorized occupants in the property. Shurelds submitted a claim to Shurelds for severe property damage caused by the unauthorized occupants. Safeco denied the claim for wear and tear, and Shurelds subsequently filed four additional claims. Safeco denied the claims.
Shurelds sued Safeco in Pennsylvania state court pro se, alleging bad faith, fraudulent misrepresentation, and negligence. Safeco removed the case to federal court and filed a motion to dismiss the complaint for failure to state a cause of action. The court granted Safeco's motion, dismissing the bad faith claim without prejudice, dismissing the other allegations with prejudice, and permitting Shurelds to refile his bad faith claim within 60 days.
Shurelds filed a first amended complaint against Safeco alleging bad faith practices on a claim for interior water damage. During discovery, Shurelds filed a statement regarding potential witness interference that was dismissed by the court.
Shurelds then sought leave to amend his complaint to add emotional distress, witness tampering, and slander. The court granted the leave for the emotional distress and slander claims but not witness tampering. Shurelds then filed a second amended complaint which included seven additional claims, but none were for slander or emotional distress. Shurelds, without leave of court, then filed a third amended complaint with three additional claims, and later, a fourth amended complaint. Safeco filed a motion to dismiss the amended complaints, and opposed Shurelds' motions to amend.
In Shurelds' second amended complaint, Shurelds states that he submitted a valid property insurance claim, but Safeo engaged in bad faith by "misrepresenting facts, providing shifting justifications for denial, and failing to conduct a reasonable investigation." Shurelds also alleged that Safeco "escalated its conduct from claim-based bad faith into litigation-based retaliation and obstruction." He further alleges Safeco misused discovery procedures and motion practice and expressed that it stated it would "'vigorously fight' against his claim, 'reflecting an intent to exhaust and punish rather than litigation in good faith."
The court found Shurelds' bad faith allegations were deficient and dismissed them for failure to state a cause of action. To establish bad faith under Pennsylvania law, the plaintiff must establish by clear and convincing evidence that (1) the insurer did not have a reasonable basis for denying benefits under the policy; and (2) the insurer knew or recklessly disregarded its lack of a reasonable basis in denying the claim. Shurelds alleged Safeco engaged in bad faith insurance practices by recycling previously denied allegations in subsequent proceedings, advancing knowingly false timelines, reusing claim numbers, and ignoring documentary proof in contradiction of their position.
The court found Shurelds failed to "identify with any specificity what benefits were rejected, the date of the alleged loss, what 'timelines' were false, and what documentary proof was ignored." The court found Shurelds only provided "a threadbare recital of the elements of a Sect. 8371 claim" and dismissed the complaint. The court also dismissed the other allegations in the complaints, dismissing the complaint in its entirety.
SHIM’S SERIOUS INJURY SEGMENT
Stephen M. Shimshi
[email protected]
02/11/26 Acosta v. Acosta
Supreme Court, Kings County
Kings County Supreme Court Grants Defendant’s Motion for Summary Judgment on the Basis that Plaintiff Did Not Sustain a “Serious Injury” With Respect to Claims Under the 90/180 Category but Denies Defendant’s Motion as to All Other Categories
This matter arises from personal injuries alleged by plaintiffs, Jose M. Landrau Acosta, and Chastity Kristal Marie Wrench (collectively, "plaintiffs") in connection with a motor vehicle accident that occurred on May 10, 2023. Plaintiffs were passengers inside defendant Jean Carlos Landrau Acosta’s vehicle when it was struck in the rear by defendant Theodore Karaounos’ vehicle. The accident occurred while the vehicles were traveling on the Long Island Expressway ("LIE"). Plaintiffs filed the Note of Issue on August 21, 2025.
Karaounos has moved for summary judgment on the basis that plaintiffs did not sustain “serious injury” within the meaning of Insurance Law § 5102(d). In support of his motion, Karaounos submitted the following materials: (1) plaintiffs’ deposition transcripts; (2) plaintiffs’ verified bills of particulars; (3) affirmed orthopedic IME reports with findings of full range of motion and without objective disability; and (4) a biomechanical analysis disputing causation. Karaounos’ IME doctor found that all of plaintiff’s alleged conditions were resolved and opined that both plaintiffs were capable of working and performing all ordinary activities without restriction. In support of his motion, Karaounos’ also submitted biomechanical analyses supporting his argument that the low speed rear-end collision was insufficient to cause the plaintiffs’ alleged injuries. The Court determined that Karaounos satisfied his burden of proof.
In support of their opposition to Karaounos motion, the plaintiffs included the following: (1) affirmed medical reports from Dr. Richard Seldes, Dr. Anjani Sinha, and Dr. Joseph Jimenez; (2) contemporaneous treatment records, MRI reports, operative records; and (3) plaintiffs’ deposition testimony. The foregoing revealed that the plaintiffs commenced medical treatment immediately after the accident and received months of physical therapy, injections, and underwent surgery. Plaintiffs’ aforementioned treating doctors identified range of motion deficits of the bilateral shoulders and cervical and lumbar spines. Plaintiffs’ physicians concluded that plaintiffs’ injuries were causally related to the subject accident and that the injuries detected were permanent in nature.
However, the Court also determined that Karaounos was entitled to summary judgment with respect to the plaintiffs’ claims under the 90/180-day category. Bacon v Bostany, 104 AD3d 625, 627 [2d Dept 2013]. According to plaintiffs’ bills of particulars, they were confined for “approximately one (1) month post-accident,” (i.e., 30 days). Plaintiffs also alleged confinement “again for approximately three (3) months post-surgery.” However, the Court noted that plaintiff Acosta’s surgery occurred 208 days after the accident and plaintiff Wrench’s surgery occurred 160 days after the accident. Furthermore, plaintiffs’ medical records failed to establish that plaintiffs were directed by their physicians to be confined at all. As such, the Court held that the plaintiffs failed to meet their burden in that they sustained serious injuries under the 90/180 category sufficient to defeat Karaounos’ prima facie showing.
Upon review of the foregoing, the Kings County Supreme Court found that plaintiffs raised a triable issue of fact as to whether they sustained serious injuries within the meaning of Insurance Law § 5102(d). The Court held that Karaounos’ summary judgment motion was granted with respect to the 90/180-day category of Insurance Law § 5102(d). Karaounos' motion was denied in all other respects.
NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
[email protected]
The content of this column also appears in the “Liability & Insurance,” a monthly newsletter focusing on Canadian coverage and published by Heather Sanderson. Contact her for a subscription.
02/18/26 Tragger v. Intact Insurance Company
Alberta Court of King’s Bench
Alberta Court Slashes $137K Costs Against Intact and RSA. Court Draws Sharp Line between Duty to Defend and Duty to Indemnify in Section 534 Coverage Dispute
The Alberta Court of King's Bench has delivered a decisive ruling limiting costs awards for successful judgment creditors pursuing insurance coverage, slashing a $137,000 claim down to just $38,000 in a decision that clarifies the boundaries between duty to defend and duty to indemnify obligations.
Justice Michael J. Lema's February 2026 decision in Tragger v. Intact Insurance Company addresses a critical question facing judgment creditors who successfully establish coverage under Alberta's Insurance Act: Are they entitled to full indemnity for their legal costs, or do ordinary cost principles apply?
The answer, according to Justice Lema, is clear—duty-to-defend cost principles do not automatically transfer to duty-to-indemnify disputes.
Background: A Coverage Fight After Judgment
The case stems from a construction defect dispute that began in 2007 when David Alexander Tragger and Hypocrite Productions Inc. hired a contractor to supply and install stone siding on two buildings. By 2014, significant delamination required complete removal and replacement of the siding.
The plaintiffs sued the contractor and subcontractor for negligent faulty workmanship and breach of contract. In summary judgment proceedings, the court awarded approximately $310,000 jointly and severally against both defendants.
Unable to collect on the judgment, the plaintiffs invoked section 534 of Alberta's Insurance Act, which allows judgment creditors to proceed directly against the judgment debtor's liability insurers. The contractor had notified both Intact Insurance Company and Royal & Sun Alliance Insurance Company of Canada (RSA) of the claim, but each insurer denied coverage.
The contractor did not dispute these denials or assert a duty to defend, instead defending the liability action on its own. In the subsequent coverage action, the court found the plaintiffs' losses were covered under certain policies and ordered the insurers to indemnify those losses, reserving the issue of costs for written submissions.
The $137K Costs Claim
The plaintiffs sought total costs of $137,252.66, comprising $93,223.83 for the coverage action itself and $44,028.83 in "thrown-away" post-judgment enforcement costs from the underlying liability action. They also raised $42,424.87 in post-judgment interest as an additional recovery item.
Their core argument drew an analogy to duty-to-defend authorities. As judgment creditors standing "in the shoes" of the insured under section 534, they argued they should receive full indemnification flowing from the insurance contract, consistent with the Alberta Rules of Court's objectives of efficiency and access to justice.
In the alternative, the plaintiffs tendered a Schedule C comparison totaling $15,411.91 under the ordinary party-and-party costs framework.
Insurers Push Back
Both Intact and RSA countered that duty-to-defend cost principles were inapposite because the case concerned the duty to indemnify, not the duty to defend. They argued that no other basis supported full-indemnity costs.
The insurers also emphasized their conduct in the coverage litigation was efficient and collaborative, including use of an Agreed Statement of Facts and a streamlined, one-day trial of an issue. This approach, they submitted, warranted ordinary costs rather than enhanced awards.
Intact proposed a lump sum of $30,000 as a fair costs award, while both insurers argued against including enforcement costs from the first action.
The Court's Analysis: Five Key Rulings
Justice Lema's decision addressed five distinct aspects of the cost dispute:
1. No Solicitor-Client Costs in Duty-to-Indemnify Cases
The court rejected the plaintiffs' reliance on duty-to-defend jurisprudence, emphasizing a fundamental distinction: the contractor's defence of the first action proceeded without any asserted duty to defend, and the coverage proceeding concerned indemnity, not defence.
"The plaintiffs identified no duty-to-indemnify authority justifying full-indemnity costs for an initial refusal to indemnify," Justice Lema noted. The court endorsed British Columbia Court of Appeal reasoning from West Van Holdings, cautioning against reading insurance contracts to cover enforcement costs absent express wording and against routine awards of special costs divorced from litigation misconduct.
2. Insurers' Conduct Warranted Ordinary Costs
Accepting both insurers' descriptions of a cooperative, efficient approach to resolving coverage through an Agreed Statement of Facts and streamlined trial, the court found no basis for enhanced costs.
3. Lump-Sum Award of $38,000
While the plaintiffs offered a Schedule C comparator of $15,411.91 and Intact suggested $30,000, Justice Lema balanced benchmarks from case law, the claimed solicitor-client fees, and proportionality principles to fix a lumpsum, all-inclusive award of $38,000 for the coverage action.
4. Post-Judgment Enforcement Costs Excluded
The plaintiffs' separate claim of $44,028.83 for enforcement steps in the first action fell outside the scope of the costs determination in the coverage proceeding. Such steps carried their own costs consequences in the original action and should be pursued via supplementary costs in that proceeding under Schedule C's post-judgment framework, not in the section 534 coverage action.
5. Post-Judgment Interest Remains Open
The plaintiffs' request to include $42,424.87 of post-judgment interest was not a costs issue and had not been pleaded or argued as damages. The court declined to award it within the costs ruling but invited brief letter submissions on whether such interest forms part of the insured loss covered by the policies, setting deadlines of February 27, 2026, for the plaintiffs and March 6, 2026, for the insurers.
Industry Implications
The decision clarifies several important principles for insurers, judgment creditors, and coverage counsel:
Section 534 Success Doesn't Equal Full Indemnity: Judgment creditors who successfully establish coverage on indemnity grounds are not automatically entitled to full-indemnity costs. The success alone does not trigger enhanced cost awards.
Duty-to-Defend Principles Don't Transfer: The robust cost protection available in duty-to-defend cases—where insurers who wrongfully refuse to defend may face full indemnity for defence costs—does not carry over to duty-to-indemnify disputes.
Ordinary Costs Presumption: Absent misconduct or express contractual wording covering enforcement costs, courts will prefer ordinary costs calibrated to reasonableness and proportionality, often awarded as lump sums.
Proper Forum for Enforcement Costs: Post-judgment enforcement expenses from the underlying action should be sought in that action under Schedule C's post-judgment framework, not imported into the subsequent coverage proceeding.
Interest as Coverage Issue: Claims that post-judgment interest forms part of the insured loss must be advanced as coverage issues through proper pleadings and evidence, not as costs matters.
A Key Distinction
The Tragger decision reinforces the critical difference between an insurer's duty to defend and its duty to indemnify—a distinction that carries significant cost consequences.
In duty-to-defend scenarios, where an insurer wrongfully refuses to provide a defence, case law supports robust cost awards because the insurer has breached a foundational contractual obligation to stand beside its insured from the outset of litigation. The policy rationale recognizes that defence costs are explicitly contemplated in liability policies and that insureds should not bear the financial burden when insurers wrongfully abandon them.
By contrast, duty-to-indemnify disputes typically arise after liability is established. The insurer's obligation is to pay covered losses, not to provide active representation. While judgment creditors under section 534 can step into the insured's shoes to pursue coverage, they do not automatically inherit the enhanced cost protection associated with defence obligations.
Justice Lema's decision makes clear that courts will not reflexively apply duty-to-defend cost principles to indemnity disputes without a principled basis for doing so. The distinction matters—both doctrinally and financially—as the $99,000 difference between the claimed and awarded costs demonstrates.
The decision provides valuable guidance for insurers defending coverage claims and for judgment creditors considering section 534 proceedings, setting realistic expectations for cost recovery in duty-to-indemnify disputes.
© Hurwitz Fine P.C. 2026
All rights reserved
