Coverage Pointers - Volume XXVII No. 22

Volume XXVII, No. 22 (No. 721)
Friday, April 10, 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.

AVOID ACT – Third Party Practice Changes in New York

We had 400 people attending our AVOID Act presentation last week.  For those unfamiliar, it’s the New York legislation that, requires third party lawsuits for contribution and indemnity to be commenced within 90 days of a defendant filing an answer.  If that isn’t done, a court order is necessary to commence a third party action at a later date.  The Act goes into effect for lawsuits commenced or after April 18 (so before the next issue of this publication). Did you miss our presentation?  It provided helpful practice pointers for defense lawyers and coverage counsel,.

Here is a link to the video …  The Passcode is: m9#7!wGM

You’re welcome.

We also love lawyers who are looking to advance to a firm that values who they are and what they might need.

 

Employment Opportunities at the Firm – At any of our offices or hybrid – Inquire confidentially

Hurwitz Fine P.C. is home to one of the largest and most forward-thinking insurance coverage practice groups in New York State, with offices across New York and New England—and we’re growing. We’re looking for Insurance Coverage Attorneys who want more than just a job. Here, you’ll work side-by-side with respected, approachable mentors who are invested in your growth, your voice, and your long-term success. You’ll handle meaningful work in a fast-moving practice area, collaborate with a supportive team, and build a career with real opportunity to advance.

If you’re seeking a place where your work matters, your development is intentional, and your colleagues actually enjoy working together, we’d like to meet you. NYC/Buffalo/Albany/Rochester/New England. Hybrid's fine.

Qualified candidates should have at least two years of experience in:

1. Experience in policy interpretation and insurance coverage analysis
2. First party property policies and/or homeowners policies
3. Commercial General Liability policies
4. Directors & Officers Policies
5. Environment/Pollution Policies
6. Construction Defect/Builders Risk Policies
7. Litigation of Coverage Disputes

In office or hybrid work opportunities are available.

The successful candidate for this position will have excellent writing, communication, and analytical skills. We are committed to growing our firm with high caliber attorneys, and offer competitive benefits, a diverse environment, mentorship, and growth opportunities, and encourage community involvement.

Submit resume and writing sample to Hurwitz Fine P.C., Attn: Susan Ruhland, Director of Human Resources, The Liberty Building, 424 Main Street, Suite 1300, Buffalo, New York 14202 or fax to 716-332-7411 or email to [email protected].

We know that we have lots of lawyers who subscribe to this publication and lots of claims professionals who work with excellent attorneys through our coverage area – NY, NJ, CT, VT, MA, RI, NH and around the country. Please spread the word.

 

Thanks to the New York Insurance Association and the Defense Association of New York (DANY)

I had the pleasure of participating in the NYIA Insurance Roundtable this week, with my associate, Ryan Maxwell, where we talked about the AVOID Act (which will go into effect before the next issue of CP hits the newsstands. I also joined my friend, Frank Ramos, from the Miami office of Goldberg Segalla in a presentation to DANY on Artificial Intelligence. We enjoyed those opportunities.

Litigation Strategies:  Removing Cases to Federal Court
April 16, 2026
Via Zoom

After that, our Retail & Hospitality team will be back on April 16^th 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.

 

Understanding Attorney-Client Privilege in Claims Handling
April 23, 2026
Via Zoom

This webinar will explore the evolving scope of attorney-client privilege across the United States and what it means in practice. Join Insurance Coverage attorneys Victoria S. Heist and Lexi R. Horton for a clear, practical discussion of how the privilege applies in real-world scenarios, including dual-purpose communications, interactions with in-house counsel and insurers, bad-faith litigation, and the discoverability of claims files.

Attendees will gain actionable insight into protecting privileged communications while navigating complex coverage and claims environments.

For more information and to register, click here. 

 

LinkedIn:

For those who need to keep up to date on insurance coverage between issues of Coverage Pointers, we’re happy to help. Just follow me on LinkedIn and we’ll keep you up to date. I’m easy to find – my linked in name is (ready for this unusual and unexpected name):  Kohane  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.

 

Didn't Take Much to Bankrupt This Auto Company – 100 Years Ago:

The Brooklyn Daily Times
Brooklyn, New York
10 Apr 1926

MOTOR CO. BANKRUPTCY

Ranier Trucks Named in Suit by Creditors

An involuntary petition in bankruptcy was filed today in the Federal Building here against Rainier Trucks, Inc., dealers, and manufacturers of motor trucks. with a plant at Bayside Ave. and the Long R. R. tracks, Flushing.

The creditors are: The Continental Motors Corporation, with a claim for $1,215 for supplies; James F. Simpson and Henrietta Gebhard.

An application for the appointment of a receiver will be filed later, it was stated. Arthur Leonard Ross, attorney, of 160, Broadway, Manhattan, represents the petitioners.

 

Peiper on Property (and Potpourri):

Nothing from me this week, see you in two.

Steve
Steven E. Peiper
[email protected]

 

"Night Doctor" Sounds Like a Soap Opera – 100 Years Ago:

The Brooklyn Daily Times
Brooklyn, New York
10 Apr 1926

BILL WOULD CREATE
“NIGHT PHYSICIANS”

League’s Plan Would Place One
In Each Neighborhood.

If the bill that the Ridgewood Metropolitan Civic-League will ask Assemblyman John T. Hammond to introduce in the Legislature becomes law, at least one doctor in each neighborhood will be available for public service at any time of the night.

The motion to petition Hammond's aid in the passing of such a bill was made by Andrew J. Reiss of 95 Elliot st. Mr. Reiss complained that the death of his son, Robert. on April 4, was partly due to the failure of an ambulance to arrive until an hour and a half after it had been summoned. The 'child died during the delay.

It was decided to start a campaign for the 8,200 feet of water main that has been promised the section some time ago. The low water pressure of that district was called a distinct fire menace. Richard E. Treharne presided.

 

Lee’s Connecticut Chronicles:

Dear Nutmeggers,

Been jumping on planes and trains and automobiles, blanketing the region for court and depositions. It’s exhausting, and even worse, all done with a matzo bloat that only my observant friends can relate to. It lends a whole new dimension to the cry of “Let My People Go.” But next week, that may not be an issue at all as I head to Mexico City as my wife’s plus one.

This edition, we continue to tell the story of the fertility doctor who surreptitiously used his own sperm on unsuspecting IVF patients, and his fight for coverage. Read on for the hard to believe details.

Lee
Lee S. Siegel
[email protected]

 

What's a Cake Eater? – 100 Years Ago:

Daily News
New York, New York
10 Apr 1926

CAKE EATER GUILTY, FIRST DEGREE

WRONG, HE KNEW, BUT STILL HE KILLED A MAN

With no more emotion than a schoolboy might display in confessing to having played hooky, Herbert Koerber, 17, cake eater, admitted yesterday at his trial for murder that he realized he had killed a man.

Asked by Assistant District Attorney Froessel why he had not mentioned the struggle before his trial, Koerber replied:

"Why, I didn't know I shot a man."

"Do you know now you shot a man?" asked Froessel.

"Yes, sir," the youth replied calmly.

"You knew it was wrong to shoot a man, didn't you?"

"Yes, sir."

"You know it's wrong to hold up a man, don't you?"

"Yes, sir, I do."

Realizing it was wrong, Herbert said, he nevertheless stuck up people with a loaded gun.

Editor’s Note: "Cake eater" is a slang term for a wealthy, privileged person who leads a life of ease, or historically, a ladies' man. First recorded in the 1920s, it often implies someone out of touch, echoing the "let them eat cake" sentiment, and is commonly used to describe, for example, students from affluent neighborhoods.

 

Ryan’s Federal Reporter:

Nothing from me this edition. You’ll hear from me in a couple weeks though!

Ryan
Ryan P. Maxwell
[email protected]

 

Cut Him Off! – 100 Years Ago:

Wilkes-Barre Times Leader, the Evening News
Wilkes-Barre, Pennsylvania
10 Apr 1926

ADVICE TO THE
LOVELORN

BY BEATRICE FAIRFAX

A Heartless Suitor

Dear Miss Fairfax:

I am a young woman twenty years of age, in love with a young man one year my senior. I have known him about seven months and have been going out with him all this time.

He always kisses me and makes love to me, but he never proposed or talked about getting married. In fact, he told me once that he’s not settled and he doesn’t expect to marry for another five or six years.

I love him devotedly. I couldn’t even think of giving him up. What can I do?

BROKEN-HEARTED

Can you not see the selfishness of this young man in making love to you and trying to make you love him when he admits he doesn’t love you or intend to marry you? Can you see any happy future in a one-sided love affair of this sort?

Take things in your own hands. Summon all your courage, self-respect and common sense and break away from this association, which cannot possibly lead to anything but increasing wretched unhappiness for you.

 

Storm’s SIU:

Hi Team:

Two awesome results for The Storm since the last edition.

First, I had a plaintiff voluntarily file a stipulation of discontinuance in response to our motion to dismiss due to the plaintiff’s breach of the one-year contractual suit limitation condition, having commenced suit three months late. This was a high value alleged jewelry theft claim in which we assisted SIU by, among other things, conducting the insured’s EUO and requesting documents.

Second, Isabelle LaBarbera and I have the pleasure of representing the insurer in the case I report on this edition, Arruda v. New York Central Mut. Fire Ins. Co.:

• Trial Court Overruled by Appellate Division -- Summary Judgment Granted to Insurer Prior to the Completion of Discovery Precluding Coverage Beyond the Application of a $10,000 “Limited Water Back-Up and Sump Discharge or Overflow Coverage” Endorsement, Based Upon “Water” and “Earth Movement” Exclusions Preceded by Anti-Concurrent Causation Language.

It’s a good read. The Appellate Division, Fourth Department, reversed an order of the Supreme Court denying summary judgment to N.Y. Central and dismissed plaintiffs’ coverage action arising from a sewage backup in their basement. Although N.Y. Central paid $10,000 under a limited water backup endorsement, it denied further coverage based on policy exclusions for water backing up through sewers or drains and for earth movement. Relying on plaintiffs’ own engineer’s report attributing the loss to soil erosion that caused the sewer pipe to settle improperly, the Court held that both exclusions applied and barred coverage beyond the endorsement. Plaintiffs failed to raise a triable issue of fact or identify an applicable exception restoring coverage, and the Court rejected their argument that discovery was needed under CPLR 3212(f), concluding that the dispute presented a pure question of policy interpretation. Two justices dissented, reasoning that summary judgment was premature because further discovery might have clarified the precise cause and location of the sewer blockage. However, the dissent fails to realize, as the majority did, that additional discovery would have been superfluous due to the application of the anti-concurrent causation language preceding the applicable exclusions.

Go Bandits, Sabres and Dodgers! We will talk again in two weeks.

Scott
Scott D. Storm
[email protected]

 

Who Qualifies? – 100 Years Ago:

The Buffalo News
Buffalo, New York
10 Apr 1926

WANTED

Ladies of refinement and pleasant appearance, age 22 to 40, to assist Sales Manager in order department. Experience unnecessary. Permanent, pleasant work. Salary $20 per week to start and bonus.

Call 10 to 12,

233 Jackson Building, Cor. Delaware & Chippewa

 

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

Spring has finally sprung! I’ve been enjoying the warmer weather on my runs (no jacket!) and keeping my eyes peeled for the cherry blossoms.

This edition’s case from the Montana Supreme Court looked at whether a third-party claimant could bring causes of action against an insurer beyond bad faith after the parties failed to reach a settlement, and the claimant asserted that the insurer’s conduct in handling the claim led her to stop collecting evidence of its insured’s liability to her detriment.

See you in a fortnight,

Kate
Katherine A. Fleming
[email protected]

 

73 Isn't Old! – 100 Years Ago:

South Wales Evening Post
Swansea, West Glamorgan, Wales
10 Apr 1926

OLD SHOEMAKER’S DEATH.

The death of a 73-year-old retired shoemaker, at Llansamlet, formed the subject of an inquiry, held at Swansea on Saturday, by Mr. David Clarke, the Swansea deputy coroner. Mrs. Susan Rees, of Crymlyn House, Frederick-place, Llansamlet, said that the old man, who her uncle, had been complaining of illness for some months, but refused to see a doctor. A few days before Thursday he became worse and she found him in a dying condition in one of the rooms of the house. Dr. D. R. Davies said the man died from cerebral hemorrhage, due to natural causes, and a verdict was returned accordingly.

 

Gestwick’s Garden State Gazette:

Dear Readers:

I have a case chock full of goodness for you this week. Too much to mention here, so read on to find out more.

Other than that, my fiancé and I are in our final four-month countdown to wedding day. Of course, the chaos doesn’t stop there since we decided now would be the time to start looking for our first house. There’s nothing better than going home from work to work on some more work!

See you in two weeks.       

Evan
Evan D. Gestwick
[email protected]

 

"In Sickness and In Health ..." – 100 Years Ago:

The Brooklyn Daily Times
Brooklyn, New York
10 Apr 1926

SUES MATE AS DRUG ADDICT

Mrs. Abraham Liberman Charges
Husband Deceived Her.

Mrs. Bernice Liberman, of 674 West 161st st., Manhattan, brought suit late yesterday before Supreme Court Justice Edward Gavegan in Manhattan for annulment of her marriage to Abraham Liberman, of 1339 52d st., Liberman did not defend the action.

Mrs. Liberman declared her husband is a consumptive and drug addict and that she did not know of it at the time she was married to him in Brooklyn, June 27, 1922.

Liberman is the son of Jacob Liberman, wealthy real estate operator of Borough Park.

 

O’Shea Rides the Circuits:

Hey Readers,

My wife and I are currently in Ghent, Belgium, for the remainder of the week. We have been able to taste the friets, waterzooi, chocolates, and a few of their wide selection of beers. We also made a brief three-day visit in Amsterdam, which was beautiful. But all goods things come to end as we head for a 9:00 am departure time in the coming days. As we enjoy our last bit of vacation, I will take a break from this edition of Coverage Pointers and soak in the remainder of our time here.

Until Next Time,

Ryan
Ryan P. O’Shea
[email protected]

 

Whatever He Was Charged With, the Dentist Was Acquitted – 100 Years Ago:

The Brooklyn Daily Times
Brooklyn, New York
10 Apr 1926

COURT CLEARS DENTIST

Dr. Charles Reiss Feed on Old
Charge Made by Girl.

Defending himself on a serious charge made nearly three years ago, Dr. Charles Reiss, 24, a dentist, of 173 Hewes st., was discharged by Magistrate Abraham Rosenbluth yesterday. The complaint Was made by Rose Rosenthal, 19, of 310 Madison Ave., Manhattan, on September 10, 1923. Magistrate Rosenbluth found the charge unsupported by the evidence. 

 

LaBarbera’s Lower Court Library:

Dear Readers:

I have been on the hunt for healthy, red currant bushes for the last three years. Red currants are my favorite berries, and my absolute favorite thing to eat when I visit my family in Norway. Unfortunately, I have only found them at one grocery store (Wegmans, of course). This weekend I finally found a pair at Home Depot! Hopefully, I can keep them alive until they are mature enough to produce fruit.

This week I am reporting on a New York County decision finding that Harleysville owes no duty to defend or indemnify Consolidated Edison as an additional insured. The court looked toward the policy, and found that the additional insured endorsement was not triggered because (1) the injuries did not arise out of the construction work; and (2) the construction work, qualifying as completed operations, did not trigger the ongoing operations additional insured endorsement.

Until next time…

Isabelle
Isabelle H. LaBarbera
[email protected]

 

He Came, He Cried, He Picked – 100 Years Ago:

The Buffalo Times
Buffalo, New York
10 Apr 1926

Bogus Mourner
For Actor Weeps
Way Into Prison

NEW YORK, April 10. – One of the chief “mourners” at the funeral last Friday of Jacob P. Adler, the Jewish actor cried himself into jail and will remain there for the next five months and twenty-nine days.

Morris Kaplan, No. 6073 Chester Avenue, Philadelphia, is the name and Magistrate Rosenbluth meted out the sentence.

Police say Kaplan is a notorious pickpocket with a long string of aliases. Detectives observed him in the funeral throng at the Adler ceremonies. He was weeping lugubriously.

The detectives however, charged that while he was holding handkerchief to his face his fingers were deftly exploring the pockets of mourners.

 

Lexi’s Legislative Lowdown:

Dear Readers,

With better weather on the horizon, I am starting to plan what flowers I will be planting this year … stay tuned. I am thinking lots of Dahlias and Zinnias!

This week we discuss a Bill to enact the “New York property rehabilitation protection act.”

Thanks for reading,

Lexi
Lexi R. Horton
[email protected]

 

First Woman Sheriff in the State's History – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
10 Apr 1926

Gov. Smith Appoints
First Woman Sheriff
In History of State

Albany, April 9 (AP) – Heeding the dying request of Eli Senecal of Plattsburg, former sheriff of Clinton County, Governor Smith today appointed his widow, Clara Senecal, as successor to the office of sheriff. Mrs. Senecal is the first woman sheriff in the history of the state.

As the wife of the sheriff, Mrs. Senecal has acted as matron of the county jail and in judgment of the Governor is familiar with the duties of the office. In addition, Governor Smith said, representative citizens of Clinton County have endorsed Mrs. Senecal.

 

Victoria’s Vision on Bad Faith

Dear Readers,

Taking a break from traveling this month after a busy March and soon-to-be busy May (and summer).

This week I have a bad faith case from Vermont District Court, discussing an insured’s bad faith allegations against the insurer alleging failure to pay and improperly demanding an appraisal.

Have a good weekend,

Victoria
Victoria S. Heist
[email protected]

 

Deafness Cured – 100 Years Ago:

The Times Recorder
Zanesville, Ohio
10 Apr 1926

Deaf Hear Instantly

Amazing invention Brings
Immediate Relief to Those
Who Are Deaf

A wonderful invention which enables the hard of hearing to hear all sounds as clearly and distinctly as a child, has been perfected the Dictograph Products Corporation, Suite 2946, 14 E. Blvd., Chicago, Ill. There is no waiting, no delay, no danger but quick positive, instantaneous results - you hear instantly. So positive are the makers that everyone who is hard of hearing be amazed and delighted with this remarkable invention, the Acoustician, that they are offering to send it absolutely free for 10 days' trial. No deposit--no C.0. D. -10 obligation whatever. If you suffer, take advantage of their liberal free trial offer. Send them name and address today.

 

Shim’s Serious Injury Segment

Hi Readers,

I hope that everyone has been well since our last column and was able to enjoy the holidays earlier this month with family, friends, and neighbors. I cherish these opportunities to spend time with my family, particularly my grandmother, who I am blessed to have in my life.

This week I have shared a case decided by the Appellate Division, First Department, which considers an issue I have not previously written about, which is PTSD as a “serious injury” within the meaning of Insurance Law § 5102(d). The Appellate Division overturns with Supreme Court, Bronx County, decision with respect to defendants’ motion and affirms its decision denying plaintiff’s cross-motion.

See you in the next issue!

Stephen
Stephen M. Shimshi
[email protected]

 

Propaganda in Palestine – 100 Years Ago:

The Birmingham Post
Birmingham, West Midlands, England
10 Apr 1926

PROPAGANDA IN PALESTINE

ARCOS OFFICIAL EXCLUDED FROM
THE COUNTRY.

It is learned from an authoritative source (says Reuter) that when Mr. Glezer, head of the Soviet Arcos organization in Palestine, recently went on leave, he was not permitted to return to Palestine owing to the propaganda activities carried out by his organization, This action was decided on by the British authorities in Palestine, acting on their own discretion. The question of Mr. Glezer's position has now been raised by the Soviet authorities in London, and is forming the subject of an exchange of views with the British Government.

 

New England Almanack

Greetings,

As we bid farewell to (hopefully) the last snowstorm of the season in New England, we want to share two recent Massachusetts cases. The dismissal of two actions concerning alleged violations of M.G.L. c. 93A underscores the importance of statute of limitations defenses and the consequences of an insured’s failure to cooperate. We hope you enjoy the read!

Iryna
Iryna N. Dore
[email protected]

Barbara A. O’Donnell
[email protected]

Alexander G. Henlin
[email protected]

 

A Fool for a Client – 100 Years Ago:

The Times Union
Rochester, New York
10 Apr 1926

Proves Poor Lawyer
To Defend Own Case
At St. George’s Hall

New York, April 10,-(U, N.)- - Benjamin Tobolsky is through trying to be his own lawyer. His cross-examination of his accuser in a Brooklyn court ended when he was held in $10,000 bail for the Grand Jury on a charge of burglary.

Bessie Samter identified Tobolsky as a man who had entered her apartment.

"How could you know It was me when the room was dark?" asked Tobolsky.

"Just a minute.” interrupted Magistrate Reynolds. "Since you are so sure the room was dark, you must have been there. That's all I need to Know.”

 

North of the Border:

One quiet afternoon, I discovered that someone else was sending emails in my name — not a simple phishing attempt, but full impersonation. A hacker had gained access to my Outlook account and was messaging contacts across Canada, the U.S., Britain, and Europe with a password-protected PDF that appeared legitimate, even answering questions and taking calls under my identity. With IT assistance, we shut it down within an hour, but the experience felt like finding a stranger in my office — unsettling, violating, and exhausting. It began with a seemingly routine email from a travel insurer asking me to download an app using my Microsoft 365 credentials — one click too many. The lesson was swift and humbling: cybersecurity is no longer about protecting systems alone, but the integrity of professional identity itself; vigilance and healthy skepticism now belong squarely within the lawyer’s duty of care.

My article this week discusses the aggregation issue in a claims-made errors and omissions policy.

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]

• Where Additional Insured Settled Underlying Claim Before Providing Notice to Named Insured’s Insurer, Coverage Is Lost Based on an Irrebuttable Presumption of Prejudice
• Risk Transfer Comes in Different Shades of Grey. Claims for Contractual Indemnity Differ for Additional Insurance Claims

 

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

• Nothing from me this time, see you in two

 

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

• Allegations That Doctor Used His Own Sperm Covered Malpractice

 

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

• Nothing from me this edition. You’ll hear from me in a couple weeks though!

 

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

• Trial Court Overruled by Appellate Division -- Summary Judgment Granted to Insurer Prior to the Completion of Discovery Precluding Coverage Beyond the Application of a $10,000 “Limited Water Back-Up and Sump Discharge or Overflow Coverage” Endorsement, Based Upon “Water” and “Earth Movement” Exclusions Preceded by Anti-Concurrent Causation Language

 

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

• Third-Party Claimant Not Barred From Asserting Causes of Action Against Insurer Beyond Statutory or Common Law Bad Faith. Trial Court Erred in Granting Summary Judgment on Spoliation and Equitable Estoppel Claims

 

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

• Court Analyzes Conflict of Laws, Late Notice, General Liability Versus Auto, and Handling of Property Exclusion

 

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

• Enjoying a vacation. See you in two weeks.

 

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

• Court Finds No Obligation to Defend or Indemnify Under Ongoing Operations Additional Insured Endorsement

 

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

• Bill to Enact the “New York Property Rehabilitation Protection Act”

 

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

• Vermont Federal Court Denies Insured’s MSJ on Bad Faith Claims 

 

SHIM’S SERIOUS INJURY SEGMENT
Stephen M. Shimshi
[email protected]

• Appellate Division, First Department, Overturns, in Part, the Decision of the Supreme Court, Bronx County, Thereby Denying Defendant’s Motion for Summary Judgment on the Issue of “Serious Injury” Within the Meaning of Insurance Law § 5102(d) and Affirming the Denial of Plaintiff’s Cross-Motion

 

NEW ENGLAND ALMANACK
Barbara A. O’Donnell
Alex G. Henlin
Iryna N. Dore

• The Insurer Did Not Engage in Bad Faith When It Disclaimed Coverage Based Upon Insured’s Failure to Cooperate – Judgment Affirmed
• Dismissal of Breach of Contract for Failure to Initiate a Lawsuit Within Two Years of the Loss and Related Dismissal of Bad Faith Claim Based Upon Good Faith Coverage Dispute

 

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

• Separate Actions, Possible Shared Circumstances: Ontario’s Guidance on Aggregating Accountant Malpractice Claims Under “Common Circumstance” Language
• Round II

That’s all she wrote.  The next issue may be coming to you from Costa Rica. 

 

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

Kohane’s Coverage Corner

Peiper on Property and Potpourri
Lee’s Connecticut Chronicles

Ryan’s Federal Reporter

Storm’s SIU

Fleming’s Finest

Gestwick’s Garden State Gazette

O’Shea Rides the Circuits

LaBarbera’s Lower Court Library

Lexi’s Legislative Lowdown

Victoria’s Vision on Bad Faith

Shim’s Serious Injury Segment

North of the Border

 

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

04/02/26         350 East Houston Street, LLC v. Travelers Indemnity Company
Appellate Division, First Department
Where Additional Insured Settled Underlying Claim Before Providing Notice to Named Insured’s Insurer, Coverage Is Lost Based on an Irrebuttable Presumption of Prejudice

Plaintiff 350 East Houston Street, LLC (“owner”)  the owner of premises located at 11 Avenue C in Manhattan, contracted with Noble to provide construction management services for a project to construct a building on the premises. Noble entered into a trade contract with Copps to perform support of excavation and foundation piles work on the project; Copps, in turn, subcontracted with Peterson to install micropyles and a dewatering system.

Temple issued Copps an excess liability policy containing the usual exclusions for late notice of occurrences and claims, and a prohibition against voluntary payments or assumption of obligations without the insurer's consent. In March 2017, the owner of a building adjacent “adjacent owner”) to the project gave notice that the excavation work had damaged the foundation of that adjacent building, causing the building to shift.

The owner was entitled to contractual indemnification from Copps on the condition that 350 East Houston, the owner of the premises, was found to be free from negligence. The intent to provide contractual indemnification under section 12.2(b) of the trade contract between Noble and Copps is clear and unambiguous, requiring indemnification for "all claims, losses, damages . . . demands, costs and expenses" related to damage to real property "in any way or measure . . . caused by, arise out of or in connection with the Work"  The indemnification clause also does not condition the owner’s right to indemnification on a finding of fault by Copps (see Rivera v Columbia Hicks Assoc. LLC, 203 AD3d 524, 525 [1st Dept 2022]).

Speculation by Copps's expert on other causes did not raise an issue of fact.

Nevertheless, contrary to plaintiffs' arguments, the lower court was right to declare that plaintiffs were entitled to unconditional indemnification. The record presents triable issues of fact as to whether 350 East Houston took part in a decision to reject Copps and Peterson's recommended change in the means and methods to be used for the micropiling work after Copps and Peterson found unexpected subsurface conditions.

As to insurance, Temple was successful in dismissing the owner’s claim for insurance coverage based on late notice. Temple demonstrated that it did not receive notice of the neighboring property's claim against 350 East Houston as soon as practicable, as required by the policy, but instead received notice when served with process in this action almost 11 months later and well after plaintiffs resolved the neighbor's claim and performed repairs.

The settlement of the claim with the neighbor before serving notice gave rise to "an irrebuttable presumption of prejudice" (Insurance Law § 3420[c][2][B]). In addition, the settlement deprived Temple of the opportunity to investigate the incident or defend against the neighbor on 350 East Houston's behalf.

 

03/31/26         Daniello v. J.T. Magen & Company Inc.
Appellate Division, First Department
Risk Transfer Comes in Different Shades of Grey. Claims for Contractual Indemnity Differ for Additional Insurance Claims

USIS, Inc.'s argument that L&K is pursuing an insurance coverage disputed claim masquerading as an indemnity claim is unavailing. It is well settled that a party may pursue contractual indemnification in addition to seeking additional insured coverage from the indemnitor's insurer. Here, L&K's contract with USIS, Inc. contained a valid indemnity clause, and that clause was triggered when plaintiff claimed injuries incurred in the course of his work for a subcontractor of USIS, Inc. Accordingly, L&K now merely seeks to hold USIS, Inc., responsible at law for the benefit of its contractual bargain.

 

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

04/08/26         Ash Development, LLC v. Fidelity Nat. Title Ins. Co.
Appellate Division, Second Department
Where Claims Fall Squarely Within an Applicable Exclusion, Duty to Defend Also Does Not Trigger

This interesting decision comes out of an adverse possession argument, and plaintiff’s request for coverage under its title insurance policy with Fidelity.  Fidelity refused defense, and indemnity, based on an exclusion that removed coverage for claims arising out of people in possession of disputed property.  Ash Development commenced this action challenging Fidelity’s claims, seeking a declaration that it was entitled to indemnity, and seeking reimbursement for accrued legal fees and associated litigation costs.

The Court recognized that a title insurance policy was, nevertheless, a policy of insurance that needed to be read like any other contract.  This meant giving full impact to the duty to defend clause which called for coverage to be triggered regardless of whether the claims asserted against the insured where “groundless, false, or fraudulent.”   However, although the duty to defend is exceedingly broad, the Second Department also rightly recognized that no duty shall lie where, as here, an exclusion removes any possibility of indemnity ever being awarded.  The claim was cast squarely within an exclusion that precluded coverage for litigation stemming from someone’s disputed possession of property. 

As a final point of clarification, the Court recognized the dismissal of Ash Development’s claims for past legal fees.  It advised that the portion of the file requesting declaratory relief should not have been dismissed.  Rather, the matter needed to be remanded back to the trial court for entry of a declarative order which was to confirm Fidelity’s argument that it had no duty to defend, nor indemnify, Ash Development relative to the underlying matter.

 

03/27/26        Arruda v. New York Central Mut. Fire Ins. Co.
Appellate Division, Fourth Department.
Trial Court Overruled by Appellate Division -- Summary Judgment Granted to Insurer Prior to the Completion of Discovery Precluding Coverage Beyond the Application of a $10,000 “Limited Water Back-Up and Sump Discharge or Overflow Coverage” Endorsement, Based Upon “Water” and “Earth Movement” Exclusions Preceded by Anti-Concurrent Causation Language

Kudos to our own Scott Storm and Isabelle LaBarbera who orchestrated this big win!  Be sure to check out Scott’s full write in his below column. 

 

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

04/07/26         Integris Ins. Co. v. Tohan
Connecticut Appellate Court
Allegations That Doctor Used His Own Sperm Covered Malpractice

This is a case we’ve been following for you for a few years now – and it still may not be over. This insurance coverage case is related to a January 2025 Connecticut Supreme Court decision which reinstated the claims by two underlying plaintiffs for wrongful life.

So, let’s start at the beginning, again. Dr. Narendra Tohan is a reproductive endocrinologist who assisted two couples struggling with infertility. Dr. Tohan utilized his own sperm rather than the sperm of the men the offspring believed to be their fathers to impregnate their mothers, allegedly causing the plaintiffs physical and emotional harm. The offspring sued Dr. Tohan for damages. That lawsuit was dismissed on the grounds that the causes of action were for noncognizable wrongful life claims. In January 2025, the Supreme Court reinstated the claims, finding that they sounded in ordinary negligence because they arose from Dr. Tohan’s alleged negligence in using his own sperm to impregnate the mothers during IVF.

The underlying offspring plaintiffs, who are both in their thirties, were conceived through IVF. Dr. Tohan is the reproductive endocrinologist who performed the IVF procedures for the respective parents. Unbeknownst to anyone, Dr. Tohan used his own sperm in the IVF procedures. The parents never agreed to the use of donor sperm, and no genetic testing was performed to ensure that the defendant was a suitable donor. In 2019, the offspring learned of the deception through genetic testing. As a result, they learned that the men they believed to be their fathers were in fact not their biological fathers. In 2021, the plaintiffs brought this action.

Soon after, Integris, Dr. Tohan’s malpractice carrier, brought the above-coverage action. The trial court granted Integris summary judgment, finding that the claims against the insured were excluded because all the alleged damages fell under the intentional conduct exclusion. The court, as a matter of dicta, also found that all the claims would be precluded by the sexual misconduct exclusion. The Appellate Court flipped the outcome, finding that the claims for negligence trigger coverage and are not, on their face, fully within the exclusions.

The controlling issue is whether claims that a doctor substituted his own sperm – negligently! – for that of the donor parent is inherently a covered professional service that is not conduct that was intentional, regardless of the pleadings. The appellate court, in finding a duty to defend, honored the allegations in the pleading. The court concluded, “On appeal, the plaintiff claims that none of the injuries alleged by the civil action plaintiffs arises out of "professional services," as that term is used in the policy. We disagree.” The court added:

For purposes of the present analysis, our focus is on the first count of that complaint, which alleges negligence on the part of the defendant.10 In that count, the civil action plaintiffs allege, inter alia, that Kayla's parents "had been treating with [the defendant] in his professional capacity, in their efforts to become pregnant"; that "[p]rior to the pregnancy, they were not advised that the sperm would be anything but [Gary] Suprynowicz's sperm"; that the defendant "negligently . . . mixed his sperm with [Gary] Suprynowicz's sperm to impregnate" her mother; that the defendant negligently "failed to offer [Kayla's [*18]  parents] the choice of sperm donor"; and that, "after she became pregnant, [Kayla's] mother was advised that the pregnancy was the result of 'mixed sperm.' "

The fact that the defendant may have negligently used his own sperm while providing those professional services, as the civil action plaintiffs allege in their complaint, does not alter that conclusion.

The appellate court generously looked at the forest rather than the trees. Focusing not on the allegation that the insured used his own sperm to impregnate his patients, the court stepped back to see that the nature of the treatment itself was the provision of IVF services. Citing to a 4^th Circuit decision, the court found compelling the argumenta that: “[The defendant's] fraudulent artificial insemination of his patients with his own sperm involved the provision of professional, medical services requiring special skill and knowledge.” Therefore, finding that the allegations included claims that the insured provided professional medical services to the birth mothers, the court determined that these claims implicated the trigger of coverage.

The appellate court then reversed the trial court, holding that these claims were not inherently intentional. Integris, the court concluded, did not meet its burden on summary judgment to show that the claims “willful, wanton, intentional, dishonest, fraudulent, criminal, illegal or malicious act or omission…”

The court held that the negligence causes of action were not wholly, as a matter of law, within the excluded conduct, differentiating them from the fraud cause of action. “The civil action plaintiffs then set forth four distinct allegations of negligence on the part of the defendant, averring that the defendant negligently (1) "mixed his sperm with [Gary] Suprynowicz's sperm to impregnate" Kayla's mother; (2) "replaced the sperm of Gary Suprynowicz with his own"; (3) "failed to offer [Kayla's parents] the choice of sperm donor"; and (4) "utilized sperm that contained a genetic trait including a genetic disease, leading to Kayla's contracting a cerebral condition and mass cell activation disorder." Count one concluded by alleging that Kayla sustained injuries "[a]s a result of [the defendant's] negligence . . . ."

The court appeared to be persuaded by the insured’s counterclaim and other extrinsic evidence that using mixed sperm was a common medical practice at the time of treatment. “Viewed in in the light most favorable to the defendant, we cannot conclude that his alleged conduct decades ago was "so inherently harmful" that the injuries sustained by Kayla were "unarguably foreseeable" at the time he provided those services to her parents.”

It is difficult to see these allegations – the use of the doctor’s own sperm to impregnate his patients – as anything other than a knowing intentional act devoid of any of the trappings of negligence. We’ll see if the Supreme Court takes the case and if they also agree that a defense is owed.

Editor’s Note: A copy of this decision is available upon request.

 

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

Nothing from me this edition. You’ll hear from me in a couple weeks though!

 

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

 

03/27/26        Arruda v. New York Central Mut. Fire Ins. Co.
Appellate Division, Fourth Department.
Trial Court Overruled by Appellate Division -- Summary Judgment Granted to Insurer Prior to the Completion of Discovery Precluding Coverage Beyond the Application of a $10,000 “Limited Water Back-Up and Sump Discharge or Overflow Coverage” Endorsement, Based Upon “Water” and “Earth Movement” Exclusions Preceded by Anti-Concurrent Causation Language

Isabelle LaBarbera and I had the pleasure of representing N.Y. Central in this case

This is a coverage dispute with respect to a water loss to the plaintiffs’ residence. N.Y. Central issued a Homeowners Policy to the plaintiffs, who submitted a claim alleging that water entered the basement through a backup of the floor drain. N.Y. Central liberally interpreted the policy to provide coverage under a “Limited Water Back-Up and Sump Discharge or Overflow Coverage” paying $10,000 and issuing a partial coverage denial for the balance of the claim.

The plaintiffs then retained an attorney and engineer. N.Y. Central agreed to revisit its partial coverage denial. The engineer submitted a letter stating the loss involves “raw sewerage backup,” and that the “downstream pipe system during a rainfall event flow backward, upstream, under pressure that is built up” which has caused “permanent backup” that “only occurs during rainfall events.”  The engineer further alleged that the “water logged exterior downstream pipe caus[ed] water to squirt out from the non-pressure joints (like a pressure washer) eroding the joints integrity. This erodes the soil/backfill around the sewer pipe causing the pipe to settle,” resulting in the pipe sinking “below the proper slope of the sewer line which causes permanent backup.”  

After receiving the report, N.Y. Central reasserted its partial denial taking the position that coverage is clearly precluded based upon the plaintiffs’ expert’s report, which places the cause of the damage squarely within the “Earth Movement” and “Water” exclusions, including the anti-concurrent causation language of the lead-in clause preceding them.

The plaintiffs then commenced litigation. Prior to any discovery, N.Y. Central moved for summary judgment asserting that the engineer’s report compels the conclusion that plaintiffs’ loss falls squarely within the “Limited Water Back-Up and Sump Discharge or Overflow Coverage,” as the loss was caused by water, or waterborne material, which backs up through sewers or drains. Additionally, the report confirms the applicability of the “Earth Movement” and “Water” exclusions.

The policy does not provide coverage “for loss caused directly or indirectly” by “Earth Movement,” including “earth sinking, rising or shifting” “regardless of any other cause or event contributing concurrently or in any sequence to the loss.”  The “Earth Movement” exclusion applies regardless of whether the sinking, rising, or shifting “is caused by an act of nature or is otherwise caused.”  The Policy also does not provide coverage “for loss caused directly or indirectly” by “Water” which “Backs up through sewers or drains” “regardless of any other cause or event contributing concurrently or in any sequence to the loss.”

In filing its motion prior to discovery, N.Y. Central took the position that the plaintiffs have not demonstrated there is any specific information in the exclusive possession of N.Y. Central which they need to oppose the motion. N.Y. Central based its motion on the report of the plaintiffs’ expert. N.Y. Central pointed out that there is nothing to be gained from further discovery, other than needlessly driving up the expenses for both parties.

N.Y. Central also argued that the complaint does not sufficiently plead a violation of New York’s General Business Law § 349 as the plaintiffs allege nothing more than a private contractual dispute involving their personal dealings with N.Y. Central in respect to their individual claim, and they fail to identify any representation or omission likely to mislead a consumer acting reasonably under the circumstances.

The cause of action alleging a breach of the implied covenant of good faith and fair dealing is duplicative of the cause of action for breach of contract; and it fails to state claim for consequential damages, not particularizing any actual losses supporting special damages and not pleading any provision in the policy substantiating any special damages would be available in the event of a breach. 

The plaintiffs attempted to confuse the Court by arguing that a question of fact exists whether the loss was caused by events off the residence premises and by relying on an exception to excluded perils, which N.Y. Central did not rely on. The exception states that “unless the loss is otherwise excluded, we cover loss to property covered under Coverage A, B or C resulting from an accidental discharge or overflow of water or steam from within a: (1) Storm drain, or water, steam or sewer pipe, off the ‘residence premises’; or (2) Plumbing, heating, air conditioning or automatic fire protective sprinkler system or household appliance on the ‘residence premises’...”. 

N.Y. Central replied that the exception expressly applies only to certain enumerated excluded perils none of which N.Y. Central relied upon in denying coverage. Furthermore, the exception further stated that certain subparagraphs of the “Water” exclusion do not apply to the exception. However, the exception did not include the subparagraph of the “Water” exclusion which precludes coverage for water which backs up through sewers or drains and, therefore, it continues to apply.

N.Y. Central pointed out that it is the plaintiffs’ burden to prove the application of the “exception” to the exclusion upon which they rely, not N.Y. Central’s burden to disprove it and they failed to do so.

The plaintiffs also argued that in relying on the plaintiffs’ expert report to deny coverage, rather than retaining her own engineer, the adjuster was practicing engineering without a license. Among other things, we pointed out that if this were the case, then every property adjuster throughout the United States who makes a coverage decision daily without first securing the opinion of an engineer is practicing engineering without a license. The plaintiffs’ argument was so absurd that the court did not even address it.

Without specifically addressing the issues, N.Y. Central’s motion was denied by the Supreme Court without prejudice to refile it after discovery had been completed. Instead, N.Y. Central appealed. 

On appeal the majority of the Appellate Division Fourth Department, in a 3-2 decision, agreed fully with N.Y. Central, overruling the Supreme Court. The dissent said it would have affirmed the trial court’s decision to let discovery run believing that the plaintiffs established that evidence regarding both the specific cause of the sewage backup and the specific location of an alleged blockage could be obtained through further discovery. However, the dissent failed recognize, like the majority did, additional discovery would be superfluous due to the application of the anti-concurrent causation language preceding the “Water” and “Earth Movement” exclusions:

We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.

The loss is clearly excluded after application of the “Limited Water Back-Up and Sump Discharge or Overflow Coverage” of $10,000.

 

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

03/31/26         D’Hooge v. Cincinnati Ins. Co.
Montana Supreme Court
Third-Party Claimant Not Barred From Asserting Causes of Action Against Insurer Beyond Statutory or Common Law Bad Faith. Trial Court Erred in Granting Summary Judgment on Spoliation and Equitable Estoppel Claims

While walking across an automobile repair shop parking lot (Tire Rama), D’Hooge slipped and broke her leg. She filed an insurance claim with Tire Rama’s insurance company, Cincinnati. A Cincinnati claims specialist informed D’Hooge that she did not need to provide additional information to document Tire Rama’s liability beyond what was already provided, and D’Hooge received an email advising that Cincinnati was accepting liability for certain medical expenses and lost wages as discussed. Cincinnati began paying D’Hooge, and D’Hooge did not attempt to gather evidence or retain an attorney as she had planned to do if Cincinnati contested liability.

D’Hooge and Cincinnati attempted to negotiate a settlement but reached an impasse after two and a half years. After the parties could not settle, D’Hooge retained counsel and filed a complaint against Tire Rama, later adding Cincinnati as a defendant. D’Hooge asserted causes of action for negligence, promissory estoppel, equitable estoppel, and spoliation. D’Hooge alleged that Tire Rama negligently maintained its parking lot and that Cincinnati contractually obligated itself to accept liability for her injuries through the claim specialist’s actions. Further, D’Hooge alleged that neither defendant could contest liability due to Cincinnati’s communications with D’Hooge regarding liability. Tire Rama disputed liability. Cincinnati stated that it reserved its right to reevaluate Tire Rama’s liability and deny liability for future payments and that it had paid expenses that were reasonable, necessary, and causally related to D’Hooge’s injuries. With the passage of time, D’Hooge’s counsel struggled to gather evidence of Tire Rama’s negligence because of fading memories and irretrievable security camera footage. From the bench, the district court granted D’Hooge’s motion for partial summary judgment on breach of contract and promissory estoppel. The district court concluded that Cincinnati was estopped from denying liability based on Cincinnati’s agreement to pay the damages D’Hooge sustained from the slip and fall by accepting liability for her insurance claim. Before the district court could issue a written order memorializing its ruling, Cincinnati moved for summary judgment on all D’Hooge’s causes of action. Before the orders on the motions, Tire Rama was dismissed from the action after settling with D’Hooge. The district court later granted Cincinnati’s motion for summary judgment and issued an order reversing its oral ruling and denying D’Hooge’s motion for partial summary judgment, reasoning that Montana law barred D’Hooge as a third-party claimant from asserting breach of contract, promissory estoppel, equitable estoppel, and spoliation claims against Cincinnati because third-party claimants can only sue insurers for statutory or common law bad faith based on an insurer allegedly mishandling a claim. Further, the district court concluded that D’Hooge could not prove the elements of her claims even if they were not barred by Montana law.

On appeal, the Montana Supreme Court disagreed with the district court’s conclusion that D’Hooge could not assert causes of action against Cincinnati other than statutory or common law bad faith based on how Cincinnati handled her insurance claim under Montana law. Based on the applicable statute’s plain language, it did not preclude a third-party claimant from asserting causes of action based on breach of contract, equity, or tort based on how an insurer handled an insurance claim. As for whether D’Hooge would be able to prove the elements of her claims, D’Hooge did not assert that she could have presented more evidence to create a dispute of material fact if given the opportunity, and the Montana Supreme Court did not find that the email from the Cincinnati claims specialist created an enforceable contract regarding payment of the claim or an unambiguous promise to pay as it only addressed medical bills and lost wages but nothing beyond that obligation. However, the Montana Supreme Court concluded that the district court’s holding that Cincinnati did not have a legal or contractual duty to preserve evidence to avoid hampering a third-party claimant’s cause of action against its insured was incorrect and that it was foreseeable that instructing D’Hooge to stop gathering evidence of liability would induce her to stop and impact her ability to prove a negligence claim. While the record did not definitely establish that evidence was destroyed, it created a factual issue that precluded summary judgment on the spoliation claim. The Montana Supreme Court also found that the lower court erred in granting summary judgment on equitable estoppel because it did not analyze whether the undisputed material facts established that D’Hooge could not prove the elements of her cause of action.

Accordingly, the court affirmed in part, reversed in part, and remanded for further proceedings.

 

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

03/30/26         Northfield Ins. Co. v. Prime Ins. Co.
United States District Court, District of New Jersey
Court Analyzes Conflict of Laws, Late Notice, General Liability Versus Auto, and Handling of Property Exclusion

BCM, a moving company, was moving a new resident into the twenty-second floor of a condo building called the Park Tower Stanford. Park Tower required the use of Masonite floors when a new resident was in the process of moving in, to protect the floors that lay beneath. Park Tower supplied the Masonite floors to BCM and directed BCM to lay the flooring down before any moving could take place. BCM complied with this directive. Later, as the BCM employees were carrying items in to the new resident’s home, a fellow resident of the same floor was walking by and tripped on a gap between two pieces of Masonite flooring. The resident sued BCM and the building owner for her injuries.

BCM had two insurance policies: (1) a commercial automobile policy, issued by Prime; and (2) a commercial general liability policy, issued by Northfield. BCM notified Northfield, the general liability carrier, on September 9, 2021. However, BCM did not notify Prime, its commercial auto insurer, until February 23, 2023. In the time between the two notices, Northfield had been defending BCM in the underlying action under a reservation of rights. When Northfield caught wind that BCM had a commercial auto insurer, and that its auto exclusion likely applied, Northfield tendered the claim to Prime. However, Prime denied coverage under that policy’s Handling of Property exclusion and late notice condition and offered no courtesy defense. Northfield ended up contribution the lion’s share of the eventual settlement of the underlying action (Prime contributed nothing). This action followed.

 

Choice of Law

In its decision on the eventual cross-motions for summary judgment, the Court started out by deciding whether Connecticut or New Jersey law applied. The first step in a choice of law analysis is determining whether an actual conflict of law exists (i.e., whether the two states’ substantive laws differ). Here, the Court noted that New Jersey and Connecticut law differ on the standard by which an insurer may disclaim coverage based on late notice of the claim. The Court noted that New Jersey law requires an insurer to show: (1) a breach of the insurance contract’s notice provision; and (2) a likelihood of appreciable prejudice resulting from that breach, in order to be entitled to so disclaim. On the other hand, while Connecticut law also requires a showing of material prejudice, it does not require an insurer to show that it would have had a likelihood of success in defending against the merits of the underlying case, as New Jersey law does. Thus, the Court found a conflict of substantive law.

When there is a conflict of state substantive law, the next step in a choice of law analysis is to determine which state’s substantive law bears the most significant relationship to the loss. The factors used in this analysis include: (1) the needs of the interstate and international systems; (2) the relevant policies of the forum; (3) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue; (4) the protection of justified expectations; (5) the basic policies underlying the particular field of law; (6) certainty, predictability, and uniformity of results; and (7) ease in the determination and application of the law to be applied. If the issue is the interpretation of an insurance contract, like an insurance policy, additional factors are considered: (1) the place of contracting; (2) the place of contract negotiation; (3) the place of performance; (4) the location of the subject matter of the contract; and (5) the domicile, residence, nationality, place of incorporation, and place of business of the parties.

Here, because both policies were issued to New Jersey insureds, the Court opted to apply New Jersey law to the substantive coverage questions.

 

General Liability Versus Auto Claim

Next, the Court analyzed whether the facts of this loss triggered coverage under Prime’s commercial auto policy, versus Northfield’s general liability policy. The Court noted that the Prime policy’s insuring agreement provided coverage for bodily injury resulting from the ownership, maintenance, or use of a covered auto. Under New Jersey law, loading and unloading activities qualify as “use” of an auto. Moreover, New Jersey courts apply a “complete operation” rule to loading and unloading activities, which maintains that coverage for loading and unloading covers the entire process involved in the movement of goods, from the moment they are given into the named insured’s possession, until the goods are turned over at the place of destination to the party to whom delivery is to be made.

An important exception to this rule exists, for when pre-existing unsafe conditions were the cause of the resulting injury. If that is the case, then some courts hold that the resulting injury did not result from the loading or unloading of the vehicle, but rather, the pre-existing conditions, as an intervening force. Here, however, the Court ruled that the gap in the Masonite flooring was not a pre-existing defective condition, since the sole reason the Masonite flooring was there was to protect the permanent flooring while the moving activities were ongoing. Thus, the Court held that the presence of the Masonite flooring was related to the use of the vehicle, and that the loss was an auto loss, rather than a general liability loss.

 

Handling of Property Exclusion

Other than its position that the loss did not constitute an auto loss, Prime also took the position that its Handling of Property exclusion barred coverage for the loss. That exclusion bars coverage for bodily injury or property damage resulting from the handling of property either: (a) before the property is moved from the place where it is accepted by the insured for movement onto or into the covered auto; or (b) after it is finally delivered to its intended destination.

Here, the Court found a question of fact as to whether all of the property to be transported was delivered to its “final destination” at the time of the claimant’s fall. The claimant testified in the underlying action that, at the time of her fall, there were still boxes in the hallways, and the BCM employees were still present on that floor.

 

Late Notice Issue

Lastly, the Court considered whether Prime, having not been notified for approximately 18 months after the accident, had the right to deny coverage for late notice. As above, New Jersey law requires a showing that the late notice of the claim breached the policy’s late notice condition and created a likelihood of appreciable prejudice. To show appreciable prejudice, an insurer must show an irretrievable loss of substantial rights to defend the underlying case and/or to complete its coverage investigation.

In the end, the Court found issues of material fact related to whether Prime’s substantial rights were irretrievably lost because of the late notice. Here, because Prime was notified just before the action was settled, it could not be determined whether Prime lost substantial rights to defend the case.

 

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

Enjoying a vacation. See you in two weeks.

 

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

03/27/26         Consolidated Edison Co. of N.Y., Inc. v. Harleysville Ins. Co.
Supreme Court, New York County
Court Finds No Obligation to Defend or Indemnify Under Ongoing Operations Additional Insured Endorsement

Consolidated Edison Company of New York (“Con Ed.”) filed a declaratory judgment action Harleysville Insurance Company (“Harleysville”) seeking a declaration that Harleysville owes a duty to defend and indemnify Con Ed. in an underlying tort action. The underlying action concerns alleged slip/fall injuries sustained in Brooklyn, after a woman fell on a crosswalk.

Con Ed. argues that there was a contract with non-party Tri-Messine Construction Co. (“Tri”), requiring additional insured status under Tri’s insurance policies. According to Con Ed., Tri performed paving work at specific locations around 18^th and 65^th Street in Brooklyn.

Con Ed. and Harleysville both moved for summary judgment. The records before the court confirmed that Tri’s work at the site was completed nearly two years prior to the accident, qualifying it as a completed operation.

In rendering the decision, the court first looked to the underlying action pleadings and found that Tri is not mentioned. The court found that this suggests that the injuries did not arise out of Tri’s work at the property.

In addition, Harleysville repeatedly maintained that Tri’s work was not associated with the crosswalk, and Con. Ed. failed to raise a triable issue of fact that Tri worked on the crosswalk.

Even further, looking toward the language of the Harleysville policy, the court found that there is no additional insured coverage for completed operations. The Harleysville policy only contained ongoing operations and additional insured coverage. Under the pertinent endorsement, “a person’s or organization’s status as an insured under this endorsement ends when your operations for that insured are complete.”

Since there was no dispute that Tri’s work ended years prior to the accident, the court found that the additional insured endorsement was not triggered.

Based on the above, the court denied Con Ed.’s motion for summary judgment, granted Harleysville’s motion, and issued a declaration that Harleysville owes no duty to defend and/or indemnify Con. Ed. in the underlying slip/fall action.

 

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

04/10/26        New York Senate Bill S9386
New York State Senate
Bill to Enact the “New York Property Rehabilitation Protection Act”

Senate Bill S9368 / Assembly Bill A10176 would enact the “New York property rehabilitation protection act” to prohibit the use of an assignment of benefits contract by unscrupulous rehabilitation contractors.

The Bill seeks to provide protection to property owners after they have suffered a loss because of fire, flood, storm, or other damage that requires the property to undergo rehabilitation.

The justification provides that unscrupulous rehabilitation contractors have been using Assignment of Benefit Agreements to defraud residential property owners and their insurers. It further provides that the contractors use the agreements to sign up homeowners for inadequate, expensive, insufficient, and unreliable rehabilitation services, without consumer protections, express contractual provisions outlining the construction work will be performed and at what costs and including a misconception that all costs will be paid by the homeowner’s insurance. These agreements can lead to poor rehabilitation and homeowners becoming responsible for the costs.

 

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

04/08/26         Stimson v. State Farm Fire & Cas. Co.
United States District Court, Vermont District Court
Vermont Federal Court Denies Insured’s MSJ on Bad Faith Claims 

In October 2022, Plaintiff Stimson's home was damaged by fire after an electrical surge. Stimson submitted a claim with her homeowners’ insurer State Farm for the damage to her home. The State Farm policy includes a provision whereby the parties can agree to an appraisal so long as both parties agree.

In May 2023, State Farm sent Stimson a letter demanding an appraisal to ascertain the total damages to her home, and thus the payment under the State Farm Policy. In the same month, Stimson accepted the demand for appraisal.

Stimson and State Farm retained appraisers to conduct the assessment. State Farm did not allow permit an extension of the "suit against us" provision in the State Farm Policy, and thus Stimson filed suit against State Farm in October 2023, before the appraisal award was determined by the two chosen appraisers. The allegations included causes of action for breach of contract and bad faith. Both parties crossed for summary judgment. The parties dispute the amount and allocation of the insurance payments.

The Court denied both parties' motion for summary judgment. First, the Court denied State Farm's motion for summary judgment to dismiss the allegation of breach of contract under Coverage A because in its motion, State Farm states it has paid the "approximate" total under the policy, but the total dollar amount is in dispute. Second, the Court denied Stimson's motion for summary judgment to dismiss the allegation of breach of contract under Coverage B finding genuine issues of material facts pertaining to the valuation of the property, categories of property included in the appraisals, and how much State Farm has paid under the Policy.

Third, the Court denied Stimson's motion for summary judgment on the bad faith allegation. The Court first found to the extent that an allegation for good faith and fair dealing is duplicative of a breach of contract claim, the allegation cannot be sustained. In Vermont, to establish bad faith against an insurer, the insured "must show that (1) the insurer had no reasonable basis to deny the insured the benefits of the policy, and (2) the company knew or recklessly disregarded the fact that it had no reasonable basis for denying the insured's claim."

The Court rejected Stimson's bad faith claim, finding Stimson's argument--that State Farm improperly demanded an appraisal instead of requesting it subject to Stimson's agreement--was insufficient to establish bad faith. Further, the Court found a genuine dispute of material fact as to Stimson's argument that State Farm acted in bad faith in its refusal to pay because "Stimson has not developed the factual record enough at this time for the Court to be able to conclude that her bad faith claim extends beyond a claim that was fairly debatable."

 

SHIM’S SERIOUS INJURY SEGMENT
Stephen M. Shimshi
[email protected]

03/26/26         Ravi S.A. v. Gyebi
Appellate Division, First Department
Appellate Division, First Department, Overturns, in Part, the Decision of the Supreme Court, Bronx County, Thereby Denying Defendant’s Motion for Summary Judgment on the Issue of “Serious Injury” Within the Meaning of Insurance Law § 5102(d) and Affirming the Denial of Plaintiff’s Cross-Motion

This matter arises from post-traumatic stress disorder ("PTSD") allegedly suffered by Infant Plaintiff J.A. ("plaintiff" or "J.A.") in connection with a motor vehicle accident. Plaintiff commenced the instant action alleging PTSD. Plaintiff treated with a therapist and a psychologist for a few months each. Thereafter, plaintiff’s mother, who is not a mental health professional, withdrew plaintiff from therapy and began to treat her at home. Plaintiff's expert psychologists tested plaintiff for PTSD, using the Trauma Symptom Checklist for Children and Child PTSD Symptom Scale, but found only one (1) or two (2) mild clinically significant findings on each instrument. Defendants did use mental health experts. Defendants moved to dismiss the complaint on grounds that the plaintiff’s PTSD did not constitute a serious injury within the meaning of Insurance Law § 5102(d) under the permanent consequential limitation of use and significant limitation of use categories. Plaintiff filed a cross-motion for partial summary judgment on the issue of serious injury. On May 28, 2025, the Bronx County Supreme Court entered an Order dismissing the complaint. Plaintiff appealed to the Appellate Division, First Department.

 

Defendants’ summary judgment motion:

Defendants only satisfied their burden with respect to their claim that the plaintiff did not suffer a permanent consequential limitation of use. According to the defendants’ papers, after the subject accident, plaintiff treated her PTSD with a therapist and an alleged psychologist for a few months. Thereafter, the plaintiff's mother, who is not a mental health professional, withdrew the plaintiff from therapy and began treating the plaintiff herself. As such, the Court found that the defendants “identified an effective cessation of the infant plaintiff's treatment” (see Pommells v Perez, 4 NY3d 566, 572 [2005]; Ramkumar v Grand Style Transp. Enters. Inc., 22 NY3d 905, 906 [2013]).

The Court determined that plaintiff failed to present an issue of fact. Plaintiff’s experts failed to reconcile plaintiff’s mother's decision to terminate treatment notwithstanding the therapist’s recommendation that plaintiff would benefit from additional counseling. See, Fernandez v Sukhdeep, 245 AD3d 630, 632 [1st Dept 2026]. Plaintiff’s experts also failed to opine as to whether any treatment that plaintiff allegedly received from her mother, in fact, addressed plaintiff’s ongoing symptoms. As such, Court found that the claim for permanent consequential limitation of use was properly dismissed (see e.g. Solano v American United Transp. Inc., 243 AD3d 497, 497-498 [1st Dept 2025]).

As stated above, the defendants did not have an expert examine plaintiff. Therefore, the Court determined that they failed to establish, prima facie, that plaintiff's PTSD is not a significant limitation within the meaning of Insurance Law § 5102(d).

The evidence submitted by defendants in support of their motion included some of the plaintiff's treatment records from her initial therapist, her mother's deposition testimony. The Court noted that the defendants “adopted the mother and daughter's deposition testimony as accurate by submitting it in support of their motion” (see e.g. Kassai v Trump Mgt. Inc., 242 AD3d 602, 602 [1st Dept 2025]). Nevertheless, the defendants’ interpretation of the foregoing as not supporting a claim of serious injury was not supported by any expert opinion. Such evidence submitted by defendants was insufficient. The Court held that the defendants should not have been granted summary judgment dismissing the plaintiff's claim of significant limitation of use, without regard to the sufficiency of the opposing papers (see Pullman v Silverman, 28 NY3d 1060, 1062 [2016]).

 

Plaintiff’s cross-motion:

Plaintiff’s cross-motion was properly denied with respect to whether her PTSD constituted a significant limitation of use. “Causally related emotional injuries can constitute serious injuries under Insurance Law § 5102(d) if they are serious, verifiable, and established by objective medical evidence (see Bissonette v Compo, 307 AD2d 673, 674 [3d Dept 2003]). ‘Serious,’ in this context, means severe, pervasive, or debilitating, as opposed to transient, temporary, ‘minor, mild[,] or slight’ (Licari v Elliott, 57 NY2d 230, 236 [1982]).”

Based on the evidence submitted, the Court stated that the plaintiff failed to establish that her PTSD was “serious” in this manner. See, Fillette v Lundberg, 150 AD3d 1574, 1578-1579 [3d Dept 2017]; Chapman v Capoccia, 283 AD2d 798, 800 [3d Dept 2001]). Neither of plaintiff’s experts presented medical findings of causally related limitations. Both of the plaintiff's expert psychologists tested plaintiff using the Trauma Symptom Checklist for Children and the Child PTSD Symptom but only found “one or two mild clinically significant findings on each instrument, which also was insufficient to establish a serious injury as a matter of law” (cf. e.g. Ampofo v Key, 168 AD3d 601, 602 [1st Dept 2019]; Ogando v National Frgt., Inc., 166 AD3d 569, 570 [1st Dept 2018]). Based on the foregoing, the plaintiff was properly denied partial summary judgment on the issue of serious injury.

 

NEW ENGLAND ALMANACK
Barbara A. O’Donnell
[email protected]

Alexander G. Henlin
[email protected]

Iryna N. Dore
[email protected]

03/12/26        Nwozuzu v. Safety Insurance Company
Massachusetts Appeals Court
The Insurer Did Not Engage in Bad Faith When It Disclaimed Coverage Based Upon Insured’s Failure to Cooperate – Judgment Affirmed

The insured sought coverage for damage to the front passenger side of his vehicle that allegedly occurred when the vehicle was parked. The auto repair shop discovered damage to the vehicle’s undercarriage. Pointing to the discrepancy between the undercarriage damage and the insured’s contention that his vehicle was hit when parked, the carrier issued a coverage denial that stated: “Your failure to provide us with factual information in regard to this loss is considered non-cooperation under this policy and thus voids any recovery under said policy.”

The insured filed a lawsuit against the insurer with claims for breach of contract, breach of the covenant of good faith and fair dealing, and a violation of M.G.L. c. 93A. The jury returned a verdict in the insurer’s favor on the first two claims. Following a bench trial on the remaining c.93A claim, the trial court entered judgment for the insurer. The Plaintiff appealed.

On appeal, the court ruled on several evidentiary issues including the admissibility of photos taken by the appraiser, who did not testify at the trial. The Appeals Court noted that the authenticity of the photos could be established by testimony from a witness that: (a) the photos depict what its proponent represents it to be, and/or (b) circumstances exist which imply that the image is what its proponent represents it to be.

The trial court admitted the first set of photographs based upon the insurer’s auto claims manager’s testimony that an appraiser took the photographs while inspecting the vehicle and sent them to the insurer, where they were then integrated into its filing system. The second set of photographs was also admitted based upon the auto claims manager’s testimony that they were taken by the insurer’s expert when he prepared his report (even though the expert did not appear for the trial). The Appeal Court held that “[b]ecause this testimony provided sufficient circumstantial authentication of the accuracy of the photographs, the judge did not abuse his discretion in allowing them in evidence.”

As to the c.93A claims, the Appeal Court held that the insurer did not violate the statute by disclaiming coverage for failure to cooperate even though the damage to the vehicle could be covered under the policy regardless of the disputed cause of loss. In so holding, the Appeals Court noted that the policy clearly stated that an insured’s failure to cooperate in the claim investigation could result in a disclaimer. The Court held that the evidence amply supported the trial court’s conclusion that the plaintiff violated his duty to cooperate "by withholding information about the extent of his vehicle's damage” from the carrier. The Appeals Court also found that the plaintiff's failure to cooperate prejudiced the insurer by requiring it to retain an accident reconstruction expert to determine how the damage to the vehicle's undercarriage occurred and who, if anyone, might be at fault.

 

03/19/26        Storm Works Roofing & Restoration, Inc. v. AmGuard Ins. Com.
United States District Court, Massachusetts
Dismissal of Breach of Contract for Failure to Initiate a Lawsuit Within Two Years of the Loss and Related Dismissal of Bad Faith Claim Based Upon Good Faith Coverage Dispute

On August 23, 2020, wind damaged the roofs of two commercial properties in Wakefield, Massachusetts which were managed by QP Holdings, LLC. QP was the policyholder on an insurance policy covering both properties.

QP entered into a contract with Storm Works to repair the roof damage to both properties. After beginning work on the project, Storm Works discovered that the substrate below the damaged roof tiles was made of concrete. Installing new roof tiles directly onto the concrete substrate would violate the Massachusetts Building Code. To complete the repair within code, Storm Works installed half-inch CDX plywood over the existing concrete roof decks at an additional cost of $70,200 per building, or $140,400 in total.

The carrier agreed to pay for the full cost of the existing roof structure with $10,000 per building for the plywood installation costs. The insurer based its position on Policy language that provided a $10,000 sublimit for “increased costs incurred to comply with enforcement of an ordinance or law on the course of repairs, rebuilding or replacement of damaged parts of that property.”

The Court held that the breach of contract and related right of recovery under the Policy claims (which were assigned to Storm Works by QP) were both time-barred by the two-year statute of limitations set forth in M.G.L. c. 175, § 99. While applying the statute of limitations, the Court held that the claim under the policy did not relate back to a timely breach of contract claim asserted by Storm Works in another lawsuit against QP and the property owner for the non-payment for the plywood installation.

Turning to the M.G.L. c. 93A bad faith claim, the Court reiterated the well-recognized principal that good-faith disputes over insurance coverage “do not constitute unfair or deceptive trade practices, even if a court ultimately overrules the insurer’s denial of a claim, as long as that denial was made in good faith, based upon a plausible interpretation of the insurance policy, and was not otherwise immoral, unethical, or oppressive.” The Court noted that that was precisely the nature of the parties’ dispute, i.e., the applicability of the exclusion to the claimed expenses. As a result, the Court dismissed the c. 93A claim.

 

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.

01/14/26        Krandel v. CPA Professional Liability Plan Inc. et al
Ontario Superior Court
Separate Actions, Possible Shared Circumstances: Ontario’s Guidance on Aggregating Accountant Malpractice Claims Under “Common Circumstance” Language

Mr. Krandel filed this application in the Ontario Superior Court for a declaration that two on-going lawsuits in this same court that had been filed against him did not aggregate as a single claim under a claims made professional liability policy. As his insurer was providing a defence, this application was for a declaration pertaining to indemnity and was declared to be premature. However, the court's analysis of the issue is interesting and useful, as there is minimal case law dealing with the aggregation of claims under professional liability policies.

Background
Until sometime in 2023, Morris Milton Krandel practised as a chartered accountant out of an office on Lawrence Avenue West, in Toronto. CPA firms in Ontario that practise public accounting or provide accounting services to the public must hold professional liability insurance. That insurance can be obtained through the CPA Professional Liability Plan or from other providers. That insurance can be obtained through the CPA Professional Liability Plan or elsewhere. It seems that Mr. Krandel chose to place his liability insurance with the Plan.

Unfortunately, Mr. Krandel was sued in the Ontario Superior Court in his capacity as an accountant in two separate lawsuits:

• The Herzog Claim: Filed in 2019 by Dianne Herzog in her capacity as Estate Trustee of the Estate of Shalom Herzog, together with other plaintiffs which named Morris Krandel as the defendant
• The Pearl Claim: Melvin Pearl sued Morris Krandel in an action filed in 2021.

Mr. Krandel told CNA that Messrs. Pearl and Herzog were business partners. The reported judgment only hints at the subject matter of these lawsuits. Those hints suggest that, in 2015 and 2016, both Pearl and Herzog each owned 25% of a company called Lancashire Holdings Inc. In turn, Lancashire held an interest in the Menkes (Gibson Square) Limited Partnership, which was completing the high-profile Gibson Square condominium development in the Willowdale neighbourhood of Toronto. Both Pearl and Herzog received income from Lancashire.

Krandel states in a Statement of Defence to the Pearl action that is discussed in detail in the case report states that on instructions from both of them, the revenue paid by Lancashire was to be recorded as a loan on the personal tax filings of each of them. Herzog died in 2017. Thereafter, Pearl instructed Mr. Krandel to include the Lancashire revenue as taxable income in his personal tax return. Mr. Krandel pleads that Pearl knew this carried the risk that the CRA would reassess Pearl's 2015 and 2016 tax returns, which subsequently occurred. The Melvin Pearl lawsuit is apparently seeking damages tied to CRA reassessments of Mr. Pearl's 2015 and 2016 returns, increasing his tax liability by $2,727,283, plus outstanding penalties and interest. There is no similar description of the Herzog action.

 

Mr. Krandel’s Policies
In the 2018-2019 policy year and in the 2021-2022 policy years the CPA Professional Liability Plan was underwritten by CNA/Continental Casualty Company.

CNA issued the following claims-made policies to Mr. Krandel:

Policy No.	Policy Period	Limit
18-2121	July 3, 2018, to July 3, 2019	C$1 million
21-2121	July 3, 2021, to July 3, 2022	C$2 million

CNA agreed to defend Mr. Krandel against both lawsuits. Under both CNA policies, the defence costs were paid in addition to the policy limits.

Both policies provided that all demands or allegations arising from a common set of circumstances constitute a single claim, deemed to be first made, and reported when those circumstances were first reported. Mr. Krandel reported the Pearl matter during the policy period of the 2018 policy. The Herzog claim was reported during the 2021-2022 policy period.

 

Aggregation Language
The policy aggregates claims using the following language: “All demands or allegations arising from a common set of circumstances shall be considered a single CLAIM regardless of the number of INSUREDS, the number of persons or organizations making demands or allegations, or whether all such demands are made concurrently.”

 

Mr. Krandel’s Position

In this action, Mr. Krandel, arguing for himself, sought a declaration that the Herzog and Pearl actions constitute separate claims under the 2018 and 2021 policies, giving access to both limits. Representatives for Melvin Pearl and the Herzog Estate intervened and supported Mr. Krandel’s arguments and further argued that the policies are claims-made and reported policies.

That application was brought at a time when both the Pearl and Herzog actions were in the early stages of litigation. As Mr. Krandel was being defended, his application could only be an application for indemnity.

 

CNA’s Position

In response to Mr. Krandel’s application, CNA argued that both actions arise from a common set of circumstances and are subject to the 2018 policy limit. CNA’s counsel cross-examined Mr. Krandel on the affidavit that he swore in support of this application for a declaration that the claims were separate claims, triggering both policies. In that cross-examination, CNA’s counsel asked Mr. Krandel several questions regarding the commonalities between the Herzog and the Pearl actions. Mr. Krandel did not answer those questions on the advice of his defence counsel in the Pearl and Herzog actions. CNA did not press for answers as doing so would be potentially prejudicial to Mr. Krandel’s defence of those actions and could be considered an act of bad faith on the part of CNA.

 

The Court’s Analysis

The Court on this application held that both CNA’s policies are claims-

made and reported policies meaning that to be covered by a given policy, the claim must be made and reported during the policy period. However, if the claim that is made and reported arises out of the same circumstances as a notification made to an earlier policy period then that earlier policy is triggered, regardless of when the claim is actually made and reported.

The test as to whether the Pearl and Herzog lawsuits arise from “a common set of circumstances” is fact dependent. That test is set out in the Ontario Court of Appeal decision, Simpson Wigle Law LLP and the decisions that follow it. Following a discussion of those cases, the Court held that “… it will have to determine whether the claims in the Pearl action commenced in 2021 arise from a set of circumstances that are in common with the circumstances giving rise to the Herzog action, which that were first reported to the Insurer or CPA Professional Liability Plan Inc. in 2019 (but within the2018 Policy Period)….It is premature to make findings of fact regarding the commonality, if any, in circumstances giving rise to the Pearl action and the Herzog action.”

 

02/04/26         Melvin Pearl v. Morris Krandel
Ontario Superior Court
Round II

On February 2, 2026, within days of the release of the decision in Krandel v. CPA Professional Liability Plan Inc. et al., the parties were back before a different judge of the Ontario Superior Court to respond to Mr. Pearl’s application to have CNA added as a defendant to his action against Morris Krandel.

Mr. Pearl argued that he is bringing this application as CNA has taken the position that his claim and the “Herzog claim,” which is proceeding by way of separate action, constitute one Claim under the CNA policy. If CNA is correct, and this claim and the Herzog claim are found to be one claim, then Mr. Pearl argues that his recovery will be limited. The Court noted that it is more accurate to say that his recovery against the defendant will be the same; what might be limited is the defendant’s available insurance coverage.

In a decision released February 4, 2026, the Court rejected this application holding that the Pearl action and the Herzog claim are being tried separately. That means that the trial judge in the Pearl action will not be able to determine if a 'common set of circumstances' exists, as the trial judge will not be informed of the circumstances of the Herzog claim. Furthermore, the findings will not, arguably, bind Herzog, as he is not a party to the Pearl action. There is a real risk of inconsistent findings.

As a result, the application to amend the Pearl action to add CNA as a defendant was rejected.