Volume XXVII, No. 26 (No. 725)
Friday, June 5, 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.
We congratulate Lexi Horton on her wedding this weekend! Hurrah!
Welcome to the 100 new subscribers since our most recent issue. You are reading the “cover letter,” what we call our Dear CP introduction to the newsletter. The actual issue of Coverage Pointers is attached as a pdf. Past issues are available, and searchable, on the Hurwitz Fine website.
This issue marks the final issue of our 27th year of publication. It’s actually our 725th issue. Have no fear, Volume 28 start two weeks from today. We’ve published on alternating Fridays since July 8, 1999. There are about 13 editors, each of whom publish a column on various topics, along with a cover note (which you’ll find in the cover letter).
Hurwitz Fine celebrated its 49th anniversary on June 1, starting as a four-lawyer firm in Buffalo, and now with offices throughout New York State, with lawyers in Connecticut and New England. We practice in New Jersey, Massachusetts, New Hampshire, Rhode Island, and Vermont and are pleased to help you wherever we can. Because I’m a history buff, our cover letter is peppered with stories from newspapers around the country dated 100 years before the current issue. Enjoy.
And we love education programming.
Coverage Pointers University is a monthly educational offering. In June, you’re stuck with me as the educator, and we’ve brought back one of the most popular offerings. So popular it is, we’ve doubled the size of our Zoom Room, since we announced it three weeks ago.
Coverage Pointers University – Next Program
June 18, 2026
12:00 PM in Eastern Time
New York Liability Protocols
Doing it Right to Prevent Disaster – Protecting the Disclaimer, Preserving Coverage Defenses
Room size extended from 500 to 1,000 Present
Currently 585 Registered
Join Insurance Coverage Co-Chair Dan D. Kohane for a practical and essential webinar on navigating New York’s unique and unforgiving liability coverage landscape. Unlike most jurisdictions, a reservation of rights letter may not be enough to preserve coverage defenses where Insurance Law § 3420(d)(2) applies—making precision and timing critical. This session will walk through when a carrier must issue a prompt and specific disclaimer, why delay can result in waiver of key defenses, and how New York’s statutory framework governs bodily injury and wrongful death claims.
The program will also address those who must receive a disclaimer, including insureds, injured parties, and potential claimants, and clarify the important distinctions between lack of coverage, policy exclusions, and breaches of policy conditions. We will also touch on the indirect impact on horizontal exhaustion claims as a result of the recent adoption of the AVOID Act, which has altered timing of third-party lawsuits for contribution and indemnity. Attendees will gain practical guidance on drafting effective disclaimers, understanding the limits of reservation of rights letters, handling partial disclaimers, and navigating related issues such as independent counsel and recoupment of defense costs—helping avoid costly and irreversible coverage missteps.
New York Tort Reform
If you haven’t heard about it yet, significant NY tort reform changes were adopted by the legislature and signed into law on April 26. Read all about them here.
For those who need to keep up to date on insurance coverage between issues of Coverage Pointers, we’re happy to help. Just follow me on LinkedIn and we’ll keep you up to date. I’m easy to find – my linked in name is (ready for this unusual and unexpected name): Kohane and you can find me here: https://www.linkedin.com/in/kohane/
Need a Mediator or Arbitrator, Give a Call:
A growing percentage of my practice has been a mediator (and sometimes as an arbitrator) in insurance coverage, commercial, personal injury, and other disputes. With a robust national client base, I am regularly called on by friends and colleagues from around the country, folks who know me and trust me, to help resolve disputes. Often, particularly in mediated matters, I know the insurers and lawyers on both (or several) sides of the dispute. Since they all trust me as a fair dealer, they feel comfortable having me try to help close the file (and avoid precedent). Just pick up the phone, 716.849.8942 or send an email to [email protected] and I’ll try to help.
Newsletters:
We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:
- Premises Pointers: This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!). Please drop a note to Jody Briandi at [email protected] to be added to the mailing list.
- Labor Law Pointers: Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at [email protected] to subscribe.
- Products Liability Pointers: Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework, and governmental agencies. Contact V. Christopher Potenza at [email protected] to subscribe.
- Medical & Nursing Home Liability Pointers. Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Elizabeth Midgley at [email protected] to subscribe.
An Exciting Car Ride – 100 Years Ago:
Buffalo Courier Express
Buffalo, New York
5 June 1926
DAYS NEWS FROM
WESTERN NEW YORK
William Rohan, a farmer, was nearly killed on Friday on his first automobile ride near Hornell. He became excited and grasped the wheel from the driver and caused the car to go in the ditch and overturn. Both Rohan and the driver were seriously injured.
Peiper on Property (and Potpourri):
Check out my two cases this week – one on prevailing competitive prices, and another on the correct standard applicable to a motion for default judgment.
Steve
Steven E. Peiper
[email protected]
Predictions – 100 Years Ago:
The San Diego Sun
San Diego, California
5 June 1926
MAKES 1975 PREDICTIONS
Predictions made for 1975 by a mathematicians of Johns Hopkins University show that 42,000,000 passenger cars and 8,500,000 trucks will be in operation. The population is estimated at 171,900,000.
Lee’s Connecticut Chronicles:
Dear Nutmeggers:
Well, sadly the courts have let us down—again. No cases of interest to discuss this edition. I must concede that I am completely fed up with Lexis and the daily question of will it or won’t it work today. So, if there’s a case out there that I missed, my apologies.
In other Connecticut news, the season of “graduation” has finally come to a close. Three out of four children graduated from their graduate or undergraduate programs (MFA, MA, and a BFA). One child, one semester to go! Our empty nest may not be so empty soon, as they are all still looking for jobs.
Until next edition, keep keeping safe.
Lee
Lee S. Siegel
[email protected]
Expecting Reindeer Burgers? – 100 Years Ago:
San Francisco Chronicle
San Francisco, California
5 June 1926
Sees Time When Alaska
Will Furnish U.S. Meat
That at a date not far distant the United States will draw a considerable part of its meat supply from reindeer herds of Alaska was prediction made yesterday the by W. L. Swenson, mining engineer, of Nome, Alaska, who is in San Francisco on a business and pleasure visit.
"According to latest reports, there are now in Alaska approximately 300,000 reindeer," said Swenson at the Stewart Hotel yesterday.
"It is estimated that two-thirds of this number are the property of Eskimos. This is most important. It has raised the Eskimos from a primitive to a pastoral stage; from nomads to civilized men, having in their herds assured support for themselves and the opportunity to accumulate wealth.
Ryan’s Federal Reporter:
Hello Loyal Coverage Pointers’ Subscribers,
Proud dad moment yesterday as my middle child went three for three at the plate, made some stellar plays in the field, making the right throws and, seemingly, figuring out the game a little bit more each and every week. Now if we can just get him to understand that there is no catcher at his level to catch the right throws to the plate…
This edition, I have written about a recent Second Circuit decision involving application of a Sexual Abuse and Molestation Exclusion to EEOC claims of workplace sexual harassment, abuse, and molestation.
Until next time…
Ryan
Ryan P. Maxwell
[email protected]
Jurors Fired – 100 Years Ago:
Star Tribune
Minneapolis, Minnesota
5 June 1926
Jurors ‘Fired’
For Disobeying
Court Direction
Municipal Judge Sets Aside
Verdict for $40 in
Place of $325
Difference Arises Over the
Value of X-ray Services
Given Collector.
Holding that the value of services rendered could only be decided by professional men, - whose testimony had fixed them at approximately $236, Judge C.L. Smith fired outright a jury that returned a directed verdict or only $40 in a case before him in municipal court recently.
The case was that of A.J. Rotering, head of a collection agency, against Charles Schelinske, for X-ray plates made at Eitel hospital.
As an aftermath to the discharge of the jury, one woman declined to accept a check for only two days’ services, holding that she had been “hired” for two weeks. She was refused more, the clerk of municipal court asserting that Judge Smith’s action terminated the juror’s services forthwith.
Storm’s SIU:
Hi Team:
I hope you were able to attend:
If not, we are glad to present it to your company or organization.
This session focused on the strategic application of the “Concealment or Fraud” condition and related coverage defenses in fraud investigations.
Top Ten Takeaways:
- If an insured has fraudulently placed in the proof of loss a statement of property lost which she did not possess or has placed a false and fraudulent value upon the articles which she did own, coverage for the entire claim is void and she is not entitled to recover anything.
- Breach of the “Concealment or Fraud” and breach of the “Cooperation” conditions are two separate defenses with different burdens of proof (“clear and convincing evidence” v. “preponderance of the evidence”) and both must be charged to a jury and may be based upon the same facts.
- Overvaluation of insured property raises a presumption of fraud, and such presumption becomes conclusive where the insurer demonstrates that the difference between the amounts claimed in the proof of loss and the loss actually shown to have been sustained are grossly disparate without reasonable explanation.
- An insured may amend or withdraw part of her proof of loss but by so doing she does not foreclose the insurance company from attempting to prove that the withdrawn part of the original claim was false or fraudulent. The contract of insurance is entire and indivisible, and a cause of avoidance or forfeiture in respect to a part of the property insured affects the whole contract.
- When a public adjuster submits a fraudulent proof of loss, the insured is barred from recovery as the public adjuster is the agent of the insured, the fraud is imputed to the insured even if the insured is ignorant of the misrepresentation.
- The sworn statement in proof of loss continues to be an important document to proving fraud, should be included as part of the fraud investigation and is a condition precedent to recovery under the policy when requested, being mindful: to request it in writing; provide a blank form; and allow 60-days for compliance from the date of the receipt of the request until the time of mailing.
- The legal principle of “judicial estoppel” precludes an insured from declaring the value of property in one legal proceeding (i.e., bankruptcy) and then inconsistently declaring the value to be substantially higher in a subsequent matter (i.e., insurance claim).
- Although “late notice of claim” is an onerous defense in 3rd-party liability claims, it remains a strong defense in 1st-party property cases, with courts finding delays as little 10 days to be unreasonable as a matter of law when there is no reasonable excuse; and there are limited reasons constituting a “reasonable excuse”.
- The “Thrasher standard” which requires an insurer to prove willful and avowed obstruction in the investigation of a 3rd-party liability claim and is said to create a heavy burden of proof, is intended to protect an innocent third-party’s right of recovery and does not apply to first-party property claims, where the standard is whether the insured fully disclosed all requested material information. See my article, “Headed in the Wrong Direction.”
- A material misrepresentation in an application for insurance compels an insurer to rescind a property policy; or void coverage for an auto claim for any conspirators in the misrepresentation. Where the insured's agent fills out the application for the insured, inserts false answers as to material facts, and the insured signs the application, he or she adopts the statements as those of his or her own agent, and in this regard the agent must be considered as the agent of the insured and not the agent of the insurer.
Four interesting cases for you this edition:
- Absent Evidence of a Special Relationship or an Express/Implied Undertaking by the Broker to Verify Application Details, the Insured Bears Responsibility for the Accuracy of Signed Application Statements. A Broker’s Common-Law Duty is to Obtain Requested Coverage, Not to Investigate and Confirm Facts Such as Occupancy; a Misrepresentation by the Insured Can Justify the Insurer’s Denial and Bars Recovery Against the Broker on These Facts.
- The Second Circuit, Guided by the Court of Appeals, Held that Mere Professional Misconduct — Such as Paying for Referrals in Violation of Education Law § 6530(18) and 8 N.Y.C.R.R. § 29.1(b)(3) — Without Ceding Control of a Professional Corporation to an Unlicensed Party, Does Not Disqualify a Provider from No‑Fault Reimbursement Under New York’s Eligibility Regulation, New York’s No‑Fault “Eligibility Regulation,” 11 N.Y.C.R.R. § 65‑3.16(a)(12).
- Where Insurer Allegedly Failed to Transmit Insurance Proof to DMV Causing DMV Suspension Leading to Plaintiff's Arrest at Police Checkpoint, Claims for Negligent Misrepresentation, False Imprisonment, Breach of Contract, and Tortious Interference Were Dismissed Leaving a Cause of Action for Negligence.
- Insureds’ Written Declinations of SSL Coverage Prior to the Amendment of § 3420(g) to Make SSL Coverage Mandatory by Default Remain Effective for Subsequent Renewals, Provided the Declination Substantially Complies with the Model Form and Includes Premium Information.
Strict statutory Notice Requirements at Renewal Still Apply; an Insurer’s Failure to List the SSL Premium on the Premium Notice is a Violation, but Courts May Refuse to Reform a Policy to Add SSL Coverage Where the Insured Validly Declined and Paid no SSL Premium, Absent a Statutory Mandate, Fraud, or Mistake.
Have a great two weeks!
Scott
Scott D. Storm
[email protected]
That's About $140,000 in 2026 Dollars – 100 Years Ago:
The Brooklyn Daily Times
Brooklyn, New York
5 June 1926
FINGER HURT, WINS $7,500
Mrs. Zimmerman Recovers From
Druggist Who Gave First Aid.
One deformed finger netted Mrs. Julia Zimmerman, 336 Pacific st., the sum of $7,500, according to a sealed verdict which was opened in the court of Supreme Court Justice Cunningham today.
The verdict was directed against Paul Mendelsohn, druggist, of 690 Broadway. Some months ago, Mrs. Zimmerman told the jury, she had run a splinter into her index finger. Appealing to the druggist for aid, she had been given temporary relief, but the treatment had caused an infection resulting in a deformity of the finger. Mrs. Zimmerman sued for $50,000.
Fleming’s Finest:
Hi Coverage Pointers Subscribers:
This week’s case from the West Virginia Supreme Court considered whether an insurer was required to show prejudice from the insureds’ late reporting of an accident to the police.
Summer is almost here! It’s been a busy Spring, so it will be nice to get outside and spend time with family.
See you in a fortnight,
Kate
Katherine A. Fleming
[email protected]
Who Can Argue? – 100 Years Ago:
Buffalo Courier Express
Buffalo, New York
5 June 1926
ROLL, DON’T CUT
SPAGHETTI, HIS
SUCCESS RECIPE
New York, June 4 (AP) – Nonchalantly perched on the pinnacle of the tallest building in the world, George Cockley today paused in his task of painting the Woolworth tower red to talk to a woman reporter sitting on a gargoyle beside him.
“To what,” Mr. Cockley was asked, “do you attribute your success in reaching such a high place in life?”
Looking down from his altitude of 792 feet above street level, Mr. Cockley replied:
“I never cut spaghetti. Always I roll it.”
No, he was not married. “What woman,” he inquired, “would want to take a chance on me?” His ambition is to chuck quoits from the tower onto the Statue of Liberty, and he is unafraid of dizzy heights.
“I ain’t dropped off one of these towers yet,” explained.
Gestwick’s Garden State Gazette:
Dear Readers:
I will have to make this brief, as I am writing this before I get packing for my bachelor trip this weekend. My finest friends and I are heading to Ellicottville, NY for the weekend to play a few rounds of golf, weather permitting. Heck, we just may enjoy a beer or two along the way, too.
I made time to bring you two important decisions this week. The first is a question of “Whose Employee Is It Anyway?” Although I do not think they have turned it into a late-night comedy special on the CW, it is an interesting read. The second is an excellent reminder of the important difference between “true excess” policies, and policies with excess Other Insurance provisions.
That’s it for this week. See you in two more.
Evan
Evan D. Gestwick
[email protected]
Wonder Why So Little? – 100 Years Ago:
The Buffalo News
Buffalo, New York
5 June 1926
MOTOR COLLISION DAMAGE
SUIT SETTLED FOR $1700
LITTLE VALLEY, June 4. – The five cases of John Czerniawski, Machias, for himself and various members of his family, against Joseph E. Perry, Tonawanda, were settled by Stipulation in open court for $1700.
This settlement covers the injuries to Czerniawski and his wife and two children and the death of two other children.
The case arose out of an automobile collision near Delevan, September 1, 1924. This was the third trial of the suits.
O’Shea Rides the Circuits:
Hey Readers,
As noted last in last edition, there was a battle of wills, and my training regime was lax. The saying is that “where there’s a will, there’s a way.” Well, there was some will, but the way ended up be longer than expected. I finished behind a certain respected senior colleague in Rochester’s Corporate Challenge. However, the sting of defeat yielded after a post-run hotdog and Genny.
This week I have a quick read from the Fifth Circuit where a party sought to correct a contractual standing issue through an amended complaint.
Until Next Time,
Ryan
Ryan P. O’Shea
[email protected]
104.8 Million, Not 42 Million Cars, 24.3 Million Trucks, Not 8,500, 216 Million People, Not 171,000 Million – 100 Years Ago:
The San Diego Sun
San Diego, California
5 June 1926
MAKES 1975 PREDICTIONS
Predictions made for 1975 by a mathematician of Johns Hopkins University show that 42,000,000 passenger cars and 8,500,000 trucks will be in operation. The population is estimated at 171,900,000.
LaBarbera’s Lower Court Library:
Nothing to report from me this week, see you in two!
Isabelle
Isabelle H. LaBarbera
[email protected]
The Couple Divorced Five Years Later – 100 Years Ago:
The Buffalo News
Buffalo, New York
5 June 1926
JUDGE WEDS FIRST
AND LAST COUPLE
LOCKPORT, June 3. – Police Judge Irving T. Roberts performed his first – and he says also his last – marriage ceremony Friday afternoon.
A couple who gave the names of Willis Allen Morton, 22 years old, 264 West Ferry street, Buffalo, and Michalin Jaworska, 18 years old, of the township of Lockport, went before County Judge Charles Hickey, after obtaining their license at the City Hall here. Judge Hickey said that he was too busy to officiate and sent them to Police Judge Roberts.
After the ceremony Judge Roberts said that it was the first that he has performed and that it would be the last.
“I have always wanted to marry one couple, and I got a thrill out of it, but I will not marry anymore,” Judge Roberts said. He has turned down many requests to marry couples in the past. There were no attendants at the ceremony.
Lexi’s Legislative Lowdown:
Dear Readers,
I am off to the chapel this weekend. It’s hard to believe our wedding day is almost here after 2.5 years of planning. This week has been filled with emotion and excitement. I am looking forward to seeing it all come together and to be surrounded by everyone we love as we celebrate this next chapter!
This week we discuss Governor Hochul’s reforms to lower auto insurance premiums for New Yorkers that recently passed with the passing of the New York State Budget.
Thanks for reading,
Lexi
Lexi R. Horton
[email protected]
Fined for Daredevil Speed – 100 Years Ago:
The Buffalo News
Buffalo, New York
5 June 1926
DRIVER FORFEITS $30
OLEAN, June 4. – Charles Klein, 25 years old, Buffalo, failed to appear in City court Thursday, and he forfeited $30. He was arrested by Motorcycle Policeman Monroe Jordan who charged him with driving a motor truck through the streets of Olean at 30 miles an hour. Klein told police he was a huckster.
Victoria’s Vision on Bad Faith
Dear Readers,
Headed to Brockport this weekend to celebrate Lexi’s upcoming nuptials!
This week, I have a case from the Third Circuit Court of Appeals discussing bad faith allegations in a property damage claim stemming from property damage in the Virgin Islands.
Have a great weekend,
Victoria
Victoria S. Heist
[email protected]
Down With Gas Pumps! – 100 Years Ago:
The Daily Messenger
Canandaigua, New York
5 June 1926
WOULD REMOVE
“GAS” PUMPS
Resolution Introduced in
Council to Remove All
Gas Pumps Outside
Sidewalks
A resolution providing for the removal of all gasoline pumps situated outside the sidewalk in the streets of the city was introduced at a meeting of the common Council at the City Hall last evening. The resolution as introduced, would be effective after four years and eight months from the date of its adoption by the Council. The matter was held over for final action at the meeting of the Council Friday, June 2.
A resolution was also presented which would raise the cost of a gasoline pump license from $10 to $25, and another which would raise the fee charged circuses, from $25 to $40. It was though that the latter move would tend to check the influx of small circuses to this city and would thus encourage the larger shows to bring their attractions here.
Shim’s Serious Injury Segment
Hi Readers,
Hope everyone has been well since our last column.
“Almighty God: Our sons, pride of our Nation, this day have set upon a mighty endeavor, a struggle to preserve our Republic, our religion, and our civilization, and to set free a suffering humanity.”
The quote included above is perhaps the most well-known portion of the publicly broadcasted D-Day prayer led by President Franklin Delano Roosevelt on the evening of June 6, 1944. This Saturday we will reach the 82nd anniversary of D-Day, Operation Overlord, the greatest amphibious military operation in world history. On that day, approximately 156,000 Allied troops broke Nazi Germany’s Western Wall and turned the tide of the Second World War. Though they carried the weight of the Free World on their shoulders, the Great Liberators answered the call.
The Great Liberators of D-Day have always been held in the highest esteem in my mind – a stunning example of patriotism, faith and courage. They are among the greatest Americans who will ever live. As we approach yet another anniversary of their immeasurable sacrifice and valor, I ask that we all take a moment to consider the gift of freedom they have given us. We must earn it.
I have shared a different type of case than is typically discussed in this column (in part because of the limited number of recent decisions since our last column). The Supreme Court, Kings County, declined to impose sanctions on a defense attorney who submitted an attorney affirmation in support of a summary judgment motion on the issue of “serious injury” with material factual misstatements. The case does a great job illustrating the significance of thorough review of all materials, particularly those that are before the Court.
See you in the next issue!
Stephen
Stephen M. Shimshi
[email protected]
Huge Wrongful Death Settlement – 100 Years Ago:
The Brooklyn Citizen
Brooklyn, New York
5 June 1926
Woman Agrees to
Settle for Big Sum
For Husband’s Death
Mrs. Ellen C. O’Neill, of No. 107 Taylor Street, Astoria, Queens, yesterday filed a petition with Surrogate Daniel Noble, in Jamaica, for permission to accept a settlement of $2,000 for death of her husband, Joseph, who lost his life as an employee of the firm of Rufus Darrows Sons, Ins. The concern was directed to settle with Mrs. O’Neill and also file an additional bond of $2,000 for the protection of her estate.
O’Neill was employed as a stevedore. He was loading cement bags aboard a barge at the foot of Elm Street, Astoria, when he fell into the water from a plank gangway and was drowned. Mrs. O’Neill, as administratrix of her husband’s estate, brought suit in the Supreme Court, Queens, against the Darrow Company, charging negligence.
She agreed to settle with the company for $2,000, and Surrogate Noble permitted her request.
New England Almanack
Meteorological spring came to an end with a bang in New England this past weekend – literally. At 2:06 pm this past Saturday afternoon, a meteor five feet wide (1.6 meters) with a mass of some 5.6 metric tons entered the atmosphere near Boston and streaked through the sky at 42,000 mph for some 26 miles before breaking up over Cape Cod Bay. The explosion about 31 miles above sea level had a force equivalent of 230 tons of TNT. Not that you would have seen it from the ground: dense clouds and unseasonably cold rain meant that most folks just heard the sonic boom. As for me, well, I wasn’t around for any of it as I enjoyed my college reunion in Washington, DC.
With that, though, the season seems to have turned. Those of you blessed to have a rooting interest in the Stanley Cup Finals can contemplate just how deep into June your interest in the Carolina-Las Vegas tilt can go. For the rest of us, it’s time to think of baseball, summer cookouts, and some much-deserved downtime.
Traditionally, the courts tend to issue a spate of decisions in May and June, in the run up to well-deserved summer vacations. We’re starting to see that pattern hold. This time, we bring you a brief but important holding about “special relationships” from the Massachusetts Appeals Court, and a business-exclusion case from the federal district court in New Hampshire. We’ll be back with more in two weeks.
Alex
Alexander G. Henlin
[email protected]
Barbara A. O’Donnell
[email protected]
Iryna N. Dore
[email protected]
Now There's a Penalty for Drunk Driving .... – 100 Years Ago:
The Buffalo Times
Buffalo, New York
5 June 1926
Drunks Sentenced
To Take Pledge at
Mother’s Graves
CLEVELAND, June 5. – Holding “surprise court” for 75 “drunks,” Municipal Judge Moylan ordered them to visit the graves of mothers or friends and take the “pledge.”
“I want every one of you to go to a cemetery today,” he said. “If your mothers are buried here visit the graves and vow that you will never drink again. The rest of you take the pledge at the grave of a friend.”
North of the Border:
While there may be no Canadian franchise skating for what is widely regarded as one of the hardest trophies to win in professional sport, Canadian talent will nonetheless be at the centre of this year’s Stanley Cup Final. With elite homegrown players on both sides of the matchup, the series should showcase playoff hockey at its best: fast, physical, tightly structured, and decided by the familiar hallmarks of the spring game—clutch goaltending, resilience, and timely execution in the moments that matter most.
This week’s article explores an Ontario decision enforcing a mediated settlement in favour of an elderly plaintiff, despite the defendants’ subsequent discovery that the purported liability insurance under which the insurer appointed counsel and adjuster were acting was a phantom policy. It highlights the court’s insistence that defendants who participate in litigation and settlement through insurer appointed defence counsel remain bound by the agreement, and that any resulting lack of indemnity is a problem between the defendants and their insurer, not the injured claimant.
Until next time.
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]
- Failure to Give Timely Notice Leads to Uninsured Motorist Arbitration to be Permanently Stayed
- In a Rare Win for an Insurer on Lack of Cooperation, the Carrier Demonstrated “Willful and Avowed Obstruction.”
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
- Question of Fact on “Prevailing Competitive Price” Precludes Summary Judgment
- Reasonable Excuse AND Meritorious Defense Needed to Defeat Default
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]
- No Connecticut cases of interest this edition.
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
- Sexual & Physical Abuse Exclusion Found Applicable to Claims of EEOC Claims Involving Workplace Sexual Harassment and Abuse
STORM’S SIU
Scott D. Storm
- Absent Evidence of a Special Relationship or an Express/Implied Undertaking by the Broker to Verify Application Details, the Insured Bears Responsibility for the Accuracy of Signed Application Statements. A Broker’s Common-Law Duty Is to Obtain Requested Coverage, Not to Investigate and Confirm Facts Such as Occupancy; A Misrepresentation by the Insured Can Justify the Insurer’s Denial and Bars Recovery Against the Broker on These Facts
- The Second Circuit, Guided by the Court of Appeals, Held That Mere Professional Misconduct — Such as Paying for Referrals in Violation of Education Law § 6530(18) and 8 N.Y.C.R.R. § 29.1(b)(3) — Without Ceding Control of a Professional Corporation to an Unlicensed Party, Does Not Disqualify a Provider From No‑Fault Reimbursement Under New York’s Eligibility Regulation, New York’s No‑Fault “Eligibility Regulation,” 11 N.Y.C.R.R. § 65‑3.16(a)(12)
- Where Insurer Allegedly Failed to Transmit Insurance Proof to DMV Causing DMV Suspension Leading to Plaintiff's Arrest at Police Checkpoint, Claims for Negligent Misrepresentation, False Imprisonment, Breach of Contract, and Tortious Interference Were Dismissed Leaving a Cause of Action for Negligence
- Insureds’ Written Declinations of SSL Coverage Prior to the Amendment of § 3420(g) to Make SSL Coverage Mandatory by Default Remain Effective for Subsequent Renewals, Provided the Declination Substantially Complies with the Model Form and Includes Premium Information
- Strict statutory Notice Requirements at Renewal Still Apply; an Insurer’s Failure to List the SSL Premium on the Premium Notice Is a Violation, But Courts May Refuse to Reform a Policy to Add SSL Coverage Where the Insured Validly Declined and Paid No SSL Premium, Absent a Statutory Mandate, Fraud, or Mistake
FLEMING’S FINEST
Katherine A. Fleming
[email protected]
- Insurer Required to Show Prejudice from Late Reporting Based on Policy’s Plain Language
GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]
- Court Finds Question of Fact on Question of Employment Status
- Only if a Policy Is Contingent Upon the Exhaustion of Another Policy Is That Policy a “True Excess Policy;” Other Insurance Clauses Are Used Only to Determine the Priority of Coverage Among Insurers on the Same Level
O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]
- Denial of Leave to Amend Vacated Thus Permitting Parent Company to Add Insured Subsidiary to Create Standing
LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]
- See you in two!
LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]
- Governor Announces NY Budget Finalized and Includes Reforms to Address Abusive and Excessive Litigation
VICTORIA’S VISION ON BAD FAITH
Victoria S. Heist
[email protected]
- Court of Appeals Upholds Insurer’s Favorable Jury Verdict on Bad Faith for Property Damage Claim
SHIM’S SERIOUS INJURY SEGMENT
Stephen M. Shimshi
[email protected]
- Supreme Court, Kings County, Declines to Impose Sanctions on a Defense Attorney Who Submitted an Attorney Affirmation in Support of a Summary Judgment Motion on the Issue of “Serious Injury” with Material Factual Misstatements
NEW ENGLAND ALMANACK
Barbara A. O’Donnell
Alex G. Henlin
Iryna N. Dore
- Personal Liability Policy’s Business Exclusion Precludes Coverage for Malicious Prosecution Claims Arising from Dissolution of Insured’s Joint Venture
- Insurer That Had Provided Coverage for Two Decades Not Responsible for Property Owner’s Inadequate Limits
NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
[email protected]
- No Insurance, No Escape: Court Enforces Settlement Despite Non-Existent Policy
All the best to you and yours.
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
Barbara A. O’Donnell
Brian F. Mark
Scott D. Storm
Alexander G. Henlin
Iryna N. Dore
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
Jessica L. Deren
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
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
New England Almanack
North of the Border
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
06/04/26 Allstate Fire & Casualty Insurance Company v. Alas
Appellate Division, Second Department
Failure to Give Timely Notice Leads to Uninsured Motorist Arbitration to be Permanently Stayed
Allstate commenced this proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of a claim for uninsured motorist benefits arising out of an alleged hit-and-run accident, on the ground, among others, that its insured, the respondent, Alas, failed to satisfy a condition precedent to arbitration as required by the insurance policy. The subject policy required the insured to report an accident to a police, peace, or judicial officer, or to the Commissioner of Motor Vehicles, within 24 hours or as soon as reasonably possible.
Where, as here, 'an insurance policy requires that notice of an occurrence be given as soon as practicable, notice must be given within a reasonable time. In view of all of the Alas's failure to comply with this condition precedent, absent a valid excuse, vitiates coverage under the subject policy. Here, there was no excuse so arbitration was permanently stayed.
05/27/26 Foddrell v. Utica First Insurance Company
Appellate Division, Second Department
In a Rare Win for an Insurer on Lack of Cooperation, the Carrier Demonstrated “Willful and Avowed Obstruction.”
This was a direct In an action pursuant to Insurance Law § 3420(a)(2) to recover the amount of an unsatisfied judgment against Utica First’s insured, J&R Construction. In 2006, the plaintiff commenced an action against J&R Construction to recover damages for personal injuries he allegedly sustained in a construction-related accident (“underlying action”). J&R was insured by Utica and retained a law firm to represent it the underlying action and hired an investigator to contact Singh, J&R's principal.
Singh did not appear for two court-ordered depositions in the fall of 2008, despite his attorney's attempts to notify him. In January 2009, Utica retained the same investigator to inform Singh that a deposition was scheduled for April 13, 2009.
According to J&R's attorney, on February 15, 2009, Singh answered a call from J & R's attorney and was informed that the plaintiff had moved to strike J&R's answer and that Singh was required to appear for a deposition. On April 3, 2009, Utica requested that the investigator hand-deliver a letter to Singh informing him that it would refuse to indemnify J&R if he did not attend the deposition. According to a letter addressed to J&R's attorney, the investigator spoke with Singh at his home on April 8, 2009, and advised him of the time and location of the deposition.
According to J&R's attorney, on April 10, 2009, Singh answered a call from J & R's attorney and told the attorney he would attend the deposition. However, Singh did not attend the deposition. In a letter dated April 15, 2009, Utica informed Singh that it would not indemnify J&R in the underlying action.
Thereafter, in an order dated August 4, 2009, the Supreme Court granted the motion of J&R's attorney to be relieved as counsel for J&R, and in another order dated August 4, 2009, the court granted the plaintiff's motion to strike J&R's answer to the extent of directing that J & R's answer would be stricken unless J & R appeared for a deposition by December 4, 2009.
After J&R failed to appear for a deposition by December 4, 2009, the court issued an order dated September 30, 2010, inter alia, striking J&R's answer. After an inquest on the issue of damages, the court entered a judgment in the underlying action in favor of the plaintiff and against J & R and another entity in the total sum of $673,422.71.
In December 2013, the plaintiff commenced this action pursuant to Insurance Law § 3420(a)(2) to recover the amount of the unsatisfied judgment from Utica First. In an order entered March 28, 2017, the Supreme Court, among other things, denied Utica's motion, inter alia, for summary judgment dismissing the complaint. In a decision and order dated December 18, 2019, this Court affirmed so much of the order entered March 28, 2017, as denied Utica's motion (see Foddrell v Utica First Ins. Co., 178 AD3d 901).
After a nonjury trial, on June 5, 2023, the Supreme Court entered a judgment in favor of Utica and against the plaintiff dismissing the complaint. The plaintiff appeals.
Contrary to the plaintiff's contention, this Court's decision and order on the prior appeal did not bar the Supreme Court, at trial, from considering the issue of whether J&R's conduct amounted to willful and avowed obstruction. The decision and order did not determine that issue on the merits
"Where an insured's failure or refusal to cooperate is asserted by an insurer as a defense in an action pursuant to Insurance Law § 3420(a)(2), 'the burden shall be upon the insurer to prove such alleged failure or refusal to cooperate'" (id. at 712, quoting Insurance Law § 3420[c][1]). "'An insurer who seeks to disclaim coverage on the ground of noncooperation is required to demonstrate that (1) it acted diligently in seeking to bring about the insured's cooperation, (2) its efforts were reasonably calculated to obtain the insured's cooperation, and (3) the attitude of the insured, after its cooperation was sought, was one of willful and avowed obstruction'".
Here, the plaintiff introduced evidence at trial that he obtained a judgment against J&R, served the judgment upon Utica, and awaited payment for 30 days prior to commencing this action. Therefore, the plaintiff established a prima facie case of the right to a judgment against Utica pursuant to Insurance Law § 3420(a)(2)
However, Utica established that J&R failed to cooperate. Utica introduced evidence demonstrating that it diligently sought J & R's cooperation and that Utica's efforts were reasonably calculated to do so. The evidence also supported the conclusion that J & R willfully obstructed Utica's defense of the underlying action.
Although Singh initially cooperated by providing a written statement, he could not have reasonably believed that he had fulfilled his obligation to cooperate with Utica. Utica demonstrated that Singh was informed of the time and location of his April 13, 2009, deposition, as well as the possibility that J&R's answer would be struck, and that Utica would disclaim coverage of J&R in the underlying action if he failed to attend. Nonetheless, despite indicating to J & R's attorney that he would attend the deposition, Singh failed to do so without explanation. Therefore, Utica met its burden of showing lack of cooperation of its insured.
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
05/27/26 M.V.B. Collision, Inc. v. State Farm Mut. Auto Ins. Co.
Appellate Division, Second Department
Question of Fact on “Prevailing Competitive Price” Precludes Summary Judgment
State Farm’s insured presented his vehicle to M.V.B. for repairs. M.V.B., in turn, provided its estimate to State Farm. It appears from the decision that State Farm rejected the proposed cost/scope of repairs proposed, and instead offered a different scope and estimate of damages.
M.V.B. took an assignment of State Farm’s insured’s claim, and commenced the instant action for breach of contract. The Court acknowledged that to demonstrate a breach of contract a party must establish a contract, performance by one party, a breach of the required performance by the other party and resulting damages. The policy/contract here required State Farm to provide “the prevailing competitive price.” Upon review of the Record, the Appellate Division ruled that State Farm had not met its burden, as the moving party, in demonstrating that its offer was consistent with its contractual obligations under the policy. Accordingly, a question of fact precluded summary judgment and the matter was remanded back to the trial court.
05/26/26 Lotus Residences, LLC v. Northfield Ins. Co.
Appellate Division, First Department
Reasonable Excuse AND Meritorious Defense Needed to Defeat Default
Plaintiff presented this application to vacate a default judgment that was entered against Defendant Castillo pursuant to CPLR 5015. Importantly, plaintiffs offered no explanation for Castillo’s default, but rather only pointed to an allegedly mistaken application of an exclusion. In rejecting plaintiff’s contention, the Court noted that plaintiff had notice of the alleged error in Northfield’s logic. The Court also noted that plaintiff also failed to explain its year delay in seeking vacatur of the default.
Finally, the Court also rejected plaintiff’s argument that Castillo’s default should be vacated “in the interest of justice.” Here, the Court aptly noted that Castillo’s default would not preclude plaintiff from challenging Northfield’s position insofar as it impacted plaintiff.
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]
No Connecticut cases of interest this edition.
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
05/29/26 Joy Constr. Corp. v. StarStone Specialty Ins. Co.
Second Circuit Court of Appeals
Sexual & Physical Abuse Exclusion Found Applicable to Claims of EEOC Claims Involving Workplace Sexual Harassment and Abuse
Joy Construction Corporation sought insurance coverage from StarStone Specialty Insurance Company for costs to defend an EEOC charge. StarStone denied coverage and Joy sued for breach of contract and declaratory relief.
Underlying the coverage dispute were claims made by Tanzima Tuli, a security officer at a Joy Construction site, who filed an EEOC charge alleging her supervisor repeatedly told her he was sexually attracted to her, made overtures toward a sexual relationship despite her protests, and, in one instance, groped her breasts.
Joy asserted a right to defense coverage under its policy with StarStone, which defined a covered “Claim” to include civil or administrative proceedings commenced by a complaint or notice of charges, and defined “Wrongful Act” to include actual or alleged sexual or workplace harassment. That policy, however, contained a Sexual & Physical Abuse Exclusion barring damages and defense costs for any claim “based upon, arising out of, [or] in any way involving” sexual abuse, physical abuse, “licentious, immoral or sexual behavior intended to lead to or culminate in any sexual act,” or transmission of any communicable disease.
Central to the arguments that the parties raised, it was disputed whether “Claim” in the policy meant each individual cause of action or the entire EEOC proceeding—i.e., whether any excluded conduct in the proceeding would bar coverage for the whole proceeding. However much focus had been placed upon this issue, the court noted it could affirm on any basis supported by the record and thus did not need to resolve that definitional dispute.
Specifically, the Second Circuit noted that even assuming “Claim” meant an individual cause of action, the court held that every cause of action in the EEOC matter involved either “sexual abuse” or “licentious, immoral or sexual behavior intended to lead to or culminate in any sexual act,” placing the entire proceeding squarely within the policy’s Sexual & Physical Abuse Exclusion. Because coverage was defeated under Joy’s preferred reading, the court found it unnecessary to define “Claim” more broadly.
The Second Circuit also rejected Joy’s contention that the exclusion made coverage illusory. It reasoned that the exclusion would not bar coverage for all forms of sexual harassment (for example, harassment based solely on offensive remarks about a person’s sex), so the policy still provided meaningful coverage even if the exclusion applied to the particular facts here.
On these grounds the Second Circuit affirmed dismissal of Joy’s claims for defense and indemnity under the policy.
STORM’S SIU
Scott D. Storm
[email protected]
05/07/26 Xin Wang Chen v. Hyundai Marine & Fire Insurance Co., Ltd., and Chao’s Insurance Agency, Inc.
Supreme Court of New York, New York County.
Absent Evidence of a Special Relationship or an Express/Implied Undertaking by the Broker to Verify Application Details, the Insured Bears Responsibility for the Accuracy of Signed Application Statements. A Broker’s Common-Law Duty Is to Obtain Requested Coverage, Not to Investigate and Confirm Facts Such as Occupancy; A Misrepresentation by the Insured Can Justify the Insurer’s Denial and Bars Recovery Against the Broker on These Facts
The motion before the court was Chao’s Insurance Agency, Inc.’s motion for summary judgment, which the court granted.
Plaintiff sought to recover insurance proceeds following a fire at a property he owns in Brooklyn. He obtained a policy from Hyundai Marine & Fire Insurance Co., Ltd. and submitted a claim; Hyundai denied the claim. The insurance application represented that the premises were a four-family tenant-occupied house, but the property was actually configured to house more than four families (five or six), which the earlier court ruling concluded was a material misrepresentation.
Hyundai previously moved to dismiss; that motion was fully briefed by March 2021 and granted by a different judge on December 21, 2022. That decision found Hyundai’s denial justified because the application’s representation (four-family occupancy) was false given that more than four families resided at the location, constituting a material misrepresentation. The present motion involves only plaintiff’s claims against Chao, the broker.
Chao served as the broker used to obtain the insurance and asserted it had “nothing to do with” Hyundai’s proper disclaimer. It argued the plaintiff was responsible for verifying the accuracy of the application’s answers, regardless of who filled out the form, and that Chao had no duty to ensure the information signed by plaintiff was correct.
Plaintiff argued Chao undertook duties beyond clerical tasks by completing the application, presenting it for his signature, and thus had to investigate occupancy before obtaining the policy. He asserted there were issues of fact regarding whether Chao assumed broader duties to verify the application’s accuracy.
Chao maintained there was no “special relationship” with plaintiff that would impose a duty to verify and check the application’s answers and that plaintiff could not create an issue of fact by claiming he failed to review the application’s contents.
The court noted that an insurance policy is a contract between insurer and insured. As a general rule, the relationship between an insurance agent and an insured does not create advisory duties; however, in exceptional, particularized situations, an agent may, by conduct or agreement, assume duties beyond those recognized at common law. The court drew this statement from First Department authority quoted in the opinion.
The court found no basis to conclude Chao did anything that would raise a triable issue of fact about a “special relationship” requiring Chao to verify answers in the application. Plaintiff’s references to Chao’s deposition established only “quality customer service,” not an undertaking to ensure the application’s accuracy. There were no documents or communications in which Chao agreed to investigate or confirm occupancy for plaintiff.
The application bore plaintiff’s signature and included an “applicant’s statement” in which he declared the information to be true, complete, and correct to the best of his knowledge and belief. The court concluded that Chao met its common-law duty to obtain coverage for the client (even though the claim was later disclaimed) and that it was not Chao’s responsibility to ensure the application information was complete and accurate. The court referenced authority dismissing claims against brokers in similar circumstances, including where insureds asserted they lacked English proficiency and could not verify application facts.
The court granted Chao’s motion for summary judgment.
03/10/26 Gov’t Employees Ins. Co. v. Mayzenberg
United States Court of Appeals, Second Circuit
The Second Circuit, Guided by the Court of Appeals, Held That Mere Professional Misconduct — Such as Paying for Referrals in Violation of Education Law § 6530(18) and 8 N.Y.C.R.R. § 29.1(b)(3) — Without Ceding Control of a Professional Corporation to an Unlicensed Party, Does Not Disqualify a Provider From No‑Fault Reimbursement Under New York’s Eligibility Regulation, New York’s No‑Fault “Eligibility Regulation,” 11 N.Y.C.R.R. § 65‑3.16(a)(12)
Plaintiffs were GEICO entities; defendants were Mayzenberg and three acupuncture professional corporations: Mingmen Acupuncture, P.C., Sanli Acupuncture, P.C., and Laogong Acupuncture, P.C. The claims arose from GEICO’s allegation that defendants paid third parties “kickbacks” for patient referrals of no‑fault insureds to Mingmen, which then billed GEICO for treatments. GEICO invoked New York’s no‑fault “Eligibility Regulation,” 11 N.Y.C.R.R. § 65‑3.16(a)(12), arguing that paying for referrals violated professional‑conduct rules and thereby constituted a failure to meet a “licensing requirement” necessary to perform services, permitting GEICO to deny reimbursement.
District court proceedings:
In the Eastern District of New York, the court granted GEICO summary judgment on its declaratory judgment, common‑law fraud, and RICO claims, accepting GEICO’s reading of the Eligibility Regulation to disqualify providers who bought patient referrals from receiving no‑fault reimbursements.
First appeal and certified question:
On appeal, the Second Circuit agreed there was no genuine dispute of fact that the defendants paid for patient referrals but could not confidently predict whether New York law allowed denial of no‑fault benefits on that basis under the Eligibility Regulation. The court certified the question to the New York Court of Appeals, asking whether an insurer may deny payment where a provider violated New York Education Law § 6530(18) and 8 N.Y.C.R.R. § 29.1(b)(3) by paying for referrals, on the ground the provider “failed to meet” a necessary licensing requirement under 11 N.Y.C.R.R. § 65‑3.16(a)(12).
New York Court of Appeals’ answer:
The Court of Appeals held that the Eligibility Regulation does not authorize denial of no‑fault payments based on “alleged professional misconduct that falls short of ceding control of a professional services corporation to an unlicensed party.” In other words, violations such as paying for referrals, without more, do not render a provider ineligible for no‑fault reimbursement under § 65‑3.16(a)(12).
Second Circuit decision on return:
In light of the Court of Appeals’ answer, the Second Circuit vacated the district court’s judgment for GEICO, concluding the district court erred by treating improper referral payments as a disqualifying “licensing requirement” failure under the Regulation. The Second Circuit remanded for further proceedings consistent with the opinion.
The court declined both sides’ supplemental requests: GEICO’s bid to affirm on an alternative theory that the referral scheme effectively ceded control of Mingmen to an unlicensed party, and defendants’ request to bar GEICO from filing another summary judgment motion. The panel left any further arguments resulting from the Court of Appeals’ decision to the district court in the first instance.
Legal framework clarified:
Eligibility Regulation (11 N.Y.C.R.R. § 65‑3.16(a)(12)): Insurers may deny no‑fault reimbursement if a provider “fails to meet any applicable New York State or local licensing requirement necessary to perform such service.” The Second Circuit, guided by the Court of Appeals, clarified that mere professional misconduct—such as paying for referrals in violation of Education Law § 6530(18) and 8 N.Y.C.R.R. § 29.1(b)(3)—does not, by itself, constitute failure to meet a “licensing requirement” unless it amounts to unlawful ceding of corporate control to an unlicensed person.
Practical implications:
Insurers cannot categorically deny no‑fault claims solely because a provider engaged in referral‑payment misconduct; they must show misconduct that rises to the level of corporate control being ceded to an unlicensed party to invoke § 65‑3.16(a)(12). Claims premised on the broader disqualification theory (declaratory judgment, common‑law fraud, RICO) require re‑evaluation under this narrower standard on remand.
05/19/26 Bammeke v. GEICO Indem. Co.
United States District Court for the Southern District of New York
Where Insurer Allegedly Failed to Transmit Insurance Proof to DMV Causing DMV Suspension Leading to Plaintiff's Arrest at Police Checkpoint, Claims for Negligent Misrepresentation, False Imprisonment, Breach of Contract, and Tortious Interference Were Dismissed Leaving a Cause of Action for Negligence
Insurer allegedly failed to transmit insurance proof to DMV causing DMV suspension leading to plaintiff's arrest at police checkpoint. It was recorded as “fault-related” incident and higher insurance premiums resulted from the fault classification.
The plaintiff brought five claims against GEICO: negligence (Count I), negligent misrepresentation (Count II), false imprisonment (Count III), breach of contract (Count IV), and tortious interference with a prospective business relationship (Count V). GEICO moved to dismiss Counts II through V, and the court granted the motion, dismissing these claims without prejudice.
Negligent Misrepresentation (Count II):
Bammeke alleged that GEICO owed him a duty to provide accurate information regarding his insurance coverage and breached that duty by misrepresenting that his policy was active and properly transmitted to the DMV. Under New York law, a claim for negligent misrepresentation requires (1) a special or privity-like relationship imposing a duty to impart correct information, (2) incorrect information, and (3) reasonable reliance on the information. The court dismissed this claim for two reasons:
- Duplicative Nature: The negligent misrepresentation claim was deemed duplicative of the negligence claim, as both were based on the same conduct and sought the same relief. Under New York law, duplicative claims are dismissed when they are based on identical conduct and seek the same relief.
- Lack of Special Relationship: Bammeke failed to allege a special or privity-like relationship with GEICO. New York law generally does not recognize a fiduciary relationship between an insurer and an insured in arm's-length transactions unless there is a significant imbalance of trust or confidence. The court found that Bammeke’s allegations of GEICO’s superior knowledge and control over regulatory reporting systems were insufficient to establish such a relationship.
False Imprisonment (Count III):
Bammeke claimed that GEICO was liable for false imprisonment because the DMV’s erroneous suspension of his license and registration, allegedly caused by GEICO’s reporting, led to his arrest and detention by the NYPD. Under New York law, false imprisonment requires: (1) intent to confine, (2) consciousness of confinement, (3) lack of consent, and (4) confinement not otherwise privileged. To prove intent, a plaintiff must show that the defendant either: (a) confined or intended to confine the plaintiff or (b) affirmatively procured or instigated the plaintiff's arrest. The court dismissed this claim because of lack of Intent. Bammeke did not allege facts showing that GEICO intended to confine him or affirmatively procured or instigated his arrest. The court cited precedent rejecting the argument that providing information to a system that triggers enforcement action constitutes intent to confine.
Breach of contract (Count IV):
To state a claim for breach of contract under New York law, a plaintiff must allege (1) the existence of an agreement, (2) performance by the plaintiff, (3) breach by the defendant, and (4) damages. Where plaintiff alleged GEICO breached insurance policy by failing to maintain accurate DMV filings and improperly recording arrest as fault-related incident, breach of contract claim dismissed for failure to identify specific policy provision breached and lack of allegations showing intent required for good faith covenant breach.
Tortious Interference with Prospective Business Relationship (Count V):
Bammeke alleged that GEICO’s inaccurate reporting of his arrest and vehicle impoundment as an at-fault incident impaired his ability to obtain competitively priced insurance coverage with other insurers, such as Progressive. Under New York law, this claim requires: (1) a business relationship with a third party, (2) defendant’s knowledge of that relationship and intentional interference, (3) defendant’s sole purpose to harm the plaintiff or use of dishonest, unfair, or improper means, and (4) injury to the relationship. The court dismissed this claim for two reasons:
- Lack of Knowledge of Specific Relationship: Bammeke failed to allege that GEICO had knowledge of a specific business relationship with Progressive. General foreseeability of harm to third-party relationships is insufficient.
- No Malice or Improper Means: Bammeke did not allege that GEICO acted with malice or used wrongful means, such as fraud, physical violence, or economic pressure, which are required to meet the heightened standard for this claim.
The court granted GEICO’s motion to dismiss Counts II through V without prejudice, allowing Bammeke the opportunity to amend his claims if he could address the deficiencies identified. Count I, the negligence claim, was not challenged by GEICO and thus remains pending.
05/20/26 State Farm Mutual Automobile Insurance Co. v. Ricciardi
U.S. Court of Appeals for the Second Circuit
Insureds’ Written Declinations of SSL Coverage Prior to the Amendment of § 3420(g) to Make SSL Coverage Mandatory by Default Remain Effective for Subsequent Renewals, Provided the Declination Substantially Complies with the Model Form and Includes Premium Information, Strict statutory Notice Requirements at Renewal Still Apply; An Insurer’s Failure to List the SSL Premium on the Premium Notice Is a Violation, But Courts May Refuse to Reform a Policy to Add SSL Coverage Where the Insured Validly Declined and Paid No SSL Premium, Absent a Statutory Mandate, Fraud, or Mistake
Appeal by Daniel and Margaret Ricciardi from an EDNY judgment granting State Farm declaratory relief that it has no duty to defend or indemnify Daniel in a tort suit filed by his spouse.
State Farm issued Daniel an auto policy on a 2023 BMW X5 effective March 23, 2023, to September 23, 2023. At that time, Supplemental Spousal Liability (SSL) coverage—coverage for bodily injury to a spouse based on the insured’s culpable conduct—was optional by default under N.Y. Ins. Law § 3420(g) (2020), available upon written request by the insured. In 2022 (amended March 2023), New York amended § 3420(g) to make SSL coverage mandatory by default for policies issued, renewed, or amended on or after August 1, 2023, unless the insured declined in writing; implementing regulations took effect June 20, 2023 (11 NYCRR § 60-1.6).
On June 26, 2023—before the August 1 effective date—Daniel signed State Farm’s SSL declination form. The form described SSL coverage, recommended consulting an agent if unsure, identified the policy number, and stated the additional monthly premium of $15.60 for SSL coverage.
After the 2023 vehicle was totaled, State Farm issued an amended policy for a 2024 BMW X5 effective September 20, 2023, to March 23, 2024. The amended policy again excluded SSL coverage and included a disclaimer explaining SSL and that New York law required SSL unless declined. However, the notice accompanying the amended policy did not list the SSL premium, as the post‑August statute required on the front of the premium notice.
On April 29, 2024, Margaret sued Daniel in New York Supreme Court (Kings County), alleging she was struck and seriously injured by Daniel’s 2024 BMW. State Farm initially retained counsel for Daniel with a reservation of rights, then filed this federal action seeking a declaration of no duty to defend or indemnify. The district court granted State Farm judgment on the pleadings; the Ricciardi’s appealed.
Issues on appeal:
- Whether Daniel’s June 26, 2023, written declination of SSL coverage remained effective under the post‑August 1, 2023, version of § 3420(g) when his policy was amended after that date.
- Whether State Farm’s failure to include the SSL premium in the notice accompanying the September 2023 amended policy (a statutory requirement) required reformation of the policy to include SSL coverage.
Holdings:
- The June 26, 2023, declination was a valid and effective waiver of SSL coverage for the later September 2023 amended policy. The declination tracked the model form, explained SSL, and stated the premium; New York’s implementing regulation explicitly preserved prior written declinations at renewal or amendment (11 NYCRR § 60-1.6[a][3]) [7].
- The amended policy’s notice was noncompliant because it failed to list the SSL premium as required by § 3420(g)(2)(B) (2023). However, equitable reformation to add SSL coverage was not an appropriate remedy on these facts. The court affirmed judgment for State Farm and rejected the Ricciardis’ remaining arguments [8].
Court’s reasoning:
The declination form Daniel signed “tracked” the New York Department of Financial Services model, explained SSL, stated that coverage would be included unless declined in writing, identified the premium that would apply if not declined, recommended consultation with an agent, and referenced the original policy number.
Nothing in the post‑August 1 statute makes a pre‑effective‑date declination invalid if given on sufficient notice. The regulation expressly provides that a prior written declination remains effective at renewal or amendment, so Daniel’s June 2023 declination carried forward to the September 2023 amended policy.
The amended policy, as an “amendment of a motor vehicle liability policy” after August 1, 2023, triggered the statute’s notice requirement. The statute mandated notice “upon issuance, renewal or amendment” and required that the notice be on the front of the premium notice in boldface and include the insurer’s premium for SSL. State Farm’s notice omitted the premium and thus did not strictly comply. Prior pre‑renewal communications could not substitute for the specific on‑renewal, on‑premium‑notice requirement.
While New York law generally supersedes non‑conforming policy terms with statute and regulation, the remedy for pure notice violations is less clear. The Second Circuit predicted the New York Court of Appeals would not order equitable reformation to add coverage that the insured had expressly declined and never paid for.
The only missing item from the September 2023 notice was the premium, which had already been provided in the June 26, 2023, declination. The SSL statute provided no textual basis for reformation as a remedy for notice failures; the court cited its recent decision in Loomis noting the absence of a statutory reformation remedy for failure to provide notice of optional coverage.
No fraud or mistake was shown. Adding SSL coverage retroactively would give Daniel a windfall because he never paid SSL premiums. Therefore, reformation to include SSL was inappropriate despite State Farm’s notice defect.
The district court’s declaratory judgment stands; State Farm owes no duty to defend or indemnify Daniel in Margaret’s suit under the amended policy because SSL coverage was validly declined and cannot be imputed by reformation to cure a notice omission.
The Second Circuit noted the district court erred in applying the pre‑August 1, 2023, version of § 3420(g) to the September 2023 amended policy, but the error was harmless because the outcome is the same: the pre‑August declination remained effective, and reformation is not the remedy for the later notice defect.
FLEMING’S FINEST
Katherine A. Fleming
[email protected]
05/21/26 Dobbins v. West Virginia Nat’l Auto. Ins. Co.
West Virginia Supreme Court
Insurer Required to Show Prejudice From Late Reporting Based on Policy’s Plain Language
On a Friday afternoon, Mr. Dobbins’ pickup truck was struck in a hit and run accident after an unidentified driver lost control of their vehicle. The day of the accident, Mr. Dobbins drove home and complained of back and neck pain, but Mr. and Mrs. Dobbins did not report the accident right away because the following Monday was a legal holiday. Several days after the accident, they went to make a police report in person but were advised that it was too late. Mr. and Mrs. Dobbins made a claim for uninsured motorist coverage under Mrs. Dobbins’ auto policy. West Virginia National Automobile Insurance Company commenced an investigation after the accident was reported. Mr. and Mrs. Dobbins completed an insured driver’s statement form to provide information about the accident, including three witnesses to the accident. An inspection of the vehicle was conducted, and West Virginia national obtained the witnesses’ recorded statements. The insurer denied the claim for UM coverage based on the policy’s provisions and the West Virginia Code because the insureds did not report the accident to a police, peace, or judicial officer within twenty-four hours. However, per the policy’s terms, the failure to report an accident only operates as a bar to coverage under the insurance policy if it results in prejudice to the insurer.
Mr. and Mrs. Dobbins filed a complaint against John Doe, the unknown driver of the other vehicle, alleging negligence causing bodily injury, property damage, and other damages; and against West Virginia National for a declaratory judgment that the insurer had to provide UM coverage under the policy, breach of contract, bad faither/breach of the implied covenant of good faith and fair dealing, and conduct constituting unfair claim settlement practices. The parties moved for summary judgment, and the circuit court granted partial summary judgment in favor of the insureds, finding they were entitled to UM coverage because West Virginia National had not presented evidence of prejudice. The circuit court also noted there were also reasons for the delay, including that Mr. Dobbins could not read or write, and Mrs. Dobbins had similar limitations; Mr. Dobbins was upset by the accident, and the accident occurred on a holiday weekend at the close of business. The burden then shifted to the insurer to show it was prejudiced by the four day delay in notice, which it failed to establish.
The Intermediate Court of Appeals reversed, finding the circuit court erred in conducting the prejudice analysis instead of strictly applying the plain language of the policy and relevant statute with the reporting requirement.
The West Virginia Supreme Court held that the circuit court did not err in requiring West Virginia National to prove that its investigation was prejudiced by the failure to strictly adhere to the twenty-four-hour reporting requirement and in finding no prejudice. The West Virginia Supreme Court reasoned that the policy clearly and unambiguously required the insurer to provide prejudice, so the full effect should be given to the plain meaning intended. Accordingly, the West Virginia Supreme Court reversed the decision of the Intermediate Court of Appeals and remanding for further proceedings.
GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]
05/21/26 Sky Blue Operations, LLC v. Prime Prop. & Cas. Ins. Co.
District Court of New Jersey
Court Finds Question of Fact on Question of Employment Status
On June 12, 2019, Beltran was driving a truck owned by EAB and operated by Sky Blue. EAB and Sky Blue were each part of a family of related trucking businesses, which also included L&Y Enterprises and Doing-It-Right Technologies, LLC. On that date, Beltran was involved in a motor vehicle accident in which he sustained serious bodily injuries, resulting in the amputation of one of his legs below the knee.
Beltran brought a workers compensation claim against L&Y, which he maintained was his employer. Beltran also sued EAB and Sky Blue in a tort lawsuit. Sky Blue sought coverage from its general liability insurer, Prime (the defendant in this action). Prime denied coverage to Sky Blue on the basis of its employer’s liability exclusion, which precluded coverage for bodily injury to employees of the insured. The Prime policy defined an “employee” to include leased workers, but not temporary workers.
The central coverage question was whether Beltran was an employee of Sky Blue, and thus, whether Prime’s employer’s liability exclusion applied to the loss. Discovery revealed that while Beltran had initially applied for employment with Sky Blue, and that Sky Blue performed Beltran’s drug tests and that Beltran drove a truck on behalf of Sky Blue on multiple occasions, L&Y paid Beltran’s wages and his workers’ compensation claim. According to Beltran, he was an employee of L&Y, although he also drove trucks on behalf of Sky Blue when requested to do so.
On summary judgment, Prime argued that Beltran was an employee of Sky Blue because he was driving the truck on that company’s behalf at the time of the accident, and because the Federal Motor Carrier Safety Regulations define all drivers—even “independent contractors—” as employees. Sky Blue, in turn, argued that the definition of employee developed by New Jersey jurisprudence should apply, since the policy did not make any reference to the Federal Motor Carrier Safety Regulations.
The Court rejected Prime’s urging to use the Federal Motor Carrier Safety Regulations’ definition of “employee.” In so doing, the Court pointed out that the Federal Motor Carrier Safety Regulations are a “suretyship by the insurance carrier to protect the public,” and are only triggered “when the policy it is attached to does not provide coverage.” The Court noted that because Prime failed to identify any “uncompensated victims” or any “state or federal statute that is offended by the potential gap in coverage,” the Prime policy remained subject to the ordinary principles of contract interpretation. The Court then turned to the Prime policy and noted that the policy’s definition of “employee” (which facially excludes temporary workers) was never meant to conform with the Federal Motor Carrier Safety Regulations’ definition of “employee,” because the Regulations are clear that they apply to any driver of a motor vehicle, even if they are temporary workers or independent contractors.
The Court then turned to Sky Blue’s imposition of the definition of “employee” imposed by New Jersey case law. Under New Jersey law, the “control test” is used to determine whether a worker is an “employee.” This test requires four factors: (1) the degree of control exercised by the employer over the means and methods of completing the work; (2) the source of the workers’ compensation; (3) the source of the workers’ equipment and resources; and (4) the employer’s termination rights.
Applying the control test, the Court noted that the hiring and administrative documents associated with Beltran bore Sky Blue’s name and logo, and that a former Sky Blue employee testified in the case that Beltran was hired by Sky Blue in 2019. However, two L&Y employees testified that Beltran was L&Y’s employee, and was leased to Sky Blue. Noting that there was substantial and conflicting evidence as to which entity exerted primary control over Beltran as of the time of the accident.
Ultimately, the Court denied both motions, finding a question of fact.
05/28/26 Pa. Mfrs. Ass’n Ins. Co. v. NJ Mfrs. Ins. Co.
District Court of New Jersey
Only if a Policy Is Contingent Upon the Exhaustion of Another Policy Is That Policy a “True Excess Policy;” Other Insurance Clauses Are Used Only to Determine the Priority of Coverage Among Insurers on the Same Level
Jones and Zalescik were involved in an auto accident for which Zalescik bore liability. Zalescik was apparently driving within the scope of his employment by Capital Health Systems Inc., which was insured under a commercial automobile policy issued by PMA. Zalescik was personally insured under a personal auto policy issued by NJM, as well as a personal umbrella liability policy, also issued by NJM. It was undisputed that, because of the employment relationship, both Zalescik and Capital Health were insured under each of the PMA policy and both NJM policies.
The parties agreed to settle the resulting lawsuit for a total of $950,000. NJM paid Jones $500,000, as the primary layer of coverage for Zalescik and Capital Health. It was undisputed that the NJM primary policy went first until its limits were exhausted. PMA, Capital Health’s insurer, paid the remaining $450,000.
At the core of this action was PMA’s attempt to recover part of the $450,000 it paid in the settlement from Zalescik’s umbrella policy with NJM. In making that argument, PMA argued that its Other Insurance clause was functionally equivalent to that under the NJM umbrella policy—that the respective policies were primary as to owned autos, and excess over other valid and collectible insurance as to non-owned autos. In response, NJM argued that because the coverage provided by the PMA policy was not conditioned on the exhaustion of coverage under any other policy, the PMA policy was not a “true excess policy,” and therefore did not provide insurance on the same level as the NJM policy.
Under New Jersey law, where two or more policies provide coverage on the same level, courts turn to the policies’ respective Other Insurance clauses to determine the payout allocation among insurers on the same level. If both clauses provide that the given insurer will make a pro rata contribution based on the proportion that its policy limits provide to the total available policy limits, all insurers pay pro rata based on this method. On the other hand, if one insurer has a pro rata clause and the other has an excess clause, and there is no conflict between the two provisions, the policy with the pro rata clause would be paid first, and the policy with the excess clause would be paid subsequently.
However, there is an important different between policies with an excess Other Insurance clause and policies that are “true excess” policies. Instead of simply having an excess clause written into its Other Insurance provision, a “true excess” policy conditions payment on the existence and exhaustion of a separate primary policy.
As the Court discussed, Other Insurance provisions are only to be used when allocating coverage among policies that have already been determined to provide coverage on the same level. “True excess” policies do not provide coverage “on the same level” as primary policies that contain excess Other Insurance clauses.
The Court then turned to the insurance policies at issue, and noted that the NJM umbrella policy conditioned its coverage on the existence and exhaustion of the NJM primary policy. As the Court noted, this was markedly different from the terms of the PMA policy, which only contained an excess provision written into its Other Insurance clause.
Thus, the Court found that PMA was not entitled to recoup any portion of the $450,000 it paid to Jones as part of the settlement.
O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]
06/02/26 Champion Corp. v. AIG Ins. Co. of Canada
United States Court of Appeals, Fifth Circuit
Denial of Leave to Amend Vacated Thus Permitting Parent Company to Add Insured Subsidiary to Create Standing
AIG and ICSOP issued general liability policies to Ecolab, Inc., which together provided coverage from December 31, 2017, to December 31, 2020. The policies contained a broad form Named Insured Endorsement that provided coverage to any subsidiary, associated, affiliated, allied, or acquired company or corporation of which Ecolab had more than a 50% ownership interest.
By 2020, ChampionX obtained ownership of several Ecolab subsidiaries. Some of these entities included ChampionX Holding, Inc. and Nalco Champion, which later became ChampionX Canada ULC. The main ChampionX entity claimed that as part of its acquisitions of the Ecolab subsidiaries, it acquired rights to or under Ecolabs policies with AIG and ICSOP.
On June 4, 2020, Highwood Oil Company commenced a suit in Alberta, Canada, against “Nalco Champion, an Ecolab Company; Ecolab; Nalco Canada ULC; and Champion X ULC. The thrust of the Complaint was that in February 2018 Nalco provided Highwood with a report advising that corrosion probability for several Highwood pipelines was low. Yet in July 2018, Highwood discovered an oil-emulsion release arising from several failures from one of the pipelines included in Nalco’s report. Highwood asserted the failure was caused by internal corrosion.
ChampionX filed notices of loss with ICSOP and AIG in July 2020. Both insurers denied the claim. ChampionX then brought an action in Texas state court asserting breach of contract, bad faith, and violations of the Texas Insurance Code. ICSOP removed the case to federal court and ChampionX moved for partial summary judgment prior to service of AIG.
On appeal the court pondered whether ChampionX possessed standing to assert claims under the policies. The court also addressed whether the District Court properly denied ChampionX’s leave to amend to add additional plaintiffs to the suit to cure the standing issue.
ChampionX did not dispute the fact it lacked direct contractual privity with AIG and ICSOP, but still asserted that it was entitled to declaratory relief. Notably, ChampionX asserted ICSOP waived the standing argument since ICSOP did not assert the defense in its Answer. However, ChampionX never briefed the argument at the District Court level. Thus, ChampionX forfeited its own waiver argument.
Nonetheless, ChampionX asserted it qualified as an interested party to the policies because like an injured third party it suffered financial losses in defending the underlying suit as a parent company. The Fifth Circuit disagreed since financial losses did not suffice to create standing for declaratory relief. While an injured third-party may have rights to the proceeds of a policy, a parent company lacks a comparable legal relationship to contracts entered into by its subsidiaries.
ChampionX further argued the District Court erred in denying leave to join Nalco Champion, Nalco Canda ULC, and ChampionX Canada ULC, and Ecolab as additional plaintiffs. The proposed amendments allege that ICSOP and AIG issued the policies to Ecolabs, the other parties were named defendants in the underlying suit, and ChampionX Canada ULC was a wholly owned subsidiary of Ecolab and thus, qualified as an insured under the policies.
On this issue, ICSOP and AIG did not dispute that the additional proposed plaintiffs could have contractual standing to seek relief under the policies. Rather, the insurers argued only that the addition of the plaintiffs would not cure ChampionX’s lack of standing. However, the futility standard relates only to if the Complaint would fail to state a claim upon which relief can be granted, not when the amendment fails to allow the original plaintiff to state a claim.
For the above reasons, the District Court’s grant of summary was affirmed but the denial for leave to amend was vacated.
LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]
See you in two!
LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]
06/05/26 New York State Budget Finalized
New York State Legislature
Governor Announces NY Budget Finalized and Includes Reforms to Address Abusive and Excessive Litigation
On May 27, 2026, Governor Hochul announced that the NYS Budget had been finalized and includes significant measures to address Abusive and Excessive Litigation.
The budget included the following reforms intended to address fraud and lower auto insurance premiums for New Yorkers:
- A limitation on damages available for drivers engaging in criminal behavior at the time of the accident, including uninsured motorists, drunk drivers, and drivers in the act of committing a felony.
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Elimination of the 90/180 “serious injury” threshold category.
- Which eliminates the “serious injury” category which defined a “serious injury” to include: a medically determined injury or impairment of a non-permanent nature which prevents the injured person from performing substantially all of the material acts which constitute such person's usual and customary daily activities for not less than ninety days during the one hundred eighty days immediately following the occurrence of the injury or impairment. New York Insurance Law Section 5102(d)
- Modification of the comparative negligence rule in auto personal injury cases – The rule provides that in any action to recover damages for personal injuries in an action subject to No-Fault Law, “ the culpable conduct attributable to the claimant shall bar recovery if the culpable conduct attributable to the claimant is greater than the culpable conduct of the person against whom recovery is sought or is greater than the combined culpable conduct of the persons against whom recovery is sought.”
Governor Hochul states that these changes are geared to battle fraud, limit damages paid to bad actors and prioritize consumers.
VICTORIA’S VISION ON BAD FAITH
Victoria S. Heist
[email protected]
06/03/26 RLF Nazareth, LLC v. York RSG Int'l Ltd.
Third Circuit Court of Appeals
Court of Appeals Upholds Insurer’s Favorable Jury Verdict on Bad Faith for Property Damage Claim
RLF Nazareth, LLC ("RLF") owns property in the Virgin Islands consisting of one main building and three cottages. The property was damaged during hurricanes Irma and Maria. RLF was insured by Certain Underwriters at Lloyd's. The Lloyd's Policy provided coverage for the dwelling and structures attached to the dwelling, but not structures set apart from the dwelling by clear space. The coverage dispute turned on whether the three cottages were part of the covered "dwelling".
After RLF filed its claim, York RSG Int'l Ltd. ("York") was retained to inspect the property and adjusted only the main building and did not include the three cottages. RLF obtained its own adjuster, who included the detached cottages in its inspection. After, York conducted a revised assessment.
RLF rejected York's revised assessment and brought an action in the District Court of the Virgin Islands against Lloyd's and York asserting (1) breach of contract; (2) negligently failing to properly, accurately, or otherwise competently determine the damages under the Policy, and (3) that Lloyd's and York acted in bad faith during the adjustment process.
In litigation, Lloyd's moved to compel appraisal, which the District Court enforced. After the appraisal award was paid, the District Court decided each parties' cross-motions for summary judgment, dismissing the breach of contract claim as moot because there were no unpaid damages under the policy, and denying summary judgment asking the Court to find bad faith.
The Court held to be successful on a bad faith claim, RLF must prove the existence of an insurance contract, breach by the insurer, and that the insurer intentionally and knowingly refused to pay the claim despite the absence of any reasonably legitimate or arguable reason. The Court found genuine disputes of fact as to whether the denial of coverage as to the cottages constituted a coverage determination and whether Lloyd's knowingly and intentionally excluded the cottages from coverage.
The case proceeded to trial on the bad faith claim alone, and prior to trial, the parties stipulated that the cottages were not covered under the policy. The jury returned a verdict for Lloyd's and RLF appealed to the Third Circuit Court of Appeals challenging the jury instructions given on the bad faith claim, stating the District Court should not have instructed the jury on breach of contract and the jury charge improperly suggested that the jury could not find bad faith absent unpaid contractual damages beyond the amount Lloyd's had paid under the appraisal award.
The Third Circuit Court of Appeals affirmed the jury's verdict, finding that RLF asserted breach as to the denial of the cottage coverage for the purpose of demonstrating its bad faith claim, and the jury was to consider the breach as part of RLF's bad faith claim. Next, the Third Circuit Court of Appeals rejected RLF's second argument, finding the jury instructions directed the jury to proper questions. That is, whether Lloyd's denied the claim and if so, whether it lacked a legitimate basis for doing so.
SHIM’S SERIOUS INJURY SEGMENT
Stephen M. Shimshi
[email protected]
05/24/26 Ferraras v. Chowdhury
Kings County Supreme Court
Supreme Court, Kings County, Declines to Impose Sanctions on a Defense Attorney Who Submitted an Attorney Affirmation in Support of a Summary Judgment Motion on the Issue of “Serious Injury” with Material Factual Misstatements
This action arose from a motor vehicle accident that occurred on November 26, 2022, in Kings County, New York. Plaintiff commenced this action to recover for personal injuries allegedly sustained in connection with the motor vehicle accident. Defendant filed a motion for summary judgment to dismiss the Plaintiff's complaint on the ground that Plaintiff failed to sustain a serious injury in accordance with Insurance Law § 5102(d). Upon review of Defendant's papers, the Court determined that factual misstatements were set forth by counsel in the attorney’s affirmation in support. The matter had been settled prior to the below.
Because the movant must rule out all categories claimed in the bill of particulars in asserting that the plaintiff failed to sustain a serious injury as defined in Insurance Law § 5102(d), including 90/180 (see Diaz v Nightingale Bakery & Beverage Distrib., Inc., 241 AD3d 642 [2d Dept 2025]; Santos v Fiktus, 232 AD3d 698 [2d Dept 2024]; Curiale v Delfavero, 211 AD3d 905), and/or must establish that whatever injuries are claimed by the plaintiff did not proximately result from the subject motor vehicle accident (see Lemieux v Horn, 39 NY3d 1108 [2023], affg 209 AD3d 1100 [3d Dept 2022]; Franklin v Gareyua, 29 NY3d 925 [2017], affg 136 AD3d 464 [1st Dept 2016]; Rivera v Fernandez & Ulloa Auto Group, 25 NY3d 1222 [2015], affd 123 AD3d 509 [1st Dept 2014]), the Court assumed that the attorney affirmation used accurate facts from the instant case to describe the Plaintiff's confinement to bed and missing work: "Plaintiff was not confined to bed as a result of the accident" (Paragraph "11"). "Plaintiff missed two months of work as a result of the accident and was confined to bed and home for one week per the bill of particulars and does not meet the 90/180 requirement" Paragraph "25"). However, the Court’s review of the bill of particulars yielded different information: that Plaintiff (A) was confined to bed for a period of approximately 1 week except for necessary and essential excursions for required purposes; (B) was confined to home for a period of approximately 1 week except for necessary and essential excursions for required purposes; and (C) was incapacitated from employment for approximately 1 week.
The Court determined that Defendant's affirmation in support falsely claimed that radiological evidence existed when none was submitted. The Affirmation contained inconsistencies about plaintiff's bed confinement (i.e., Paragraph "11" said none, Paragraph "25" said one week). The Affirmation also inaccurately stated that plaintiff missed two months of work when the plaintiff’s bill of particulars showed only one week of alleged incapacitation. The Court also discovered “identical template affirmations used across multiple cases by same law firm with same typographical errors.” The Court scheduled a sanctions hearing to be held with oral argument on the motion, to determine whether such misstatements constituted frivolous conduct for having asserted “material factual statements that are false” (22 NYCRR 130-1.1 [c] [3]).
Included in the opinion is an observation of the Court of the use of template attorney affirmations submitted by the firm of Baker, McEvoy & Moskovits, counsel for the movant, in support of serious injury threshold summary judgment motions. The Court compared the attorney affirmation in the instant action with those submitted in six (6) other actions: Burd v Rikelman (Index No. 514311/2018 [Sup Ct, Kings County]); St. Louis v Revishvili (Index No. 513654/2022 [Sup Ct, Kings County]); Berthold v Williams (Index No. 508768/2023 [Sup Ct, Kings County]); Thomas v Peak Limo Inc. (Index No. 515578/2023 [Sup Ct, Kings County]); Jean Philippe v Islam (Index No. 520505/2023 [Sup Ct, Kings County]); and Barrios Gramajo v Fox Ride Inc. (Index No. 525473/2023 [Sup Ct, Kings County]). Upon review, the Court determined that several paragraphs in the subject affirmation submitted by defense counsel are exactly identical to those it submitted in the aforementioned affirmations.
Sanctions:
A party's presentment of inaccurate claims warrants a sanction. See, Cram v Keller, 166 AD3d 846 [2d Dept 2018] ["no good faith basis for the defendant's motion to set aside the verdict to the extent it was predicated upon the inaccurate claim that the defendants did not own the subject property"]).
At the hearing, Defense counsel stated that he was preparing several affirmations in various motions contemporaneously and inadvertently included the same statements, including the one pertaining to radiological evidence. He did not elaborate on exactly how many motions he was working on. The Court determined that the aforementioned misstatements could not be attributed merely to working on multiple motions. This was evident from the usage of the same boilerplate paragraphs where it was obvious to the Court that they are not reviewed for individual accuracy. As such, the Court concluded that “material factual statements that are false were asserted” (see Cram v Keller, 166 AD3d 846).
Nevertheless, the Court exercised discretion against the imposition of sanctions based on: (1) no actual prejudice to plaintiff due to settlement; (2) plaintiff's counsel's testimony about defense counsel's integrity and lack of malevolent intent; (3) defense counsel's contrition and presumption against future repetition; and (4) principles of proportionality requiring judicial restraint in sanctions decisions.
NEW ENGLAND ALMANACK
Barbara A. O’Donnell
[email protected]
Alexander G. Henlin
[email protected]
Iryna N. Dore
[email protected]
03/09/26 Voscopoulos v. Liberty Mutual Insurance Company
U.S. District Court – New Hampshire
Personal Liability Policy’s Business Exclusion Precludes Coverage for Malicious Prosecution Claims Arising From Dissolution of Insured’s Joint Venture
The plaintiffs are residents of New Hampshire. Some years ago, Mr. Voscopoulous set up a limited liability company with his brother and with a common friend to invest in real estate in Florida. The three men had a falling out. In 2019, Mr. Voscopoulos sued the friend (one Reese) in Florida, claiming that Reese had perpetrated accounting fraud against the joint venture. When it granted final judgment in favor of Reese, the Florida court did not mince words: “The real purpose of the lawsuit is to force Reese out of the LLC.”
Undeterred, Mr. Voscopoulos filed a new lawsuit in Florida against Reese and against his own brother in 2022. Reese counterclaimed, alleging that Mr. Voscopoulos engaged in fraud to oust Reese and retain all of the benefits of the investment venture for himself. Among the counterclaims were allegations of malicious prosecution.
Liberty Mutual had issued a personal liability insurance policy to the plaintiffs that was in force from March 2022 to March 2023. Relevant here is that the policy excluded coverage for any bodily injury, property damage, or “personal injury” “arising out of any business or the use of business property.” The policy defined “business” as including “any employment, trade, profession, or occupation, engaged in on a full-time, part-time, or occasional basis” as well as “any other activity engaged in for money or other compensation other than reimbursement of expenses incurred to perform the activity.”
The question before the court was whether the business exclusion precluded coverage for the counterclaims asserted by Reese in the Florida litigation. The policy is governed by New Hampshire law. The court began by noting that the business exclusion employed the term “arising out of,” which New Hampshire has construed as a “very broad, general and comprehensive term, which means originating from or growing out of or flowing from.” The court went on to state that Reese’s malicious prosecution counterclaims “plainly” arose out of the business of the LLC, even after accepting all of the facts pled in the complaint as true and indulging all reasonable references in favor of the plaintiffs.
The court went on to state that the business exclusion used “clear and unambiguous policy language” that was “so clear as to create no ambiguity which might affect the insured’s reasonable expectations.” The countercomplaint, the court wrote, contained no allegations beyond those related to Mr. Voscopoulos’ efforts to operate and control the real-estate investment venture. Based on the exclusion, the court held that “no reasonable intendment” of Reese’s pleadings “can infer defendant’s liability to provide defense coverage.” There was no duty to defend, let alone any duty to indemnify. The court dismissed the case.
Note: Post-decision motions have been decided, and the appeal period for this order has now closed. Hurwitz Fine Attorney Alex Henlin briefed and argued the motion to dismiss that resulted in the Court’s order. A copy of the decision is available upon request to him: [email protected].
05/18/26 Family River Realty, LLC v. Hanover Insurance Company
Massachusetts Appeals Court
Insurer That Had Provided Coverage for Two Decades Not Responsible for Property Owner’s Inadequate Limits
Donnie and Diana Settlemore set up Family River Realty LLC to buy a waterfront home and an adjacent marina in Haverhill, Massachusetts, in 2021. They asked the seller for advise on insuring the property and were directed to the Costello Insurance Agency. A fire destroyed the home in December 2022, at which time the insureds learned that the policy’s $1.1 million limit was inadequate to cover their lost personal property. The insureds sued.
As against Hanover, the insureds asserted claims of negligence and recklessness. The insureds conceded that, as a general rule, there is no duty for an insurance company to ensure that a policyholder obtains insurance that is adequate for their needs. They nevertheless contended that “special circumstances” supported the imposition of a duty.
The trial court had granted Hanover’s motion to dismiss. On appeal, the state’s intermediate appeals court noted that facts relevant to the existence of special circumstances included a prolonged business relationship, the complexity and comprehensiveness of the customer’s coverage, the frequency of contact between the parties related to the customer’s insurance needs, and the extent to which the customer relied on the advice of the insurer. In Massachusetts, these are typically questions of fact.
The Appeals Court nevertheless affirmed the dismissal of the complaint, holding that the facts pled were not sufficient to state a “plausible” claim. There were no assertions that Family River ever communicated directly with Hanover prior to the loss, and the pleadings (which had been amended before dismissal) omitted any facts that would suggest Hanover made any assertions or representations as to coverage to Family River, at all. The pleadings were devoid of any facts that would permit the court to show reliance on such representations by the insureds.
The court went on to state that the mere facts that Hanover had insured the property (and not the insureds) for two decades, and that Hanover increased insurance coverage on other buildings on the property after the fire were not sufficient to create any duty.
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.
04/13/26 Hales, et al. v. Vaughan Build Ltd., et al.
Ontario Superior Court of Justice (trial level)
No Insurance, No Escape: Court Enforces Settlement Despite Non-Existent Policy
Toronto resident, Mrs. Rosemary Hales, who at the time was in her late 80s, was coming home from shopping accompanied by her personal support worker, when a wind gust propelled an unsecured construction fence onto the sidewalk, striking her and knocking her to the ground. She suffered life-altering injuries that forced her into hospital and then assisted living at a monthly cost of $5,500.
The construction site where the accident occurred was no ordinary project. Dancap Family Investment Office—managing the fortune built by generic pharmaceutical pioneer Leslie Dan—had hired Vaughan Builder to transform a 1914 Georgian revival mansion on Yonge Street near Toronto's Rosedale neighbourhood into a sustainable office building. Both companies had purchased a Wrap-up Construction Insurance Policy from Lloyds' managing general agent Trustar Underwriting Inc. Or, so they thought.
Mrs. Hales sued Vaughan Builder and Dancap for compensation. Both named defendants reported the claim to TruStar who appointed Charles Taylor Adjusting to adjust the claim. In time, the Toronto office of Dolden Wallace Folick LLP were appointed to defend the action. As is the usual case, Vaughan Builder and Dancap left the management of the litigation to Kate O’Malley at Dolden’s office.
The Litigation
O’Malley shepherded the litigation through pleadings and discovery to a mediation. Mrs. Hales attended the August 7, 2024, mediation with her lawyer. O’Malley and the adjuster attended for the defendants. After obtaining authority from Mr. Daniel Moses, the President and CEO of Trustar, O’Malley and the adjuster offered Mrs. Hales $600,000 to end the litigation which she accepted; and, so, the litigation settled. The parties signed a mediation agreement warranting that each had the authority to enter into the settlement. Vaughan Builder and Dancap were relieved—the litigation had ended within policy limits, with no impact on future premiums or ratings.
O’Malley requisitioned the settlement funds from Moses. Despite follow-up, the request for funds went unanswered.
By the end of December 2024, five months had gone by without receipt of the settlement funds. Was that unusual? As the Court stated “… overseas funding delays by Lloyd’s syndicates may have survived money transfer innovations since insurance payment cheques were mailed and transported to the New World by clipper ship.”
The Fraud
On December 30, 2024, O’Malley learned from the adjuster that the Trustar policy was likely a fake insurance policy.
On December 10, 2024, the Ontario Superior Court of Justice had rendered a judgment in a lawsuit by Trustar against Daniel Moses. Trustar alleged that Moses had been selling insurance policies to proposed policyholders, that were never placed with any insurance company. Notwithstanding the lack of any issued policy, Moses accepted and then, according to Trustar, Moses deposited the premiums into his personal bank account. The Ontario Superior Court ordered on December 14, 2024, that all assets of Moses are to be frozen.
It seems that the Wrap-Up Construction policy ‘issued’ to Vaughan Builder and Dancap was one such ‘policy’.
Fighting the Settlement
Vaughan Builder and Dancap applied to the Ontario Superior Court for an order nullifying the settlement under Ontario Rule 49.09: Where a party to an accepted offer to settle fails to comply with the terms of the offer, the other party may, (a) make a motion to a judge for judgment in the terms of the accepted offer, and the judge may grant judgment accordingly; or (b) continue the proceeding as if there had been no accepted offer to settle.
Vaughan Builder and Dancap applied under 49.09(b) and Mrs. Hales applied under 49.09(a). Ontario law on that Rule states that the Court must apply a two-part test: First determine whether a settlement agreement was reached, based on ordinary contract law principles. If it was reached, the court must enforce it, unless the circumstances would render such enforcement unjust. Vaughan Builder and Dancap argued that there was no settlement agreement, because it was tainted by fraud and concluded by a lawyer they did not retain. If there was an agreement, it would be unjust to enforce it against the defendants in their uninsured capacities.
The Court hearing this application held that Vaughan Builder and Dancap participated in the mediation that enabled Moses to instruct the adjuster and defence counsel to exchange promises to pay compensation and release the defendants; Vaughan Builder and Dancap have the standing and means to pursue Trustar and Moses. The Court rejected the argument that Vaughan Builder and Dancap did not retain O’Malley to represent them. They allowed her to plead the case on their behalf; Mrs. Hales and her lawyers were entitled to rely on defence counsel’s ability to bind the defendants to a settlement of a proceeding before the court. After reiterating that defence appointed to defend under a general liability policy acts for both the insurer and the insured, the Court held that throughout O’Malley was the defendants’ lawyer and, as well, the lawyer for the putative insurer. She was able to settle the litigation on behalf of the defendants and therefore a valid contract to settle had been entered into that was binding on Vaughan Builder and Dancap.
As for the second half of the test, the court held that it would be unjust in the extreme to nullify the agreement to settle and force Mrs. Hales back into litigation. The Court stated “…it would be patently unjust to reopen the proceedings so the defendants can one day defend a damages trial prosecuted by Ms. Hales’ estate. As between the defendants and Ms. Hales, the provisional absence of indemnity for the defendants is their problem to contend with - not hers.”
Mrs. Hales received her judgment. Vaughan Builder and Dancap must pay it as well as Mrs. Hales’ court costs in an amount to be ordered in a subsequent hearing.
Comment
Defendants who participate in settlements – mediated or otherwise - through insurer-appointed counsel are bound by the resulting settlement agreement, regardless of whether coverage actually exists. Beyond the immediate risk of phantom policies, this decision underscores the importance of verifying insurance placement directly with insurers and understanding that defence counsel’s authority to settle does not evaporate when coverage does.
© Hurwitz Fine P.C. 2026
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