Coverage Pointers - Volume XXVII No. 6

Friday, August 29th, 2025

Volume XXVII, No. 6 (No. 705)
Friday, August 29, 2025
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.

HF Coverage Pointers header

Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.  Our newsletter is attached; this is our cover note.

The Courts are still in summer doldrums and there’s not a lot to report on in the attached issue, but there are some good cases to review.

There is one decision that that deserves attention

In Steve’s potpourri column, there is a troubling decision out of the Second Department,  Usoiani, that could cause some to flee if read literally.  But it was, in our opinion, confusingly litigated, so the outcome, an unfortunate one, we believe was caused, in part, by the peculiar way it reached the Appellate Division.

Normally, if an insurer assigns defense counsel to an insured in a situation where it, the insurer, knows of extrinsic evidence that would lead to a finding of no coverage, it is clear that defense counsel, seeking to protect his or her client, will not present that proof to the court.

So, imagine the classic bar fight case, where the plaintiff is hit in the head with a beer bottle.  The carrier believes to be intentional and there are witnesses that would sustain that belief.  However, defense counsel can’t put those witnesses on the stand because if the jury found the claim intentional, the counsel’s client would lose coverage.  Defense counsel is precluded from throwing the client’s coverage interests under the bus so to speak.  The underlying plaintiff won’t put those witnesses on the stand either, or there may be a verdict in the non-covered area.  So, the verdict will be one of negligence.

So, the carrier has two options. It can start a Declaratory Judgment Action or await a direct action by the plaintiff-turned-judgment creditor after the underlying trial.  Then, the carrier can get its day in court and put on the other witnesses.

In the case Steve reports on (and I’ve commented on it there), Countrywide, the carrier tried, as a non-party, to vacate a judgment of negligence and the court held that it was collaterally estopped from doing so.  It’s a strange way to try to challenge a decision, with an appeal from a non-party (standing?).  The court found that it was collaterally estopped from challenging the decision on negligence because it “controlled the defense”.  It didn’t.  Insurers don’t control the defense of civil litigation.  

If I were the insurer, I would have taken a more traditional way of getting my day in court. 

 

26 Hurwitz Fine Attorneys Recognized by The Best Lawyers in America® and Best Lawyers: Ones to Watch in America®

Hurwitz Fine is pleased to announce that 26 of the firm’s attorneys have been selected by their peers for inclusion in the 2026 edition of The Best Lawyers in America®. Among this list, four Hurwitz Fine attorneys were named to the Best Lawyers: Ones to Watch® in America list.

The attorneys named to the 2026 edition of The Best Lawyers in America and the practice areas in which they were honored are as follows:

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

(Year) First year the lawyer was listed in the published practice area.

 

MEDIATION

I was pleased to be listed in the Best Lawyers in America in the areas of Commercial Litigation, Insurance Law, Litigation – Insurance, and Mediation.

Those are my favorite areas of practice, and I combine them all in my growing mediation book.

Need a mediator for an insurance dispute? Coverage mediation is a thing!  Subject matter expertise may be useful.

Hey coverage lawyers.  Hey professionals. Have you and a friend, adversary, or lawyer for whom who have respect reached a stalemate on a coverage dispute?  Look, we know each other.  We know that.  We don’t want to litigate every coverage disagreement.  Why?   Because the position we oppose today may be the one we advocate tomorrow.  Face it.  We all understand that.

Let me help mediate your disagreement to see if there is some mutual agreement, we can reach that will not box us into a corner. Reach out to me.  I will be pleased to mediate your dispute.

My partners, Mike Perley and Ann Evanko, are also available to help resolve other challenges.

You don’t want adverse precedent that will bite you next time you might have a slightly different view on coverage issues. You don’t want to spend tens of thousands of dollars to litigate a coverage issue before a motion judge or appellate justice that knows as much about insurance coverage as you do about nuclear physics.  For those in the Western District of New York, I am certified by the Court and on the WDNY Mediation Panel as are Mike and Ann.

Try mediation.

 

LinkedIn

For those who need to keep up to date on insurance coverage between issues of Coverage Pointers, we’re happy to help.  Just follow me on LinkedIn and we’ll keep you up to date. I’m easy to find – my linked in name is (ready for this unusual and unexpected name):  Kohane (now there’s a shock)  and you can find me here:   https://www.linkedin.com/in/kohane/

 

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.

 

Oh good. I wondered. – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
29 Aug 1925

Sauerkraut
Is Defined
As A Guide

Official approval
From Washington

Washington, D.C., Aug 28 (A.P.) – An official definition of sauerkraut was approved today by the secretary of agriculture as a guide for department officials in the enforcement of the food and drugs act.

The secretary ruled that sauerkraut is ‘the clean, sound product of characteristic acid flavor, obtained by the full fermentation, chiefly lactic, of properly prepared and shredded cabbage and the presence of not less than 2 per cent nor more than 3 per cent of salt.”

“It contains, upon completion of the fermentation, not less than 1 ½ per cent of acid, expressed as lactic acid,” said the definition. “Sauerkraut which has been rebrined in the process of canning of repacking contains not less than 1 per cent of acid expressed as lactic acid.

 

Peiper on Property (and Potpourri):

On December 19, 2006, I accepted a position with Hurwitz Fine (then called Hurwitz & Fine).  On December 20, 2006, I resigned from my previous firm.  And, on December 22, 2006, we welcomed our daughter, Reagan, to the world.  I don’t recall, exactly, but I probably started writing my weekly column shortly thereafter. 

While I’m still here writing every two weeks, much has changed since late 2006.

We embrace, reluctantly, yet another change as we drop off Reagan at her Freshman Year dorm room.  We’re already counting the days to Fall Break! 

As for the column this week, we review an interesting decision involving Country-Wide Insurance.  The facts are a bit murky, but the upshot is that the Court found Country-Wide was collaterally estopped from raising a fraud defense in a subsequent Declaratory Judgment Action because the manner in which the alleged incident occurred was no challenged in the underlying tort claim. 

For one, it is not clear that the fraudulent activity was uncovered during the course of the underlying trial.  And two, perhaps more fundamentally, Country-Wide was not a party to the underlying action.  It should not be collaterally estopped from challenging factual scenarios which fall outside of coverage just because defense counsel did not raise them in the underlying action. 

That’s it for this week. See you in two more.

Steve
Steven E. Peiper
[email protected]

 

Were there hanging chads? – 100 Years Ago:

The Buffalo News
Buffalo, New York
29 Aug 1925

LABOR INVESTIGATES
VOTING MACHINE CHARGE

SYRACUSE, Aug. 28. – Immediate investigation of charges that Mrs. Florence E.S. Knapp secretary of state, placed an order for voting machines for the city of New York with a company paying less than the prevailing wage rate and employing non-union workers was started by the executive committee of the New York State Federation of Labor, as the convention closed.

Niagara Falls was the city named for the meeting next year.

Just before the convention convened a statement to the effect that at least 90 per cent of the delegates from New York were going back strong for Senator Walker candidate for mayor brought forth a storm of applause and cheers.

 

Lee’s Connecticut Chronicles:

Dear Nutmeggers:

The end of summer approaches. Two down and one to go! We’ve delivered two children back to school – one in Fredonia, New York (near our Buffalo headquarters) and one to Brooklyn. The third goes back to Manhattan this weekend. [The fourth lived on his own this summer but is back in Amherst for his last year of grad school.] Then it will just be me, my wife, and our dog living on the beach. Here’s to a warm, quiet September.

Until next time, keep keeping safe,

Lee
Lee S. Siegel
[email protected]

 

Maybe it’s the tariffs? – 100 Years Ago:

The Buffalo News
Buffalo, New York
29 Aug 1925

AMERICAN TRADE
WITH CANADIANS
SHOWS DECLINE

However, It Furnished Canada
84 Per Cent. Of Her Import
And Took 71 Per Cent. Of
Her Exports in Year of
1924-25.

WASHINGTON, Aug. 28. – Though the United States Trade with Canada during U.S. Fiscal year ended June 30, 1925, receded, it still predominated over that of all other non-empire countries, when it furnished 84 per cent of Canada’s foreign imports and took 71 per cent of her foreign exports, according to the European division of the Department of Commerce.

Exports to Canada during the fiscal year amounted to $517,680,000 compared with $570,868,000 during the previous year and our imports from Canada totaled $449,276,000 as against $423,885,000 for the year ended June 30, 1924. Exports to Canada were made up largely of manufactured articles, with a few raw materials.

 

Ruffner’s Road Review:

Dear readers,

It has started to feel like fall in Buffalo the last couple days. I’m not ready for summer to be over, but it is beginning to look a lot like football season!

In this week’s case, the Appellate Division revered the Supreme Court, granting the insurer’s Petition to permanently stay the SUM arbitration, as the claimant was not an “insured” under his Lyft driver’s policy. The court reasoned that the driver was not operating a “TNC” vehicle providing a “prearranged trip” at the time of the accident, as required for SUM coverage to apply, because the policy excluded a vehicle transporting passengers “for-hire in the city” from this definition.

Until next time,

Kyle
Kyle A. Ruffner
[email protected]

 

Advice from Miss Fairfax – 100 Years Ago:

The Kansas City Post
Kansas City, Missouri
29 Aug 1925

Dear Miss Fairfax – I am a girl 15 years old and am much in love with a boy four years my senior. He is a good boy and has a good reputation, but my father does not approve of me going with him. I am very jealous of him, but he is not jealous of me. Sometimes I think of running off and getting married. Please give me some good advice. How may I overcome being jealous of him? – P.V.W.

You are too young to be going with any boy. That is probably the reason of your father’s disapproval. You are certainly a foolish little girl to be talking of running off and getting married. You should be thinking of school and play, not these grown-up subjects. Jealousy is beneath the dignity of a gentlewoman.

 

Ryan’s Federal Reporter:

On paternity leave.

Ryan
Ryan P. Maxwell
[email protected]

 

Should have filled up then – 100 Years Ago:

Democrat and Chronicle
Rochester, New York
29 Aug 1925

GASOLINE SEEN
NEAR LOWEST
PRICE LEVEL

Further Cuts Will Make
It Cheapest in years,
Dealers Assert.

NEW PROCESS AIDS

Bigger Yields Now Obtained
From Crude Oil; Tourists
Complain of Prices

Advice from gasoline dealers here last night carried more welcome news for thousands of motorists when prediction of the cheapest gasoline in years was made by several distributors. Most of the dealers covering Western New York territory admitted that further reductions were on the way but could not say when they would become effective or how low reductions would carry the retail figure. E.C. Freling, manager for the Pennzoil Oil Company, announced that ‘the cheapest gasoline ever is in sight.”

“Gasoline prices have got to tumble,” continued Mr. Freling. “Chemists have been working diligently on new methods. It is now possible to secure forty gallons of gasoline from forty-two gallons of crude oil. Reductions must result.”

19 to 22 Cents Here.

Motorists continued to pay from 19 to 22 cents a gallon at stations yesterday, but throughout the industry there was a feeling of confidence that the oil producers have not reached the limit yet in price reductions.

 

Storm’s SIU:

Hi Team:

Two interesting cases this edition:

  • Contractual Suit Limitation Condition Applies to the Mortgagee.

  • In Rescission Action Commenced by Insurer Due to Material Misrepresentations in the Application, Additional Insured Entitled to Intervene as of Right Under Fed. R. Civ. P. 24(a)(2).

Have a nice long holiday weekend!

Scott
Scott D. Storm
[email protected]

 

Compulsory Auto Insurance is Not a Remedy – 100 Years Ago:

Buffalo Post
Buffalo, New York
29 Aug 1925

COMPULSORY AUTO INSURANCE

At a superficial glance it might be thought that compulsory insurance would be a good thing for the public that owns automobiles. Those who take out insurance against accidents naturally feel that others should do the same.

But the question is whether such insurance will tend to decrease accidents or render everybody more careless. Compulsory accident insurance is only a palliative. It is not a remedy.

Let us suppose there was a compulsory security law. The cost of insurance would at once increase because of the carelessness of those who have little financial responsibility and who have never been able to pay for insurance. The mulcting of multitudes of decent car owners to pay for the errors of a relatively few reckless ones is unjust to the former.

Every effort should be bent first to decrease accidents. Reckless driving is the biggest factor in automobile operation that has to be contended with. But reckless driving would not decrease if everybody knew that he was protected in case of accident. The insured driver lacks one motive for care, one restraint on taking chances, that the uninsured driver cannot forget.

The report of the committee of nine on financial responsibility for automobile accidents, representing various insurance companies, points out that the real evil is not that certain individuals may not be indemnified for injuries suffered through the faults of others, but because through reckless and negligent operation of motor vehicles upon our highways and the disregard of laws many individuals are injured. The obvious thing to do, therefore, is to cut down the number of accidents, not tend to increase them by lessening the responsibility placed upon car drivers. The real objective must always be the prevention of accidents.

 

Fleming’s Finest:

On the road; see you in a fortnight.

Kate
Katherine A. Fleming
[email protected]

 

That’s “Unfare” – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
29 Aug 1925

CONCERT IS ABANDONED

Bands notified of no Sunday
Opening of State fair.

Syracuse, Aug. 28 (A.P.). – Bands who had entered the state championship contest and judges who has accepted invitations to decide winners in the competition were notified today by Frederick E. Norton, secretary of the chamber of commerce, of complete abandonment of all plans for Sunday entertainment at the state fair this year, due to Attorney General Ottinger’s ruling against charging for admissions or distributing prizes on the Sabbah.

Committees in charge of different parts of the proposed Sunday program were informed of the ruling and relieved of their duties.

 

Gestwick’s Garden State Gazette:

Dear Readers:

As summer winds to an end, I have had much to celebrate. First, my fiancé grew a year older yesterday (she is now the same age she will be when we get married!) And, exactly one week from today, I am headed to Florida for my sister’s fiancé’s bachelor party. Some golf, swimming, seafood, and… oh yeah… the Buffalo Bills season opener (!!!) is enough to get me through the rest of this week and into next, I suppose.

The case I have for you this week discusses what is colloquially known as the “prior knowledge condition.” This is a condition precedent to coverage, commonly found in professional liability/E&O policies. A typical prior knowledge condition requires that, before coverage for a claim may apply, no insured under the policy had any reasonable basis to believe that any insured breached a professional duty and also had no basis to foresee that any wrongful act or circumstance may reasonably result in a claim. The question was—can an allegation made in a probate lawsuit about a lawyer’s conduct serve as such a basis? The answer is probably the one you are expecting but give it a read anyway.

See you in two weeks.

Evan
Evan D. Gestwick
[email protected]

 

A “hi-cup” at the bridge – 100 Years Ago:

The Buffalo News
Buffalo, New York
29 Aug 1925

CAR AND LIQOUR HELD.

NIAGARA FALLS, Ont., Aug. 28. – A touring car, owned by Ivan Lozina of Niagara Falls, N.Y., was seized at the Canadian end of the upper bridge here today by Customs Inspector Richard Sloggett. A quantity of alcohol was found in the rear seat.  The car and liquor were confiscated by the customs authorities.

 

O’Shea Rides the Circuits:

Dear Readers,

My wife and I have recently plunged back into Seinfeld and the Larry Sanders Show. Seinfeld is undoubtedly one of the best shows of all time, but I feel the Larry Sanders Show is underrated. “Hey Now” Hank Kingsley is one of the funniest, most loathsome characters written. It is a tight race between Hank and George Costanza for the most self-interested characters, but George takes first place. This determination is made upon George’s great escape from a small apartment fire.

This week I discuss a case regarding an umbrella policy and UIM endorsement. The question posed is whether the mere inclusion of an underlying auto policy with a UIM endorsement implies UIM coverage under the umbrella policy.

See you in two,

Ryan
Ryan P. O’Shea
[email protected]

 

"Death Car Drivers" Can be Convicted of Murder– 100 Years Ago:

Buffalo Courier
Buffalo, New York
29 Aug 1925

RULES DEATH CAR DRIVERS MAY
BE PROSECUTED FOR MURDER

Washington, Aug. 28 (By Associated Press). – Death car drivers may be prosecuted for murder as well as manslaughter under a ruling today of Chief Justice McCoy of the district of Columbia supreme court.

The court overruled a motion to quash the second-degree murder growing out of the killing of a nun here several months ago, which was made on the ground that the defendants unintentionally killed the sister with their automobile.

 

LaBarbera’s Lower Court Library:

Dear Readers:

Hoping that everyone enjoys the long weekend ahead of us. With summer wrapping up, I am reluctantly beginning to move all of the plants back indoors for the season. This summer I may have gone a bit overboard, so it will be an interesting weekend attempting to figure out where everything will go. I have a sneaking suspicion a new plant stand will be purchased very, very soon.

The past few weeks have been slow in the trial courts. Thankfully, I have a case of our own to report on. A copy of the decision is available upon request. In this Suffolk County case, the Court granted the insurer’s motion to dismiss, finding that they owed no duty to provide replacement cost value to the damaged property, based on the insured’s failure to replace or repair the damaged property.

Until next time…

Isabelle
Isabelle H. LaBarbera
[email protected]

 

Buy two; they’re inexpensive – 100 Years Ago:

The Buffalo News
Buffalo, New York
29 Aug 1925

A sign with black text AI-generated content may be incorrect.

 

Lexi’s Legislative Lowdown:

Dear Readers,

I'm looking forward to the long weekend ahead and a family celebration on the schedule!

This week discusses a Senate Bill related to regulating large AI models to prevent severe risks that have been predicted by tech leaders.

Thanks for reading,

Lexi
Lexi R. Horton
[email protected]

 

Still optional in 1925 – 100 Years Ago:

The Daily Item
Port Chester, New York
29 Aug 1925

DON’T DRIVE YOUR CAR
WITHOUT LIABILITY INSURANCE

On account of the large verdicts for personal injuries by automobiles, this coverage is now the most important for the car owner. Our companies are the best.

Marshall & Remsen
109 Adee Street Telephone 310

 

Victoria’s Vision on Bad Faith

Dear Readers,

The weather has finally cooled off, and it’s almost time to dust off my Bills gear.

This week I have a case from the Eastern District of North Carolina discussing an insurer’s obligations to its insured while settling within the deductible.

Have a great long weekend,

Victoria
Victoria S. Heist
[email protected]

 

Hubby Liable for Wife’s Slander – 100 Years Ago:

The Buffalo Times
Buffalo, New York
29 Aug 1925

Mate Liable for
Wife’s Slander

TRENTON, N.J., Aug 28. – The Supreme Court here has held that slander uttered by a married woman, even though the husband is not present, makes the latter also liable to damages. The court affirmed a verdict of $100 awarded in Bergen County to John Sargeant against Mary and Michael Fedor.

Sargeant alleged that the woman had accused him of stealing a piano.

 

Shim’s Serious Injury Segment

Hi Readers,

Late August – if you play fantasy football you know it’s the start of draft season. Many readers may have drafted already but if not, I’m happy to share some of my thoughts for the upcoming season and my team in my long-time fantasy football league I’ve been a part of since high school. Primarily, I target players who are: (1) dominating touches on their teams; (2) part of top 10-12 scoring offenses; (3) undervalued in pre-season rankings; and (4) enter the season without any injuries that will sideline them to start the season (and beyond). This season, I had the third overall pick in the draft and selected Atlanta Falcons running back, Bijan Robinson. The rest of my team is as follows:

QB – Brock Purdy/Dak Prescott

RB – Bijan Robinson

RB – De’Von Achane

WR – Mike Evans

WR – Xavier Worthy

TE – George Kittle

FLEX – Chase Brown

FLEX – Devonta Smith

FLEX – Jakobi Myers

FLEX – Ricky Pearsall

Happy drafting and good luck this season!

This week I have shared a case decided by the Appellate Division, Second Department. The Rockland County Supreme Court decided a summary judgment motion in favor of defendants and entered an Order dismissing plaintiff’s complaint. However, the Appellate Division, Second Department, overturned the Rockland County Supreme Court’s decision on grounds that defendants failed to meet their burden of proof to establish that plaintiff did not suffer a serious injury within the meaning of Insurance Law § 5102(d).

See you in our next issue!

Stephen
Stephen M. Shimshi
[email protected]

 

Only for affairs? – 100 Years Ago:

The Buffalo Times
Buffalo, New York
29 Aug 1925

SPIRITUAL MEDIUM- Madam Frances gives advice on all affairs. Call for appointment.

 

North of the Border:

On vacation this week; see you in two.

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]

  • Excess Carrier Liable for Water and Moisture Infiltration. Claim That the Damage Was Caused by a Breach of the Condo Agreement or Other Contractual Breaches Does Not Negate the Fact That the Damage Was Also Caused by an Accident

     

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

  • Failure to Raise Intentionality/Fraud in Defense of the Underlying Action Results in Collateral Estoppel of the Subsequently Pleaded Declaratory Judgment. Thousands Flee

     

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

  • Policy With Different UM/UIM Limits Not Ambiguous

     

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

  • Petition to Stay SUM Arbitration Granted, as Claimant Was Not an Insured Under the Policy

     

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

  • On paternity leave

 

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

  • Contractual Suit Limitation Condition Applies to the Mortgagee

  • In Rescission Action Commenced by Insurer Due to Material Misrepresentations in the Application, Additional Insured Entitled to Intervene as of Right Under Fed. R. Civ. P. 24(a)(2)

     

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

  • See you in a fortnight

     

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

 

  • No Coverage Under Professional Liability Policy Where Insured Should Have Reasonably Expected a Claim

     

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

     

  • Listing of Auto Policy on Umbrella Policy’s Schedule of Underlying Insurance Does Not Incorporate UIM Coverage

     

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

     

  • Insurer Motion to Dismiss Granted Based on Insured Failure to Repair or Replace the Damaged Premises

     

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

     

  • Bill S6953B Relates to Training and Use of Artificial Intelligence Frontier Models

     

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

     

  • North Carolina Court Holds an Insurer Must Show Consideration (But Not Equal Consideration) Toward Its Insureds in Settling Claims

     

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

     

  • Defendants Fail to Meet Their Prima Facie Burden of Proof That Plaintiff Did Not Sustain a Serious Injury Within the Meaning of Insurance Law § 5102(d) 

     

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

     

  • On vacation; see you in two weeks

 

See you in two.  Have a great Labor Day weekend.

 

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
Agnes A. Wilewicz
[email protected]

COPY EDITOR
Evan D. Gestwick
[email protected]

 

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
[email protected]

Steven E. Peiper, Co-Chair
[email protected]

Michael F. Perley

Agnieszka A. Wilewicz

Lee S. Siegel

Brian F. Mark

Scott D. Storm

Ryan P. Maxwell

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea

Isabelle H. LaBarbera

Lexi R. Horton

Victoria S. Heist

 

FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
[email protected]

Michael F. Perley

Scott D. Storm

 

NO-FAULT/UM/SUM TEAM
Dan D. Kohane
[email protected]

Ryan P. O’Shea
[email protected]

Kyle A. Ruffner
[email protected]

 

APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]

 

Topical Index

Kohane’s Coverage Corner

Peiper on Property and Potpourri
Lee’s Connecticut Chronicles

Ruffner’s Road Review

Ryan’s Federal Reporter

Storm’s SIU

Fleming’s Finest

Gestwick’s Garden State Gazette

O’Shea Rides the Circuits

LaBarbera’s Lower Court Library

Lexi’s Legislative Lowdown

Victoria’s Vision on Bad Faith

Shim’s Serious Injury Segment

North of the Border

 

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

08/21/25       The Cobblestone Lofts Condo. v. Great American Ins. Co.
Appellate Division, First Department
Excess Carrier Liable for Water and Moisture Infiltration. Claim That the Damage Was Caused by a Breach of the Condo Agreement or Other Contractual Breaches Does Not Negate the Fact That the Damage Was Also Caused by an Accident

This declaratory judgment action concerns an insurance coverage dispute arising out of alleged unintended water and moisture infiltration resulting in toxic contamination of a unit located at plaintiff's condominium building.  The damages alleged in the underlying action range from $5 million to $50 million, higher than the floor of the Great American policy, so the issues are justiciable.

Great American issued a "direct, definitive notice" to plaintiff disclaiming coverage. By letter dated September 17, 2018, Great American notified plaintiff that its policy does not afford coverage because 1) "a breach of contract is not an accident and, therefore, does not constitute an 'occurrence' under the Primary Policy or Umbrella Policy" and 2) because the "Primary Policy excludes coverage for breach of contract." Consequently, it advised plaintiff that it "will close its file on this matter."

The letter is a repudiation of plaintiff's rights. That the letter requests submission of additional information "that might impact our coverage analysis" and might trigger "further review" or that Great American's excess policy "may not" be triggered does not negate the insurer's definitive position that no coverage is available.

Great American will be obligated to indemnify plaintiff for any liability imposed upon it in the underlying action that is in excess of the policy issued by Admiral Indemnity Company. Plaintiff, a condominium association, is being sued in the underlying action for property damage and bodily injury allegedly caused by unintended water and moisture infiltration resulting in toxic contamination of a condominium unit. The infiltration allegedly was caused by plaintiff's breaches of its contractual obligations under its bylaws and the condominium declarations, and violations of its statutory duties under state and local law.  Great American policy covers liability for bodily and property damage "that takes place during the Policy Period and is caused by an 'occurrence' happening anywhere . . ."

The term "occurrence" is defined, in relevant part, to mean "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Under this definition, the term "occurrence" includes within its scope continuous exposure to a harmful condition alleged, as in the underlying action, to have been caused by the insured's breaches of contract or violations of statutory or regulatory duties.

Great American argues that the alleged "bodily injury" and "property damage" were caused by plaintiff's breaches of its bylaws and condominium declarations, and not by an accident. That tortured interpretation renders the word "accident" meaningless. In an insurance policy, the word "accident" is given its commonly understood meaning (see Michaels v City of Buffalo, 85 NY2d 754, 757 [1995]).

Great American cannot recast that meaning by arguing that damages were caused by the insured's alleged breaches of contract. Notably, the policy defines "accident" to include "continuous or repeated exposure to substantially the same general harmful conditions," which is exactly what is alleged in the underlying action.

Accordingly, while plaintiff's liability in the underlying action remains in dispute, Supreme Court properly declared that any damages above the floor and within the limits of the Great American policy for which plaintiff may ultimately be found liable in that action will be covered by the Great American policy.

Finally, the contractual liability exclusion of Admiral's primary policy, to which the Great American policy follows form, does not apply. The primary policy excludes claims for bodily injury or property damage which the insured is obligated to pay "by reason of the assumption of liability in a contract or agreement." The exclusion applies when the insured assumes liability through an indemnification agreement, which is not at issue.

 

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

08/27/25       Usoiani v. Dumbo Moving & Storage, Inc.
Appellate Division, Second Department
Failure to Raise Intentionality/Fraud in Defense of the Underlying Action Results in Collateral Estoppel of the Subsequently Pleaded Declaratory Judgment. Thousands Flee

This case was a mess.

Plaintiffs Usoiani and Kasoev were allegedly injured when the vehicle in which they were traveling was struck by a vehicle operated by Kunelauri and owned by Dumbo Moving.  Mr. Kunelauri was apparently engaged in the course of this employment with Dumbo at the time of the incident. 

We are advised that both Kunelauri and Dumbo were afforded defense counsel by Dumbo’s commercial auto carrier, Country-Wide.  Counsel appeared and defended the matter throughout summary judgment motions (decided against the defendants) and damages trials for both Usoiani and Kasoev.  Judgments on both trial verdicts were entered in January of 2022.  At some point thereafter, Dumbo Moving filed an application to vacate the judgments on the basis that the incident was staged and thus objected based upon an apparent fraudulent recovery. 

Country-Wide, too, objected to the judgments on the basis of fraud/intentionality and commenced a Declaratory Judgment Action.  We are advised that Country-Wide also joined Dumbo Moving by filing its own motion to vacate the trial verdicts. 

 After both Dumbo Moving and Country-Wide appealed the denial of their respective motions, this appeal ensued.  Oddly, the Court addresses Country-Wide’s standing in the Declaratory Judgment Action within the context of this case.  Essentially, the Court found that Country-Wide was collaterally estopped from challenging the determinations in the underlying action that the incident was the result of Kunelauri’s negligence. 

At that time, Country-Wide had complete control over the defense of Kunelauri and Dumbo Moving.  No argument as to intentionality or fraud was raised at the time of the motions, and there appears no indication that Country-Wide asserted any coverage defenses until long after the summary judgment motion.    

On that basis, the Court then switches back to the matter at bar and affirmed the trial court’s denial of the aforementioned motions to vacate.

Peiper’s Point – We’re, admittedly, a little confused by this one.  If Country-Wide/Dumbo Moving uncovered evidence of fraud that post-dated the decision on summary judgment, when would they not be able to raise it.  Is the Court saying because you did not uncover the fraud during the underlying litigation, you are estopped from later raising it?  If so, that does not seem to square with what would seem like good public policy of calling out fraud when it is discovered. 

Editor’s Note (DDK here):  The real problem here is that a separate declaratory judgment action on the issue of accident or no-accident should have been prosecuted. An insurer that takes the position that a claim is not covered because of extrinsic evidence and there is evidence that cannot be submitted to the jury because it would be a conflict of interest to do so (taking one’s client out of coverage), is entitled to its day in court.  My favorite case on this top is Kacmarek. 

In that case, the insured was sued in negligence for a boiling water incident.  State Farm provided a defense under an HO policy.  It believed the incident was an assault and sought to intervene to put on proof that the damages were intentionally caused. The Fourth Department denied the application and the language is compelling:

"[Whether] [a] movant will be bound by the judgment within the meaning of that subdivision [CPLR 1012 (a) (2)] is determined by its res judicata effect" ( Vantage Petroleum v Board of Assessment Review, 61 NY2d 695, 698). Here, since State Farm is not a party, nor is it in privity with any party in the underlying action, it will not be bound by principles of res judicata by any judgment rendered in the action …

Nor will State Farm be collaterally estopped from litigating the issue of indemnification in a subsequent action in the event of a judgment for plaintiff in the personal injury action. Clearly, State Farm would not have been given a "full and fair opportunity to contest the decision said to be dispositive." 
Kaczmarek v. Shoffstall, 119 A.D.2d 1001, 1002 (4th Dept. 1986).

 

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

08/11/2025    Cotto v. Utica Nat’l Assur. Co.
Superior Court of Connecticut, Hartford
Policy With Different UM/UIM Limits Not Ambiguous

The trial court found that a commercial auto policy with different UM/UIM limits was not ambiguous. The policy’s declaration page indicated liability limits of $1 million and UM/UIM limits of $75,000. The policy packet also contained a UM/UIM endorsement with limits of $1 million but was otherwise blank (it had no premium amount or effective date). The court held that as a matter of law, the contract provided only $75,000 in limits and was not rendered ambiguous by the presence of the incomplete endorsement. The court went on to find that even if the policy was ambiguous, the extrinsic evidence demonstrated the intent of the contracting parties to have the lower limits. The court noted that the premium was consistent with the lower limit and credited the testimony of the named insured and the carrier that it was their intent to have the lower limit.

Because the plaintiff’s worker’s compensation benefits exceeded the $75,000 in available coverage, the plaintiff was not entitled to any UM/UIM payment.

 

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

08/13/25             Matter of Progressive Ins. Co. v. Service
Appellate Division, Second Department
Petition to Stay SUM Arbitration Granted, as Claimant Was Not an Insured Under the Policy

Respondent allegedly was injured in a motor vehicle accident as a passenger in a Lyft vehicle, owned and operated by proposed additional respondent Artur Nazaryan. Nazaryan's vehicle was insured under a policy issued by Hereford Insurance Company, which contained supplementary uninsured motorist (“SUM”) coverage. Lyft carried motor vehicle insurance with Progressive which also included SUM coverage. Progressive disclaimed coverage and the Respondent served Progressive with a demand for arbitration. Progressive commenced this proceeding pursuant to CPLR article 75 to permanently stay arbitration, which the Supreme Court denied, dismissing the Petition.

On appeal, the Court noted that, "In determining an insurance coverage dispute, a court must first look to the language of the policy" (Holtzman v Connecticut Gen. Life Ins. Co., 213 AD3d 918, 919; see Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208, 221). Unambiguous provisions of an insurance contract must be given their plain and ordinary meaning, and the interpretation of such provisions is a question of law for the court.

Here, the Court determined Respondent Service was not an "insured" under the subject policy. In order to qualify as an "insured" under the SUM endorsement, the accident had to have occurred while Nazaryan was operating a TNC vehicle. defined as a vehicle "used by a transportation network company driver" who "is providing a transportation network company prearranged service" originating within the state of New York. However, the policy provided that a "prearranged trip” did not include transportation provided through the use of a taxicab, livery, luxury limousine, or other for-hire vehicle, as defined in Administrative Code § 19-502(g) of the City of New York to include "a motor vehicle carrying passengers for hire in the city". Therefore, since Nazaryan's vehicle was being used to carry a passenger for hire within New York City at the time of the accident, it was being operated as a "for-hire vehicle," rather than as a "TNC vehicle".

Accordingly, the Court held that the Respondent Service did not qualify as an "insured" under the terms of the policy. As such, the Supreme Court’s order was revered and Progressive’s petition to permanently stay the subject arbitration for SUM coverage was granted.

 

 

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

On paternity leave.

 

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

08/14/25       Balint v. Allstate Ins. Co.
United States District Court, M.D. Pennsylvania.
Contractual Suit Limitation Condition Applies to the Mortgagee

Kenneth Havir owned property which was insured by Allstate.  Kenneth Havir died on April 13, 2022.  The property was destroyed by fire on April 15, 2022, intentionally set by Christopher Havir (Kenneth's son), who died by suicide the same day.  Terri Balint became administratrix of her father's estate.  LoanDepot held a mortgage on the property and was covered as a mortgagee under the insurance policy.  The insurance policy contained a provision stating, "Any suit or action must be brought within one year after the inception of the loss damage".  Allstate denied Balint's claim because the property was destroyed by an intentional act of a household resident.  LoanDepot filed its motion to intervene on August 4, 2023, more than 15 months after the fire.

The court held that LoanDepot's claim was barred by the limitations clause in the insurance policy, which required any suit to be brought within one year after the inception of loss.  The court held that a mortgagee clause does not override the clear language of a limitations clause in an insurance policy.  The distinct and independent aspect of the contract does not mean the mortgagee is free to ignore the time limitations contained in the policy. It only means the owner and mortgagee's insurable interests are not the same. Both the owner and the mortgagee are subject to the limitations clause. The court determined that both property owners and mortgagees are subject to the time limitations contained in insurance policies.

 

08/14/25       Colony Ins. Co. v. Oz Solutions
United States District Court, S.D. New York.
In Rescission Action Commenced by Insurer Due to Material Misrepresentations in the Application, Additional Insured Entitled to Intervene as of Right Under Fed. R. Civ. P. 24(a)(2)

Colony Insurance Company issued two insurance policies to Oz Solutions that Colony now seeks to rescind based on alleged fraudulent misrepresentations in the insurance applications.  The Colony Policy provides coverage to "all persons or organizations as required by written contract with the Named Insured [Oz Solutions]."  HCC qualifies as an "additional insured" under the terms of the Colony Policy.  If the Colony Policy is rescinded, HCC would lose coverage for an underlying state-court action and potentially be forced to bear the cost of defense and indemnity.

Under Fed. R. Civ. P. Rule 24(a)(2), a party may intervene as of right if it: (1) files a timely motion; (2) asserts an interest relating to the property or transaction that is the subject of the action; (3) is so situated that without intervention the disposition of the action may, as a practical matter, impair or impede its ability to protect its interests; and (4) has an interest not adequately represented by the other parties.

The court held that HCC qualifies as an "additional insured" under the Colony Policy and is entitled to intervene as of right under Fed. R. Civ. P. 24(a)(2).

The timeliness requirement in the Rule 24(a)(2) context is flexible and entrusted to the district court's sound discretion. Relevant considerations include (1) how long the applicant had notice of the interest before it made the motion to intervene; (2) prejudice to existing parties resulting from any delay; (3) prejudice to the applicant if the motion is denied; and (4) any unusual circumstances militating for or against a finding of timeliness.  HCC's motion was timely because it was filed less than two months after receiving notice of the action and well before the close of fact discovery. Neither party argued they would be prejudiced by HCC's entry.

For an interest to be cognizable under Rule 24(a)(2), it must be direct, substantial, and legally protectable. The requirement that a party is so situated that without intervention the disposition of the action may impair or impede its ability to protect its interests is satisfied for the same reasons as the substantial interest requirement.  HCC has a "clear economic interest" in the litigation as an additional insured under the Colony Policy. If the policy is rescinded, HCC would lose coverage for an underlying state-court action. Denying intervention would substantially impair HCC's ability to protect its interest in maintaining coverage under the Colony Policy. 

The requirement that an intervenor's interest is not adequately represented by existing parties is satisfied if the applicant shows that representation may be inadequate, and the burden of making that showing should be treated as minimal.  Oz Solutions cannot adequately represent HCC's interests because it has been out of business since 2018 and "may have little to lose through an adverse judgment" due to limited assets available to satisfy a judgment in the underlying state-court action.

 

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

On the road; see you in a fortnight.

 

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

08/18/25       Ascot Spec. Ins. Co. v. Mason, Griffin & Pierson, P.C.
District Court of New Jersey
No Coverage Under Professional Liability Policy Where Insured Should Have Reasonably Expected a Claim

A lawyer represented a married couple with respect to their respective estates. After both parties passed away, the husband’s estate filed a proof of claim against the wife’s estate, alleging that the wife’s estate misappropriated some of the assets belonging to the husband’s estate. The husband’s estate filed a Complaint with the Probate Court on December 14, 2020, seeking a declaration that the wife’s estate improperly transferred assets belonging to the husband’s estate to friends and relatives of the wife. The probate suit also alleged that the lawyer had improperly assisted the wife’s estate in the alleged misappropriations.

On April 26, 2021 (roughly four months after the probate suit commenced), the lawyer’s Firm applied for professional liability insurance with Ascot. In so doing, the President of the lawyer’s Firm agreed that if any person insured under the policy (i.e., any lawyer in the Firm) had knowledge of any wrongful act, fact, circumstance, or situation that they had any reason to suppose may result in a future claim, that claim would be excluded from coverage under the prospective policy.

With this understanding in place, Ascot issued the policy to the Firm, effective April 26, 2021, to expire April 26, 2023. The insuring agreement of the policy provided that Ascot would pay damages in excess of a self-insured retention that an insured became legally obligated to pay as a result of a claim made against an insured arising out of a wrongful act, where the claim is first made during the policy period or the extended reporting period. Separately, the policy provided that, as a condition precedent to coverage, the wrongful act that is the basis of any claim occurred either: (1) during the policy period; or (2) on or after the policy’s retroactive date, prior to the policy period, but only if the Firm had no basis to believe that: (a) any insured breached any professional duty; or (b) to foresee that any wrongful act or circumstance might reasonably be expected to serve as the basis for a claim against any insured.

On January 10, 2023—while the Ascot policy was in effect—the husband’s estate filed a separate malpractice action against the lawyer and his Firm, alleging that the lawyer knowingly, intentionally, and/or negligently assisted the wife’s estate in the tortious misappropriation of the husband’s assets.

The Firm notified Ascot of the malpractice action eight days after it commenced. Roughly three weeks later, Ascot denied any obligation to defend or indemnify the Firm due to the Firm’s prior knowledge of the circumstances giving rise to the claim. This declaratory judgment action followed.

Ascot sought a declaration that it owed no duty to defend or indemnify the Firm or the lawyer in the malpractice action. In support of this claim, Ascot argued that, as a condition precedent to coverage, neither the Firm nor anyone else to be insured under the policy have any basis to believe that any insured breached a professional duty, nor any basis to foresee that a wrongful act or related circumstance might reasonably be expected to serve as the basis for a claim against any insured. Under this provision, Ascot argued that any reasonable lawyer would have foreseen that the allegations in the probate action could result in a malpractice action against the lawyer and his Firm.

In response, the Firm argued that its reasonable expectation of a claim was triggered by receipt of the malpractice action (sued while the policy was in effect), rather than the probate action (sued before the Firm applied for the policy). The Firm emphasized the fact that the plaintiffs in the probate action amended their complaint to remove all claims against the lawyer personally. The Firm further argued that whether a reasonable lawyer would have expected a malpractice claim to follow the probate action was a question of fact for a jury.

The Court found, first, that the central issue in this case was the interpretation and determination of the extent of coverage under an insurance contract, which is generally a question of law capable of resolution on a motion for judgment on the pleadings. Thus, the Court rejected the Firm’s question of fact argument.

The Court then noted that the purpose of the policy’s condition precedent was to protect the insurer against a professional who, in recognition of a past error or omission, purchases a claims made policy before the error is discovered, and a claim is made. As the Court noted, in such a scenario, an insurer cannot properly evaluate the risk of taking on an insured without also being aware of the prospect of future claims.

The Court continued by noting that, generally, New Jersey law applies a “subjective-objective test” with respect to policy provisions such as the one at bar, colloquially known as a “prior knowledge condition.” Under that test, courts first ask whether the insured had knowledge of the relevant suit, act, error, or omission. If so, courts then ask whether the suit, act, error, or omission might reasonably be expected to result in a claim or suit. The first question is a subjective one, as it looks to what the insured at hand actually knew, while the second question is objective, as it asks what a generally reasonable professional would think. See Colliers Lanard & Axilbund v. Lloyds of London (3d Cir. 2006).

However, the Court ruled that this standard test did not apply in this case, since the prior knowledge condition omitted the subjective component of the test. As above, the prior knowledge condition at issue here applies when the insured either: (1) has no basis to believe that any insured breached a professional duty; or (2) when an insured cannot reasonably foresee that any wrongful act or related circumstance might reasonably be expected to serve as the basis of a claim.

The Court explained that the probate action, and its specific references to the lawyer personally, demonstrated that he may have committed actions that could give rise to a subsequent malpractice claim, even if those allegations were later withdrawn. Based on this, the Court concluded that a reasonable attorney in the lawyer’s position would indeed believe that an insured had breached a professional duty and would also reasonably foresee that any such wrongful act or related circumstance might reasonably be expected to serve as the basis of a claim against an insured.

In reaching this ruling, the Court highlighted the allegations from the probate action (before they were withdrawn), which sought to disqualify the lawyer in question due to conflicts of interest, and for his allegedly “knowing and intentional facilitation of tortious transfers.” These allegations in particular, the Court found, demonstrate that a reasonable attorney would have anticipated a claim.

The Court found that Ascot had no duty to defend or indemnify the lawyer or his Firm in the malpractice action.

 

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

08/13/25       Rable v. Sompo Ins. Co.
United States Court of Appeals, Sixth Circuit
Listing of Auto Policy on Umbrella Policy’s Schedule of Underlying Insurance Does Not Incorporate UIM Coverage

Rable is the administrator of the Estate of Atushi Tanaka. Tanaka passed away in a motor vehicle accident with a semi-truck. The semi-truck’s liability carrier paid the Estate $1 million in policy limits minus a $7,043.98 property lien. The Estate valued the loss at over $2.1 million and thus, sought excess insurance from Sompo under the Sompo policy’s $1 million Underinsured Motorist (“UIM”) endorsement and a Sompo umbrella policy with $10 million in limits. Sompo denied coverage since the tortfeasor’s liability limits equaled the UIM limit and the umbrella policy did not afford UIM coverage. Sompo insured Tanaka’s employer.

The Estate focused on the UIM endorsement’s language that an “underinsured motor vehicle” is a vehicle for which the sum of all liability bonds or polices applicable at the time of the accident carry liability limits less than the endorsement or reduced by payments made to others. The appellate court noted that the UIM endorsement does not look to insurance applicable to the Estate, but rather the form’s language clearly looks to the policies applicable to the underinsured vehicle.

As a secondary argument, the Estate asserted that since the umbrella policy declarations included listed the underlying auto policy as underlying insurance, UIM coverage applies. The reasoning behind this argument is that underlying auto policy itself contains the UIM endorsement and thus, is implicitly included within the umbrella policy’s scope of coverage. In reading the umbrella policy as a whole, the court rejected the Estate’s secondary argument.

The umbrella policy applied only to damages for which the insured is liable, not damages the insured sustained. Next, the umbrella policy lacked any language that suggested the mere inclusion of the underlying auto policy incorporates the UIM endorsement. It noted the “ultimate net loss” language referred to bodily injuries and property damage for which the insured is legally liable and UIM coverage is omitted from the grant of coverage. The umbrella policy also only mentioned UIM coverage twice and neither incorporated coverage. One provision added exclusions if UIM coverage was attached to the policy, but the declarations page did not identify any UIM coverage. The other provision excluded UIM coverage through operation of law.

The Estate’s tertiary argument looked to the property damage lien. The Estate asserted the lien reduced the available liability coverage and therefore, rendered the semi-truck an “underinsured vehicle.” However, the Estate’s complaint lacked any factual information about the lien, and the argument was raised for the time on appeal. Further, the Estate’s bare allegation failed to allege the lien was payment to others injured in the accident. Based on this reasoning, the court affirmed the lower court’s dismissal of the Estate’s claims.

 

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

08/13/25       Six Corners Dev. LLC v. Blitenthal, et. al.
Supreme Court, Suffolk County
Insurer Motion to Dismiss Granted Based on Insured Failure to Repair or Replace the Damaged Premises

Vicki Blitenthal (the “Driver”) was operating a Hyundai when it caught on fire. She parked the vehicle in the driveway of a property owned by Six Corners Development LLC and 321 B, LLC (the “Insured”). The fire spread to the rental property, causing damage to the building. As a result of the loss, the Insured commenced a lawsuit against the Driver, New York Central Mutual Fire Insurance Company (the “NYCM”), Hyundai, and L&D Service Station, Inc. (the “Repair Shop”).

As a result, the Insured asserted two causes of action against each defendant. First, it asserted two causes of action against NYCM for breach of contract. The Insured asserted two causes of action against the Driver and Repair Shop for negligence and causes of action against Hyundai for negligence and strict liability. Each defendant made crossclaims against the others. 

At the time of the loss, NYCM issued a businessowners insurance policy to the Insured. The Insured alleged that NYCM breached the policy by failing to pay the full amount of rent lost and rebuilding costs.

NYCM moved for summary judgment, seeking a dismissal of the Insured’s Complaint and all crossclaims. In support of the motion, NYCM submitted affirmations from the claims adjuster and independent adjuster, affirming that the claim was promptly investigated. As a result of the investigation, both the rental income and building claim were settled. The building claim was settled for actual cash value, and the Insured was paid twelve months of lost rent. The Insured cashed the check but failed to take any steps to replace or repair the damaged building.

In support of the motion, NYCM cited to the terms of the businessowners policy at issue. Here, the policy only provided business income coverage for twelve months following a loss. The policy allowed for an extension of sixty days of coverage, but only upon the actual repair or replacement of the damaged property. In relation to the building claim, the policy explicitly stated that the Insured would only be entitled to actual cash value payment for a loss, with recoverable depreciation available only in instances where actual repair or replacement was made within 180 days of payment.

In opposition, the Insured argued that despite the language of the policy, they were entitled to extended business income coverage and replacement cost value coverage for the building claim. Further, the Insured argued that an appraisal was demanded but never occurred. Lastly, the Insured argued that the language in the NYCM businessowners policy was ambiguous.

The Court first addressed the Insured’s argument regarding appraisal. The Court turned to Insurance Law § 3408, identifying that an appraisal cannot determine whether a policy provides coverage for any portion of a claimed loss. Instead, coverage issues must be resolved before an appraisal occurs. As such, because the dispute involved whether additional coverage is available under the policy, the Court held that an appraisal was unwarranted.

Next, the Court looked at the language of the businessowners policy, finding that it was unambiguous. It noted that replacement cost recovery, and extended business income coverage is only contemplated where the damaged property is actually repaired or replaced. Here, since the Insured elected to deposit the check, and not complete repairs, the Court held that additional coverage under the policy was precluded.

Lastly, the Court addressed NYCM’s portion of the motion seeking to dismiss the crossclaims asserted by all co-defendants. The Court held that the crossclaims failed to state a cause of action against NYCM, based on the fact that NYCM had no duty to the remaining defendants. NYCM did not contract with the Driver, Hyundai, or the Repair Shop. As such, the claims for indemnity and/or contribution were dismissed for failure to state a cause of action.

 

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

08/29/25        New York Senate Bill S6953B
Bill S6953B Relates to Training and Use of Artificial Intelligence Frontier Models

Bill S6953B, passed both houses. The Bill seeks to require safety reports for powerful frontier artificial intelligence models in order to limit harm.

The justification provides that there are significant risks posed by large AI models aiding in cyberattacks, production of bioweapons, and circumventing controls imposed by developers.

Outlined in the Bill Justification, the Bill would require that companies training the most advanced AI models take the following steps:

1. Have a safety plan to prevent severe risks (as most of them already do);

2. Conspicuously publish a redacted version of the safety plan;

3. Disclose major security incidents, so that no one has to make the same mistake twice.

 

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

7/15/25         Martin Marietta Materials, Inc. v. Ace Am. Ins. Co. et al.
United States District Court, Eastern District of North Carolina
North Carolina Court Holds an Insurer Must Show Consideration (But Not Equal Consideration) Toward Its Insureds in Settling Claims

In this case, the underlying claimant sustained injuries after a collision between the railcar he was riding on, and a front-end loader operated by the insured, Martin Marietta Materials, Inc. ("Martin"). The claimant's injuries included three amputated toes, a broken ankle, and shoulder surgery.

The claimant brought a lawsuit against Martin for his injuries. The insurers, Ace American Insurance Company and Ace Property and Casualty Insurance Company (collectively “Ace”) issued Martin a liability insurance policy and an umbrella policy. The liability insurance policy's deductible was $3,000,000.

After Martin put Ace on notice of the loss, Ace decided to work with Martin's chosen counsel instead of taking over the defense. The claimant's initial demand was $4,400,000, and Martin's chosen counsel advised that settlement under $1,000,000 was a reasonable goal. Ace believed defense counsel undervalued the damages and risks and obtained outside counsel to opine on valuation. Outside counsel determined settlement between $2,000,000 and $3,000,000 was a reasonable goal given the circumstances.

The claimant later lowered his demand to $2,825,000, and Ace told Martin that if they refuse to re-engage in settlement negotiations and offer more towards settlement, Ace will exercise its duty to settle the claim within the $3,000,000 deductible. Martin then offered $500,000, and the claimant lowered its demand to $2,750,000. Ace then offered $2,500,000 to settle the case once trial started, and the claimant accepted.

Ace then sought reimbursement from Martin, which Martin refused to pay, which led to this lawsuit. Martin sued Ace in May 2023, alleging common law breach of duty of good faith and fair dealing, violation of the Unfair Deceptive Trade Practices Act, and declaratory judgment regarding the insurers' handling of the liability claim. Ace moved for summary judgment.

In reviewing Martin's bad faith claim, the Court stated North Carolina law imposes the duty of good faith on the insurer, including the right to effectuate settlement of the claim. The insurer has a duty to consider the insured's interest in settling, but an insurer may act in its own interest in the settlement of the claim. The Court held that bad faith does not arise by a disagreement in the valuation of the claim. Further, North Carolina law does not require insurers to give equal consideration to the interests of their insureds, but it does require that the insurer shows consideration to the insured.

Here, the Court held Ace gave consideration to its insured by continuing to negotiate with the claimant "beyond the first settlement demand under the $3 million deductible." Accordingly, the Court found Ace did not act in bad faith and granted its motion for summary judgment.

 

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

08/20/25       Jaggi v. Munger
Supreme Court of New York, Appellate Division, Second Department
Defendants Fail to Meet Their Prima Facie Burden of Proof That Plaintiff Did Not Sustain a Serious Injury Within the Meaning of Insurance Law § 5102(d). 

This case involves personal injuries allegedly suffered by plaintiff, Rajat Jaggi, in connection with a motor vehicle accident. The defendants moved for summary judgment dismissing the plaintiff’s complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). The Supreme Court, Rockland County, entered an Order granting defendants’ motion for summary judgment dismissing the plaintiff’s complaint on the ground that plaintiff did not suffer a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident on April 15, 2025.

The aforementioned Order of the Supreme Court, Rockland County, was reversed by the Appellate Division, Second Department, on the law, with costs. The Appellate Division, Second Department, held that the defendants failed to meet their prima facie burden of demonstrating that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). See, Toure v Avis Rent A Car Sys., 98 NY2d 345, 774 N.E.2d 1197, 746 N.Y.S.2d 865; Gaddy v Eyler, 79 NY2d 955, 956-957, 591 N.E.2d 1176, 582 N.Y.S.2d 990). The defendants failed to proffer any “competent medical evidence establishing, prima facie, that the plaintiff did not sustain a serious injury to the cervical region of his spine and to his right shoulder under the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d).” See, Zennia v Ramsey, 208 AD3d 735, 735, 171 N.Y.S.3d 921; Melika v Caraballo, 187 AD3d 1173, 1173, 131 N.Y.S.3d 589; Staubitz v Yaser, 41 AD3d 698, 699, 839 N.Y.S.2d 113). The defendants also failed to eliminate triable issues of fact regarding the plaintiff’s claims that he sustained a serious injury under the 90/180 day category of Insurance Law § 5102(d) (see Che Hong Kim v Kossoff, 90 AD3d 969, 934 N.Y.S.2d 867; Rouach v Betts, 71 AD3d 977, 897 N.Y.S.2d 242; see also Richards v Tyson, 64 AD3d 760, 761, 883 N.Y.S.2d 575). Lastly, the defendants also failed to establish, prima facie, that the plaintiff’s alleged injuries to the cervical region of the spine and to his right shoulder were not caused by the accident (see Zennia v Ramsey, 208 AD3d at 735; Luigi v Avis Cab Co., Inc., 96 AD3d 809, 949 N.Y.S.2d 61; Reyes v Diaz, 82 AD3d 484, 917 N.Y.S.2d 632; see generally Jilani v Palmer, 83 AD3d 786, 787, 920 N.Y.S.2d 424).

Based on the foregoing, the Court did not analyze whether plaintiff’s papers in opposition to defendants’ motion were sufficient to raise triable issues of fact as to whether plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

 

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.

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