Coverage Pointers - Volume XXVIII No. 2

Volume XXVIII, No. 2 (No. 727)
Friday, July 3, 2026
A Biweekly Electronic Newsletter

As a public service, Hurwitz Fine P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York, New Jersey, and Connecticut appellate courts and Canadian appellate courts. The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers.

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at [email protected] or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.

 

Dear Coverage Pointers Subscribers: 

Do you have a situation? We love situations. And a belated Happy Canada Day to our many Canadian subscribers.

From your friends at HF, we wish you a wonderful Fourth of July weekend.  I tried to get this issue out the door earlier today, but sometime life and clients get in the way. I know I will get hundreds of “out of office” bounce backs, as so many of you celebrate our nation’s 250^th anniversary.

Attached is our “regular” issue of Coverage Pointers, along with another piece for consideration on this special .

This weekend, we celebrate the anniversary of nation’s founding — and with it, the enduring promise of the Rule of Law..

The Importance of Independence Day

I rarely use this platform to speak from the heart but today feels like the right moment to do so.

We should never forget how hard-won our freedom was. It was not handed to our founders. It was not granted as a gift. Nearly 250 years ago, it was secured through courage, sacrifice, blood, sweat, tears, and an unshakable belief that people should not live at the mercy of authoritarian rule.

Our founders broke from monarchy and set out to build something extraordinary: a government of laws, not of unchecked power. A system designed to protect citizens from autocracy. A republic that, despite its imperfections and struggles, has endured for a quarter of a millennium.

Outside this forum, I have often reminded friends and colleagues of the vital role attorneys play in protecting the Rule of Law. We are not merely advocates for clients. At our best, we are guardians of process, defenders of fairness, and stewards of the constitutional principles that make liberty possible.

On this anniversary of our nation’s independence, that responsibility feels especially meaningful. Freedom survives only when people are willing to defend it. The Rule of Law endures only when we insist upon it.  In 2020, I had the honor of presenting remarks on Protecting Lives through the Rule of Law before 150 state court appellate judges at the National Foundation for Judicial Excellence annual symposium in Chicago. I attach those remarks to this newsletter as well,

 

I thank GeorgiaLawyersfortheRuleofLaw for these important words, which I excerpt here and endorse:

As America approaches the 250th anniversary of the Declaration of Independence, July 4th asks more of us than celebration. It asks for both remembrance and courage.

The Declaration’s most famous words remain foundational because they are not partisan: “all men are created equal,” endowed with rights no government may lawfully erase. The Founders called that truth “self-evident.” But the Declaration did not stop with lofty ideals. It made a relentless, detailed case, a lawyer’s case against tyranny: power exercised without consent, punishment without due process, trade strangled to compel obedience, troops imposed upon homes, courts manipulated, taxes levied to fund policies the people had no voice in shaping.

Those grievances were not abstractions. They were the lived experience of colonists, many of them immigrants or children of immigrants, who believed government becomes illegitimate when it places itself above law.

As David McCullough recounts in John Adams, independence did not arrive in a burst of certainty. Adams and Jefferson, different in temperament but united in purpose, labored through the Second Continental Congress to persuade cautious colonies that the time had come to stand together. Adams understood the danger of the word “tyranny.” It was grave, inflammatory, and irreversible. Yet the facts demanded moral clarity.

To sign the Declaration was to risk being branded traitors. Benjamin Franklin’s warning still echoes: “We must all hang together, or most assuredly we shall all hang separately.”

That is the inheritance of lawyers, from Jefferson and Adams on, in a constitutional republic. We are not called merely to admire the rule of law when it is safe. We are called to defend it when power becomes impatient with limits.

***

On this anniversary, let us not merely celebrate independence. Let us declare again, with unity and courage, that we stand for democracy and against authoritarianism, for the self-evident truth and against tyranny, that we stand for the rule of law.

,

Coverage Pointers University Keeps on Giving …

College of Casualty CGL Department:
Connecticut Coverage and Bad Faith Avoidance

Date & Time

July 16, 2026, 01:00 PM in Eastern Time (US and Canada)

Description

Click to Register

Join Insurance Coverage Attorney Lee Siegel for a user’s guide to common Connecticut insurance coverage issues, with an emphasis on bad faith avoidance and claim-handling best practices. This seminar will address first- and third-party coverage standards, common law bad faith and the statutory CUTPA and CUIPA schemes. Designed as a practical primer for coverage counsel, in-house claims professionals, and adjusters, this session will help identify and clarify common Connecticut coverage pitfalls and offer actionable guidance on structuring claim decisions and communications to minimize exposure to extra-contractual and unfair claims handling allegations.

 

LinkedIn

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

 

Need a Mediator or Arbitrator, Give a Call:

A growing percentage of my practice has been a mediator (and sometimes as an arbitrator) in insurance coverage, commercial, personal injury, and other disputes. With a robust national client base, I am regularly called on by friends and colleagues from around the country, folks who know me and trust me, to help resolve disputes. Often, particularly in mediated matters, I know the insurers and lawyers on both (or several) sides of the dispute. Since they all trust me as a fair dealer, they feel comfortable having me try to help close the file (and avoid precedent). Just pick up the phone, 716.849.8942 or send an email to [email protected]  and I’ll try to help.

 

Newsletters:      

We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:

 

• Premises Pointers:  This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!).  Please drop a note to Jody Briandi at [email protected] to be added to the mailing list.

 

• Labor Law Pointers:  Hurwitz Fine P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at [email protected] to subscribe.

 

• Products Liability Pointers:  Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving. Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies. This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework, and governmental agencies. Contact V. Christopher Potenza  at [email protected] to subscribe.

 

• Medical & Nursing Home Liability Pointers. Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Elizabeth Midgley at [email protected] to subscribe.

 

Wouldn't Those Limits Be Nice? – 100 Years Ago:

The Buffalo News
Buffalo, New York
3 July 1926

RULE LIMITING
CAMPAIGN COSTS
GETS APPROVAL

Senate Committee Favors
Resolution Which Prevents
Seating of Senator-Elect
Whose Primary Expenditures
Exceed $25,000.

WASHINGTON, July 3 (AP). – Dr. Ernest H. Cherrington, general secretary of the Anti-Saloon League, today provided a new source of information for the senate campaign funds committee in its investigation of the activities of the Anti-Saloon league and other organizations active in political and legislative affairs.

He was summoned to supplement the testimony of Wayne B. Wheeler, general counsel and legislative agent of the league, and to explain some of the voluminous data brought back from its national headquarters at Westerville, O., by the committee’s agent.

Decision to proceed along this line in this phase of its investigation was disclosed by the committee yesterday after Senator Reed, Democrat, Missouri, the chairman, and Wheeler, again on the witness stand, had wrestled in the warm hearing room for five hours over their conflicting viewpoints and masses of figures out of the league’s records.

 

Peiper on Property (and Potpourri):

Happy July 4^th Weekend.  Enjoy plenty of hot dogs, hamburgers and fireworks this weekend.  As always, please take due care to stay hydrated.  Plenty of ice is suggested. 

See you in two weeks.

  Steve
Steven E. Peiper
[email protected]

 

An "Unmarriage" Tax – 100 Years Ago:

The Buffalo News
Buffalo, New York
3 July 1926

GREECE IMPOSES TAX ON
BACHELORS AND SPINSTERS

LONDON, July 3. – The Pangalos government yesterday issued a decree imposing special taxes on bachelors and spinsters, according to the Athens correspondent of the Westminster Gazette.

Single people between the ages of 24 and 40 years must pay an annual tax of 3000 drachmas – approximately $37 at the present rate of exchange- bit the penalty on those over 40 years old is not so severe. They have to pay only a thousand drachmas.

 

Lee’s Connecticut Chronicles:

Dear Nutmeggers,

Hard to believe, but (save for a doomed trip to Yankee Stadium), this Connecticut lawyer has been in Connecticut for two whole weeks. My little beach town celebrated our nation’s 250^th birthday last weekend with a fireworks extravaganza to rival Macy’s. The best part was that we didn’t have to leave our deck.

Also, if you’re looking for fireworks, you have to enroll in our Coverage Pointers University, Connecticut Coverage and Bad Faith Avoidance course. We will be live, on Zoom, July 16^th at 1 p.m. Eastern, filling you in on all things Connecticut. 

Bring your questions, your concerns, and your situations. We can’t wait to see you there!

Until then, we have a couple of cases in this edition. One reminds you of the standard to rescind coverage, and the other follows the saga of our fertility doctor who used his own sperm to impregnate his patients. Whoever said insurance wasn’t fun?

Keep keeping safe.

Lee
Lee S. Siegel
[email protected]

 

Jealousy Considered – 100 Years Ago:

New Orleans States
New Orleans, Louisiana
3 July 2026

Advice To The
Lovelorn

By BEATRICE FAIRFAX

Rifts In Love

DEAR MISS FAIRFAX:

I am 16 and have been getting with a fellow 23, keeping steady company for a year. I love him and he says he loves me. I am jealous of him, but he says he isn’t jealous of me.

1 – Do you think this boy loves me and how can I find out? 3 – He says he loves only me, but I am jealous of him, what shall I do? 4 – How can I find out whether he goes with other girls or not? 5 – He won’t let me use rouge or lipstick or speak to any other boys. Is this meanness, jealousy or love? 6 – He won’t even let me speak to his brother and when I do he winks his eye at me and I know what it means. Is this jealousy? – PINKIE

1 – One can love without being jealous, but it is not usual. 2 – You’ll never know if you keep on being so suspicious. 3 – Quite down and stop being so jealous. 4 – Keep your eyes and ears open. 5 – It is a little jealousy and a deep interest in you, but go on speaking to people anyhow, but don’t flirt with them. I don’t see how he could object to the former, but he naturally would to the latter.

 

Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers’ Subscribers:

Another house season is in the books at our local Little League. We will have a two-week reprieve before travel practices resume, but summer camps are in full swing. For the first year, our boys will share a camp for a few weeks this summer and it seems to be going well so far. We will see how quickly that devolves in the weeks ahead.

This edition, I have summarized a Second Circuit decision discussing additional insured coverage in the context of an employee injury. How detailed must the allegations of the employer’s negligence in a third-party pleading be (drafted self-servingly by the purported additional insured itself). The answer may shock you (or not).

Until next time…

Ryan
Ryan P. Maxwell
[email protected]

 

Updating Lincoln Memorial – 100 Years Ago:

The Washington Post
Washington, District of Columbia
3 July 1926

Lights to Be Changed
At Lincoln Memorial

Electric lights are to be placed in the Lincoln Memorial this summer, to eliminate the “footlight effect” that is spoiling the features of the Lincoln statue, it was announced at the office of public buildings and public parks of the national Capitol yesterday.

The intensity of light through the translucent marble panels above the statue is not sufficiently reduced and sunlight coming in the entrance throws the shadows on the statue upward instead of downward, spoiling the artistic effect. To remedy this, flood lights are to be place above the marble panels so that shadows will be cast downward.

 

Storm’s SIU:

Hi Team:

Sorry no cases last edition, I was attending my nephew’s destination wedding in Toulouse, France, just before the extreme heat there. 

Four interesting cases for you this edition:

• In No-Fault Staged-Accident Defenses, Insurers Can Prevail on Summary Judgment by Marshaling EDR Data, EUO Inconsistencies, Policy Timing, Claim-Reporting Delays, and Treatment Patterns That Collectively Support a “Founded Belief” and Show, by a Preponderance of the Evidence, the Event Was Not Accidental.    

 

• In All-Risk Property Coverage Disputes, Where Anti-Concurrent and Anti-Sequential Causation Clauses Apply, the Insurer Can Defeat Coverage by Showing that an Excluded Peril (like Wear and Tear or Deterioration) Contributed to the Loss in any Sequence; to Survive Summary Judgment, the Insured Must Offer Competent Expert Evidence Creating a Genuine Dispute that a Covered Peril was the Sole Cause Under the Policy Framework.

 

• PIP Denials Were Sufficient Without Listing EUO Dates, and Insurer Met Its Burden Showing Two Properly Scheduled EUOs, the Assignor’s Nonappearance, and Timely Denials.

 

• For Fraud Claims Against an Insurer Allegations of Insurer Misconduct Must Include Facts Supporting Intent to Mislead; and Gist‑of‑the‑Action Doctrine Bars Negligence Claims Against an Insurer That Merely Repackage Alleged Failures to Perform Under an Insurance Contract.

See you again in two weeks.

Scott
Scott D. Storm
[email protected]

 

Sesqui-Centennial Celebrations – 100 Years Ago:

The Buffalo News
Buffalo, New York
3 July 1926

COOLIDGE SPEAKS

On Monday afternoon, July 5, from 2:30 until 4 o’clock, WEAF will broadcast a special program direct from the Sesqui-Centennial exposition being held in Philadelphia. The outstanding feature of this broadcast will be an address by President Calvin Coolidge.

 

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

A couple of weeks ago, we were walking around Boston when the Scotland fans (in their kilts) were in town for the World Cup and enjoyed seeing the traffic cones they put on the statues. The little cone on the Bruins bear outside TD Garden was by far the best one. While it was very busy with fans in some areas, the rest of the city was so quiet that you could only hear the birds chirping. It was the easiest drive in and out of the city that I have ever had. Now, I’m looking forward to seeing Noah Kahan at Fenway before our next edition and am on the hunt for something appropriately bug themed to wear to the concert.

This edition’s case is from the Oklahoma Supreme Court. The insured brought claims for tortious interference and civil conspiracy against an engineering company retained by the insurer in their investigation. Since the engineering company was acting in a representative capacity for the insurer, a party to the insurance contract, the Oklahoma Supreme Court held that the claims failed as a matter of law.

Stay cool and see you in a fortnight,

Kate
Katherine A. Fleming
[email protected]

 

TW Celebrations – 100 Years Ago:

The Chat
Brooklyn, New York
3 July 1926

 

Gestwick’s Garden State Gazette:

Dear Readers:

Another two weeks have gone by, and plenty has changed. We are now inside of one month until we get married, for one. The excitement and stress are building in equal proportions. We also recently moved; moving furniture and unpacking boxes have to be two of my least favorite things to do. But two of my favorite things to do are coming up—eating hot dogs and watching fireworks. That’s more my speed. Happy Fourth! Be sure to stay hydrated; it’s going to be a scorcher.

I have two cases this week. One is a somewhat rare decision in which a Court refused to bifurcate bad faith claims from breach of contract claims. The other addresses dismissal of bad faith claims as duplicative of breach of contract claims, as well as a continuous insurance provision in a professional liability policy. Read on to find out how they shook out.

That’s it, I’ll see you in two weeks. May the Fourth be with you!

Evan
Evan D. Gestwick
[email protected]

 

NY Celebrates – 100 Years Ago:

Daily Sentinel
Rome, New York
3 July 1926

NATION’S BIRTHDAY
MARKED IN SCORES
OF NEW YORK TOWNS

Pageants, Parades Arranged
For Declaration’s Sesqui-Centennial.

SCHUYLERVILLE OPENS
FOUR-DAY CELEBRATION

Canadians Join with American
Neighbors in Fetes
Along Border.

Albany, July 3. – (AP) – Pageants and parades, fireworks and music, sports and speechmaking will proclaim throughout the state that Sunday is the 150^th anniversary of the signing of the Declaration of Independence.

Several of the cities and villages, among them Buffalo, Syracuse, Binghamton and Albany, have been observing this week as Independence Week with appropriate festivities, but the majority of the state’s residents will celebrate Sunday and Monday.

 

O’Shea Rides the Circuits:

Readers,

I hope everyone is enjoying the sweltering heat and the World Cup. A few upsets occurred, looking at you Germany, as the Round of 16 will begin shortly. It has been entertaining to see the likes of Messi and Ronaldo, still playing at high level. It gives me hope to achieve the same athletic excellence as I approach their age. But something tells me, the ship not only sailed but struck an iceberg and sank years ago.

This week I have a couple cases. One from the Sixth Circuit addressing an extended reporting period and retroactive claim exclusion. The other case involves the hijacking of an insured’s CFO’s email leading to a $4 million loss.

Happy Fourth,

Ryan
Ryan P. O’Shea
[email protected]

 

Hobo Convention – 100 Years Ago:

The Buffalo News
Buffalo, New York
3 July 1926

SHORTER WORKING DAY
DISCUSSED BY HOBOES

 

PHILADELPHIA, July 3 (AP). – The Sesqui-Centennial city is acting as host to a hobo convention. Delegates to the meeting – the Migratory Casual and Unemployed, otherwise known as the International Brotherhood Welfare association and the Hoboes’ union – came to the city chiefly on freight trains and “blind baggage.” There are approximately twenty official delegates, but there are many without credentials.

They were welcomed by J. Eads How, “millionaire hobo.” The convention will continue until Monday with discussions of old age pensions, insurance against unemployment, adequate education and a shorter working day.

 

LaBarbera’s Lower Court Library:

Dear Readers:

This has been quite an eventful World Cup. For those who are not following closely, many teams are making history for their respective countries. My Norwegian pride has been soaring, with the men’s team winning its first ever knock-out round game. Heia Norge!

It has been a slow few weeks for the courts, but I was able to locate a case in the Civil Court of the City of New York, pending in Richmond County. Here, the Court denied the carriers’ motion, finding that the admissible evidence presented was insufficient to make a finding that the injuries did not arise out of a covered loss and/or that the incident was allegedly a staged accident.

Until next time…

Isabelle
Isabelle H. LaBarbera
[email protected]

 

The Good Old Days – 100 Years Ago:

The Franklin Repository
Chambersburg, Pennsylvania
3 July 1926

U.S. CLOSES YEAR
WITH SURPLUS OF
$377,767,000

Mellon Gives Accounting Of
Government’s Financial Condition

Washington, July 2. – Secretary Mellon gave today a formal accounting of the financial condition of the Government at the end of the fiscal year on June 30. He announced a reduction in the public debt of $872,900,000 and that the books of the Treasury at the end of the period showed a surplus of $377,767,000.

The surplus was under the estimate of $390,000,000 made recently by the President, but last-minute expenditures of $11,000,000 on account of the postal deficiency and of $6,000,000 on account of estate tax refunds held down the total. Both of these expenditures belong more properly to 1927 fiscal year, which began today.

 

Lexi’s Legislative Lowdown:

Dear Readers,

I am hoping everyone has a wonderful 4^th of July weekend. I am looking forward to enjoying the weather and hopefully a hot dog or two.

This week we discuss DFS’s Circular Letter to all insurers authorized to issue motor vehicle insurance addressing the 2026 Motor Vehicle Insurance Reforms.

Thanks for reading.

Lexi
Lexi R. Horton
[email protected]

 

Make the Bums Work – 100 Years Ago:

The Buffalo News
Buffalo, New York
3 July 1926

Washing Machines for Firemen
Plan of Cleveland Official

Suggest Installation of One in Every Firehouse to
“Make the Bums Work.”

CLEVELAND, Ohio, July 3 (AP). – City firemen will be forced to wash their bed clothes if Safety Director Edwin D. Barry has his way. Barry proposed that a washing machine by furnished every fire station.

“Anything at all to make the bums work, and quit sitting around all day doing nothing,” Barry declared. “There’s nothing a fireman thinks about so much as when he’s going to be off next.”

The proposal was made when Assistant Fire Chief James E. Granger requested Barry to amend the rules to permit firemen to work forty-eight hours and be off forty-eight, instead of twenty-four, as at present.

“A fireman gets too much time off as it is” Barry added. “He’s off three days every week. The poor cops work their time, day and night, without a kick, and the public gives them the dickens for enforcing the law. Bu the public loves a fireman because about once a week he puts out a fire.”

 

Victoria’s Vision on Bad Faith

Dear Readers,

Happy Fourth! I plan on spending my long weekend painting my basement. Fun stuff.

This week, I have two cases: one from the Second Department affirming the Supreme Court's dismissal of the plaintiff’s cause of action for breach of the covenant of good faith and fair dealing, and another discussing claims for bad faith and consequential damages against an insurer.

Have a good weekend!

Victoria
Victoria S. Heist
[email protected]

 

That's About $37,000 Today – 100 Years Ago:

The Buffalo News
Buffalo, New York
3 July 1926

ALLEGED ALCOHOL SELLER
IS HELD IN BAIL OF $2000

PORT COLBORNE, Ont., July 3. – Charged with selling liquor that was almost fatal to Joseph Beaupre, sailor, Fred Rutka, 207 Fares street, was arrested and now is out on $2000 bail awaiting trial.

Beaupre was picked up by police nearly dead from the effects of drinking alcohol, and it was only prompt action on the part of doctors and police that saved his life. Two others who were with Beaupre also were arrested, one of them being in almost the same condition as Beaupre.

The three men said they had purchased alcohol from Rutka.

 

Shim’s Serious Injury Segment

Dear Readers,

Hope everyone has been well since our last column. Unfortunately, we are still in a bit of a “serious injury” drought when it comes to recent decisions since our last issue. Regardless, I have shared a case wherein the Appellate Division tackles an issue of timeliness and the grounds on which defendants’ respective cross-motions are based, including “serious injury”.

With the Fourth of July just a couple of days away, we will soon reach the United States’ 250th birthday. I have always been proud to be an American and appreciative of all that our country has given me. Each year I look forward to the Fourth of July and reflect on our nation’s rich history but also be grateful for the privileges our nation affords us. I hope that while you enjoy festivities this weekend, you can also take a moment to appreciate what we have and what we can do to make the United States even greater.

Have a wonderful Fourth of July weekend! See you in the next issue!

Stephen
Stephen M. Shimshi
[email protected]

 

Is That a Crime? – 100 Years Ago:

The Buffalo News
Buffalo, New York
3 July 1926

HELD AS WIFE DESERTER

WELLAND, Ont., July 3. – Completing a ten-day term for drunkenness, Edward Durant was arrested by Sergent Davis and Patrolman Anderson as he was leaving the county jail Friday, on a warrant issued at Oakville, where he is wanted for wife desertion.

 

New England Almanack

Dear Readers,

For this issue, we report two cases from New Hampshire and Rhode Island. U.S. District Court for the District of New Hampshire confirmed strict requirements for entry of a separate and final judgment under Rule 54(b). Supreme Court of Rhode Island held that the issue of whether the particulate use of a “non-owned” automobile is a “regular use” excluded from UIM coverage is a question of fact.

Happy Fourth of July!

Barbara
Barbara A. O’Donnell
[email protected]

Alex
Alexander G. Henlin
[email protected]

Iryna
Iryna N. Dore
[email protected]

 

Happy Birthday, America – 100 Years Ago:

Daily Sentinel
Rome, New York
3 July 1926

NATION’S BIRTHDAY
MARKED IN SCORES
OF NEW YORK TOWNS

Pageants, Parades Arranged
For Declaration's
Sesqui-Centennial

SCHUYLERVILLE OPENS
FOUR-DAY CELEBRATION

Canadians Join with American
Neighbors in Fetes.
Along Border.

Albany, July3. – (AP) - Pageants and parades, fireworks and music, sports and speechmaking will proclaim throughout the state that Sunday is the 150th anniversary of the signing of the Declaration of Independence.

Several of the cities and villages, among them Buffalo, Syracuse, Binghamton and Albany, have been observing this week as Independence Week with appropriate festivities, but the majority of the state's residents will celebrate Sunday and Monday.

Historical pageants have a prominent place on the general Independence Day program this year. Interest in the state's history, stimulated by the decision to restore the revolutionary battlefields of Oriskany, Saratoga, Fort Stanwix and Bennington, is said never to have been more lively, and many communities, proud of their contributions toward the creation of the republic, are to depict In pageant form the deeds of the forefathers.

 

North of the Border:

Three weeks ago, our family welcomed a new granddaughter into the world, arriving safely and softly, as if she’d simply always been meant to be here. Her downy head fits perfectly in the curve of my neck, her whole body small enough to stretch only from the palm of my hand to my elbow, and her newborn squeaks have a way of making time stand still as I rock her in the same chair where I once rocked my own children—and where my parents once rocked me.

As she starts to find her footing in this world, Calgary is getting ready for another ten‑day Stampede extravaganza. Even against the backdrop of grim international headlines, there is a lightness in the community mood as we prepare to make the most of our brief Canadian summer. In the weeks ahead, I plan to spend as much time as I can with this newest member of our family, and it’s from that place of renewed perspective—on risk, on resilience, and on what truly matters—that I offer the thoughts in this article about a Canadian lawyer representing her clients against organized crime until she couldn’t.

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]

• Owner of Property That Sought Contractual Indemnity Was Not “Owner” as Define in Indemnity Agreement
• Insurer With Professional Liability Exclusion in CGL Policy for Engineering Firm Still Must Defend Insured Where There Are Broad Allegations of General Negligence Against the Firm.  Another Carrier That Claimed That Underlying Contract Work Not Part of Policy Is Allowed to Compel Discover on That Issue, Before the Court Rules on a Duty to Defend
• Never Forget the Importance of the Anti-Subrogation Rule.  To the Extent That Two Parties Are Insured Under the Same Policy, Anti-Subrogation Bars Those Claims.
• An Uninsured Motorists Benefit Applicant Must Comply with Notice Rules or Forfeit the Right to Benefits

 

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

• Covid-19 Claims Still Being Pursued, and Still Failing Just the Same
• Short Term Disability Carrier Could Not Assert Lien on, Nor Subrogate Against, Bodily Injury Recovery

 

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

• Misrepresentations Regarding Scope of Services Leave Insured Without Coverage
• Allegations That Doctor Used His Own Sperm to Impregnate Patients Triggers a Defense

 

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

• Allegations in Third-Party Complaint Deemed to Sufficiently Allege Proximate Cause and Trigger Defense of Additional Insured

 

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

• In No-Fault Staged-Accident Defenses, Insurers Can Prevail on Summary Judgment by Marshaling EDR Data, EUO Inconsistencies, Policy Timing, Claim-Reporting Delays, and Treatment Patterns That Collectively Support a “Founded Belief” and Show, by a Preponderance of the Evidence, the Event Was Not Accidental
• In All-Risk Property Coverage Disputes, Where Anti-Concurrent and Anti-Sequential Causation Clauses Apply, the Insurer Can Defeat Coverage by Showing That an Excluded Peril (like Wear and Tear or Deterioration) Contributed to the Loss in Any Sequence; to Survive Summary Judgment, the Insured Must Offer Competent Expert Evidence Creating a Genuine Dispute That a Covered Peril Was the Sole Cause Under the Policy Framework
• Denials Were Sufficient Without Listing EUO Dates, and Insurer Met Its Burden Showing Two Properly Scheduled EUOs, the Assignor’s Nonappearance, and Timely Denials
• For Fraud Claims Against an Insurer Allegations of Insurer Misconduct Must Include Facts Supporting Intent to Mislead; and Gist‑of‑the‑Action Doctrine Bars Negligence Claims Against an Insurer That Merely Repackage Alleged Failures to Perform Under an Insurance Contract

 

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

• Claims for Tortious Interference with Contract and Civil Conspiracy Failed Against Representative for Insurer as a Matter of Law

 

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

• Court Refuses to Bifurcate Bad Faith Claims from Breach of Contract Claims
• Court Dismisses Bad Faith Claims on Two Bases: (1) They Were Duplicative of Breach of Contract Claims; and (2) No Coverage Was Available Under the Policy’s Continuous Coverage Provision

 

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

• Insured’s Failure to Provide Timely Notice Dooms Claimant-Assignee’s Direct Actions
• Terms of Endorsement Exclusion Barred Coverage for Cyberfraud Originating from Insured’s Internal Emails

 

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

• Insurer Motion for Summary Judgment Denied, Finding That Admissible Evidence Only Points to a “Founded Belief” of Staged Accident, Not That Insurer Was Entitled to Judgment, as a Matter of Law

 

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

• DFS Issues a Circular Letter to Motor Vehicle Insurers in New York State to Discuss 2026 Motor Vehicle Insurance Reforms

 

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

• Second Department Affirms Dismissal of Allegation of Breach of the Covenant of Good Faith and Fair Dealing Against Insurer
• SDNY Denies, in Part, Insurer’s Motion to Dismiss Claims for Bad Faith and Consequential Damages

 

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

• The Appellate Division, Second Department, Denies the Defendants’ Post-Note of Issue Cross-Motions to Dismiss the Amended Complaint on Grounds of Timeliness

 

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

Alex G. Henlin
[email protected]

Iryna N. Dore
[email protected]

• Insurer’s Rule 54(b) Request for a Separate and Final Judgment Was Denied Even Though All Claims Against the Carrier Were Dismissed
• Whether the Particular Use of a “Non-Owned” Automobile Is a “Regular Use” Excluded from UIM Coverage Is a Question of Fact

 

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

• Is Business Interruption Coverage Available When Fire, Bullets, and Fear Silence a Law Firm?

 

Enjoy the long weekend and celebrate your freedom.

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, New Jersey, and across New England.

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

Lee’s Connecticut Chronicles

Ryan’s Federal Reporter

Storm’s SIU

Fleming’s Finest

Gestwick’s Garden State Gazette

O’Shea Rides the Circuits

LaBarbera’s Lower Court Library

Lexi’s Legislative Lowdown

Victoria’s Vision on Bad Faith

Shim’s Serious Injury Segment

New England Almanack

North of the Border

 

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

06/30/26          Almer v. Summit Glory Property LLC
Appellate Division, First Department
Owner of Property That Sought Contractual Indemnity Was Not “Owner” as Defined in Indemnity Agreement

Almer, an apprentice electrician employed by nonparty Forest Electric, tripped and fell over a drag line, a rope used to pull cable trough conduit, while the drag line was attached to a partially installed data cable that had been coiled up and hung from a passageway ceiling. The construction project involved the build-out of tenant space at 28 Liberty Steet in downtown Manhattan; the building was owned by Summit, a subsidiary of Fosun, and the space was leased to nonparty Wolters Kluwer. Summit engaged Benchmark to serve as the project's general contractor. Wolters Kluwer, in turn, contracted with Linear to run all the project's low energy data and communications cable, and Linear subcontracted that work to Momentum.

On the indemnity and coverage issues, Linear is entitled to indemnity against Momentum based on the contract between them. Linear is defined as "Contractor" in the agreement and is thus named as a party to whom Momentum owed contractual indemnity. Moreover, the accident "arose out of," was "in connection with," or was "a result of or consequence of" the work (. Further, the triggering of an "arising out of" clause is not contingent upon proof that the indemnitor was negligent. Summit, Fosun, and Benchmark, however, are not named). Defendants argue that Summit is an indemnitee because it is the "Owner" and Benchmark and Fosun are its agents.

However, the term "Owner" in the Linear/Momentum contract refers to Wolters Klewer, the tenant with whom Linear contracted, and the "prime contract" is the contract between Linear and Wolters Klewer. Even if Summit were named, there is no evidence that either Fosun or Benchmark Builders were its agents

Defendants Summit and Fosun are entitled to indemnity from Linear based upon the Linear/Wolters Kluwer Contract. That contract has a two-page rider entitled "Insurance and Indemnity Rider" that provides that the indemnitees are the parties listed "below" as additional insureds. The portion of the rider outlining insurance requirements lists Summit and Fosun as parties that Linear is obligated to name as additional insureds, thus making them indemnitees under the contracts. Linear's argument that those entities are not intended indemnitees because they are listed above, rather than below, the indemnity clause is unpersuasive, as the intent of the parties is clear from the contract. Benchmark, however, is not named as an additional insured, nor is it an agent of Summit for purposes of contractual). Thus, its contractual indemnity claims against Linear must be dismissed.

Linear failed to make a showing that it procured the required insurance so as to warrant dismissal of defendants' breach of contract claim against it.

 

06/26/26         County of Erie v. Selective Insurance Company
Appellate Division, Fourth Department
Insurer With Professional Liability Exclusion in CGL Policy for Engineering Firm Still Must Defend Insured Where There Are Broad Allegations of General Negligence Against the Firm.  Another Carrier That Claimed That Underlying Contract Work Not Part of Policy Is Allowed to Compel Discover on That Issue, Before the Court Rules on a Duty to Defend

The County of Erie (“County”) commenced this declaratory judgment and breach of contract action seeking a declaration that defendant insurers, Selective Insurance Company of America (“Selective”) and Zurich American Insurance Company (“Zurich”), who issued commercial general liability policies naming the County as an additional insured, must provide coverage to the County in an underlying personal injury lawsuit. The County hired Destro & Brothers Concrete Company, Inc. (“Destro”) as a contractor and hired LiRo Engineers, Inc. (“LiRo”) to provide construction management services in connection with a paving project. Selective insured Destro, and Zurich insured LiRo.

The plaintiff in the underlying action sought damages for personal injuries she sustained when she fell off her bicycle at a County park owned by the County when she transitioned from the pavement edge to the grass. She named as defendants the County, Destro, and LiRo.

After defendants refused to provide insurance coverage for the County, the County commenced this declaratory judgment action.

Zurich does not dispute that the County met its initial burden of establishing its entitlement to coverage under the Zurich policy, but Zurich contends that it established the applicability of the professional services exclusion in the policy, which provides that "[t]his insurance does not apply to . . . '[b]odily injury' . . . arising out of the rendering of, or failure to render, any professional architectural, engineering or surveying services." Zurich contends that inasmuch as LiRo was hired as an engineering consultant and the injuries to the plaintiff in the underlying action allegedly arose from those engineering services, the professional services exclusion in the policy applies.

Here, the plaintiff in the underlying action alleged that her injuries were the result of the negligent conduct of the County, Destro, and LiRo "in the ownership, operation, maintenance, management, construction, control and design of the . . . pavement." Zurich failed to demonstrate that the allegations in the underlying action fell "solely and entirely within the policy exclusion.

As to Selective, there is no dispute that Destro did paving work at the park where the underlying accident occurred and that the contract between the County and Destro required Destro to name the County as an additional insured on its insurance policy. Selective contends, however, that the contract did not unambiguously include the paving work at the park.

The court rejected Selective's contention that the addenda to the bids for the paving project were not part of the contract between the County and Destro inasmuch as the addenda was expressly incorporated into the contract. Moreover, those addenda specifically referenced work in parks, and Destro's bid included that work.

However, the contract set forth a specific bid amount for the paving project, which was an amount that excluded work in the parks. We therefore conclude that there was an ambiguity in the contract as to whether work in the parks was included in the scope of the paving project

Where, as here, "contract language is reasonably susceptible to more than one interpretation, . . . extrinsic or parol evidence may then be permitted to determine the parties' intent as to the meaning of that language" . To be entitled to summary judgment, "the moving party has the burden of establishing that its construction of the [contract] is the only construction [that] can fairly be placed thereon" (Kowalak v Keystone Med. Servs. of N.Y., P.C., 197 AD3d 893, 894 [4th Dept 2021] [internal quotation marks omitted]). Summary judgment is not appropriate when a "determination of the intent of the parties depends on the credibility of extrinsic evidence or on a choice among reasonable inferences to be drawn from extrinsic evidence".  The court concludes that neither the County nor Selective met the burden on their respective motion and cross-motion of establishing that their construction of the contract regarding the scope of the paving project is the only fair construction, and thus neither party is currently entitled to summary judgment with respect to Selective's obligation to defend the County and reimburse it for reasonable defense.

Inasmuch as discovery is still outstanding, including Selective's demand for deposition testimony from the County that is the subject of Selective's motion to compel.

 

06/25/26         Santacruz v. 58 Gerry St LLC
Appellate Division, First Department
Never Forget the Importance of the Anti-Subrogation Rule.  To the Extent That Two Parties Are Insured Under the Same Policy, Anti-Subrogation Bars Those Claims

Decision is loaded with Labor Law issues.  With respect to the coverage issues, though, it’s always good to remember that there are often unraised anti-subrogation issues.

Here, the subcontractor, C-Concrete was entitled to summary judgment dismissing the Owner defendants' third-party claims for indemnification against it as barred by the anti-subrogation doctrine . The Owner defendants are named as additional insureds on C-Concrete's Commercial General Liability (CGL) policy.

However, to the extent the Owner defendants' contractual indemnification claims seek relief in the event a liability award exceeds the CGL policy limits, the umbrella/excess liability coverage required under the subcontract terms would be triggered. Should plaintiff obtain a settlement or judgment that exceeds the policy limits, the Owner defendants would be entitled to contractual indemnification from C-Concrete to the extent not barred by the anti-subrogation rule.

 

06/23/26         In the Matter of USAA Casualty Insurance Co. v. Kastor
Appellate Division, First Department
An Uninsured Motorists Benefit Applicant Must Comply With Notice Rules or Forfeit the Right to Benefits

This is a matter involving an application to permanent stay Kastor’s demand for arbitration in a claim for uninsured motorists (“UM”)benefits. 

The notice requirements in the automobile/liability insurance policy through petitioner insurer are not ambiguous, as the Supplemental Uninsured/Underinsured Motorist Endorsement (SUM) contained therein both expressly replaces the "uninsured motorist" (UM) coverage found in Part C of the policy, and further tracks the language prescribed under Insurance Law § 3420(f) and 11 NYCRR 60-2.3(f). Kastor’s assertion that he did not need to provide a recorded statement of the facts underlying his claim unless petitioner waived its right to an examination under oath is unavailing.

The court providently exercised its discretion in staying arbitration. Petitioner was permitted to disclaim coverage because Kastor did not satisfy the policy's notice requirement that he file a sworn statement setting forth the facts in support of his claim. Kastor’s counsel promptly asserted a UM/SUM claim by letter and transmitted respondent's sworn NF-2 no-fault application to USAA, these documents failed to identify the accident as a hit-and-run accident, establish the requisite physical contact or state that the offending vehicle's identity was either unascertainable or provide evidence of due diligence to obtain the identity.

Accordingly, despite being sworn-to, the no-fault application alone did not impute notice to petitioner. The MV-104 accident report provided to petitioner over three months after the accident did not identify the accident as a hit and run. Indeed, the accident was not expressly identified as a "hit-and-run" until the arbitration demand nearly 11 months later.

 

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

 

Property

07/01/26        Wellpath Holdings, Inc. v. XL Ins. Am., Inc.
Appellate Division, Second Department
Covid-19 Claims Still Being Pursued, and Still Failing Just the Same

Plaintiff operates hundreds of medical facilities across the country. It brought this action to recover business interruption losses allegedly caused by shelter-in-place orders issued during the early days of Covid-19. Plaintiff argued that its facilities sustained property damage because Covid-infected airborne particles permeated the air inside them. According to plaintiff, because the air within the buildings was “damaged,” the buildings themselves were likewise “damaged.” Plaintiff further alleged that the facilities were unsafe, as shown by the many patients and employees infected with Covid-19 before the closures.

In granting the various insurers’ motion to dismiss, the Court repeated the well-established precedent that coverage for business interruption could only be triggered where there is “direct physical loss to property.”  That term includes, necessarily, complete dispossession.  Impaired functionality or loss of use is simply not enough for the insured to meet its burden on “direct physical loss.”  Because plaintiff failed to allege anything which could be arguably interpreted as material alternation or complete dispossession, the insurers various motions to dismiss were granted. 

 

Potpourri

07/01/26         Trombetta v. Eklecco Newco, LLC
Appellate Division, Second Department
Short Term Disability Carrier Could Not Assert Lien on, Nor Subrogate Against, Bodily Injury Recovery

The plaintiff was injured in an off-hours slip-and-fall accident in a parking lot owned and maintained by the defendants. Although the accident was not work-related, the plaintiff was unable to work and received $2,346 in short-term disability benefits through his employer’s policy, underwritten by ShelterPoint. After the plaintiff settled his negligence action for $125,000, ShelterPoint asserted a lien seeking reimbursement from the settlement proceeds.

The Appellate Division first addressed Workers’ Compensation Law § 227, which permits a disability benefits carrier to assert a lien on a third-party recovery in some circumstances. The court held that the statute does not create an unconditional right of reimbursement. Rather, the lien applies only where the injured worker’s recovery can fairly be deemed to compensate the worker for the same lost earnings that the disability carrier paid. In other words, the statute is designed to prevent double recovery for lost wages, not to allow an insurer to reach settlement funds that compensate the plaintiff for other damages.

Applying that rule, the court found no basis for ShelterPoint’s lien. The plaintiff’s complaint sought damages for pain and suffering, and the record did not show that the settlement included any amount for lost wages. Because the settlement proceeds could not be deemed to have been recovered for ShelterPoint’s benefit, Workers’ Compensation Law § 227 did not support the lien. The court therefore concluded that the lien was invalid on that ground alone.

The court then held that General Obligations Law § 5-335 independently barred ShelterPoint’s claim. That statute creates a conclusive presumption that personal injury settlements do not include compensation for losses already paid or payable by an insurer, including lost earnings, and it generally prohibits insurers from asserting reimbursement or subrogation claims against settling plaintiffs. The statute contains exceptions for certain categories, including Medicare, Medicaid, no-fault benefits, and workers’ compensation benefits, but not short-term disability benefits.

ShelterPoint argued that short-term disability benefits should be treated like workers’ compensation benefits because they appear within the Workers’ Compensation Law and because § 227 authorizes liens for disability benefits. The court rejected that argument, emphasizing that workers’ compensation benefits and short-term disability benefits have different histories, purposes, and statutory structures. Workers’ compensation covers employment-related injuries, while disability benefits cover non-work-related sickness or injury that prevents an employee from working.

The court also concluded that General Obligations Law § 5-335 and Workers’ Compensation Law § 227 can be harmonized. Section 227 may permit reimbursement when a recovery actually compensates an employee for lost wages, but § 5-335 reflects a legislative policy that, in ordinary personal injury settlements, insurers may not presume that settlement funds include amounts for losses already covered by insurance. Because the Legislature expressly preserved liens for workers’ compensation benefits but did not do so for short-term disability benefits, the court would not read such an exception into the statute.

Finally, the court found the legislative history of § 5-335 consistent with this interpretation. The statute was enacted and amended to prevent insurer reimbursement claims from interfering with personal injury settlements and to protect settlement proceeds from being depleted by liens, except in specifically identified circumstances. Because short-term disability benefits were not included among those exceptions, ShelterPoint had no enforceable lien or subrogation right against the plaintiff’s settlement.

 

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

06/30/26        Union Mut. Fire Ins. Co. v. Krajewski
United States District Court, D. Connecticut
Misrepresentations Regarding Scope of Services Leave Insured Without Coverage

The district court granted Union Mutual’s motion for summary judgment, finding that the insured’s material misrepresentations in the policy application rendered the coverage void ab initio. The insured represented that he performed only masonry work with no subcontractors, excavation, or heavy equipment. However, he contracted with the underlying plaintiffs to perform foundation replacement, excavation, and drainage work using subcontractors. These misrepresentations, the court held, were material to Union Mutual's underwriting decision, as it would not have issued the policy had it known the true nature of Krajewski's business operations.

In Connecticut, an insurer must establish that the policy applicant made a knowingly false statement to void coverage. Innocent, albeit incorrect, statements are insufficient. Here, the insurer established that: 1) the insured made misstatements as part of the application for coverage; 2) the insured signed the application affirming the truth of the representations; and 3) the misrepresentations were material to its underwriting decision.

 

06/09/26        Integris Ins. Co. v. Tohan
Supreme Court of Connecticut
Allegations That Doctor Used His Own Sperm to Impregnate Patients Triggers a Defense

This long coverage battle has come to an end, as the Connecticut Supreme Court declined to hear Integris’ appeal. We’ve been following this case since 2023, when the trial court found Integris had no duty to defend, but in 2025, that determination was overturned on appeal. The Supreme Court's refusal to act brings us to the end of the coverage saga.

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

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

Soon after, Integris, Dr. Tohan’s malpractice carrier, brought the above-coverage action. The trial court granted Integris summary judgment, finding that the claims against the insured were excluded but, interestingly, could be a medical incident. “As the allegations in the Suprynowicz action could fall within the coverage of the Integris Insurance Policy, subject to the applicability of any exclusion, the court cannot grant summary judgment seeking a declaration that the damages sought in the Suprynowicz action are not within the coverage of the Integris Insurance Policy because they are not a result of an injury arising out of a medical incident and must now consider whether any exclusion applies.”

However, the trial court found that all the alleged damages fell under the intentional conduct exclusion in the policy. The court, as a matter of dicta, also found that all the claims would be precluded by the sexual misconduct exclusion

In a reversal, the Connecticut Appellate Court ruled that Integris must defend Dr. Tohan against the underlying claims, finding that IVF fraud constitutes "professional services" and the use of his own sperm was not, as a matter of law, excluded sexual misconduct. The panel was persuaded that the underlying plaintiffs alleged that the misuse of his own sperm could be a medical malpractice claim. "Providing IVF services to Kayla's parents plainly is within the customary scope of the defendant's practice specialty and thus constitutes 'professional services' as that term is defined in the policy. The fact that the defendant may have negligently used his own sperm while providing those professional services, as the civil action plaintiffs allege in their complaint, does not alter that conclusion."

The appellate court reasoned that while the underlying complaint could be read to allege that Dr. Tohan intentionally used his own sperm, the pleading did not assert that he had intended to cause injury to the plaintiffs.

But is this really the last battle of the coverage war? Indemnity is yet to be decided, and for that skirmish, the court will have to consider not vague allegations in a pleading that favor a duty to defend but rather the actual evidence. So, our work here is not yet done. Stay tuned. 

            

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

 

06/23/26         New York Marine v. Federal Insurance Co.
Second Circuit Court of Appeals
Allegations in Third-Party Complaint Deemed to Sufficiently Allege Proximate Cause and Trigger Defense of Additional Insured

Mary Guzman, an employee of cleaning company PBM, LLC, was injured when a glass panel in a revolving door fell on her while she was cleaning it at a building owned by Old Slip Property LLC and Beacon Capital Partners, LLC, with Bank of New York Mellon (BNYM) as the fifteenth-floor lessee. Guzman sued the Owners (Old Slip and Beacon) and BNYM in state court, alleging they created or permitted a dangerous condition that caused her injuries. The Owners then filed third‑party complaints against PBM and BNYM, asserting their negligence caused the accident. BNYM answered with counterclaims against the Owners and crossclaims against PBM seeking contribution and indemnification.

Thereafter, LM Insurance Corporation (the Owners’ insurer) sought a declaration that PBM’s insurer (New York Marine) and BNYM’s insurer (Federal Insurance) must defend and indemnify the Owners. Federal also sought a declaration that New York Marine must defend and indemnify BNYM and the Owners. The district court held Federal had a duty to defend the Owners, but New York Marine had no duty to defend or indemnify either the Owners or BNYM.

On appeal, the central factual disputes were whether PBM (or Guzman, for whose conduct PBM could be responsible) committed negligent acts or omissions in the course of PBM’s cleaning operations that proximately caused the glass panel to fall, and whether PBM bore any responsibility for the revolving doors’ condition. PBM was not mentioned in Guzman’s complaint (she could not sue her employer), but the Owners’ third‑party complaint alleged that PBM’s affirmative, active, and primary negligence created the hazardous condition. The Second Circuit also noted that the record on appeal did not conclusively resolve PBM’s role or responsibility either.

The Second Circuit found that Old Slip and BNYM qualify as additional insureds under PBM’s New York Marine policy based upon written service contracts, but Beacon did not because no written agreement required PBM to add Beacon as an additional insured. The procurement requirement in the underlying contracts, or lack thereof, however, did not end the inquiry.

The additional-insured endorsement covered liability for bodily injury “caused, in whole or in part, by” PBM’s acts or omissions (or those acting on PBM’s behalf) in the performance of PBM’s ongoing operations for the additional insureds. This requires proximate causation by PBM’s actionable conduct. And while Guzman’s complaint alleges negligence only by Owners and BNYM and does not mention PBM (because she could not sue her employer), the Owners’ third‑party complaint alleges that PBM’s affirmative, active, and primary negligence caused the dangerous condition and Guzman’s injuries. These allegations were deemed sufficient to potentially bring the claim within the New York Marine policy’s additional‑insured coverage, thereby triggering New York Marine’s duty to defend Old Slip and BNYM.

The Second Circuit distinguished Pioneer Central School District v. Preferred Mutual Insurance Company, where the insurer had no duty to defend because the underlying pleadings foreclosed any proximate causation by the insured contractor. Here, by contrast, the record did not rule out that PBM or Guzman (for whom PBM was responsible) committed a negligent act that proximately caused the glass panel to fall, so a potential basis for coverage remains.

Accordingly, New York Marine’s duty to defend Old Slip and BNYM was triggered.

Maxwell’s Minute: The Second Circuit expressly indicates (in response to New York Marine’s argument, no doubt) that it was “True, Owners’ third-party complaint is thin on concrete factual allegations.” This, however, did not deter the Second Circuit from finding the third-party complaint allegations sufficient to trigger a broad defense obligation. And the inclusion of the above sentence in the opinion causes me to reflect on a Southern District of New York decision that had parsed scant factual allegations in more detail a few years back.

Specifically, this decision reminds me of the analysis in Ohio Security Insurance Company v. Travelers Indemnity Company of Connecticut, No. 19-cv-1355 (AJN), 2021 WL 797670, at *5-6 (S.D.N.Y. March 1, 2021), which recognized that New York draws distinctions between those factual scenarios where an injured party’s employment merely places them on site, and others involving acts or omissions in the actual performance of work on the site. Where cases involve underlying and third-party allegations implicating the acts or omissions of a subcontractor, rather than merely placing an employee on site, a duty to defend is triggered. Compare Indian Harbor Ins. Co. v. Alma Tower, LLC, 165 A.D.3d 549, 87 N.Y.S.3d 9 (1st Dept. 2018) (finding a duty to defend due to a reasonable possibility of coverage based upon third-party allegations); All State Interior Demolition Inc. v. Scottsdale Ins. Co., 168 A.D.3d 612, 92 N.Y.S.3d 256 (1st Dept. 2019) (same); with Ohio Security, supra. (finding mere employment insufficient); Pioneer Central School Dist. 165 A.D.3d 1646 (4^th Dep’t 2018) (same).

A more recent federal district court decision distinguishing from the Ohio Security decision above provides interesting commentary on what can make the difference between coverage and non-coverage:

Ohio Sec. Ins. Co. v. Travelers Indem. Co. of Conn., 2021 U.S. Dist. LEXIS 38292, 2021 WL 797670 (S.D.N.Y. Mar. 1, 2021), on which AFICA relies, is factually inapposite. There, the district court held that a general contractor was not entitled to coverage as an additional insured where the evidence showed that the worksite injury—in which an employee tripped over a floor covering—was attributable to a temporary floorboard installed not by the insured but by the general contractor itself. 2021 U.S. Dist. LEXIS 38292, [WL] at *1-2. There is no analogous showing here that Grace caused the improper installation of the scaffold, let alone that it did so acting alone (i.e., to the exclusion of named insured Pinnacle). And Caceres' injuries arose from his work on the improper scaffold, the safety of which, as explained, was a contractual responsibility of Pinnacle.

For much the same reason, Hanover Ins. Co. v. Philadelphia Indem. Ins. Co., 159 A.D.3d 587, 73 N.Y.S.3d 549, 550 (2018), is inapposite. There, the district court denied a bid by the insurer of a Manhattan music school to have the school's tort defense covered by the insurer of the security guard contractor who claimed that he had slipped on a freshly mopped floor. Id. The First Department held that the music school could not avail itself of the security company's insurance, because "the sole proximate cause of the injury [had been] the additional insured [the music school]." Id. at 588. On the record at hand, the same cannot be said of Grace here.

Ohio Sec. Ins. Co. v Acc. Fund Ins. Co. of Am., 2026 US Dist LEXIS 1762, at *29, n 4 (SDNY Jan. 6, 2026).

 

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

06/26/26        Riya Dev. Corp. v. AmGUARD Insurance Co.
United States Court of Appeals for the Third Circuit
In All-Risk Property Coverage Disputes, Where Anti-Concurrent and Anti-Sequential Causation Clauses Apply, the Insurer Can Defeat Coverage by Showing That an Excluded Peril (like Wear and Tear or Deterioration) Contributed to the Loss in Any Sequence; to Survive Summary Judgment, the Insured Must Offer Competent Expert Evidence Creating a Genuine Dispute That a Covered Peril Was the Sole Cause Under the Policy Framework

District court granted summary judgment to AmGUARD on coverage for roof damage at Riya Dev’s motel following Hurricane Ida.  The Third Circuit affirmed concluding the record established that age-related deterioration and deferred maintenance (excluded perils) contributed to the roof damage and the insured failed to create a genuine dispute that Hurricane Ida was the sole cause.

Riya Dev owns and operates a motel with an asphalt-shingled roof that had been in poor condition for years, with only isolated repairs in 2011 and 2019 and visible damage documented by aerial and street-view photos from 2013–2021.  A late-2020 storm caused additional roof issues; AmGUARD denied that 2020 claim and Riya Dev did not challenge the denial.  In September 2021, Hurricane Ida struck; Riya Dev claimed roof damage from the hurricane. AmGUARD again denied coverage, citing policy exclusions and expert findings that the roof’s condition was due to age-related wear, deterioration, and deferred maintenance rather than a single wind event.

AmGUARD relied on two engineering experts. Post-Ida inspections noted sagging, worn shingles, corroded nail pops, advanced deterioration of wood cladding, a crack at a wall-roof interface, prior patches, and layers of sealant, leading to the conclusion that the roof was beyond its useful life and not damaged by a recent, singular weather event.

The businessowner’s policy provided all-risk property coverage but excluded loss “directly or indirectly” caused by wear and tear, deterioration, and long-term water seepage, and included anti-concurrent and anti-sequential causation clauses stating the exclusions apply regardless of other contributing causes.

Once an insured shows a fortuitous loss under an all-risk policy, the insurer bears the burden to bring the loss within an exclusion; if an excluded cause contributed to the damage, anti-concurrent/sequential causation clauses bar coverage.

Issues and holdings:

• Whether AmGUARD met its burden to show that an excluded peril (wear and tear/deterioration) contributed to the roof damage: Yes. AmGUARD’s engineering evidence established that age-related deterioration and deferred maintenance contributed to the loss, triggering the anti-concurrent/sequential causation language and exclusions.
• Whether Riya Dev created a genuine dispute that Hurricane Ida was the sole cause: No. The court explained that expert testimony was necessary to sort out causation given the policy’s exclusions and the roof’s condition. The insured’s expert (Halkiadakis) failed to explain why wear and tear did not at least partly cause the damage and thus did not rebut AmGUARD’s experts. Lay evidence (a public adjuster report or an underwriter’s failure to flag roof issues) could not substitute for expert testimony on causation.

Having credited AmGUARD’s expert analyses showing age-related deterioration predated Ida and contributed to the roof’s condition, the court held AmGUARD satisfied its burden to bring the loss within exclusions that apply “regardless of any other cause or event” contributing in any sequence.  Because the question was whether wind from Ida versus wear/deterioration—or a combination—caused the damage, an expert was required; the insured’s expert did not address why wear-and-tear did not contribute and thus failed to create a triable issue.

 

06/22/26        Clinton Medical Office P.C. v. Progressive Max Ins. Co.
Civil Court of the City of New York, Richmond County
PIP Denials Were Sufficient Without Listing EUO Dates, and Insurer Met Its Burden Showing Two Properly Scheduled EUOs, the Assignor’s Nonappearance, and Timely Denials

PIP denial based on failure to attend EUOs need not list the EUO dates.

The case was decided on Progressive’s CPLR 3212 motion for summary judgment to dismiss the provider’s first‑party no‑fault action. The assignor, Charles #3 Staley, was allegedly injured on July 3, 2024. The provider rendered services on November 4, 12, and 25, 2024, billing $101.93, $377.28, and $125.76, respectively, for a total of $604.97. Progressive sent EUO notices on August 23, 2024 (scheduling a September 5, 2024, EUO), and on September 10, 2024 (scheduling a September 26, 2024, EUO). The assignor failed to appear on both dates. Plaintiff did not dispute that the assignor failed to appear.

Progressive issued three denial-of-claim forms corresponding to the three bills—two dated December 2, 2024, and one dated December 11, 2024—stating the claims were denied because the assignor failed to submit to a medical examination in violation of policy duties and conditions. The denials did not list the EUO dates.

Progressive moved for summary judgment, arguing it established: (1) proper scheduling of at least two EUOs, (2) the assignor’s nonappearance, and (3) timely denials based on the failure to appear. The court noted that an attorney affirmation with first‑hand knowledge of the nonappearance can suffice to establish the failure to appear; proof of mailing EUO letters can be shown via an affidavit describing standard mailing practices that were followed in the case.  The court found Progressive made a prima facie showing.

Issue:  whether Progressive’s denials were legally sufficient even though they did not include the specific dates of the missed EUOs, and whether Progressive otherwise satisfied the elements to dismiss a no‑fault action based on an assignor’s failure to attend two properly scheduled EUOs.

An insurer moving for summary judgment may prevail by showing it duly scheduled at least two EUOs, the claimant failed to appear, and the insurer issued a timely denial based on the failure to appear. An attorney affirmation with first‑hand knowledge can establish nonappearance; proof of mailing can be established through affidavits describing standard mailing practices followed in the particular case.

The court relied on Second Department authority that denial forms must comply with 11 NYCRR 65‑3.4(c)(11) (NYS Form NF‑10), be complete, and not be vague, conclusory, or otherwise invalid; leaving portions blank or omitting critical information like claim receipt dates and amounts can render a denial fatally defective. However, the Appellate Term, Second Department has held that a denial based on failure to attend EUOs need not list the EUO dates.

Plaintiff argued that under Unitrin Advantage Ins. Co. v. All of NY, Inc., a denial must specify EUO dates. The Civil Court rejected that position, explaining that Appellate Term, Second Department precedent controls here and specifically allow denials for EUO nonappearance without listing the EUO dates. The court also distinguished Unitrin as fact‑specific: there, the denial listed one missed EUO date but omitted another, which could mislead a provider into believing there had been only one nonappearance. A general statement of failure to attend EUOs is sufficient under Second Department Appellate Term authority and consistent with a fair reading of Unitrin’s facts.

The court found Progressive satisfied all elements: it scheduled two EUOs, the assignor failed to appear both times, and Progressive issued timely denials grounded in that failure. Even though the denials did not recite the EUO dates, the court held they were valid under binding Appellate Term, Second Department authority, and that Unitrin did not compel a different result in Richmond County. The court emphasized that proper denials for EUO nonappearance are only valid after two failed appearances—an element that Progressive established. Given plaintiff did not dispute nonappearance and only challenged denial specificity, the challenge failed as a matter of law in this Department.

 

05/29/26        Shurelds v. Safeco Insurance Co. of America
United States Court of Appeals for the Third Circuit
For Fraud Claims Against an Insurer Allegations of Insurer Misconduct Must Include Facts Supporting Intent to Mislead; and Gist‑of‑the‑Action Doctrine Bars Negligence Claims Against an Insurer That Merely Repackage Alleged Failures to Perform Under an Insurance Contract

Appeal from a dismissal for failure to state a claim by the U.S. District Court for the Eastern District of Pennsylvania.  Appellant/plaintiff Sean Shurelds (pro se) v. Appellees Safeco Insurance Company of America (also known as Liberty Mutual) and adjuster Joshua Tison.

Safeco denied Shurelds’s insurance claims for property damage.  Plaintiff asserted in the civil action: bad faith insurance practices, fraudulent misrepresentation, and negligence.

District court proceedings on Safeco’s Rule 12(b)(6) motion, the magistrate judge: dismissed the bad‑faith claim without prejudice and granted leave to amend; and dismissed the fraudulent‑misrepresentation and negligence claims with prejudice.  After several amendment attempts and efforts to add new claims, the district court dismissed the entire action, prompting this appeal.  Affirmed in full.

In regard to Bad faith (Pennsylvania law) the court agreed that the complaint did not plausibly allege that Safeco lacked a reasonable basis for denying benefits—an essential element under precedential law. The pleading largely recited elements without factual context explaining why Safeco’s denial was unreasonable. Therefore, dismissal was proper.  Conclusory recitals of elements will not survive Rule 12(b)(6); specific facts showing why a denial of benefits was unreasonable are required for bad‑faith claims.

As for alleged fraudulent misrepresentation, the complaint asserted Safeco knowingly made false statements about claim payments and manipulated claims to avoid payouts, but it lacked facts giving rise to a reasonable inference that Safeco intended to mislead, as required by law.  Allegations of insurer misconduct must include facts supporting intent to mislead.

The negligence theory was based on Safeco’s alleged failure to perform contractual obligations under the insurance policy. The court held the claim was barred by the gist‑of‑the‑action doctrine, which prevents a purely contractual duty from serving as the basis for a tort claim. Gist‑of‑the‑action doctrine will bar negligence claims that merely repackage alleged failures to perform under an insurance contract.

 

06/01/26        CuraHealth Specialty Pharmacy Corp. v. State Farm Insurance Co.
Civil Court of the City of New York, Queens County
In No-Fault Staged-Accident Defenses, Insurers Can Prevail on Summary Judgment by Marshaling EDR Data, EUO Inconsistencies, Policy Timing, Claim-Reporting Delays, and Treatment Patterns That Collectively Support a “Founded Belief” and Show, by a Preponderance of the Evidence, the Event Was Not Accidental  

Provider-assignee sued for first-party no-fault benefits; insurer moved for summary judgment alleging the subject loss was staged/fraudulent; provider cross-moved for summary judgment claiming its prima facie case of overdue benefits and arguing the fraud theory was speculative.

CuraHealth Specialty Pharmacy Corp., as assignee of Eduardo Del Rosario, sought $496.80 for services rendered after a December 27, 2023, automobile incident, suing under 11 NYCRR § 65.15.  Insurer’s defense: the collision was intentionally caused (staged), therefore not a covered “accident” under the policy.

An intentionally caused or staged collision is not a covered accident, and the insurer owes no coverage even to innocent third parties.  The insurer need not prove fraud by clear and convincing evidence; it needs only show by a preponderance that the collision was not an accident, supported by facts elicited in its investigation.

The insurer submitted, among other exhibits, a claims specialist’s affirmation, an NF-10 denial of claim, an uncertified police report, an engineering report analyzing the vehicle’s Event Data Recorder (EDR), and certified Examination Under Oath transcripts of the assignor (Mr. Rosario), the vehicle’s driver, and passengers Cedeno and Hilarion.

The policy originated less than a month before the alleged loss.  The loss was not reported until a couple of months after the incident.  Conflicting accounts of the events were given at the EUOs by policy claimants.  All claimants received identical boilerplate treatment from the same medical providers despite testifying they did not know each other.

Plaintiff argued the insurer’s fraud theory was speculative and asserted it had established a prima facie case that payment of benefits was overdue.  Plaintiff principally relied on an attorney affirmation; the court held that an attorney affirmation without personal knowledge is insufficient to either raise a triable issue of fact or to establish a prima facie case for summary judgment in a no-fault provider action. 

The court found State Farm met its prima facie burden of showing, by a preponderance of the evidence, that the collision was intentionally caused and thus not a covered accident, resting on its thorough investigation and the enumerated red flags.

Plaintiff failed to raise a triable issue of fact and failed to make out its own prima facie case on the cross-motion due to reliance on counsel’s affirmation without personal knowledge and the absence of admissible proof that its statutory claim forms were mailed and received and that benefits were overdue.

Defendant’s motion for summary judgment granted in full; complaint dismissed. Plaintiff’s cross-motion denied.

 

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

06/20/26        Cmty. Resourcing, Inc. et al. v. Berkshire Hathaway Specialty Ins.
Oklahoma Supreme Court
Claims for Tortious Interference With Contract and Civil Conspiracy Failed Against Representative for Insurer as a Matter of Law

Community Resourcing Incorporated d/b/a Our Daily Bread Food and Resource Center (“Community”) obtained property insurance through its agent from Berkshire Hathaway Specialty Insurance (“Insurer”). A hailstorm damaged Community's property, and it filed a claim for coverage based on its policy with the Insurer. The Insurer hired an engineering company to conduct an additional inspection of Community’s property. Community sued the Insurer for breach of contract and bad faith and sued the agent for misrepresentation. Community amended its petition to add claims for tortious interference with the insurance contract and civil conspiracy against the engineering company. The engineering company moved to dismiss the claims against it, arguing that it had no duty to Community and that the tortious interference claim failed as the engineering company was acting pursuant to its contract with the Insurer. The district court denied the engineering company’s motion.

The Oklahoma Supreme Court agreed that the tortious interference claim failed as a matter of law because the engineering company was acting in a representative capacity for the Insurer, a party to the insurance contract. The Court reasoned that permitting Community to sue the engineering company, as a third-party professional retained as a representative to investigate a disputed claim, would create legal redundancy and risk an improper double recovery for the same injury, so the claim failed as a matter of law. Because an insurer’s core duties are non-delegable under Oklahoma law, the Court noted that it made little sense to impose an independent duty on the engineering company when the Insurer remained subject to liability for any mishandling of the inspection through claims for breach of contract and bad faith.

As for the civil conspiracy claim, because the underlying claim for tortious interference with contract lacked a legal foundation, the conspiracy claims also failed as a matter of law. As a representative acting on behalf of the insurer, the engineering company’s investigative actions were legally privileged and could not constitute a conspiracy to interfere with its principal's own contract. Additionally, the engineering company was a stranger to the insurance contract, and it owed no implied covenant of good faith and fair dealing to the insured. Accordingly, the Court concluded that the district court erred in denying the engineering company’s motion to dismiss, and the Court reversed and remanded.

 

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

06/25/26         80 Maple Ave., LLC v. Harleysville Ins. Co. of N.J.
United States District Court, District of New Jersey
Court Refuses to Bifurcate Bad Faith Claims From Breach of Contract Claims

After the Rhew Family’s home set fire, the Rhews sold the home, and assigned their insurance claim, to 80 Maple Ave., LLC. At the time of the fire, the home was insured under a homeowners policy issued by Harleysville. Harleysville eventually denied coverage for the fire on the basis that the Rhew’s son was living at home at the time of the fire, and that he did not meet the policy’s definition of an “insured.” According to Harleysville, this meant that the home did not meet the policy’s definition of a “residential premises,” vitiating coverage. This lawsuit followed.

80 Maple Ave., the assignee of what would have otherwise been the Rhew family’s claim, brought suit against Harleysville, asserting causes of action sounding in breach of contract, breach of the implied covenant of good faith and fair dealing, and bad faith.

Before too long, Harleysville moved to sever and stay the implied covenant of good faith and fair dealing, and bad faith claims from the breach of contract claim. Under the federal rules of civil procedure, severance of certain claims is proper when the claims to be severed are discrete and separate from the other claims. See Fed. R. Civ. P. 21. In other words, severance is appropriate when one claim is capable of resolution without the need to determine the other claim. As the Court noted, courts consider three factors when deciding whether to sever claims: (1) whether the issues are significantly different; (2) whether issues require different witness testimony and/or other discovery; (3) whether severance (or no severance) will prejudice any party.

Here, the Court started its analysis by examining the New Jersey bad faith standard. Under New Jersey law, an insurer is said to act in bad faith when it lacked any “fairly debatable” reason for denying (or failing to timely pay) the claim; and (2) knew or recklessly disregarded the fact that it lacked such a fairly debatable basis.

Although the Court noted that severing and stayed bad faith claims from breach of contract claims is the “prevailing practice” in New Jersey state and federal court, the Court elected not to sever or stay the bad faith claims in this particular instance. The Court explained that the breach of contract and bad faith claims overlapped significantly, since a bad faith claim necessarily hinges on the overall coverage determination. The Court also noted that 80 Maple Ave. alleged no separate conduct, apart from knowingly breaching the insurance policy, to support its bad faith claims, and that all claims therefore arose out of an allegedly improper coverage denial. The Court also considered the scope of discovery, noting that the bad faith claim would involve substantially the same evidence as the other claims.

Editor’s Note: While a tough decision, the Court was careful to note that the decision only applied to discovery procedures, and reserved ruling as to whether the refusal to bifurcate the claims also applied to trial.

 

06/25/26         Vincent Cusumano Architect P.C. v. Berkshire Hathaway Direct Ins. Co.
Court Dismisses Bad Faith Claims on Two Bases: (1) They Were Duplicative of Breach of Contract Claims; and (2) No Coverage Was Available Under the Policy’s Continuous Coverage Provision

The plaintiff in this action was insured under a professional liability policy issued by Berkshire Hathaway. When the plaintiff was sued in an underlying professional malpractice case arising out of work it performed prior to the inception of the Berkshire policy period, the plaintiff requested coverage from Berkshire, which Berkshire denied.

Prior to coming to Berkshire, the plaintiff was insured under a different professional liability policy issued by another carrier. That policy lapsed approximately three months prior to the inception of the Berkshire policy. Meanwhile, the Berkshire policy provided coverage for losses caused by an “occurrence” during the Berkshire policy period. The Berkshire policy additionally provided coverage for claims arising from actions taken on behalf of the plaintiff’s business that the plaintiff first learned about during the policy period, but only where the plaintiff previously had continuous insurance coverage that would have otherwise covered the claim. The second grant of coverage applied even to claims that were not the result of an occurrence during the Berkshire policy period.

Although the claim that was the subject of the professional liability action pending against the plaintiff occurred during the prior policy period, Berkshire denied coverage to the plaintiff for that claim based on the three-month gap between the lapse of the plaintiff’s prior policy and the inception of the Berkshire policy.

As a result of Berkshire’s coverage denial, the plaintiff sued Berkshire, asserting causes of action sounding in breach of contract, declaratory judgment, bad faith, and more. Berkshire later moved to dismiss all of the plaintiff’s claims.

The Court agreed to dismiss the declaratory judgment claim on two bases: (1) there was a present justiciable controversy; and (2) that claim was duplicative of the breach of contract cause of action. However, the Court also dismissed the breach of contract cause of action based on the fact that the plaintiff had a three-month gap in coverage, which violated the continuous coverage provision. Finally, because it was found that there was no coverage available for the loss, the plaintiff’s bad faith claim was also dismissed.

 

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

06/29/26         Bridges v. Maxum Indem. Co.
United States Court of Appeals, Sixth Circuit
Insured’s Failure to Provide Timely Notice Dooms Claimant-Assignee’s Direct Actions

McKeen procured three malpractice policies, a policy with Maxum, a policy with StarStone, and a policy Landmark. The Maxum policy’s duration ran from May 2, 2018, to May 2, 2019, but contained an Optional Extended Reporting Period that extended certain coverages for an additional two years from July 2, 2019, to July 2, 2021. The StarStone and Landmark policies both ran concurrently from May 2, 2019, to May 2, 2020.

A potential claim arose between June and July 2018. McKeen notified Maxum and StarStone of the potential claim on April 20, 2020. It was alleged Landmark also received notice of a potential claim at this time.

On February 18, 2022, the potential claim ripened into an actual claim as McKeen was named in a suit. Maxum, StarStone, and Landmark all denied coverage. McKeen then settled the claim and assigned its rights under all three policies to the Bridges, the claimant. Bridges then began an action against all three insurers. StarStone and Bridges entered in a stipulation of discontinuance, so Landmark and Maxum were left.

However, Bridges’s claims were uncovered as a matter of law as McKeen failed to timely notify the insurers of the claim.

While the Maxum policy carried an Optional Extended Reporting Period, an exception to the clause applied. The relevant clause required McKeen to provide Maxum with written notice of a claim no later than 60 days after the end of a policy period. An exception to the reporting period is if McKeen became aware of a potential claim and provided written notice to Maxum within the policy period. In this scenario, McKeen would have coverage if the claim ripened outside of the policy period due to McKeen providing prior notice of a potential claim.

Although McKeen provided written notice of the potential claim in April 2020, it still did not meet the reporting exception since the policy period was specifically identified as May 2, 2018, to May 2, 2019. Thus, McKeen failed to provide written notice of the potential claim within the policy period listed within the Maxum policy’s declarations page.

No coverage applied under the Landmark policy for similar reasons. The Landmark policy followed form to the StarStone policy. So, the StarStone policy’s terms controlled the analysis. The StarStone policy excluded claims that occurred prior to the retroactive date of May 2, 2019. As the claim occurred from June 2018 to July 2018, the retroactive date exclusion applied on its face.

 

06/18/26         Off. of the Special Deputy Receiver v. Hartford Ins. Co.
United States Court of Appeals, Seventh Circuit
Terms of Endorsement Exclusion Barred Coverage For Cyberfraud Originating From Insured’s Internal Emails

The Hartford insured the Office of the Special Deputy Receiver (“OSD”) under a Financial Institution Bond for Insurance Companies. The OSD is a non-profit that administers estates for insolvent or financially troubled insurance companies. Unfortunately, fraudsters outside the OSD used a phishing scheme to access the email account of the OSD’s CFO. Through the use of CFO’s email, the hackers asked OSD employees to transfer assets to fund new investments. The hackers were able to respond to employee questions through the CFO’s email. Over the course of a few eeks, the OSD lost $4 million from the scheme.

The Hartford denied coverage for the claim due to an endorsement entitled Rider 17. The exclusionary language of the rider reads:

“loss resulting directly or indirectly from [OSD] having, in good faith, transferred or delivered Funds, Certificated Securities or Uncertificated Securities, in reliance upon a fraudulent instruction sent to [OSD] through electronic mail, except when covered.”

Rider 17 also contains a grant of coverage that provides coverage for:

Loss resulting directly from [OSD] having, in good faith, transferred or delivered Funds, Certificated Securities or Uncertificated Securities, in reliance upon a fraudulent instruction sent to [OSD] through electronic mail, and:

(1) which fraudulent instruction purports and reasonably appears to have originated from:

(a) a Customer of [OSD], or

(b) an Employee acting on instructions of such Customer, or

(c)  another financial institution acting on behalf of such Customer with authority to make such instructions;

but, in fact, was not originated by the party referenced in (a) - (c) above whose identification it bears[.]

The Court found the exclusion applied and the bond did not insurer the OSD for the fraud. The material language of the exclusion was the term “instructions sent to the OSD.”

Under the facts, the emails were sent to the OSD, and the emails caused the claimed loss. As such the exclusion applied. The OSD claimed the emails were internal and thus, were sent within the OSD, not specifically to the OSD. But, this argument did not tread water as the emails were clearly sent to OSD employees, therefore the exclusionary language triggered.

The Court opined the alternative argument that the exclusion is restricted to specific senders was also unconvincing. Rider 17’s grant of coverage applied to frauds that reasonably appear to have originated from (i) a customer; (ii) an employee acting on behalf of a customer, or (iii) another financial institution acting on behalf of a customer. But when read together, the grant of coverage contained a limitation pertaining to the senders. In contrast, the exclusion lacks any such restriction and is applied to any email sent to the OSD. Accordingly, the exclusion was broader than the scope of coverage.

 

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

06/18/26         Liberty RX Inc. v. Liberty Mut. Ins. Co.
Civil Court of the City of New York, Richmond County
Insurer Motion for Summary Judgment Denied, Finding that Admissible Evidence Only Points to a “Founded Belief” of Staged Accident, Not that Insurer was Entitled to Judgment, as a Matter of Law

Liberty RX Inc. a/a/o Marie Charlot (the “No Fault Claimant”) commenced an action against Liberty Mutual Insurance Company (“Liberty Mutual”) in the New York State Civil Court of the City of New York, Richmond County, seeking no-fault benefits under a policy of insurance issued by Liberty. Liberty asserted that it owed no coverage to the No Fault Claimant, because the assignor made material misrepresentations, the injuries did not arise from a covered loss, and/or that the alleged accident was staged, and an intentional act for which there is no insurance coverage.

Liberty moved for summary judgment. In support, Liberty attached investigator affirmation testimony, detailing the basis to support Liberty’s argument that the insured made material misrepresentations, and that the alleged incident was not a covered loss and/or a staged accident. This testimony included inconsistent testimony received from the insured, presented over a variety of examinations under oaths.

The Court denied Liberty’s motion. The Court relied upon a recent finding by the Hon. Sandra Elana Roper, in the Kings County Civil Court, which found, “the prima facie burden to viably satisfy a staged accident motion for summary judgment is indeed a high one.”

Using this standard, the Court found that inconsistencies in witness testimony raise issues of credibility, but standing alone, are insufficient to support a conclusion that the accident was staged, as a matter of low. The Court found that even if the testimony was vague and at times inconsistent, the insureds’ recollections are not sufficient to demonstrate that a purposeful collision occurred.

Ultimately, the Court held that while Liberty did demonstrate a ‘founded belief’ that the alleged injuries did not arise out of an insured incident,  the admissible evidence before the Court did not establish that a conclusion as a matter of law was warranted. 

 

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

07/03/26        DFS Circular Letter Re Motor Vehicle Insurance Reforms
New York State Department of Financial Services
DFS Issues a Circular Letter to Motor Vehicle Insurers in New York State to Discuss 2026 Motor Vehicle Insurance Reforms

New York’s Department of Financial Services has issued Circular Letter No. 3, directing auto insurers to account for major 2026 statutory reforms in pending and future motor vehicle rate filings. The reforms target staged accidents and inflated claims, narrow the serious-injury threshold, impose a limited cap on non-economic damages for certain at-fault claimants, and adopt a modified comparative negligence rule for covered auto injury cases.

The circular letter makes clear that DFS views these reforms not only as claims and litigation changes, but also as pricing changes. Insurers are expected to evaluate and reflect projected savings or reductions in claim frequency, claim severity, loss adjustment expenses, and other actuarially indicated reductions in all pending and future motor vehicle insurance rate filings.

DFS has also updated the Rate Filing Sequence Checklist to include new Exhibit TR-1, Automobile Tort Reform Calculation. Insurers must identify the percentage decrease in anticipated claims and loss adjustment expenses attributable to the reforms and provide a complete explanation of the calculations, assumptions, actuarial methods, and processes used to derive that percentage. Pending filings must be amended to include this information by August 31, 2026.

The circular letter also highlights a change to flex rating. Effective November 27, 2026, insurers may no longer implement overall average rate level increases of up to 5% without prior approval from the Superintendent, although decreases of up to 5% remain permitted without prior approval. The flex-rating statute is scheduled to be repealed on May 27, 2030, after which nonbusiness motor vehicle rate filings will be subject to prior approval.

 

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

07/01/26        Gruber v. Donaldsons, Inc.
New York Appellate Division, Second Department
Second Department Affirms Dismissal of Allegation of Breach of the Covenant of Good Faith and Fair Dealing Against Insurer

In 2014, Thomas Difolco was involved in an accident with a motorcycle. Kevin Gruber owned the motor vehicle Difolco was using. The motorcycle driver commenced an action against Gruber and Dilfolco and Russo & Tambasco represented them. The motorcycle driver obtained summary judgment on liability and Gruber's liability exceeded the insurance limits.

In 2018, Gruber and Dilfolco commenced a lawsuit against Donaldsons, Inc, the dealership where the vehicle was purchased, GEICO, and Russo & Tambasco as the attorneys retained by GEICO to represent them in the underlying action. The complaint alleges causes of action for fraud, breach of the covenant of good faith and fair dealing against GEICO, and legal malpractice against Russo & Tambasco.

The plaintiffs alleged Donaldsons induced Gruber to purchase and become the register owner of the vehicle when the vehicle was intended for Dilfoco's use, by misrepresenting that the only person named on the policy, and not the registered owner, had liability. It also alleges that Donaldsons fraudulently secured coverage with GEICO in Difolco's name, even though Gruber was not named as an insured. Finally, the Plaintiffs alleged that GEICO breached the covenant of good faith and fair dealing by issuing a New York State insurance identification card to Gruber that misrepresented that GEICO had issued an owner's policy of insurance to him.

In 2021, GEICO attorneys, GEICO defendants, and the Donaldsons filed motions to dismiss and motions for summary judgment to dismiss the complaint. The Supreme Court granted the defendants' motions. The plaintiffs appealed to the Second Department.

In pertinent part, the Second Department held the complaint failed to state a case of action to recover damages for the breach of the covenant of good faith and fair dealing against GEICO. The Court found the complaint did not allege that GEICO failed to fulfill its coverage obligations but rather acted in bad faith in issuing the policy, which falls outside the covenant of good faith and fair dealing. The covenant of good faith and fear dealing with insurance means "that the insurer must investigate claims for coverage in good faith, must not manufacture factually incorrect reasons to deny insurance coverage, must not deviate from its own practices or from industry practices, and must not act with 'gross disregard of the insured's interests.'"

The Court also affirmed the Supreme Court's decision to dismiss the allegations of fraud but reversed the Supreme Court's decision granting summary judgment dismissing the legal malpractice claims against the GEICO attorneys.

 

6/30/26           Walton Condo v. Landmark Am. Ins. Co.
United States District Court, Southern District of New York
SDNY denies, in part, Insurer’s Motion to Dismiss Claims for Bad Faith and Consequential Damages

Plaintiff Walton is a condominium that owns property in New York. Landmark issued a commercial property insurance policy to Walton for the property.

In September 2023, the plumbing lines at the premises became discharged which caused a sudden water discharge at Premises, resulting in damages exceeding $7,000,000. Walton filed a claim with Landmark, who denied coverage on the basis that the water damage was caused by frozen pipes that had burst because they were not properly drained prior to the heat being turned off. Walton, however, provided Landmark with documentation confirming that the water system was professionally drained prior to the heat shutdown.

Walton brought this lawsuit against Landmark alleging breach of contract and declaratory judgment. In its breach of contract claim, Walton seeks consequential damages in excess of $3,000,000. Landmark brought a motion to dismiss Walton's claims for breach of implied covenant of good faith and fair dealing, bad faith, consequential damages, attorney's fees, and declaratory judgment.

Walton alleges that because Landmark denied coverage in bad faith, it is entitled to consequential damages. In its motion to dismiss, Landmark argues Walton is not entitled to consequential damages because it fails to state a claim for breach of the implied covenant and only seeks consequential damages under the breach of contract claim.

The Court cited Bi-Economy in its decision which held to set forth the necessary elements of a claim for consequential damages: such consequential damages were a natural and probable consequent of the breach; the damages were or should have been foreseeable; and the damages were reasonably contemplated by the contracting party at the time the policy was issued. Walton argues its consequential damages include costs with mitigating the damage, procuring alternate funding, delays in repairs, and related economic harm.

In its decision, the court cited a SDNY case which held a determination of whether consequential damages were foreseeable should not be decided on a motion to dismiss but rather should wait until the record is fully developed.

The Court ultimately held that Walton sufficiently pleads bad faith at the motion to dismiss stage because the Complaint alleges Landmark's conclusion was reached without adequate investigation and there is no evidence the damage was caused by frozen pipes. Because bad faith was adequately pleaded, the allegation for consequential damages also survives the motion to dismiss stage. Notwithstanding, the Court granted Landmark's motion to dismiss Walton's claims for attorney's fees and declaratory judgment claim, stating attorney's fees are not recoverable, and the declaratory judgment claim is duplicative of the breach of contract claim.

 

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

07/01/26         Villegas v. Tseten
Appellate Division, Second Department
The Appellate Division, Second Department, Denies the Defendants’ Post-Note of Issue Cross-Motions to Dismiss the Amended Complaint on Grounds of Timeliness

Plaintiff commenced this action to recover damages for personal injuries that she allegedly sustained in connection with a motor vehicle accident. Plaintiff filed the note of issue on January 26, 2023. Thereafter, the Court set forth a deadline to serve summary judgment motions no later than March 28, 2023. On March 2, 2023, plaintiff moved for summary judgment on the issue of liability and to dismiss the defendants’ affirmative defenses alleging culpable conduct on the part of the plaintiff. On April 14, 2023, the defendant Dutchess Beer Distributors, Inc. ("Dutchess"), opposed plaintiff’s motion and contemporaneously cross-moved for summary judgment dismissing the amended complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). On April 25, 2023, the defendant Scott Ruta ("Ruta") also cross-moved for summary judgment dismissing the amended complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). The plaintiff opposed both defendants’ cross-motions, arguing that the same was untimely and that defendants failed to demonstrate good cause.

Pursuant to a Court Order dated August 22, 2023, it was determined that defendants' cross-motions were timely. The Court granted Ruta’s cross-motion and the branch of Dutchess’ cross-motion for summary judgment dismissing the amended complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. Plaintiff now appeals the foregoing.

The Appellate Division, Second Department found that the defendants’ cross-motions were made several weeks after the expiration of the deadline imposed by the Supreme Court. Additionally, the defendants proffered no explanation for this delay. The defendants’ respective cross-motions for summary judgment dismissing the amended complaint were based on the same ground, i.e., that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. However, defendants’ respective cross-motions “were not made on nearly identical grounds to the plaintiff's timely motion, as the plaintiff did not seek summary judgment on this issue” (see id.; Alexander v Gordon, 95 AD3d 1245, 1247). Accordingly, the Appellate Division, Second Department, found that the Supreme Court should have denied both of the defendants’ cross-motions as untimely (see Gomez v Tilden Estates, LLC, 241 AD3d 791, 793; Acosta v Shanahan Group, LLC, 240 AD3d 557, 558; Wittenberg v Long Is. Power Auth., 225 AD3d at 732).The branch of Dutchess’ cross-motion which was for summary judgment dismissing the amended complaint the ground that it was not liable for the happening of the accident was made on nearly identical grounds to the plaintiff's timely motion, however. It should  therefore have been considered (see Montes-Vidal v New York State Thruway Auth., 238 AD3d 1131, 1135; Lewinski v City of New York, 229 AD3d 456, 458; Wittenberg v Long Is. Power Auth., 225 AD3d at 73.

Based on the foregoing, the Appellate Division, Second Department, remitted the matter to the Supreme Court, Dutchess County, for a determination on the merits of the plaintiff's motion for summary judgment on the issue of liability and to dismiss the defendants’ affirmative defenses alleging culpable conduct on the part of the plaintiff, and that branch of Dutchess' cross-motion which was for summary judgment dismissing the amended complaint insofar as asserted against it on the ground that it was not liable for the happening of the accident (see Malta v Culha, 240 AD3d 772, 773; Jones-Parrish v Ranieri, 231 AD3d 795, 796).

 

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

Alexander G. Henlin
[email protected]

Iryna N. Dore
[email protected]

 

06/15/26        Am. Foods, LLC v. GKI Foods, LLC
United States District Court, New Hampshire
Insurer’s Rule 54(b) Request for a Separate and Final Judgment Was Denied Even Though All Claims Against the Carrier Were Dismissed

American Foods, LLC asserted claims against Republic Franklin Insurance Company, Utica Mutual Insurance Company, Home-Owners Insurance Company, and GKI Foods, LLC. After multiple dispositive motions, only one claim against GKI Foods remained pending. Utica moved for the entry of a separate and final judgment pursuant to Federal Rule of Civil Procedure 54(b). Although there was no claim pending against Utica and no party objected to the request, the Court denied the motion.

The Court started its analysis by stating that Rule 54(b) allows it to enter a partial final judgment only after finding that the ruling underlying the proposed judgment is final. The finality requirement is satisfied if the ruling fully resolves all of the rights and liabilities of at least one party in the action.  If the court concludes that the finality requirement is met, the court must determine whether "there is no just reason for delay" in entering judgment on the resolved claims under Fed. R. Civ. P. 54(b). In so doing, the court must make an individualized assessment of the desirability and effect of an immediate appeal. Other relevant factors include (i) whether the ruling raises legal or factual issues that overlap with any claims that remain pending in the action and (ii) how the equities and efficiencies of piecemeal review would compare to those raised in a single proceeding. The First Circuit has repeatedly emphasized that the entry of a separate and final judgment under Rule 54(b) must be reserved for the unusual case in which the costs and risks of multiplying the number of proceedings and overcrowding the appellate docket are outbalanced by the litigants’ pressing needs for an early and separate judgment as to some claims or parties.

The Court noted that Utica did not articulate any reason why the matter was an "unusual" case warranting entry of a separate judgment under Rule 54(b). The Court also stated that its evaluation of the parties’ motions to dismiss required it to conduct intertwined assessment of claims asserted against Utica and Home-Owners. Given concerns over multiple appeals, the Court held that Utica did not “demonstrate that this is an appropriate case for this court to deviate from the long-settled and prudential policy against the scattershot disposition of litigation.”

06/17/26        O’Rourke v. Nationwide Mut. Ins. Co.
Supreme Court, Rhode Island
Whether the Particular Use of a “Non-Owned” Automobile Is a “Regular Use” Excluded from UIM Coverage Is a Question of Fact

The plaintiff’s auto policy provided specified uninsured motor vehicle coverage for injuries sustained by the plaintiff. Coverage was excluded for “[b]odily [i]njury suffered while occupying a motor vehicle furnished for the regular use of you or a relative but not insured for Auto Liability Coverage under this policy.” At the time of the accident, the plaintiff was operating a vehicle provided by his employer that was not insured under his Policy.

After the carrier disclaimed coverage under the Policy’s “regular use” exclusion, the plaintiff filed a complaint for breach of contract. After the parties testified at trial, the defendant insurer moved to discharge the jury, arguing that “the jury’s determinations have ended. They are the fact finders. The facts are agreed to.” The trial court agreed and discharged the jury.

The Supreme Court disagreed with the trial court. It held that “[t]he question whether the particular use of a 'non-owned' automobile is a 'regular use' within the meaning of the policy is a question of fact.”  The case was remanded.

 

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.

06/04/26         Carr Law P.C. v. Certas Home and Auto Insurance Company
Ontario Superior Court of Justice (trial level)
Is Business Interruption Coverage Available When Fire, Bullets, and Fear Silence a Law Firm?

Lisa Carr, a 2004 grad from Osgoode Hall Law School in Toronto, started her career at a Toronto Bay Street firm, but in 2011, she decided that she wanted something different. She bravely struck out on her own and started her own general practice in a strip mall in Vaughan, Ontario, just north of Toronto City proper. At first, the practice consisted of herself, an assistant and an associate taking all-comers: divorce, real estate, commercial disputes. But then, some auto-insurance companies came to Carr Law asking her to launch civil actions against Toronto GTA tow truck drivers on the basis that they had fraudulently billed for their services. Carr Law took that on as well. The files were prosecuted with skill and diligence and with success came more files and a stellar reputation in the area. By 2018, Carr Law had 13 full-time employees and 1,400 active fraud files where her insurance company clients were alleging that the tow truck industry defendants were charging inflated rates for towing and storage or repairs that never occurred.

In some Ontario cities, the police doled out the towing to approved firms. In the GTA, the first tow truck driver on scene got the work. Tow truck drivers cruised the streets looking for business, while listening to traffic reports and police scanners. Some of the drivers were honest … but others were the opposite. The unscrupulous charged inflated rates; talked the shocked accident victims into having their vehicle repaired by ‘friends’ and storing it at a lot outside the GTA with a hefty towing charge and storage fees. The injured were referred to the rehab centres of ‘friends’. It wasn’t long before insurers were presented with bills of $10,000 or more for a single tow. It also was not long before organized crime moved in to direct and control the business and intimidate those who did not comply. Several murders of tow truck drivers and employees were traced to the fraud in the industry. A police crackdown in 2020 linking this fraud to both a biker and an ethnic gang netted illegal weapons and caches of drugs (when tow trucks aren’t busy they can haul other things).

In the meantime, while that police investigation was underway, the Carr Law office continued its stellar work obtaining judgments against the tow truck companies.

Like the saying “no good deed goes unpunished”, in late 2018, a man broke into the Carr Law office at night. He shattered a window and set fire to a plant near the entrance, then left it to burn to ash. Two months later, an intruder smashed the glass door of the office, doused the lobby in gas and set it ablaze. Lisa Carr refused to back down.

In August 2019, a Carr Law associate was sitting in her car in the office parking lot when a man approached her open car window. He pointed a gun at her head and asked her if she wanted to grow old? He then said, if so, stop suing ‘my friend’.  A week later, on September 6, 2019, the same man returned in daylight and from his parked car, sprayed seven rounds through the plate glass office windows into the office reception area. Lisa Carr found her receptionist on her hands and knees covered in glass but uninjured.

A few days later, police made an arrest. Following the arrest, the police found a video where the same person had pulled his car to a stop beside that of Lisa Carr; pointed a gun at her head and pulled the trigger. The gun jammed, preventing assassination. The police recommended that Lisa Carr and her husband should go into hiding – the law firm closed; Lisa Carr and her husband left Canada for five months. Those arrested refused to say or did not know who hired them.

On her return to Canada, the police told her that the firm must remain closed. They refused to provide paid duty protection, and no private security company would accept the assignment. She hired movers to relocate office equipment to her home. As it was pre-pandemic, neither the firm nor the Ontario courts were equipped to allow the lawyers to conduct litigation remotely. At the very least, Ms. Carr and her colleagues would have had to commute to courthouses to attend hearings and thus expose themselves to being followed back home.

The Insurance Bureau of Canada (”IBC”) convened an urgent meeting with Lisa Carr and the representatives of her insurer clients. The clients all refused to allow Ms. Carr to use their claims office addresses for court documents, out of fear of being targeted for similar criminal damage attacks. 

Ms. Carr and her close associates attempted to regain the firm’s insurance law practice. It downsized its personnel and became associated with another firm, as a vehicle for finding creative ways to resume the work. Various workarounds were proposed, such as limiting Ms. Carr and her associates to preparation of court documents and having the other firm’s lawyers attend hearings.  The insurers rejected these proposals. They then individually instructed the firm to return their files. Certas, who insured the building and the law firm’s property, was the first to pull its files.

 

The Property Insurance Coverage Held by Carr Law

Certas had issued a commercial package policy to Carr Law – both the professional corporation and the holding company that held the lease for the premises. Certas repaired the physical damage to the leased property for both fire losses and the gunfire damage under the property damage broad form cover. When the insurers pulled their files, and the law firm, despite its efforts had to close, Lisa Carr submitted a proof of loss under the business interruption coverage for the front office door damage ($5,285.00) and $1.4 million for the lost fees for the 12-month period following September 6, 2019, being the date of the gunfire incident. Certas paid the door / gunfire damage and $25,000 for lost earnings while the door was being repaired. The remainder of the business interruption claim was denied. Carr Law sued Certas; Certas applied to have the claim dismissed using summary judgment procedure.

Certas applied to the court in this application to have the action dismissed under summary judgment procedure, arguing that:

1. the law firm did not close as a result of direct physical loss or damage to insured property;
2. loss of use or occupancy is not direct physical loss or damage and is excluded under Commercial Property Broad Form (discussed below); and
3. business income interruption suffered by the firm from the closure was not “in consequence of” the loss or damage.

 

The Policy Wording: Triggers, Period, and Exclusions

The business interruption (BI) coverage sat atop the property form and turned on a specific trigger: Coverage applied “in the event that the business of the Insured is interrupted as a result of a direct physical loss or damage from an insured peril,” with indemnity for the “actual loss of ‘business income’ and ‘rental income’ sustained during the ‘indemnity period’ in consequence thereof.” The indemnity period began on the date of loss and ended no later than 12 consecutive months thereafter, during which the “results of the business” were “affected in consequence of the loss or damage.” The property form also contained an exclusion for “delay, loss of market, or loss of use or occupancy,” and a criminal-acts exclusion that did not apply if the criminal act was reported to police and the insurer—an exception that mattered here because the arson and gunfire were promptly reported. The BI grant provided coverage when the business “is interrupted as a result of a direct physical loss or damage from an insured peril,” with payment of actual loss during the “indemnity period” “in consequence thereof” The indemnity period ran from the date of loss and could extend up to 12 months while results were “affected in consequence of the loss or damage” The property form excluded “delay, loss of market, or loss of use or occupancy” and contained a criminal‑acts exclusion made inapplicable where criminal acts were immediately reported to police and the insurer.

 

The Competing Theories: Why Did the Business Close?

Carr Law’s argument was straightforward: Organized criminals attacked the office to shut the practice down, and that physical damage triggered BI coverage for the firm’s sustained loss of fees during the 12‑month period, as the business could not recover once all insurer clients abruptly pulled their files. Carr Law argued that, on a plain reading, the firm’s extended closure was an interruption “as a result of” the arson and gun damage, aimed at stopping the firm’s work, warranting coverage up to 12 months.

Certas advanced a narrower causation theory. It accepted that the arsons and gunfire caused covered physical damage but said the firm did not close “as a result of” that damage. Instead, the shutdown flowed from safety concerns, client withdrawals, and business decisions after repairs—factors not amounting to direct physical loss. In Certas’ view, “loss of use or occupancy” is not physical loss and is expressly excluded; “interruption” implies a temporary pause tied to the repair period, not a permanent wind‑down of the practice. Certas argued the firm did not close as a result of direct physical loss or damage; loss of use/occupancy is not direct physical loss and is excluded; and the interruption here was not “in consequence of” the property loss beyond repairs. Certas’ causation theory separated the building damage from client withdrawals and the decision to cease operations, contending the latter were the true drivers of closure rather than the physical damage or repair timeline.

 

The Court’s Analysis: “As a Result of” Means What It Says

Justice Akazaki, of the Ontario Superior Court, focused on the words the insurer chose. The policy did not say “as a direct result of” physical loss; it said, “as a result of.” That distinction mattered. The court held that “as a result of” is broader than “as a direct result of.” Once physical damage from an insured peril triggers BI, the policy contemplates indemnity until the business’ results are no longer affected, even after repairs, up to 12 months. The court held that “as a result of” cannot be read as “as a direct result of,” noting Certas could have inserted “direct” to tighten causation, but did not. The BI wording and the indemnity period show that coverage can extend beyond completion of repairs until results recover or 12 months elapse.

On the loss‑of‑use exclusion, the court said it does not override a properly triggered BI claim; reading it that way would gut BI coverage entirely because interruption naturally entails delay, market loss, or inability to occupy. The court similarly rejected the loss‑of‑use / occupancy exclusion as a bar where BI is triggered by physical damage.

As for criminal acts, the property form’s criminal‑acts exclusion did not apply The property coverage treated immediately reported criminal acts as insured perils via an exception to the criminal‑acts exclusion, bringing the arson and gunfire within coverage.

In practical terms, the court accepted that the clients’ across‑the‑board file withdrawals were a natural result of the arson and gun attacks on the premises—an event that interrupted the business—and that “interruption” did not necessarily exclude a closure that, in fact, extended through the indemnity period. The court found the insurers’ immediate pull of files was sufficiently related to the arson and gun attacks on the building to constitute a result of the criminally caused property loss, and that “interruption” was not confined to purely temporary closures.

 

Bad Faith Claim Rejected

The Court rejected the claim that Certas acted in bad faith but had this to say on the subject: “The quantum of the business loss indemnity was never properly adjusted by Certas. I do not agree with Carr Law’s submission that this amounted to bad faith claims handling. While I do question the lack of a formal coverage denial letter, the prejudice to Carr Law is likely reflected in additional legal expenses in preparation of the pleadings and affidavits. I will therefore restrict my decision to the coverage issue and decline to find that Certas acted in bad faith. I appreciate that Certas’ rush to the front of the line to withdraw their files may have added salt to Carr Law’s wound. However, ultimately that conduct was evidence supporting Carr Law’s position that the business loss was a result of the arson and gun attacks on the building and not an independent or subjective response to the overall situation.”

 

Outcome: Coverage Declared, Quantum to Follow

Certas’ summary judgment motion was dismissed. The court declared that Carr Law’s BI coverage extends beyond the time needed to repair the front doors and other damage, up to the 12‑month indemnity period, with the amount of loss to be determined later.

 

Comment

This summary does not do justice to Justice Akajaki’s analysis, laced with humourous observations that are both legally and historically accurate. He draws from his deep pre-appointment experience as a defence counsel. In this judgment, he deftly applied this compelling fact pattern against the wording of the Certas business interruption coverage, producing a terrific primer as to the meaning of “interruption “and “as a result of.”  He did not hesitate to lean into his own experience and perhaps the evidence before him when he stated the truism: “An insurance defence litigation firm cannot simply reopen and start new lawsuits for it to defend; in the way a restaurant can reopen to the public or a factory can resume manufacturing. It cannot rely on advertising to bring in new files. Having devoted the practice to a niche, this firm also had no real prospect of reforming as a general insurance law firm within 12 months.”

This summary is premised upon the facts as recited in the judgment, supplemented by CBC and CTV news reports and an in-depth article by Simon Lewswen The Violent Life of a Tow Truck Driver, published in Toronto Life magazine, February 5, 2026.

 

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