Coverage Pointers - Volume XXVIII No. 5

Volume XXVIII, No. 5 (No. 730)
Friday, August 14, 2026
A Biweekly Electronic Newsletter

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

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

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

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

 

Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.  And we love hearing from you, if only to say “hello”.

This evening, our five offices joined for our annual summer party here in Buffalo.  I thought I would share the crowd with you.

.

A very dormant week in the appellate courts as they are quite quiet in August (and will be through mid-September).  We offer what we have available in the attached issue.

It’s a great time of year to bring cases to resolution.

A growing percentage of my practice has been as a mediator (in insurance coverage, commercial, personal injury, and other disputes). We conducted four mediations this week alone. 

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.

 

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/

 

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.

 

Quick Execution – He Was Executed in May 1927 – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
14 Aug 1926

Orchestra Leader
Sentenced to Die

          Camden, N.J., Aug. 13 (AP)—Paul W. Fuerstein, former leader of the Camden Philharmonic orchestra, was convicted today by a jury of the murder in the first degree for the slaying of Mrs. Harriet Vickers.  The jury made no recommendation for mercy and Justice Kathzenbach sentenced him to be electrocuted on September 20^th.

          The verdict under the law, required Justice Kathzenbach of the state supreme court who presided at the trial to impose the death sentence.

          After the verdict was delivered by the jury foreman, Fuerstein’s counsel asked or the customary poll of the jury.  When the clerk asked Mrs. Margaret G. Riggins, one of the two women members, to confirm the verdict, she broke down and it was several minutes before she became sufficiently composed to speak.

 

Peiper on Property (and Potpourri):

Greetings on the penultimate issue of Summer.  With a very limited docket, we don’t have much to report.  The column does review an interesting decision where the claimant was counter-sued for fraudulently misrepresenting what was alleged to be preexisting damage to his vehicle.  The defendant also named the claims professional handling the property damage loss on behalf of the claimant.  Both, not surprisingly, were dismissed for failure to state a cause of action.

That, though, is pretty much it for this week.  We, too, will take our summer leave, and see you again in two weeks.

Steve
Steven E. Peiper
[email protected]

 

What a Dummy – 100 Years Ago:

The Oneonta Star
Oneonta, New York
14 Aug 1926

GUARD NOT FOOLED
BY DUMMY IN CELL

Had Been Caught by Trick Once
Before—Convict Found on Roof
Of Sing Sing Building

          Ossining, Aug. 13 (AP)—The well laid plans of George Peterson to escape from Sing Sing prison went awry at the last moment tonight because he tried to play the dummy trick on a keeper who had been fooled once before.

          Peterson, 28, now serving his third term in Sing Sing, painstakingly constructed a dummy that was conceded by Warden Lawes to be “a work of art,” and he capped it modernly enough with a Helen Wills hat.

          Peterson carefully laid out the image on his cot and then concealed himself in the prison yard when the other convicts were called in at 6 o’clock.  A little later Keeper Alfred Molitor, who three years ago was hoodwinked by the dummy trick and consequently suspended 15 days without pay, came by to count the prisoners.

          For several nights Peterson had refused to answer when called, and the old keeper on the beat had gone on without requiring the formality.  But Molitor, new to the beat tonight, remembers his former mistake and entered the cell when the dummy did not respond.  He found the dummy, its head made of lime and asbestos with painted cheeks and colored eyes, lying with it legs crossed on the cot.

          Peterson, who had counted on the outside guards being withdrawn from the walls when the prisoners were counted for the night, was found on the roof of the power house within the yard.

          In reward for his carefulness Molitor was given a week off with pay.

 

Lee’s Connecticut Chronicles:

Connecticut courts were quiet this week—see you in two more. Keep keeping safe.

Lee
Lee S. Siegel
[email protected]

 

Really? A $13 Deficit – 100 Years Ago:

The Buffalo News
Buffalo, New York
14 Aug 1926

$12.97 DEFICIT CAUSES
NIAGARA DOG QUARANTINE

Old State Law Is Invoked in County.

          LOCKPORT, Aug. 13.—Every dog in Niagara County whether licensed or unlicensed will be quarantined in the fall as a result of a $12.97 deficit in the dog tax found for the county, officials pointed out here Friday when the financial statement for the dog tax fund was made out.  The report will be submitted to the board of supervisors next month.

          Under the terms of an old state law, every county that shows a deficit in dog taxes is placed under quarantine, the terms of which require that every dog in the county must be kept chained from sunset until one hour after sunrise.  Any dog running free between those periods is subject to being shot by state or county authorities.

          The law is on the statute books for the protection of sheep owners and has been recently enforced in several New York state countries where a deficit was reported.

          The financial statement shows that receipts for the year were $15,620 and the expenditures were $15,927.  In addition, claims were paid to formers for the slaughter of sheep by dogs to the amount of $1152, but this was offset by a balance which remained in the account at the end of last year.  The final balance shows a deficit of exactly $12.97.

          The cities of Niagara Falls and Lockport showed favorable balances but collections in the rural districts accounted for the deficit, county authorities declare.

 

Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers’ Subscribers:

Nothing from me this time around. See you all next edition!

Until next time …

Ryan
Ryan P. Maxwell
[email protected]

 

Well-Trunked Capture– 100 Years Ago:

The Buffalo News
Buffalo, New York
14 Aug 1926

SQUAW, SINGLEHANDED,
CAPTURES 3 ELEPHANTS

          SPOKANE, Wash., Aug. 13 (U.P.)—An aged Indian woman captured three of the five elephants which had escaped from a circus at Cranbrook, B.C., according to word received here.

          Coming upon the beasts suddenly yesterday, the squaw offered them apples, and one immediately took advantage of her gift.  Two others followed.

          The dispatch added that one elephant bolted as they were being loaded into a car and still is at liberty.

 

Storm’s SIU:

Hi Team:

Not much in the SIU arena so I have four interesting property decisions and one  liability for you this edition. 

This time I included a few more case digests than usual as I had not contributed to the past couple editions.  It has been a very busy summer workwise as well as on the home front, including a destination wedding for my nephew in Toulouse, France.  We have to pack in as much as we can during the short summer months in Western New York.

The case digest captions this edition include:

• In a first-party property loss “any ensuing loss” in a faulty-workmanship exclusion’s carve-back covers consequential damage to other property without any added requirement of non-foreseeability or an independent causal force. But the carve-back is subject to other exclusions.

A broadly worded pollution exclusion that defines “pollutants” as “irritants or contaminants” can encompass construction dust even when “dust” is not explicitly listed, particularly where the policy uses “including” as illustrative rather than exhaustive and where persuasive authority has applied similar language to dust-related claims.

• An insurer that brings a DJ action to avoid defense/indemnity obligations risks fee shifting if the insured prevails; this is so even if the insurer believed an exclusion applied, and even if the insured’s own carrier initially funds the defense. When awarding fees as damages under New York law, courts may add 9% prejudgment interest, often calculated from a reasonable midpoint date where fees accrued over time.
• Mere allegations and contractor estimates without causation evidence cannot defeat summary judgment in coverage disputes. Collapse and ordinance-or-law exclusions can bar both property and loss-of-use claims arising from neighboring structural failures and civil authority orders. For personal property, insureds must map the loss to a listed peril and address exclusions like neglect.
• Short‑term rental activity that dominates a dwelling’s use can defeat first-party property coverage that is conditioned on “principal” residential use; sporadic or intermittent stays by the owner will not overcome consistent, whole‑house rental use.
• Residency requirement in homeowner’s policy unambiguously defined the insured premises as the place “where you reside.” The insured moved out, rented the property to tenants, and failed to notify the insurer of the change in occupancy thereby forfeiting coverage for a fire loss to the property.  The fact that the insurer also insured the current residence and an auto policy showed the current residence address did not create a waiver of the coverage defense.

More case digests in two weeks.  See you then!

Scott
Scott D. Storm
[email protected]

 

Bad Luck on Friday the Thirteenth – 100 Years Ago:

The Buffalo News
Buffalo, New York
14 Aug 1926

Friday, 13^TH, BAD FOR
FRENCH CONCIERGE

Special Cable (Copyright)

Buffalo Evening News.

          PARIS, August 13.—Madame Allise, a concierge in the Rue St. Andrew des Arts, was so fearful of bad luck befalling her today, Friday the 13^th – which had been prophesied for her by fortune teller, that she accepted advice on warding off the misfortune by allowing a “woman in black” to take her jewels and 300 francs to a church for safe keeping.

          Afterward the fortune teller came back saying the money was insufficient, so the concierge gave her 5300 francs more in banknotes.  The woman in black failed to return—and her prophecy came true.

 

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

It has been a busy week at HF. We all attended the associate development days and learned about a variety of topics before the summer party.

This edition’s case from the Supreme Court of Alabama looked at whether the lower court exceeded its discretion by staying a declaratory judgment action to the extent that it refused to address the duty to defend in the underlying tort action pursuant to the insurance agreement.

See you in a fortnight,

Kate
Katherine A. Fleming
[email protected]

 

Overestimating Growth—Population in Buffalo a Generation Later Was 570,000 – 100 Years Ago:

The Buffalo News
Buffalo, New York
14 Aug 1926

Grow With
Growing Buffalo

          During the next few years with factories being drawn here by the magnet of immense business and limitless resources, Buffalo’s population will increase as it has never increased before.

          And more people for Buffalo can only mean a more rapid natural increase in the value of Buffalo real estate.

          The future greatness of Greater Buffalo is a theme that can never be exhausted, and one of the most absorbing phases of it is the enormo7us growth of the city’s population.

          In less than a generation hence Buffalo will be a city of 1,250,000.

          Do you fully realize what this means?  Just think of doubling the present residence district of this great city.  The present residential section will be a thing of the past.  Kinsey’s Sheridan Parker Terrace will be a community of home-loving people.

 

Gestwick’s Garden State Gazette:

Dear Readers:

Well, it’s official … I’m a married man! It was a picture-perfect day. Everything went so smoothly, and the weather held out just fine. Our only complaint was that the day went by too quickly. Here is a photo from our special day:

This week, I have a case that speaks to the limited set of circumstances in which courts are permitted to deviate from the standard subjective intent analysis when determining when CGL policies’ insuring agreements are triggered. Read on to find how it all played out.

That’s it for two more weeks—talk soon!

Evan
Evan D. Gestwick
[email protected]

 

Likely, Driving Without a License – 100 Years Ago:

The Post-Star
Glens Falls, New York
14 Aug 1926

CLOUDBURST DROWNS
GIRL DRIVING COWS

          ELMIRA, Aug. 13 (AP).—While walking in a pasture field to drive her father’s cows home later this afternoon, Stella L. Peppard, aged 13 years, daughter of Mr. and Mr. William Peppard of Chemung, Chemung County, was caught in a deluge as a cloudburst visited this section.  The water swept her so rapidly she was unable to gain a footing and was drowned.  Her body later was found a mile away in a wheat field, after the water had subsided.  A sister, Eva, aged 17 years, saved her life by clinging to some bushes.

 

O’Shea Rides the Circuits:

Hey Readers,

Last week my wife and I went camping at Stony Brook State Park. Of course, we brought the dogs who enjoyed laying in the creek and also hiking through the park. However, the larger dog faced his longstanding nemesis, stairs. Miraculously he both climbed and descended at least 20 flights of stairs. Upon return home, he melted into a puddle for a few days, but now he is up and moving.

This week I have quick read on late notice and the application of the MCS 90 endorsement.

Until Next Time,

Ryan
Ryan P. O’Shea
[email protected]

 

Dancing Impacts Love? – 100 Years Ago:

New Orleans States
New Orleans, Louisiana
14 Aug 1926

A JEALOUS BOY

DEAR MISS FAIRFAX:

          I am 16, considered very pretty.  I go with a boy of 18, and I love him very much.  One night at a party I danced with another boy several times and he got angry.  He hasn’t spoken to me for two weeks and I don’t see why dancing with other boys should make him angry at me.  How can I win his love back?

                                                                       JUST SIXTEEN

                                                                        Kinder, La.

          Be sweet to him, but not too much so, for even though he is jealous just because he cares for you, there is no reason why he should run it into the ground.  If he continues to sulk, let him alone and he’ll snap out of it by himself.

 

LaBarbera’s Lower Court Library:

Dear Readers:

Slow few weeks at the trial level, nothing new to report on from me this edition – hopefully two to report on next time around.

Isabelle
Isabelle H. LaBarbera
[email protected]

 

Simply Too Young – 100 Years Ago:

Times Herald
Washington, District of Columbia
14 Aug 1926

ADVICE TO THE
LOVELORN

By Beatrice Fairfax

DEAR MISS FAIRFAX:

I am coming to you with my problem.

I am going with a young man 25 years of age.

          He is wonderful except that he is terribly jealous.  I cannot smile at another young man without his raving.  When I tell him he is jealous, he gets angry.  But we make up again.

          He has given me several compacts, a pearl necklace and a wristwatch.  Also, he says he is going to get me a ring.  I love his young man dearly.  Without his love my life would be miserable.  I am 15 years of age.   He is not too old for me, is he?

          How can I cure him of being jealous?

                                                                        BOBBIE.

          You are too young, Bobbie, to think of any man in such a sentimental way.  After three or four years there will be time enough for you to think seriously of love.  Until you become engaged, you will not, if you are wise, accept expensive presents, such as a ring and wristwatch, from any man.

          Explain to this young man that you value his friendship, but that you can’t promise not to look or smile at other young men.

          There is no reason why you should not cultivate the friendship of all the worthwhile young men you know.  In this way when you are old enough to marry, you will have a large circle of friends and can choose more wisely.           

 

Lexi’s Legislative Lowdown:

Dear Readers,

This weekend we are heading to see Tyler Childers and are hoping he will play the song “Lady May”, which our dog is named after. Next weekend, heading to a wedding back home.

This week we discuss proposed legislation, just introduced, that would require insurers to provide homeowners with clearer information regarding available policy endorsements during the application process.

Thanks for reading,

Lexi
Lexi R. Horton
[email protected]

 

In the Majors for a Cup of Coffee – 100 Years Ago:

The Boston Globez

Boston, Massachusetts
9 Aug 1926

NEED CATCHERS

          Owing to the injury of Zach Taylor, and Frank Gibson the Braves are in a bad way for catchers.  Womack, recalled from Providence, may be able to help out, but another experienced catcher is urgently needed.

          Judge Fuchs and Bancroft have been doing their best to get one, but, thus far, have been unsuccessful, and the prospects of their being able to land a good backstop are not very good.

Editor’s Note:  One hundred years ago this week, Sidney Kirk Womack  debuted as a catcher for the Boston Braves this week, in 1926.  (October 2, 1896 – August 28, 1958), nicknamed "Tex", was an American professional baseball player. He appeared in one game in Major League Baseball for the 1926 Boston Braves as a catcher. He was born in Greensburg, Louisiana, and died in Jackson, Mississippi. He went to LSU and Mississippi State University.

 

Victoria’s Vision on Bad Faith

Dear Readers,

My kayak trip last weekend in Rochester went over well. Our goal was to start at Black Creek Park and head towards the Genesee River, but one log jam after another prevented us from finishing our journey, let alone much of Black Creek. It was good weather with good company, though I think that was my first and last time kayaking at that location.

This week I have an interesting case from the 11th Circuit, which discusses the innocent-insured exclusion in conjunction with bad faith (think the 11th Circuit version of Reed v. Federal Insurance Co. for those that practice in New York).

Victoria
Victoria S. Heist
[email protected]

 

Who Would Have Imagined – 100 Years Ago:

The Herald Statesman
Yonkers, New York
14 Aug 1926

WOMEN EQUAL OF
MEN IN BUSINESS

Viscountess Rhondda, Director
In Twenty-eight Big Firms Holds Female
Has Brains of Male

          London.—Viscountess Rhondda, who is a director in 28 important companies, refuses to believe that women as a whole are either better or worse suited to business than men.  She was recently elected president of the Institute of Directors, the first woman to hold the position.

          “It is purely an individual matter,” she said of women in business.  “It is impossible to generalize.  There has been a big development recently and signs of a general awakening to the idea of women working side by side with men in business.  This is a good thing, I believe, for the commercial world and for the nation as a whole.  In a country where business and trade are premier factors you want to recruit the whole of the business ability of the country instead of only half.”

 

Shim’s Serious Injury Segment

Hi Readers,

Hope everyone has been well since our last column.

In our last column I wrote about the MLB trade deadline and the Detroit Tigers’ need to find a trade partner for Tarik Skubal. Much to the disappointment of fans nationally, the Los Angeles Dodgers acquired Tarik Skubal for Zyhir Hope, River Ryan, and Brady Smith. Overall, this appears to be a solid prospect return for the impending free agent, Tarik Skubal. The baseball world remains disappointed nevertheless as the rich get richer in their pursuit of a third consecutive World Series Championship.

Today I have shared an appeal decided by the Supreme Court of New York, Appellate Division, Second Department, which upheld a Supreme Court, County of Westchester, decision granting defendants motion for summary judgment on the issue of serious injury in accordance with Insurance Law 5102(d).

See you in the next issue!

Stephen
Stephen M. Shimshi
[email protected]

 

Tough Times – 100 Years Ago:

Press and Sun-Bulletin
Binghamton, New York
14 Aug 1926

BUFFALO ITALIAN
KILLED IN STREET

Buffalo, Aug. 14 – (Associated Press) – Frank Polizzi was shot to death early today at a street corner. Police believe he was a victim of the bootleggers’ war in which three other persons have been killed in the Italian section here recently.

          Residents near the scene of the killing said they heard five shots and saw two men enter an automobile and speed away, leaving Polizzi lying in the street.

 

New England Almanack

We are on the road today, visiting our colleagues at the home office in New York. Hope you are enjoying your summer.

Barbara
Barbara A. O’Donnell
[email protected]

Alex
Alexander G. Henlin
[email protected]

Iryna
Iryna N. Dore
[email protected]

 

I’m In – 100 Years Ago:

Buffalo Courtier Express
Buffalo, New York
13 Aug 1926

FREE CHARLESTON LESSONS
TO BE GIVEN AT ERIE BEACH

            Continuing its policy of providing the maximum of service and enjoyment for its patrons, the Erie Beach Company has announced free lessons in Charleston dancing beginning next Monday and continuing each Monday and Friday evening the remainder of the season, under direction of Arthur J. Funk.

          Tomorrow is expected to be the biggest day of the entire season at the beach when four fraternal, industrial and church organizations hold their annual picnics there.  All of the courts of Erie and Niagara counties affiliated with the Independent Order of Foresters will hold a monster outdoor rally and reunion.

 

North of the Border:

My youngest granddaughter is two months old now, and I am learning that no two days with her are ever quite the same. Yesterday she was fascinated by the ceiling light; today it's her own reflection in the mirror. Was that a smile, or just a flicker? By tomorrow, I suspect, it will be unmistakable.

She is more awake now, more predictable in her rhythms, steadily gaining weight and growing before our eyes. And in watching her, she is teaching me something I thought I already knew: to slow down. To live in the moment. To be present and aware of what is right in front of me, rather than rushing toward what comes next.

There is a quiet magic in living fully in each day, and then simply letting it go, carrying only what mattered forward. Two months old, and she is teaching those around her to watch and listen.

My column this week describes a really interesting case where a coverage issue drove a liability settlement.

Enjoy!

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]

• Since the Defendant Was on Notice of the Facts and Circumstances of an Accident, and Since the Insured Had a Timely Action Pending, First Party Insurer Could File Its Complaint Beyond the Statute of Limitations Under the Relation Back Doctrine, Action Was Timely

 

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

• In an Odd Case, Claim by Tort Defendant Against Plaintiff Alleging That Plaintiff Exaggerated Property Damage Claim Leading to High Premiums Is Whittled Down

 

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

• Connecticut courts were quiet this week—see you in two more. Keep keeping safe.

 

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

• Nothing from me this edition. See you next time!

 

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

• In a First-Party Property Loss “Any Ensuing Loss” in a Faulty-Workmanship Exclusion’s Carve-Back Covers Consequential Damage to Other Property Without Any Added Requirement of Non-Foreseeability or an Independent Causal Force. But the Carve-Back Is Subject to Other Exclusions; and A Broadly Worded Pollution Exclusion That Defines “Pollutants” as “Irritants or Contaminants” Can Encompass Construction Dust Even When “Dust” Is Not Explicitly Listed, Particularly Where the Policy Uses “Including” as Illustrative Rather Than Exhaustive and Where Persuasive Authority Has Applied Similar Language to Dust-Related Claims
• An Insurer That Brings a DJ Action to Avoid Defense/Indemnity Obligations Risks Fee Shifting if the Insured Prevails; This Is so Even if the Insurer Believed an Exclusion Applied, and Even if the Insured’s Own Carrier Initially Funds the Defense. When Awarding Fees as Damages Under New York Law, Courts May Add 9% Prejudgment Interest, Often Calculated from a Reasonable Midpoint Date Where Fees Accrued Over Time
• Mere Allegations and Contractor Estimates Without Causation Evidence Cannot Defeat Summary Judgment in Coverage Disputes. Collapse and Ordinance-Or-Law Exclusions Can Bar Both Property and Loss-Of-Use Claims Arising from Neighboring Structural Failures and Civil Authority Orders. For Personal Property, Insureds Must Map the Loss to a Listed Peril and Address Exclusions Like Neglect
• Short‑Term Rental Activity That Dominates a Dwelling’s Use Can Defeat First-Party Property Coverage That Is Conditioned on “Principal” Residential Use; Sporadic or Intermittent Stays by the Owner Will Not Overcome Consistent, Whole‑House Rental Use
• Residency Requirement in Homeowner’s Policy Unambiguously Defined the Insured Premises as the Place “Where You Reside.” The Insured Moved Out, Rented the Property to Tenants, and Failed to Notify the Insurer of the Change in Occupancy Thereby Forfeiting Coverage for a Fire Loss to the Property.  The Fact That the Insurer Also Insured the Current Residence and an Auto Policy Showed the Current Residence Address Did Not Create a Waiver of the Coverage Defense

 

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

• Writ of Mandamus Issued to Vacate Stay of Declaratory Judgment Action in Order to Proceed as to Duty to Defend in Underlying Tort Action

 

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

• Court Finds No Duty to Defend or Indemnity Abuser in Sexual Abuse Case

 

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

• Failure to Notify Insurer of Prior to Default Results in Denial and MCS-90 Applied Only to the Named Insured Listed on the Policy

 

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

• Nothing new to report on from me this edition

 

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

• Proposed Legislation Requiring Insurers to Disclose All Available Endorsements for Homeowners’ Liability Insurance Policies During the Application Process

 

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

• Court Dismisses Bad Faith Claim Finding Innocent-Insured Exclusion Applicable

 

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

• Appellate Division Upholds Grant of Defendants’ Serious Injury Threshold Motion

 

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

• Prescription of Addictive Medication for Non-Qualifying Patient to Keep Her Romantically Involved with Prescribing Doctor Is “Professional Service” for Purposes of Regulatory Defense Coverage
• “Limit of Insurance” Provision That Confined Stacking of Underinsured Motorist Coverage to Individual Named Insured Did Not Provide Illusionary Coverage Even Though Policy Did Not List Individual Named Insured

                                                     

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

• St. John’s to Vancouver: How Insurance Coverage Uncertainty Shaped a $30 Million Class Settlement

 

See you in a couple of weeks.  Keep those cards, letters, and emails coming in.

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]

07/30/26         217 Trust v. VIR Construction, Inc.
Appellate Division, First Department
Since the Defendant Was on Notice of the Facts and Circumstances of an Accident, and Since the Insured Had a Timely Action Pending, First Party Insurer Could File Its Complaint Beyond the Statute of Limitations Under the Relation Back Doctrine, Action Was Timely

The question is this case was whether the court should allow amendment of a complaint ' motion to amend their complaint in an s action to add a claim by against renovation contractors to add a claim by plaintiffs' first-party insurer, as subrogee, to recover the portion of plaintiffs' damages for which the insurer had reimbursed them. The action was otherwise time barred.

The First Department allowed it, in a rare, signed opinion, under the relation-back doctrine because the original complaint gave defendants "notice of the transactions, occurrences, or series of transactions or occurrences, to be proved pursuant to [the subrogation claim asserted in] the amended pleading".

While an application to amend a pleading pursuant to CPLR 3025 lies within the court's sound discretion, "there is no sound basis in law to grant amendment pursuant to CPLR 3025(c) to add an untimely claim" Thus, a pleading cannot be amended to assert a new claim for which the statute of limitations has expired unless the assertion of the new claim is deemed to relate back to an earlier operative pleading that was filed while the new claim still would have been timely (see id.). Whether a new claim relates back to the time of the filing of the earlier pleading is governed by CPLR 203(f), which provides:

"A claim asserted in an amended pleading is deemed to have been interposed at the time the claims in the original pleading were interposed, unless the original pleading does not give notice of the transactions, occurrences, or series of transactions or occurrences, to be proved pursuant to the amended pleading."

In determining whether the original pleading provides the requisite notice of the transactions or occurrences underlying the proposed new claim, a court "should not . . . look[] beyond the four corners of the original pleading."

It appears that the question of the applicability of the relation-back doctrine to a subrogation claim asserted by an insurer of the original plaintiff has not yet been directly posed to the Court of Appeals.

As previously noted, whether the defendant received notice of the relevant transactions or occurrences from a prior pleading before the expiration of the statute of limitations is indeed the touchstone of the relation-back inquiry under CPLR 203(f). Tellingly, defendants do not deny that the prior complaints put them on notice of the transactions and occurrences giving rise to the claim to which Great Northern became subrogated — namely, defendants' management of the renovation project, which allegedly resulted in defective work, delays and increased costs. Rather, defendants rely on the fact that the earlier complaints contained no reference to Great Northern's payment of the 217 plaintiffs' claim under their policy.  That did not concern the court.

The earlier complaints put defendants on notice of what the claims of both the 217 plaintiffs and Great Northern were really about. The few facts added in the proposed FAC to support the subrogation claim — the existence of the insurance policy, the claim made thereunder, and Great Northern's payment on that claim — are cut and dried and unlikely to be the source of much contention in the litigation.

 

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

Potpourri

08/12/26         Whitfield v. Vizhco
Appellate Division, Second Department
In an Odd Case, Claim by Tort Defendant Against Plaintiff Alleging That Plaintiff Exaggerated Property Damage Claim Leading to High Premiums Is Whittled Down

In March 2022, Whitfield commenced this action against the defendant Vizhco and Siguacriollo, Harmacoond), who was a claims adjuster for GEICO and another defendant. He claimed that in March 2021, he was involved in a car accident with a car operated by Vizhco which was registered to Siguacriollo and insured by GEICO. He further claimed that Vizhco and Siguacriollo committed insurance fraud by, among other things, claiming that certain preexisting damage to the subject car was caused by the March 2021 accident, which allegedly caused the plaintiff's insurance carrier to pay GEICO and increase the plaintiff's car insurance premiums.

In May 2022, Vizhco and Siguacriollo moved to dismiss the cause of action alleging unjust enrichment insofar as asserted against them. The plaintiff opposed the motion and cross- to dismiss Vizhco's and Siguacriollo's affirmative defenses and sought other relief.

In May 2022, Harmacoond moved, inter alia, pursuant to CPLR 3211(a) to dismiss the causes of action alleging prima facie tort, ordinary negligence, and gross negligence insofar as asserted against him.

"The elements of a cause of action to recover for unjust enrichment are '(1) the defendant was enriched, (2) at the plaintiff's expense, and (3) that it is against equity and good conscience to permit the defendant to retain what is sought to be recovered'". The essence of such a cause of action is that one party is in possession of money or property that rightly belongs to another.  Here, the plaintiff has not pleaded with sufficient facts to demonstrate that Vizhco and Siguacriollo were unjustly enriched at the plaintiff's expense.

Further, the Supreme Court properly granted those branches of Harmacoond's motion which were to dismiss the causes of action alleging prima facie tort, ordinary negligence, and gross negligence insofar as asserted against him. The complaint, inter alia, failed to allege sufficient facts that would support Harmacoond's personal liability to the plaintiff.

 

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

Connecticut courts were quiet this week—see you in two more. Keep keeping safe.

 

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

Nothing from me this edition. See you next time!

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

06/24/26        Campanile v. Hanover Insurance Co.
United States District Court, for the Eastern District of Pennsylvania
In a First-Party Property Loss, “Any Ensuing Loss” in a Faulty-Workmanship Exclusion’s Carve-Back Covers Consequential Damage to Other Property Without Any Added Requirement of Non-Foreseeability or an Independent Causal Force. But the Carve-Back Is Subject to Other Exclusions; and A Broadly Worded Pollution Exclusion That Defines “Pollutants” as “Irritants or Contaminants” Can Encompass Construction Dust Even When “Dust” Is Not Explicitly Listed, Particularly Where the Policy Uses “Including” as Illustrative Rather Than Exhaustive and Where Persuasive Authority Has Applied Similar Language to Dust-Related Claims

Plaintiffs sued Hanover for breach of a homeowners policy.  Hanover moves for summary judgment.

Campaniles hired Newton Construction to repair their home’s foundation. While they were away, fine white dust and debris from the work infiltrated the home’s HVAC system and settled on all interior surfaces. It was undisputed that Newton’s faulty workmanship caused the dust intrusion.  The Campaniles submitted a claim seeking coverage for the dust-related damage only (not for the defective foundation work). Hanover denied the claim citing two policy provisions: (1) the “faulty workmanship” exclusion and (2) a pollution exclusion that referenced silica dust.

The faulty workmanship exclusion, Section I — Exclusions paragraph (B)(3)(b) excludes loss to property caused by “[f]aulty, inadequate or defective … [d]esign, specifications, workmanship, repair, construction, renovation, remodeling, grading, [or] compaction,” but contains an ensuing loss carveback: “any ensuing loss to property … not precluded by any other provision in this policy is covered”.  The pollution exclusion. Section I — Perils Insured Against paragraph (A)(2)(c)(6)(e) excludes loss “caused by … discharge, dispersal, seepage, migration, release or escape of pollutants,” with “pollutants” defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste”.

Plaintiffs argued the dust damage to the home is an “ensuing loss” resulting from faulty workmanship and is therefore covered by the carveback to the exclusion. They relied on Griggs Rd., L.P. v. Selective Way Ins. Co. of Am. to argue the carveback provides coverage for consequential property damage beyond correcting the faulty work itself.

Hanover argued “ensuing loss” requires an independent, non-foreseeable cause intervening to damage other property; dust from nearby construction and an operating HVAC is a foreseeable byproduct of the work. Hanover cited Ridgewood Grp., LLC v. Millers Cap. Ins. Co. and TMW Enterprises, Inc. v. Fed. Ins. Co. to argue the carveback does not extend to damages that naturally and foreseeably flow from excluded faulty workmanship.

The court rejected Hanover’s “non-foreseeability” gloss. It concluded that “any ensuing loss” means a consequential loss that follows from faulty workmanship and results in damage to property other than the defective work itself, without any requirement that the loss be non-foreseeable or caused by a wholly independent force.

The court found the phrase unambiguous and aligned with the Griggs approach, noting that the non-precedential Ridgewood decision was not binding and, in the court’s view, inconsistent with Pennsylvania Supreme Court principles of construing insurance policies and exclusions.

However, the Court held that even assuming the dust damage qualifies as an ensuing loss, the carveback applies only to losses “not precluded by any other provision,” so the court turned to the pollution exclusion.

Although “dust” is not named in the exclusion’s list, the court emphasized that “including” is a term of enlargement; unnamed substances of the same class are covered. The court concluded the dust at issue is an “irritant” or “contaminant” within the policy’s definition of “pollutants,” drawing on cases defining those terms and reasoning that dust fits squarely within them.

The court also relied on the Third Circuit’s analysis in Devcon Int’l Corp. v. Reliance Ins. Co., which interpreted materially identical pollution-exclusion language to bar coverage for damages caused by airborne construction dust. The court found Devcon’s reasoning persuasive and applicable here, even though “dust” was not expressly listed in the definition of pollutants.

The court held that while the dust damage could constitute an ensuing loss under the carveback to the faulty workmanship exclusion, coverage was nevertheless barred by the policy’s pollution exclusion, because the dust was a “pollutant” and the loss resulted from its “discharge, dispersal, … release or escape”.

The court granted Hanover’s motion for summary judgment and entered judgment in Hanover’s favor.

 

05/12/96        Midvale Indemnity Co. v. Arevalos Construction Corp.
United States District Court, for the Eastern District of New York
An Insurer That Brings a DJ Action to Avoid Defense/Indemnity Obligations Risks Fee Shifting if the Insured Prevails; This Is so Even if the Insurer Believed an Exclusion Applied, and Even if the Insured’s Own Carrier Initially Funds the Defense. When Awarding Fees as Damages Under New York Law, Courts May Add 9% Prejudgment Interest, Often Calculated From a Reasonable Midpoint Date Where Fees Accrued Over Time

D&G Construction NY Inc.’s motion for attorney’s fees, costs, and prejudgment interest following earlier summary-judgment rulings in a coverage declaratory-judgment action.

Midvale Indemnity Company filed this federal action seeking a declaration that it owed no duty to defend or indemnify Arevalos Construction Corp., Victor Siguenza Zuniga, 625 Halsey LLC, D&G Construction NY Inc., and RM Construction and Development Corp. in a related New York state-court personal-injury suit.

District Judge Natasha C. Merle denied Midvale’s motion for summary judgment and granted in part/denied in part cross-motions by D&G and Zuniga. The court held that Midvale’s disclaimer based on the policy’s Multi‑Unit and Tract Housing Residential Exclusion was untimely as a matter of law, so Midvale could not rely on that exclusion to reject the duty to defend. The court also held that D&G could recover its fees arising from its defense in this declaratory action.

The Second Circuit affirmed the court’s award of summary judgment. Judge Merle referred D&G’s fee application to Magistrate Judge Levy.

The issue included whether D&G, as a prevailing insured in Midvale’s declaratory-judgment action, was entitled to recover attorney’s fees and costs (and if so, the amount), and whether prejudgment interest should be awarded.

D&G sought $41,219.94 in fees and costs, plus statutory interest. Midvale argued: (1) fees should not be awarded where a policy exclusion applies (even if the disclaimer was untimely); and (2) D&G had no recoverable fees because its own insurer (via a third-party administrator) paid the defense invoices.

Under New York law, an insured may recover its legal fees when “cast in a defensive posture” by an insurer’s action to free itself from policy obligations (Mighty Midgets; City Club Hotel). An insured cannot recover fees when it initiates an affirmative action to settle rights under the policy. The duty-to-defend principle extends to defending the insurer’s declaratory action itself. Judge Merle had already held D&G could recover fees in this case, which became the law of the case.

Midvale’s argument that D&G suffered no recoverable “fees” because its own insurer paid the bills failed. The court noted Midvale cited no authority for avoiding fee liability where the insured’s carrier fronted the costs; D&G would presumably reimburse its carrier from any recovery, so there is no windfall, and Midvale’s obligation to pay the insured’s reasonable defense costs remains intact.

Midvale did not challenge reasonableness. The magistrate judge nonetheless reviewed the records and found the hourly rates—$200 for attorneys and $125 for paralegals—within the E.D.N.Y. range and the hours and expenses reasonable, supporting the requested $41,219.94.

Applying N.Y. C.P.L.R. §§ 5001(a) and 5004, the court concluded interest is mandatory at 9% per annum. For damages incurred at “various times,” the court may select a “single reasonable intermediate date.” Using November 2, 2023 (midpoint between the first invoice on September 14, 2022, and D&G’s motion on December 20, 2024), the court calculated $4,207.82 in prejudgment interest, yielding a total award of $45,427.76.

The magistrate judge recommended awarding D&G $45,427.76 in fees, costs, and prejudgment interest. The docket reflects that the recommendation was later adopted, with a motion granted in a subsequent entry.

 

07/20/26        Puleo v. Plymouth Rock Assurance Corp.
United States District Court for the Eastern District of Pennsylvania
Mere Allegations and Contractor Estimates Without Causation Evidence Cannot Defeat Summary Judgment in Coverage Disputes. Collapse and Ordinance-Or-Law Exclusions Can Bar Both Property and Loss-Of-Use Claims Arising From Neighboring Structural Failures and Civil Authority Orders. For Personal Property, Insureds Must Map the Loss to a Listed Peril and Address Exclusions Like Neglect

Defendant’s motion for summary judgment granted.

Puleo purchased a homeowners policy. The municipality of Norristown declared the home unsafe for occupancy due to the collapse of a wall on a neighboring property, requiring Puleo to vacate.  Puleo notified the insurer that he had vacated the home.  At the insurer’s request, Insurance Restoration Consultants, Inc. (IRC) inspected the home. IRC observed bricks in the alley from the neighboring collapse and that the meter had been pulled/power turned off but reported no direct physical damage to the exterior or interior floors attributable to the collapse; it noted parge coating had fallen in the basement (per insured’s representatives, due to power shutoff) and that the refrigerator was ruined from spoiled food. IRC concluded the neighboring collapse did not cause direct physical damage to Puleo’s home.

Puleo submitted a new claim alleging vandalism, including theft of copper and unspecified other damage; the insurer denied the claim. 

The neighboring property was demolished. Puleo alleged the demolition caused additional damage to his home but did not notify the insurer until filing suit.

Puleo brought a single count for breach of contract based on the insurer’s denial of coverage for losses allegedly caused by: (1) the neighboring collapse; (2) subsequent vandalism; and (3) the demolition of the neighboring building. The insurer moved for summary judgment, arguing that Puleo lacked evidence of “direct physical loss” from any of the alleged events, that vandalism was excluded due to vacancy/unoccupancy, and that late notice of demolition-related damage prejudiced the insurer.

The IRC report’s conclusion that the collapse did not cause direct physical damage defeated Puleo’s assertion; family statements about basement parge coating and the pulled meter/power shutoff did not create a triable fact because causation would require speculation.  Even if there had been damage, the policy’s “collapse” exclusion meant the neighboring collapse was not a “Peril Insured Against,” foreclosing Loss of Use coverage based on civil authority as well.  Puleo offered no record evidence—no testimony or documentation—that vandalism (e.g., copper theft) actually occurred; unspecified assertions in briefing were insufficient to defeat summary judgment.  Because the vandalism was unproven, the court did not reach the parties’ dispute over a vacancy-based vandalism exclusion; in any event, the policy excluded vandalism losses where the dwelling was vacant/unoccupied more than 30 days.

Contractor estimates listed services and costs but did not connect those costs to demolition-caused damage; they did not create a triable issue on causation and would invite jury speculation. The insurer also argued prejudice from late notice of demolition-related damage; the court focused on the lack of causation evidence.

The IRC report supported that the refrigerator was ruined due to food spoilage after the power was turned off. But Puleo failed to show the loss fit any of the 16 enumerated perils for personal property, and he did not substantively analyze the contract terms to place the loss within coverage. The policy expressly excluded “Neglect,” and Puleo did not address whether he took reasonable steps (e.g., removing perishable food) to protect the refrigerator, further undermining coverage.

Coverage D required a “Peril Insured Against.” There was no evidence of direct physical loss to Puleo’s home, and the neighboring “collapse” was not an insured peril. Further, the municipality’s unsafe-structure notice implicated the “ordinance or law” exclusion, barring loss-of-use recovery regardless of concurrent causes.

Puleo did not produce evidence of direct physical loss to his residence from the collapse, vandalism, or demolition, and the policy’s language independently foreclosed coverage for the refrigerator and loss-of-use claims (collapse and ordinance-or-law exclusions; failure to tie the refrigerator loss to an enumerated personal-property peril; potential neglect). Summary judgment for the insurer. 

 

08/07/26        Tiong Tan v. Allstate Insurance Co.
United States Court of Appeals for the Third Circuit
Short Term Rental Activity That Dominates a Dwelling’s Use Can Defeat First-Party Property Coverage That Is Conditioned on “Principal” Residential Use; Sporadic or Intermittent Stays by the Owner Will Not Overcome Consistent, Whole House Rental Use

After discovery, the district court granted summary judgment for Allstate, concluding the insured primarily used the dwelling as a rental property; the Third Circuit reviewed de novo and affirmed.

The insured, Yoke Tiong Tan, owned a five-bedroom home and purchased an Allstate homeowner’s policy. A fire damaged the property. Allstate investigated and found that Tan offered all five bedrooms for short-term rentals and allowed guests access to the first-floor common areas. Tan kept a room for himself but often slept elsewhere when his room was booked and no other was available. At the time of the fire, renters occupied all five rooms.

Allstate denied coverage, stating the policy did not cover “the Property as a rental or commercial property,” and Tan sued for breach of contract.

The dispute turned on whether the house qualified for coverage as a homeowner’s risk, which required that the property be “principally used as a private residence.” The insurer argued the dwelling’s principal use was commercial (short‑term rentals), taking it outside the policy’s homeowner coverage.

The district court concluded that, on the undisputed record, Tan primarily used the property as a rental, not as a private residence, and entered summary judgment for Allstate. 

Third Circuit’s analysis held that even in the light most favorable to Tan, the record “undisputedly” showed he offered and did rent all five bedrooms and granted renters unfettered access to the common areas. Tan’s intermittent stays did not alter the principally commercial nature of the use. As a result, he failed to show the home was “principally used as a private residence,” a prerequisite for homeowner coverage under the policy.

The court also noted that Tan forfeited any argument that the property’s principal use was residential because he did not present that argument to the district court at summary judgment.

The homeowner’s policy did not cover loss to a property used principally for short‑term rentals; on the undisputed facts, the dwelling’s principal use was commercial, not a private residence.

 

07/22/26        Mattis v. Allstate Property & Casualty Insurance Co.,
United States District Court for the Eastern District of Pennsylvania
Residency Requirement in Homeowner’s Policy Unambiguously Defined the Insured Premises as the Place “Where You Reside.” The Insured Moved Out, Rented the Property to Tenants, and Failed to Notify the Insurer of the Change in Occupancy Thereby Forfeiting Coverage for a Fire Loss to the Property.  The Fact That the Insurer Also Insured the Current Residence and an Auto Policy Showed the Current Residence Address Did Not Create a Waiver of the Coverage Defense

Allstate moved to dismiss Mattis’s amended complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. The complaint alleged breach of contract and statutory bad faith under 42 Pa. Cons. Stat. § 8371 based on Allstate’s denial of a homeowner’s claim for a fire loss.

The insured premises on Kindred Street was a single-family dwelling covered by an Allstate homeowner’s policy.  A fire severely damaged the property in December 2025. Mattis had moved out of the Kindred Street property in 2024 and rented it to tenants. He nonetheless continued paying premiums on the Allstate policy insuring that premises.  After moving out, he lived with his wife on Rutland Street and had been an insured on an Allstate homeowner’s policy for that Rutland Street property since 2021. An Allstate auto policy effective July 2025 also listed his address as Rutland Street.

The policy covered “sudden and accidental direct physical loss” to the “residence premises.”  “Residence property” was defined to mean “dwelling,” and “dwelling” was defined as “the single family building structure, identified as the insured property in the Policy Declaration, where you reside and which is principally used as a private residence”.

The policy required the insured to “inform us of any change in title, use or occupancy of the residence premises.”

Allstate argued that coverage was unavailable because Mattis did not reside at the Kindred Street property at the time of the loss and had not for at least a year, and because he failed to inform Allstate of the change in occupancy (owner-occupied to tenant-occupied).

The court found the policy’s requirement that the insured “reside” at the insured property at the time of loss to be clear and unambiguous. Mattis did not live at the Kindred Street property when the fire occurred and had not lived there for at least a year; the house was tenant-occupied. Under the plain terms, the property no longer qualified as a covered “dwelling” because it was not where the insured “reside[s]” and was not “principally used as a private residence” by him. The court cited similar authority upholding such residency conditions as unambiguous and enforceable.

The policy expressly obligated the insured to inform Allstate of any change in use or occupancy of the residence premises. Mattis failed to do so, further breaching a condition of coverage.

Mattis argued Allstate knew he lived at the Rutland Street address because: (1) he was an insured on an Allstate policy covering Rutland Street; and (2) an Allstate auto policy listed his Rutland Street address. The court rejected this argument. A page from the Rutland Street homeowner’s policy listed the mailing address as Kindred Street, and the auto policy page listed Rutland Street, but there was nothing showing what the auto policy said about “residence.” More broadly, Allstate’s possession of multiple policies for countless insureds did not put it on notice that Mattis no longer resided at Kindred Street, nor did it waive the explicit residency condition in the Kindred Street policy. Given the undisputed facts and the clear policy terms, Mattis’s coverage claims failed, and his derivative bad-faith claim also failed.

The court granted Allstate’s Rule 12(b)(6) motion and dismissed the amended complaint in its entirety. Mattis was “precluded from recovering for the fire loss to the Kindred Street property” because he failed to satisfy the residency condition and the notification requirement under the policy. Consequently, both the breach of contract and the § 8371 bad-faith claims were dismissed.

 

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

08/07/26         Ass’n of Cnty. Comm’ns of Ala. Liab. Self Ins. Fund, Inc.
Alabama Supreme Court
Writ of Mandamus Issued to Vacate Stay of Declaratory Judgment Action in Order to Proceed as to Duty to Defend in Underlying Tort Action

County workers sued the county commission for injuries allegedly sustained due to exposure to rodent infestations and faulty air-conditioning and roofing systems while working in a county courthouse. The county commission was a member of the Association of County Commissions of Alabama Liability SelfInsurance Fund, Inc.’s (the association) self-insurance fund. Under the insurance agreement, the association had a duty to defend the county commission against certain claims, and the association provided the county commission with a defense in the tort action subject to a reservation of rights.

The association commenced a declaratory judgment action against the county commission and county workers as defendants for a declaration that certain exclusions applied to the county workers’ claims and for a declaration that it had no duty to defend the county commission in the tort action based on the exclusionary provisions. The county workers moved to dismiss, arguing that the action was not ripe and therefore not justiciable before the tort action was resolved. The county commission also moved to dismiss, arguing the association had a duty to defend. The circuit court entered an order staying the declaratory judgment action pending the outcome of the underlying claim in the tort action. The association’s mandamus petition followed.

In its petition, the association argued that the Alabama Supreme Court should issue a writ of mandamus directing the circuit court to vacate its order staying the declaratory judgment action because there will never be a determination of the duty to defend in the tort action. The Court considered the arguments in the association’s mandamus petition only as they pertained to its potential duty to defend the county commission in the tort action. For the duty to defend the county commission in the tort action, the association argued that the declaratory-judgment action should proceed for a determination regarding whether the conduct underlying the county workers' claims against the county commission qualified as an "occurrence.” The association also argued that exclusion for expected or intended injury potentially applied as well as an exclusion for injury arising out of exposure to hazardous materials. The Court did not opine on the applicability of the exclusions to the claims, but it agreed that the circuit court exceeded its discretion by staying the declaratory-judgment action to the extent that the circuit court refused to consider the association's request for a determination regarding its duty to defend the county commission in the tort action. Accordingly, the Court granted the petition and issued a writ directing the circuit court to vacate its order staying the association’s declaratory judgment action in order for the circuit court to proceed to the extent that the association seeks a determination regarding its duty to defend the county commission in the tort action. The Court declined to issue the writ to require the circuit court to vacate its stay of the DJ action to consider the extent of the association’s duty to indemnify the county commission.

 

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

07/31/26         H.L. et al. v. Maucione
Superior Court of New Jersey, Appellate Division
Court Finds No Duty to Defend or Indemnity Abuser in Sexual Abuse Case

Maucione, formerly a schoolteacher, was accused of sexually abusing a then-16 year old student for the better part of one full school year. The alleged abuse consisted of inappropriate text messages, phone calls, sending explicit photographs, giving car rides, hugging and kissing, and the solicitation of indecent photographs from the student. Maucione was arrested for this conduct and eventually pled guilty to third-degree criminal official misconduct. As part of his criminal plea, Maucione was sentenced to five years’ probation, ordered to forfeit his teaching certificates, and was permanently disqualified from holding any “position of honor, trust, or profit under this State or any of its administrative or political subdivisions.”

The student and her parents eventually brought a tort suit against the District Superintendent, the high school she attended and its principal, and two school administrators, in connection with Maucione’s misconduct.

At the time of the abuse, the school district was insured by Selective. The CGL policy’s insuring agreement provided liability coverage for “bodily injury” caused by an “occurrence.” “Bodily injury” was defined as “bodily injury, sickness, or disease,” while “occurrence” was defined as an “accident.” The CGL policy also contained an exclusion for bodily injury arising out of the actual or threatened abuse or molestation by anyone or any person while in the care, custody, or control of any insured, or the negligent employment, investigation, supervision, reporting, or retention of a person for whom any insured was legally responsible.

Upon receipt of notice of the claim, Selective declined to defend or indemnity Maucione, on the bases that: (1) the student did not allege a “bodily injury,” and that its CGL insuring agreement was therefore untriggered; (2) the student’s bodily injuries, if any, were expected or intended from the standpoint of Maucione, and therefore excluded from coverage; and (3) the abuse or molestation exclusion, described above, operated to bar coverage.

Eventually, the Superintendent and the two administrators settled with the student, the amount of which was paid by Selective. At the same time as the settlement with the Superintendent and administrators, Maucione and the student entered into a separate settlement agreement, by which Maucione agreed to pay $500,000 in resolution of the student’s claims against him, subject to an assignment of rights to the student to collect that money from Selective herself. Following the consummation of that settlement, the student commenced this declaratory judgment action against Selective.

On appeal from the order on summary judgment, the central question was whether Selective had sufficiently established that Maucione’s actions were intentional. In making this analysis, New Jersey courts employ either a subjective intent to injure, or, in some circumstances, presume an intent to injure from the objective circumstances. As the Appellate Division noted, while the current trend seems to favor a subjective inquiry into the actor’s actual intent, the actor’s intent to injure can be presumed from the act itself where the act was “particularly reprehensible.” The Court also noted that, with respect to sexual assault claims in particular, an adult of ordinary intelligence and experience would certainly know, and should expect, some physical or psychological injury to result from the act of sexual abuse.

Here, given the criminal plea, it was undisputed that Maucione committed the act of sexual abuse against the student. The Court noted that Maucione was an educator, and was certainly an adult of average intelligence, and therefore should have expected that his conduct would have resulted in injuries to the student.

For this reason, the Appellate Division affirmed the ruling of the motion court, finding no obligation to defend or indemnify Maucione for his conduct.

 

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

 

08/12/26         Cincinnati Ins. Co. v. Owens
United States Court of Appeals, Fourth Circuit
Failure to Notify Insurer of Prior to Default Results in Denial and MCS-90 Applied Only to the Named Insured Listed on the Policy

Cincinnati provided auto coverage to WSC. WSC employed Hunt who got into an accident with McLean. McLean died in the accident. Levi Owens, the representative of McLean’s Estate (“Estate”), brought a Wrongful Death action in South Carolina State Court. Hunt defaulted and a judgment was entered against him. A Special Referee awarded $100,000 in damages to the Estate due to Hunt’s negligence and recklessness.

Hunt later moved to vacate the default. While Hunt’s motion pended, Cincinnati sued Hunt, the Estate, and WSC in federal action seeking a declaration that Cincinnati owed no duty to defend and indemnify Hunt. Cincinnati denied coverage since it received notice after the default was entered against Hunt. The Estate moved to Amend its Answer asserting counterclaims that Cincinnati was still obligated to provide coverage under the MCS 90 Endorsement. As the Estate’s Motion pended, Cincinnati moved for summary judgment.

The District Court denied the Estate’s motion as futile since the MCS 90 applied only to WSC as the Named Insured, not Hunt. The court also held that Hunt and WSC failed to provide Cincinnati with timely notice of the claim and Wrongful Death actinon. Therefore, Cincinnati owed no duty to defend or indemnify Hunt.

The Estate appealed on the grounds that (i) the coverage action should been stated due to Hunt’s motion to vacate; (ii) the Estate’s MCS 90 argument was not futile; and (iii) summary judgment was premature.

On the first issue, the Court of Appeals found a stay unnecessary. Cincinnati’s duty to defend presented a justiciable controversy as Cincinnati received notice of the claim and thus, the defense obligation potentially arose. Cincinnati’s potential duty to indemnify also raised a justiciable controversy since Hunt’s liability had already been determined due to the default judgment. The court reasoned Hunt’s pending motion to vacate did not affect the finality of the Wrongful Death action or suspend its operation. Under South Carolina law, the default judgment itself was final and conclusive, unless Hunt successfully prosecuted an appeal. Thus, the Estate failed to persuade the court of the necessity of a stay.

The Estate was also unsuccessful on the MCS 90 issue. Under the Federal Motor Carrier Safety Act and its corresponding regulations, the endorsement acts as a surety to protect the public. The endorsement provides coverage in the event the endorsed policy itself provides no coverage. The District Court interpreted the term “insured” to refer to as the policy’s Named Insured. Since the policy did not name Hunt as the Named Insured, the MCS 90 did not provide coverage to Hunt. Therefore, the proposed amendment remained futile.

The Court also deemed Cincinnati’s motion timely. It reasoned the Estate’s arguments were underdeveloped. The Court also rejected the assertion the Estate lacked facts to justify its opposition to Cincinnati’s motion as the Estate conducted discovery around the MCS 90.

Editor’s Note: There is also an abstention argument and application of the Nautilus factors. But that analysis also favored Cincinnati.

 

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

Nothing new to report on from me this edition.

 

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

08/12/26        New York Senate Bill S10267
New York State Senate
Proposed Legislation Requiring Insurers to Disclose All Available Endorsements for Homeowners’ Liability Insurance Policies During the Application Process

Senate Bill S10267, introduced on May 11, 2026, seeks to amend the Insurance Law by adding a new section 3463 requiring insurers offering homeowners’ insurance policies to disclose all available endorsements as part of the application process.

The bill would require plain language descriptions of the coverage added by each endorsement so that homeowners can better understand optional coverages available beyond the base homeowners’ policy.

The sponsor memo explains that endorsements are intended to bridge gaps in coverage for homeowners with unique situations or specialized interests, but homeowners may not learn of available endorsements until after a loss occurs, when the coverage would have been useful.

If enacted, the act would take effect on the first of January next succeeding the date on which it becomes law and would apply to contracts entered into, renewed, modified, or amended on or after that effective date.

Bill S10267 was referred to the Senate Insurance Committee on May 11, 2026. We will continue to monitor the Bill.

 

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

08/11/26        Rebfroe v. USAA Gen. Indem. Co.
Eleventh Circuit Court of Appeals
Court Dismisses Bad Faith Claim Finding Innocent-Insured Exclusion Applicable

A father and a daughter owned a house together in Alabama though only the daughter lived in the house. The father and daughter did not get along; the father received a restraining order against his daughter years earlier, and they had not spoken outside court for five years. In the father's brief to the court, the father admitted that the two hated each other.

In January 2020, the father, when shopping for insurance for the home, told USAA that he thought his daughter was in the process of setting things up to burn the house down because she was moving furniture. The daughter claimed that she moved sentimental items out of the home because she heard that her father and ex-husband were planning on burning the house down. Despite this, USAA issued a $500,000 policy for the house. After the policy was issued, the daughter called USAA to tell them about her father's history with house fires, and how she believed he was planning to burn this house down too.

"A few weeks later-- surprise!-- the house burned down" and the father submitted a claim to USAA. The investigation conducted by USAA revealed the fire was consistent with arson and USAA disclaimed coverage to the father and daughter believing that either one had set the fire, and regardless of which one set the fire, the policy's innocent-insured exclusion precluded coverage for the entire loss.

The father sued USAA alleging breach of contract and tortious bad faith and after discovery, both sides moved for summary judgment. The district court granted summary judgment to USAA dismissing Renfroe's bad faith claim but found USAA's innocent-insured exclusion void as a matter of law.

On appeal, the 11th Circuit reversed the district court's decision, holding the innocent-insured endorsement enforceable, and upholding the district court's decision granting USAA summary judgment on the bad faith claim.

On the bad faith claim, the 11th Circuit explained that in Alabama, a bad faith claim arises for an insurer's intentional refusal to settle a direct claim where there is either no lawful basis for the refusal coupled with actual knowledge of that fact or intentional failure to determine whether there was any lawful basis for such refusal.

The Court found that USAA had an arguable reason not to pay out (the innocent-insured exclusion) because it had evidence that the father had intentionally started the fire, and the burden of proving arson in Alabama is not a particularly heavy lift. Thus, USAA had offered enough evidence at summary judgment to support a good faith arson defense, and the bad faith claim was dismissed.

 

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

07/29/26         Cessay v. Gotham Bronx, LLC
Appellate Division, Second Department
Appellate Division Upholds Grant of Defendants’ Serious Injury Threshold Motion

Plaintiffs commenced an action to recover for personal injuries allegedly sustained in connection with a motor vehicle accident. Omar Cordoba was operating a truck owned by Gotham Bronx, LLC, and Gotham Ready Mix, LLC (collectively, "defendants") which struck the plaintiff’s residence.  Defendants filed a motion for summary judgment on the ground that none of the plaintiffs suffered a serious injury within the meaning of Insurance Law § 5102(d) in connection with the impact. In an Order dated August 8, 2024, the Supreme Court granted defendants’ motion. Upon reargument, the Supreme Court upheld its decision in a subsequent Order dated August 28, 2024. 

On appeal, the Appellate Division, Second Department, determined that the defendants met their prima facie burden. See, Toure v Avis Rent A Car Sys., 98 NY2d 345, 774 N.E.2d 1197, 746 N.Y.S.2d 865; Gaddy v Eyler, 79 NY2d 955, 956-957, 591 N.E.2d 1176, 582 N.Y.S.2d 990. In support of their application, defendants submitted the plaintiffs’ medical records from their treating therapist. The foregoing showed, prima facie, that neither plaintiff sustained a psychological injury in connection with the subject accident that constituted a serious injury under § 5102(d) of the Insurance Law (see Perez v Dixon, 166 AD3d 913, 914, 85 N.Y.S.3d 878; see also McGovern v Walls, 201 AD2d 628, 607 N.Y.S.2d 964).

The plaintiffs failed to raise a triable issue of fact. The Appellate Division, Second Department, rejected the plaintiffs’ prematurity argument (see, Quintanilla v Mark, 210 AD3d 713, 714, 177 N.Y.S.3d 687; CPLR 3212[f]; Lopez v WS Distrib., Inc., 34 AD3d 759, 760, 825 N.Y.S.2d 516; White v U-Haul Co. of Ariz., 226 AD3d 851, 853, 209 N.Y.S.3d 147). The plaintiffs did not demonstrate that additional discovery may lead to relevant evidence required to oppose the defendants’ motion or that facts essential to the plaintiffs’ opposition were exclusively in the defendants’ knowledge and/or control. The Appellate Division, Second Department determined that the plaintiffs' remaining contentions were without merit.

Accordingly, the Appellate Division, Second Department, held that the Supreme Court properly granted the defendants’ motion dismissing the plaintiffs’ causes of action to recover damages for personal injuries.

 

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

Alexander G. Henlin
[email protected]

Iryna N. Dore
[email protected]

 

08/07/26        O’Connor v. MAG Mutual Insurance Company
Supreme Judicial Court, Massachusetts
Prescription of Addictive Medication for Non-Qualifying Patient to Keep Her Romantically Involved With Prescribing Doctor Is “Professional Service” for Purposes of Regulatory Defense Coverage

A medical professional liability insurance policy required the insurer, inter alia, to provide the physician with “limited regulatory defense” coverage for proceedings regarding his medical license during the coverage period. The policy defined “regulatory defense” in medical license proceedings as “[d]efense costs for any investigation, hearing, formal action or administrative proceeding brought against [the insured] by any licensing board … or regulatory authority which arises out of” either “a covered claim” or “a patient complaint about [the insured’s] professional activities.” The policy defined “professional activity” as “[p]roviding … medical professional services by [the insured] to a patient.” It did not define “professional services.”

A former patient’s spouse filed a complaint with the board that alleged that: (i) an abuse prevention order had been issued against the physician for stalking the patient, leaving harassing voicemail messages on her telephone, stealing her mail, and surveilling her property; (ii) the physician had violated the abuse prevention order by trespassing onto the patient’s property and attempting to break into her house; (iii) an arrest warrant had been issued against the physician as a result; and (iv) the physician had been in a romantic relationship with the patient from 2008 to 2016 and had prescribed an addictive medication to her for about six years during this period “as her primary care physician would not fill anymore orders [sic] as he was concerned about the addictive nature of the drug.”

A board investigation confirmed the issuance of a warrant for the physician’s arrest for trespass, violation of an abuse prevention order, and attempting to commit a crime at the patient’s property. The investigation also confirmed that the physician had prescribed an addictive medication to the patient. As a result, in February 2020, board counsel filed a motion for summary suspension of the physician’s certificate of registration to practice pending the outcome of a hearing on the revocation of the physician’s license to practice medicine.

The physician requested regulatory defense coverage for the board proceedings under the policy. The insurer denied coverage based upon determination that the husband’s criminal conduct allegations did not concern the physician’s professional activities.

Reversing the entry of judgment for the insurer, the Massachusetts Supreme Judicial Court disagreed. It noted that the duty to provide regulatory defense coverage is triggered by the inclusion of any potentially covered allegations of “professional services.” The Court held that whether a particular act constitutes “professional services” depends on several relevant considerations, including “that membership in [the] profession has traditionally been recognized as requiring the possession of special learning,” that “when rendering patient care, [said professionals] are called upon to use or apply special learning,” and the existence of a “causal relationship between the alleged harm and the complained-of professional act or service, that is, it must be a medical or dental act or service that causes the harm, not an act or service that requires no professional skill.”  The focus of this assessment is “the act or service performed rather than the fact that the alleged wrongdoer was a physician.” 

Applying this standard, the Court confirmed that the complaint allegations centering on the physician’s criminal conduct did not comprise professional services. The Court held, however, that “the operative complaint can be read to allege that, at the time the physician prescribed the addictive medication, he was rendering care to the patient, who had been receiving prescriptions for the medication at issue from her primary care physician.” It concluded that, under the circumstances of the case, “the allegations of the operative complaint regarding the prescription of the medication to the patient constitute providing a professional service.” As a result, the insurer’s duty to provide regulatory defense coverage was triggered.

07/30/26        Horsman v. Travelers Prop. Cas. Co. of Am.
Supreme Court, Rhode Island
“Limit of Insurance” Provision That Confined Stacking of Underinsured Motorist Coverage to Individual Named Insured Did Not Provide Illusionary Coverage Even Though Policy Did Not List Individual Named Insured

Mr. Horsman died as a result of a motor vehicle accident while in the course of his employment. Mr. Horsman’s widow requested underinsured motorist coverage under a commercial auto policy insuring twenty-six vehicles owned by the employer. The claimant requested stacking of underinsured motorist coverage for each vehicle ($26,000,000). The insurer paid the per vehicle’s $1,000,000 limit for underinsured motorist coverage.

As grounds for its denial of the request for stacked limits, the insurer relied on the “Limit of Insurance” provisions that stated that “[i]f there is more than one covered ‘auto’, our limit of insurance for any one ‘accident’, if ‘bodily injury’ is sustained by an individual Named Insured or any ‘family member’, is the sum of the limits applicable to each covered ‘auto’.” The insurer agreed that the decedent was an “insured” under the Policy because he was operating a “covered auto” at the time of the accident but denied the request for stacking because the decedent was not an “individual Named Insured.”

The claimant argued that the “stacking benefit” was illusionary because the named insured was a corporation and there was no “individual Named Insured” under the Policy. The Court rejected the argument after finding that “[t]he mere exclusion of the decedent as an individual named insured did not render UIM coverage under the Policy illusory because coverage was not precluded – there was a $1,000,00 UIM coverage limit per accident” that the claimant collected. 

 

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.

 

07/30/26        Liptrot v. Vancouver College Limited
British Columbia Supreme Court (trial level)
St. John’s to Vancouver: How Insurance Coverage Uncertainty Shaped a $30 Million Class Settlement

The Christian Brothers of Ireland in Canada Ltd. is the Canadian branch of a lay order of Roman Catholic educators.  Founded in Ireland in the early 19^th century, the Order created and operated schools and orphanages around the world.

Mount Cashel Orphanage in St. John’s, Newfoundland, and St. Thomas More Collegiate and Vancouver College, both in Vancouver, are three such institutions for boys founded by the Canadian branch of the Order.  For decades, the Christian Brothers operated all three institutions.

Beginning in 1975, the boys at Mount Cashel began speaking out about the physical and sexual abuse that they were enduring. A police investigation was initiated and shut down in response to these reports, but it was re-opened in 1989 in light of further reports of abuse and public pressure.

A public inquiry into these allegations began in 1989. The Roman Catholic Diocese of St. John’s initiated its own parallel inquiry. The public inquiry revealed that between 1976 and 1983, six Christian Brothers from Mount Cashel were transferred to another Christian Brother school in Vancouver, St. Thomas More Collegiate, which is affiliated with Vancouver College. One of them, Edward English, had confessed to the Royal Newfoundland Constabulary in 1975 that he molested Mount Cashel boys.

Former students of St. Thomas More allege that English and the other five Christian Brothers continued their established pattern of molestation and physical abuse while teaching at St. Thomas More and the affiliated school, Vancouver College.

In the 1990’s, four of the six brothers who were transferred were criminally convicted for the Mount Cashel abuse, including English.

In 2021, a class action began in British Columbia on behalf of the former students at the Vancouver schools claiming compensation for the abuse sustained. In 2023, the class was certified by court order as:

All students enrolled at Vancouver College, between 1976-2013, or St. Thomas More, between 1976-1989, who claim they were physically, sexually, or psychologically abused by current or former members of the Christian Brothers.

The defendants in that class action were the two Vancouver schools, the Vancouver Roman Catholic diocese, the St, John’s Diocese, in addition to the six Christian Brothers who were transferred to Vancouver from St. John’s.

After certification, the parties prepared for a complex, lengthy trial. While the litigation was underway, a coverage issue was brewing.

The insurers of the Vancouver schools were carefully watching the coverage issue facing The Roman Catholic Diocese of St. John’s. That Diocese was contesting a denial of coverage arising out of the Mount Cashel class action which, in turn, alleged abuse perpetrated by the same Christian Brothers who were defendants in the British Columbia action.

The facts behind that issue are found in the litigation styled, Roman Catholic Episcopal Corporation of St. John’s v. Guardian Insurance Company of Canada.  In that case the RCEC St. John’s acknowledged it had received information about its priests sexually abusing youth during the late 1970’s and early 1980’s but did not disclose it to child protection authorities, nor to Guardian Insurance Company who issued CGL occurrence-based coverage to the RCEC St. John’s between 1980 and 1985. The St. John’s Diocese argued it had not considered the information important for insurance reasons.

Evidence from insurance underwriters who testified at trial in that case stated that insurers at the time did not consider sexual abuse material information from religious institutions. They generally considered them low hazard. Therefore, brokers didn’t ask churches in the early 1980s about allegations of sexual abuse, but this changed in response to an increased understanding of abuse and discussions within the industry about how to address it.

Despite this, the Newfoundland Supreme Court held that the Diocese had a duty of utmost good faith to disclose the information.  The court found that had it been disclosed it was unlikely that Guardian would have issued a policy. Therefore, Guardian was within its rights to deny coverage to the St. John’s Diocese.

That decision was under appeal as the parties in the Vancouver action prepared for litigation.  Similar to what transpired in St. John’s, the same ‘knowledge’ and ‘failure to disclose’ issues were present in this case. That meant that there was a significant possibility that there would be no insurance coverage for the proven claims at the close of the litigation.

The 35-day common issues trial in the British Columbia class action was set for October 2024. Formal mediation occurred in April, July and August 2024. Formal mediation occurred in April, July, and August 2024. A settlement did not emerge from the mediation process; however, negotiations continued. Settlement offers were exchanged in 2024-2025. In February 2026 a settlement was reached and the terms of which were fully negotiated. The agreement capped the Defendants’ liability at $30 million. A claims process was agreed upon with tiered levels of recovery dependent upon the severity of the abuse.

The last step to resolve the class action was to obtain court approval of the settlement. That application was heard on April 30, and July 6 and 7, 2026.

Two weeks before the first day of argument in that approval process, the Newfoundland Court of Appeal released its decision in the appeal of the Guardian insurance coverage dispute on April 15, 2026. That court upheld the lower court decision: Guardian was not obliged to extend coverage in view of the non-disclosure.

 

The Analysis of the British Columbia Supreme Court

The Court heard that more than 200 class members had come forward on a confidential basis. About 10% allege sexual abuse that they sustained as boys. The Court endorsed class counsel’s view that $30 million reflected the outer boundary of what the defendants and their insurers were likely to pay given coverage fragility, and that proceeding to judgment risked losing insurance altogether.

Beyond dollars, the settlement offered a non‑adversarial, trauma‑informed process with individualized, confidential assessments and the prospect of earlier compensation.   The alternative—multi‑year litigation, a hard trial on common issues followed by individual causation and damages phases—posed privacy harms, re‑traumatization risk, and delay.   The Court recognized that many class members strongly preferred to maintain privacy and control over their personal accounts, which the settlement structure was designed to respect.

On a cost‑benefit analysis, the Court found the settlement clearly preferable to continued litigation, citing the prospect of a long common‑issues trial, appeals, then adversarial individual proceedings.  Crucially, the Court accepted that insurance coverage uncertainty materially limited both the realistic monetary recovery and the enforceability of any eventual judgment, making the negotiated sum and structure prudent.

On that basis, the Court approved the settlement as being “fair, reasonable and in the best interests of the Class Members as a whole.”

 

Comment

This case is a study as to why coverage disputes are sometimes best resolved through mediation.  

The Vancouver action took nearly five years to move from its 2021 filing to a $30 million settlement.  The coverage question that hung over this case — whether an insurer can void coverage for an institution’s non-disclosure of known abuse allegations — was dependent on a very similar if not identical coverage issue that was being litigated in Newfoundland. The uncertainty as to outcome in Newfoundland was the coverage issue in the British Columbia action.

The Vancouver litigants were not just looking at the risks of a common issues trial;  they were operating in the shadow of coverage litigation that they did not control. Every step in the Newfoundland litigation, from the 2024 trial decision through an appeal that was not heard until December 18, 2025, and not decided until April 15, 2026, left the British Columbia parties negotiating the risk that the Newfoundland trial decision would be reversed. The existence of the Newfoundland coverage litigation that was playing out publicly resulted in uncertainty in British Columbia but, as these litigants demonstrated, uncertainty creates opportunity for resolution.

Early mediation of a coverage dispute lets insurers quantify and manage that exposure in a confidential process and, in doing so, gives all sides more room to negotiate the liability claims sooner. The British Columbia litigants were impliedly advising the court that coverage certainty, even negotiated certainty, is worth more to both sides of the ‘v.’ than the chance of a better outcome three years and one appeal from now.

 

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