Coverage Counsel

Advanced Social Media Research Tools & Resources

noreply@blogger.com (Roy A. Mura) — Sat, 18 May 2013 17:31:00 +0000

Earlier this week I delivered Episode 56 of my social media research presentation to a major P&C insurer's enterprise risk prevention committee or group. That was the 56th time I've spoken on the potential value of SM content to insurance and law enforcement industry groups since May of 2010 when the good folks out at the Rocky Mountain IASIU Chapter had me present what I then suspected might be or become a popular topic. It was and has and continues to be so.

Much has changed in my presentation over the past three years. New social networks have emerged and ascended onto the Top 10 list of most popular SN sites, while some of the original Top 10 sites have slipped in the rankings. And new techniques, tools and resources have appeared to assist SM researchers in their efforts to find, secure, verify and then utilize SM content in responsible business decision making. For those who have not attended one of my more recent episodes, in no particular order here are some of my favorite newcomers to the SM research party:

TWITTER AGGREGATORS

Twitter has grown in popularity and use since May 2010 and much content that once was deposited onto a Facebook page or wall now gets blasted out into the Internet 140 characters at a time. Spotting and finding those contrails of relevant SM content have become somewhat easier.

In the last five or so episodes of my SM research presentation I have told the story of finding and then reporting what likely is an actual case of a fraudulent insurance claim. I run a Twitter aggregator called TweetDeck, which enables me to monitor from my desktop and laptop computers my two Twitter accounts, key words, hash tags, and individual Twitter users who may be under investigation. There are other Twitter aggregators out there, but I prefer TweetDeck.

In preparing for one of my recent SM research presentations I noticed an interesting tweet in my TweetDeck’s “Insurance Fraud” column, which pulls in any English-language tweet that contains the words insurance fraud. After a bit of basic SM research, I had what appeared to be an actual outing of someone’s fraudulent auto physical damage claim. I called and then emailed the tweet links to the local special investigator of the auto insurer identified in one of the tweets, and I understand he confirmed that the insured had made a stolen-recovered-crashed claim when in fact a Twitter account bearing his name and likeness admitted to having crashed his car while drunk. Getting a twitter account and using an aggregator like TweetDeck can make Twitter research and monitoring easier and more efficient.

TWITTER CONTENT SEARCHING

Have you ever tried to find someone’s old tweets? For unprotected Twitter accounts try All MyTweets, which will display up to approximately 3,200 of the account’s most recent tweets on one page. Unfortunately, Twitter limits the number of tweets Twitter API (Application Programming Interface) services such as All My Tweets can retrieve to 3,200, and I have yet to find a way around that limitation. Also, if a person has at some point changed their unprotected Twitter account to a protected Twitter account, compilers such as All My Tweets won’t work. Nonetheless, displaying an unprotected Twitter account’s last 3,200 tweets on one page enables word searching (Ctrl+F or Command+F) on that page for key terms. Try it. Tweet Tunnel and Snap Bird do essentially the same thing as All My Tweets, but in bunches rather than all on one page. They are also limited to approximately 3,200 tweets.

For word-specific or phrase-specific Twitter searches, try Twitter’s Advanced Search engine. I use this page frequently for searching tweets to or mentioning certain accounts, especially when the 3,200-tweet limit tweet compilers like All My Tweets prevents me from finding older tweets of an active Twitter account. I also use the “To these accounts” or “Mentioning these accounts” Advanced Search fields to find tweets to or mentioning persons who have protected Twitter accounts. Valuable substantive or relational information can sometimes be found from such “to” or “mentioning” tweets.

LOCATION-BASED TWITTER SEARCHING

Location-enabled tweets can carry data that provide the means of determining where the device that broadcast the tweet was located at the time. Creepy remains an interesting and useful geolocation data aggregator for Twitter, although it can be buggy at times and works only on PCs.

There are other methods for conducting location-based Twitter searches. If you want to find tweets about a particular word or phrase within a particular radius of a particular town or city, enter the desired word in a Twitter search bar followed by “near:[city,state] within:[x]mi”, like this: arson near:Buffalo,NY within:50mi

If you want to search around an actual address, use GoogleMaps or another mapping site to obtain and copy the X- and Y- geocoordinates ofthe address then use the following search nomenclature: [key word] geocode:[geocoordinates],Xmi” into a Twitter search box, replacing the geocoordinates with the location you want to search and the “X” with the radius of your desired search in miles. For example, the search term for searching “insurance fraud” within 10 miles of my office would be: "insurancefraud" geocode:42.886496,-78.873358,10mi

Bing Maps also offers a method of viewing recent tweets at or around a particular location. Best accessed through IE or Safari (the “explore map apps” menu option does not appear when using Chrome), Bing’s Twitter Maps app, when it works, offers another easy method of viewing recent tweets near a particular location. Here’s what recent tweets near my office in Buffalo, New York look like. Be sure to search the address before loading the Twitter Maps app.

FACEBOOK GRAPH SEARCH

Facebook recently rolled out its Graph Search feature, which is still in beta. Why should you consider requesting and trying Graph Search Beta? Because it will significantly enhance your search capabilities within Facebook. For example, you find an individual’s FB page but it is friends-only protected and your company does not allow pretexting. Dead end? Maybe not. With Graph Search (which FB just earlier this week enabled on my FB account after I applied several weeks ago) you would be able to search for photos of the person appearing on other persons’ FB pages. What once required a time-consuming manual search through an individual’s friends’ pages and photo albums can now be done in a single search using FB’s Graph Search toolbar. I can’t think of a single reason why any investigator who does SM research would NOT want to sign up for FB’s Graphic Search.

REVERSE IMAGE SEARCHING

Approximately a year ago I began incorporating reverse image searching into all of my SM research projects. Google offers an excellent reverse image search engine that can locate additional SN and web sites on which an individual’s image appears. Once you have the URL of an online image or have downloaded an image onto your computer, use Google Images search engine to find that image elsewhere on the Internet.

Another reverse image search engine I use is Tin Eye. Works pretty much the same way as Google Images’ reverse image search engine, but Tin Eye found only two matches for this image of me whereas Google Images found five matches.

* * * * *

If anyone who reads this post has any other advanced SM research tools or resources they would like to share, please do so in the comments to this post. Updated and tweaked versions of both my basic and advanced SM research presentations are available now and either are or can be coming to your area soon. If you would like either or both presentations for your organization or company, contact me here.

Emergency Adoption of the Twelfth Amendment to New York Insurance Regulation 64

noreply@blogger.com (Roy A. Mura) — Fri, 30 Nov 2012 01:58:00 +0000

This afternoon New York Governor Andrew Cuomo announced four new measures or actions being taken in New York purportedly to expedite and in response to Sandy-related insurance claims:

today's issuance by the New York Department of Financial Services of an emergency amendment to New York Insurance Regulation 64 (11 NYCRR Part 216) reducing from 15 business days to 6 business days the time for insurers "to commence" an investigation of certain types of claims "occurring from October 26, 2012 through November 15, 2012" in the 10 designated counties (Bronx, Kings, Nassau, New York, Orange, Queens, Richmond, Rockland, Suffolk or Westchester) and, if they wish their investigation to include an inspection of the damaged or destroyed property, to conduct that inspection within that 6-day period;
the inclusion within that emergency regulation of a provision allowing claimants to commence certain repairs immediately and before the insurer has had an opportunity to inspect the damaged property "[w]here necessary to protect health or safety" and provided the claimant submits proof of loss documentation;
the issuance of Executive Order Number 82 temporarily suspending from today and until further notice the requirements of New York Insurance Law § 2108 so that the DFS may more easily issue temporary public adjuster licenses that authorize such temporary licensees to adjust property/casualty insurance claims in the counties of Bronx, Kings, Nassau, New York, Orange, Queens, Richmond, Rockland, Suffolk and Westchester that are commenced during the period this executive order remains in effect; and
the launching of an "online report card system concerning insurance companies who are operating in the areas that were affected by Hurricane Sandy."

You can watch the Governor's press conference, including the Q&A at its end, here:

New York property insurers should take note of the following:

Twelfth Amendment to New York Insurance Regulation 64 (11 NYCRR Part 216)

Amendment of Existing Subsection 216.5(a)

Notwithstanding what the Governor's and DFS's press releases say or imply, there never was and still is no actual requirement in Regulation 64 that a New York property insurer inspect a claimed loss. Until today section 216.5(a) only required insurers subject to that section to "establish procedures to commence an investigation of any claim filed by a claimant, or by a claimant’s authorized representative, within 15 business days of receipt of notice of claim." That subdivision was amended ever so slightly by renumbering it as 216.5(a)(1) -- to allow for the addition of subsection (a)(2) -- and by deleting the words "establish procedures to" and changing ""receipt of" to "receiving". The amended subsection, which is applicable to ALL insurers that are subject to section 216.5, now begins by providing that such an insurer

shall commence an investigation of any claim filed by a claimant, or by a claimant’s authorized representative, within 15 business days of receiving notice of claim.

Of course, the regulation nowhere defines what suffices to "commence" an investigation of a filed claim. Presumably that is something more than merely acknowledging a claim, however, inasmuch as section 216.4(a) already requires insurers within 15 business days to acknowledge in writing their receipt of all claim notifications.

Addition of New Subsection 216.5(a)(2)

The bulk of today's emergency regulation is its new paragraph (2) of section 216.5(a). Here's the language of that new paragraph, which took effect today:

(2)(i) Notwithstanding paragraph one of this subdivision, for claims that would otherwise be subject to the provisions of paragraph one the provisions of this paragraph shall instead apply, with respect to any claim occurring from October 26, 2012 through November 15, 2012 in the counties of Bronx, Kings, Nassau, New York, Orange, Queens, Richmond, Rockland, Suffolk or Westchester, including their adjacent waters, with respect to

(a) loss of or damage to real property;
(b) loss of or damage to personal property; or
(c) other liabilities for loss of, damage to, or injury to persons or property.
(ii) Every insurer shall commence an investigation of any claim filed by a claimant, or by a claimant’s authorized representative, within six business days of receiving notice of claim, provided, however, that if a claimant, or the claimant’s authorized representative, filed a claim
between October 26, 2012 and November 29, 2012, then the insurer shall commence an investigation of the claim within six business days after November 29, 2012 or 15 business days of receiving notice of claim, whichever is sooner. If the insurer wishes its investigation to include an inspection of the damaged or destroyed property, the inspection, whether performed by the insurer, an independent adjuster, or other representative of the insurer, must occur within the time frames specified in this paragraph.

(iii) An insurer shall furnish to every claimant, or claimant's authorized representative, a notification of all items, statements and forms, if any, that the insurer reasonably believes will be required of the claimant, within six business days of receiving notice of the claim.

(iv) A claim filed with an agent of an insurer shall be deemed to have been filed with the insurer unless, consistent with law or contract, the agent notifies the person filing the claim that the agent is not authorized to receive notices of claim.

(v) Where necessary to protect health or safety, a claimant may commence immediate repairs to heating systems, hot water systems, and necessary electrical connections, as well as exterior windows, exterior doors, and, for minor permanent repairs, exterior walls, in order to enable property to retain heat, and any policy requirement that the policyholder exhibit the remains of the property may be satisfied by the policyholder submitting proof of loss documentation of the damaged or destroyed property, including photographs or video recordings; material samples, if applicable; and inventories, as well as receipts for any repairs to or replacement of property. This subparagraph does not apply to claims under flood policies issued under the national flood insurance program.

Insurers subject to section 216.5(a)(2) should take note of the following:

Temporal Limitation of 216.5(a)(2) -- 216.5(a)(2)(i)

This new subdivision expressly only applies to "any claim occurring from October 26, 2012 through November 15, 2012". Now, I'm not sure when a claim "occurs" and whether this new subsection should have read "any loss occurring", but this new subsection does seems to be temporally limited to claims "occurring from October 26, 2012 through November 15, 2012". If someone could explain why November 15th was selected as the end date, I would be appreciative. That's a period of 20 calendar days.

Territorial Limitation of 216.5(a)(2) -- 216.5(a)(2)(i)

This new subdivision applies only to claims "occurring" in the counties of Bronx, Kings, Nassau, New York, Orange, Queens, Richmond, Rockland, Suffolk or Westchester, and their adjacent waters. Once again, I presume the Department meant loss rather than claim when speaking of something "occurring". I don't know what it means for a claim to "occur" in the Bronx, or Staten Island, or Long Island. Claims stems from losses and are asserted, filed, or made; they don't really occur, do they? Nevertheless, whatever is meant by "occurring", it must have taken place in one of these 10 counties or their adjacent waters for this new paragraph and its new requirements to apply.

Type Limitation of 216.5(a)(2) -- 216.5(a)(2)(i)

This new subdivision only applies to three types of claims or losses:

loss of or damage to real property;
loss of or damage to personal property; or
other liabilities for loss of, damage to, or injury to persons or property.

I know what Types 1 and 2 are and think Type 3s are 3rd-party BI and PD liability losses and resulting claims. Right?

Contrary to what may become or already is a widespread belief, however, no part of this emergency regulation is limited to Sandy-related claims. As long as a claim "occurs" within the designated period and within one of the designated counties and is of one of the above three types, the new requirements ostensibly apply.

Reduction of Time to "Commence" Investigation to Six (6) Business Days -- 216.5(a)(2)(ii)

For claims to which new subsection 216.5(a)(2) applies (see above), the insurer's time to "commence" its investigation of such claims is now either

six (6) business days after today, November 29, 2012 -or-

15 business days of receiving notice of the claim

whichever is sooner. During Governor Cuomo's press conference, Superintendent Lawsky explained that if a claim was already filed with the insurer, the insurer would have the lesser of either the balance of the previous 15-day period or 6 days from today to commence its investigation and, if desired, to inspect the loss. I'm interpreting and adding the latter part; both Governor Cuomo and Superintendent Lawsky made it sound like this new emergency regulation would impose an obligatory inspection requirement on all applicable insurers for all applicable claims, but it doesn't read that way. Notice that the second sentence of 216.5(a)(2)(ii) reads:

If the insurer wishes its investigation to include an inspection of the damaged or destroyed property, the inspection, whether performed by the insurer, an independent adjuster, or other representative of the insurer, must occur within the time frames specified in this paragraph.

The inspection is not a "shall"; it's an "if". And only if it's desired on qualifying claims must it then be conducted "within the time frames specified in this paragraph" which presumably (hedge here) is the sooner of either six business days from today or 15 business days from when the insurer received notice of the claim.

Reduction of Time to to Six (6) Business Days to Furnish to Claimants Stuff that Will Be Required of Them -- 216.5(a)(2)(iii)

This seems relatively straightforward. For qualifying claims, insurers shall furnish to every claimant, or claimant's authorized representative, a notification of all items, statements and forms, if any, that the insurer reasonably believes will be required of the claimant, within six (6) business days of receiving notice of the claim.

Claims Filed with the Insurer's Agent -- 216.5(a)(2)(iv)

Also pretty straightforward. Unless a producing agent notifies the the person filing the claim that the agent is not authorized to receive notices of claim, claims filed with an agent of a qualifying insurer will be deemed to have been filed with the insurer.

Immediate Repairs Provision -- 216.5(a)(2)(v)

Notwithstanding the new provisions of 216.5(a)(2)(ii), claimants of qualifying claims (see above) may commence certain immediate repairs "[w]here necessary to protect health or safety". Immediate repairs may be made to

heating systems, hot water systems, and necessary electrical connections -and-

exterior windows, exterior doors, and, for minor permanent repairs, exterior walls, in order to enable property to retain heat[.]

This subdivision further provides that any policy requirement that the policyholder exhibit the damaged property "may be satisfied by the policyholder submitting proof of loss documentation of the damaged or destroyed property, including photographs or video recordings; material samples, if applicable; and inventories, as well as receipts for any repairs to or replacement of property."

Public Adjuster-repped Claims

Our governor today announced the temporary suspension of certain licensing requirements of Insurance Law § 2108 so that more public adjusters could be temporarily licensed to help New York insureds with their property claims, but did anyone at the DFS consider that section 216.2(d) of Regulation 64 already provides, and continues to provide, since it was left unamended and unaffected by this emergency regulation, that

... subdivision (a) of section 216.5 of this Part shall not be applicable to policies of insurance where the claimant is represented by a public adjuster or a person acting in the capacity of a public adjuster pursuant to the provisions of article 21 of the Insurance Law[?]

So what become of the new requirements of subparagraph (2) of 216.5(a) in PA-repped qualifying claims? Certainly an argument could be made they don't apply.

Executive Order Number 82

Which brings us to Executive Order Number 82, which you can read in its entirety for yourself if you care to. My read of this executive order is that it merely permits or creates the category of a temporary public adjuster who, upon issuance of such a license, will be authorized only "to adjust property/casualty insurance claims in the counties of Bronx, Kings, Nassau, New York, Orange, Queens, Richmond, Rockland, Suffolk and Westchester that are commenced during the period for which this Executive Order is effective[.]"

Once again, I'm not sure what is meant by "claims ... that are commenced" within this executive order's period, but presumably it means claims filed on and after today and for as long as this executive order, which itself has a "until further notice" expiration date, remains in effect.

Under this executive order, the requirements to obtain such a temporary PA license are:

completion of an application on a form prescribed by the Superintendent of Financial Services;
signing of such application form by a public adjuster who is licensed in this State pursuant to Section 2108 of the Insurance Law, whose license is in good standing, and who will be responsible for both the supervising of the temporary licensee either in an employer/employee relationship or other arrangement whereby the licensed public adjuster has control over the temporary licensee and the satisfactory completion of all adjustment undertaken by the temporary licensee;
the temporary licensee has not had an insurance license revoked, suspended or otherwise terminated for cause in any state in the United States in the last ten years;
the temporary licensee has not been charged with, been convicted of, or pleaded guilty to or nolo contendere with respect to a crime or misdemeanor in any state in the United States in the last ten years;
the temporary licensee has not been found liable for misrepresentation, fraud, or unethical conduct in any state in the United States in the last ten years; and
the temporary licensee is presently licensed in another state as a public or independent adjuster to adjust property/casualty insurance claims; or has 5 years prior experience within the last ten years as a public or independent adjuster adjusting property/casualty insurance claims in the United States; or has been licensed as a public or independent adjuster in New York State within the last 5 years.

Online Insurer Report Cards

For the stated purpose of "hold[ing] insurance companies accountable to consumers and allow[ing] New Yorkers to see the performance of their insurance company compared to other companies", today the DFS published online "report cards" of certain, but certainly not all, auto and property insurers that "are operating in the areas that were affected by Hurricane Sandy." (Wait, I thought it wasn't a hurricane, Governor Cuomo and Superintendent Lawsky?)

Those lucky 24 insurers or insurer groups are:

In his press conference this afternoon, Governor Cuomo spoke (at 2:00 of the video, to be exact) of the "many, many complaints" insureds have made about their insurers following the ravaging ~~Hurricane~~ ~~Super Storm~~ ~~Really Big~~ Storm Sandy. Yes, Governor, I suppose 742 complaints could be called "many". But that number is the total of all complaints of the 329,156 claims reported on those report cards as of November 27, 2012, or less than ¼ of 1% of all claims filed. 99.78% is a pretty good grade on any report card in any school or industry, I would say. And the number of complaints that were warranted must be less than that. Which is why, I suppose, New Yorkers needed this emergency regulation and additional executive order right now, right?

Somewhere, some law professor who teaches administrative law must be salivating over what Governor Cuomo and Superintendent Lawsky have gifted him or her for syllabus material for an upcoming semester. Moratoriums, executive orders, and emergency regulations, oh my.

Law and sausage.

Episode 42 -- Social Media Research in Claims Investigations Training

noreply@blogger.com (Roy A. Mura) — Sat, 20 Oct 2012 17:46:00 +0000

This is for those of you who have asked me when you might be able to attend a "full" version of my social media research training presentation. I'll be delivering a 145-minute version of that interactive presentation on this coming Thursday, October 25, 2012 at the Albany Claims Association's 29th Annual Education Day in Latham, New York.

This will be Episode 42 in my now long-running series of social media research presentations. Even if you have seen one of the prior episodes, you may want to attend this one. There have been a number of important case decisions and other developments in this area that we will be discussing. Here's the seminar's agenda:

The seminar's cost is a modest $35 per person, which includes lunch. The stated registration deadline is this coming Monday, August 22, 2012, so click HERE to register and submit right away. I can't imagine they would turn away walk-ins, however, in the event you are not able to register by Monday the 22nd.

No Fishing Allowed -- Fourth Department Reverses Order Granting Discovery of Plaintiff's Facebook, MySpace and Other Internet Postings

noreply@blogger.com (Roy A. Mura) — Wed, 03 Oct 2012 16:14:00 +0000

PERSONAL INJURY – DISCOVERY – SOCIAL MEDIA CONTENT
Kregg v. Maldonado
(4th Dept., decided 9/28/2012)

Christopher Williams was injured in a motor vehicle accident while driving a motorcycle manufactured and distributed by Suzuki Motor Corporation of Japan and American Suzuki Motor Corporation. Charlotte Gregg, Williams' guardian, sued the owner and operator of the car involved in that accident and the Suzuki defendants. After initial disclosure exchanges, the Suzuki defendants learned that family members of Williams had established Facebook and MySpace accounts for him and had made Internet postings on his behalf in connection with those accounts. The Suzuki defendants served additional discovery demands on the plaintiff, requesting the "entire contents" of those and any other social media accounts maintained by or on behalf of Williams. When plaintiff refused to provide those materials, the Suzuki defendants moved to compel such disclosure. Plaintiff opposed that motion on the grounds of relevance and burden, contending that the demand for disclosure was a "fishing expedition." Supreme Court agreed with the Suzuki defendants that they were entitled to such disclosure.

In REVERSING Supreme Court's order compelling the disclosure, the Appellate Division, Fourth Department, held:

Although CPLR 3101 (a) provides for "full disclosure of all matter material and necessary in the prosecution or defense of an action," it is well settled that a party need not respond to discovery demands that are overbroad (see Optic Plus Enters., Ltd. v Bausch & Lomb Inc., 35 AD3d 1263, 1263). Where discovery demands are overbroad, " the appropriate remedy is to vacate the entire demand rather than to prune it' " (Board of Mgrs. of the Park Regent Condominium v Park Regent Assoc., 78 AD3d 752, 753). In McCann v Harleysville Ins. Co. of N.Y. (78 AD3d 1524, 1525), we addressed a similar discovery demand and concluded that the request for access to social media sites was made without "a factual predicate with respect to the relevancy of the evidence" (see Crazytown Furniture v Brooklyn Union Gas Co., 150 AD2d 420, 421). Here, as in McMann, there is no contention that the information in the social media accounts contradicts plaintiff's claims for the diminution of the injured party's enjoyment of life (cf. Romano v Steelcase, Inc., 30 Misc 3d 426, 427). As in McCann, the proper means by which to obtain disclosure of any relevant information contained in the social media accounts is a narrowly-tailored discovery request seeking only that social-media-based information that relates to the claimed injuries arising from the accident. Thus, we deny that part of the Suzuki defendants' motion to compel the disclosure of the entire contents of the injured party's social media accounts, without prejudice to the service of a more narrowly-tailored disclosure request.

The 10-Year Life Cycle of a New York Consequential Damages Claim

noreply@blogger.com (Roy A. Mura) — Tue, 02 Oct 2012 18:49:00 +0000

COMMERCIAL PROPERTY – CONSEQUENTIAL DAMAGES
Stern v. Charter Oak Fire Ins. Co.
(4th Dept., decided 9/28/2012)

Who out there other than I remembers this case and the position it forever occupies in the evolutionary chain of the recoverability of consequential damages against property insurers in New York State? Those who do might understand then why I am blogging about a one-line decision.

Vivian Stern made a claim to The Charter Oak Fire Insurance Company (Travelers) for losses stemming from an armed robbery that occurred at her jewelry store on or before December 28, 2001. For reasons not apparent in the 13 (!) reported decisions of the Fourth Department in this case (most regarding motion practice), a dispute arose between the parties and Stern sued Charter Oak in 2002 for both contractual damages and consequential damages, including future lost profits and future sale value of the business.

In September 2005, Charter Oak moved to dismiss the complaint's consequential damages claim arguing, among other things, that coverage for such damages was negated by the policy's consequential loss exclusion. Onondaga County Supreme Court (Deborah H. Karalunas, J.) granted that motion and plaintiff appealed.

In a decision issued March 16, 2007, the Appellate Division Fourth Department, unanimously affirmed Supreme Court's order dismissing the consequential damages claim, holding:

Supreme Court properly granted Charter Oak's motion to dismiss plaintiff's claim for consequential damages, including future lost profits after December 28, 2001 and future sale value of the business. The court also properly granted Charter Oak's motion to preclude plaintiff's expert from testifying with regard to that claim and denied plaintiff's cross motion seeking partial summary judgment determining that the expert's testimony was admissible at trial. The insurance policy expressly excludes coverage for the consequential damages claimed by plaintiff (see Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y., 37 AD3d 1184 [2007]; J.R. Adirondack Enters. v Hartford Cas. Ins. Co., 292 AD2d 771, 772 [2002]; Crawford Furniture Mfg. Corp. v Pennsylvania Lumbermens Mut. Ins. Co., 244 AD2d 881 [1997]).

In that decision, keen-eyed property coverage professionals will notice the Fourth Department's citation to its decision of one month earlier in Bi-Economy Market, Inc. v. Harleysville Ins. Co. of N.Y.,which decision those same professionals will also recall the New York Court of Appeals reversed in the watershed decision on the recoverability of consequential damages against New York property insurers in February 2008.

So what's a robbed jewelry store owner to do under those circumstances? Make a motion to renew the motion that resulting in the adverse order based on a change in the law, of course. Unfortunately, plaintiff made such a motion to the Appellate Division, which in July 2008 denied her motion and referred her back to Supreme Court with the instruction that "[i]f [she was] is aggrieved by an order of Supreme Court, plaintiff's remedy is an appeal to this Court from that order."

The order to which the Appellate Division was referring was one apparently granted by Supreme Court Justice Karalunas on May 5, 2008, which had denied plaintiff's Bi-Economy-based motion to renew her opposition to Charter Oak's original motion to dismiss plaintiff's consequential damages claim based on the doctrine of "law of the case", which essentially is a "because I already said no" legal doctrine that courts sometimes apply when litigants want a do-over.

So plaintiff appealed that order back to the Appellate Division, Fourth Department, and in February 2009 that court, in light of the intervening opinion of the Court of Appeals in Bi-Economy, modified the order appealed from to grant plaintiff's motion to renew her opposition to Charter Oak's original motion and then, on such renewal, denied Charter Oak's motion to dismiss and reinstated the plaintiff's consequential damages claim:

Following our decision in the prior appeal, the Court of Appeals reversed the order in Bi-Economy Mkt., Inc., concluding under circumstances similar to those present in this case that a contractual exclusion for consequential losses in the insurance policy issued to the plaintiff business did not bar its claim for consequential damages caused by the defendant insurer's alleged breach of the terms of the policy (Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y., 10 NY3d 187, 194-196 [2008]; see Panasia Estates, Inc. v Hudson Ins. Co., 10 NY3d 200, 203 [2008]).

While the instant action remained pending, plaintiff moved, inter alia, for leave to renew her opposition to Charter Oak's motion to dismiss her claim for consequential damages, based upon the decisions of the Court of Appeals in Bi-Economy Mkt., Inc. and Panasia Estates, Inc. Supreme Court erred in denying that part of plaintiff's motion for leave to renew with respect to consequential damages based upon the doctrine of law of the case and instead should have granted leave to renew and, upon renewal, denied Charter Oak's motion. "[A] court of original jurisdiction may entertain a motion to renew or [to] vacate a prior order or judgment even after an appellate court has rendered a decision on that order or judgment" (Tishman Constr. Corp. of N.Y. v City of New York, 280 AD2d 374, 377 [2001]). Furthermore, we conclude that, because "the analysis employed by this [C]ourt in the prior appeal no longer reflects the current state of the law, the doctrine of law of the case should not be invoked to preclude reconsideration of" Charter Oak's motion to dismiss plaintiff's claim for compensatory damages (Szajna v Rand, 131 AD2d 840, 840 [1987]; see Foley v Roche, 86 AD2d 887 [1982], lv denied 56 NY2d 507 [1982]). We therefore modify the order accordingly.

Rearmed with her complaint's consequential damages claims, plaintiff went back to Supreme Court where in late 2009 or early 2010 the parties moved and cross-moved for summary judgment. As best as can be discerned from the limited information available on eCourts, those motions resulted in a November 18, 2010 order denying plaintiff's subsequent motion to correct the motion record and holding that: (1) Charter Oak had breached the insurance policy; (2) that the plaintiff's alleged business failure (aka consequential damages) was not proximately caused by that breach; and (3) that plaintiff was entitled to money damages of $7,887.19, plus interest. That's right -- $7,900. The printing costs already expended in the two previous trips to the Fourth Department had to cost more than the award amount.

Apparently having never heard of throwing good money after bad, or perhaps having unlimited resources to file and respond to six (!) more appellate motions prior to perfecting an appeal (five for filing extensions and one pro hac vice admission of new appellate counsel for Charter Oak), coupled with the fact that a relative of some kind assumed lead counsel responsibilities for her, plaintiff appealed Supreme Court's order denying her consequential damages and awarding her only $7,887.19 in contractual damages, plus interest.

Which brings the story of Stern v. Charter Oak to present. In a "for reasons stated in the decision at Supreme Court" one-sentence memorandum decision issued on September 28, 2012, the Fourth Department unanimously affirmed Justice Karalunas' nth order, effectively concluding the case. Except, of course, for perhaps another motion to renew and a motion for leave to appeal to the Court of Appeals. Set your Google Scholar alert.

Although Adjustment of Claim is Not Required for Public Adjuster to Collect Its Fee, Whether Public Adjuster Performed "Valuable Services" Presents a Question of Fact

noreply@blogger.com (Roy A. Mura) — Thu, 27 Sep 2012 13:09:00 +0000

PROPERTY – PUBLIC ADJUSTER COMPENSATION – "VALUABLE SERVICES"
Public Adjustment Bureau, Inc. v. Greater New York Mut. Ins. Co.
(1st Dept., decided 9/25/2012)

Under New York regulatory law (11 NYCRR Part 25, a/k/a Insurance Regulation 10), licensed public adjusters in New York may charge a fee of no more than 12½ % of the recovery for the loss adjusted by such adjusters. 11 NYCRR § 25.7, entitled "Maximum compensation", provides:

No public adjuster shall charge any insured a fee in excess of 12.5 percent of the recovery for services rendered by the adjuster.

Section 25.10, entitled "Right to compensation", further states:

(a) The public adjuster shall not be entitled to any compensation for any services performed pursuant to a compensation agreement prior to its cancellation in accordance with section 25.8 of this Part.

(b) If a public adjuster performs no valuable services, and another public adjuster, insurance broker (in accordance with section 2101[g][2] of the Insurance Law) or attorney subsequently successfully adjusts such loss, then the first public adjuster shall not be entitled to any compensation whatsoever.

(c) Where more than one public adjuster performs valuable services for an insured, and there has not been a valid cancellation of the compensation agreement in accordance with section 25.9 of this Part, the insured shall not be obligated to pay an amount for all of such services in excess of the maximum compensation amount set by section 25.7 of this Part.

Property insurers are obligated to pay public adjusters their fee only if, at the time of the claim's settlement, the the insured requests that the public adjuster be paid. Section 25.12, entitled "Payment of losses", provides:

When a claim is settled where the insured is represented by a public adjuster, upon the request of the insured, the insurer's check may be made payable to both the public adjuster and the insured or to the public adjuster named as a payee, but not in excess of the amount of the public adjuster's fee, as indicated in the written compensation agreement signed by the insured and filed with the insurer. The balance of the proceeds shall be made payable to the insured or loss payee, or both, whichever is appropriate.

It occasionally happens that insureds do not want to pay their public adjusters either at all or what their public adjuster's compensation agreement specifies as the adjuster's fee. In this case, plaintiff entered into a compensation agreement with Seward Park Housing Corporation in which the parties agreed:

TO THE INTERESTED INSURANCE COMPANIES:
We retain Public Adjustment Bureau, Inc. to perform valuable services, to include preparation and submission of claim detail and to advise and assist in the adjustment of claim detail and to advise and assist in the adjustment of the loss by collapse of January 15, 1999, at [the premises in question.] We agree to pay and hereby assign and request payment of expenses, disbursements and seven percent of the amount of loss and salvage be distributed to Public Adjustment Bureau, Inc. when adjusted or otherwise recovered, regardless to whom the loss is payable[.]

The claim was not adjusted; following extensive litigation, which included at least one trial and an appeal, Seward Park settled with Greater New York. Seward Park then disputed its obligation to pay the plaintiff, its public adjuster. Public Adjustment Bureau (PAB) sued both its client, Seward Park, and the insurer, Greater New York Mutual Insurance Company. Seward Park moved and PAB cross-moved for summary judgment. Supreme Court granted Seward Park's motion, dismissing the complaint, and PAB appealed.

In MODIFYING the Supreme Court's order to deny both motions for summary judgment, the First Department, Appellate Division, held:

We reject Seward Park's argument that plaintiff is not due any fee under the contract because it neither adjusted the claim nor provided "valuable services" that resulted in the adjustment of the claim (see 11 NYCRR 25.10). In light of the "otherwise recovered" language in the retainer agreement, we find that adjustment of the claim is not a condition precedent to plaintiff's recovery of a fee (see GS Adj. Co., Inc. v Roth & Roth, L.L.P., 85 AD3d 467 [1st Dept 2011]; see also Goldstein Affiliates v Affiliated FM Ins. Co., 178 AD2d 301 [1st Dept 1991]). However, the record presents an issue of fact whether plaintiff performed valuable services.

In New York State, public adjusters may be compensated only if they have a written and signed compensation agreement with the insured that "consist[s] of substantively the same information and statements contained in Form 1 in section 25.13(a) of [Part 25]." 11 NYCRR § 25.6(a). The "otherwise recovered" language found in PAB's compensation agreement with Seward Park is contained in the prescribed public adjustment compensation agreement found at section 25.13 of Part 25 (Regulation 10). In pertinent part, that form provides that the insured

hereby retains (name of adjuster) to act or aid in the preparation, presentation, adjustment and negotiation of or effecting the settlement of the claim for the loss or damage by (nature of loss) sustained at (loss location) on ________, [20] ________, and agrees to pay the adjuster for such services a fee of ________ percent of the amount of the loss including salvage when adjusted or otherwise recovered from the insurance companies.

Notably, the "valuable services" language that PAB incorporated into its compensation agreement is not required by or found in the prescribed compensation agreement of Regulation 10 and presumably derived instead from section 25.10(b). Had PAB not pledged in its compensation agreement to provide "valuable services" -- the delivery of which the First Department has now held presents a question of fact -- the question of whether a New York licensed public adjuster provides any "valuable services" would not be relevant to the public adjuster's compensation unless "another public adjuster, insurance broker ... or attorney subsequently successfully adjusts such loss[.]" 11 NYCRR § 25.10(b).

Second Department Holds that SUM Limit Is To Be Reduced by Recovery from All Tortfeasors

noreply@blogger.com (Roy A. Mura) — Thu, 27 Sep 2012 00:07:00 +0000

UNDERINSURED MOTORISTS COVERAGE – OFFSET – NON-DUPLICATION PROVISION
Weiss v. Tri-State Consumer Ins. Co.
(2nd Dept., decided 9/26/2012)

$250,000 per person/$500,000 per accident SUM limits.
Two deaths in insured vehicle.
Drunk driver and two Dram Shop defendants.
Drunk driver's auto insurer pays $100,000 limit to settle.
Dram Shop defendants and their insurers pay $255,000 to settle.
Total settlement of wrongful death action = $355,000.

Question: What's the recoverable SUM coverage limit?
Answer: $145,000.

Plaintiffs successfully argued to Supreme Court that the recoverable SUM limit was $400,000 because only the $100,000 settlement amount from the drunk driver's motor vehicle liability insurer was to be deducted from the $500,000 per accident SUM limit. In REVERSING the Supreme Court's denial of summary judgment to defendant Tri-State, the Second Department reasoned:

The subject policy contained the standard SUM endorsement prescribed by the Superintendent of Insurance in Regulation No. 35-D (11 NYCRR 60-2.3[c], [f]). Two conditions in the endorsement are directly at issue in this appeal. Condition 6 provides:

6. Maximum SUM Payments. Regardless of the number of insureds, our maximum payment under this SUM endorsement shall be the difference between:

a) The SUM limits; and

b) The motor vehicle bodily injury liability insurance or bond payments received by the insured or the insured's legal representative, from or on behalf of all persons that may be legally liable for the bodily injury sustained by the insured.

The SUM limit shown on the Declarations for "Each Person" is the amount of coverage for all damages due to bodily injury to one person. The SUM limit shown under "Each Accident" is, subject to the limit for each person, the total amount of coverage for all damages due to bodily injury to two or more persons in the same accident.
Condition 11 provides:

11. Non-Duplication. This SUM coverage shall not duplicate any of the following:

(a) Benefits payable under workers' compensation or other similar laws;

(b) Non-occupational disability benefits under article nine of the Workers' Compensation Law or other similar law;

(c) Any amounts recovered or recoverable pursuant to article fifty-one of the New York Insurance Law or any similar motor vehicle insurance payable without regard to fault;

(d) Any valid or collectible motor vehicle medical payments insurance; or

(e) Any amounts recovered as bodily injury damages from sources other than motor vehicle bodily injury liability insurance policies or bonds.
SUM coverage in New York is a converse application of the golden rule; its purpose is "to provide the insured with the same level of protection he or she would provide to others were the insured a tortfeasor in a bodily injury accident" (Matter of Prudential Prop. & Cas. Co. v Szeli, 83 NY2d 681, 687; see Matter of Allstate Ins. Co. v Rivera, 12 NY3d 602, 608; Raffellini v State Farm Mut. Auto. Ins. Co., 9 NY3d 196, 204; see generally Norman H. Dachs and Jonathan A. Dachs, SUM Insurance Dilemma Hits the Mainstream, NYLJ, Sept. 19, 2012 at 3, col 1). With this limited purpose, SUM coverage does not function as a stand-alone policy to fully compensate the insureds for their injuries (cf. Bauter v Hanover Ins. Co., 247 NJ Super 94, 96-97, 588 A2d 870, 872, cert denied 126 NJ 335, 598 A2d 893). The conditions quoted above make this clear, as do other conditions not directly at issue in this case.

Here, the maximum SUM coverage of the subject policy was $500,000 per accident. The amount payable under that coverage was reduced, under Conditions 6(a) and 6(b), by the $100,000 paid by McGibbon's insurer, inasmuch as that amount constituted a "motor vehicle bodily injury liability insurance . . . payment[ ]" that the plaintiffs received (11 NYCRR 60-2.3 [f]). Further, the Dram Shop claims were settled for a total of $255,000. The Dram Shop recovery constitutes, under Condition 11(e), an amount "recovered as bodily injury damages from sources other than motor vehicle bodily injury liability insurance policies or bonds." Condition 11 does not allow duplicate recovery of such damages. Consequently, under the terms of the SUM endorsement, the plaintiffs' receipt of the Dram Shop recovery reduces, by that same $255,000, the amount payable under the SUM endorsement. The plaintiffs are not penalized by this reduction, since they received the maximum amount for which they are covered under the SUM endorsement: $100,000 from McGibbon's policy, $255,000 from or on behalf of the Dram Shop defendants, and $145,000 from Tri-State.

Notice of Consolidated Proposed Consensus Rulemaking to Correct Out-of-Date Hyperlinks and References as a Result of the Consolidation of the New York State Insurance and Banking Departments Into a New Department of Financial Services

noreply@blogger.com (Roy A. Mura) — Tue, 25 Sep 2012 04:03:00 +0000

How could I have missed it with a title so clear and succinct?

Since October 3rd of last year, when the New York State Banking and Insurance Departments consolidated into a single Department of Financial Services, I've been waiting for the DFS to announce the corrected verbiage for the "Should you wish to take this up with..." consumer advisory paragraph required by Regulation 64. You know, the one that instructs insureds and claimants how to skew your company's consumer complaint ratio. I blogged about that paragraph -- and in what letters it belongs and doesn't belong -- more than four years and four months ago. If you work in claims for a personal property or auto insurer that does business in New York and don't recall reading that post, you should do so now by clicking here.

Well on July 18, 2012, the DFS proposed a consolidated consensus rulemaking that, among other things, replaces the old and outdated New York State Insurance Department references and hyperlink in the advisory paragraph with new and up-to-date references to the DFS. The new advisory paragraph will thus read:

Should you wish to take this matter up with the New York State Department of Financial Services, you may file with the Department either on its website at http://www.dfs.ny.gov/consumer/fileacomplaint.htm or you may write to or visit the Consumer Assistance Unit, Financial Frauds and Consumer Protection Division, New York State Department of Financial Services, at: 25 Beaver Street, New York, NY 10004; One Commerce Plaza, Albany, NY 12257; 163B Mineola Boulevard, Mineola, NY 11501; or Walter J. Mahoney Office Building, 65 Court Street, Buffalo, NY 14202.

Although the 45-day public comment period for this new language expired on September 1, 2012, we still wait for our newly activated ChangeDetection.com subscription (see the immediately preceding post) to register the listing of the Twelfth Amendment to 11 NYCRR 216 (a/k/a Regulation 64) among the Department's final adoptions.

I understand that some New York insurers, perhaps recognizing that this is a consensus rulemaking that is not expected to garner any objections, have already changed their letters and forms to comport with the new language, even though the proposed amendment technically has not yet taken effect. This new paragraph becoming the required one is not an if, but a when.

Little known factoid: the consumer advisory paragraph is also found on Page 2 of the prescribed NF-10 Denial of Claim Form for New York no-fault claims. Once this consolidated rule goes into effect, including its Fourth Amendment to 11 NYCRR 65-3 (a/k/a Regulation 68-C), New York no-fault insurers will need to begin using the revised or "new" NYS Form NF-10.

More Sausage, the New York Register, and Regulation 68-E

noreply@blogger.com (Roy A. Mura) — Wed, 19 Sep 2012 15:27:00 +0000

For those of you who like to watch, I bring you some more information regarding how administrative law is made in New York State.

In New York, administrative agencies that wish to promulgate new rules and regulations do so on either in an emergency basis without public review and comment, or a regular basis with an opportunity for public review and comment. The New York State Administrative Procedure Act or "SAPA" governs how proposed rules and regulations of administrative agencies in New York become law.

The maternity ward, if you will, of administrative rules and regulations in New York is the New York Register, where preemie and full-term newborn rules and regulations are displayed for adoring parents and relatives. And, much like real world maternity wards, one needs to visit the New York Register regularly to see the newborns.

Take, for example, the rules and regulations promulgated by the combined agency formerly known as the New York State Insurance Department -- the New York Department of Financial Services. Since the beginning of this year, it has proposed seven insurance regulation changes on a regular basis by publishing them in the New York Register. A Notice of Proposed Rule Making that accompanies the proposed rule or regulation will indicate, among other things, whether a public hearing is to be scheduled and how long the public comment period is to last from the proposed rule or regulation's publication in the New York Register. Similarly, since the beginning of this year it has also published seven insurance regulation changes adopted and promulgated on an emergency basis, including the adoption of Regulation 68-E, entitled "Unauthorized Providers of Health Services", which took effect on the date it was filed with the New York Secretary of State, which the DFS's website lists as August 31, 2012.

When a proposed rule or regulation is promulgated on an emergency basis there will be an accompanying Statement of Reasons for Emergency Measure filed with the New York Secretary of State and published in the New York Register. In Regulation 68-E's case, the accompanying Statement of Reasons for Emergency Measure dated August 31, 2012 reads:

This regulation concerns the de-authorization of certain providers of health services. Insurance Law § 5109(a) requires the Superintendent, in consultation with the Commissioner of Health and the Commissioner of Education, to promulgate standards and procedures for investigating and suspending or removing the authorization for providers of health services to demand or request payment for health services under Article 51 of the Insurance Law upon findings of certain unlawful conduct reached after investigation, notice, and a hearing pursuant to Insurance Law § 5109.

For years, certain owners and operators of professional service corporations and other types of corporations have abused the no-fault insurance system. These persons are involved in activities that include intentionally staging accidents and billing no-fault insurers for health services that were unnecessary or never in fact rendered. Indeed, recent federal indictments have demonstrated that organized crime has infiltrated and permeated the no-fault provider network. Such wide-scale criminal activity is estimated to have defrauded insurers of at least hundreds of millions of dollars, if not more. Insurers ultimately pass on these costs to New York consumers in the form of higher automobile premiums, and schemes such as the fraudulent staging of auto accidents endangers the innocent public. Furthermore, it places in peril the quality of care received by innocent auto accident victims and the public’s health, safety, and welfare.

It is of the utmost importance that the Superintendent, Commissioner of Health, and Commissioner of Education be able, as soon as possible, to prohibit health service providers who engage in such activities from demanding or requesting payment from no-fault insurers.

For the reasons stated above, emergency action is necessary for the public health, public safety, and general welfare.

So how does a New York insurance professional keep up on the new rules and regulations of the New York Department of Financial Services? Several ways. First, you can set up and use a webpage monitoring service to watch for changes to the DFS's proposed, emergency, and final insurance regulations pages. I use the free service offered by ChangeDetection.com. Or, if you prefer, you can navigate to the New York Register's webpage by clicking the image below and click the "Subscribe" button, which will create an email to listserver@ny.gov to subscribe to dos.dl.listserv.DAR.ERegister, after which you can then scan and read the weekly New York Register's weekly publications.

Or you can subscribe to this blog by using the widget on the right side of this page, and I'll do my best to let you know when fresh New York insurance-flavored sausage is made.

Law and Sausage

noreply@blogger.com (Roy A. Mura) — Tue, 18 Sep 2012 02:07:00 +0000

PROPERTY – "RESIDENCE PREMISES" – "RESIDES" – AMBIGUITY
Dean v. Tower Ins. Co.
(1st Dept., decided 5/10/2011)

It reportedly was the 19th Century American poet John Godfrey Saxe, not the laconic German aristocrat and statesman Otto von Bismarck, who in 1869 first said, "Laws, like sausages, cease to inspire respect in proportion as we know how they are made." You may have heard its more modern variation: if you like law and sausage, you should never watch either one being made.

And yet, in spite of Mr. Saxe's implied urgings to avert one's eyes, and at the risk of diminishing the great respect I'm sure all of you already have for the legal process, I bring you some law in the making -- the September 11th oral argument of Tower Insurance Company's appeal to the New York Court of Appeals of the First Department's 2011 reversal of the New York County Supreme Court's grant of summary judgment to Tower based on the named insureds' lack of residency in the insured dwelling.

Be warned. If you, like I, are passionate about first-party property insurance coverage, you may want to watch this 22 minute and 8 second video by yourself in a room that permits some audible, emotive outbursts. But if you watch -- please watch the video to the end. There's a surprise twist at the end. Not really, but as one who clerked for two years at the Appellate Division right out of law school, I found it refreshing that most, but not all, of the judges' questions reflected a relatively balanced peppering of the parties' legal advocates. Can you tell which of the judges seem to have already made up their minds? Here's a hint: one of them authored the Court of Appeals' 2008 5-2 majority opinion in the first-party property insurance groundbreaking decision in Bi-Economy Market, Inc. v. Harleysville Ins. Co. of NY.

For those of you who care, this case involves a denial of coverage under a homeowners insurance policy issued on a dwelling that the named insureds never moved into. Instead, the named insureds claimed that they had been working on their intended residence for more than a year after the policy was issued to fix termite damage they had discovered around the time of the property's closing. Approximately 15 months after Tower issued the subject homeowners policy, for a dwelling the named insureds had represented on their signed policy application was to be their primary and only residence, a fire of unknown origin and cause destroyed the property.

Tower denied coverage for the fire loss based, in part, on its position that because the policy insured the "dwelling on the residence premises" and that "residence premises" meant "[t]he one family dwelling ... where you reside", the property did not qualify as a "residence premises because "the dwelling was unoccupied at the time of the loss[.]" The named insureds sued and the parties move and cross-moved for summary judgment.

In granting summary judgment to Tower, the New York County Supreme Court held:

In Marshall [v. Tower Ins. Co., 44 AD3d 1014 (2d Dept. 2007)], the court found that the exact policy provisions at issue here were not “ambiguous.” According to Webster’s II New College Dictionary (2001) “reside” means "to live in a place for a permanent or extended period of time; to be inherently present.” Giving the words “where you reside” their “plain and ordinary meaning,” the policy covered a dwelling where the Deans lived for a permanent or extended period of time. Consistent with this construction, “[t]he standard for determining residency for insurance coverage ‘requires something more than temporary or physical presence and. . . at least some degree of permanence and intention to remain’” Allstate Insurance Co., v Rupp, 7 AD3d 302 (lst Dept. 2004) (citing Government Empls. Ins. Co. v Paolicelli, 303 AD2d 633, 633 [2nd Dept. 20031 (for uninsured motorist coverage, a grandson was a resident of his grandfather’s home where he lived Monday to Friday during the school year for six years and attended school based on the grandfather’s address). Moreover, for the purposes of residency, a “resident is one who lives in the household with a certain degree of permanency and intention to remain” Canfield v Peerless Ins. Co., 262 AD2d 934,934-935 (4th Dept. 1999), lv denied 94 NY2d 757 (1999) ( the insurer failed to rebut the plaintiffs testimony that she maintained a residence at both her own household and at the household of the insured, where plaintiffs testimony established that she was the sole owner of the home in which the insured resided, spent weekends and holidays in the home, had a key to the home, maintained her own bedroom in the home, in which she kept clothing and necessaries, and paid the heating, water costs and real estate taxes for the home.)

Here, plaintiffs do not allege that they ever lived at the Mountain Road house. At best, plaintiffs have established ownership of the house and presence in it to perform certain renovations, and a stated intent of living there. The court concludes that under these circumstances, there is insufficient evidence of plaintiffs’ physical presence and permanency to demonstrate that they resided in the premises at any time prior to the date of loss. Accordingly, defendant has established there is no coverage, and is entitled to summary judgment.

Plaintiffs appealed and the First Department REVERSED, denying summary judgment to Tower based on its finding that because the policy did not define the work "resides", that term was ambiguous:

Because the "residence premises" insurance policy fails to define what qualifies as "resides" for the purposes of attaching coverage, the policy is ambiguous in the circumstances of this case, where the plaintiff insureds purchased the policy in advance of closing but were then unable to fulfill their intention of establishing residency at the subject premises due to their discovery and remediation of termite damage that required major renovations. "[B]efore an insurance company is permitted to avoid policy coverage, it must satisfy the burden which it bears of establishing that the exclusions or exemptions apply in the particular case, and that they are subject to no other reasonable interpretation" (Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311 [1984] [citations omitted]). Accordingly, the ambiguity in the policy must be construed against defendant under the facts of this case, and precludes the grant of summary judgment in its favor (see Ace Wire and Cable Co. v Aetna Cas. and Sur. Co., 60 NY2d 390, 398 [1983]).

Notably, the First Department rejected the lower court's and Tower's reliance on the Second Department's 2007 decision in Marshall v. Tower Ins. Co., finding that Marshall was "inapposite because it did not address whether the term 'residence premises' is ambiguous in light of the policy's failure to define 'resides'" and because unlike in this case, the plaintiff in Marshall reportedly had no intention of living at the premises.

The Court of Appeals granted Tower leave to appeal and on last Tuesday, September 11th, heard oral arguments on that appeal. The judges' questions included:

Is a homeowners policy's residency requirement permitted under the 165-line New York standard fire insurance policy of New York Insurance Law § 3404(e)? See, Lane v. Security Mut. Ins. Co., 96 NY2d 1 (2001).
Does a HO policy's residency requirement preclude coverage where people have bought insurance and closed on their purchase of a new home but not yet moved into it?
Are the concepts of residency and occupancy the same?
Doesn't the record in this case indicate that Tower's risk inspection agent knew or should have known that the named insureds were not residing in the dwelling, and does the allegation of such actual or constructive knowledge present a question of fact precluding summary judgment from being granted to Tower?
Is the policy's residency requirement found in the definition of the term "residence premises" clear or ambiguous?

What do you think? Which way do you think the judges are leaning, if any, from their questions? Any prediction on what the Court will do in deciding Tower's appeal?

Post Script (09.27.12) ~~ Over in LinkedIn's New York Insurance group, a member asked why Tower took a SJ motion denial to the Court of Appeals. Max Gershweir, who argued the case for Tower, provided the back story.

In April 2011 the Second Department reversed the Supreme Court and granted SJ to Tower in a similar matter, holding, in part, that "the policy's 'residence premises' provision is not ambiguous[.]" That was in Vela v. Tower Ins. Co. The plaintiffs in that case sought leave to appeal to the Court of Appeals presumably based on the First Department's May 2011 contrary decision in Dean v. Tower, and the Second Department granted leave on September 29, 2011. Tower itself had made a motion to the First Department for leave to appeal the Dean decision to the Court of Appeal based presumably on the conflicting authority between the First and Second Departments, which was granted on September 8, 2011.

According to Max, both cases headed to the Court of Appeals together, but Vela was settled and the appeal was withdrawn in January.

Mura & Storm's Biennial New York Coverage 2010-2012 Seminar

noreply@blogger.com (Roy A. Mura) — Tue, 21 Aug 2012 02:29:00 +0000

In three weeks and three days my office will again be hosting our biennial New York insurance coverage seminar, which is scheduled to be held in Amherst, New York, on Thursday, September 13, 2012. If you are an insurance professional or service provider to insurance companies and would like to attend this seminar, click the image above, download and complete the registration form, and return it via email or fax to my office right away.

If you work at a company where others might be interested in attending this seminar or know of such people who might not otherwise see this post or be on our seminar invitation list, please forward this post to them by clicking here.

This long-running seminar remains free for current clients of Mura & Storm (at least one new file since January 2010) and independent adjusters of my insurer clients. The nominal cost for others is only $50 per person for six hours of intensive and content-packed insurance coverage case law discussion. And snacks and drinks. Can't beat the value. As always, we'll cover New York property case law and statutory/regulatory developments in the morning, and New York liability/casualty case law and statutory/regulatory developments in the afternoon, which will also include separate break-out sessions for Auto/UM/SUM, No-Fault, and Homeowners/General Liability. Attendance is limited to insurance claims and underwriting professionals and persons who provide services to the property and casualty insurance industry, such as independent adjusters and staff counsel.

Some of you have already registered several of your companies' underwriters. That's an excellent idea I wish I had thought of years ago. Please encourage your underwriters to attend. I have found over the years that underwriters can benefit greatly from hearing how judges read and interpret insurance policies, which often differs from how underwriters do the same.

For those folks attending from out of town, the Ramada has set aside a limited number of rooms at a special rate of $79.00 per night if reservations are made by August 15, 2012. Reservations should be made directly with the Ramada Hotel by calling (716) 636-7500 and mentioning my firm's name.

CLE approval for New York-admitted attorneys is pending.

Hope to see you there.

To Whom NY General Obligations Law § 5-335 May Concern...

noreply@blogger.com (Roy A. Mura) — Tue, 21 Aug 2012 02:00:00 +0000

I generally like the insurance professionals who volunteer their time to hear intercompany arbitration matters for companies like Arbitration Forums. I really do. They provide a valuable cost-savings service to those insurers who participate in intercompany arbitration. But folks, please. Please slow down and take the time to actually read the statute you're citing to deny and dismiss that med pay subrogation claim.

On November 12, 2009, section 5-335 was added to the New York General Obligations Law (GOL). That day I blogged about that bill and that section here. I quoted the new statutory sections, listed their effective dates, and explained what types of claims were and were not encompassed by the new law.

Just recently a New York auto insurer client contacted me to report that intercompany arbitrators have been routinely rejecting the company's med pay intercompany subrogation claims based on GOL § 5-335. Reportedly, the arbitrators were citing that statute for the proposition that it statutorily precludes all such claims. It does not.

Assuming there has been no settlement between the insured and the negligent party against whom the auto insurer is subrogating (and be sure to verify that before filing your intercompany arb), your subrogation departments should include the following in their intercompany arb submissions:

Please note that New York General Obligations Law § 5-335(a) does not apply to preclude this subrogation claim. That statute only applies to situations in which the injured person has entered into a settlement with the negligent party. That statute states, in pertinent part:

Except where there is a statutory right of reimbursement, no party entering into such a settlement shall be subject to a subrogation claim or claim for reimbursement by a benefit provider and a benefit provider shall have no lien or right of subrogation or reimbursement against any such settling party, with respect to those losses or expenses that have been or are obligated to be paid or reimbursed by said benefit provider (emphasis added).
There has been no such settlement, and the respondent’s insured is not a settling party within the meaning of section 5-335(a). Thus, General Obligations Law § 5-335(a) does not apply to this matter to bar or preclude recovery of this subrogation claim.

Capisci?

When Someone Other Than Your Named Insured Co-Owns the Insured Building

noreply@blogger.com (Roy A. Mura) — Mon, 20 Aug 2012 04:08:00 +0000

PROPERTY – TENANTS IN COMMON – INSURABLE INTEREST – INSURANCE IN NAME OF ONLY ONE COTENANT
Gilbert v. Allstate Ins. Co.
(2nd Dept., decided 5/15/2012)

This is a bit of back fill. But important back fill.

You insure one person but find out after a fire that destroyed the insured dwelling that another person, who is not listed or named on the policy, is listed as a co-owner on the property's deed. There's no mortgagee. Do you:

a. pay 100% of the dwelling loss to just your named insured?
b. pay 100% of the dwelling loss to both your named insured and the other co-owner? -or-
c. pay 50% of the dwelling loss to just your named insured?

If you were Allstate, you do c., pay 50% of the dwelling loss to just your named insured. And in the recent opinion of the Second Department, Appellate Division, you would be correct in doing so.

The plaintiff owned property as a tenant in common with a business partner, who was not a party to this action. In 1996 the plaintiff procured a policy of fire insurance on the property from Allstate solely in his own name. On October 2, 2009, the premises were destroyed by a fire. Allstate paid the plaintiff one-half of the value of the property on the ground that the plaintiff had only a one-half insurable interest in the property. The plaintiff, arguing that a tenant-in-common has an undivided right to the full use, enjoyment, and possession of the entire property (and therefore had a 100% insurable interest in that property), brought this action to recover the full value of the destroyed premises. The Supreme Court, Orange County (Slobod, J.), denied the plaintiff's motion for summary judgment on the issue of liability and granted Allstate's cross motion for summary judgment dismissing the complaint.

In AFFIRMING the grant of summary judgment to Allstate, the Appellate Division, Second Department, succinctly reasoned:

Insurance Law § 3401 limits a contract or policy of insurance to the insured's "insurable interest." When two cotenants own real property which is damaged by a fire and insurance is procured in the name of only one contenant, recovery under the policy is limited to the insured cotenant's one-half interest in the real property (see Graziane v National Sur. Corp., 120 AD2d 773, 775 [1986]; Krupp v Aetna Life & Cas. Co., 103 AD2d 252 [1984]).

When Attorney-Client Communications Aren't Attorney-Client Privileged

noreply@blogger.com (Roy A. Mura) — Thu, 19 Jul 2012 14:02:00 +0000

PROPERTY – BOAT VANDALISM CLAIM – DISCOVERY – REPORTS FROM COUNSEL – EXAMINATIONS UNDER OATH
Melworm v. Encompass Indem. Co.
(Sup. Ct., Nassau Co., decided 7/16/2012)

I could say I told you so.

Plaintiffs made a claim to defendant Encompass for vandalism damage to their dry-docked 1977 40-foot Tollycraft yacht. Encompass retained counsel to conduct an EUO of its insured(s) and ultimately denied payment to them. Plaintiffs sued and served interrogatories, seeking, among other things, the contents of Encompass' claim file. In response, Encompass produced a redacted copy of its electronic claims diary, asserting that the redacted content was protected by attorney-client privilege. Plaintiffs moved to compel Encompass to produce the redacted portions of the electronic claims diary and letters from retained counsel to Encompass.

In ordering Encompass to produce an unredacted claims diary and letters from counsel for the court's in camera inspection, Nassau County Supreme Court Justice Arthur M. Diamond rejected the plaintiffs' argument that the attorney-client privilege at issue belonged to the plaintiffs and not to their insurer, but held that "communications which occurred before the date that the defendants had reasonable grounds to reject the claim ... are not immune from discovery":

In order to raise a valid claim of attorney-client privilege, the party seeking to withhold the information must show that it was a "confidential communication" made between the attorney and the client in the context of legal advice or services. Documents which are "not primarily of a legal character, but [express] substantial nonlegal concerns" are not privileged. However, "[s]o long as the communication is primarily or predominantly of a legal character, the privilege is not lost merely by reason of the fact that it also refers to certain nonlegal matters" (Bertalo's Rest. v. Exchange Ins. Co., 240 AD2d 452 [2nd Dept. 1997]; Rossi v Blue Cross & Blue Shield, 73 NY2d 588, 594 [1989 ]).

Defendants' claim that the internal discovery conducted by retained counsel, such as the examination under oath of the insured, is protected by the attorney client privilege is clearly misplaced. First, in a dispute between the insurer and the insured pertaining to an underlying claim, the claims file is generally not privileged material and the insurer cannot claim confidentiality against the insured. [Diamond State Ins. Co. v. Utica First Ins. Co., 37 AD3d 160; Woodson v. American Transit Insurance Company, 280 AD2d 328 [1st Dept. 2001]; Fireman's Insurance Company of Newark v. Norman Gray et al. and Allstate Insurance Company, 41 AD2d 863]. Second, as stated by the Second Department in Bombard v. Amica Mut. Ins. Co., (11 AD3d 647, 648 [2nd Dept. 2004]):

"[T]he payment or rejection of claims is a part of the regular business of an insurance company. Consequently, reports which aid it in the process of deciding which of the two indicated actions to pursue are made in the regular course of its business" (Landmark Ins. Co. v Beau Rivage Rest., 121 AD2d 98, 101 [1986] [internal quotation marks omitted]). Reports prepared by insurance investigators, adjusters, or attorneys [emphasis added] before the decision is made to pay or reject a claim are thus not privileged and are discoverable (see Landmark Ins. Co. v Beau Rivage Rest., supra at 101; see also Bertalo's Rest. v Exchange Ins. Co., 240 AD2d 452, 454 [1997]; Roman Catholic Church of Good Shepherd v Tempco Sys., 202 AD2d 257, 258 [1994]; Paramount Ins. Co. v Eli Constr. Gen. Contr., 159 AD2d 447 [1990]), even when those reports are "mixed/multi-purpose" reports, motivated in part by the potential for litigation with the insured (see Landmark Ins. Co. v Beau Rivage Rest., supra at 102; see also McKie v Taylor, 146 AD2d 921 [1989]).'[Id.].
Merely because such an investigation was undertaken by attorneys will not cloak the reports and communications with privilege (see, Spectrum Sys. Intl. Corp. v Chemical Bank, 78 NY2d 371, 377) because the reports, although prepared by attorneys, are prepared as part of the "regular business" of the insurance company. (Bertalo's Rest.v. Exchange Ins. Co., 240 AD2d 452 [2nd Dept. 1997]). Moreover, evaluating the extent of potential liability of the insured, which would necessarily include assessment of damages, is within the ordinary course of business of an insurance company, and therefore is not privileged even though it has been conducted by retained counsel to perform examinations under oath. (Westhampton Adult Home v. National Union Fire Ins. Co. of Pittsburgh Pa., 105 AD2d 627, 628, 481 N.Y.S.2d 358 [1st Dept 1984]).

Justice Diamond concluded that after making his in camera review, "[i]f [the withheld materials] are primarily reports of an investigation of plaintiffs' claim, then they are then discoverable even though prepared by counsel." (Emphasis added.)

This language and verbiage from the Second Department's 1997 decision in Bertalo's Rest. v Exchange Ins. Co. seem to leave open the possibility that not all pre-denial attorney communications to their insurer clients will be discoverable:

In order to raise a valid claim of privilege, the party seeking to withhold the information must show that it was a "confidential communication" made between the attorney and the client in the context of legal advice or services (see, Matter of Priest v Hennessy, 51 N.Y.2d 62, 69; Coastal Oil N. Y. v Peck, 184 AD2d 241). Documents which are "not primarily of a legal character, but [express] substantial nonlegal concerns" are not privileged (Cooper-Rutter Assocs. v Anchor Natl. Life Ins. Co., 168 AD2d 663). However, "[s]o long as the communication is primarily or predominantly of a legal character, the privilege is not lost merely by reason of the fact that it also refers to certain nonlegal matters" (Rossi v Blue Cross & Blue Shield, 73 N.Y.2d 588, 594).

In Bertalo's Restaurant, the property insurer, Exchange Insurance Company, sought to protect "reports" made by the attorneys who had conducted the investigation of the claim for Exchange and communications from Exchange to those attorneys. In spite of its citation to the Rossi v. Blue Cross & Blue Shield proposition, however -- that so long as the communication is primarily or predominantly of a legal character, the privilege is not lost merely by reason of the fact that it also refers to certain nonlegal matters -- it is important to note that the Second Department in Bertalo's Restaurant ordered the disclosure of all documents prepared before the date Exchange contended it had decided to deny its insured's claim.

Both first- and third-party insurers should be guided accordingly, especially within the jurisdictions of the First and Second Departments in New York.

Fillable Prescribed New York No-Fault Forms

noreply@blogger.com (Roy A. Mura) — Wed, 11 Jul 2012 13:11:00 +0000

It was on Christmas Eve 2009 that I said "I'll probably wait until after the New York State Insurance Department completes its revisions on Regulation 68 and the prescribed no-fault forms before creating and uploading any more fillable forms." On that date, I published a fillable NF-2 New York Motor Vehicle No-Fault Insurance Law Application for Motor Vehicle No-Fault Benefits form. And started my wait.

Well, we no longer have a New York State Insurance Department in this state,and it's looking less and less likely that the Regulation 68 revisions that department proposed back in November 2009 will ever make it through to promulgation and publication in the New York Register. So, after a client's inquiry of earlier this week, and given that the 1/2004 editions of the prescribed NY PIP forms don't look like they're retiring anytime soon, I put my Adobe Acrobat Pro purchase of several years ago to use and created what may be the only publicly available and soon-to-be collector's edition, complete set of the current Appendix 13 prescribed New York no-fault forms. I'm not a graphic artist and I never played one on TV, so please forgive any format glitches that you may find in any of these forms (but tell me and I'll fix and re-save the forms to my Dropbox account, which is where they will reside for downloading). Here's the complete, first edition set of the Appendix 13 prescribed forms, in fillable PDF format:

Once the Dropbox document viewer opens, click the Download button in the upper right-hand corner of that page to download the form. These forms will now accommodate the names and addresses of insurers, self-insurers, applicants, providers and hospitals. Those of you who may prefer my collection of static New York no-fault claim forms that I separately uploaded in November 2009 can still find them here. Please let me know if you encounter any bugs in the fillable forms.

The Use and Usefulness of Social Media Content in Insurance Claims Investigations

noreply@blogger.com (Roy A. Mura) — Thu, 16 Feb 2012 14:22:00 +0000

Those of you who have attended one of my social media presentations may recognize this article to be much of what we discuss during the first two-thirds of that session. Claims Magazine/Property Casualty 360° asked me to submit an article on this still hot topic, and it was published online this past Tuesday.

Citations to any legal materials referenced in my article are available on request. Or, if you are a member of LinkedIn's IASIU or SIU Professionals groups, you may download a copy the latest iteration of my social media presentation on the discussion board of either group. You can also follow me on Twitter or connect with me on LinkedIn to follow developments on this subject.

The area in which case law on the subject of using social media content in litigation is most rapidly developing is the issue of authenticating such material. Albeit in the context of criminal cases, courts have held for social media content to be admissible, it must be authenticated by either: (1) an acknowledgement by its creator that it's his or hers; (2) forensic computer evidence linking the material to the purported author; or (3) circumstantial evidence establishing that the material was in fact created by the person whose name or image the material bears. The two seminal cases on this issue are: Teinda v. State of Texas, (TX Ct. Crim. Apps., decided February 8, 2012) and Griffin v. State of Maryland (MD Ct. Apps., decided April 28, 2011). They are interesting cases and worth the read.

"Stage Hand" Exclusion Found to be Ambiguous

noreply@blogger.com (Roy A. Mura) — Sat, 24 Dec 2011 03:24:00 +0000

CGL – "STAGE HAND" EXCLUSION – "ARISING OUT OF" – AMBIGUITY
Dzielski v. Essex Ins. Co.
(4th Dept., decided 12/23/2011)

We all know that courts construe policy exclusions narrowly and, when they are found to be ambiguous, against the insurer. But it's seemingly getting tougher and tougher to sustain exclusion-based denials in New York's Fourth Judicial Department. Is the "clear and unmistakable language ... subject to no other reasonable interpretation" standard of construing policy exclusions ever attainable when a court wants to find coverage?¹

The Merriam-Webster dictionary defines the intransitive verb "participate" to mean:

a : to take part
b : to have a part or share in something

The "stage hand" exclusion of the "Restaurant, Bar, Tavern, Night Clubs, Fraternal and Social Clubs Endorsement" of Essex' commercial liability policy negated liability coverage for "bodily injury, ... or any injury, loss or damage arising out of ... [i]njury to any entertainer, stage hand, crew, independent contractor, or spectator, patron or customer who participates in or is a part of any athletic event, demonstration, show, competition or contest[.]"

Plaintiff provided sound equipment to a band that was performing at Essex' insured's nightclub. After the show, plaintiff was carrying some of his equipment from the nightclub to his truck when he fell from the nightclub's allegedly defective loading dock, sustaining injuries. Essex denied liability coverage to the nightclub based on the policy's "stage hand" exclusion, and plaintiff obtained a $950,000 default judgment against the insured nightclub in his personal injury action. Plaintiff then brought this action against Essex to recover that judgment pursuant to New York Insurance Law § 3420(b)(1). Supreme Court, Erie County (Diane Y. Devlin, J.), granted plaintiffs' motion and denied Essex' cross motion for summary judgment, awarding plaintiffs the entire $950,000 underlying judgment amount, plus interest and costs, even though the Essex policy had a $500,000 per occurrence liability coverage limit. Essex appealed.

In a 3-2 decision, the three-justice majority of the Appellate Division, Fourth Department, AFFIRMED the judgment appealed from, agreeing with the motion court that the exclusion's language was ambiguous:

It is axiomatic that, "to negate coverage by virtue of an exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case' " (Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377, 383). We agree with plaintiffs that the language "participates in or is a part of any . . . show" is ambiguous, and that the court properly resolved that ambiguity against the insurer, "particularly [because it is] an exclusionary clause" (Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390, 398). Although, as defendant suggests, the policy language may be read broadly to encompass all persons who performed any tasks in connection with the show, including loading and unloading sound equipment, it may also reasonably be read narrowly to encompass only those persons who actually performed in the show or were injured as a result of activities occurring during the show. It is undisputed that the accident occurred after the show had ended, and we note in particular that the accident was caused by a defect in the premises that was wholly unrelated to the show itself. We thus conclude that the court properly determined that the exclusion does not apply in this case.

We reject defendant's contention that the inclusion of the phrase "arising out of" in the exclusion mandates the broader interpretation espoused by defendant. Even assuming, arguendo, that the phrase "arising out of" is interpreted as "originating from, incident to, or having connection with" (Maroney v New York Cent. Mut. Fire Ins. Co., 5 NY3d 467, 470 [internal quotation marks omitted]), we note that coverage is excluded only if an accident originates from, is incident to or has connection with a person's "participat[ion]" in a "show." Here, it cannot be said that there is no ambiguity concerning whether the accident arose out of plaintiff's participation in a show, which in fact had ended before the accident occurred.

While ruling against Essex on the coverage issue, the majority did at least recognize that a judgment creditor proceeding via Insurance Law § 3420(b)(1) against the judgment debtor's liability insurer may not recover more than the limit of the judgment debtor's liability coverage, which in this case was $500,000 per occurrence, less a $500 deductible. Consequently, the majority reduced the award against Essex from $950,000 to $499,500, plus interest and costs.

Justices Fahey and Peradotto dissented, all but guaranteeing an appeal of this case to the New York Court of Appeals. The dissenting justices concluded that the language "participates in or is a part of any . . . show" is not ambiguous, and that the plaintiff fell squarely within that language:

[P]laintiff was hired by the band to provide sound reinforcement services for the show, and thus there is no question that he "participate[d] in or [wa]s a part of" the show on the night of his accident. The majority's conclusion that such clause may "reasonably be read narrowly to encompass only those persons who actually performed in the show or were injured as a result of activities occurring during the show" is not supported by the plain language of the exclusion. First, if the exclusion was intended to apply only to those persons who "actually performed" in a show, then the language "spectator, patron or customer" in the exclusion would be superfluous. Second, such an interpretation imposes a temporal limitation on the exclusion where no such limitation appears therein. Indeed, if defendant had intended to limit the exclusion in that manner, it could have done so explicitly as it did in other provisions of the policy (see Maroney v New York Cent. Mut. Fire Ins. Co., 5 NY3d 467, 473). For example, the policy's medical payments coverage provision specifically excludes expenses for bodily injury "[t]o a person injured while taking part in athletics" (emphasis added). Similarly, the policy's "combination endorsement" excludes expenses for bodily injury or personal injury to any person "while practicing for or participating in any event or function of a sporting or athletic nature" (emphasis added). Here, by contrast, the absence of such limiting language in the exclusion in question reflects an intent to provide a broad exclusion for all injuries arising from participation in shows or other special events (see Maroney, 5 NY3d at 473).

With respect to the majority's rejection of the broadening effect of the exclusion's "arising out of" language, the dissenters, relying on New York Court of Appeals' case law, noted:

We further conclude that plaintiff's injury "ar[o]se[] out of" his participation in the show within the meaning of the exclusion. In the insurance context, the phrase "arising out of" has been broadly interpreted to mean "originating from, incident to, or having connection with" (Maroney, 5 NY3d at 472 [internal quotation marks omitted]; see Regal Constr. Corp. v National Union Fire Ins. Co. of Pittsburgh, PA, 15 NY3d 34, 38). Here, plaintiff's accident occurred while he was in the process of removing his sound equipment from the nightclub. The process of packing up and removing sound equipment at the conclusion of a show necessarily "originat[es] from, [is] incident to, or ha[s] connection with" the show (Maroney, 5 NY3d at 472 [internal quotation marks omitted]). The fact that plaintiff's accident was allegedly caused by the defective nature of the loading dock rather than any condition of the show itself does not remove plaintiff's injury from the policy exclusion. "[T]he focus of the inquiry is not on the precise cause of the accident but the general nature of the operation in the course of which the injury was sustained" (Regal Constr. Corp., 15 NY3d at 38). Indeed, "the phrase arising out of' . . . requires only that there be some causal relationship between the injury and the risk for which coverage is provided" (Maroney, 5 NY3d at 472), and such a causal relationship clearly exists here.

With its double dissent, expect this case to head to Albany. Although the "stage hand" exclusion itself may not be of great interest to most liability insurers doing business in New York, the "participates in" and "arising out of " language of that exclusion, and the New York courts' interpretation of those phrases, should be.

Post Script (July 11, 2012) ~~ On June 5, 2012, the New York Court of Appeals unanimously REVERSED this decision for the reasons given by the dissenting justices at the Fourth Department in a very short memorandum decision that you can read here.

1. Rhetorical coverage question.

... and Sometimes the Bar Eats You

noreply@blogger.com (Roy A. Mura) — Wed, 21 Dec 2011 15:02:00 +0000

CGL – 62-DAY LATE NOTICE – 33-DAY UNTIMELY DISCLAIMER
Tower Ins. Co. of N.Y. v. NHT Owners LLC
(1st Dept., decided 12/20/2011)

Those of you who read the advance sheets know that Tower Insurance Company has successfully defended many late notice disclaimers, especially in the Appellate Division, First Department, where Tower is headquartered. Reporting delays of 3 months, 5 months, 5 months, 7 months, 9 months, and 9 months to Tower have been ruled unreasonable as a matter of law, entitling Tower to summary judgment. Most of the reported case law to date, of course, was decided under New York's "old" no-prejudice rule; under most New York liability policies issued, renewed or modified on and after January 17, 2009, insurers must demonstrate that they were prejudiced by their insureds' delayed reporting in order successfully to disclaim coverage based on such late notice.

In this latest episode of late notice limbo, Tower disclaimed liability coverage to the defendant insureds in this case based on their 62-day delay in notifying Tower of an accident in which an individual fell from a ladder in an elevator at defendants' premises. The insureds were aware of the accident on the day it occurred. Supreme Court, New York County (Marcy S. Friedman, J.) granted the defendant insureds' cross motion for summary judgment against Tower in this declaratory judgment action, and Tower appealed.

In unanimously AFFIRMING the order appealed from, with costs, the Appellate Division, First Department, found it unnecessary to reach the issue of whether the insureds' 62-day reporting delay was timely because Tower's 33-day delay in disclaiming was, in the First Department's opinion, untimely as a matter of law:

A liability policy that requires an insured to provide notice of an occurrence to its insurer "as soon as practicable" obligates the insured to give notice of the occurrence within a reasonable period of time (Great Canal Realty Corp. v Seneca Ins. Co., 5 NY3d 742, 743 [2005]). However, we need not reach the question of whether, under all the circumstances, the insureds' notice of claim, 62 days after the occurrence, was timely, where they conducted an inquiry into the underlying accident, and believed there was no liability (see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 441 [1972]) because the court properly held that the notice of disclaimer, after a 33-day period, was untimely as a matter of law (see Ins Law § 3420[d]; First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 68-69 [2003]; see e.g. West 16th St. Tenants Corp. v Public Serv. Mut. Ins. Co., 290 AD2d 278 [2002], lv denied 98 NY2d 605 [2002]). The insurer's sole ground for the disclaimer of coverage was the insured's delay in notifying it of the occurrence, which was readily apparent at the time of the notice of claim (see First Fin. Ins. Co., 1 NY3d at 69).

The New York courts have recognized a number of excuses to an insured's late notice of occurrence:

reasonable, good faith belief in non-liability
de minimus injury
ignorance of coverage

In effect, a liability insurer's untimely disclaimer of coverage can also operate to excuse an insured's late notice. New York Insurance Law § 3420(d)(2) requires that for bodily injury or death claims arising out of New York accidents, liability insurers must disclaim liability or deny coverage in writing "as soon as is reasonably possible" to the insured and the injured person or any other claimant.

How soon is that? In this case, 33 days was not as soon as reasonably possible. But that's not the New York state record. 30 days is. Where the ground or grounds for the liability insurer's disclaimer are "readily apparent" from the time of the insured's first notice of claim, any delay by the insurer in disclaiming liability or denying coverage will be scrutinized by the New York courts. Here are the low water marks in New York for what have been found to be untimely disclaimers as a matter of law:

30 days	West 16th Street Tenants Corp. v. Public Service Mut. Ins. Co., 290 AD2d 278 (1st Dept. 2002)
37 days	2833 Third Ave. Realty Assocs. v. Marcus, 12 AD3d 329 (1st Dept. 2004)
41 days	Matter of Nationwide Mut. Ins. Co. v. Steiner, 199 AD2d 507(2nd Dept. 1993)
48 days	First Fin. Ins Co. v. Jetco Contr. Corp., 1 NY3d 64 (Ct. Apps. 2003)
60 days	Milbank Housing Dev. Fund v. Royal Indem. Co., 17 AD3d 280 (1st Dept. 2005)

Claim Professionals Cannot be Held Personally Liable

noreply@blogger.com (Roy A. Mura) — Mon, 19 Dec 2011 13:07:00 +0000

HOMEOWNERS – BREACH OF CONTRACT – PUNITIVE DAMAGES – FRAUD – ATTORNEYS' FEES – PERSONAL LIABILITY
O'Keefe v. Allstate Ins. Co.
(2nd Dept., decided 12/13/2011)

There's nothing new in this decision, but it sets forth a number of important and useful principles relating to the defense of first-party property coverage disputes:

Personal Liability of Claims Professionals

Agents of a disclosed principal cannot be held personally liable for the principal's breach of contract. Supreme Court properly dismissed this action against the Allstate claims professionals who were named as individual defendants in the complaint.

The Supreme Court properly granted that branch of the defendants' motion which was pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against the individual defendants, Mark Malenczak, David Mateer, and Freida Hicks (hereinafter collectively the individual defendants), all employees of the defendant Allstate Insurance Company (hereinafter the insurer), as they cannot, under the circumstances of this case, be held personally liable to the plaintiffs (see Bardi v Farmers Fire Ins. Co., 260 AD2d 783, 787; Schunk v New York Cent. Mut. Fire Ins. Co., 237 AD2d 913, 915; Benatovich v Propis Agency, 224 AD2d 998, 998-999).

Fraud Cause of Action

If a complaint's fraud cause of action relates directly to its breach of contract cause of action, it must be dismissed.

With respect to the complaint insofar as asserted against the insurer, the third cause of action sounds in fraud but relates directly to the breach of contract claims, in that it alleges that the insurer's actions were undertaken to avoid paying the plaintiffs the amounts specified in their insurance policy. Accordingly, the third cause of action cannot be sustained (see Pepper v Hezghia, 307 AD2d 959, 960; Schunk v New York Cent. Mut. Fire Ins. Co., 237 AD2d at 913-915; F. Nathanson & Co. v Marinello, 192 AD2d 575; Manshul Constr. Corp. v City of New York, 143 AD2d 333, 336).

Attorneys' Fees

As a general rule, attorneys' fees are not recoverable in a breach of contract action. An insured may not recover the expenses incurred in bringing an affirmative action against an insurer to settle the insured's rights under the policy.

Moreover, the Supreme Court properly granted that branch of the motion which was to dismiss so much of the complaint as sought an award of an attorney's fee against the insurer. An "insured may not recover the expenses incurred in bringing an affirmative action against an insurer to settle its rights under the policy" (New York Univ. v Continental Ins. Co., 87 NY2d 308, 324; see Mighty Midgets v Centennial Ins. Co., 47 NY2d 12, 21).

Punitive Damages

Punitive damages are not recoverable unless the complaint alleges facts supporting the contention that the insurer's conduct was egregious or fraudulent, or that it evidenced wanton dishonesty so as to imply a criminal indifference to civil obligations directed at the public generally. Private breach of contract disputes generally do not warrant punitive damages.

Further, punitive damages are not warranted, as "[t]he insureds failed to set forth any facts or allegations to support their contention that the defendant insurer'[s] conduct was egregious or fraudulent, or that it evidenced wanton dishonesty so as to imply a criminal indifference to civil obligations directed at the public generally. This case is, in effect, simply a private breach of contract dispute between the insurer[ ] and [its] insureds with no greater implications" (Flores-King v Encompass Ins. Co., 29 AD3d 627, 627; see Rocanova v Equitable Life Assur. Socy. of U.S., 83 NY2d 603, 615).

Don't Ask, Don't Tell Me You Have a Good Faith Belief in Nonliability

noreply@blogger.com (Roy A. Mura) — Fri, 16 Dec 2011 14:25:00 +0000

CGL – LATE NOTICE – GOOD FAITH BELIEF IN NONLIABILITY
Fine Line Bldrs. & Remodelers, Inc. v. Atlantic Cas. Ins. Co.
(2nd Dept., decided 12/13/2011)

Atlantic Casualty disclaimed liability coverage based on its insured's late notice of an accident. The insured attempted to explain its late notice by claiming that it had a good faith belief in nonliability, one of the judicially recognized excuses for late notice in New York. The motion court was unpersuaded, granting summary judgment to Atlantic Casualty in this declaratory judgment action.

The Appellate Division, Second Department, AFFIRMED, noting:

The plaintiff's claim that it had a reasonable, good faith belief in nonliability was belied by its failure to inquire into the circumstances of the accident at issue in the underlying action (see Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 441; Hanson v Turner Constr. Co., 70 AD3d 641; York Specialty Food, Inc. v Towers Ins. Co. of N.Y., 47 AD3d 589, 590; St. Nicholas Cathedral of Russian Orthodox Church in N. Am. v Travelers Prop. Cas. Ins. Co., 45 AD3d 411; Felix v Pinewood Bldrs., Inc., 30 AD3d at 461).

Belied: to show something to be false or wrong.

Insureds who do not inquire into the circumstances of a known accident may not legitimately claim that they had a reasonable, good faith belief in nonliability so as to excuse their late reporting of the accident to their liability insurers.

Coverage Counsel Honored as a LexisNexis Top Insurance Law Blog for 2011

noreply@blogger.com (Roy A. Mura) — Fri, 16 Dec 2011 13:50:00 +0000

I am pleased to announce that this blog has again been selected as a LexisNexis Top Blog for Insurance Law. The top blogs were nominated by the LexisNexis Insurance Law Community members.

From LexisNexis:

After some very careful review and a great deal of deliberation, the LexisNexis Insurance Law Community has selected its Top Insurance Blogs for 2011.

We’d like to express gratitude to our Community members for your comments and suggestions. All of you submitted many of the new names on the 2011 Top Blogslist and we thank you for infusing fresh talent into our Community. We also want to especially thank the LexisNexis Insurance Law Advisory Board for giving us their input.

These top blogs offer some of the best writing out there. They contain a wealth of information for all segments of the insurance industry, and include timely news items, expert analysis, practice tips, frequent postings and helpful links to other sites and sources.

These sites demonstrate the power of the blogsphere, by providing a collective example of how bloggers can—and do—impact and influence the law and the business of insurance.

Thank you Coverage Counsel readers for your continued support and input.

Here's the full list of the 42 top insurance blogs:

Ask Tim (Tim Dodge, Independent Insurance Agents & Brokers of NY)
Binding Authority (Randy J. Maniloff)
Boston ERISA and Insurance Litigation Blog (Stephen Rosenberg)
Corporate Insurance Blog (Scott Godes)
Coverage Counsel (Mura & Storm)
CyberInquirer (Cozen O’Connor)
Disability Insurance Lawyer Blog (Frankel & Newfield)
Gauntlett on Intellectual Property/Antitrust Insurance (David A. Gauntlett)
GC Capital Ideas (Guy Carpenter)
GlobalTort (Kirk Hartley, Steve Sellick and Tim Greene)
Healthblawg (David Harlow)
Health Care Law Reform (McDermott Will & Emery)
Insurance Claims and Issues (Dennis Wall)
Insurance Class Actions Insider (Wystan Ackerman)
Insurance Coverage Corner (Carlock, Copeland & Stair)
Insurance Coverage Law Blog (Dunn Carney Allen Higgens & Tongue LLP)
Insurance Coverage Law in Massachusetts (Nina Kallen)
Insurance Litigation and Regulatory Law Blog (Barger & Wolen LLP)
Insurance Law Hawaii (Tred R. Eyerly)
InsureReinsure (Edwards Wildman Palmer LLP)
Life, Health and Disability Insurance Blog (Barger & Wolen LLP)
Life Insurance Law Blog (Currin Compliance Services LLC)
Loree Reinsurance and Arbitration Law Forum (Loree & Loree)
National Insurance Law Forum (National Insurance Law Forum)
Nevada Insurance Law Blog (Mills & Associates Law Firm)
No-Fault Defender (Jason Tenenbaum)
North Carolina Insurance Law (George Simpson)
PLUS Blog (Professional Liability Underwriting Society)
Policyholder Perspective (Farella Braun + Martel LLP)
Property Insurance Coverage Law Blog (Merlin Law Group)
Reinsurance Focus (Jorden Burt LLP)
reinsurance girl’s blog (Rein4ce)
Reinsurance Law Blog (Stauffer & Nathan)
Risk Management Monitor (RIMS)
Subrogation & Recovery Law Blog (Cozen O’Connor)
Tennessee Insurance Litigation Blog (Brandon McWherter and Parks T. Chastain)
Terms + Conditions (Insurance Information Institute)
The D&O Diary (Kevin M. LaCroix)
The Insurance and Reinsurance Report (Goldberg & Segalla)
Tort Talk (Dan E. Cummins)
Traub Lieberman Insurance Law Blog (Brian Margolies)
Zalma on Insurance (Barry Zalma)

New York Appellate Court Holds that Third-Party Diminution in Value Damages Are Recoverable in Addition to Cost of Repairs for Personal Property that Appreciates in Value

noreply@blogger.com (Roy A. Mura) — Thu, 15 Dec 2011 13:50:00 +0000

PERSONAL AUTO – THIRD-PARTY DIMINISHED VALUE – COST OF REPAIRS – MEASURE OF RECOVERABLE DAMAGES
Franklin Corp. v Prahler
(4th Dept., decided 11/10/2011)

Spoiler alert: it could be said that this decision makes new law in New York on the issue of whether third-party diminution of value damages for a motor vehicle are recoverable in addition to the cost of repairs even if the repairs restore the vehicle to its pre-accident condition. In the opinion of the Appellate Division, Fourth Department, they are if the personal property or vehicle in question is the type that appreciates in value.

Plaintiff owned a 550-hp 2005 Ford GT sportscar¹, one of only 4083 ever built. The MSRP in 2005 for one of these cars was $149,995, but plaintiff claimed the GT "is a rare collector's sports car rapidly appreciating in value." On May 28, 2005, defendant's 1997 Jeep Cherokee (MSRP $20,460) brushed up against and allegedly damaged² the plaintiff's GT while it was parked on a street in the Chippewa bar district of downtown Buffalo, New York.

Defendant's personal auto insurer, State Farm, estimated the cost of repairing the damage to plaintiff's GT to be $3,484.35. Plaintiff sued the defendant in negligence, seeking $52,000 in damages. Plaintiff claimed that even if the GT were fully repaired, the mere fact that it had been in an accident had diminished its market value by $40,000 because it would no longer be in its "original factory condition." Plaintiff also claimed that repairing the GT would itself cause the vehicle to lose market value because it would no longer be in its original factory condition. As of March 2009 when plaintiff's president was deposed, the GT had 2,500 miles on it and had not been repaired.

On the eve of trial, defendant made a motion in limine seeking to preclude plaintiff's two expert appraisers from "giving expert opinion testimony" at the damages trial.³ Defendant also requested that the court charge New York Pattern Jury Instruction (PJI) 2:311, entitled "Damages—Property with Market Value", which states:

If plaintiff's . . . automobile . . . was damaged by the defendant's negligence, you will award to the plaintiff as damages the difference between its market value immediately before and immediately after it was damaged, or the reasonable cost of repairs necessary to restore it to its former condition, whichever is less.

Thus, if the reasonable cost of repairs exceeds the reduction in market value, you will award the amount by which the market value was reduced. If the reasonable cost of repairs is less than the reduction in market value, you will award to the plaintiff the reasonable cost of repairs required to restore the . . . automobile . . . to its condition immediately before it was damaged.

Plaintiff cross-moved in limine and submitted its own proposed post-trial jury charge based on PJI 1:60:

In this case the plaintiff claims that it has suffered damage to its automobile as a result of the accident caused by the defendant. Plaintiff further claims that the measure of damages is the difference between the market value of the vehicle immediately prior to the accident and the value after the accident. It is plaintiff's contention that even with repairs to return the vehicle to its pre-loss condition in terms of appearance and function, this particular vehicle is worth less after the accident simply because it was involved in an accident.

Citing Johnson v. Scholz, 276 A.D. 163 (2nd Dept. 1949), plaintiff also requested that the following jury charges on damages be given:

Where the repairs do not restore the property to its condition before the accident, the difference in the market value immediately before the accident and after the repairs have been made may be added to the costs of repairs.

When, as in this case, the property damaged is a limited edition collector item[,] the plaintiff may recover the difference in money between the market value of the property before and after the damage. In determining the amount of such loss, you will consider the evidence presented with respect to: witnesses experienced in the trade of the specialized market, testimony as to the market for such property, the distinction in value between two similar collector items where one has been damaged and repaired and one that has never been damaged and repaired, together with all other evidence presented to establish the value of the vehicle and the extent of plaintiff's damage.

The trial court granted defendant's motion in limine and, concluding that the case was controlled by the Second Department's decision in Johnson v. Scholz, ruled that the jury would be instructed that the measure of damages would be either the diminution in value or the reasonable cost of repair, whichever was less. Recognizing that its ruling would limit the proof and issues at trial,the court ordered that the trial would be stayed pending plaintiff's appeal of its decision to the Appellate Division.

In REVERSING the trial court's decision on defendant's motion in limine, the Appellate Division, Fourth Department, in a unanimous opinion written by Justice Martoche, concluded that the trial court erred in limiting plaintiff's proof at trial with respect to the diminution in value of the GT and thus that plaintiff was entitled to the charges it requested on that issue.

Distinguishing Johnson, the Fourth Department noted that there was no evidence that the automobile in Johnson had appreciated in value from the time of its purchase, as plaintiff contended the GT did in this case. The Fourth Department likened the GT more to the plaintiff's violin in Schalscha v Third Ave. R.R. Co., a First Department, Appellate Division, decision from 1897, in which the court held that the plaintiff could recover not only the cost to repair the damaged violin but also its after-repair depreciation in value.

In support of its decision, the Fourth Department quoted Restatement of Torts § 928, entitled "Harm [t]o [C]hattels", which provides:

Where a person is entitled to a judgment for harm to chattels not amounting to a total destruction in value, the damages include compensation for

(a) the difference between the value of the chattel before the harm and the value after the harm or, at the plaintiff's election, the reasonable cost of repair or restoration where feasible, with due allowance for any difference between the original value and the value after repairs, and

(b) the loss of use.

Noting that a majority of jurisdictions have adopted Restatement of Torts § 928 to conclude that a plaintiff may recover the reduction in value after repairs are made, the Fourth Department reasoned that the trial court was not constrained to charge the jury with New York PJI 2:311, which was based on the holding in Johnson. While not disagreeing with the holding in Johnson, the Fourth Department seemingly created an exception to the Johnson rule, stating:

Conversely, there can be no doubt that, under a general theory of damages, a plaintiff is entitled to be made whole. The situation presented here is somewhat unusual in that the GT has allegedly increased in value since the time of purchase, unlike most motor vehicles that would have diminished in value from the time of purchase to the time of the accident. Where a vehicle, like any other piece of personal property, has increased in value and is subsequently damaged by the negligence of the defendant, the plaintiff should be entitled to recover the cost of that diminution in value. Otherwise, the plaintiff will not be made whole. In our view, PJI 2:311 was intended to cover the situation in Gass (264 NY at 143-144), where personal property has depreciated from its original market value and is then damaged by the negligence of the defendant. The plaintiff in such a case will be entitled to recover the costs of repairs or the diminution in value, whichever is less.

If personal property appreciates in market value from the time of its acquisition and is damaged by the negligence of another, the rule of this decision allows for the third-party recovery of both repair costs and proven diminished value IF repairs are actually made. If, however, like most chattel (personal property), if the property's original market value has depreciated, then its owner will be limited to recover either the reasonable cost of repairs or the property's diminished value, whichever is less.

The actual impact of this decision to personal auto and liability insurers should be minimal since most personal property depreciates rather than appreciates in market value after acquisition. It marks, however, what could be considered a "new" rule in New York. New, at least, to the 20th and 21st centuries.

Post Script (August 29, 2012) ~~ I tried this case to a jury for the defendant, Justin Prahler. Verdict returned today. $0.00 in repair costs. $0.00 in diminished value. Huge.

1. The decision says 2000, but Ford built the GT for model years 2005 and 2006 only.

2. Substantial dispute exists between the parties as to whether the GT sustained any damage at all from its contact with the defendant's Jeep. If anything, the damage was cosmetic only. My office represents the defendant in this action.

3. The court previously granted plaintiff's motion for partial summary judgment on negligence liability against the defendant.

Homeowner Insurer's Failure to Timely Respond to Insured's Proof of Loss or Send 90-Day Delay Letters Does Not Preclude Exclusion-Based Coverage Defenses

noreply@blogger.com (Roy A. Mura) — Wed, 14 Dec 2011 14:28:00 +0000

PROPERTY – HOMEOWNERS – PROOF OF LOSS – REGULATION 64 – 90-DAY DELAY LETTERS – DEFENSE PRECLUSION
Mallory v. Allstate Ins. Co.
(2nd Dept., decided 12/6/2011)

Section 216.6 (c) of New York Insurance Regulation 64 (Title 11 NYCRR Part 216) requires an insurer, "[w]ithin 15 business days after receipt by the insurer of a properly executed proof of loss and/or receipt of all items, statements and forms which the insurer requested from the claimant," (30 days if the insurer suspects that the claim involves arson) to advise a claimant, or a claimant's representative, in writing, (1) of its acceptance or rejection of the claim, or (2) that it needs more time to determine whether the claim should be accepted or rejected. Thereafter, if the claim remains unsettled, unless the matter is in litigation or arbitration, the insurer must, 90 days from the date of the initial letter setting forth the need for further time to investigate, and every 90 days thereafter, send to the claimant or the claimant's authorized representative a letter setting forth the reasons additional time is needed for investigation. These letters are sometimes called "delay letters" by property claims representatives.

What if the insurer fails to comply with this regulatory requirement by not responding to the insured's proof of loss or claim submission or sending the 90-day delay letters within the required time period? Is the insurer precluded from raising and relying on policy exclusions to deny coverage? No, says the Appellate Division, Second Department. Again.

Plaintiff commenced this action to recover the proceeds of a fire insurance policy. Allstate asserted several affirmative defenses based on policy exclusions. Plaintiff moved to dismiss Allstate's exclusion-based affirmative defenses on the ground that it was precluded from raising those defenses because of its failure to comply with 11 NYCRR § 216.6(c) in processing the plaintiff's claim. Supreme Court denied plaintiff's motion and, reaffirming its 2004 decision in De Marinis v Tower Ins. Co. of N.Y., the Appellate Division AFFIRMED:

In De Marinis v Tower Ins. Co. of N.Y. (6 AD3d 484, 486-487), this Court held that a failure to comply with 11 NYCRR 216.6(c) does not preclude an insurance company from relying on a policy exclusion to disclaim coverage. We decline the plaintiff's invitation to overrule De Marinis. Accordingly, the plaintiff did not demonstrate that the defenses were without merit as a matter of law (see CPLR 3211[b]; Galasso, Langione & Botter, LLP v Liotti, 81 AD3d 880, 882).

The potential consequence of not complying with 216.6(c) is administrative sanction, not defense preclusion.

Appellate Division, First Department, Holds that Fee Schedule is a Precludable Defense

noreply@blogger.com (Roy A. Mura) — Wed, 14 Dec 2011 02:03:00 +0000

NO-FAULT – WORKERS' COMPENSATION FEE SCHEDULE – DEFENSE PRECLUSION – UNTIMELY DENIAL – INSURANCE LAW § 5106
Mercury Cas. Co. v. Encare, Inc.
(1st Dept., decided 12/13/2011)

If a New York no-fault insurer does not issue a timely denial of PIP benefits, is it precluded from limiting payment to the amounts prescribed by the New York workers' compensation fee schedule? In the opinion of the Appellate Division, First Department, the answer is YES, it is precluded from asserting the fee schedule defense.

Nor do we find it significant, in light of the genesis and purposes of the preclusion rule, that Insurance Law § 5108 prohibits a medical provider from seeking fees in excess of the fee schedule. Virtually every application of the preclusion rule involves the compromise of statute, policy provision, or judge-made rule in service of effectuating the important purposes of the No-Fault Law. The expansion of the lack of coverage exception proposed by Mercury would substantially weaken the long-established rule of preclusion.

Jason Tenenbaum, who represented Mercury in this case, offers his observations of this decision here.

Madness. Simply madness.

Why I Haven't Been Blogging

noreply@blogger.com (Roy A. Mura) — Wed, 07 Dec 2011 13:13:00 +0000

Since mid-November I've been occupied with getting ready for and trying this, this, this, this and this. Yes, the trial judge really did call my client's intentional acts defense "incomprehensible". We'll see what the jury thinks. Deliberations and verdict should come tomorrow.

Update ~~ December 13, 2011

After another day of trying the case against two lawyers, one to my side and one in front of me on the bench, the jury swiftly returned a verdict for the plaintiff. Final two news stories are here and here. I guess in the end it didn't matter that I was able to get both plaintiff's experts to concede that they could not definitively say that the largest of the three areas of fire origin was electrical in cause (because they couldn't say that the sections of BX cable they found in the largest area of origin nearly two years after the fire were actually connected to anything and energized at the time of the fire). And despite plaintiff's expert having offered a new and different theory of fire spread and ignition at trial, the judge refused to let me recall my fire origin and cause expert as a rebuttal witness.

My client is considering an appeal. The damages trial starts January 17, 2012.