News Insurance Limits Must be Exhausted by Payment (NY) August 23, 2013 < Back Share to: Anyone who grew up in the 1980's is familiar with the "Commodore 64" home computer. The company filed for bankruptcy in 1994, but its directors were recently involved in an interesting case involving excess insurance coverage issues. In Ali v. Federal Insurance Company, the directors sought coverage under their multi-tier insurance policy. The directors were insured by a “tower” system – namely, each excess policy would be triggered when the limits of the policy below it had reached. The policies contained an “exhaustion” clause which provided that the excess insurance would not apply until all of the underlying limits had been exhausted, “solely as a result of payment of losses thereunder.” Two of the excess carriers in the tower had become insolvent, including one which had issued an excess policy that contained limits of between $10 million and $15 million. Because the $10 million excess carrier had gone under, the insureds sought coverage under the Federal excess policy that provided coverage in excess of $15 million. The insureds argued that because they were not able to obtain coverage for the amount of liability of $10-15 million, the Federal policy dropped down to cover that amount of liability. The Second Circuit disagreed and relied on the specific policy language that provided coverage where the underlying policies were exhausted as a result of “payment” of the loss, not merely liability above that amount. In reaching this decision, the Second Circuit also made two interesting points. First, this is limited to the context of third party liability policies, and did not apply to the first party context. For example, an insured seeking coverage for its own property does not have to force a primary carrier to pay him before reaching an agreement with the excess carrier. Second, the Court noted that if it allowed the upper limits to be exhausted by liability alone, the insured could artificially inflate the structure of any settlement in order to tap into these higher limits, and that the requirement of actual payment afforded the insures some protection against the threat. Thanks to Mendel Simon for his contribution to this post. If you would like more information, please write to Mike Bono. Previous Next Contact

News California Insureds File Suit Seeking Coverage For Covid-19 Claims April 17, 2020 < Back Share to: A prominent California law firm, along with two commercial property owners and a restaurant have sued their insurer in Los Angeles County Superior Court seeking coverage for losses related to the coronavirus pandemic. The four suits, filed on April 9 and April 10, 2020, seek declarations that Travelers Indemnity Co. of Connecticut is obligated to provide coverage under the policyholders’ “all-risk” policies. According to the plaintiffs, Travelers has accepted their premium payments with no intention of covering loss and shutdown from a virus pandemic under the civil-authority coverage section of the Travelers policies. Los Angeles Mayor Eric Garcetti ordered all nonessential businesses in the city to close on March 15. The order followed a similar statewide order from California Governor Gavin Newsome issued on the same day. The plaintiffs also name the Los Angeles Mayor as a defendant in the suits. According to the plaintiffs’ complaints, Mayor Garcetti’s order specifically referenced “dire risks of exposure with the contraction of Covid-19 and evidence of physical damage to property.” All four plaintiffs have used this language to couch their argument for coverage under the business income and extra expense coverage parts for closures by order of civil authority. In addition, the civil authority coverage parts of the policies here include “direct physical loss” and indirect damage. Notably, it appears, the plaintiffs will argue that the global scientific community’s consensus is that the coronavirus is a cause of “real physical loss and damage.” According to the complaints, Covid-19 has physically affected the plaintiffs’ property since the virus can remain on surfaces or objects for up to 28 days. Each lawsuit seeks a declaratory judgment that Mayor Garcetti’s order triggers coverage under the policies. Though in their early stages, these suits offer a glimpse into what insureds will likely argue in order to trigger coverage under their policies. The particularly noteworthy argument is making use of both the shutdown civil authority order, as well as the scientific consensus on the ability of the virus to remain on surfaces and objects for a substantial period of time. We’ll continue to keep you posted on this emerging area of law. Thanks to Joseph Anzalone for his contribution to this post. If you have any questions or comments, please contact Colleen Hayes. Previous Next Contact

News NJ Court Affirms PIP Insurer's Right To Settle Even If Policy Limits Are Exhausted For Other Claims December 21, 2009 < Back Share to: Marilus Rodriquez suffered personal injuries in a motor vehicle accident with medical bills for treatment totaling $623,677. The Allstate policy providing PIP benefits to her had $250,000 per accident limits. After Allstate paid $250,000, another unpaid provider, Endo Surgical sought additional benefits over the Allstate policy limits. It argued that while its demand for arbitration was pending, Allstate had a duty to notify it that the insured's PIP benefits were going to be exhausted. The appellate division rejected this argument and affirmed , finding that, absent bad faith, an insurer may settle with one claimant, notwithstanding that the settlement may exhaust the policy limits available for other claimants. http://www.judiciary.state.nj.us/opinions/a2146-08.pdf Previous Next Contact

News Guilty Plea Not Necessarily Proof of Liability For Civil Suit (NY) August 9, 2012 < Back Share to: In Maiello v. Kirchner, the Second Department was asked to determine whether a defendant was collaterally estopped from contesting liability in a civil matter where he entered a conditional plea of guilty to an assault charge, but that plea was later vacated. On the day of the incident, the defendant went to the plaintiff’s house to speak with his estranged wife, who happened to be dating the plaintiff at the time. A confrontation ensued when the defendant tried to get in the door, so the plaintiff picked the defendant up and placed him on the front of the porch, where the defendant lost his balance. The defendant then reached out and grabbed the plaintiff, pulling him off the porch and causing substantial injuries. The defendant subsequently pled guilty to assault in the third degree on the condition that upon completion of probation, the plea would be vacated and the charge would be amended to harassment in the second degree. The defendant completed the probation, the assault charge was vacated, and the charge was amended. In his civil action against the defendant, the plaintiff moved for summary judgment arguing that based on his guilty plea to assault, the defendant was collaterally estopped from contesting liability. A party may invoke the doctrine of collateral estoppel to prevent a party from contesting liability where the criminal conviction is based upon facts identical to those in issue in a civil action. The party seeking benefit of collateral estoppel bears the burden of proving that the identical issue was necessarily decided in the prior action, and is decisive in the present action. The party against whom preclusion is sought bears the burden of demonstrating the absence of a full and fair opportunity to contest the prior determination. The Supreme Court found that the defendant’s plea estopped him from contesting liability, but the Second Department disagreed. It found that although the defendant’s plea involved the identical issue in the civil proceeding, liability was not decided because a conditional plea was not a final judgment. Rather, when a defendant enters a conditional plea, sentencing is adjourned. The court further found that the defendant’s plea to harassment did not estop him from contesting liability because he did not have a full and fair opportunity to contest liability. It reasoned that the defendant did not have the same incentive to contest the charge against him because harassment was a nonviolent violation. Thanks to Gabriel Darwick for his contribution. For more information, contact Denise Ricci at dricci@wcmlaw.com   Previous Next Contact

News This New Year, Perhaps Tell Your Personal Trainer to "Butt Out" January 4, 2013 < Back Share to: Many of us have already begun the annual pilgrimage back into crowded gyms with the intent to follow through on New Year's resolutions. But if you're looking for a personal trainer to help guide you on your path to personal fulfillment, it may be a good idea to make sure he or she does not instead set you on a path to pain. In a split decision, the Appellate Division, Third Department, has ruled that where a gym patron suffered a back injury while performing a squat exercise pursuant to a personal trainer's written instructions, a jury should generally decide whether the patron assumed the risk of injury. Under the well-settled doctrine of assumption risk, a person who voluntarily participates in a recreational activity is deemed to have assumed the inherent risks of that activity. Plaintiff Dianne A. Layden took part in a personal training session at a fitness center with a personal trainer, defendant Angela Plante. Prior to her training session, plaintiff advised Ms. Plante that she had a history of back problems. Ms. Plante supervised plaintiff's training session, and provided her with written instructions on how to repeat the exercises independently. Plaintiff returned to the gym days later, and attempted to perform a weight-lift move known as a "Smith squat," as described in the written instructions. While performing the maneuver, plaintiff experienced back pain, which thereafter required surgery to correct two herniated discs. Plaintiff commenced a lawsuit against the trainer, and the owner of the fitness center. The defendants each moved for summary judgment based on the doctrine of assumption of risk. The Third Department reversed the trial court's decision granting the defendants summary judgment, and ruled that a jury should decide whether plaintiff assumed the risk of injury when attempting to perform the squat exercise. The court noted that the application of the assumption of risk doctrine is typically a question of fact best resolved by a jury. Specifically, the majority found that the plaintiff raised a question of fact as to whether the trainer's potentially misleading directions "unreasonably heightened the risks to which [plaintiff] was exposed." Plaintiff's experts testified that the trainer improperly instructed plaintiff to "stick her butt out" while performing the squats. Instead, plaintiff's experts averred that a person should maintain a straight back when performing Smith squats. So this New Year, instead of assuming that your personal trainer will prevent you from getting injured, you may wish to simply tell him or her to "butt out" of your workout. Layden v. Plante, 2012 WL 6698873, 2 (3d Dept. 2012). http://www.nycourts.gov/reporter/3dseries/2012/2012_09126.htm Many thanks to Steve Kaye, Jr. who assisted with this post.   Previous Next Contact

News Whether Belief In Non-Liability Is Reasonable Question For Jury June 11, 2009 < Back Share to: In Preferred Mutual Insurance Co. v. New York Fire-Shield, the Third Department analyzed the timeliness of notice provided by an insured. First, the court recognized that timely notice was still required under general liability and excess policies, and that notice made two years after the insured was aware of a possible claim would ordinarily be late. However, the court held that a reasonable belief in non-liability would excuse untimely notice, and it was for a jury to determine whether the insured’s belief was reasonable. http://decisions.courts.state.ny.us/ad3/Decisions/2009/505847.pdf Previous Next Contact

News Prominent Art Gallery Alleges It Was Sued for “Buyer’s Remorse” (NY) August 23, 2016 < Back Share to: A recently filed suit by art dealer Fabrizio Moretti claims art dealer David Zwirner engaged in “chicanery” and played a game of “three-card monte,” regarding the sale of a sculpture titled Gazing Ball (Centaur and Lapith Maiden) by artist Jeff Koons, pictured below. The work of art was initially marketed by Zwirner in 2013 as Edition 1 of 3 (plus an artists’ proof). In June 2014, Moretti contracted with Zwirner’s gallery to purchase #2 of 3 in the sculpture set for $2,000,000. According to the complaint, Zwirner promised Moretti the sculpture would be delivered within a year after signing the purchase agreement. Moretti alleges his sculpture was completed in April 2015, but was misidentified as “3/3.” Moretti claims Zwirner knew the work was mislabeled, but did not attempt to correct the mistake because Zwirner wanted to sell the work as the third and final part of the set at public auction. In May 2015, #3 of 3 was listed at Sotheby’s in New York, but failed to fetch the estimated $1.8–$2.5 million listing price. According to Moretti, this failed auction heavily damaged the overall value of Koons’ work. After waiting over two years for #2 of 3, Moretti advised Zwirner it was cancelling the contract and he requested his money for the sculpture be returned. When that didn’t happen, Moretti filed suit seeking $6 million in damages, and alleging violations of New York Arts and Cultural Affairs Law, breach of contract, breach of warranties, and fraud. Zwirner swiftly moved to dismiss the complaint in lieu of answering based on CPLR 3211(a)(1) and (7) for failure to state a claim and documentary evidence. According to Zwirner, there was no breach of contract because the purchase agreement did not contain any deadline for completion, and Moretti was required to provide notice before claiming a breach. According to Zwirner, Moretti continued to make payments on the sculpture, showed interest in having it delivered, and only now seeks to cancel the contract because he “lost interest” in the work. It will be interesting to see whether the court grants Zwirner’s motion to dismiss. Here, it does seem there was some “chicanery” on both sides. Moretti likely was sold on the exclusivity of Koons’ work based on the artist’s relationship with the Zwirner Gallery and the exhibition materials provided to Moretti by Zwirner. The catalogue clearly states that Gazing Ball is Edition 1 of 3 (plus artist’s proof). Yet, Moretti claims there are at least five casts of the sculpture (with more on the way), and Moretti would not have made his original purchase if all of this information was disclosed. In the world of fine art, owning a specific piece of art from a set can drastically increase the work’s overall worth because of its exclusivity. Yet, according to Moretti, Zwirner ignored this exclusivity premium by attempting to sell additional sculptures as “prototypes.” On the other hand, there is substance to Zwirner’s claims that Moretti is simply having “buyer’s remorse.” Why would Moretti continue to make payments on the purchase agreement without requesting a deadline for the completed work? Why would Moretti inquire with Zwirner about potential resale values for Koons’ work a couple months before attempting to rescind the contract? Moretti may have determined the subjective interests that drive the art world no longer favored Koons’ work (e.g., the failed Sotheby’s auction). Upon seeing the decline in interest for similar sculptures, Moretti may be trying to hedge his bets since the sculpture was never delivered. Either way, it’s a case that we will keep an eye on because it can have profound effects on how art galleries transact business with each other. Thanks to Dan Beatty for his contribution to this post. If you have any questions about this post, please call or email Brian Gibbons at Brian Gibbons for additional information. Previous Next Contact

News WCM Partner Bob Cosgrove to Speak at IUA London Event on COVID and Insurance. May 15, 2020 < Back Share to: WCM Partner Bob Cosgrove is set to speak at the International Underwriting Association of London on May 20 for a seminar entitled COVID 19: It’s Wreaked Havoc on Social Life and the Economy. Is Insurance Its Next Target in the US? For more information about the seminar, see this IUA flyer. The seminar which look at such things as: * Business income claims under a property policy -- How presented? -- Physical loss? -- ISO Virus exclusion? -- Pollution exclusion? * Business income and liability claims under a CGL policy -- How presented? -- Property damage? -- Negligence? * Policyholder attacks -- Ambiguous wordings -- Inconsistency in claims handling -- Reasonable expectations * Legislative and public policy COVID concerns * Suggested responses -- Reserve or disclaim? -- Request for information? -- Outside adjusters? * Litigation -- Class action/MDL -- Ripeness -- Precedents The seminar will be conducted along with WCM friend André C. Gaudin, a Louisiana based partner at Burglass Tankersley, LLP and Joseph D. Zopolsky, a Texas based partner at Glast, Phillips & Murray. While we can't guarantee room at the IUA event, if you have interest for your company, just reach out to Bob. Previous Next Contact

News Hockey Player Assumed Risk of Injury in Fight (NY) December 14, 2018 < Back Share to: Rodney Dangerfield once joked: “I went to a fight the other night, and a hockey game broke out.” But unlike Rodney, law and common sense received plenty of respect in Falcaro v American Skating Ctrs., LLC (2018 NY Slip Op 08469). There, a hockey player was injured during an in-game fight during his amatuer league game, after a referee had pulled him off the pile. In his lawsuit against the arena and others, the plaintiff claimed it was customary for fights to stop when a referee became involved. Nevertheless, he kept on fighting and was injured. Recognizing that a sports participant “consents to those commonly appreciated risks which are inherent in and arise out of the nature of the sport and generally flow from such participation,” the court granted the defendants’ motion for summary judgment. According to the court, the risk of involving oneself in an ongoing fight were inherent in the risks of ice hockey and “perfectly obvious.” The trial court actually denied the defendants' summary judgment motion, but on appeal, the 2nd Dept. reversed, citing the primary assumption of risk doctrine. So instead of a verdict in his favor, the plaintiff will have to settle for a 5-minute major. Thanks to Mike Gauvin for his contribution to this post. Please email Brian Gibbons with any questions.       Previous Next Contact

News Clarification of insurer’s burden on defense for material misrepresentations. February 23, 2009 < Back Share to: In Rafi v. Rutgers Cas. Ins. Co., the insurer declined to pay insured's claim for losses due to material misrepresentations made by the insured. The insured filed a breach of contract action and, following a jury trial, judgment was entered in favor of the insured. On appeal, New York’s Appellate Division, Fourth Department, ruled that the trial court committed reversible error by charging the jury that the insurer was required to prove that the alleged misrepresentations were intentional. The appellate court held that, if a misrepresentation is material, it can void a policy regardless of the insured’s intent. In order to prevail on a material misrepresentation defense, an insurer is required to submit evidence that it would not have issued the same policy had the correct information been included in the application. Thanks to Robin Green for her contribution to this post. http://www.courts.state.ny.us/reporter/3dseries/2009/2009_00905.htm Previous Next Contact

News Museum Vandalism: A Concern for Art Insurers? August 16, 2011 < Back Share to: Although, unlike with stolen art, there is not a database setting out acts of fine art vandalism, according to the Washington Post, vandalism is a big problem -- especially at museums. The problem is that the viewing public's right or desire to see unprotected works conflicts with the best possible security options available to museums. The conflict is unlikely to go away anytime soon, but should be considered by fine arts underwriters. For more information about this post or WCM's fine arts practice, please contact Bob Cosgrove at rcosgrove@wcmlaw.com . Previous Next Contact

News No Resuscitation May 4, 2017 < Back Share to: In Douse v. City of New York, et.al, the plaintiff claims she tripped and fell on "a piece of metal sticking out of the concrete". In this regard, the plaintiff stated "the first time” that she observed the piece of metal was one month after the alleged accident when she returned to the scene with her attorney. The defendant moved for summary judgment on the grounds that plaintiff could not identify what caused her fall, which was fatal to her claim. Contrary to established case law, the Supreme Court, Kings County, denied the defendant’s motion. However, on appeal, the Second Department refused to allow the lower court to resuscitate this fatal flaw. The Second Department held that “a trier of fact would be required to base its finding of proximate cause on pure speculation” and dismissed the plaintiff's claim. Thanks to Edward Lomena for his contribution to this post. http://www.courts.state.ny.us/reporter/3dseries/2010/2010_00921.htm Previous Next Contact