Wade Clark Mulcahy LLP

News New York Court Permits Insurer To Rely On Flood Exclusion Omitted From Disclaimer April 8, 2016 < Back Share to: It is never a good practice for an insurer to omit applicable exclusions in a disclaimer, but according to a New York Second Department decision issued this week, that mistake is not always fatal. In Provencal, LLC v. Tower Ins. Co. of New York, the insured’s premises suffered water damage as a result of rain storms and the collapse of a retaining wall. The insurer disclaimed coverage based on an exclusion for damage caused by water migrating from under the ground. After the insured filed suit, the insurer relied on an exclusion barring coverage for damage caused by flood and/or surface water. The insured countered that the policy exclusion did not bar coverage because the insurer failed to specifically identify the exclusion in its disclaimer. The Second Department disagreed, and held that the exclusion barred coverage despite the fact that it was not identified in the disclaimer. In reaching that decision, the court reasoned that the line of New York cases addressing an insurer’s obligation to disclaim coverage with specificity was grounded in New York Insurance Law §3420(d)(2), and that statute applies only to accidents arising out of bodily injury or death. Because the damages in Provencal were property damage, the statute did not apply. With the statute inapplicable, the court analyzed the disclaimer by analyzing the issue through the prism of estoppel. Because the insured did not show that it was prejudiced by the insurer’s piecemeal disclaimer, the court held that the insurer was entitled to rely on the exclusion. All disclaimers should be thorough. They should all cite every ground upon which they are based. That is especially true in the context of bodily injury claims. But the Second Department’s decision in Provencal shows that, at least in the context of property damage claims, not all piecemeal disclaimers are fatal. Why risk it though? Insurers should cite all applicable exclusions in their disclaimers. Thanks to Mike Gauvin for his contribution to this post. For more information, please email Dennis M. Wade at dwade@wcmlaw.com . Previous Next Contact

News Ignoring School Harassment May Be “Intentional” Conduct With Unintended Consequences March 20, 2018 < Back Share to: The Second Department recently held that there was a question of fact regarding whether a school district’s conduct in ignoring complaints of anti-Semitic harassment was a covered “occurrence” under the insurance policy. In Graphic Arts Mutual Insurance Co. v. Pine Bush Central School District, plaintiffs in an underlying action alleged the Pine Bush Central School District violated their civil rights by being deliberately indifferent to anti-Semitic harassment. The School District tendered their defense in the underlying action to Graphic Arts Mutual Insurance Company. Graphic Arts Mutual initially defended the School District in the underlying action, but later disclaimed any duty to indemnify. The School District ultimately settled for $3 million in compensatory damages and $1.48 million in attorneys’ fees. Graphic Arts Mutual did not contribute to the settlement, and commenced a declaratory judgment action. Graphic Arts claimed it was not obligated to indemnify the School District because the District’s conduct constituted intentional discriminatory conduct, and the claims did not constitute a covered “occurrence” or “loss.” The Second Department found that for the claim to have been an “accident,” it would have to be unexpected, unusual, or unforeseen from the point of view of the insured. The underlying plaintiffs alleged that the repeated nature of harassment gave rise to an inference that the District “intended for the harassment to occur” based on the District’s policies in dealing with reports of discrimination. Ultimately, the court held that whether the incidents giving rise to the underlying complaint were “accidents” were questions of fact that could not be decided on a motion to dismiss. Insurers should be mindful of the court’s discussion of “accidental results flowing from intentional causes.” Specifically, the court held that “an act that is intentionally committed or performed may still be considered an accident within the meaning of an insurance policy, as long as the insured did not expect or intend the harm caused.” Thus, even though the District’s conduct may be intentional, it would nonetheless be covered conduct because the consequences from that conduct were unexpected. The outcome of this case remains unclear, but a decision on the underlying facts may shed light on how New York courts approach “accidental results flowing from intentional causes.” Thanks to Douglas Giombarrese for his contribution to this post.       Previous Next Contact

News A Missed Opportunity by Defense Counsel in PA May 29, 2020 < Back Share to: In Shiflet v. Lehigh Valley Health Network, Inc., the Pennsylvania Supreme Court affirmed the trial court’s $2,391,620 verdict in favor of the plaintiff under the “general-verdict rule,” which states that “when a jury returns a general verdict involving two or more issues, and the verdict is supported as to at least one issue, the verdict will not be reversed on appeal.” The plaintiff in Shiflett underwent knee surgery at Lehigh Valley Hospital. While recovering from her surgery in the hospital, she fell out of her hospital bed and fractured her left tibia, which went undiagnosed by the nursing staff. She was then transferred to a rehabilitation unit. While undergoing rehabilitation therapy, the tibia fracture displaced. She then underwent two additional surgeries and suffered permanent left leg injuries. The plaintiff subsequently sued the hospital for negligence. At the close of trial, the jury awarded the plaintiff $2,391,620 in damages. There was no breakdown of damages on the verdict sheet, and counsel for the hospital did not object or seek apportionment of the verdict amount. The Superior Court ruled that one of the claims upon which the plaintiff prevailed at trial was time-barred and should not have been submitted to the jury. Finding that some portion of the jury’s damage award may have been based upon the time-barred claim, the intermediate appellate court remanded the case for a new trial on damages. After its review, the Pennsylvania Supreme Court concluded the Superior Court erred in this regard, as pursuant to the “general-verdict rule” adopted by Halper v. Jewish Family & Children’s Services, 963 A.2d 1282 (Pa. 2009), the Hospital waived any entitlement to a new trial on damages when it failed to request a special interrogatory on the verdict sheet that would have permitted the jury to allocate the damages awarded on each claim Shiflett demonstrates the need for counsel to be aware of the timeliness of requesting an allocation of damages. Thanks to John Lang for his contribution to this post. Please email Heather Aquino with any questions. Previous Next Contact

News NY High Court Upholds “Best Interest” Standard of Care for Insurance Producers October 21, 2022 < Back Share to: Finally, some clarity. A unanimous New York high court decided this week to uphold the Suitability and Best Interests in Life Insurance and Annuity Transactions Amendment to Insurance Regulation 187. The Department of Financial Services (DFS) in 2018 added this amendment because of concerns that the increasing complexity involved in purchasing annuities and life insurance made consumers more reliant on the advice of agents and brokers, who were incentivized to recommend transactions that prioritized their own compensation over the consumer’s best interest. The Amendment set forth a uniform standard of care for all insurance agents and brokers (i.e. producers) that provide retirement planning or investment advice: producers must act in the best interests of their clients by making reasonable efforts to obtain client suitability information and based any recommendation on that suitability information (i.e. age, annual income, and financial situation, needs, objectives, and experience, among other categories) and not on any compensation or other incentives. The Amendment requires producers to recommend only suitable transactions and have a reasonable basis to believe that the consumer has been reasonably informed of the consequences of the purchase and ultimately benefits from such a purchase. Such a standard of care had previously only applied to annuity contracts. The Amendment was challenged as arbitrary and capricious and unconstitutionally vague. In 2020, a Justice of the Supreme Court upheld the Amendment, but the Appellate Division, Third Department, reversed and held that the Amendment was unconstitutionally vague because it failed to provide concrete, practical guidance to insurance producers. On October 20, 2022, the New York Court of Appeals, reversed yet again, holding that DFS “appropriately exercised its authority to create a carefully considered and clear regulation” in concluding that the duty to act in the “best interest” of the consumer was a necessary standard of care “to protect consumers.” Thanks to Abed Bhuyan for his contribution to this post. Please contact Abed Bhuyan with any questions. Previous Next Contact

News NY's General Obligations Law § 9-103: A Continued Thorn For Plaintiff's In Personal Injury Cases Against Landowners April 23, 2013 < Back Share to: In Ferland v. GMO Renewable Resources, LLC, the estate of Rene L. Ferland, Jr. filed suit against Fund 6 Domestic, LLC after the decedent died when his snowmobile struck the side of a tractor-trailer that was carrying a load of logs on a private logging road. This road was also used as a snowmobile trail on Fund 6’s property. Fund 6 moved for summary judgment on the grounds that General Obligations Law § 9-103 entitled it to immunity and that the consideration exception to this provision’s grant of immunity did not apply. General Obligations Law § 9-103(1) provides that “an owner…of premises…owes no duty to keep the premises safe for entry or use by others for…snowmobile operation…or to give warning of any hazardous condition…on such premises.” An exception to this exists under G.O.L. § 9-103(2)(b) when consideration is given in exchange for permission to pursue any of the activities enumerated in the section. The plaintiff contended that the consideration exception applied to this case because Fund 6 entered into recreation leases with various non-party fish and game clubs whereby Fund 6 accepted rent in consideration for the clubs to post the leased premises and use them for limited purposes. The key language in the lease agreements was the term “other recreational activities” and the plaintiff argued that this term contemplated snowmobiling, thereby allowing the action to proceed against Fund 6. The Appellate Division disagreed, finding that snowmobile clubs actually maintained the snowmobile trails through volunteer efforts of their members. Further, the court cited to the lease agreement between Fund 6 and the St. Lawrence County Snowmobiling Association that granted the Association permission to use the property for snowmobiling “without charge”. From reviewing the record, the court held that the evidence established that the snowmobile trails were open to the public without charge. Finally, the court gave no credibility to the plaintiff’s attempt to argue that the Association’s use agreement that required it to name Fund 6 as an additional insured on its trail insurance policy, acted as consideration sufficient to trigger the exception. G.O.L. § 9-103 encompasses fourteen different outdoor recreational activities. Whenever a suit is brought against a landowner who has permitted recreational use on its property, it is important to remember G.O.L. § 9-103 as a potential shield to liability – and a continued thorn – in plaintiffs’ personal injury cases against landowners. Special thanks to Michael Nunley for his contributions to this post. For more information, please contact Nicole Brown at nbrown@wcmlaw.com . Previous Next Contact

News 33 Seconds Is Not Sufficient Notice For NJ App. Div. January 19, 2011 < Back Share to: In Capano v. Moral Foods , Inc, the Appellate Division affirmed the summary judgment dismissal of plaintiff's personal injury complaint for a slip and fall accident in defendant's supermarket. Plaintiff slipped and fell in defendant's store while shopping. A store surveillance video confirmed that a male customer dropped a container of cottage cheese on the floor at 3:02:40 and that plaintiff fell at 3:03:15, 33 seconds later. Plainitff argued that the store was small and the spill was in the front of the store , therefore that a fact question existed as to whether a store employee should have observed the spill. The Appellate Division affirmed summary judgment finding that 33 seconds was not sufficient notice and that plaintiff's fall was " relatively instantaneous" providing no time for the store to react. The Court also found that the facts did not establish a " dangerous mode of operation " case which would have eliminated the requirement of proving notice. The Court found the dangerous condition caused by spillage from a packaged container of cottage cheese was not a foreseeable risk posed by the store's mode of operation. Please contact Robert Ball with any questions regarding this post. http://www.judiciary.state.nj.us/opinions/a3218-09.pdf Previous Next Contact

News NY Federal Court Deems Misrepresentation Regarding Multiple Policies Material January 15, 2009 < Back Share to: In John Hancock Life v. Perchikov, a judge in the EDNY recently agreed with the insurer that the insured's misrepresentation in its application for coverage regarding the existence of other policies covering the risk was material and permitted recision, because the insurer would not have issued the policy without verifying the existence of additional income. Although this involved a life insurance policy, it can likely be applied in other areas where the type or amount of coverage issued is related to the value of the underlying risk. Previous Next Contact

News Judge Lippman Redux February 19, 2010 < Back Share to: New York's new Chief Judge continues to tilt toward plaintiffs and claimants, a trend we first reported in this space yesterday. Now this. In 2006, a conductor on a NYC subway train assaulted a subway customer. Let's back up. The episode began when a rider complained about subway service. The conductor reacted to this complaint by calling the rider a "faggot." The rider responded by attributing some sexual ambiguity to the conductor's late father. So, the conductor grabbed the rider by the neck and slung him around for a bit. The Transit Authority terminated the conductor. The case went to arbitration pursuant to the collective bargaining agreement between the Transit Authority and the union. The collective bargaining agreement provides that in cases of assault, the arbitrator shall affirm the Transit Authority's choice of punishment (i.e., termination in this case) unless there is "credible evidence that the action by the [Transit] Authority is clearly excessive......" The arbitrator here found that termination was "clearly excessive" and gave the conductor his job back. The Transit Authority appealed. The Court of Appeals, in a decision by Judge Lippman, has now upheld the arbitrator's decision, and all New Yorkers are advised to keep their complaints about the subways to themselves. http://www.courts.state.ny.us/reporter/3dseries/2010/2010_01378.htm Previous Next Contact

News EDPA Upholds An Insurer’s Choice of (Maritime) Law Clause (PA) April 16, 2021 < Back Share to: After the recent kerfuffle in the Suez Canal, it seems as though ships running ashore and maritime law are becoming common topics of conversation. Most recently, the Eastern District of Pennsylvania addressed the impact of an insurer’s choice of law provision in an insurance contract in connection with an insured seeking coverage for damages following its ship running aground. Great Lakes Insurance SE v. Raiders Retreat Realty Co. centered around a shipping vessel owned by the defendant-insured and insured by the plaintiff, with a period of coverage extending over twelve years. Throughout the coverage period, and in all the renewal documents for the policy at issue, there was a choice of law clause determining the relevant applicable law. The clause set Federal Admiralty law as governing, with New York as a backup. The insured argued, inter alia, that the choice of law clause was not enforceable and Pennsylvania law should apply because the clause was unreasonable based on the insurer’s lack of contacts with New York and, thus, enforcing the clause would contravene the public policy of Pennsylvania. Ultimately, the court disagreed. In reaching this conclusion the court first looked to the multiple business contacts the insurer maintained with New York, including maintaining an agent for service of process as well as multiple accounts, and its status as an insurer in New York. Beyond that, the court analyzed multiple precedential cases holding that choice of law clauses were not against public policy. Most notably, the court concluded that application of maritime law was appropriate, and that “public policy of a state where a case was filed cannot override the presumptive validity, under federal maritime choice-of-law principles, of a [choice of law provision] where the chosen forum has a substantial relationship to the parties or transaction.” Accordingly, this case shows that Pennsylvania courts are apt to uphold an insurance policy’s choice of law provision, and also provides some of the factors courts will look to in determining whether the chosen forum has a sufficient relationship to the parties. Thanks to Abby Wilson for her contribution to this post. If you have any questions or comments, please contact Colleen Hayes. Previous Next Contact

News Pedestrian Knockdown Outside the Crosswalk? Presence of Traffic Signal is Key June 16, 2016 < Back Share to: When dealing with a pedestrian knockdown case, defendants will often try to determine whether the plaintiff should bear any comparative negligence based on where the accident happened. According to New York State Vehicle and Traffic Law §1151(b), “[n]o pedestrian shall suddenly leave a curb or other place of safety and walk or run into the path of a vehicle which is so close that it is impractical for the driver to yield.” In most cases, if a pedestrian walks or runs into the middle of a street outside of a crosswalk, and he or she is struck by a vehicle, plaintiff may be assessed some comparative negligence. In Bush v Kovacevic, plaintiff was struck by defendant’s vehicle while crossing the street. The defendant driver testified that because she struck plaintiff on the passenger side of her car, the plaintiff must have been approximately two feet outside of the crosswalk. However, the Court explained that §1151(b) “by its plain terms, applies only where there are no traffic signals.” In this case, there was a traffic signal at the intersection, and the Court held that §1151 of the Vehicle and Traffic Law did not apply. Defense counsel should always be mindful to consider whether a personal injury plaintiff may have been comparatively negligent in an effort to shift liability. In pedestrian knockdown cases, defendants must keep in mind that if the plaintiff is struck at an intersection with a traffic signal, the exact location of the accident will bear much less significance. Thanks to Jeremy Seaman for his contribution to this post. Previous Next Contact

News No Coverage to Insured Where it did Not Cause the Damage April 20, 2018 < Back Share to: In Consolidated Rail Corporation v. ACE Property & Casualty, Consolidated Rail owned/operated several freight yards and geographical sites from 1976-1999. During that time, the Environmental Protection Agency conducted studies at several of the Conrail locations. The EPA found that many of the sites were contaminated with toxins resulting from toxin spills, waste storage, and other harmful practices that occurred before Conrail owned/operated the properties. Nevertheless, because Conrail owned/operated the properties, it was responsible for the remediation costs and related expenses, for which it paid millions of dollars. Conrail then sought coverage from its insurers who denied coverage. The relevant policy language stated: “TO INDEMNIFY THE INSURED FOR ANY AND ALL SUMS THE INSURED SHALL BECOME LEGALLY LIABLE TO PAY AS DAMAGES, INCLUDING LIABILITY ASSUMED BY THE INSURED UNDER ANY AGREEMENT OR CONTRACT, TO ANY PERSON OR PERSONS AS COMPENSATION FOR: * * * (b) DAMAGE TO OR DESTRUCTION OF PROPERTY, INCLUDING LOSS OF USE THEREOF, EXCLUDING INSURED'S OWN PROPERTY BUT INCLUDING PROPERTY OF OTHERS IN INSURED'S CARE, CUSTODY OR CONTROL; * * * ARISING OUT OF ANY OCCURRENCE OR OCCURRENCES CAUSED BY OR GROWING OUT OF THE INSURED'S OPERATIONS ANYWHERE IN THE WORLD, AND ALL OPERATIONS INCIDENTAL THERETO. * * * Occurrence means an event, or continuous or repeated exposure to conditions which cause injury or damage during the term of the policy.” Conrail sued and the court interpreted “CAUSED BY OR GROWING OUT OF” to allow Conrail to be reimbursed for environmental contamination only if Conrail caused the damage. The environmental contamination occurred before Conrail owned/operated the properties, and Conrail did not cause any of the damage. Consequently, the trial court ruled Conrail was not entitled to coverage under the policies. The trial court recognized that “The result is somewhat unusual-where Conrail did nothing wrong, it is not covered, but where it is at least partially at fault, it is entirely covered.” On appeal, the Superior Court upheld the “sound analysis” of the trial court. This case highlights the importance of careful drafting/reading of insurance policies. Many individuals may disagree with the Court’s decision from a fairness standpoint, but it is one that the policy language dictated. Depending on the policy language, being at fault may be a good thing. Thanks to Malik Pickett for his contribution to this post.     Previous Next Contact

News Willful Disregard of So-Ordered Stipulation Results In Preclusion (NY) June 1, 2017 < Back Share to: The First Department recently struck the answers of the City of New York and Metropolitan Transportation Authority for ignoring multiple court orders and then producing a witness who was unable to answer questions at a deposition in McHugh v. City of New York. The Court established defendants as automatically liable, with damages being the only remaining issue to be established. McHugh arose in 2012, when plaintiff was injured while constructing the second Avenue Subway in Manhattan. Plaintiff brought suit in 2014 against both the City and the MTA. During the course of litigation, the defendants ignored two so-ordered-stipulations to produce a witness “with knowledge,” so plaintiff moved to strike defendants' answer. After the Court order, defendants produced an employee who was “admittedly unprepared,” and could not answer any questions regarding the City and the MTA, or ownership of the tunnel and the ground on which it was built. Defendants refused plaintiff’s demand to produce an additional witness. In response, plaintiffs again moved to strike defendant’s answer. Although the lower Court denied plaintiff’s motion, on appeal, the appellate Court found that the trial court improvidently exercised its discretion in failing to strike defendants’ answers. The Court found that defendants’ noncompliance constituted “willfull and contumacious behavior, warranting the striking of their answer.” The Court highlighted the fact that not only did the defendants fail to provide a timely response but also failed to address plaintiff’s requests meaningfully or with a good-faith effort. As it goes without saying, the Court’s ruling demonstrates the extreme importance of not only selecting the right person for a deposition and sufficiently preparing that witness but of paying close attention to the course of litigation and being “reasonable” with the opposing counsel’s demands. Playing “hardball” too often may have unintended and sometimes harsh consequences. Thanks to Patrick Burns for his contribution to this post. Please email Brian Gibbons with any questions. Previous Next Contact