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News The Phrase “An Insured” Alters Applicability of Policy Exclusions (PA) September 27, 2019 < Back Share to: In Doe 1 v. Liberty Mutual Fire Ins. Co., the Court for the Middle District of Pennsylvania analyzed whether Liberty Mutual Fire Insurance Company’s (“Liberty”) was obligated to defend and indemnify N.H., a minor, and D.H., N.H.’s mother, for underlying claims asserting sexual abuse and molestation. The underlying action arose out of alleged sexual abuse sustained by minor, John Doe, while he was visiting the home of N.H. and D.H. At the time of the incident, John Doe was five years old. According to the underlying complaint, N.H. sexually abused John Doe, which caused John Doe to suffer, inter alia, substantial mental and physical harm. Due to the incident, John Doe sued N.H. and D.H. in the Court of Common Pleas, Monroe County, wherein he alleged negligence, battery, negligent infliction of emotional distress, negligent supervision and punitive damages. Subsequently, the instant action was filed against Liberty for a declaration that Liberty owed coverage to N.H. and D.H. for the underlying action. In response, Liberty filed a motion to dismiss. In regard to the instant matter, Liberty issued a LibertyGuard Deluxe Homeowners Policy (“Policy”) to D.H. that was in effect on the day of the incident. The Policy contained standard policy language and exclusions. The Court first analyzed whether John Doe’s allegations of stress in the form of physical manifestations constituted “bodily injury” and whether the alleged sexual abuse constituted an “occurrence” as defined in the Policy. However, of particular note is the Court’s discussion of the applicability of the Policy’s Intentional Or Criminal Act and Sexual Molestation Exclusions as they relate to John Doe’s negligent supervision claim against the mother. The Court first analyzed whether the Policy’s Intentional Or Criminal Act exclusion barred coverage to D.H. for John Doe’s claim that D.H. negligently supervised N.H. While the Policy provides coverage for “bodily injury” caused by an “occurrence”, the Policy contained an amendatory endorsement, which inter alia, excluded coverage for “bodily injury” resulting from or “may reasonably be expected to result, from the intentional or criminal acts or omissions of an “insured” even if it (1) is a different kind, quality, or degree than initially expected or intended; or (2) is sustained by a different person, entity, real or personal property, than initially expected or intended.” While the Court concluded negligent supervision does not constitute an “intentional or criminal act”, the Court relied on long-standing Pennsylvania law in holding the Intentional Or Criminal Act exclusion barred coverage. Specifically, the Court noted that courts in Pennsylvania hold, in this context, the use of the phrase “an insured” or “any insured” in an exclusion clause bars coverage for the person who acted intentionally or criminally and for the person charged with related acts of negligence. As the claim for negligent supervision stemmed from N.H.’s alleged intentional and criminal acts (as determined by the Court), the Court held the Policy’s Intentional Or Criminal Act exclusion barred coverage to D.H. Although the Court determined the foregoing exclusion barred coverage, the Court deemed it appropriate to discuss the applicability of the Policy’s Sexual Molestation exclusion as it related to John Doe’s claim of negligent supervision against D.H. The Policy’s Sexual Molestation exclusion states the Policy excludes coverage for any “bodily injury” “[a]rising out of sexual molestation, corporal punishment or physical or mental abuse.” Based on the plain language of the Policy, the Court first analyzed the phrase “arising out of”. In doing so, the Court discussed Pennsylvania case law, which holds the phrase “arising out of . . . bodily injury” does not apply to negligent acts (like it does in the context of the Intentional Or Criminal Act exclusion). While the Court did not draw any conclusion about the applicability of the Policy’s Sexual Molestation exclusion as it related to the negligent supervision claim, the Court noted it came to divergent findings regarding the Sexual Molestation and Intentional Or Criminal Act exclusions. Specifically, the Court held, because the Sexual Molestation exclusion did not contain the phrase “an insured” like the Intentional Or Criminal Act exclusion, the Sexual Molestation exclusion did not apply equally to co-insureds who did not engage in the prohibited conduct. In sum, this case is a reminder to closely examine the plain language of a policy and be cognizant of differing language in policy exclusions. Thanks to Lauren Berenbaum for her contribution to this post. Please email Vito A. Pinto with any questions. Previous Next Contact

News New York To End No Prejudice Rule June 24, 2008 < Back Share to: New York is one of the few (if not the only) state in which a carrier need not prove that an insured's late notice prejudiced the carrier in order to disclaim on that ground; Governor Patterson recently introduced a bill which changes that. It passed both the Assembly and is expected to pass the Senate shortly. The long and the short of the legislation is that 180 days after the legislation is signed, NY will join the majority and carriers will only be able to disclaim on late notice if they were materially prejudiced by the late notice. In addition, injured parties will be able to bring declaratory judgment actions challenging a late notice disclaimer before having to obtain a judgment. Moreover, if a primary personal lines policy or a statutorily mandated policy is in play, the injured party will have the right to obtain coverage information FROM THE CARRIER prior to commencing litigation. Previous Next Contact

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News Construction Defect Litigation -- Now Playing In the Big Apple? October 25, 2009 < Back Share to: Construction defect litigation is the bane of commercial general liability policy insurers. Given that the duty to defend is far broader than the duty to indemnify, insurers often find themselves defending very expensive cases where "negligence" is alleged, even though the actual damage in the case is defective work product. To date, New York, with its old housing stock, has been immune to this phenomenon. However, as a result of a construction boom over the past few years, some are predicting that defective workmanship claims are set to hit New York. Claims against insurers and expensive litigation will follow. As if New York's Labor Law wasn't enough to worry about! http://www.nytimes.com/2009/10/25/realestate/25cov.html?_r=1 On an unrelated construction defect matter (on which we previously reported), Chinese drywall is a major source of claims. The search for a causal linkage between the drywall and the claimed injuries/damages continues. http://www.nytimes.com/2009/10/30/business/30drywall.html?_r=1&scp=1&sq=chinese%20drywall&st=cse If you would like more information regarding this post, please email rcosgrove@wcmlaw.com . Previous Next Contact

News School Not Liable For Teacher's Sexual Assault On Students October 26, 2010 < Back Share to: In Acosta-Rodriguez v. City of New York, a New York City public school teacher was accused of sexually abusing several students. The students, in turn, filed an action against the Board of Education under the theory of respondeat superior. The 1st Department granted the Board of Education's summary judgment motion. Among other things, it found that there was no triable issue of fact as to whether the teacher's conduct was done for purely personal reasons and not in furtherance of any school business. The Court also held that the Board of Education was not on actual or constructive notice of the employee's propensity for sexual abuse of minors merely because he bought pizza for students and observed them while they played. http://www.courts.state.ny.us/reporter/3dseries/2010/2010_07470.htm Thanks to Georgia Stagias for her contribution to this post. Previous Next Contact

News Court Prevents Deposition of Counsel in Coverage Dispute (PA) January 29, 2016 < Back Share to: In JCT Leasing LLC. V. Travelers Casualty Insurance Company, Plaintiffs sued their insurer, seeking damages for breach of contract and bad faith arising out of a fire claim. Plaintiffs sought to depose defendant’s coverage counsel, and the court needed to evaluate whether attorney-client privilege barred his deposition. After plaintiffs submitted a claim to Travelers for fire at their property, Travelers retained Ernest Koshineg, Esq. to advise them on whether plaintiffs’ claim was covered. Upon advice from counsel, Travelers notified plaintiffs that it was rescinding their policy, as the policy was issued based on the representation that a sprinkler system was in the warehouse, when in fact there was not. Plaintiffs notified defendant that they intended to depose Koshineg and required him to bring materials he prepared while assisting in the claims investigation and policy rescission process. Defendant moved for a protective order, which was ultimately granted. Plaintiffs argued that Koshineg worked as part of the defendant’s claims adjusting team and should be considered to be an investigator for the insurer because he became involved so early on in the matter. But the Court found that Mr. Koshineg played a traditional lawyer’s role of providing legal advice to a client, and did not serve as a member of defendant’s claims investigation team and thus the attorney–client privilege applied. Plaintiffs further argued that even if privilege existed, it had been waived because the Vice President, who advised the plaintiffs of their policy rescission testified that in drafting the rescission letter, he relied on the advice of counsel. But the Court found that defendant had not waived the privilege because the defendants did not assert "reliance on course" as an affirmative defense to the lawsuit. Thanks to Chelsea Rendelman for her contribution to this post and please write to Mike Bono for more information. Previous Next Contact

News Stumped: Cement Signpost Stump is Part of Sidewalk under NYC Administrative § 7-210 June 29, 2017 < Back Share to: In a city as crowded and fast paced as New York, signs and signposts are everywhere, advising of parking, towing zones, traffic, construction, and other realities of urban life. The signs are installed by various City and quasi-City agencies such as the Department of Transportation and Transit Authority. Figuring out what exactly the signs mean is often a difficult task. Given the City’s ever changing landscape and development signs are routinely erected, dismantled, and moved. Who is responsible for remnant area around sign, in a trip and fall setting – the City or the abutting property owner? In Bronfman v East Midtown Plaza Hous. Co., Inc., 2017 NY Slip Op 05189, the First Department affirmed that the abutting property owner had a duty to maintain not only the sidewalk itself, but also the cement mound around the stump of signpost on a sidewalk located in a pedestrian plaza pursuant to Administrative Code of the City of New York § 7-210. Plaintiff tripped and fell upon a cement mound around the stump of a signpost, on a sidewalk located in a pedestrian plaza that was a sidewalk easement granted to the City for the benefit of pedestrians. Defendant, the owner and operator of premises adjacent to the defective sidewalk, asserted that the stump was the remnant of a sign that the City had installed. The Appellate Division ruled that the motion court correctly denied defendant's motion for summary judgment dismissing the complaint, because as abutting property owner, the defendant had a duty to maintain the sidewalk pursuant to Administrative Code of the City of New York § 7-210. Even assuming that the signpost belonged to the City, and was therefore not part of the "sidewalk" for purposes of the statute (Smith v 125th St. Gateway Ventures, LLC, 75 AD3d 425, 425 [1st Dept. 2010]), defendant still had a duty under the statute to maintain the sidewalk around the signpost stump. This case illuminates the expansive scope of the abutting property owner’s duty under the city “Sidewalk Law.” While the City may have installed the sign, signpost, and cement stump structure, whatever remains following the signposts removal is the property owner’s responsibility. Thanks to Justin Pomerantz for his contribution to this post. Please email Brian Gibbons with any questions. Previous Next Contact

News Court of Appeals Deems A Tree Well Not To Be Part Of NYC Sidewalk June 4, 2008 < Back Share to: In Dzafer Vucetovic v. Epsom Downs, Inc., --- N.E.2d ----, 2008 WL 2242308 (N.Y.), 2008 N.Y. Slip Op. 04901, plaintiff was injured when he stepped into a defective tree well located on the sidewalk in front of the building owned by defendant. Plaintiff asserted that defendant, as the abutting landowner, violated section 7-210 of the Administrative Code of the City of New York that requires abutting landowners to maintain the sidewalk in a reasonably safe condition. Defendant successfully moved for summary judgment contending that the tree well was not part of the sidewalk as defined by the Administrative Code. In a 3-2 decision, the Appellate Division upheld the trial court's decision. Engaging in statutory interpretation, the Court of Appeals affirmed the Appellate Division's decision. Noting that earlier Administrative Code sections 16-123 and 19-152 imposed a duty upon abutting landowners to repair and maintain the sidewalk, these sections did not create tort liability upon these landowners for their failure to do so. The enactment of section 7-210 of the Administrative Code imposed tort liability upon abutting landowners and "mirrored the duties and obligations of property owners...as set forth in Administrative Code sections 19-152 and 16-123." Finding that Administrative Code sections 7-210, 16-123 and 19-152 neither define "sidewalk" nor mention tree wells, and guided by the principle that legislative enactments in derogation of the common law must be strictly construed, in "a close question" the Court found that the legislators did not consider tree wells when it shifted tort liability in creating section 7-210. Thus, as the Administrative Code is currently constituted, along with the curbstone of sidewalks, tree wells also remain the responsibility of the City of New York. http://www.nycourts.gov/ctapps/decisions/jun08/jun08.htm Previous Next Contact

News Res Judicata Not Applicable to Claim Against Professional Employee September 6, 2011 < Back Share to: In Farren v. Lisogorsky, the plaintiff sued Metro pharmacy after plaintiff had a prescription filled at Metro, however Metro filled the prescription with the wrong drug, causing plaintiff to sustain personal injuries. In plaintiff’s action against Metro, it conceded liability, however contested damages. Prior to trial, Metro and plaintiff settled for $300,000 and executed a stipulation of discontinuance with prejudice. Plaintiff then commenced an action against Lisogorsky, part owner of Metro and the pharmacist/employee that allegedly improperly filled the plaintiff’s prescription. Prior to answering, Lisogorsky moved to dismiss under CPLR 3211(a)(5) and (7). With respect to (a)(5), the trial court granted Lisogorsky’s motion to dismiss on the basis of res judicata. Plaintiff appealed. The Appellate Division, Second Department reversed, finding that the doctrine of res judicata was inapplicable to plaintiff’s action against Lisogorsky. The Second Department reasoned that plaintiff was entitled to pursue Lisogorsky in his professional capacity as a pharmacist, which was entirely distinct than the suit against Metro. As such, the doctrine of res judicata was inapplicable and the trial court improperly granted Lisogorsky’s motion to dismiss on that basis. http://www.courts.state.ny.us/reporter/3dseries/2011/2011_06366.htm Thanks to Alison Weintraub for her contribution to this post. Previous Next Contact

News A New York Lloyd's? July 8, 2008 < Back Share to: Details are sketchy and many issues must still be worked out, but the recreation of the New York Insurance Exchange is in the works. If all goes according to plan, the Exchange will re-open in the next 18 months. The question is -- will pubs and coffee houses follow? http://www.insurancejournal.com/news/national/2008/07/08/91689.htm?print=1 Previous Next Contact

News NJ Appellate Division Approves Auto Policy's Family Member Exclusion July 7, 2009 < Back Share to: In Cassini v. Soussou, the Appellate Division ruled that an injured driver could not recover from an excess policy purchased by the son of the defendant, due to an exclusion denying coverage when use of a family member owned vehicle other than the named insured's " covered auto" was involved. The Court found the exclusion to be unambiguous, and that excluding coverage for a separately insured family member's use of a noncovered auto was not uncommon, was legally sound and was supported by the policy. http://www.judiciary.state.nj.us/opinions/a5205-07.pdf Previous Next Contact

News Covid-19 Closures and the Reasonable Expectations of a Commercial Insured is still undecided in Pennsylvania (PA) January 15, 2021 < Back Share to: COVID-19 related insurance litigation has often left insurers with more questions than answers. In Brown's Gym, Inc. v. The Cincinnati Ins. Co., another open question of law in Pennsylvania is being looked at in relation to such a COVID-19 initiated case. Here, the Court of Common Pleas of Pennsylvania in Lackawanna County recently ruled that a case by a commercial insured looking to sue their insurance broker for negligence should not be dismissed for several reasons, but one being that the reasonable expectations doctrine as applied to a commercial insured is still an open one. Plaintiff is a gym that was forced to shut down due to government shut down orders. Plaintiff sought a declaratory judgement that its insurance policy covers the losses suffered because of the closures. While this is still an open question before many courts, plaintiff has taken the additional step in arguing in the alternative that its insurance broker was negligent in failing to provide the coverage that the plaintiff sought and reasonably expected. Defendant, plaintiff’s insurance broker, sought dismissal of the claim for three reasons. First, the broker owed no duty to plaintiff. Second, the broker was not a party to the insurance contract. Both of these reasons are analyzed and rejected by the Court. Third, plaintiff as a commercial insured is not entitled to the “reasonable expectations doctrine.” Plaintiff claims that they made it clear to their broker that they wanted to purchase an “All Risk” policy, one without an exclusion for viruses, one that would cover government shutdown orders, with the goal for it be “as broad as possible.” The Court explained that, “under the reasonable expectations doctrine, when interpreting a policy of insurance, the court should focus upon whether the insurer or its agent created in the insured a reasonable expectation of coverage that is not supported by the policy terms.” The Court noted that thus far, Pennsylvania courts have only applied this doctrine to non-commercial insureds. However, the Court also points to the 3rd Circuit, which “predicted that Pennsylvania courts would apply that doctrine even where the insured is a sophisticated purchaser of insurance.” The Court held that, with no precedential decision on this question of law, the question could not be resolved at this stage of the litigation and specified that the broker could revisit the issue in a motion in limine or an objection to proposed jury instructions later in the case. This case demonstrates that even if courts eventually do settle on the determination that the COVID-19 shutdown is not covered by most insurance policies, insureds will target brokers for the failure to provide a policy which covers their expectations. Thanks to Ryan Geib for his contribution to this post. Should you have any questions, please contact Thomas Bracken. Previous Next Contact