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News Cyberattack Might Not Be War-Worthy < Back Share to: War risk exclusion has been included especially in commercial property insurance policies for a long period of time. Recently, a New Jersey Appellate court addressed the modern application of the war risk exclusion. Plaintiff Merck & Co., Inc. (“Merck”), a multinational pharmaceutical company based in New Jersey, believed it was entitled to insurance coverage under the “all risks” property insurance policies issued by multiple defendants after a cyberattack damaged thousands of Merck’s computers in its global network. The subject cyberattack was caused by a malware that started from a Ukraine accounting company used by Merck that processes invoices and financial data to the Ukrainian government. Defendants denied coverage under the “Hostile/Warlike Action” exclusion within the policies. Merck & Co. v. Ace Am. Ins. Co ., 475 N.J. Super. 420 (App. Div. 2023). The property coverage clause states: “This policy insures against all risks of physical loss or damage to property, not otherwise excluded in this policy, while at an Insured Location except as hereinafter excluded.” Physical loss is defined as “any destruction, distortion or corruption of any computer data, coding, program or software except as excluded specifically in clause 6.M., Electronic Date Recognition Exclusion, and as hereinafter excluded.” Under New Jersey law, insurance policy exclusions are construed narrowly. The Appellate court ruled that the plain language of the Hostile/Warlike exclusion does not apply to a cyberattack on a non-military company that services non-military consumers, even if the alleged cyberattack was initiated by a private actor or a “government or sovereign power.” Further, the Court dived into the history behind the war risk exclusion. The purpose of the war risk exclusion is to “eliminate the insurer’s liability in circumstances in which it is impossible to evaluate the risk.” Considering the history and intent of the war risk exclusion, the Court pointed out that the cyberattack at hand was not sufficiently linked to a military action in order for the war risk exclusion to apply. Merck and Co. Inc. v. Ace American Insurance Company .pdf Download PDF • 320KB Previous Next Contact

News Default is not a Total Loss (NY) September 24, 2020 < Back Share to: In a personal injury action, plaintiff Castaldini claims personal injury when a propane tank exploded at the home of defendant Walsh. Upon defendant’s failure to answer, plaintiff’s motion to enter default judgment was granted by the trial court, and the case was sent to inquest for a trial on damages. At the inquest trial, plaintiff testified as to his injury and submitted a written sworn statement by one of his treating physicians. Defendant objected to the admission of the sworn statement arguing that he should be allowed to cross-examine the physician testifying as to plaintiff’s injuries. The trial court admitted the sworn statement into evidence and handed down a judgment totaling $275,000 for plaintiff’s past and future suffering. Defendant appealed to the Second Department arguing plaintiff failed to establish the accident caused his injuries and argued he had a right to cross-examine the physician. The Second Department held in Castaldini v. Walsh, that a defaulting defendant admits all allegations in the Complaint as true, but does not admit the plaintiff’s conclusory statements as to its damages. Once defendant defaulted by failing to answer the Complaint, plaintiff did not need to prove the accident caused his injuries. The purpose of an inquest court is to ascertain the amount of damages. (Gonzalez v Wu, 131 AD3d 1205, 1206; see Rokina Opt. Co., Inc. v Camera King, Inc., 63 NY2d at 730; Arluck v Brezinska, 180 AD3d 634; Jihun Kim v S & M Caterers, Inc.,136 AD3d 755, 756). The Second Department agreed with defendant that he had a right to cross-examine the plaintiff’s physician. Since the inquest is to ascertain damages, and defendant is present at the inquest, then plaintiff must make any treating physicians available for cross-examination. See Reynolds Sec. v Underwriters Bank &Trust Co., 44 NY2d 568, 572. Thus, the trial court should not have admitted the physician’s sworn statement into evidence and the case was remitted back to the trial court for a new inquest on the amount of damages. The key takeaway in this case is that even though a defendant failed in timely answering the complaint, and thus cannot argue causation, a defendant can still, and should, object as to plaintiff’s evidence for damages. Moreover, at that inquest trial for damages, a defendant has the right to cross-examine plaintiff’s treating physicians to contest damages even when in default. Thanks to Raymond Gonzalez for his contribution to this post. Please contact Vincent F. Terrasi with and questions. Previous Next Contact

News Dodging the Spoliaton Bullet (NY) November 21, 2013 < Back Share to: In Shields v. First Avenue Builders, LLC, a New York County trial court refused to strike third-party defendant’s pleading after the party accidentally destroyed the evidence that it was ordered to preserve. In Shields, plaintiff alleged that he was injured while cleaning a concrete pump that was manufactured by defendant/third-party plaintiff Worthington’s predecessor in liability. Third-party defendant MC & O was ordered to preserve the pump for a second inspection after plaintiff amended his bill of particulars to include additional allegations regarding the manufacture of the pump. MC &O, however, inexplicably destroyed the pump before the second inspection took place. Several parties moved for a stricken pleading and sanctions against MC&O without explaining about how they would specifically be prejudiced by the pump’s destruction. In addition, prior to this motion’s decision, Worthington was granted summary judgment and dismissed from the case. The court, therefore, held that Worthington’s motion was rendered moot given its dismissal from the case. In addition, it held that the other party did not submit any evidence proving that the pump’s destruction was prejudicial to its case. Therefore, rather than striking the pleading, the court ordered that an adverse inference charge at trial as the appropriate sanction. The lesson learned is that defendants must to take great care in preserving any property involved in an accident when court ordered to do so. A clear channel of communication must be established to ensure that property subject to a court order is preserved. That said, defendants can have some faith the court will not just strike pleadings and order sanctions for any minor violation. Rather, the moving party must show that such spoliation was actually prejudicial. Thanks to Alison Weintraub for the post. If you have any questions, please contact Paul at pclark@wcmlaw.com Previous Next Contact

News Painful Verdict for Pain and Suffering (NY) July 23, 2020 < Back Share to: The Bronx has a reputation for plaintiff-friendly verdicts, and the case of Cabrera v Port Auth. of N.Y. N.J. (2020 NY Slip Op 03993) did not disappoint. Plaintiff, an employee at a Dunkin Donuts franchise at LaGuardia Airport, was involved in an accident with a salt spreading truck in the parking lot during a snowfall. After a jury trial, she was awarded future damages for only a period of three years, yet was awarded $12 million dollars. Fortunately for the defense, the First Department found many instances of reversible error warranting a new trial. First, the court truncated proof on whether the parking lot was public or private, which directly impacted whether the jury should been charged with the recklessness standard set forth in NY VTL §1103 or VTL §1163. This alone was enough for a new trial, but the court had made a trifecta of mistakes. The second error came in precluding defendant’s accident reconstruction expert from testifying. The Appellate Division found the lower court’s in limine inquiry of the expert concerning scientific studies was irrelevant to the subject of his testimony. Additionally, any deficiencies in the expert disclosure could have been remedied by limiting the testimony, not precluding it. Finally, a retrial on damages was necessary because the defense medical expert was improperly barred from testifying on the issue of whether plaintiff’s injuries were traumatically induced and whether the surgeries were necessary and appropriate. Any one of these errors would warrant a new trial, but all three, combined with a future damages award of $12 million dollars for a period of only three years, certainly required a new trial. This case confirms that unsupported and excessive jury verdicts will be scrutinized by the court. Thanks to Mehreen Hayat for her contribution to this post. Please contact Heather Aquino with any questions. Previous Next Contact

News Guidance Provided for Choice of Law Analysis for Coverage Disputes in NJ September 20, 2012 < Back Share to: The outcome of a conflict of laws analysis is often difficult to predict. But a recent Appellate Division decision may provide some guidance as to how allocation of coverage issues are decided in New Jersey where there is a conflict of laws. In the consolidated appeals of In The Matter Of The Liquidation Of Integrity Insurance Company/Sepco Corporation and In The Matter Of The Liquidation Of Integrity Insurance Company/Mine Safety Appliances Company, the Appellate Division was faced with the issue of which state’s laws should apply when apportioning insurance coverage in the mass tort context. Both Sepco Corporation, a California-based company, and Mine Safety Appliances Company, based in Pennsylvania, were insured under excess policies with Integrity, a New Jersey insurance company, in the mid-1980s. After Integrity’s Liquidator filed its liquidation plan, both Sepco and Mine Safety filed proofs of claim with the Liquidator for coverage under the policies. The Liquidator denied the claims based on the utilization of an “all-sums” (joint and several) allocation methodology. Under that methodology, “the insured may recover in full under any triggered policy that it chooses and leave the selected insurer to pursue cross-claims against other triggered carriers whose policies are also available.” While both California and Pennsylvania utilize this approach, New Jersey has rejected the joint and several allocation method for a pro-rata allocation method. The denials were referred to a Special Master, who affirmed the Liquidator’s decisions in both matters, citing New Jersey’s compelling interest in having its own law applied to the claims because Integrity was being liquidated pursuant to New Jersey law, and because the pro-rata approach was more equitable as to other claims filed against Integrity than was the joint and several approach. The Special Master’s determinations were affirmed by the trial court. On review, the Appellate Division affirmed the trial court’s decision to apply New Jersey law. While refusing to state a blanket rule that the law of the insurer’s home state would govern the analysis, the Appellate Division found that the balance of the equities favored applying New Jersey law to the claims against Integrity, who was in its twenty-fifth year in the liquidation process, even though the policy language confusingly seemed at times to favor an “all-sums” approach. The best way to guard against uncertainty is to add a provision as to choice of law; otherwise, an unintended and unexpected interpretation of policy terms may result. Thanks to Christina Emerson for her contribution to this post. If you would like further information please write to mbono@wcmlaw.com .     Previous Next Contact

News NY App Div Rules Gym Teacher's Instruction Sufficient to Support Summary Judgment December 31, 2009 < Back Share to: In Bramswig v. Pleasantville Middle School, a 12-year old plaintiff was injured when a classmate (and teammate) accidently struck him in the mouth with a hockey stick during a floor hockey game at Pleasantville Middle School in Westchester County. The plaintiff's first cause of action was based upon negligent instruction of the "high-sticking" rule by the gym teacher. (Presumably, there were other causes of action in this case in addition to negligent instruction, together with contributory negligence defenses, but none were addressed by the Court in this decision.) The gym teacher was deposed, and testifed that he instructed the students at the beginning of that game, and in fact at the beginning of every gym class, that the practice of "high-sticking" was prohibited in floor hockey (not to mention a double minor in the NHL if injury ensues.) Further, he testified that he defined "high sticking" as lifting one's hockey stick above his or her waist during play.The defendants moved for summary judgment on the issue of negligent instruction, and plaintiff argued that there was a triable issue of fact as to the substance of the gym teacher's warning. Specifically, the plaintiff asserted that it was unclear whether the instruction of "high-sticking" involved raising one's stick above the knees or above one's waist. The Appellate Division, Second Department found that the plaintiff's premised triable issue of fact was academic, in that regardless of the gym teacher's warning, the plaintiff was struck in the mouth by the high stick, and therefore either potential instruction was not heeded by the other student. Accordingly, the defendants' failure to instruct on the "high-sticking" rule was not a proximate cause of the plaintiff's injury, and defendants were granted summary judgment on this issue. Thanks to Brian Gibbons for his contribution to this post. http://www.courts.state.ny.us/reporter/3dseries/2009/2009_09603.htm Previous Next Contact

News Decision on Pollution Exclusion Stinks for Insurer (NY) December 16, 2011 < Back Share to: Barney Greengrass is a small delicatessen located on the Upper West Side. The “Sturgeon King” has been open for more than 100 years, and is a well known breakfast spot. But its neighbor, Theodore Bohn, is not a fan. Claiming that he was unable to use his living room because of overpowering odors, he sued the restaurant. Barney Greengrass tendered the defense of the suit to its insurer, Lumbermens, who denied coverage, citing to the pollution exclusion, which excluded coverage for property damage arising out of the discharge of “pollutants.” The restaurant filed a declaratory judgment action against its insurer, and was awarded summary judgment. The district court found that to read pollution as encompassing restaurant odors would “contradict common speech” and the “reasonable expectations of a business person.” On appeal, the insurer argued that the odors were “fumes,” defined in the policy as a pollutant. The appellate court rejected that claim, noting that the policy did not define fumes, and that any precedent for odors falling within the ambit of the exclusion were in circumstances where the odor was linked to traditional environmental pollution, such as the dumping of waste materials or leakage from a sewage treatment plant. Lumbermens also claimed that, under the New York City Administrative Code, restaurant odors could constitute “air contaminants” subject to regulation. But the Court was unwilling to link such regulations to an insurance coverage dispute and upheld judgment in favor of the restaurant. http://www.leagle.com/xmlResult.aspx?xmldoc=In%20FCO%2020111104087.xml&docbase=CSLWAR3-2007-CURR If would like more information about this case, please write to Mike Bono at mbono@wcmlaw.com . Previous Next Contact

News Out-of-Possession Landlords May be Out of Luck on Risk Transfer (NY) September 19, 2019 < Back Share to: The First Department just issued a decision allowing an out-of-possession landlord to contract away liability assigned through the New York City Administrative Code §7-210. This decision is currently being reviewed by the Court of Appeals. Plaintiff claimed injury after slipping and falling on ice in front of his job on Flushing Avenue in Brooklyn. His employer leased the building and as such, plaintiff was barred from suit due to the worker’s compensation law. However, plaintiff sued the building owner as the administrative code assigns liability to property owners for injuries caused by the failure to safely maintain sidewalks. The landlord moved for summary judgment citing a lease provision that plaintiff’s employer was responsible for keeping the sidewalk clean and free from snow. Plaintiff opposed stating that while a landlord may contract away responsibility for the sidewalk, liability is non-delegable and the landlord’s recourse would be in indemnification. The trial court agreed and the landlord appealed. The First Department reversed in a short decision stating that an out-of-possession landlord who contracted away responsibility for sidewalk maintenance could not be held liable for plaintiff’s injuries as the presence of snow and ice does not constitute a significant structural or design defect, however, they failed to address the administrative code. During oral arguments, the Court of Appeals appeared receptive to plaintiff’s arguments questioning why the City would require property owners to have liability insurance if it was transferable to their tenants. A decision is pending, but could potentially eliminate the out-of-possession landowner rule should the Court reverse the First Department. Thanks to Mehreen Hayat for her contribution to this post. Please email Brian Gibbons with any questions. Previous Next Contact

News Capacity to Generate Income May Impose Duty on Commercial Owner in NJ May 8, 2012 < Back Share to: In Ethel Gray v. Caldwell Wood Products, New Jersey’s Appellate Court has held that a commercial property owner of a vacant building has a duty to maintain the vacant building’s abutting sidewalk. Plaintiff slipped and fell on the sidewalk abutting defendant’s vacant commercial building that had allegedly not been cleared of snow and ice. Defendants were granted summary judgment by the trial judge who relied on Abraham v. Gupta, 281 N.J. Super. 81 (App. Div. 1995) which held that “the owner of the vacant commercial lot could not be held liable because that property: (1) was not owned by or used as part of a contiguous commercial enterprise or business; (2) did not entertain a daily business activity on the lot to which safe and convenient access was essential; and (3) had no means of generating income to purchase liability insurance or to spread the risk of loss.” Plaintiff demurred and argued that issues of fact remained surrounding the building’s potential to generate income, the active marketing of the building at the time of the accident, the eventual sale of the property, and the owner’s ability to spread the risk as evidenced by commercial insurance coverage on the property. The Appellate Court distinguished Abraham and held that the commercial property owner here was liable because the building had the capacity to generate great income. Moreover, because the commercial property owner was showing the building to potential buyers, it had a duty to maintain the premises in a reasonably safe condition. As such, the Appellate Court reversed the trial court’s decision and remanded the case for further proceedings. http://www.judiciary.state.nj.us/opinions/a0120-11.pdf Thanks to Alison Weintraub for this post. If you have any questions or comments about this post, please email Paul at pclark@wcmlaw.com . Previous Next Contact

News Avoiding Liability in Rear-End Collisions May 17, 2016 < Back Share to: Generally, a rear-end collision with a stopped vehicle creates a prima facie showing of negligence on the part of the rear driver. Defendants can rebut the presumption of negligence where the rear end collision was the result of a sudden emergency. The “emergency doctrine” recognizes that where a defendant driver rear-ends another vehicle because of a sudden and unavoidable emergency, the defendant driver may not be negligent if his actions are reasonable and prudent in the context of an emergency. In Maisonet v. Roman, plaintiff sustained personal injuries when defendant’s vehicle struck the rear of his vehicle. After defendants served their answer, the plaintiff moved for partial summary judgment on liability, arguing that because he was hit in the rear, he was entitled to judgment against the defendants as a matter of law. In opposition, defendants argued that they had a valid emergency doctrine defense. The defendant driver submitted an affidavit explaining that to avoid a head on collision with another vehicle that had cut him off, he was forced to swerve to his left, causing him to strike the back of the plaintiff’s vehicle. The lower court granted plaintiff’s motion, and on appeal, the First Department reversed and denied plaintiff summary judgment. The Court opined that the facts viewed in a light most favorable to defendants were sufficient to raise triable issues of fact “as to the existence of an emergency and the reasonableness of defendant driver’s response to that emergency.” The Court further explained that the emergency doctrine may protect a driver from liability where the driver, through no fault of his or her own, is required to take immediate action in order to avoid being suddenly cut off. In defending rear-end motor vehicle accidents, defendants should be cognizant of the emergency doctrine defense. If the defendant driver faced any type of emergency immediately prior to the collision, this could constitute an emergency and a viable defense. At the very least, defense counsel should consider the emergency doctrine as a defense to a plaintiff’s summary judgment motion on liability. Thanks to Jeremy Seeman for his contribution to this post.   Previous Next Contact

News Nothing To Weep About For Art Purchaser April 11, 2012 < Back Share to: The New York State Court of Appeals recently decided a dispute over the ownership of a 1,100 pound sculpture entitled The Cry, by Jacques Lipchitz, between the executor of the owner's estate and the purchaser (who purchased the sculpture from a man claiming to have been gifted the sculpture from the owner in 1997). In July 2004, the executor of the estate claimed to have sold the sculpture to an art gallery, while the purchaser claimed to have purchased the sculpture from another man in September 2005. The executor and the purchaser each filed petitions asking the Surrogate’s Court to resolve the conflicting claims of ownership. The Surrogate’s Court found in favor of the purchaser, noting that the decedent’s inter vivos gift of the sculpture was valid, and dismissed the executor’s petition. However, on appeal, the Appellate Division, First Department, reversed on the law, finding that the purchaser’s claim of ownership was barred by the statute of limitations because the sculpture was converted in 1998 when loaned to the French government. In Mirivsh v. Mott, the Court of Appeals reversed again and found that the Surrogate’s Court correctly ruled in the purchaser's favor because the purchaser established each of the elements of a valid inter vivos gift (intent, delivery and acceptance) by clear and convincing evidence, and, in any event, both parties had agreed by stipulation to allow the Surrogate’s Court would decide ownership of the sculpture on the merits. The court noted that the original owner’s intent to make a present transfer of "The Cry" was clear on the face of the gift instrument, which was in the form of a picture of the sculpture with a writing describing the piece and declaring that it was a gift (and did not necessarily require physical transfer or delivery of the sculpture itself). Thanks to Joe Fusco for this post. If you have any questions or comments, please email Paul Clark at pclark@wcmlaw.com Previous Next Contact

News Expert Affidavit Cannot Overcome Inability To Identify Cause Of Fall August 17, 2010 < Back Share to: It is well established that in a slip and fall action, the plaintiff's inability to identify the cause of the fall is a fatal flaw. In Murphy v. The New York City Transit Authority, the plaintiff was injured when she slipped and fell on a stairway in a subway station. The Transit Authority was granted summary judgment because the plaintiff could not identify the cause of her fall and the Appellate Division affirmed. On appeal, the Appellate Division addressed whether an affidavit of an engineer stating that the stairs violated certain provisions of the New York State Building Code was enough to overcome the plaintiff's inability to identify the cause of her fall. The Second Department held that it would be purely speculative to find that the alleged violations in the engineer's report proximately caused the plaintiff's fall. Thanks to Ed Lomena for his contribution to this post. http://www.courts.state.ny.us/reporter/3dseries/2010/2010_04559.htm Previous Next Contact