Wednesday, September 3, 2014

Mura & Storm's 2012-2014 New York Insurance Coverage Seminar

It's back.  And we're back.  Or we will be back on Thursday, September 11, 2014.  It's an even-numbered year, which means we're hosting our biennial New York insurance coverage seminar again at the Ramada Amherst/Getzville Hotel & Conference Center in, you guessed it, Getzville, New York.  Here's your invitation:


Now, you should consider yourself invited only if you work with or for insurance companies of any ilk and could use some learnin' on recent New York insurance coverage case law.  Those of you employed by or working for "active clients" of Mura & Storm  (defined as a company that has sent us at least one new file since January 2012) may attend for FREE.  That's right.  Free.  Zero dollars and cents.  The fee for those not working for active clients of Mura & Storm is a nominal $50.  New York attorneys will get CLE.  Bring a new file with you and the seminar's free for you and your coworkers.  Not that anybody has ever done that, but it would be cool.   

There will be lots to talk about this seminar.  Come join us and see.  Or hear.  Or both.  There's still time to register, so click here to compose and send your registration email today.  Be sure to include your contact information and specify which sessions you will be attending.  

Hope to see you next week.  

Tuesday, February 25, 2014

Breach of a Liability Insurer's Duty to Defend Does Not Bar Insurer From Asserting Policy Exclusions to Defend Suit for Indemnification Coverage: New York Court of Appeals Vacates Its K2-I Holding

LIABILITY  – DUTY TO DEFEND – EXCLUSIONARY NON-COVERAGE GROUNDS
K2 Investment Grp. LLC v. American Guarantee & Liability Ins. Co.
(Ct. Apps., decided 2/18/2014)

In June 2013 the New York Court of Appeals held, in essence, that if a liability insurer breaches its duty to defend its insured, it may not subsequently assert policy exclusions to deny indemnification coverage.  That decision -- now dubbed K2-I -- sent shockwaves through the insurance industry in New York, with many arguing that the court had upset or ignored its own long-established and controlling precedent on this very question.

The Court of Appeals granted the insurer's motion for reargument and on February 18, 2014 vacated its decision in K2-I and reversed the Appellate Division's order that had affirmed summary judgment in favor of the plaintiffs.

Claims for legal malpractice were brought against American Guarantee's insured, Jeffrey Daniels, which American Guarantee refused to defend. Daniels suffered a default judgment, and then assigned his rights against American Guarantee to the plaintiffs in the suit against him. Those plaintiffs brought this action seeking to enforce American Guarantee's duty to indemnify Daniels for the judgment. In defense, American Guarantee asserted that the loss was not covered, relying on two exclusions in the policy.

The motion court and Appellate Division and Court of Appeals in K2-I held that because American Guarantee had breached its duty to defend Daniels, it was barred from asserting the two policy exclusions in defense of the plaintiffs' claim for indemnification coverage.  That holding appeared to be irreconcilable with the New York Court of Appeals' 1985 holding in Servidone Const. Corp. v Security Ins. Co. of Hartford (64 NY2d 419 [1985]) in which the court unanimously held that a liability insurer's breach of its duty to defend its insured in a personal injury action did not preclude the insurer from asserting policy exclusions to defend itself in a later suit for indemnification coverage.

On reargument, a 4-2 majority of the Court of Appeals  agreed that the Servidone and K2-I holdings cannot be reconciled and declined to overrule Servidone:
Plaintiffs suggest that the cases are distinguishable because in Servidone the insured had settled with the plaintiff in the underlying litigation, whereas here there was a judgment, not a settlement. We do not find the distinction persuasive. A liability insurer's duty to indemnify its insured does not depend on whether the insured settles or loses the case. It is true that a judgment, unlike most settlements, is a binding determination of the issues in the underlying litigation. Thus it can be said here, as it could not in Servidone, that the issues in the suit brought against the insured are now res judicata. But that is irrelevant, because American Guarantee does not seek here, and the defendant in Servidone did not seek, to relitigate the issues in the underlying case. It is well established that such relitigation is not permitted after an insurer has breached its duty to defend (see the authorities discussed in K2-I, 21 NY3d at 390). The issue in Servidone, as here, is whether the insurer may rely on policy exclusions that do not depend on facts established in the underlying litigation.

Plaintiffs also rely, as we did in K2-I, on our decision in Lang v Hanover Ins. Co., 3 NY3d 350, 356 [2004]). We said in Lang that, when an insurer has refused to defend its insured, it "may litigate only the validity of its disclaimer" when it is later sued on a judgment obtained against the insured. But the issue we now face was not presented in Lang. We decided in Lang "that a judgment is a statutory condition precedent to a direct suit against the tortfeasor's insurer" (id. at 352); we did not consider any defense based on policy exclusions. The sentence on which plaintiffs rely was offered as support for our statement that "an insurance company that disclaims in a situation where coverage may be arguable is well advised to seek a declaratory judgment concerning the duty to defend or indemnify the purported insured" (id. at 356). That continues to be sound advice, but Lang should not be read as silently overruling Servidone.

The dissent would read Servidone as being limited to cases in which the defense was "based on noncoverage" rather than "predicated on an exclusion" (dissenting op at 3). It is true, as the dissent says, that we have made such a distinction in cases arising under Insurance Law § 3420, which imposes an obligation of timely disclaimer. It could hardly be clearer, however, that we were not making that distinction in Servidone. Describing the defense asserted by the insurer in that case, we said: "Security responded that, pursuant to an exclusion in the policy, a loss based upon any obligation the insured had assumed by contact was outside coverage" (64 NY2d at 422; emphasis added). Thus, "outside coverage," as Servidone used the term, describes a loss to which a policy exclusion applies.

In short, to decide this case we must either overrule Servidone or follow it. We choose to follow it.

There is much to be said for the rule of K2-I, as our previous opinion shows; but, as the Servidone opinion shows, there is also much to be said for the Servidone rule. Several states follow the Servidone approach (e.g., Sentinel Ins. Co. v First Ins. Co. of Hawai'i, Ltd., 76 Hawaii 277, 290-297, 875 P2d 894, 907-914 [1994]; Polaroid Corp. v Travelers Indemnity Co., 414 Mass 747, 760-766, 610 NE2d 912, 919-923 [1993]), while others adopt a rule like that of K2-I (e.g., Employers Ins. of Wausau v Ehlco Liquidating Trust, 186 Ill2d 127, 150-154, 708 NE2d 1122, 1134-1136 [1999]; Missionaries of Co. of Mary, Inc. v Aetna Cas. and Sur. Co., 155 Conn 104, 112-114, 230 A2d 21, 25-26 [1967]). A federal district judge, writing in 1999, said that "the majority of jurisdictions which have considered the question" follow the Servidone rule (Flannery v Allstate Ins. Co., 49 F Supp 2d 1223, 1227 [D Colo 1999]).

Under these circumstances, we see no justification for overruling Servidone. Plaintiffs have not presented any indication that the Servidone rule has proved unworkable, or caused significant injustice or hardship, since it was adopted in 1985. When our Court decides a question of insurance law, insurers and insureds alike should ordinarily be entitled to assume that the decision will remain unchanged unless or until the Legislature decides otherwise. In other words, the rule of stare decisis, while it is not inexorable, is strong enough to govern this case.
It is important to note that it remains the rule in New York that a liability which does not defend its insured in an underlying action may not relitigate the issues of that action by relying on policy exclusions that depend on facts established in that underlying action.  But where noncoverage grounds are based on facts not established in the underlying, undefended action, the insurer's breach of its duty to defend will not preclude it from asserting and litigating those noncoverage grounds in an action to recover indemnification coverage.

Tuesday, February 18, 2014

New York's Highest State Court Finds that a Two-Year Suit Limitation Period Is Unreasonable and Unenforceable in Cases Where the Insured Property Cannot Reasonably Be Replaced in Two Years

PROPERTY – SUIT LIMITATIONS PERIOD – PERIOD OF TIME TO REPAIR OR REPLACE
Executive Plaza, LLC v. Peerless Ins. Co.
(Ct. Apps., decided 2/13/2014)

We'll start with this statement from the second paragraph of this decision:
[W]e hold that such a [two-year] contractual limitation period, applied to a case in which the property cannot reasonably be replaced in two years, is unreasonable and unenforceable.
Read that again and let it sink in.  Answering a certified question from the United States Court of Appeals for the Second Circuit, the New York Court of Appeals has essentially eliminated the two-year contractual suit limitations condition found in most New York property insurance policies in cases where insured property, damaged or destroyed by a covered peril, "cannot reasonably be replaced in two years[.]"

Executive Plaza LLC owned a commercial building in Long Island that was severely damaged by a fire in February 2007.  The building was insured for $1 million, and the insurer, Peerless Insurance Company, made a $757,812.50 actual cash value payment to the insured.  Rather than replacing the insured building by buying another one elsewhere, the insured chose to rebuild the building on the same site, but ran into zoning problems due to various changes it had proposed for the new building.  Those zoning problems allegedly caused the insured not to be able to complete the reconstruction of the insured building until October 2010, more than two and a half years after the loss.

The policy under which the plaintiff's building was insured contained the following replacement cost condition:
We will not pay on a replacement cost basis for any loss or damage:  
(i)  Until the lost or damaged property is actually repaired or replaced; and
(ii)  Unless the repairs or replacement are made as soon as reasonably possible after the loss or damage.
The policy also contained a "Legal Action Against Us" suit limitations condition that provided:
No one may bring a legal action against us under this insurance unless:
a.  There has been full compliance with all terms of this insurance; and
b.  The action is brought within 2 years after the date on which the direct physical loss or damage occurred.
Just prior to the February 2009 two-year anniversary of the fire loss but before it had completed the insured building's reconstruction, the insured commenced an action against Peerless.  That action was removed to federal court and dismissed on motion based on Peerless' argument that the insured had not yet expended more than the ACV payment in repairs or replacement of the building.  The insured eventually completed the building's reconstruction in October 2010 and sued again for the replacement cost holdback of approximately $250,000.

Peerless again moved to dismiss the action based on the policy's two-year suit limitations period.  In granting that motion, the United States District Court held:
[T]he Court finds that the Policy unambiguously bars any and all suits commenced more than two years after the date of the damage or loss. Since Plaintiff commenced this action well beyond the limitations period prescribed in the Policy, Plaintiff's action is time-barred.
Plaintiff appealed that decision to the United States Court of Appeals for the Second Circuit and that court, rather than deciding that appeal, certified the following question to the New York Court of Appeals:
If a fire insurance policy contains
(1) a provision allowing reimbursement of replacement costs only after the property was replaced and requiring the property to be replaced "as soon as reasonably possible after the loss"; and  
(2) a provision requiring an insured to bring suit within two years after the loss; 
is an insured covered for replacement costs if the insured property cannot reasonably be replaced within two years?
The New York Court of Appeals has now answered that question in the affirmative, adding that it would consider any suit limitations condition that bars a suit for replacement cost coverage benefits for property that cannot be reasonably replaced within two years to be unreasonable and unenforceable:
"[A]n agreement which modifies the Statute of Limitations by specifying a shorter, but reasonable, period within which to commence an action is enforceable" (John J. Kassner & Co. v City of New York, 46 NY2d 544, 551 [1979]; emphasis added). We conclude that the contractual period at issue here — two years from the date of "direct physical loss or damage" (i.e., from the date of the fire) — is not reasonable if, as the Second Circuit's question requires us to assume, the property cannot reasonably be replaced within two years.

It is true, as the District Court pointed out, that there is nothing inherently unreasonable about a two-year period of limitation. In fact, we have enforced contractual limitation periods of one year (Blitman Constr. Corp. v Insurance. Co. of N. Am., 66 NY2d 820 [1985]; Sapinkopf v Cunard S.S. Co., Ltd., 254 NY 111, 114 [1930]) and six months (Continental Leather Co. v Liverpool, Brazil & Riv. Plate Steam Nav. Co., 259 NY 621 [1932]; Aron & Co. v Panama R.R. Co., 255 NY 513, 519 [1931]; see also John J. Kassner, 46 NY2d at 552). The problem with the limitation period in this case is not its duration, but its accrual date. It is neither fair nor reasonable to require a suit within two years from the date of the loss, while imposing a condition precedent to the suit — in this case, completion of replacement of the property — that cannot be met within that two-year period. A "limitation period" that expires before suit can be brought is not really a limitation period at all, but simply a nullification of the claim. It is true that nothing required defendant to insure plaintiff for replacement cost in excess of actual cash value, but having chosen to do so defendant may not insist on a "limitation period" that renders the coverage valueless when the repairs are time-consuming.

We have found no case in which we have squarely held that an otherwise reasonable limitation period may be rendered unreasonable by an inappropriate accrual date. We think, however, that the law was correctly stated in Judge Crane's dissenting opinion in Continental Leather Co.: "[T]he period of time within which an action must be brought . . . should be fair and reasonable, in view of the circumstances of each particular case . . . . The circumstances, not the time, must be the determining factor" (259 NY at 622-623). While that rule was stated in a dissent, the majority, in affirming without opinion, apparently disagreed not with the principle but with its application to the case. The Appellate Division opinion that we affirmed in Continental Leather stated essentially the same rule in saying that the issue was whether the plaintiff had "a reasonable opportunity to commence its action within the period of limitation" (Continental Leather Co. v Liverpool, Brazil & Riv. Plate Steam Nav. Co., Ltd., 234 App Div 386, 387 [2d Dept 1932]).

Blitman also supports our holding here. In that case, we enforced an agreed-upon twelve-month limitation period, rejecting the insured's argument that it was "commercially unreasonable" under the circumstances (66 NY2d at 823). But in doing so, we pointed out that the policy enabled the insured to "protect itself by . . . beginning an action before expiration of the limitation period" (id.). Here, the insured did begin an action on the last day of the limitation period — and the insurer successfully argued that that action was brought too soon. It is unreasonable for it now to say, as it in substance does, that a day later would have been too late.
Some legal commentators has opined that this decision has limited precedential value or impact.  I disagree.  Insureds and their public adjusters will now argue in both building and contents loss claims that where the insured property "cannot reasonably be replaced" within two years the insurer must consider payment beyond the loss's two-year anniversary.  First-party property coverage suits brought after that two-year anniversary will no longer be subject to automatic dismissal based on a clear violation of the policy's two-year suit limitations condition.  Insureds undoubtedly will argue that they could not reasonably repair or replace the insured property within that two-year period and, therefore, should not be subject to the policy's two-year suit limitation.  Property insurers that previously had been able to take down reserves on open claims for replacement costs holdbacks will no longer be able to do so confidently in all claim situations.  Insurers that seek to avoid the impact of this decision by making it clear that damaged or destroyed property must be repaired or replaced within that two-tear period may face legal challenges and court nullification of such redrafted conditions based on the Court of Appeals' expressed view that such a condition would be unreasonable and unenforceable.

Of course, who's to say when it is that insured property "cannot reasonably be replaced" within two years after its damage or destruction?  What test or standard will be utilized to assess whether the reasons given for such delay are reasonable?  And does the court's use of the adverb "reasonably" mean that all disputes over a more than two-year delay in repair or replacement will involve one or more questions of fact, not amenable to summary disposition on motion?  We shall see.

Tuesday, February 11, 2014

New Jersey Automobile Medical Fee Schedule Held to Apply to New York No-Fault Claimant's Treatment in New Jersey

PIP – PREVAILING FEE FOR HEALTH CARE SERVICES RENDERED OUTSIDE NEW YORK – NEW JERSEY AUTOMOBILE MEDICAL FEE SCHEDULE
Matter of Arbitration Between Specialty Surgical of Secaucus, LLC and Geico Ins. Co.
(AAA Case 412012124315, Arbitrator Michael B. Parson, Esq., decided 1/13/2014)

A New York EIP, insured under a New York auto policy. (is picked up by a limo, driven to, and) treats in northern New Jersey for injuries sustained in a New York motor vehicle accident.  What fee must the NY PIP insurer pay for the the NJ health care provider's services?

11 NYCRR § 68.6, also known as Regulation 83, answers that question:
If a professional health service reimbursable under section 5102 (a)(1) of the insurance law is performed outside New York State, the permissible charge shall be the prevailing fee in the geographic location of the provider.  
So what is "the prevailing fee in the geographic location"?  Who decides what that is?  Can the rates set by the New Jersey Automobile Medical Fee Schedule be considered the prevailing fees for New Jersey locations?  In the opinion of AAA No-Fault Arbitrator Michael B. Parson, Esq., the answer to that last question is yes, the New Jersey fee schedule applies to determine the NY PIP-compensable fee.

Arbitrator Parson reasoned as follows:
The question before me therefore is, what is the prevailing fee and how is it to be determined in this forum? Applicant would argue that the regulation does not limit reimbursement to a foreign state's fee schedule. I agree to the extent that a fee schedule is not itself dispositive of the issue. However, I find that in a state like New Jersey, which has established a fee schedule specifically for patients being treated as a result of an automobile accident, the expectation of providers in New Jersey in treating such injuries is that they will be limited to the fees in the schedule. The fact that a person seeking treatment resides in another state, is, in my view, simply incidental and does not change that expectation. I find that the New Jersey fee schedule is therefore a fair indication of the prevailing fees for treating injuries sustained in a motor vehicle accident in the geographic location where the treatment was rendered in this case.

Treating a New York resident should not provide an opportunity for a provider to charge as high a fee for services as possible due solely to the accident of residency. Under the present health care system in the United States, there are many different fees charged for the same procedure in most jurisdictions, depending on the circumstances. For example, in situations that do not involve automobile accidents, a person with private health insurance will pay far less, as will the private insurance company, than someone who is not covered. Different insurance companies will pay different rates, depending on a number of factors. Because of these types of variances in fees charged and paid, I must look to the intentions of the foreign state relative to the treatment of persons injured in automobile accidents. Both New York and New Jersey have sought, by the institution of fee schedules for treatment of persons injured in automobile accidents, to limit fees that may be charged for such services. There are many policy reasons for this, not the least of which is to permit coverage and treatment that will not exhaust the policy limits of the injured parties. I note too that NJSA 11:3-29.1, in describing the purpose and scope of the New Jersey fee schedule for automobile accident related treatment does not make any exclusion for out of state patients, does not limit its terms to in-state accidents and states, at 11:3-29.5:
No health care provider may demand or request any payment from any person in excess of those permitted by the medical fee schedules and this subchapter, nor shall any person be liable to any health care provider for any amount of money that results from the charging of fees in excess of those permitted by the medical fee schedules and this subchapter.
Accordingly, I find that the New Jersey fee schedule should apply to the surgery and take judicial notice of that fee schedule. Although there was vigorous argument from Applicant's counsel that the New Jersey fee schedule should not be the basis upon which my determination of the prevailing facility fee in Northern New Jersey is made, both parties herein agreed at hearing that were I to find that that the New Jersey fee schedule applies, the sum provided in that schedule for the CPT code billed here, for the services rendered by the Applicant is $1,265.10. My own examination of the New Jersey fee schedule, reveals that the $1,265.10 figure is correct.

Accordingly, I find that the Applicant should be paid in the total sum of $1,265.10.

Production of Entire Claims File Ordered

SUM – DISCOVERY OF ENTIRE CLAIMS FILE – DEPOSITION OF HANDLING CLAIM REP
Heimbach v. State Farm Ins.
(4th Dept., decided 2/7/2014)

Pay attention insurers.  It has been the case decisional law in New York for some time that reports prepared by insurance investigators, adjusters, or attorneys before the decision is made to pay or reject a claim are not privileged and are discoverable.  Here is another case decision holding the same thing.

Plaintiff sued State Farm for SUM coverage benefits and served a discovery demand for State Farm's entire claims file.  She also sought to depose various representatives of State Farm, including the claim representative who had been handling her SUM claim.  State Farm apparently declined to produce the entire claims file and the handling claim rep for a deposition, and plaintiff moved to compel such discovery.  The motion court denied plaintiff's motion insofar as it sought the entire claims file and the handling claim rep's deposition.

In MODIFYING the order appealed from to grant plaintiff's motion to compel production of the entire claims file and the handling claim rep's deposition, the Fourth Department held:
Given the scope of the liability and damages issues framed by the pleadings, we conclude that plaintiff's request for the entire claim file was not palpably improper and that the disclosure was "material and necessary" for the prosecution of plaintiff's action (CPLR 3101 [a]; see generally Cain v New York Cent. Mut. Fire Ins. Co., 38 AD3d 1344, 1344; Gibson v Encompass Ins. Co., 23 AD3d 1047, 1047-1048). Furthermore, defendant failed to meet its burden of establishing that those parts of the claim file withheld from discovery by the court contain material that is privileged or otherwise exempt from discovery (see Gibson, 23 AD3d at 1048; Bombard v Amica Mut. Ins. Co., 11 AD3d 647, 648). Inasmuch as plaintiff established that defendant's claim representative directly responsible for handling plaintiff's claim possesses "material and necessary" information regarding the action (CPLR 3101 [a]), that part of plaintiff's motion seeking to compel his deposition also should have been granted.
Be advised.

Thursday, February 6, 2014

New York Insurance Regulation 64 (11 NYCRR Part 216) -- Updated Version

Since March 2010 when I first posted a link on this blog, New York Insurance Regulation 64 has seen several amendments.  The last updated version I posted and made available was in September 2012, but the October 2011 replacement of the New York State Insurance Department with the Department of Financial Services and the regulatory changes that arrived in Superstorm Sandy's wake after October 2012 made that September 21, 2012 version outdated almost as soon as I posted it.

Click HERE for a version of Regulation 64 that is current through January 29, 2014.  I'll do my best to update all of the links on this blog to the older version, but if you find any of those outdated links, please email me and I'll fix them.   

Those who would rely on the provisions of Regulation 64 are always best to check the official version, which is available via this link.

Tuesday, February 4, 2014

Joseph Lin and the Craigslist PayPal Scam

It was early afternoon on Super Bowl Sunday (cue NFL trademark lawyers) and I decided to post that Craigslist ad for our Yamaha console piano that will not be making the move with us.

Undistracted by the game that wasn't, I was delighted to receive an email response to my ad later that very evening from someone calling himself Joseph Lin, which read:
 I hope you still have the Piano available for sale..? Joseph
Okay, I know spelling and punctuation aren't supposed to count any longer, but I was initially struck by the oddity of the responder's inquiry.  Still available?  The posting was barely dry.  Is there that much demand for Yamaha console pianos that they can expect to be snatched up within hours?  Unlikely I thought.

In any event, I emailed Joseph Lin back from my work email via Craigslist email routing at 5:44 the next morning while waiting to board a flight at the Buffalo Niagara International Airport.  My email read:
Yes, Joseph.  The piano is still available.  Would you like to see it?
Now you would expect that the next response would be via email and would say something like, "Yes, I would like to take a look at the piano. Where is it located?", right?  That's what I thought.  That was until I received a text message -- yes a text message -- at 6:23 AM presumably from a mobile phone using number (201) 822-5138:


Okay Joseph.  Now you have my attention.  You must really want this piano.  But why text rather than email me back?  And why ask the same question you asked in your initial response through Craigslist when you obviously received my email?  (My cell number is in my work email signature.)  Oddity ## 2 and 3.   My legal practice concentrates in the investigation of insurance fraud, Joseph.  You should have looked me up before texting me and repeating your question.

But when there's what feels like a nibble, sometimes it's best to raise to raise your line slowly to make the fish commit to the bait.  So despite the brashness of Joseph's text messaging, at 6:26 AM I texted back "Yes it is still available."

Nine minutes later I received the reply you can see above and below.


The imperfect punctuation and spelling still suggested a non-native speaker,  and there were Oddity ## 4, 5, 6 and 7:
  • I love my dad, but who buys their dad a $2,500 piano as a surprise gift?
  • The 201 area code suggested Bergen County, NJ, and having grown up there I know that the reference to "New York" means New York City.  Who would pay the cost to move/ship a 500-pound piano more than 400 miles across the state?
  • You're offering me $300 more than the asking price when the body of my ad said that I would also consider best offers?  Who does that?
  • Cordially?  We're now on cordial terms after two emails and text messages?  
With the boarding process having begun but my laptop back in my bag, I used my iPhone to do a quick Internet search of
"joseph lin" paypal craigslist 
The first three search results about say it all, don't they:
I read with interest how the "PayPal scam" works and then sent this text message back to the cordial Joseph Lin at 6:40 AM as I was walking to Gate 7:
Nice try.  Don't contact me again.  I'm reporting your phone number. http://800notes.com/Phone.aspx/1-281-891-3296
And that was the last I heard from Joseph Lin and (201) 822-5138.  Blogger blogs such as this one get pretty good SEO, so I'm posting this on an insurance coverage blog as a warning and resource to others who might be contacted by Joseph Lin or (201) 822-5138 or the like via a Craigslist ad with a PayPal payment and "I'll arrange to pick it up" proposal.  Don't fall for this scam.

And the piano's still for sale.  Cash only please.

Friday, January 31, 2014

SUM Insurer Not Required to Consent to High-Low Arbitration of Insured's Underlying Bodily Injury Claim

SUM – TRIGGER – SUBROGATION AGAINST TORTFEASOR – CONSENT TO HIGH-LOW ARBITRATION
Matter of Ducz v Progressive Northeastern Ins. Co.
(2nd Dept., decided 1/29/2014)

Interesting twist on the consent-to-settle condition of the New York SUM (supplementary uninsured motorists) coverage endorsement.

Before settling with a tortfeasor (at-fault party), SUM claimants must obtain the SUM insurer's consent.  A SUM insurer might not consent because it believes a subrogation claim against the tortfeasor for what it might have to pay in SUM coverage benefits to its insured is viable and collectible.  But what if instead of seeking to settle its bodily injury claim with the tortfeasor, the SUM claimant want to proceed with a high-low arbitration to decide that BI claim?  Must the SUM insurer give or not give its consent to that?  No, says the Second Department:
In a letter dated January 26, 2012, the respondent declined to consent to the arbitration, and indicated that it would not waive its right to subrogation against the alleged tortfeasor. Thereafter, the petitioner commenced the instant proceeding, and moved to compel the respondent to consent to the high-low arbitration and to direct the respondent to proceed to arbitration of the petitioner's claim for SUM benefits. The Supreme Court denied the petitioner's motion.

"As a condition precedent to the obligation of the insurer to pay under the supplementary uninsured/underinsured motorists insurance coverage, the limits of liability of all bodily injury liability bonds or insurance policies applicable at the time of the accident shall be [*2]exhausted by payment of judgments or settlements" (Insurance Law § 3420[f][2][A]). Contrary to the petitioner's contention, she failed to establish that she exhausted the alleged tortfeasor's policy through settlement (see Garcia v State Farm Ins. Co., 232 AD2d 488, 489; cf. Matter of State Farm Mut. Auto. Ins. Co. [Perez], 94 AD3d 1314, 1315-1316). Therefore, the Supreme Court properly denied that branch of the petitioner's motion which was to compel the respondent to proceed to arbitration of the petitioner's claim for SUM benefits.

The Supreme Court also properly denied that branch of the petitioner's motion which was to compel the respondent to consent to the high-low arbitration between the petitioner and the alleged tortfeasor's insurer, as that relief may not be sought in a CPLR article 75 proceeding (see CPLR 7503).

Tuesday, January 28, 2014

Should You Wish to Complain About Us to the New York State Department of Financial Services

If I'm going to reactivate this blog (and I am) I might as well start by updating this May 2008 posting.

You insurers who do business in New York know, of course, that New York Insurance Regulation 64  (11 NYCRR Part 216) requires certain letters to "prominently set out" a certain paragraph advising those to whom your letters are addressed that they may complain about you or your coverage decision to New York's insurance regulator, known since October 2011 as the New York State Department of Financial Services.

It only took that department approximately 20 months after its creation to update all regulatory references to the previous regulator -- the New York State Insurance Department -- including what I like to refer to as the "consumer advisory paragraph" of Regulation 64.  That paragraph now reads:
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: One State 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.
A number of New York insurers apparently remain uncertain, however, of what kinds of letters must actually include that advisory paragraph. Under Regulation 64, there are only two kinds of letters that must do so:
  1. letters "rejecting any element of a claim involving personal property insurance" (11 NYCRR § 216.6[h]); and
  2. letters explaining or rejecting any element of a claim for auto physical damage (11 NYCRR § 216.7[d][3]).
Let's take these in reverse order. Everyone knows what an "auto physical damage" claim is, right? We're talking first-party, not third-party claims. Indeed, § 216.7 begins by stating that “[t]his section is applicable to claims arising under motor vehicle collision or comprehensive coverages”. Thus, by implication, letters regarding third-party property damage claims need not include the advisory paragraph. Notice also that § 216.7(d)(3) is somewhat broader in its scope than § 216.6(h) in that the advisory paragraph must be included in both coverage rejection and explanation letters.

Which brings us to letters "rejecting any element of a claim involving personal property insurance", the first type of letter in which the advisory paragraph must be included. A letter rejecting an element of a personal property claim is not:
  • an acknowledgement letter;
  • an ROR letter;
  • a non-waiver agreement;
  • a letter written solely to explain personal property coverage or payments;
  • a letter forwarding payment to an insured;
  • a liability coverage declination letter; or
  • every single letter that leaves the insurer's office addressed to an insured or claimant.
In a January 6, 2004 opinion letter, the NYS Insurance Department's OGC (Office of General Counsel) opined:
The term "personal property insurance" in Section 216.6(h) limits the applicability of subdivision (h) to personal lines property insurance. Thus, subdivision (h) is not applicable to commercial lines property insurance or to liability insurance.
Letters rejecting commercial lines property insurance -- no advisory paragraph required.
Letters rejecting (disclaiming/denying) liability coverage -- no advisory paragraph required.

See?

Nearly six years later I'm still seeing the advisory paragraph being included in letters in which it is not required.  If you don't care about your consumer complaint ratios, then keep on keeping on.  If you question whether the paragraph belongs in a certain letter even after reading the above, email me.  We'll  figure it out.

Monday, January 27, 2014

Updated NYS DMV Police Accident Report Cover Sheet & Secret Decoder Ring

It was back in May of 2008 that I last posted a link for the NYS DMV Police Accident Report Cover Sheet "N". That post ranks as the 8th most popular of this blog, probably because like me, you find it easier to search for the cover sheet on the Internet than try to remember where in your desk or cabinet you stuffed that thing.

In the nearly five years that have passed since then, the NYS DMV apparently has replaced Cover Sheet "N" with the more universal MV-104COV (11/13).  Okay, there's no secret decoder ring inside the link, but there are included listings of injury codes, hospital codes and vehicle type codes.

Other NYS DMV forms can be found here.

Sunday, January 26, 2014

Redefining Vandalism 1,558 Years Later

COMMERCIAL PROPERTY – VANDALISM – INTENT & STATE OF MIND OF THE VANDAL – MALICE
Georgitsi Realty, LLC v Penn-Star Ins. Co.
(Ct. Apps., decided 10/17/2013)

File:Genseric sacking Rome 455.jpg
Till Goths, and Vandals, a rude Northern race, Did all the matchless Monuments deface.
John Dryden, "To Sir Godfrey Kneller" 47-48 (1694)

If Valentinian III had not been assassinated in 455 AD, his daughter Eudocia had not married Petronius Maximus' son Palladius instead of her original betrothed, Vandal king Genseric's son Huneric, and the Vandals had not then sacked Rome, marking the end of the Roman Empire, what term would we be using for the willful and malicious or mischievous damage or destruction of property without permission?  Hunnism?  Gothism?  Visigothism?

Since its first appearance in 1530 or 1794, the term "vandalism" has meant the willful and malicious or mischievous damage to or destruction of someone else's property without permission.  King Genseric's intent and state of mind was never in doubt.  He intended to and reportedly did "sack" Rome, even if that sacking included the burning of only one church.  But it was the stripping and thieving of the gold and bronze roof shingles of the Temple of Jupiter Optimus Maximus, and the intentional defacement of Rome's artwork, statues and monuments that reportedly prompted French Bishop Henri GrĂ©goire to coin the term vandalism to describe the destruction of artwork following the French Revolution.

Criminological research into vandalism reportedly has found that it serves many purposes for those who engage in it and stems from a variety of motives. Sociologist Stanley Cohen and criminologist Mike Sutton have enumerated seven different types of vandalism:
  1. Acquisitive vandalism (looting and petty theft). 
  2. Tactical vandalism (to advance some end other than acquiring money or property – such as breaking a window to be arrested and get a bed for the night in a police cell).
  3. Ideological vandalism (carried out to further an explicit ideological cause or deliver a message).
  4. Vindictive vandalism (for revenge). 
  5. Play vandalism (damage resulting from children’s games). 
  6. Malicious vandalism (damage caused by a violent outpouring of diffuse frustration and rage that often occurs in public settings).
  7. Peer status motivated vandalism.
So what if your neighbor hires a contractor to build a new building on the lot right next to yours, and the contractor's excavation of that adjacent lot, which continued in spite of the issuance of "stop work" orders by the local building department and a temporary restraining order by a local court, causes your building's foundation and walls to crack?  Is that vandalism?  To your building?  Covered vandalism?  In this case, the New York Court of Appeals said yes, it could be.

Penn-Star Insurance Company issued a broad form, named perils policy of commercial insurance to the plaintiff, Georgitsi Realty, LLC, covering "direct physical loss ... or damage ... caused by or resulting from" any of 14 kinds of events or perils, including vandalism, which the policy defined as "meaning willful and malicious damage to, or destruction of, the described property."  The policy covered plaintiff's four-story apartment building in Park Slope, Brooklyn, New York.  Armory Plaza, Inc., the owner of the lot adjacent to plaintiff's property, decided to build a new building and underground parking garage on its property and hired a contractor to excavate for that new construction. According to the plaintiff, the excavation caused cracks in the walls and foundations of plaintiff's building.  As the cracks became more pronounced and the building began to settle, plaintiff feared the building would collapse. Plaintiff complained to the New York City Department of Buildings, which issued a series of violations and "stop work" orders. Plaintiff alleged that the violations resulted in guilty pleas or defaults and fines totaling more than $36,000, but that the stop work orders were ignored and the contractors kept working. Plaintiff obtained a temporary restraining order from New York Supreme Court, directing the adjacent property owner and its contractors "to cease all construction and/or excavation work." This order too was ignored, according to plaintiff.

Plaintiff's building on left; Armory Plaza's new building on right after completion.
Plaintiff made a claim for damage to its building caused by the excavation contractor, contending that the damage was covered due to that contractor's vandalism.  Penn-Star denied coverage on the basis that there was no willful and malicious damage "to the described property" because there was no evidence that the excavation contractor intended to and did maliciously damage plaintiff's property.  Plaintiff sued for breach of contract and the New York Supreme Court action was removed to federal court.

In granting Penn-Star's motion for summary judgment, the US Eastern District Court held that because the policy clearly stated that the willful and malicious damage or destruction must be to "the described property," and plaintiff was not alleging that the adjacent property owner or excavator acted with deliberate intent to damage or destroy the plaintiff's building, the policy did not afford vandalism coverage for plaintiff's building damage.

Plaintiff appealed that decision to the US Court of Appeals for the Second Circuit, which, based on its finding that "New York case law on the circumstances under which activities conducted on adjacent property can constitute vandalism is unclear", certified two questions to the New York Court of Appeals:
  1. For purposes of construing a property insurance policy covering acts of vandalism, may malicious damage be found to result from an act not directed specifically at the covered property? 
  2. If so, what state of mind is required?
In a 6-1 opinion authored by Judge Robert Smith, the New York Court of Appeals answered the two certified questions as follows:
  1. Yes.
  2. The state of mind is the same that would be required to award punitive damages against the alleged vandal: such a conscious and deliberate disregard of the interests of others that the conduct in question may be called willful or wanton.
Relying on a 1976 Appellate Division, Second Department decision, and a 1985 6th Circuit US Court of Appeals' decision, the majority reasoned:
We see no reason why the term "vandalism" should be limited to acts "directed specifically at the covered property." Vandalism, as the term is ordinarily understood, need not imply a specific intent to accomplish any particular result; vandals may act simply out of a love of excitement, or an unfocused desire to do harm, or (as in Cresthill, Louisville, and in the present case) out of a desire to enrich oneself without caring about the consequences to others. Nor does it seem relevant that the alleged act of vandalism here—as in Cresthill and Louisville—did not bring the alleged vandals in direct contact with the covered property. Where damage naturally and foreseeably results from an act of vandalism, a vandalism clause in an insurance policy should cover it.
With respect to the Second Circuit's second certified question -- concerning what state of mind is required for vandalism to be said to have occurred -- the majority held:
In common speech, and by the express terms of the policy in suit, vandalism is "malicious" damage to property. The Second Circuit's second question asks, in essence, what state of mind amounts to "malice" for these purposes. We answer by adopting, insofar as it relates to property damage, the formulation we have used in reviewing awards of punitive damages. Conduct is "malicious" for these purposes when it reflects "such a conscious and deliberate disregard of the interests of others that [it] may be called wilful or wanton" (Marinaccio v Town of Clarence, 20 NY3d 506, 511 [2013], quoting Dupree v Giugliano, 20 NY3d 921, 924 [2012]; see also Prozeralik v Capital Cities Communications, 82 NY2d 466, 479 [1993]; Carvel Corp. v Noonan, 350 F3d 6, 24 [2d Cir 2003]; Prosser & Keeton, Torts § 2 at 9 [5th ed 1984]). This familiar test, we believe, will serve to distinguish between acts that may fairly be called vandalism and ordinary tortious conduct. Insurance against vandalism should not be converted into something approaching general coverage for property damage. Insureds who want broader coverage should obtain it and pay an appropriate premium.
It is important to understand that the New York Court of Appeals did not decide plaintiff's appeal of the federal district court's grant of summary judgment to Penn-Star; it only answered the two certified questions put to it.  If the case continues (is not settled), the Second Circuit will decide the pending appeal based on the New York Court of Appeals' answers to the certified question.  What that means is that the Second Circuit may reverse the grant of summary judgment to Penn-Star based on there being questions of fact as to whether the excavation contractor's conduct was both "willful and malicious".

In her dissent, Judge Sheila Abdus-Salaam did not disagree with the majority's answer to the first certified question, but did disagree somewhat with how majority answered the second certified question:
I would hold that, to recover under a policy insuring against a loss caused by vandalism, the insured must prove that the damage was caused by a malicious act intended to damage property, even if not the insured's specific property. Such an evidentiary requirement would better confine vandalism coverage to the bounds contracted for by the parties to an insurance contract, and prevent coverage from extending to willful and malicious acts not properly categorized as vandalism because property damage was not the actor's primary intent.
The outcome of this case is likely explained by the excavation contractor's continued work in spite of the stop work orders and TRO.  Regardless of whether you believe that the New York Court of Appeals has broadened the scope of vandalism coverage in New York with this decision, absent explicit policy language addressing the issue, New York insurers must now consider vandalism claims that stem from conduct not specifically directed at and occurring off or away from the insured property.

Saturday, January 25, 2014

Defamation Claim Against Property Insurer Dismissed

COMMERCIAL PROPERTY – ARSON – DEFAMATION – COMMON INTEREST QUALIFIED PRIVILEGE – GENERAL BUSINESS LAW § 349
Farm Fresh Gourmet Salads, LLC v. Sentinel Ins. Co.
(Sup.Ct., NY Co., decided 1/10/2014)

It has been my observation that the assertion of defamation causes of action against property insurers has become more common over the past few years, especially in claims investigated or denied for possible fraudulent or intentional conduct.  I guess that's why I developed a training presentation on this topic nearly four years ago.  I've also blogged about a number of New York cases before, which you can review here.

In this case, Sentinel investigated its insured's fire loss and denied coverage based, in part, on its conclusion that the insured caused or procured the fire.  The disclaimer letter sent to the insured and copied to the insured's attorney, public adjuster and insurance agent stated: "Sentinel's investigation has determined that the fire was the result of an intentional act caused or procured by the insured, or someone acting on its behalf."

A summons and complaint followed, with the complaint unsurprising alleging a breach of contract cause of action.  Presumably in an effort to recover plaintiffs' attorneys' fees in the event they prevailed, also somewhat unsurprisingly the complaint alleged a violation of New York General Business Law § 349, New York's deceptive business acts and practices act.

But what caught my eye when I read this decision was its mention of the defamation causes of action against the insurer AND its adjuster who had signed the disclaimer letter.  Is it possible to deny coverage based on the insurer's conclusion that its insured intentionally caused or procured the loss, or breached the policy's fraud/misrepresentation condition, without incurring defamation liability?  As this case illustrates, the answer is yes, of course it is.

Defendants made a motion for partial summary judgment to dismiss the complaint's two defamation causes of action.  In GRANTING that motion, New York County Supreme Court Justice Eileen Rakower agreed that the common interest qualified privilege applied to preclude defamation liability:
Defamation arises from "the making of false statement which tends to expose the plaintiff to public contempt, ridicule, aversion or disgrace, or induce an evil opinion of him in the minds of right-thinking persons, and to deprive then of their friendly intercourse in society." Foster v. Churchill, 87 N.Y.2d 744 (1996)(citations omitted).
The elements of defamation "are a false statement, published without privilege or authorization to a third party, constituting fault as judged by, at a minimum, a negligence standard, and, it must either cause special harm or constitute defamation per se." Dillon v. City of New York, 261 A.D.2d 34, 38 [1st Dept 1999]. "Truth provides a complete defense to defamation claim." (Id.).
"Slander per se" "consist of statements (I) charging plaintiff with a serious crime; (ii) that tend to injure another in his or her trade, business or profession; (iii) that plaintiff has a loathsome disease; or (iv) imputing unchastity to a woman." Liberman v. Gelstein, 80 N.Y.2d 429, 435 (1992).
"Even though a statement is defamatory, there exists a qualified privilege where the communication is made to persons who have some common interest in the subject matter." (Id. at 751). "A privileged communication is one which, but for the occasion on which it is uttered, would be defamatory and actionable." (Id.). "The defense of qualified privilege will be defeated by demonstrating a defendant spoke with malice. Moreover, the conditional or qualified privilege is inapplicable where the motivation for making such statements was spite or ill will (common law malice) or where the statements [were] made with [a] high degree of awareness of their probable falsity (constitutional malice)." (Id.) (citations omitted).
Here, Defendants have established prima facie evidence of entitlement to summary judgment on the defamation/libel claims by establishing that the alleged defamatory statement was made to persons who share a common interest in the subject matter and therefore was subject to qualified privilege. The only persons that the allegedly defamatory statement was published to were Plaintiffs' lawyer, and Plaintiffs' agents handling their insurance affairs (Plaintiffs' public adjuster and insurance agent). In additionally, Plaintiffs have presented no evidence of malice to defeat this privilege.
It is important to understand that the court did not conclude that the statement contained in Sentinel's disclaimer letter was defamatory.  It concluded that even if it were, the common interest qualified privilege, undefeated by any showing of malice, applied to preclude defamation liability.

Defendants also moved for summary judgment to dismiss plaintiffs' GBL § 349 cause of action, arguing that plaintiffs had not sufficiently alleged the type of consumer-oriented deceptive practices that this statute was intended to eradicate.  Because plaintiffs did not oppose that aspect of defendants' motion, the court granted summary judgment on and dismissed that cause of action, as well.

Tuesday, August 13, 2013

The $230,000 Email

PERSONAL INJURY ACTION – BINDING AND ENFORCEABLE SETTLEMENT – EMAIL CONFIRMATION
Forcelli v. Gelco Corp.
(2nd Dept., decided 7/24/2013)

Those who practice or work in casualty claims probably know that a settlement is binding and enforcement if it is either (1) confirmed in writing and signed by the parties or their attorneys or (2) "spread" on the record in open court.

New York CPLR Rule 2104 provides:
Rule 2104.  Stipulations. An agreement between parties or their attorneys relating to any matter in an action, other than one made between counsel in open court, is not binding upon a party unless it is in a writing subscribed by him or his attorney or reduced to the form of an order and entered. With respect to stipulations of settlement and notwithstanding the form of the stipulation of settlement, the terms of such stipulation shall be filed by the defendant with the county clerk.
So if a claims adjuster for a defendant confirms a settlement in an email to plaintiff's counsel at the end of which her name is printed is there a binding, enforceable settlement agreement?  Yes there is, says the Appellate Division, Second Department.

Forcelli sued Gelco and other defendants for injuries he allegedly sustained in a three-car accident.  Following discovery, Gelco and the driver of its vehicle moved for summary judgment.  Approximately two and a half months later, on March 18, 2011 that motion and plaintiff's cross motion for summary judgment were fully submitted to the court.  That same day the parties attended a mediation at which a claims adjuster from Sedgwick CMS, Gelco's liability insurer (or claims administrator for Gelco or its liability insurer) appeared.  The action did not settle at the mediation.

On April 22, 2011, Sedgwick's adjuster contacted plaintiff's counsel by telephone to revive settlement negotiations.  She offered $200,000 that day, and on May 3, 2011, she increased her offer to $230,000, which plaintiff's counsel orally accepted.  That same day the Sedgwick adjuster sent the following email to plaintiff's counsel:
Per our phone conversation today, May 3, 2011, you accepted my offer of $230,000 to settle this case. Please have your client executed [sic] the attached Medicare form as no settlement check can be issued without this form. 
You also agreed to prepare the release, please included [sic] the following names: Xerox Corporation, Gelco Corporation, Mitchell G. Maller and Sedgwick CMS. Please forward the release and dismissal for my review. Thanks Brenda Greene.
On May 4, 2011, Forcelli signed a release in favor of the Gelco defendants.  On May 10, 2011, before Sedgwick has issued the settlement payment, the court issued an order granting summary judgment to the Gelco defendants dismissing plaintiff's complaint against them.  Counsel for the Gelco defendants learned of that order by email the next day, May 11, 2011, and immediately served a copy of the court's order with written notice of entry on plaintiff's counsel by overnight mail.  Meanwhile, on the very same day, plaintiff's counsel sent to the Sedgwick adjuster by fax and certified mail the plaintiff's signed release.

On May 12, 2011, defense counsel for the Gelco defendants sent a fax to plaintiff's counsel purporting to reject the release and stipulation of discontinuance.  On May 23, 2011, plaintiff moved to vacate the court's May 10, 2011 order awarding summary judgment to the Gelco defendants and to enforce the settlement agreement as set forth in the Sedgwick adjuster's email.  At issue on that motion was whether the adjuster's May 3, 2011 email constituted a binding written settlement agreement within the meaning of CPLR Rule 2104.  The court granted plaintiff's motion and judgment was entered against the Gelco defendants in the principal sum of $230,000.

In AFFIRMING the judgment, the Appellate Division, Second Department, held that "where, as here, an email message contains all material terms of a settlement and a manifestation of mutual accord, and the party to be charged, or his or her agent, types his or her name under circumstances manifesting an intent that the name be treated as a signature, such an email message may be deemed a subscribed writing within the meaning of CPLR 2104 so as to constitute an enforceable agreement."

Sunday, August 11, 2013

Rottie Bite Out Car Window Not Ownership, Maintenance or Use of Motor Vehicle

UNDERINSURED MOTORISTS COVERAGE – OWNERSHIP, MAINTENANCE OR USE OF UNDERINSURED VEHICLE – STAY ARBITRATION
Matter of Allstate v. Reyes
(2nd Dept., decided 8/7/2013)

Deborah Reyes was walking past a parked car at a Sunoco Mart in Poughkeepsie, New York, when a rottweiler dog extended its head from inside the vehicle and bit her right breast. Reyes sued  the vehicle's owner, Michael Kazimer, which GEICO, the insurer of Kazimer's vehicle, later settled for $25,000, the limits of the policy. Reyes then sought SUM coverage from her own auto insurer, Allstate. Allstate denied SUM coverage, concluding that the incident did not arise "out of the ownership, maintenance, or use of an underinsured vehicle." Reyes demanded arbitration of her SUM claim, and Allstate commenced this special proceeding to permanently stay arbitration. Supreme Court, Dutchess County (Pagone, J.) denied the petition, concluding that the incident had arisen "out of the ownership, maintenance, or use of an underinsured vehicle."  Allstate appealed.

In REVERSING Supreme Court's order and granting the petition to stay arbitration, the Appellate Division, Second Department, held:
Underinsured endorsements, such as the one at issue in this case, provide coverage only when the injuries are the result of an accident "arising out of such [underinsured's] motor vehicle's ownership, maintenance or use" (11 NYCRR 60-2.3[2][e][2]; see Matter of Liberty Mut. Fire Ins. Co. [Malatino], 75 AD3d 967, 968). Use of an automobile encompasses more than simply driving it, and includes all necessary incidental activities such as entering and leaving its confines (see Rowell v Utica Mut. Ins. Co., 77 NY2d 636, 638). To satisfy the requirement that it arose out of the "ownership, maintenance or use of" a motor vehicle, the accident must have arisen out of the inherent nature of the automobile and, as such, inter alia, the automobile must not merely contribute to the condition which produces the injury, but must, itself, produce the injury (see Zaccari v Progressive Northwestern Ins. Co., 35 AD3d 597, 599; Eagle Ins. Co. v Butts, 269 AD2d 558, 559-560; U.S. Oil Ref. & Mktg. Corp. v Aetna Cas. & Sur. Co., 181 AD2d 768). "[T]he vehicle itself need not be the proximate cause of the injury," but "negligence in the use of the vehicle must be shown, and that negligence must be a cause of the injury" (Zaccari v Progressive Northwestern Ins. Co., 35 AD3d at 599; see Empire Ins. Co. v Schliessman, 306 AD2d 512, 513). "To be a cause of the injury, the use of the motor vehicle must be closely related to the injury" (Zaccari v Progressive Northwestern Ins. Co., 35 AD3d at 599).

Here, as a matter of law, Reyes's injuries did not result from the inherent nature of Kazimer's vehicle, nor did the vehicle itself produce the injuries. The injuries were caused by Kazimer's dog, and the vehicle merely contributed to the condition which produced the injury, namely, the location or situs for the injury. Allstate established that a causal relationship between the car and the incident was lacking, and Reyes failed to rebut that showing (see Empire Ins. Co. v Schliessman, 306 AD2d at 513; Eagle Ins. Co. v Butts, 269 AD2d at 559; see also Keppler v American Family Mut. Ins. Co., 588 NW2d 105; Sanchez v State Farm Mut. Auto. Ins. Co., 878 P2d 31; Alvarino by Alvarino v Allstate Ins. Co., 370 Pa Super 563; American States Ins. Co. v Allstate Ins. Co., 484 So 2d 1363). Accordingly, since coverage is lacking, the Supreme Court should have granted the petition to permanently stay arbitration.
It was the dog, not the car, that caused Reyes' injuries, so no SUM coverage.  But can someone explain to me why GEICO paid its policy limit in the first place?

Saturday, May 18, 2013

Advanced Social Media Research Tools & Resources


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.