Saturday, December 4, 2021

The Interpretation & Applicability (Or Inapplicability) of the Controlled Substance Exclusion of a Homeowners Policy (At Least in PA for the Time Being)

Although this decision is from the Pennsylvania Superior Court (intermediate appellate-level court), it's interesting enough (at least to me and hopefully to you casualty coverage peeps) to copy and paste from my LinkedIn post of earlier today

This decision befuddles me. 

Nationwide insured the parents of Adam Kramer, who, while they were out of town, had Michael Murphy over to their home. Murphy later died of a drug overdose while at that home. 

Murphy's mother, Laurie Cruz, filed a wrongful death and survival action against Adam and his parents. Cruz alleged that at the time Adam hosted her son, Adam was widely known to use and sell controlled substances. Cruz asserted further that Adam was negligent in supplying the decedent with the drugs that caused his overdose. Relatedly, Cruz alleged in both the survival and wrongful death claims that the parents negligently allowed their son to use their home for such illicit activities. 

The Nationwide HO policy pledged that Nationwide "will pay damages an insured is legally obligated to pay due to an occurrence resulting from negligent personal acts or negligence arising out of the ownership, maintenance or use of real or personal property."  (Bolding in original [meaning defined terms].)

The policy defined "occurrence" as "bodily injury or property damage resulting from an accident including continuous or repeated exposure to the same general condition." 

"Bodily injury" was defined as "bodily harm, including resulting care, sickness or disease, loss of services or death. Bodily injury does not include emotional distress, mental anguish, humiliation, mental distress or injury, or any similar injury unless the direct result of bodily harm." 

The policy excluded liability coverage, however, for "bodily injury or property damage ... resulting from the use, sale, manufacture, delivery, transfer or possession by a person of a controlled substance[.]" 

Based on that exclusion, Nationwide denied liability (defense and indemnification) coverage to the parents in the wrongful death/survival action. The policyholders sued and both parties moved for summary judgment. 

In granting the parents' MSJ, the trial court reasoned that the controlled substance exclusion did not apply because the parents’ alleged liability in the underlying action was rooted in negligence, which was distinct from the type of occurrence contemplated by the exclusion. [Huh?

On Nationwide's appeal a three-judge panel of the Pennsylvania Superior Court AFFIRMED the trial court's order, finding that the policy's controlled substance exclusion did NOT apply to negate coverage to the parents because: 

...the wrongful death claim against the parents in the underlying action is not limited to bodily injury, as such damages are defined in the policy. The decedent’s family is also potentially seeking other types of damages rooted in its “emotional distress, mental distress or injury, or any similar injury,” none of which would be the direct result of bodily harm to the decedent’s family itself. 

Since these are the types of damages that do not fall under the ambit of the policy’s "bodily injury" definition, the policy’s controlled substance exclusion would not apply to them.

Do you see the flaw in the court's reasoning?

Here's a hint: If the exclusion doesn't apply because the decedent's family's claim against the parents doesn't "fall under the ambit of the policy’s 'bodily injury' definition", then...[finish this sentence]. 

Here's another hint: What's makes for a covered claim in the first instance?

Last hint (for those who ever attended any of my annual/biennial New York insurance coverage seminars):  Is the light switch ON?

P.S. I think I figured it out. 

Really last hint: The answer lies in how the court interpreted (and limited by enlargement) the policy's BI definition. I've gone back and highlighted above some language from the court's opinion.  Get it now?

Wednesday, November 24, 2021

Rate Evasion/Garaging Fraud -- Obtaining a Declaratory Judgment of No No-Fault Coverage Owed


State Farm Fire & Cas. Co. v. AutoRx
(Sup. Ct., NY Co., 11/10/2021)

Here's a good example of successfully investigating, denying and litigating a rate evasion/garaging fraud case.  

Mikheal Bogle applies for an auto policy from State Farm in February 2019, representing on his application that he lives and garages his vehicle in Lake Peekskill, Orange County, New York. 

That was false.  Although he once lived in Lake Peekskill (once, as in 12 years earlier), in reality he lived and garaged his vehicle in Rosedale, Queens County, New York, approximately 60 miles away.  

Problem (for State Farm, not initially for Bogle): had Bogle truthfully disclosed the Rosedale garaging address, his 6-month auto policy premium would have been $4,483.82 more than what it was for the Lake Peekskill address he gave. 

On April 28, 2019, Bogle allegedly was injured in a motor vehicle accident (in New York City, of course) and treated with the defendant medical providers, who took assignments of benefits from him and billed State Farm.  After conducting Bogle's EUO, "State Farm timely denied the numerous claims for benefits (see 11 NYCRR 65-3.8[a][1]), concluding that, based on Bogle's testimony at the EUO and its own investigation, Bogle made material misrepresentations in his initial application for the issuance of the subject insurance policy with respect to where the insured vehicle was usually garaged and maintained in order to lower the cost of obtaining the policy, and that coverage was thus vitiated."

State Farm then commenced this affirmative declaratory judgment action to confirm its no-fault coverage denials.  None of the defendants appeared and State Farm moved for a default judgment against all of them.  

Finding that State Farm had not properly served the FDNY defendant (emergency responder), the court denied State Farm's motion for a default judgment.  

But finding proper service of process against all other defendants, the court reviewed State Farm's burden of proof on its motion and State Farm's proof and GRANTED default judgment to State Farm those non-appearing defendants declaring that State Farm "is not obligated to pay no-fault benefits to the defendant Mikheal Bogle in connection with injuries that he sustained in a motor vehicle accident on April 28, 2019, or to reimburse the defendants Autorx, LLC, CHC Chiropractic, P.C., Ocean Spine and Joint Medical Care, P.C., also known as Comprehensive Chiropractic Center, Kanwarpaul Grewal, D.O., JCB Acupuncture, P.C., Ocean Valley Physical Medicine, P.C., or Stand-Up MRI of Lynbrook for treatment that they rendered or equipment and supplies that they provided to him for those injuries[.]" 

The court explained: 
With respect to the proof of the facts constituting the claim, 
"CPLR 3215 does not contemplate that default judgments are to be rubber-stamped once jurisdiction and a failure to appear have been shown. Some proof of liability is also required to satisfy the court as to the prima facie validity of the uncontested cause of action (see, 4 Weinstein-Korn-Miller, NY Civ Prac paras. 3215.22-3215.27). The standard of proof is not stringent, amounting only to some firsthand confirmation of the facts" 
(Joosten v Gale, 129 AD2d 531, 535 [1st Dept 1987]; see Martinez v Reiner, 104 AD3d 477, 478 [1st Dept 2013]; Beltre v Babu, 32 AD3d 722, 723 [1st Dept 2006]). Stated another way, while the "quantum of proof necessary to support an application for a default judgment is not exacting ... some firsthand confirmation of the facts forming the basis of the claim must be proffered" (Guzetti v City of New York, 32 AD3d 234, 236 [1st Dept 2006]). In other words, the proof submitted must establish a prima facie case (see id.; Silberstein v Presbyterian Hosp., 95 AD2d 773 [2d Dept 1983]). 

"Where a valid cause of action is not stated, the party moving for judgment is not entitled to the requested relief, even on default" (Green v Dolphy Constr. Co., 187 AD2d 635, 636 [2d Dept 1992]; see Walley v Leatherstocking Healthcare, LLC, 79 AD3d 1236, 1238 [3d Dept 2010]). In moving for leave to enter a default judgment, the plaintiff must "state a viable cause of action" (Fappiano v City of New York, 5 AD3d 627, 628 [2d Dept 2004]). In evaluating whether the plaintiff has fulfilled this obligation, the defendant, as the defaulting party, is "deemed to have admitted all factual allegations contained in the complaint and all reasonable inferences that flow from them" (Woodson v Mendon Leasing Corp., 100 NY2d 62, 71 [2003]). The court, however, must still reach the legal conclusion that those factual allegations establish a prima facie case (see Matter of Dyno v Rose, 260 AD2d 694, 698 [3d Dept 1999]). 

Proof that the plaintiff has submitted "enough facts to enable [the] court to determine that a viable" cause of action exists (Woodson v Mendon Leasing Corp., 100 NY2d at 71; see Gray v Doyle, 170 AD3d at 971) may be established by an affidavit of a party or someone with knowledge, authenticated documentary proof, or by complaint verified by the plaintiff that sufficiently details the facts and the basis for the defendant's liability (see CPLR 105[u]; Woodson v Mendon Leasing Corp., 100 NY2d at 71; Gray v Doyle, 170 AD3d at 971; Voelker v Bodum USA, Inc., 149 AD3d 587, 587 [1st Dept 2017]; Al Fayed v Barak, 39 AD3d 371, 371 [1st Dept 2007]; see also Michael v Atlas Restoration Corp., 159 AD3d 980, 982 [2d Dept 2018]; Zino v Joab Taxi, Inc., 20 AD3d 521, 522 [2d Dept 2005]; see generally Mitrani Plasterers Co., Inc. v SCG Contr. Corp., 97 AD3d 552, 553 [2d Dept 2012]). 

Where an insured makes material misrepresentations on his or her application for insurance as to where he or she regularly garages a vehicle sought to be insured, coverage is defeated (see Remedial Med. Care, P.C. v Infinity Prop. & Cas. Co., 2017 NY Slip Op 50391 [U], 55 Misc 3d 130[A] [App Term, 2d, 11th & 13th Jud Dists, Mar. 31, 2017]; Jamaica Dedicated Med. Care, P.C. v Praetorian Ins. Co., 2015 NY Slip Op 50756[U], 47 Misc 3d 147[A] [App Term, 2d, 11th & 13th Jud Dists, May 6, 2015]; see also Liberty Mut. Ins. Co. v Mendez, 2021 NY Slip Op 30071[U], *4, 2021 NY Misc LEXIS 85, *6-7 [Sup Ct, N.Y. County, Jan. 7, 2021]; see generally State Farm Fire & Cas. Co. v Jewsbury, 169 AD3d 949, 950 [2d Dept 2019]). State Farm's proof establishes, prima facie, the facts underpinning its contentions, namely, that when Bogle first applied for insurance coverage on February 2, 2019, he represented that he resided at 93 Hollowbrook Road, Apartment 2, Lake Peekskill, New York 10537, and garaged the insured vehicle there, but actually lived at 244-07 136th Avenue, Rosedale, New York 11422, an address located in Queens County, and kept the vehicle garaged there, where premium rates are substantially higher than those for vehicles garaged in Lake Peekskill. 

As set forth in the affidavit of State Farm's claims specialist Tim Dacey, who investigated the claim, the subject collision occurred in Queens County, Bogle's Queens County address is listed on all no-fault benefit forms submitted by Bogle and the medical defendants, Bogle treated and received therapy in Queens County, Bogle is registered to vote at the Rosedale address in Queens County, and a video search revealed that all sightings of the insured vehicle were in Queens County and western Nassau County, with no sightings at or near Lake Peekskill. In addition, Dacey averred that a State Farm representative visited Bogle's Rosedale address, and confirmed with an occupant of those premises, a neighbor, and a postal delivery employee that Bogle resided there, while another representative visited the Peekskill Lake address, and was informed by a long-time resident at a neighboring address that he had never seen Bogle at the Peekskill Lake address identified on Bogle's application. Dacey further explained that the garaging the vehicle at the Queens County address costs $4,483.82 more, for each six-month period of coverage, than garaging the vehicle at Peekskill Lake. 

In fact, although Bogle procured the policy on February 2, 2019, he testified at his EUO on July 26, 2019 that he had resided solely at the Rosedale address since 2013, and that although he had lived in Peekskill Lake in 2007, he hadn't lived there since for 12 years. He averred that he receives all of his mail in Rosedale, has all of his credit cards issued to that address, and maintains of his personal property there. Bogle admitted that he had never garaged the insured vehicle in Peekskill Lake, but used that address on his application because of his poor driving record and his understanding that he would not be able to procure insurance had he used his actual residence address. 

The denial-of-claim statements show that the relevant denials of coverage were expressly based on the ground that Bogle made material misrepresentations in connection with his application for insurance with respect to the where the vehicle was regularly garaged in order to reduce her insurance premium rates. 

Hence, State Farm is entitled to a declaratory judgment against the defendants that were properly served with process.
See?  Rate evasion on a personal auto policy in New York CAN have negative first-party (physical damage/PIP/UM/UIM) coverage consequences provided, especially in a no-fault claim context, the suspected garaging fraud is timely identified and investigated (and coverage denied).  

Saturday, November 6, 2021

That or Which and the Rules of Grammar in Insurance Contract Interpretation

Those who follow me on LinkedIn know that I consider myself somewhat of a (okay, an obsessive-compulsive) grammarian.  

A post to LinkedIn that I made this morning today prompted an interesting discussion (at least to me and, at last count, one other) in the comments about policyholders', insurers', and courts' use of dictionary definitions to argue and determine the meaning of an insurance policy's undefined term.  

What's at stake, of course, is the dreaded "A" word:  Ambiguity.  Why?  Because ambiguities in contracts are construed against the drafter of the contract--the insurer in the case of an insurance coverage dispute.  I've heard that insurance recovery attorneys are taught that in kindergarten.  

The A-word can be quite the vorpal blade when it comes to slaying the ambiguous Jabberwock.  Especially for words or terms left undefined in an insurance policy.  But it is well-established in New York (and many other jurisdictions) that an ambiguity does not arise from an undefined term in a policy merely because the parties interpret that term differently.  Mount Vernon Fire Ins. Co. v. Creative Housing, Ltd., 88 NY2d 347, 352 (1996).

So what's the role, if any of grammar (and syntax) in insurance policy interpretation?  The now-retired Justice Bernard J. Fried, who concluded that his "job is not to police the rules of grammar", said it best in his 2006 decision in AIU Ins. Co. v. Robert Plan Corp. (2006 Slip Op. 52538 [Sup. Ct., NY Co., 2006], affd, 44 A.D.3d 355 [1st Dept. 2007]):

Under New York principles of contract interpretation, however, strict rules of grammar do not have the last word, when a grammatical construction of a contract is inconsistent with the parties' intent. Rather, a court's purpose in interpreting a written contract should be: 

to discover the intention which the parties have formulated in its written language. Often punctuation and grammatical construction are reliable signposts in the search. At times the language of a contract, read as a whole and in the light of the circumstances surrounding its execution, may disclose an intention which would be thwarted by a strict grammatical construction. We refuse to follow a signpost when it appears that it points in the wrong direction. Intention may be formulated in words that are not strictly accurate and in terms that are not grammatical. 

Wirth & Hamid Fair Booking v. Wirth, 265 NY 214, 219, 220-21 (1934) (concluding that a fair construction of the language of a written contract manifested that parties intended that defendant should have right to book performances for two circuses during summer months, notwithstanding the strict grammatical construction of the restrictive covenant to the contrary). 

The Court of Appeals has further instructed: 

Contracts are not to be interpreted by giving a strict and rigid meaning to general words or expressions without regard to the surrounding circumstances or the apparent purpose which the parties sought to accomplish. The court should examine the entire contract and consider the relation of the parties and the circumstances under which it was executed. 

William C. Atwater & Co. v. Panama R., 246 NY 519, 524 (1927) (citations and internal quotations omitted). In Atwater, for instance, the Court refused to enforce a provision of a contract for the sale of coal that, read literally, precluded the plaintiff seller from obtaining damages for breach of contract as to any coal remaining unshipped at the expiration of the contract. The Court reasoned that a literal reading of the provision was inconsistent with the "general sense of the contract," read in the light of "reason, equity, [and] fairness." Id. at 523-24. The Court concluded that it was "evident that the plaintiff had not the remotest intention of releasing any claims against defendant [the buyer] for damages for breach of contract which had accrued at the date of the expiration of the agreement and that the defendant could not reasonably have so understood the language thus used." Id. at 523. 

Although Wirth and Atwater were decided some years ago, they articulate principles that remain valid. See, e.g., Kass v. Kass, 91 NY2d 554, 566 (1998); In re Estate of Stravinsky, 4 AD3d 75, 81-82 (1st Dept. 2003).

For those two of you who may be wondering (and didn't click the case's Google Scholar hyperlink), the case before Justice Fried involved the restrictive and nonrestrictive relative pronouns of "that" and  "which" -- a topic which that has brought many grammarians better than me I to fisticuffs for a long time many years (if not decades or centuries).  Justice Fried explained:

In the previous Order, I concluded that the universe of property owned by Plaintiffs is the property described in clause A,[4] after subtracting the property described in clause B. Order at 2-3, 3 n.2. I further stated that clause C the phrase, "which are the property of AGENT" modifies the property described in clause B. Order at 3-4 n.2. These conclusions followed July's oral argument, at which the parties focused on whether "which" modified clause A or clause B. July 14 Trans. at 36-43. The issue of how "which" modified clause B did not arise. It seems necessary now to investigate how clause C modifies clause B, and, in particular, the significance of the word "which" in clause C. 

Strict grammarians prefer the use of the word "that" as the defining, or restrictive relative pronoun, while reserving "which" as the nondefining, or nonrestrictive relative pronoun. William Strunk, Jr. & E.B. White, The Elements of Style 59 (4th ed. 2000). So, for example, in the sentence, "The lawn mower that is broken is in the garage," the restrictive pronoun "that" tells the reader which mower is in the garage. (The broken one.) In contrast, in the sentence, "The lawn mower, which is broken, is in the garage," the nonrestrictive "which" adds a fact about the only mower in question. Id. 

In practice, however, "not all writers observe the distinction between restrictive clauses [] and non-restrictive clauses." The New Fowler's Modern English Usage 774 (R.W. Burchfield ed., 3d ed., Clarendon Press 1996). In fact, "it would be idle to pretend that it is the practice either of most or of the best writers." Id. (quoting with approval H.W. Fowler, A Dictionary of Modern English Usage 635 (1st ed., Oxford Univ. Press 1926)). The relative pronoun "which" is commonly used in both written and spoken English in place of the restrictive relative pronoun "that." Strunk, The Elements of Style at 59. In fact, writers of English sometimes use "which" in both the restrictive and the nonrestrictive sense in the same piece of writing. The New Fowler's Modern English Usage at 774 (emphasis added). 

The agreement itself contains other instances of "which" used in place of "that" as a restrictive relative pronoun. E.g. Agreement art. IV ¶ 4 ("In addition to... any applicable underwriting guideline, bulletin or instruction which may be issued from time to time..."); id. art. VI ¶ 3 ("AGENT will promptly advise the COMPANY in writing of any Insurance Department notice which specifically threatens the Company with disciplinary actions or penalties."). 

However, a strict grammarian would point out that in both of these instances, "which" is not preceded by a comma, whereas it is in clause C. Ordinarily, a comma setting off a modifying clause indicates that the modifier is nonrestrictive. See Strunk, The Elements of Style at 4. Thus, a comma preceding "which" in clause C would tend to suggest that "which" is being used as a nonrestrictive pronoun and that clause C does not limit or define clause B. This is the reading favored by Plaintiffs. 

This reading is supported by the fact that a purpose of paragraph 9 appears to be to identify who, between AIU and TRP, owned certain items relating to the business of TRP's agency. If "which" in clause C were read as a restrictive pronoun, clause B would no longer identify the items that were owned by TRP. Instead, clause B would assume that the reader knew which items were owned by TRP and would simply carve them out from the items identified in clause A, which were owned by AIU.
You had me at "restrictive, relative pronoun", judge. 😜😍

Next up: "different than" or "different from" in insurance contract interpretation?  

Wednesday, November 3, 2021

When a Structure Can be Said to Have "Replaced" Another Structure for Replacement Cost Coverage Purposes -- The "Functional Similarity" Test

What do you think? 

Can a multi-building commercial property comprising a supermarket, a wine and liquor store, a hardware store, a drug store, and an automatic car wash reasonably be said to have "replaced" a single-family, 5-bedroom dwelling rented to 10 fraternity brothers within the meaning of and under a landlord's package insurance policy that limits loss payment to actual cash value "until actual repair or replacement [of the damaged building] is completed"?

I thought not, and now Clinton County Supreme Court Justice John T. Ellis thinks not.  In an action I was defending in which the policyholder was seeking the balance of the Coverage A-Residence limit for the total fire loss of the rental dwelling, and on the eve of a jury trial, my insurer client moved and the plaintiff cross-moved for summary judgment.  

The policyholder argued that its "replacement" of the single-family, five-bedroom dwelling shown above--found in an appraisal to have had a replacement cost value of just over $1 million--with the three-parcel, six-building commercial shopping plaza shown above--at an alleged cost of nearly $1.9 million--qualified it for payment of the depreciation holdback equal to the balance of the policy's Coverage A-Residence limit.

In GRANTING my client's motion, Justice Ellis summed it up best:
Significantly, the insured premises is a dwelling, covered under a residential policy of insurance, which is rented to tenants who reside therein. The Gorman Properties are a multi-parcel, multi-building commercial shopping plaza, containing commercial tenants, who use the property for commercial reasons. Overall, a commercial shopping plaza, which has as its primary function the conduct of shopping, is not functionally similar to a residence, which functions primarily as a place for people to live. The Court therefore finds that actual replacement, as contemplated by the Replacement Cost Provision of the policy has not occurred. Based on such finding, the Defendant has not breached the contract between the parties by failing to pay the balance of the fire insurance policy. Accordingly, and for the foregoing reasons, it is hereby 

    ORDERED that the Plaintiff's cross-motion for summary judgment is hereby denied; and it is further

   ORDERED that Defendant's motion for summary judgment is granted, and the Complaint is hereby dismissed.
New York and other jurisdictions utilize the "functional similarity test" for determining whether Property B can be said to have "replaced" Property A (the insured property) for replacement cost coverage/depreciation holdback recovery purposes.  The case law establishing and discussing that test (which my senior associate Will Lorenz and I cited in our initial and reply memoranda of law) can be found beginning on page 10 of Justice Ellis' Decision and Order of October 28, 2021:

Unless modified or reversed on appeal (none has not been filed yet), this decision (which I've submitted to the New York State Reporter for consideration of publishing in the New York Official Reports) can be cited for the following propositions, in my opinion:
  1. The term "replacement" is not ambiguous.

  2. New York utilizes the "functional similarity test" for determining whether a purported replacement property qualifies for replacement cost coverage/depreciation holdback under a property insurance policy.

  3. A commercial shopping plaza is not functionally similar to a residence, even if the policyholder rented/rents both to tenants.  
Bookmark or save this post or this decision.  If you handle property claims in New York and are more than a year or two from retirement, chances are you'll encounter this issue again in one of your files.

If You Must Sue Us on Your Property Claim, You Must Do So Within ____ Years After the Loss

 Quiz time.


New York law permits property insurers to require that any suits brought against the insurer to recover for any property claims submitted under a property insurance policy must be commenced within how many years after the loss?


TWO YEARS for losses caused by the peril of fire 🔥.
ONE YEAR (or less) for losses caused by perils other than fire, like 💨, 💧, ❄, or 💥. 

Be honest.  You didn't know that, did you?  

But indeed, the New York courts have repeatedly and consistently held that although the NY Standard Fire Policy, codified by New York Insurance Law § 3404(e), provides that... 

...[n]o suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twenty-four months next after inception of the loss,...

...that 24-month period is the minimum for only fire-caused losses.  Why?  Because § 3404(f)(1) provides that 

[s]ubject to the approval of the superintendent, a policy which insures solely against the peril of fire or which insures against the peril of fire in combination with other kinds of insurance either for a divisible or indivisible premium need not comply with the provisions of subsection (e) of this section, provided: (A) the policy contains, with respect to the peril of fire, terms and provisions no less favorable to the insured than those contained in the standard fire policy[.]

See?  So if a policy covering property in New York contains a "Suit Against Us" condition that provides for a shorter period--say, 12 months (one year)--that condition may still be enforced for nonfire losses without violating § 3404(e).  

Don't believe me?  Here's some New York case law that should convince you:

  • Barbarovich v. Tower Group, Inc., 2014 NY Slip Op 32708 (Sup. Ct., Kings Co., 2014) (“The policy expressly limits the statute of limitations to one year. Although the standard fire policy in Insurance Law 3404(e) contains a statute of limitation of two years, that limitation applies only to fire insurance claims. The plaintiffs claim for recovery is based on damage caused by wind and rain. Since the policy at issue is a multi-peril policy and the claim is not based on fire damage, the one year statute of limitation is applicable.”)

  • Dockweiler v. Allstate Ins. Co., 222 AD 2d 482 (2nd Dept. 1995)(“ Moreover, because the policy in question was a multiperil policy, it could have contained a shorter limitation period which might have been enforceable against nonfire loss claims [see, Insurance Law § 3404 (f)(1)]")

  • Bargaintown D. C. v Bellefonte Ins. Co., 78 AD2d 206 (1st Dept. 1980), affd 54 N.Y.2d 700 (1981)(the statutorily mandated two-year limitations period for fire losses, contained in  subdivision (e) section 3404 of the Insurance Law, did not preclude the inclusion in the policy of a shorter limitations period for nonfire losses).
Yesterday I wrote up a coverage analysis and opinion for a client on first- and third-party claims stemming from a longstanding leak of home heating oil from an above-ground storage tank located in the basement of the insured rental dwelling located in upstate New York (aka anything north of the George Washington Bridge or what once was known as the Tappan Zee Bridge and is now known as the Governor Mario M. Cuomo Bridge if you grew up "downstate").  

The landlord's package policy in that matter included an endorsement that contained the following suit condition:

Suit Against Us
No suit to recover for any property claim may be brought against us unless: 
a. the terms of this policy have been fully complied with; and, 
b. the suit is commenced within 1 year after the loss. 
If any law of the state where the premises described in the Declarations are located makes this limitation invalid, then suit must begin within the shortest period permitted by the law.

No laws of New York State make make a limitations period of one year invalid for nonfire losses.  I provided the case law to my client (because it didn't believe me either at first), and it kept the one-year limitations period in the declination letter, quoted as is.   

Tuesday, November 2, 2021

Refusing to Issue or Renew, or Cancelling or Charging More for a Homeowners Insurance Policy Based on Certain Dog Breeds Will Be Illegal in New York State Come January 28, 2022

On October 30, 2021, New York Governor Kathy Hochul signed into law bill S4254/A4075, which prohibits insurers from refusing to issue or renew, cancel, or charge or impose an increased premium for homeowners' insurance policies based on the breed of a dog owned. This bill prohibits the use of dog breed in relation to underwriting and rating in homeowners' insurance policies as defined by New York Insurance Law §2351.

The bill adds new section 3421 to the New York Insurance Law:
§ 3421. Homeowners' liability insurance; dogs. 

 1. With respect to homeowners' insurance policies as defined in section two thousand three hundred fifty-one of this chapter, no insurer shall refuse to issue or renew, cancel, or charge or impose an increased premium or rate for such policy or contract based solely upon harboring or owning any dog of a specific breed or mixture of breeds. 

2. The provisions of this section shall not prohibit an insurer from refusing to issue or renew or from canceling any such contract or policy, nor from imposing a reasonably increased premium or rate for such a policy or contract based upon the designation of a dog of any breed or mixture of breeds as a dangerous dog pursuant to section one hundred twenty-three of the agriculture and markets law, based on sound underwriting and actuarial principles reasonably related to actual or anticipated loss experience subject to the applicable provisions of section three thousand four hundred twenty-five of this article.
We know that the new law will take effect on January 28, 2022.  

What we don't know (yet) is what impact, if any, the new law will have on insurers' use of canine or dog-breed exclusions in New York come January 28, 2022.  The new law mentions only underwriting functions, not claims--making it illegal to refuse to issue or renew a policy, or to cancel or charge more premium for a policy based on a policyholder's or prospective policyholder's "harboring or owning any dog of a specific breed or mixture of breeds."  There's nothing in the new statute expressly prohibiting insurers from including a canine exclusion in a New York homeowners policy or in denying coverage based on such an exclusion.  Many insurers writing homeowners policies in New York already use such exclusions, filed and approved by New York's insurance regulator.  Question is: how will those insurers now ask and learn about those dogs without appearing to run afoul of the new law?  

Can the Senate bill version's "Justification" section be read to suggest that the aim of the legislation may have been at prohibiting coverage denials based on dog breed?
For years, insurance companies that offer homeowners insurance have avoided loss because of the burglary prevention provided by homeowners' dogs. It is unacceptable that now insurance companies would want the ability to deny coverage based on the exact same breed of dog that may have protected the homeowners and the insurance company from loss. 

 This bill would uphold the sanctity of the law by ending the discrimination of homeowners based on the breed of dog that they own. As an equal and fair society, it is key that we amend the insurance law to protect the interests of both homeowners and their kind-hearted companion animals.
Give me a break.  Who wrote that?  The sponsoring senator's 12-year-old niece or nephew?    

Critique aside, was the "ability to deny coverage" comment meant to refer to the underwriting stage?  Or the claim stage?  The language of the new Insurance Law section suggests that that dart was aimed at underwriters, not claim handlers.  Agree?  

Please comment if you have any bright or even not-so-bright ideas.  

Monday, October 25, 2021

Massachusetts High Court Rules Auto Insurers Must Pay For Inherent Diminished Value

Massachusetts High Court Rules Auto Insurers Must Pay For Inherent Diminished Value (click to read the Claims Journal article)

To be clear--this decision relates to third-party inherent diminished value (IDV) claims, not first-party ones. The actual decision is here.

The "Part 4" policy language at issue was: 
Under this Part, we will pay damages to someone else whose auto or other property is damaged in an accident. The damages we will pay are the amounts that person is legally entitled to collect for property damage through a court judgment or settlement. We will pay only if you or a household member is legally responsible for the accident. We will also pay if someone else using your auto with your consent is legally responsible for the accident. Damages include any applicable sales tax and the costs resulting from the loss of use of the damaged property. 
And the court held: 
We conclude that part 4 of the standard policy requires the defendants, as automobile insurers, to pay claims for IDV to vehicles that are damaged and subsequently repaired, provided that the claimant establishes both (1) that his or her vehicle suffered IDV, and (2) the amount of IDV damages owed to him or her. 
New York courts are somewhat split on whether IDV is recoverable by 3rd-party claimants. Like in MA, it depends on several things. The general rule in NY is that “[t]he measure of damages for injury to property resulting from negligence is the difference in market value immediately before and immediately after the accident, or the reasonable cost of repairs necessary to restore it to its former condition, whichever is lesser”.

Monday, October 18, 2021

Snoozz -- Tab & Window Snoozing

Snoozz - Tab & Window Snoozing 

Snoozz is an excellent tab and window snoozing browser extension alternative to Tab Snooze, which I've posted about before but has been wonky since the last Chrome update. In fact, Snoozz's developer, Rohan, emailed back this morning to advise that a recurrence or "repeat" feature has just been added to Snoozz (something I recommended that Tab Snooze has), and that he's working on audible notifications. 

 If you're not using a tab/window snoozing extension on your favored browser to set tabs and windows to reopen, you're doing it wrong. I have multiple websites/web addresses set to reopen on a particular day or on a recurring schedule that I've set (once a ____, or on every ___ day of the month, etc.).   This is like me telling you how I do one of my card magic tricks. You're welcome. 

 Thanks, Rohan, for coding a most excellent extension. 


Thursday, October 14, 2021

Court-Ordered Discovery in Aid of SUM Arbitration Denied

MATTER OF ARBITRATION OF ALLSTATE INSURANCE COMPANY, 2021 NY Slip Op 5418 - NY: Appellate Div., 4th Dept. 2021 - Google Scholar

Justice delayed is justice denied, some say.

So can discovery in a SUM (supplementary uninsured/underinsured motorists) coverage claim, apparently.  

In this case, the Fourth Department AFFRIMED the denial of Allstate's petition to stay arbitration of its insured's SUM claim because "the record here establishes that '[Allstate] had ample time...within which to seek discovery of the respondent insured as provided for in the insurance policy, and unjustifiably failed to utilize that opportunity' to obtain the discovery now sought."

The appellate court also agreed that Allstate had made no showing that the discovery allowed in arbitration would be inadequate to establish its case.

Finally, the court held that "[t]o the extent that [Allstate] argues that respondent's demand for arbitration was premature inasmuch as respondent had not complied with the terms of the endorsement for SUM coverage, that argument is not properly before us because [Allstate] failed to raise it before the [lower] court [on its petition]."  One of the basic tenets of appellate practice is that issues not raised and argued to the motion or trial court generally may not be raised and argued on appeal.  

Monday, September 6, 2021

Updated COVID-19 Business Interruption Coverage New York Decisions

The labor of my Labor Day...Updated COVID-19 Business Interruption Coverage New York Decisions (as of September 6, 2021)

Until today, I hadn't really counted the Kingray decision out of the Central District of California (No. 8 on my list) as a loss, but it technically is, so it's now among the counted. Including Kingray (which the Deer Mountain Inn and SA Hospitality Group decisions roundly reject), the "score" in New York on the "direct physical loss of or damage to" issue stands at 35-1 for insurers.

Here are the current metrics: 

State Supreme Court Decisions --10
Federal District Court Decisions -- 26

State Courts
Erie County 1
Kings County 2
Nassau County 1
Onondaga County 1
Orange County 1
Queens County 1
Suffolk County 3

Federal Courts 
SDNY 14 
D. Conn. 1 
C.D. Cal. 1

Dispositive Motions: 
Granted 35 
Denied 1 

% For Insurers 97.2% 
% For Policyholders 2.8% 

Appeals Pending (per the Covid Coverage Litigation Tracker): 
2nd Circuit 8 
Appellate Division 
  Second Department 4 
  Fourth Department 2

(The document can be viewed on and downloaded from Dropbox by clicking on the post's title or image.  If anyone's company blocks that cloud sharing site, head over to my LinkedIn post and pull the document from there.  Or email me for a copy.  Cheers.) 

Saturday, June 26, 2021


The "score" in New York on COVID-19 #businessinterruption coverage lawsuits, where "direct physical loss" or "direct physical damage" was at issue, now stands at 23-0 for insurers (18 federal, 5 state).

Since my last update, here are the four recent decisions: 
Manhattan-based policyholder in the business of office project management and furniture installation, sued its commercial property insurer for business income and civil authority coverage for losses allegedly stemming from its March 2020 forced closure during COVID-19.  The policy's business interruption coverages required “direct physical loss of or damage to property” and the policy included a “Microbe Exclusion” that included viruses. 

In GRANTING the insurer's motion to dismiss the complaint, with prejudice, the court ruled:

Critically, Plaintiff’s argument also fails to consider the extensive case law that has developed in New York on this exact issue over the past year, which provides that loss of use caused by the COVID-19 pandemic is not physical damage. Unfortunately, Plaintiff is only one of numerous businesses that suffered immense income loss after shutting its doors during the pandemic. Many of those other businesses have brought materially identical actions in New York seeking business impact coverage from their insurance providers. New York courts have consistently maintained that “direct physical loss of or damage” language requires physical damage to invoke coverage, and that loss of use due to the pandemic does not constitute physical damage when the covered property was physically unharmed by the virus. * * *

As in the many analogous cases that have been brought in New York courts over the past year, the Court concludes here that the plain meaning of “direct physical loss or damage” unambiguously requires physical damage to the covered property to invoke coverage and that loss of usage does not rise to the level of physical damage. Plaintiff has failed to allege such loss or damage occurred, given that Plaintiff’s office remained physically intact and unharmed throughout its closure, other than having its doors closed to the public. Accordingly, Plaintiff is not entitled to coverage under the Business Property Coverage terms of the Policy. * * *

The language of the Policy is unambiguous and bars Plaintiff from coverage. The Business Property Coverage terms of the Policy cover direct physical damage or loss, and the Civil Authority Coverage terms of the Policy cover losses when civil authorities prohibit entrance onto the covered property due to direct physical damage to neighboring properties. Plaintiff has failed to allege that either of those occurred, and instead only alleges loss of use and limited access to the covered property due to the threat of COVID-19. Furthermore, Plaintiff is not entitled to coverage because the Policy’s Microbe Exclusion explicitly excludes coverage for damages caused by "any virus," which includes the COVID-19 virus. 

Plaintiffs, an office equipment supplier and a dental practice, sued their commercial property insurers for business interruption coverage for losses allegedly stemming from their March 2020 forced closure during COVID-19.  The policies' business interruption coverages required “direct physical loss of or damage to property”, but did not contain a virus exclusion.

In GRANTING the insurers' motion for judgment on the pleadings (post-answer motion to dismiss), the court ruled:

Plaintiffs' policies provide coverage for business interruptions caused by "direct physical loss or damage" to their insured premises or due to orders of a civil authority issued in response to  direct physical loss or damage" to nearby property that restricted Plaintiffs' access to their premises. Plaintiffs argue that they suffered covered losses because the presence of the coronavirus at or  near the insured premises constitutes "direct physical loss of or physical damage."

To make this argument, Plaintiffs point to the existence of the so-called "Virus Exclusion" and the "Virus Limitation": standard fmm endorsements developed by the ISO that exclude or limit an insured's otherwise available coverage when the conditions of the endorsement are met. * * * Plaintiffs argue that this omission constitutes an "express acknowledgement by [Defendants] that a virus is capable of causing 'direct physical loss of or damage to' property." (Doc. 78 at 18.)  from this assertion, Plaintiffs jump to the conclusion that the presence of the coronavirus constitutes direct physical loss or damage.

However, Plaintiffs' reliance on the Virus Exclusion and Virus Limitation is misplaced. Regardless of whether a virus could cause direct physical loss of or damage to property, Plaintiffs do not plausibly allege that the coronavirus caused direct physical loss or damage to their premises or property in the vicinity of their premises. The Virus Exclusion and Virus Limitation operate by limiting or excluding coverage that would otherwise be available under an insured's policy; that is, they limit rather than expand coverage. Consequently, the endorsement becomes relevant only if an insured experiences an otherwise "covered loss." In that case, the Virus Exclusion or the Virus Limitation would limit the insured's recovery for the otherwise covered loss. In Plaintiffs' case, however, the omission of the Virus Exclusion and the Virus Limitation from Plaintiffs' policies is irrelevant because Plaintiffs have not plausibly alleged that they suffered "direct physical loss or damage" to their property.

Many courts applying New York law, including this one, have already concluded that business closures due to the presence of the coronavirus or due to New York State executive orders do not constitute "direct physical loss of or damage to" property. See Kim-Chee LLC v. Phil. Indem. Ins. Co., No. 1:20-cv-1136, 2021 WL 1600831, at *5 (W.D.N.Y. April 23, 2021); id. at *3 ( citing cases applying New York law). Relying on longstanding New York precedent, these courts have ruled that the phrase "direct physical loss or damage" is unambiguous and requires physical alteration of property. Kim-Chee, 2021 WL 1600831, at *4 (applying Roundabout Theatre Co., 751 N.Y.S.2d at 8).

The presence of the coronavirus does not physically alter property in a permanent manner. In this respect, the virus is different from other physical or chemical contaminants that have been found to cause "direct physical loss or damage" to property. Id. at *5 (citing gasoline seepage, lead contamination, exposed asbestos, pervasive odor, and chemical or bacterial contamination as examples of"[c]ontamination of a structure that seriously impairs or destroys its function," thereby "qualify[ing] as direct physical loss"). Instead, the coronavirus poses a temporary health hazard to the occupants of a building, whose threat to human health dissipates with the passage of time. Many courts, including this one, have determined that merely temporary contamination does not qualify as "direct physical loss or damage." Id. (citing dust from road construction, mold or bacteria that could be eliminated by cleaning, and the controlled presence of asbestos as examples of such "short-lived contamination). * * *

In this case, the alleged presence of the coronavirus has not caused a permanent change to Plaintiffs' properties or decreased the value and function of those properties. Instead, New York State executive orders issued in response to the coronavirus temporarily deprived Plaintiffs of the ability to use their properties for their intended purpose. Because Plaintiffs have not plausibly alleged that the presence of the coronavirus caused "direct physical loss of or damage to" their insured premises or nearby property, Plaintiffs cannot state a claim for breach of contract under either their business interruption coverage or civil authority coverage. Insuring Defendants are therefore entitled to judgment on the pleadings on Plaintiffs' breach of contract claim.

The court also granted judgment on the pleadings dismissing plaintiffs' New York General Business Law § 349 cause of action, holding that that plaintiffs cannot "establish that they  suffered injury as a result of' the defendants' conduct-as required to state a claim under N.Y. Gen. Bus. Law§ 349-because they did not plausibly allege "direct physical loss of or damage to" their insured property.

Plaintiffs, self-storage facilities, sued their commercial property insurer for business interruption coverage for losses allegedly stemming from their March 2020 forced closure during COVID-19.  The policies' business interruption coverages required “direct physical loss" of property, but did not contain a virus exclusion.

In GRANTING the insurer's motion to dismiss plaintiffs' complaint, the New York State Supreme Court, Erie County, held:

The Court agrees with Defendant that there are no facts, only conclusions, to support Plaintiffs' claims. As such, the Court finds that Plaintiffs have failed to meet their burden and that dismissal is required. The complaint is void of any evidence to support the bald conclusion that the coronavirus caused an actual covered loss (physical or otherwise) under the subject policies. * * * Here, the subject policy language is specific, clear, and unambiguous. The insurance company covers losses "directly resulting from interruption of your business operations because of a business property loss insured under this policy." Mura Affirmation at ¶ 13. "Physical loss" and "business property'' are not ambiguous terms. Those are the terms included in the Policy and the Court will not now, as noted above, "rewrite the contract or impose additional terms which the parties failed to insert." Supra.

The court also dismissed the complaint’s New York General Business Law § 349 deceptive acts and practices cause of action, holding that “[t]he case before this Court likewise stems from a private dispute outside the ambit of §349 of the General Business Law.” 

Plaintiff, a Manhattan restaurant, sued its commercial property insurer for business interruption coverage for losses allegedly stemming from its March 2020 forced closure during COVID-19.  The policy's business interruption coverages required “direct physical loss of or damage to  property" and did contain a virus exclusion.

In GRANTING the insurer's motion to dismiss with prejudice; the court held:

The Complaint does not allege that the Café suffered a ‘direct physical loss’ of property that would provide for business interruption coverage under the Policy….The Complaint does not plausibly allege the Café suffered a loss covered under the Civil Authority Provision….The Court concludes that the Virus Exclusion is unambiguous and excludes the coverage sought by the Café.

For an updated listing of all 23 New York COVID-19 #businessinterruption cases decided to date, click the image below.  


Monday, June 21, 2021

NYS Appellate Division, Fourth Department, Holds That the Undefined Term "Reasonable Care" as Used in a Homeowners Policy's Freezing Exclusion, Is Ambiguous


McAleavey v. Chautauqua Patrons Ins. Co.
(4th Dept., 6/17/2021)

Some say there are two things one should never watch being made: law and sausage.  If you are one of those (who say that), avert your eyes and move along.  

The McAleaveys owned a seasonal lake house that they rarely used and which had been on the market to sell for over a year.  With respect to structures coverage, their homeowners policy with Chautauqua Patrons Insurance Company (CPIC) contained this exclusion:
    1.    Freezing, Discharge, Leakage or Overflow -Unoccupied Residence-If the residence is vacant, unoccupied (including temporary absence) or under construction and unoccupied, the insured must take reasonable care to:
a.  maintain heat in the building; or

b.  shut off the water supply and completely empty liquids from any plumbing, heating or air-conditioning system, water heater or domestic appliance.
If an insured fails to do this, we do not pay for loss caused by freezing or the resulting discharge, leakage, or overflow from such system, water heater or domestic appliance. 
Forty-three days after Mr. McAleavey was last inside the house to check on things, on February 24, 2018, the McAleaveys received word that a passerby had reported seeing water coming out of house's front door.  Following its investigation of the reported loss and related claims (during which it was learned that the furnace's circulating pump had failed, causing an upstairs toilet tank to freeze and burst, flooding the home), CPIC denied coverage based on the policy's freezing exclusion.

The McAleaveys sued and, after discovery was conducted and completed, moved and CPIC cross-moved for summary judgment.  In DENYING plaintiffs' motion and GRANTING CPIC's cross motion, Supreme Court held
    We turn now to the second issue before this Court, did Plaintiffs "take reasonable care to maintain heat in the building."  Plaintiff has acknowledged that from on or about January 12, 2018 to February 24, 2018, no person entered his lake home for the purpose of inspection. At the time of the loss, and for months prior, Plaintiff had set his thermostat at about 50 degrees, but had not drained the water in his house. This Court takes judicial notice that January and February are generally the two coldest months in western New York.  *  *  *  *  *

In the case at bar, the period that the house was left uninspectcd is forty three days, approximately one and a half months. One and a half months without inspection, especially when said months are January and February, results in this Court finding that Plaintiffs lack of care was unreasonable as a matter of law. 
The McAleaveys appealed and the Fourth Department unanimously REVERSED, denying CPIC's cross motion, granting plaintiffs' motion, and remitting the action back to Supreme Court for an inquest on damages: 
"`Before an insurance company is permitted to avoid policy coverage, it must satisfy' its burden of establishing that the policy does not cover the loss or that an exclusion or exemption applies, and that the policy provisions are clear and `subject to no other reasonable interpretation'" (Place v Preferred Mut. Ins. Co., 190 AD3d 1208, 1209 [3d Dept 2021], quoting Dean v Tower Ins. Co. of N.Y., 19 NY3d 704, 708 [2012]; see Gallo v Midstate Mut. Ins. Co., 45 AD3d 1492, 1493 [4th Dept 2007]). "Policy provisions must be interpreted according to common speech and consistent with the reasonable expectation of the average insured, and ambiguities are to be construed against the insurer" (Place, 190 AD3d at 1209 [internal quotation marks omitted]; see Lobello v New York Cent. Mut. Fire Ins. Co., 152 AD3d 1206, 1209 [4th Dept 2017]). 

Here, the parties correctly recognize that their dispute turns entirely on whether plaintiffs used "reasonable care" to maintain the heat in the subject house. If they did, then the loss is covered under the policy; if they did not, then the loss is not covered. 

To this end, in support of their motion for partial summary judgment, plaintiffs established as follows: the home's heating system was recently installed, was regularly maintained, and had never required repairs; Robert P. McAleavey (plaintiff) winterized the property by setting the internal temperature to approximately 50 degrees in the late fall of 2017; plaintiff checked on the home approximately 15 times during the winter of 2017-2018; during those visits, plaintiff ensured that the temperature was appropriate, that no windows were broken, that the toilets flushed, and that the water ran; and plaintiff last visited the house on January 11 or 12, 2018, at which point the interior temperature was "comfortable." Although plaintiff was unable to visit the property between mid-January and late February 2018 due to a broken leg and his resulting hospitalization, plaintiffs' submissions established that, during such period, they had no notice or reason to suspect that anything was wrong with the premises or the heating system. Moreover, plaintiffs' neighbors and realtor periodically checked on the property's exterior. 

In our view, the term "reasonable care" as used in the policy is ambiguous inasmuch as it is susceptible of at least two reasonable interpretations, at least one of which supports plaintiffs' contention that they exercised reasonable care, and this ambiguity was not resolved by extrinsic evidence (see generally Armstrong v United Frontier Mut. Ins. Co., 181 AD3d 1332, 1334 [4th Dept 2020]). 

"`[U]nder [these] circumstances, the ambiguity must be resolved against the insurer which drafted the contract'" (id.; see Cragg v Allstate Indem. Corp., 17 NY3d 118, 122 [2011]; Randolph v Nationwide Mut. Fire Ins. Co., 242 AD2d 889, 889 [4th Dept 1997]). We thus conclude that plaintiff's loss is specifically covered under the policy and that the exclusion relied on by defendant does not unambiguously apply in this case (see Gallo, 45 AD3d at 1494; see also Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 652 [1993]). 

Contrary to defendant's assertion and the court's conclusion, nothing in Stephenson v Allstate Indem. Co. (160 AD3d 1274 [3d Dept 2018], lv denied 32 NY3d 904 [2018]) establishes a per se rule that a policyholder's failure to conduct regular interior inspections at specific intervals, irrespective of any other efforts, constitutes a failure to use "reasonable care" to maintain heat. Rather, Stephenson granted summary judgment to the insurer because, in that case, it was "undisputed that [the policyholder] did not arrange for inspection of the premises or take any other action to ensure that adequate levels of heat were actually maintained during [the winter months]" (id. at 1276 [emphasis added]). The policyholder's wholesale neglect in Stephenson stands in stark contrast to plaintiffs' reasonable—albeit unsuccessful—efforts to maintain the heat in this case.
Does this decision stand for the proposition that the undefined term “reasonable care” as used in a policy's freezing exclusion is ambiguous and must, in the absence of extrinsic evidence or disputed facts (always?) be construed against the insurer? 

If that's the case, how is an insurer to define such a term if the policy were to include a definition? Isn’t something subjective—like the concept of reasonableness—always open to debate and/or interpretation?  How exactly is "reasonable care"--the concept--susceptible to at least two reasonable interpretations? Name two, please, because I can't think of more than one.  Isn't the Fourth Department conflating and confusing the needed quantum of reasonable care with the concept of reasonable care?  

Why doesn’t “reasonable care” simply mean what a normal, prudent person would do under the same circumstances to keep undrained water pipes from freezing during the wintertime? Property policies don’t define “promptly”, “immediately”, “temporarily” and similar words, and yet those words, although not defined or understood in exactly the same way by all people, have not been held to be ambiguous. 

Will insurers wishing to assert the freezing exclusion be required first to set specific minimums regarding how often the interior of a vacant/unoccupied house is to be checked for heat?  What ambient temperature must be maintained within a dwelling?  

Things that make you (and this coverage attorney) go hmm.  

Toll or Suspension? The New York Appellate Division, Second Department, Weighs In


Brash v. Richards
(2nd Dept., 6/2/2021)

I've posed the question here before (several times, as a matter of fact): 
👉Did Governor Cuomo's COVID-19 Executive Order 202.8 (and its extensions) suspend or toll  prescribed procedural time limitations  in New York?👈

An Albany Law School professor said toll.
A sitting New York Supreme Court justice opined suspension in a law journal article.
A New York Court of Claim judge ruled toll in a February 2021 decision.

And now, the Appellate Division, Second Department, has, in the context of ruling on a respondent's motion to dismiss an appellant's appeal as untimely taken, ruled TOLL (and nicely explained the difference between a "toll" and a "suspension" of a limitation period):
The respondent Neil M. Richards moves, and the respondent Harrison Mu separately moves, to dismiss this appeal as untimely taken and on the ground that no appeal lies from an order determining a motion in limine. These motions raise the issue of whether a series of executive orders issued by Governor Andrew Cuomo, as a result of the COVID-19 pandemic, constitute a toll or, alternatively, a suspension of filing deadlines applicable to litigation in the New York courts. For the reasons that follow, we conclude that the subject executive orders constitute a toll of such filing deadlines. As a result, this appeal was timely taken. 
A toll suspends the running of the applicable period of limitation for a finite time period, and "[t]he period of the toll is excluded from the calculation of the [relevant time period]" (Chavez v Occidental Chem. Corp., 35 NY3d 492, 505 n 8; see Foy v State of New York, 71 Misc 3d 605 [Ct Cl]). "Unlike a toll, a suspension does not exclude its effective duration from the calculation of the relevant time period. Rather, it simply delays expiration of the time period until the end date of the suspension" (Foy v State of New York, 71 Misc 3d at 608). 

In this case, a copy of the order appealed from was served upon the appellant, with written notice of its entry, on October 2, 2020. CPLR 5513(a) provides that an appeal must be taken within 30 days of service of a copy of the order or judgment appealed from and written notice of its entry. The appellant served and filed a notice of appeal on November 10, 2020. According to the respondents, the notice of appeal was untimely served and filed, because, in their view, Governor Cuomo suspended filing deadlines in civil litigation in the New York courts until November 3, 2020. In contrast, the appellant argues that Governor Cuomo tolled such filing deadlines, meaning that the appellant had 30 days from November 3, 2020, to serve and file the notice of appeal. As a result, the appellant maintains that the notice of appeal, served and filed on November 10, 2020, was timely. Executive Law § 29-a(1) provides that the Governor "may by executive order temporarily suspend specific provisions of any statute, local law, ordinance, or orders, rules or regulations, or parts thereof, of any agency during a state disaster emergency, if compliance with such provisions would prevent, hinder, or delay action necessary to cope with the disaster." 

Executive Law § 29-a(2)(d) provides that any such order "may provide for the alteration or modification of the requirements of such statute, local law, ordinance, order, rule or regulation suspended, and may include other terms and conditions." 

On March 20, 2020 Governor Cuomo issued Executive Order (A. Cuomo) No. 202.8 (9 NYCRR 8.202.8), which provided: 
"I hereby temporarily suspend or modify, for the period from the date of this Executive Order through April 19, 2020 the following: 

"In accordance with the directive of the Chief Judge of the State to limit court operations to essential matters during the pendency of the COVID-19 health crisis, any specific time limit for the commencement, filing, or service of any legal action, notice, motion, or other process or proceeding, as prescribed by the procedural laws of the state, including but not limited to the criminal procedure law, the family court act, the civil practice law and rules, the court of claims act, the surrogate's court procedure act, and the uniform court acts, or by any other statute, local law, ordinance, order, rule, or regulation, or part thereof, is hereby tolled from the date of this executive order until April 19, 2020."
Governor Cuomo later issued a series of nine subsequent executive orders that extended the suspension or tolling period, eventually through November 3, 2020 (see Executive Order [A. Cuomo] Nos. 202.14, 202.28, 202.38, 202.48, 202.55, 202.55.1, 202.60, 202.67, 202.72 [9 NYCRR 8.202.14, 8.202.28, 8.202.38, 8.202.48, 8.202.55,, 8.202.60, 8.202.67, 8.202.72]). These subsequent executive orders either stated that the Governor "hereby continue[s] the suspensions, and modifications of law, and any directives, not superseded by a subsequent directive," made in the prior executive orders (Executive Order [A. Cuomo] Nos. 202.14, 202.28, 202.38, 202.48, 202.67, 202.72 [9 NYCRR 8.202.14, 8.202.28, 8.202.38, 8.202.48, 8.202.67, 8.202.72]) or contained nearly identical language to that effect (see Executive Order [A. Cuomo] Nos. 202.55, 202.55.1, 202.60 [9 NYCRR 8.202.55,, 8.202.60]). While most of the subsequent executive orders did not use the word "toll," Executive Order (A. Cuomo) No. 202.67 (9 NYCRR 8.202.67) issued on October 5, 2020, provided that the: 
"suspension in Executive Order 202.8, as modified and extended in subsequent Executive Orders, that tolled any specific time limit for the commencement, filing, or service of any legal action, notice, motion, or other process or proceeding as prescribed by the procedural laws of the state, including but not limited to the criminal procedure law, the family court act, the civil practice law and rules, the court of claims act, the surrogate's court procedure act, and the uniform court acts, or by any statute, local law, ordinance, order, rule, or regulation, or part thereof, is hereby continued, as modified by prior executive orders, provided however, for any civil case, such suspension is only effective until November 3, 2020, and after such date any such time limit will no longer be tolled." 
Finally, Executive Order (A. Cuomo) No. 202.72 (9 NYCRR 8.202.72), issued on November 3, 2020, reiterated that the "toll" would no longer be in effect as of November 4, 2020 (see Executive Order [A. Cuomo] No. 202.72 [9 NYCRR 8.202.72]). 

Governor Cuomo's March 20, 2020 executive order, Executive Order (A. Cuomo) No. 202.8 (9 NYCRR 8.202.8), expressly and plainly provided that the subject time limits were "hereby tolled," and two of the subsequent executive orders referred to the temporary alternation of the subject time limits as a "toll[ ]" (Executive Order [A. Cuomo] Nos. 202.67, 202.72 [9 NYCRR 8.202.67, 8.202.72]; see Foy v State of New York, 71 Misc 3d 605; Kugel v Broadway 280 Park Fee LLC, Jan. 28, 2021 at 17, col 2, 2021 NYLJ LEXIS 25 [Sup Ct, NY County]). 

The respondents contend that even though Executive Order (A. Cuomo) No. 202.8 (9 NYCRR 8.202.8) purported to toll the limitations periods, Governor Cuomo did not have the statutory authority to do so, as Executive Law § 29-a, while expressly granting the Governor the authority to suspend statutes, does not expressly grant the Governor the authority to "toll" them. This contention is unpersuasive. As stated above, Executive Law § 29-a(2)(d) provides that an order issued pursuant thereto "may provide for the alteration or modification of the requirements of such statute, local law, ordinance, order, rule or regulation suspended, and may include other terms and conditions." This language in Executive Law § 29-a(2)(d) indicates that the Governor is authorized to do more than just "suspend" statutes during a state disaster emergency; he or she may "alter[ ]" or "modif[y]" the requirements of a statute, and a tolling of time limitations contained in such statute is within that authority (see Foy v State of New York, 71 Misc 3d 605). 

Furthermore, although the seven executive orders issued after Executive Order (A. Cuomo) No. 202.8 (9 NYCRR 8.202.8) did not use the word "toll," those executive orders all either stated that the Governor "hereby continue[s] the suspensions, and modifications of law, and any directives, not superseded by a subsequent directive," made in the prior executive orders (Executive Order [A. Cuomo] Nos. 202.14, 202.28, 202.38, 202.48 [9 NYCRR 8.202.14, 8.202.28, 8.202.38, 8.202.48]) or contained nearly identical language to that effect (see Executive Order [A. Cuomo] Nos. 202.55, 202.55.1, 202.60 [9 NYCRR 8.202.55,, 8.202.60]). Since the tolling of a time limitation contained in a statute constitutes a modification of the requirements of such statute within the meaning of Executive Law § 29-a(2)(d), these subsequent executive orders continued the toll that was put in place by Executive Order (A. Cuomo) No. 202.8 (9 NYCRR 8.202.8). 

Therefore, the subject executive orders tolled the time limitation contained in CPLR 5513(a) for the taking of an appeal until November 3, 2020. Accordingly, the notice of appeal, which was served and filed on November 10, 2020, well within 30 days of November 3, 2020, was timely. 

In addition, contrary to the respondents' contentions, the order appealed from is appealable as of right, as it decided motions made upon notice and affected a substantial right of the parties (see CPLR 5701[a][2][v]; Parker v Mobil Oil Corp., 16 AD3d 648, affd 7 NY3d 434). 

 Accordingly, we deny the respective motions to dismiss the appeal.
That should settle the issue, no?  

Why should you care if you're a property or casualty insurer doing business in New York?  (Hint: the answer has something to do with when reserves can be taken down.)

Next up: 
PPTL accrual before, during and after🠞what's the deadline?  
PPTL expiration during and after🠞what's the extended deadline?

Is anyone interested in a follow-up virtual meeting to go over how to calculate New York's COVID-19 toll?  #itsnotjustadding229days #letmeknowinthecomments