Monthly Archives: March 2013

No Way Out – Additional Insured Coverage Owed (NY)

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As often happens when more than one insurance policy may provide coverage for a claim, the court is called upon to resolve the dispute between insurers. Recently, in 4815 Dev. Corp. v Harleysville Ins. Co. of N.Y., the Appellate Division, Second Department addressed such a claim between two insurers who provided additional insured coverage for the same leased space to the landlord.

The underlying claim involved a wrongful death claim wherein the descendent fell through a door and down a flight of stairs at premises leased to a laundramat. By way of background, the plaintiff leased space in a building it owned to Today’s Laundromat, Inc. In accordance with the lease, Today’s Laundromat obtained comprehensive general liability insurance from United National Specialty Insurance, naming plaintiff as an additional insured. However, during the course of the original lease with plaintiff, Today’s Laundromat assigned its lease to New Today’s Laundromat, Inc. Harleysville Insurance issued a commercial general liability policy to New Today’s, also naming plaintiff as an additional insured.

The accident for which plaintiff sought coverage occurred during the terms of both the United and Harleysville policies. When the decedent’s estate commenced an action to recover damages for personal injuries, plaintiff requested that United defend and indemnify it. In its notice of claim, plaintiff informed United that the allegedly defective door which caused the decedent’s accident had been installed by United’s named insured, Today’s Laundromat. Approximately 49 days after receiving plaintiff’s notice of claim, United disclaimed coverage to its putative additional insured on a variety of bases.

Plaintiff then commenced a declaratory judgment action. Harleysville agreed to defend and indemnify plaintiff but cross-moved for summary judgment declaring that United was obligated to contribute equally to plaintiff’s defense. Harleysville brought an appeal after the Supreme Court denied it’s cross-motion.

The Appellate Division found Harleysville made a prima facie showing that United was obligated to contribute equally to plaintiff’s defense pursuant to the additional insured endorsement in United’s general liability policy. Specifically, section 1(b) of the endorsement provided that: “If liability or damage is imposed or sought to be imposed on the additional insured because of: . . . Its acts or omissions and those of the named insured, as to the defense of the additional insured, this insurance will act as coinsurance with any other insurance available to the additional insured, in proportion to the limits of liability of all involved policies.”

Harleysville provided evidence documenting that a claim asserted against the plaintiff was based upon the acts or omissions of Today’s Laudramat, triggering United’s duty to contribute to plaintiff’s defense under the additional insured endorsement.

Additionally, the Court found that contrary to United’s argument, there is no “requirement with respect to a liability policy that an insured have an insurable interest in the covered premises.”

The Appellate Court also rejected United’s contention that disclaimer was appropriate because plaintiff failed to give notice of the claim “as soon as reasonably practicable,” as required by the policy. In countering United’s argument, Harleysville demonstrated that United’s 49-day delay in issuing a notice of disclaimer to plaintiff was unreasonable as a matter of law, and, therefore, United was precluded from disclaiming coverage based on the alleged lateness of the notice of claim.

Special thanks to Joseph Fusco for his contribution.

For more information, contact Denise Fontana Ricci at

Justice Is Still No Laughing Matter in NJ.

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We previously commented on the case of NJ municipal judge Vincenzo Sicari who under the alias of “Vince August” plies his comedic trade by night (and administers justice and legal services by day). NJ’s Supreme Court has now taken up the issue. The question is whether comedic performances are incompatible with the proper decorum required for judicial office — as an officer of the court I will bite my tongue on further comment on this point. Who will get the last laugh? Stay tuned to find out! (And you thought that NJ’s highest court had more important things to worry about).

For more information about this post, please contact Bob Cosgrove at .

Pennsylvania Courts Further Divided on Restatement.

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As previously reported, a growing rift has emerged between Pennsylvania’s state and federal courts regarding the applicability of the Restatement (Third) of Torts to product liability actions.  True to form, a recent decision from the Western District of Pennsylvania further complicated matters when Judge Arthur J. Schwab declined to follow the Third Circuit’s ruling in Covell v. Bell Sports, Inc. and instead adopted the State Supreme Court’s adherence to the Second Restatement.

In Gilmore v. Ford Motor Company, Judge Schwab previously ruled that the Restatement (Second) of Torts governed plaintiff’s claim of strict liability against Ford where the decedents were ejected from their 2000 Ranger pick-up.Ford took exception and moved for reconsideration, arguing that the Third Circuit’s decisions in Covell and Sikkelee v. Precision Airmotive Corp. compelled the court to apply the Restatement (Third) of Torts. Despite Ford’s lofty citations, Judge Schwab remained unconvinced and held that because the Third Circuit’s ruling in Sikkelee was non-precedential, it was free to stand by the position that recent state decisions contradict the federal courts’ predisposition to the Third Restatement.  Specifically, Judge Schwab implied that the relevant Third Circuit opinions were obsolete in light of two state Supreme Court decisions issued after Covell and Sikkeleewhere the court continued to apply the Second Restatement.  As a result, Judge Schwab concluded that there was no change in Pennsylvania’s controlling law and endorsed the Second Restatement’s application by federal courts sitting in diversity. 

Although Judge Schwab’s district-level opinion is non-binding, it serves as a succinct, yet persuasive analysis of the tension between state and federal courts regarding the Restatement’s future in Pennsylvania.  The opinion’s latent advocacy for comity between the courts should catalyze further consideration of the issue and, at a minimum, indicates that the debate is all but over.

Special thanks to Adam Gomez for his contributions to this post. For more information, please contact Paul Clark at .

Don’t Discriminate Against The Unemployed (NY)

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New York City just passed a law that prohibits employers from discriminating against job applicants on the basis of their unemployment.  The law provides that an employer may not advertise that current employment is a requirement for any vacant position or that the employer will not consider an unemployed individual for the job.  The law, however, does not prohibit employers from considering professional licensing, experience or training when making hiring decisions.  Despite an attempted veto by New York City’s mayor based on concerns over increased litigation by disgruntled employees, the law will take effect in ninety days.  Employers now have yet another concern when making hiring decisions and we are likely to see increased employment discrimination litigation.

Special thanks to Alison Weintraub for her contribution to this post.  For more information, please contact Paul Clark at .

Visibly Intoxicated? Just Ask the Expert. (NJ)

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In Halvorsen v. Villamil, plaintiffs brought a dram shop action against defendant, T.G.I. Friday’s (“T.G.I.F.’s”) for injuries sustained during a motor vehicle accident claiming that TGIF’s served alcoholic beverages to a visibly intoxicated patron. On the day of the subject accident, the defendant visited TGIF’s from approximately 4:00 to 7:00 p.m. He testified that he consumed two or three beers at the restaurant, but had no drinks prior to his arrival. Twenty to thirty minutes after the plaintiff left TGIF’s at about 9 p.m., he rearedended a pick up truck and flipped it on its side. Paramedics at the scene noted a strong odor of alcohol when extricating the defendant from his car. He subsequently registered a .278 blood alcohol concentration when he arrived at the Jersey Shore Medical Center at 10:32 p.m.

Plaintiffs’ expert opined that the defendant would have had to consume seventeen twelve-ounce beers to reach such a high BAC and would have been visibly intoxicated while at TGIF’s. At the end of discovery, TGIF’s moved for summary judgment arguing that plaintiffs could not prove that the defendant was served alcohol while he was visibly intoxicated as required by the N.J. Dram Shop Act. The trial court granted summary judgment finding that there was no evidence of what defendant drank or how he acted while at TGIF’s.

The Appellate Division disagreed with the trial court’s ruling. In order to defeat a summary judgment motion in a dram shop case, a plaintiff must present sufficient evidence that would permit a jury to deduce that a defendant was served alcoholic beverages while visibly intoxicated. A visibly intoxicated individual is one who exhibits a state of intoxication accompanied by acts which present clear signs of intoxication. Proof of visible intoxication does not hang on eyewitness testimy.  In fact, the appellate division noted that there is no specific provision in the N.J. Dram Shop Act that requires such.   A jury could be persuaded solely by an expert’s testimony as to whether a defendant was visibly intoxicated.

Nevertheless, the report of plaintiff’s expert on its own in this case was not sufficient to defeat defendant’s motion for summary judgment. However, the report, in combination with the strong circumstantial evidence in the record (i.e., defendant only drank alcohol at T.G.I.F’s, there was a short time between his leaving TGIF’s and the accident, and defendant’s excessive BAC, among others), could allow a jury to deduce that TGIF’s served defendant beverages while he was visibly intoxicated. As such, the Appellate Division found a genuine issue of material fact and remanded the matter back to the trial court.

Special Thanks to Andrew Marra for his contribution.

For more information contact Denise Ricci at

 

Coverage Found For Subpoena Response in Sex Abuse Case (NY)

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In the last decade, sexual abuse scandals have rocked many religious and educational institutions. Several revered public figures have fallen with a thud from the lofty pedestals upon which they were perched. Beyond the moral failings and public relation disasters, more mundane questions arise such as who pays for the expensive investigations that arise after those claims become public?

Syracuse University found itself embroiled in such an alleged scandal in the fall of 2011. Two young men claimed that they were sexually abused by Associate Men’s Basketball Coach Bernie Fine during the course of his employment with the University. Complying with its contractual obligations, the University  gave written notice to its insurer, National Union, of a media report publicizing those claims. After numerous subpoenas were issued to the University in connection with state and federal investigations, the University provided copies of the subpoenas to National Union which denied any obligation to pay the costs of responding to those subpoenas. According to its motion papers, the University “expended millions of dollars in legal defense fees and costs to investigate and respond to the Subpoenas.”

Under the “Not-For-Profit Protector” policy issued by National Union on a “claims made” basis, the insurer agreed to “pay on behalf of [Syracuse University] loss arising from a claim first made against [Syracuse University] during the policy period…for any actual or alleged wrongful act of [Syracuse University]. The term “claim” included: (1) a written demand for monetary, non-monetary or injunctive relief; or (2) a civil, criminal, administrative, regulatory or arbitration proceeding for monetary or non-monetary relief which is commenced by: … (ii) return of an indictment, information or similar document (in the case of criminal proceeding)…”

The key issue was whether the grand jury’s investigations and subpoenas constituted a “written demand for… non-monetary relief” or a criminal proceeding for non-monetary relief commenced by the “return of an indictment, information or similar document (in the case of criminal proceeding).”

Ruling in favor of Syracuse University, the court held that the subpoenas’ demand for the production of documents and testimony qualified as a written demand for “non-monetary” relief. Further, the grand jury’s investigations also qualified as a “criminal proceeding” for non-monetary relief, triggering the insurer’s duty to defend Syracuse University.

The continuing saga involving Syracuse University and its Associate Coach Bernie Fine may be near a close but we suspect that the insurance coverage dispute is far from over. Stay tuned for updates on any appellate activity.

If you have any questions or comments about this post, please email Paul at

WCM Awarded Summary Judgment in Brooklyn, NY Car Accident Case.

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New York, NY 

Associate Lora H. Gleicher was awarded summary judgment in a Kings County, NY motor vehicle collision case. In the case of Delvalle v. Mercedes Benz, et al., the plaintiff, an employee of our client, King Freeze, allegedly sustained injuries when he was involved in a four-car, chain reaction motor vehicle accident. Our client was dragged into the case by the joinder defendant Mercedes Benz that argued that it was entitled to contribution and indemnification.

Prior to the close of discovery, we moved for summary judgment dismissing all claims against our client on the basis that, because Delvalle was a King Freeze employee who was acting within the scope of his employment when the accident occurred, NY’s Workers’ Compensation law barred claims for contrubution and common law indemnity unless a “grave injury” was involved (which was not the case here).

The trial court agreed with our analysis and dismissed Mercedes Benz’s claims.

Fraud Trumps Policy Language on Jury Trial Waiver (NY)

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A New York appellate court recently ruled that an insurer is entitled to a jury trial for claims of fraudulent inducement despite policy language waiving that right.

In MBIA Ins. Corp. v. Credit Suisse Sec. (USA), LLC, the insurer, MBIA, claimed that the insured, Credit Suisse, fraudulently induced MBIA to issue a policy covering payments on $900 million in residential mortgage-backed securities. MBIA alleged that before the 2008 recession, Credit Suisse bundled risky mortgages and passed them off as high-quality securities when seeking insurance coverage from MBIA.

MBIA sought a jury trial on the issue of Credit Suisse’s alleged fraud, probably because they want to appeal to a jury’s sympathy and leverage the public’s negative view of Wall Street banks.  However, a policy provision provided that both parties waived their rights to a jury trial for any litigation arising out of a policy dispute. The lower court ruled that MBIA was not entitled to a jury trial because it could not, on the one hand, claim that it was entitled to remedies under the policy while, on the other hand, claim that the language in the policy regarding the jury trial waiver was not valid.

But the appellate court disagreed, finding that an insurer’s fraudulent inducement claim is, in essence, a claim that the policy is no longer valid regardless of whether the insurer seeks to rescind the policy.

Thanks to Mendel Simon for his contribution to this post.

If you would like more information, please write to Mike Bono.

Will Anonymous Auction Sellers Be Revealed? (NY)

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For a variety of reasons, potential sellers of art like to remain anonymous when the consign works to auction houses.  The New York Court of Appeals recently agreed to consider an appeal of a controversial decision that has the potential to curtail auction anonymity in New York.

 In Jenack Inc. v. Rabizadeh, the defendant submitted an absentee winning bid of $400,000 for an antique Russian box to the plaintiff, William J. Jenack Estate Appraisers and Auctions, Inc.  The “clerking sheet” that recorded the transaction identified the consignor of the work by a numeric code, in order to maintain his or her anonymity.  Plaintiff subsequently invoiced defendant, but defendant, for whatever reason, never paid for the antique.

Plaintiff then filed suit to recover for breach of contract, and both parties moved for summary judgment, with plaintiff prevailing.  However, on appeal, the Second Department sided with the defendant, finding that the statute of frauds, which requires certain contracts to be in writing, was violated.

New York General Obligations law §5-701, requires, among other things, that a written agreement for goods sold at a public auction list the name of the purchaser and “the name of the person on whose account the sale was made.”  Although separate writings can be pieced together to satisfy the statute (indeed, that is what happened here to name the defendant), plaintiff failed to submit any writing that identified the name of the consignor.  The Court held that the number on the clerking sheet was insufficient, violating the statute of frauds.  Thus, plaintiff could not enforce the sale, and summary judgment was awarded to the defendant.

Therefore, as the law currently stands, if an auction house wants to enforce a sale, it must reveal the name of the consignor to the purchaser.  We will continue to follow this case and report on how the Court of Appeals addresses this interesting issue.

If you would like further information, please write to Mike Bono.

Consider Reconsideration Carefully (NJ)

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New Jersey’s Rules of Court allow parties to seek relief from judgments and orders based upon a showing of exceptional circumstances.  However, it is important to remember that once such a motion has been decided, any subsequent motion seeking identical relief, no matter how it is presented, may be treated by the court as a motion for reconsideration and subject to specific standards.

The plaintiff’s attorneys in the recent Appellate Division decision in Cafuli v. Paszul learned this lesson the hard way.  The plaintiff’s trial attorney was unable to locate an expert witness who had been named during discovery, and who was needed to testify on plaintiff’s behalf to overcome the “verbal threshold” needed to avoid dismissal.  Although plaintiff’s trial attorney was aware of the issue as of the first trial call, he did not inform the court of the issue or request additional time to obtain a new expert report until the sixth trial call — approximately one year after discovery in the matter had ended.

After the plaintiff’s trial attorney acknowledged that the plaintiff could not prove the case without an expert, the trial judge dismissed the matter.  Plaintiff did not appeal that decision or file a motion for reconsideration.  Four months later, plaintiff filed a motion to reinstate the complaint.  That motion was denied.  Again, plaintiff did not appeal or file a timely motion for reconsideration.  Two months later, plaintiff again moved to reinstate the complaint, citing lack of diligence on the part of the plaintiff’s trial attorney.  The trial court again denied that motion, ruling that it was essentially one for reconsideration, filed untimely and without merit.  Plaintiff then filed a motion for reconsideration, which was denied.

On review, the Appellate Division affirmed the trial court’s denial of the motion for relief from judgment and the motion for reconsideration.  The court stated that the trial judge correctly recognized that plaintiff’s second motion, although couched as a motion for relief from judgment, sought the same relief as the first motion.  Therefore, it was an improperly filed motion for reconsideration.  As a result, the motion for relief from judgment and the motion for reconsideration were both properly denied.

This case is a stark reminder that time limitations, especially on motions for reconsideration and appeals, are taken very seriously by the courts.  This case also serves as a reminder that, no matter how a motion is “packaged,” the court will look to the substance of the requests for relief in determining whether the motion has been correctly filed.

Thanks to Christina Emerson for her contribution to this post.  If you would like further information please write to Mike Bono.