NYAD1: Mirror Counterclaims Don’t Change DJ Fee Rules

The rule in New York is that if the insurer seeks a declaratory judgment against the insured and loses, the insured is entitled to attorney fees because the insurer cast the insured in a defensive posture.  If the insured institutes the action, fees are not awarded (the “Mighty Midgets” rule). But what about counterclaims?

The Appellate Division, First Department confirmed today that mirror- image counterclaims don’t change things. This makes sense, since the counterclaim is not required where the only relief sought is declaratory, and the action must result in a declaration of the rights and obligations of the parties, whether they counterclaimed or not. The counterclaim may be reflexive, but it is usually “mere surplusage.”  So  neither the insurer nor the insured can subject itself to a fee award by making a knee-jerk counterclaim.

American Home Assur. Co. v. Port Authority of N.Y. and N.J. (1st. Dept. Dec. 30, 2014).

Breach attributed to outdated, unsupported, unpatched software gets $150K fine.

OCR announced a settlement agreement with Anchorage Community Mental Health Services for a self reported breach of ePHI affecting 2,743 individuals.  OCR cays the organization was vulnerable to malware because it ran outdated, unsupported software that was not reinforced with available patches.

OCR also criticized the organization for adopting policies and procedures that were not followed, and for failing to conduct regular assessments of vulnerabilities.

The outdated software is not identified in the bulletin or settlement agreement. 

 

 

NY AD 1: Boilerplate expert disclosure trumps claim of surprise; economic loss award can exceed estimate of plaintiff’s economist; errors preserved at trial not reached on appeal from order on post-trial motion.

There was a trial of a med mal case claiming wrongful death of a 44 year old man. Defendant’s CPLR 3101(d) statement said that its expert would “testify as to the possible causes of the decedent’s injuries and contributing factors . . . [and] on the issue of proximate causation.”

On cross examination, plaintiff’s expert conceded the possibility that death resulted from a sudden cardiac event, as opposed the slower, more painful process suggested by the autopsy report. The treating emergency room physician supported the defendant’s sudden death scenario, as did defendant’s expert. Plaintiff’s counsel argued unfair surprise, but to no avail. The Appellate Division (4/1) held that plaintiff failed to object to the lack of specificity when the statement was served and was not justified in assuming that autopsy would be uncontested.

The jury awarded nothing for pain and suffering, but gave $680,000 for loss of future household services, despite the estimate from plaintiff’s economist of $247,150. The Appellate Division affirmed the trial court’s reduction to $340,000, holding that the number “need not match the expert’s assessment exactly.”

Plaintiff also complained that the trial court excluded evidence of cash support the decedent gave to his mother. The majority noted that the plaintiff appealed only from the order on the post-trial motion, and not from a final judgment. Although the issue was preserved in the trial record, it was not part of the relief sought in the motion, and so could not be reached on the appeal.

Rivera v Montefiore Medical Center (NY App. Div. 1st Dept. 12/4/2014).

Correspondence Confers Addtional Insured Status

The contractor’s CGL policy said that someone was an additional insured if a written agreement required the contractor to make that person an additional insured under the policy.

KB’s contract contained indemnity and insurance provisions but did not specify adding  KB to the contractor’s policy. The contract did specify that contractor would be subject to KB’s rules, regulations and requirements.

During the performance of the work, KB sent correspondence advising the contractor that it was required to make it an additional insured, and the contractor’s broker issued certificates of insurance to that effect.

When the claim came in, the carrier disclaimed on the grounds that the construction contract did not contain the additional insured requirement.

The Court of Appeals, Division 1, held that the correspondence, read together with the “rules, regulations and requirements” clause of the construction contract, was sufficient to establish the written agreement required by the insurance policy.

KB Home v. Charter Oak (AZ App, Div 1, 11/25/2014)

See my previous post (“Curtain Falls on Coverage”) for a case where NY’s high court construed the same additional insured clause.