On November 27, 2007 James Veach co-chaired and spoke at the Practising Law Institute's Hot Topics in Reinsurance seminar at the PLI center in New York City, on "Access to Records: Good Faith Meets Hard Ball Tactics." Other speakers included Robert Easton (Deputy Superintendent and General Counsel to the New York Insurance Department), Tracey Laws (RAA), Leigh Ann Pusey (AIA), and Stephen Packard (DeLoitte).

A Mound Cotton trial team led by Jeff Crawford, Todd Bakal, Doug Eisenstein, Renee Plessner, and Ken Lange recently obtained an outstanding result from a New York federal court jury in litigation brought by Celebrity Cruises, Inc. against Essef Corp. and other defendants represented by the firm. Click here to read the press release.

Mound Cotton Wins Second Dismissal from Seven World Trade Center Building Collapse Litigation

As reported on the front page of the New York Law Journal on March 21, 2007, Mound Cotton Wollan & Greengrass obtained the dismissal of AMEC Construction Management, Inc. from a $400 million dispute involving claims of negligent design and construction in connection with the September 11, 2001 collapse of Seven World Trade Center.  MCWG’s effort was led by partners Mark J. Weber, Douglas K. Eisenstein, and Daniel Markewich.  Read the press release here.

On April 11, MCW&G conducted a webinar entitled "Understanding and Managing the New U.S. Federal Court Electronic Discovery Rules," hosted by Larry Greengrass, Wayne Glaubinger, Jeff Weinstein, and Bruce Kaliner.  If you are interested in a CD of the presentation, please contact Jeff Weinstein at 212-804-4226 or JWeinstein@moundcotton.com.

Partner James Veach, who concentrates his practice on run-off and insolvency-related matters, and is a member of the Association of Insurance and Reinsurance Run-Off Companies (AIRROC) Publications Committee, served as the Special Editor of the Winter issue.  This Special Edition focuses on Security in Run-Off.
 
The Special Edition includes an update and discussion of the NAIC's Reinsurance Evaluation Office proposal by former NAIC counsel Doug Hartz; a report by Terry Kelaher (Allstate) on AIRROC's efforts to intervene in the debate on the REO proposal; and several articles on locating and protecting security funds within a run-off.
 
The Special Edition also features a panel discussion with three run-off managers (Dick White - Integrity; Chuck Ehrlich - Riverstone; and Jonathan Rosen - The Home in Liquidation) who also happen to be ARIAS-U.S. certified arbitrators.
 
You can find the Special Edition of AIRROC Matters at http://www.airroc.org/ .  AIRROC's web-site also contains an archive of previous issues of the AIRROC Matters newsletters.

Effective December 1, 2006, the federal rules were amended to specifically include discovery of electronically stored information ("ESI"). These new rules impose strict obligations on litigants and their counsel to ensure that potentially discoverable ESI (i.e. e-mails, Word documents, Excel spreadsheets, databases, PowerPoint presentations, etc.) are properly identified and preserved, and produced during pre-trial discovery, including in response to non-party subpoenas. Some states have already enacted e-discovery rules and the remaining states are expected to follow. Failure to comply with e-discovery preservation and production obligations can lead to sanctions and adverse inferences at trial. A thorough understanding of the amended rules is now a necessity. Companies need to be familiar with their new obligations and should have internal procedures in place.

MCW&G has for years regularly counseled clients in identifying, compiling, preserving, and producing ESI and, consequently, is well positioned to assist clients with these recent rule changes. MCW&G attorneys have developed a program to assist clients in understanding and addressing these changes. For more information on e-discovery, please contact Bruce Kaliner at (212) 804-4281 or bkaliner@moundcotton.com.

Larry Greengrass and Bill Kolb published a white paper in the current issue of the Risk Vue website, analyzing some of the critical insurance coverage issues that should be considered by insurers and reinsurers in evaluating their exposure to avian flu-related insurance claims.  Go to http://www.riskvue.com/ for the paper, or read our newsletter for a more comprehensive version.

The MCWG Newsletter archive is fully indexed and is now searchable on our website.  Click on the Newsletters tab, and you will find all the articles that have appeared in the Newsletter from Winter 1996 to present. 

Pro Bono Programs

MCWG attorneys in conjunction with the New York Legal Assistance Group ("NYLAG") and the Volunteer Lawyers for the Arts ("VLA"). NYLAG is a not-for-profit organization that provides free legal services to low income New Yorkers in a variety of different types of matters, including actions, family/matrimonial matters, wrongful evictions, criminal law issues, guardianship proceedings, bankruptcy proceedings, and contract and employment disputes. VLA is a legal aid organization that provides assistance to artists and not-for-profit entities without the resources to hire counsel. MCWG attorneys work with NYLAG and VLA referrals in providing legal services in connection with cases involving contract and employment disputes, family law matters, and not-for-profit filings. MCWG's pro bono program allows our attorneys to utilize their skills and experience in a number of areas to assist indigent individuals and not-for-profit businesses and organizations who are financially unable to retain counsel in resolving personal and professional difficulties.

Noteworthy Cases

Hendricks v. Joseph A. McNulty Co., Inc. et al.

John Parker and George Buermann were recently successful in obtaining a dismissal by the Supreme Court of New York, Suffolk County of all New York Navigation Law causes of action asserted against their client, an environmental remediation company that was retained to remediate an oil spill at a residential property in Long Island. The Navigation Law is New York's strict liability "spill act" which also allows a recovering party to seek its attorney's fees for the prosecution of such claim. Plaintiff's counsel opposed Mound Cotton's motion by claiming a novel "delay of remediation" theory against the insured. The dismissal of the Navigation Law cause of action was critical in controlling a potential windfall of damages to the plaintiff had the insured been declared strictly liable. Significantly, the dismissal of the Navigation Law causes of action also eliminated the exposure that the insured faced for the statutory reimbursement of plaintiff's attorney's fees. The Court held that the remediation company demonstrated that it was not responsible for the oil discharge and dismissed the New York Navigation Law causes of action.

In addition, Mr. Parker and Mr. Buermann were successful in dismissing the plaintiff's Punitive Damages cause of action asserted against their client. The Court reasoned that such an allegation by the plaintiff could not be sustained when considering the actions and conduct of the environmental remediation company.

 As reported in the January 2008 edition of Mealey's Litigation Report - Lead, Mound Cotton Wollan & Greengrass recently obtained the dismissal of the landlord (155 East 51^st Street LLC) and the property manager (Miller Management) from a lead paint poisoning case by convincing the Court that the defendants had neither actual nor constructive notice that a child under the age of seven lived in the apartment in question. (Omari Barker, et al., v. 155 East 51^st Street LLC, et al., No, 22457/03, N.Y.Sup., Kings Co., 2007 N.Y. Misc. LEXIS 8560). MCWG's team was led by John F. Parker and Kenneth R. Lange.

New York State Supreme Court Justice Gloria M. Dabiri of Kings County rejected the claims of the infant plaintiff and his mother that the defendants were liable for the child's exposure to lead-based paint while the infant was residing in an apartment controlled by the defendants. The infant, who had previously resided in Trinidad, had only been living at the apartment in question for six days when elevated blood lead levels were discovered during a routine physical examination required to enroll the child in school. The mother, who had been living at the apartment in question for several years, admitted that she did not inform the landlord that she was bringing the infant plaintiff from Trinidad to live with her, and the leases signed by the mother did not indicate that a child under the age of seven would be residing there.

The Defendants submitted an affidavit that they first became aware the child was living in the apartment when they received a Commissioner of Health Order to Abate Nuisance approximately five weeks after the child had been diagnosed with elevated blood lead levels.

Plaintiffs also alleged that the building's superintendent had seen the infant plaintiff in the apartment on one or more occasions, and that this was sufficient to charge defendants with constructive notice of the residence of the child. The Court rejected this argument, however, holding that brief, sporadic observations of the infant plaintiff in the presence of other adults did not crate a triable issue of fact.

In re: West Virginia Asbestos Litigation (Abbott v. A-Best Products Co.)

Dan Markewich and Ellen Margolis have continued their string of successes in the field of railroad asbestos litigation with the U.S. Supreme Court's October 2, 2006 refusal to review the West Virginia Supreme Court's dismissal of state-law products liability claims brought on behalf of numerous railroad workers against a former manufacturer of locomotives containing asbestos materials. In this case as in the others - briefed by Ellen, Dan, and Amy Kallal and argued by Dan - the West Virginia courts ruled in favor of MCW&G's client, Viad Corp, that the plaintiffs' state-based causes of action were barred by federal field preemption principles under the Locomotive Boiler Inspection Act ("BIA"), and that the workers' sole remedy was against their employers, under the Federal Employers' Liability Act ("FELA").

Following a successful "friend of the court" brief before California's highest court in 1999, MCW&G first prevailed on this issue in a case of initial impression in New York State late in 2000 before Supreme Court Justice Helen Freedman, assigned to the citywide asbestos court, whose opinion - Seaman v. A.P. Green Ind., Inc. - has become one of the leading published decisions in the field of BIA preemption, along with the other MCW&G cases named herein. In 2001 MCW&G won similar victories before the Delta County, Michigan district court and the assigned asbestos judges in Cleveland, Ohio and Louisville, Kentucky. Another such motion was argued by MCW&G before the Minnesota asbestos judge in St. Paul in the Summer of 2006 and is still undecided.

Following MCW&G's submission of a brief opposing certiorari in the Cleveland case - Darby v. A-Best Products Co. - which had been affirmed by Ohio's 8th District Court of Appeals in 2002 and the Ohio Supreme Court in 2004, the U.S. Supreme Court declined to review that case early in 2005. The recent denial of review in the West Virginia case followed MCW&G's successful argument on certified issues before that state's highest court in late 2003, subsequent dismissal of the case by the trial court in 2005, and MCW&G's filing of a brief opposing certiorari in the U.S. Supreme Court.

 People v. Harte

Dan Markewich and Sanjit Shah obtained the unanimous reversal of an arson conviction from New York's Appellate Division First Department on the ground that the trial judge and the prosecutor erred in admitting crucial evidence against the defendant.  Recent statistics indicate that the First Department overturns criminal convictions in only 2% of all appeals.

 United Airlines, Inc. v. The Insurance Company of the State of Pennsylvania

On February 22, 2006, the Second Circuit affirmed the District Court's decision where MCW&G was awarded summary judgment on behalf of The Insurance Company of the State of Pennsylvania against a $25 million (policy limit) claim made by United Airlines.  United Airlines alleged that its $1.2 billion system-wide losses in the aftermath of 9/11 should be covered under the insurer's Property Sabotage and Terrorism policy. The policy required that the insured suffer "property damage" at an insured location resulting from "Terrorism," but UAL argued that its non-physical "economic" losses should be covered as well. In denying UAL's motion for summary judgment and granting State of Pennsylvania's cross-motion for summary judgment, the court ruled that "damage" as used in the policy must be interpreted to mean "physical damage." The court also denied UAL's claim under the policy's "civil authority" coverage, which had been premised on assertions that the Pentagon was "adjacent" to Reagan National Airport (which contained an insured location) and that the damage to the Pentagon was the cause of the "order of civil authority" closing the airports on 9/11.

Michael Goldstein & Suresh Coelho obtained a favorable decision on behalf of a cedant in a reinsurance arbitration, in which the Panel held that the reinsurer was liable to the cedant for the reinsurer's share of defense fees and costs, including interest.

The cedant had been found liable to its insured in an underlying declaratory judgment action for defense fees and costs incurred by the insured in defending a counterclaim instituted by its competitor. In 1994, the insured initiated an action against its competitor alleging patent and trademark infringement, unfair competition, and other related causes of action. The competitor responded to the insured's suit and asserted various counterclaims, including restraint of trade, unfair competition, and antitrust activities. The insured tendered the defense of the counterclaims to the cedant under a single policy and thereafter initiated a declaratory judgment action under that policy. In response to the tender and as a result of the declaratory judgment action, the cedant made payments in excess of $15,934,029 for defense fees and costs and declaratory judgment costs under the policy. The cedant then billed the fees and costs to its reinsurers under its Casualty Catastrophe Excess of Loss Agreement ("Agreement") in one Agreement Year. Although the reinsurer never formally denied the claim, it refused to pay its share of the claim, asserting that the cedant's payments should be allocated over multiple policies and over multiple Agreement Years.

In addition to the award for the reinsurer's share of defense fees, declaratory judgment costs, and interest, the Panel awarded the cedant costs, expenses, and attorneys' or other fees it incurred in the matter, including the cedant's share of the fees and costs of its arbitrator and the umpire, measured from the date the Pre-Hearing Briefs were filed to the date of the award.

Livia Properties II, LC.. v. Federal Ins. Co. et al.

Wayne Glaubinger and Hilary Henkind won summary judgment on behalf of Lexington Insurance Company in the United Stated District Court for the Western District of Virginia in a first-party property insurance case involving late notice and the pollution exclusion.

Lexington’s insured was a tenant in a building in Virginia. When the insured vacated the premises, it allegedly left the premises in a state of disrepair and also, because it used certain chemicals (polybutene or "PIB") in manufacturing processes, there was chemical residue throughout the premises. The landlord sued the insured tenant, but the insured never provided notice to Lexington.

Eventually, the landlord itself provided notice to Lexington, but it did so just weeks before it moved for summary judgment in the underlying case against the tenant. Although Lexington received such notice, Lexington was unaware that the insured was bankrupt and had no counsel representing it. Thus, the summary judgment in the underlying action went unopposed, and the landlord won the case.

The landlord then brought a coverage action against Lexington and one other insurer. The two main defenses raised by Lexington were "late notice" and the applicability of the pollution exclusion. Although Virginia law does not generally require an insurer to prove prejudice from late notice, the late notice provision stated that "Any delay by the Insured in providing notice shall not affect the Insured’s right to coverage under this policy, except if and to the extent that the Company proves that it actually and substantially was prejudiced by any unreasonable delay in notice." The court held that the two-year delay in notification was untimely and that Lexington was actually and substantially prejudiced because Lexington was unable to engage actively in discovery and was unable to participate in possible settlement discussions. The court also went on to hold that even if Lexington were not entitled to summary judgment on late notice, the pollution exclusion in Lexington’s first party property policy barred the landlord’s claim for clean-up of PIB vapors and/or residue.

PinnOak Resources LLC v. Certain Underwriters at Lloyds London

Allied World Assurance Company ("AWAC"), represented by Costantino P. Suriano and Frank J. DeAngelis, obtained an order denying plaintiff's motion to remand the case to state court and granting AWAC's motion to compel arbitration pursuant to the New York Convention, which governs the enforceability of International arbitration agreements.

Plaintiffs owned and operated a mine in West Virginia that allegedly suffered a loss in excess of $100 million as a result of methane gas explosions. AWAC, a Bermudan insurance company, issued an insurance policy to plaintiffs that contained a U.K. arbitration clause. AWAC removed the case from state court to the Southern District of West Virginia and demanded arbitration. Plaintiff claimed that the New York Convention was "reverse preempted" by the McCarran-Ferguson Act and West Virginia Insurance Code and therefore must be decided by the West Viginia state court. MCW&G successfully argued before Chief Judge David Faber that the New York Convention, as an International Treaty, could not be preempted by either state or federal law. Consequently, plaintiffs were required to arbitrate their claims against AWAC in London.

Florczyc v. Stanley Stahl d/b/a Stahl Park Avenue Co. et al.

As reported in the January 20, 2005 issue of the New York Law Journal, John F. Parker and Michael Rubin, on behalf of third-party defendant Safeway Environmental Corp., successfully defeated plaintiff’s Order to Show Cause to preclude Safeway’s summary judgment motion as untimely in a New York Labor Law personal injury case. After the completion of discovery, MCWG moved for summary judgment on behalf of Safeway to dismiss various Labor Law claims being asserted by plaintiff. Safeway made its motion 63 days after plaintiff filed the Note of Issue. Shortly thereafter, plaintiff moved by Order to Show Cause to preclude Safeway’s motion, claiming that the motion was untimely under the Kings County Uniform Civil Term Rules, which require that a party move for summary judgment within 60 days after the Note of Issue is filed. The general New York State rule, found in CPLR 3212(a), gives 120 days, but can be shortened by the court as in this case. Plaintiff argued that Safeway failed to show "good cause" for the purported late filing as required pursuant to Brill v. City of New York, 781 N.Y.S.2d 261 (2004). In response, Safeway argued that its motion was in fact timely, because plaintiff had served the Note of Issue on the parties via regular mail and, therefore, Safeway was entitled to five additional days in which to make its motion pursuant to CPLR 2103(b)(2). The Court denied plaintiff’s Order to Show Cause, holding that the requirement that a party show "good cause" pursuant to Brill for a late summary judgment motion only applies to motions made more than 120 days after the Note of Issue. Because Safeway’s motion was made well before the 120 day period, the Court held that Brill did not apply and that Safeway’s motion was in fact timely. 

Nesher LLC v. Realm Nat'l Ins. Co.

David W. Kenna recently convinced the Appellate Division (First Department) that the phrase "do your best" in an all risk property coverage policy was unambiguous.  In Nesher, the insured had sought to recover for water damages sustained in its vacant investment property as a result of a frozen water pipe. The insurance policy excluded loss caused by water damage resulting from a frozen pipe unless the insured did its "best to maintain heat in the building or structure."  Although summary judgment was awarded to Realm at the trial level, on appeal, the insured argued it had done its best by hiring a caretaker to look after the property, and that the phrase "do your best" was ambiguous  precluding summary judgment.  MCW&G, on behalf of Realm, pointed out that the phrase "do your best," has a definite and precise meaning: "excelling all others," "most productive" or "in the best way" (Merriam Webster  Dictionary (1994 Ed.) and that by merely hiring a caretaker without providing him with an adequate supply of heating oil or  proper instructions for maintaining heat on the premises, the insured could not have done its "best." The Appellate Division agreed with MCW&G finding that the "phrase in the policy to 'do your best' is unambiguous and has a clear and unmistakable meaning" and that the insured had failed to do its "best" under any reasonable interpretation.  Nesher's subsequent motion to file an appeal to the New York Court of Appeals was denied.

Baralan International S.p.A. v. Avant Industries, Limited

Costantino P. Suriano on behalf of defendant Avant secured an Order from the Supreme Court of the State of New York, New York County awarding Avant over $1.1 million in legal fees expended in defense of plaintiff's 23 year-old lawsuit which proved meritless from inception. In addition, the Court awarded Avant pre-judgment interest in the amount of $1.067 million calculated from the date each legal bill had been paid despite Baralan's argument that pre-judgment interest was only applicable from the date the Court's August 4, 2003 decision. 

Brayman Construction Corp. v. The Home Insurance Co. et al.

Lawrence Greengrass, Emilie Bakal and Daniel Endick, on behalf of The Home Insurance Co. and Zurich North America Insurance Company, recently obtained in the United States Court of Appeals for the Third Circuit a reversal of a district court order denying The Home's motion to compel arbitration. This case involves a workers' compensation insurance policy issued by The Home to Brayman and an ancillary retrospective premium agreement containing a broad arbitration clause. After the Home demanded arbitration based on Brayman's refusal to pay the outstanding amount of premium, Brayman responded by filing a "bad faith" lawsuit against The Home in federal court. The Home subsequently filed a motion to compel arbitration, arguing that Brayman's complaint was simply a defense to The Home's premium collection efforts, and fell squarely under the arbitration clause in the premium agreement. The Third Circuit agreed and reversed the district court's denial of The Home's motion, holding that "[i]n light of the breadth of the arbitration provision at issue here, as well as the federal policy counseling that doubts should be construed in favor of arbitration, the District Court should have held this dispute arbitrable."

Wilkos v. Plaza Realty Services, Inc. v. Atlantic Service and Equipment Corp.

John F. Parker and Antoinette L. Banks, on behalf of third-party defendant Atlantic Service and Equipment Corp., obtained summary judgment dismissing the third-party complaint in a New York premises liability action in which the plaintiff allegedly suffered a knee fracture requiring surgery when he slipped and fell on ice in a shopping center parking lot.  Atlantic Service had contracted with the property manager, third-party plaintiff Plaza Realty, to clear the lot of snow.

MCWG moved for summary judgment on behalf of Atlantic Service to dismiss the third-party complaint.  The judge granted the motion in its entirety with costs and disbursements and held that: 1) there was no evidence that Atlantic Service breached its snow plowing contract; 2) Atlantic Service did not owe a duty to the plaintiff because the snow plowing contract was not a comprehensive and exclusive property maintenance obligation, and Atlantic Service did not contribute to the plaintiff's alleged injuries; 3) Plaza Realty could not recover for contractual indemnification because the snow plowing contract did not contain an indemnification clause, and Plaza Realty was not entitled to common-law indemnification because there was evidence that Plaza Realty was responsible for the plaintiff's injuries; and 4) Plaza Realty was not entitled to damages as a result of Atlantic Service's failure to procure insurance, because the snow plowing contract did not obligate Atlantic Service to obtain such insurance.

Familia v. 233rd Street Partnership, L.P., et al.

Plaintiff Augustina Familia, a dialysis patient, alleged that she suffered multiple fractures of the tibia and fibula on December 31, 2000 when she tripped and fell on an ice and snow-covered rubber mat at the entrance to Riverdale Dialysis Center in Bronx, New York.  MCWG represented defendants/third-party plaintiffs 233rd Street Partnership, the owner of the premises, and Mitchell Enterprises, a corporation set up to handle the administration associated with various properties. 
Defendants moved for summary judgment to dismiss the complaint, arguing that there was no issue of fact as to whether defendants had notice of any dangerous condition and that no duty had yet arisen for any party to remove the snow at the entrance to the premises because it was still snowing at the time of the alleged accident.  By Order dated November 14, 2003, Justice Betty Owen Stinson granted defendants summary judgment and dismissed the complaint.

Camacho v. Bovis Lend Lease LMB, Inc.

Mark J. Weber and Paula M. Tziavragos, on behalf of defendants, Bovis Lend Lease and Dyer Avenue Associates, successfully opposed plaintiff’s motion for partial summary judgment for strict liability as to Labor Law §240(1) in a case in which plaintiff, age 36, alleges that on March 13, 2001, while performing construction work, he was caused to fall more than twenty feet down an elevator shaft because there was no gate or protective barrier at the entrance to the elevator.  Plaintiff alleges that he sustained, among other things, traumatic brain injury, subdural hematoma, fracture of the left orbital bone and left proximal fibular, frontal sinus fracture with skull base defect, and dural leak that required a bifrontal craniotomy and cranioplasty.  He also alleged injuries to his knee and shoulder that required surgery.  The Court agreed with the defendants that there are material issues of fact as to whether:  (1) plaintiff’s walking into the elevator shaft was the sole proximate cause of the incident; and (2) there were proper safety devices provided to plaintiff.

Around Town

If you are visiting our offices in downtown New York City and want to see what events are taking place in the surrounding neighborhoods, please refer to these web sites: http://www.downtownny.com/ or http://www.sohonyc.org/

Media Inquiries

All reporters and journalists are asked to contact Doreen Fiorelli at 212-804-4239 or dfiorelli@moundcotton.com if you would like to arrange a speaking platform, bylined article or an interview with an attorney on topics relating to the insurance/reinsurance industry.

Presentations

Our attorneys are available to make presentations at your office or ours on developments concerning the insurance and reinsurance industry. Please contact Doreen Fiorelli at 212-804-4239 or dfiorelli@moundcotton.com for more information.

Newsletter and Brochure

Both are available on-line or by calling the firm at 212-804-4200.