I have a couple of autographed copies of John Grisham's just-released book, Camino Winds.  And, of course, I want to give them away to Coverage Opinions readers.  So it’s time for a contest.  I’ve decided to go back to the always popular Haiku Contest!  These always get lots of entries and they are so much fun to read. 

But this time it’s different.  Instead of the subject of the haiku being insurance coverage, as is usually the case, it must be something about home quarantine, working from home, Zoom meetings, and the like.  If you want to work in an insurance coverage angle that’s fine.  And, in fact, that would probably be popular with the (one person) judging committee.  Submit a 5-7-5 format haiku.  Submit as many entries as you’d like.  Deadline to enter - June 12.
 
The two best entries will each receive an autographed copy of John Grisham’s just-released book - Camino Winds.  Autographed John Grisham books are hard to come by.  He has done one book signing in the past 25 years or so.

To enter -- just send me an email.  Most people do that.  But it’s amazing how many people write to me and ask where the link is to send entries or ask about some other method for entering a contest.  Folks, Coverage Opinions is a low budget, one-man band, operation. Nothing fancy like that going on here.  

In some states, wearing masks has been compulsory in certain places.  And, even if not compulsory, many states have been recommending the practice.  Ironically, despite all this advocating for wearing masks, at least 18 states have laws on the books that make it a crime to do so in public.  Of course, those laws are not being enforced these days.

Here is a link to an Op-ed that I published in The Wall Street Journal late last month that looks at state anti-mask law and some judicial opinions addressing them.  I hope you can check it out:

https://www.coverageopinions.info/MustWearaMask.pdf

I have always gotten a kick out of the name Accident Insurance Company.  Man I hope they didn’t pay a branding consultant for that.

I recently came across my friends at Accident when I saw Accident Ins Co. v. U.S. Bank N.A., 2020 U.S. Dist. LEXIS 68918 (D.S. C. Apr. 20, 2020). 

Here is the first sentence of the opinion:  “Plaintiff Accident Insurance Company, Inc. (‘Accident’) filed this action against Defendant U.S. Bank National Association (‘U.S. Bank’) seeking monetary damages related to its allegedly deficient administration of a reinsurance trust account created pursuant to a written trust agreement.”

Needless to say, I did not make it to the second sentence.

All I cared about is that the opinion involves Accident Insurance Company as it reminded me of the first-ever “Randy Spencer’s Open Mic” column (October 12, 2012), which looked at fun and curious names of insurance companies.   Below is the inaugural Open Mic column -- which originally appeared in a pre-set box, making it limited in how much it could say.  Plus, it is before the fabulous Randy Spencer cartoon character was commissioned.  The format of the column was changed in October 2013, taking the constraints off Randy Spencer and enabling him to say as much as he wants in his column.  But, of course, more words does not mean less inane.

Like schools everywhere, Temple Law School switched to on-line classes when the coronavirus made it unsafe to gather in classrooms.  So, for the last five weeks of the Spring semester, I traded Room 7A of the law school building, for my home office, to teach Insurance Law 0549.  Much has been said about on-line learning.    My take - I found it to be challenging but effective.

My sixteen students appeared on the screen each Monday morning.  Attendance was nearly perfect.  That’s definitely not the case with in-person teaching.  Sure, there were some tech issues here and there.  Static sometimes made it hard to hear and things had to be repeated.  And my dogs barked a few times and I had to put one of them in detention. 

Speaking of dogs, I had bring your cats and dogs to class one week.  We all met everyone’s best furry friends.  And my daughter showed up one class and discussed her new snow cone maker with the students.  I also enjoyed teaching in casual attire over a suit.  It could be the only time ever that a law school class was taught by the professor wearing an Elvis t-shirt.  That’s probably never even happened at Memphis Law School. 

But as for what matters most – the learning – I believe that the format was effective for conveying the substantive information to the students.  There were even a couple of lectures where I thought I did a better job on the material than in past semesters. 

I can’t say enough about how great the students were.  I could see that they were getting worn out by the situation as the semester drew to a close.  But they came totally prepared, were committed to making the best of a difficult situation, stayed focused – which is an understood difficulty in an on-line learning format -- and participated when I asked them to.       
 
The biggest downside was that the environment made it more difficult to get a robust classroom discussion going.  This too is a widely-acknowledged challenge of an on-line classroom.  Maybe it’s because the students did not feel a personal connection to the class.  Also, the need for students to unmute their mics – even though it just takes a second -- took away the immediacy of dialogue, from one student to the next, that makes for a good class discussion.  And, unlike being in class, I couldn’t stare at a student to give him or her a hint that I’d like to get a comment from them.  But I didn’t press the students to speak.  I was just appreciative that they were being so attentive and didn’t want to give them any angst.  This led to the need for more lecturing from me.  After nearly two hours my voice started to give out and I was exhausted.           
  
But one trick that I did employ in a couple of classes, to get some interaction, was to have the students give a five minute pre-prepared summary of a case.  This got them to speak, while eliminating the stress of being called-on cold.  And this benefited everyone by providing a very diverse look (16 examples) at the case law on a certain issue.    

Look, for sure, teaching is best done in an in-person classroom.  But, all things considered, on-line learning was effective.  Not to mention that the switch happened overnight, so there was no real time on my part to prepare for the change in format.  With the ability to prepare, tips from experts, and now knowing what to expect and the challenges needed to be overcome, changes can be made to improve the experience.  Importantly, student exams did not reflect any deficiencies in the areas that were taught by Zoom.  But, of course, not every class is created equal when it comes to its conduciveness for an on-line format. 

Here is our class photo, which my students kindly let me share, as well as a certain bad dog that needed to be put into detention.

May 22nd was the two-year anniversary of the American Law Institute’s vote to approve the organization’s Restatement of the Law, Liability Insurance.  The road to that day was a long and contentious one.  For eight years, those with interests aligned with the insurance industry did battle with policyholder-side advocates, over what would be the Institute’s position on various lability coverage issues. 

The ALI is headquartered in The City of Brotherly Love.  But there wasn’t much evidence of that during the drafting process.  At times, it resembled The Thrilla in Phila.

Throughout its drafting, there were numerous concerns raised by insurers and their counsel that the ALI was seeking to adopt positions in the RLLI that would be detrimental to insurers’ interests.  Prognostications about the impact of the RLLI are one thing.  Judicial decisions, evidencing its impact, are another.  The RLLI is now a toddler.  It is beginning to speak.   

By my count, the RLLI has been cited in about 40 decisions, give or take – both pre- and post-approval.  Overall, the insurer-side concerns, that the RLLI could prove costly to them, have not come to pass.  At least not yet.  

In many cases, the court’s use of the RLLI has been benign, simply citing it for a general principle of coverage law and it played no part in the decision.  Insurers have also prevailed in cases where the RLLI was included in the discussion.  There have been a few cases that an insurer lost and the RLLI was included in the court’s analysis.  But, in some of those cases, it is clear that the court would have found against the insurer anyway – for other reasons.  Importantly for insurers, courts have not undone any pro-insurer precedent in favor of adopting a different rule pronounced in the RLLI.  In general, of the thousands of coverage decisions handed down in the past two years, there are a few where insurers can pin a loss on the RLLI.  The reality of the RLLI for insurers -- so far at least -- has not equated with the dire predictions.          

None of this is to say that insurers are out of the woods on the RLLI.  For sure, there are some places in the RLLI that offer courts an opportunity to adopt a novel approach on an issue that could be very detrimental to insurers.  [I’ve previously written about four potential landmines in the RLLI that I see for insurers.]  And then that approach could take hold and be adopted widely.  It is too soon for such a scenario to have played out.  But, at some point, insurers can expect to see it.   

My take on the RLLI has not changed since the beginning.  Liability insurance coverage is an extremely well-developed body of law.  On many of the RLLI subjects, the vast majority of states have already spoken.  I do not believe that courts will eschew their own precedent in favor of adopting a contrary rule contained in the RLLI. 

Rather, as I see it, the RLLI’s impact will be felt by courts using it to fill voids and crevices in their own state’s law.  Faced with an issue on which there is no home-state law (or the law is not clear), and there is a divergence of positions nationally, the court, looking for a place to land, may be inclined to adopt the RLLI’s position.  In this situation, insurers have more to fear than policyholders.  

The Colorado federal district court’s decision in Rockhill Insurance Company v. CFI-Global Fisheries Management, No. 16-2760 (D. Colo. Mar. 2, 2020) is brief.  But it still has a lot to say, and an important lesson to offer, about allocation between covered and uncovered damages. 

Heirloom initiated arbitration proceedings against CFI-Global Fisheries Management after a fisheries enhancement project, that CFI had been hired to design and construct for Heirloom, went south.  CFI sought coverage under a professional liability policy issued by Rockhill Insurance Company.  Rockhill undertook CFI’s defense, under a reservation of rights, and then filed an action seeking a declaratory judgment that it had no obligation to defend or indemnify CFI in the arbitration.

Heirloom was ultimately awarded $600,000 by the arbitrators and the parties stipulated to an award of $265,000 in attorney fees and costs.  As noted by the court: “The arbitrators’ decision was not accompanied by an explanation of reasoning because neither party requested a ‘reasoned’ award.” 

The court in the coverage action held that Rockhill was not liable for the arbitration award on account of the faulty workmanship exclusion in the professional liability policy.

However, the Tenth Circuit reversed, “finding that the intent behind the faulty workmanship exclusion was ‘to distinguish non-covered construction work from covered professional services.’”  Therefore, Rockhill was not entitled to summary judgment “as to the design components of CFI’s work for Heirloom.”

Back at the trial court, the issue was whether the arbitration award could or should be allocated between design and construction damages.  The court held that it could not be.  Translation: Coverage owed for the entirety of the arbitration award. 

Putting aside some issues unique to the facts, the court’s general message was that the insurer could not meet its burden to prove that some of the damages were excluded under the faulty work exclusion.  The court stated: “ To begin with, there is no dispute that Plaintiff controlled CFI’s defense. As a result, Plaintiff had a corresponding duty to ensure that the damages were allocated between those that were covered under CFI’s policy and those that were not. Because Plaintiff failed to request an allocated award, the arbitrators issued ‘a standard award without explanation of [the arbitrator’s] reasoning’ that says nothing with respect to allocating Heirloom’s damages.  Under these circumstances, the damages awarded are presumed to be covered under CFI’s policy.” 

I do a lot of work involving professional liability policies and whether an insured’s conduct, giving rise to a loss, was a requisite professional service necessary to trigger coverage (or to come within a CGL policy’s professional services exclusion).  I think I have a good feel for this issue.  That’s why I was surprised to by Fourth Circuit’s decision in Affinity Living Group, LLC v. Starstone Specialty Insurance Company, No. 18-2376 (4th Cir. Mar. 26, 2020).  The insurer had winning facts.  But that wasn’t enough.

Affinity Living Group, an operator of adult care homes, was sued for allegedly violating the False Claims Act for submitting Medicaid reimbursement claims for services that they never provided. Affinity sought coverage for the suit from StarStone under a professional liability policy.  StarStone denied coverage.  Coverage litigation ensued and the North Carolina District Court ruled in favor of StarStone.  The Fourth Circuit, following a lengthy jurisdiction analysis, reversed.  

The StarStone policy at issue covers “damages resulting from a claim arising out of a ‘medical incident.’”  A “medical incident” is an “act, error or omission in rendering or failure to render medical professional services [i.e., ‘the health care services or the treatment of a patient’].”

I would have expected to see Affinity lose this case for the reason that the False Claims Act complaint sought damages for submitting false Medicaid reimbursement claims for services that Affinity never provided.  But the policy’s coverage is for providing health care services or treatment to a patient.  And that’s just not what the FCA complaint was about.  

But StarStone’s policy language handed Affinity a lifeline.  Specifically, the policy provided coverage for “damages resulting from a claim arising out of a ‘medical incident.’”

Following an analysis of North Carolina law, on the meaning of “arising out of,” the court concluded that coverage was owed:

“Here, the term ‘arising out of’ falls within a provision extending coverage and so must be interpreted broadly to require only some ‘causal connection’ between the conduct defined in the policy and the injury for which coverage is sought.  There is no connection if the injury ‘was directly caused by some independent act or intervening cause wholly dissociated from, independent of, and remote from’ the conduct defined in the policy.

StarStone contends that billing for personal-care services is ‘wholly disassociated from, independent of, and remote from’ the personal-care services. Here, the false-claims-act complaint alleges that Affinity billed Medicaid for personal-care services that were not performed. This allegedly false billing does not arise in a vacuum. The personal-care-services billing is false, and thus gives rise to a claim for damages, because Affinity failed to provide the personal-care services to its residents.  In other words, but for the failure to provide the services, no claim for damages exists.

The ‘failure to render’ services is a covered ‘medical incident’ under the policy.  And that alleged failure made the Medicaid claims false, giving rise to potential damages in the false-claims-act suit. So while the alleged false billing was not itself a ‘medical professional service,’ the failure to ‘render medical professional services’ bears a causal relationship to the billing.  Thus, under North Carolina’s case law, the false-claims-act action falls within the coverage provision in the StarStone insurance policy.”

False Claims Act claims, and other claims involving the billing aspects of the provision of healthcare services, are clearly not intended to be covered under a healthcare professional liability policy designed to cover patient treatment.  Nonetheless, such billing-related claims are not unusual and efforts are often made to find coverage under patient-based policies.  It may be time for insurers to make their intent clearer, through the use of exclusions, rather than dance around what’s a medical incident and what’s professional health care services and associated causation issues. 

 

The concept of concurrent causation is usually reserved for property policies.  In very general terms, this is where a loss is caused by a combination of things – and coverage is owed so long as one of the causes is covered.

But concurrent causation played an important part in the North Dakota Supreme Court’s decision, addressing liability coverage, in North Star Mutual Insurance v. Ackerman, No. 20190135 (N.D. Mar. 25, 2020).  As the decision demonstrates, with the right facts, concurrent causation could open the door to liability coverage that otherwise seems closed. 

At issue was coverage, under a commercial general liability policy, for injury caused in a motor vehicle accident.  Specifically, Jayme Ackerman, of Ackerman Homes, was driving on an interstate when a wheelbarrow fell out of his pickup truck and landed on the road.  Another driver came upon the wheelbarrow, lost control of his vehicle and went through the median, striking Kyle Lantz, who received severe injuries.

North Star Mutual argued that no coverage was owed for Lantz’s injuries, under the CGL policy, based on exclusions for use of motor vehicles and loading and unloading of equipment.  Lantz acknowledged that the policy contained a motor vehicle exclusion, “but argued there were also covered non-vehicle related negligent acts and the concurrent cause doctrine applies to provide coverage.”

North Dakota’s top court concluded that, despite a policy exclusion for use of a vehicle, coverage was still owed.  The court agreed that the accident also had a non-vehicle (i.e., non-excluded) cause: “The wheelbarrow also was left on the road for some time before the accident occurred, and Ackerman did not remove it or warn other drivers of its presence. These were independent, nonvehicle-related, acts that did not arise out of the use of the automobile. The exclusion for injuries arising out of the use of an automobile does not apply to these acts.”

Now, faced with both vehicle and non-vehicle based causes for the accident, the court turned to the concurrent causation doctrine to conclude that coverage was owed: “The concurrent cause rule . . . takes the approach that coverage should be allowed whenever two or more causes do appreciably contribute to the loss, and at least one of the causes is an included risk under the policy. Under the concurrent cause doctrine the GCL policy provides coverage in this case. The failure to remove the wheelbarrow from the road and the failure to warn were independent acts that allegedly were a cause of the injury. The injury potentially arose just as much from failure to remove the wheelbarrow and warn other drivers, which are covered risks, as it arose from the transportation of the wheelbarrow.”

As you can see, with the right facts, concurrent causation may cause claims to be covered that  seem excluded.

 

I love this case.  I loved it last year when the trial court decision was handed down and I love it even more now that the Eleventh Circuit Court of Appeals has weighed in.

At issue in Robinson v. Liberty Mutual Ins. Co., No. 19-10940 (11th Cir. May 11, 2020) was the availability of coverage, under a homeowner’s policy, for the infestation of a home by the highly venomous brown recluse spider.  The homeowners, the Robinsons, alleged that the spiders “infested every facet of their home, could not be eradicated, posed a deadly risk, and presented ‘a dangerous and irreparable condition’ that rendered their home ‘unsafe for occupancy.’”

Liberty Mutual denied coverage, citing an exclusion for loss “[c]aused by . . . [b]irds, vermin, rodents, or insects.”  Coverage litigation ensued.

Of course spiders are insects.  Everyone knows that.  But the Robinsons said no, claiming that, scientifically speaking, spiders are not insects, but arachnids.

The Eleventh Circuit undertook a science lesson to reach its decision, noting that “[f]ew zoological terms have been more loosely used both by scientific and popular writers than the term ‘insect.’” 

What makes the decision so interesting is that the court agreed with the Robinsons that “the scientific community distinguishes between arachnids and insects.”  But the Robinsons still lost the issue, as “Alabama law cautions against using technical or scientific definitions to interpret the terms of an insurance contract.”

The court noted that “dictionary definitions of ‘insect’ establish that an ordinary person would still understand the term ‘insect’ to include spiders. That the average person has yet to adopt the scientific vernacular is not unexpected; after all, not every adult recalls the basics of their childhood science lessons as well as they should.”

In essence, the court concluded that words are defined by their common meaning, even if everyone is technically wrong in that meaning.  In support of this conclusion, the court cited to the U.S. Supreme Court’s 1893 decision in Nix v. Hedden, which concluded that a tomato was a vegetable, despite its botanical classification as a fruit because it is a vegetable ‘in the common language of the people.’”

Robinson could have opened the door to some interesting arguments, about the meaning of a term, when there is a discrepancy between its technical and colloquial understandings.  Under Robinson, a court can use its spidey-sense to figure out what a term means.

[The Robinsons also did not prevail because the court conclude that spiders are vermin.]

 

I have long been a student of whether bodily injury or property damage was caused by an “occurrence,” i.e., an accident, to satisfy one of the initial thresholds to coverage under a commercial general liability policy.  This is the oldest and most litigated of all CGL coverage issues.  The first reported “accident” coverage case that I know of goes back to 1835 -- Howell v. Cincinnati Ins. Co., from the Ohio Supreme Court.  At issue was coverage for a boat that sank.  [The “accident” issue arose in coverage disputes before the advent of liability insurance.]    

My favorite ancient “accident” case is Schneider v. The Provident Life Insurance Company (Wis. Sup. Ct. 1869).  The court addressed whether a gentlemen died by accident when, while running for a train, he slipped and fell underneath it.  Yes it was an accident, the court concluded.  The language of the decision, trying to figure it out, reads like it was written last week.  Not much progress has been made in 150 years.

The challenge of figuring out if an accident took place was best described by the Pennsylvania Supreme Court in Brenneman v. St. Paul F. & M. Ins. Co. (1963): “Everyone knows what an accident is,” the court observed, “until the word comes up in court.  Then it becomes a mysterious phenomenon, and, in order to resolve the enigma, witnesses are summoned, experts testify, lawyers argue, treatises are consulted and even when a conclave of twelve world-knowledgeable individuals agree as to whether a certain set of facts made out an accident, the question may not yet be settled and it must be reheard in an appellate court.”

That the “accident issue” has been around for so long makes sense.  There is no limit in nature to what could possibly be an accident causing injury.  So the question arises frequently and under all manner of circumstances – sometimes quite unusual and never before seen.

The Minnesota federal court’s recent decision in Campanella v. Northern Properties Group, LLC, No. 19-171 (D. Minn. Feb. 28, 2020) demonstrates this.  Not to mention being a case where the insurer could not fathom that the injury was caused by an accident.  But the court concluded that it was -- and didn’t even seem to think that its decision was particularly difficult.  This is another aspect of accident/occurrence cases -- they can be difficult to predict.  In some ways, they have an element of the judge knows what’s an accident when he or she sees it.     

Matthew Campanella rented a residence from Northern Properties.  Unfortunately it contained toxic levels of chicken feces.  Campanella claimed he contracted histoplasmosis on account of Northern Properties carelessly and negligently failing to clean and maintain the residence.  Boy I bet that last tenant didn’t get his security deposit back.  This isn’t like leaving some nail holes in the wall.
 
Histoplasmosis sounds scary.  The court described it as serious infection caused by a fungus in the environment, particularly in soil containing large amounts of bird or bat droppings. 

Northern Properties sought coverage for Campanella’s suit under a CGL policy issued by Auto-Owners.  At issue was whether the bodily injury was caused by an “occurrence,” defined as an accident.

As Auto-Owners saw it, no way, no how could Campanella’s injury have been caused by an accident: “[I]t is difficult to imagine any scenario in which the accumulation of chicken feces in a residential dwelling to a ‘toxic level’ due to a failure to clean the premises would be accidental.”

But the court saw it much differently: “Even if Northern Properties intentionally allowed a toxic build-up of chicken feces on the premises, Auto-Owners cannot point to any facts suggesting that any party foresaw Campanella contracting histoplasmosis.  In fact, Auto-Owners admits that ‘most people who breathe in the [histoplasma fungi] spores don’t get sick.’  In other words, Campanella contracting histoplasmosis was unexpected and unforeseen—an ‘accident’ as both Minnesota and Wisconsin have defined it.”

This is the classic issue in many “accident” cases.  Yes, the insured did something wrong and it caused injury.  But was the injury expected and foreseen?  [The less difficult accident case is an injury from a circumstance or confluence of circumstances that nobody could see coming.]     

In the end, while Northern Properties cleared the insuring agreement’s “accident” hurdle, no coverage was owed on account of the Auto-Owner’s policy’s fungus exclusion.

 

I have never done a study of this, but, from my Meeem-ory (all alone in the moonlight), there are a lot more coverage cases involving dogs than cats.  Well score one for the felines in Phillips v. State Farm, No. A163831 (Ore. Ct. App. Feb. 26, 2020).  While the facts of Phillips are unpleasant, the argument for coverage is interesting.  Oh those cunning cats.

At issue was coverage for a landlord, under a property policy, for damage done by a tenant who had approximately 100 cats.  [But the Dalmatians still win!]

Unfurtunately for the insured [sorry, but you knew something groan-worthy was coming; but I’ll limit it to one], the State Farm policy contained a domestic animal exclusion.  Of import, the exclusion applied to losses caused “directly and immediately” by domestic animals.  

Putting aside the trial court decision, the Oregon appeals court held that the exclusion applied purrrfectly [ok, two]. 

So how could a domestic animal exclusion not apply to waste caused by 100 cats, you ask.  The policyholder argued that the damages were not caused by the cat waste, but, rather, the passage of time and negligence of the insured.  In other words, the damage and odor was caused by the tenant’s actions and inactions.

To decide the issue, the court was required to determine the meaning of the words “directly” and “immediately.”  After resort to the dictionary – defined, respectively, as without intervening space or time and direct connection and relation – the court held that the exclusion applied:

“Damage caused by cats defecating and urinating on the insured property is direct and immediate. The fact that the damage caused by the cats may have been exacerbated by the passage of time or the failure of tenants (or the insured landlord) to clean up the cat waste does not mean that the damage was not ‘directly and immediately’ caused by the cats, and it certainly does not render the policy language ambiguous.  We conclude that the elimination of feces and urine by domestic animals onto the insured's rental property is damage that is excluded from coverage under the policy in this case. The passage of time and the failure to take reasonable steps to intervene when damage occurs may well make matters worse, but the cats caused the damage.”

Clearly a catastrophic decision for the insured.

We’ve all seen this issue.  A liability policy lists a company as an insured but the defendant named in the suit is different, but not by much.  Think “Insured LLC” and “Insured Inc.”  So, while technically the defendant is not an insured, it’s close.  Plus the two entities have the same owner and same address.  Is this a basis to disclaim coverage, including a defense?

This was the issue in East End Funeral Home, Inc. v. American European Insurance Company, No. 19-1410 (S.D.N.Y. Mar. 26, 2020).  East End, Inc. operates a funeral home in the Bronx. [Good name for a funeral home]  The funeral home premises is owned by East End, LLC.  The premises had been owned by East End, Inc. and it was transferred to East End, LLC in 2001.  The two entities have the same owners. 

East End LLC was named as a defendant in a suit for a slip and fall in the funeral home parking lot.  East End, LLC sought coverage under a liability policy – but issued to East End, Inc.  The insurer denied coverage on the basis that East End, LLC, the defendant in the suit, was not an insured under the policy issued to East End, Inc.

East End, LLC’s argument was basically, come on guys, what’s the difference, we’re just one big happy company: “Plaintiffs argue that, in interpreting the parties’ reasonable expectations, the Court should consider that East End Inc. procured the Policy to protect against risk, including defense and indemnification for a personal injury claim at the Premises, notwithstanding the transfer of title from East End Inc. to East End LLC. Plaintiffs argue that East End Inc.’s name as the Insured on the Policy is not dispositive of whether the Policy was meant to cover East End LLC, where there is an ‘identity of ownership’ between East End Inc., as the operating entity, and East End LLC, as the entity which owns the real estate, and where there was no change in the use or occupancy of the Premises during the time the Policy was in effect.”

But the court disagreed: “While the Court is sympathetic to these arguments, the average insured could not reasonably expect the Policy to cover East End LLC, where the Policy clearly states that East End Inc. is the only covered entity, ‘corporation’ is listed as the only type of covered business and the Policy contains unambiguous language stating that ‘[n]o person or organization is an insured . . . that is not shown as a Named Insured in the Declarations.’”

The court did note that the insured cited some cases suggesting that “New York courts have accommodated exceptions for an unnamed insured in certain circumstances,” but “these cases are distinguishable; none of them involve two separately formed corporate entities and a policy that unambiguously insures only one entity.”

The moral of the story here seems to be that differences between the insured and the defendant, based on the reason, can be excusable and not a basis to disclaim coverage.   But sometimes just because it looks like a technicality, swims like a technicality and quacks like a technicality, does not mean that it’s a technicality.