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Many States and other U.S. jurisdictions have adopted verbatim or variations on the National Association of Insurance Commissioners' Model Unfair Claim Practices Act. Some jurisdictions have labelled their statutes an Unfair Claims Practices Act for that reason; others have instead chosen to call their statutes Unfair Trade Practices Acts.
Montana Courts often deliver bad faith decisions against insurance companies, and Montana is one of the jurisdictions with an "Unfair Trade Practices Act" which regulates the claims conduct of insurance companies.
In a recently filed class action lawsuit, one of the named plaintiffs is the owner of a medical clinic in Montana. The clinic did not apparently sue because of its role as a medical clinic, but rather it sued in its role as a small business which purchased health insurance coverage for its employees under health insurance plans offered through the Chamber of Commerce. The class action complaint, filed on behalf of all those similarly situated, contained allegations that "by improperly charging consumers [the defendant health insurance carrier] padded premiums that included undisclosed amounts exceeding the medical premium …." The "undisclosed amounts" were alternatively identified in the complaint as "kickbacks" to the Chamber of Commerce to promote the health plan for sale. Mark Ibsen, Inc. v. Caring for Montanans, Inc., 371 P.3d 446, ¶¶ 1, 5, at 447-48 (Mont. 2016).
The Montana Supreme Court said in essence that if the Montana UTPA allowed the lawsuit, the Court would have voted to allow the class action to proceed. However, the Court held that the UTPA did not confer a private, implied right of action against the insurance company. In a lengthy review of the statutory history including judicial interpretations of the Act, the Supreme Court refused to imply such a cause of action where the Montana Legislature had clearly not provided for one. Rather, in the eyes of the Court, the Legislature left 'regulation' of the pertinent conduct to regulators and not to Courts or to private litigants in this instance. Mark Ibsen, Inc. v. Caring for Montanans, Inc., 371 P.3d 446, ¶¶ 20-43, at 450-55 (Mont. 2016).
PART TWO: Insurance Class Action Settlement REJECTED.
The background of this insurance class action settlement is detailed in Part One, posted here on Thursday, June 24, 2016. For our purposes in exploring the Court's rejection of the insurance class action settlement, it is enough to recall that the alleged conduct of the defendant Blue Cross Blue Shield of Michigan leveraged its 60% market share into raising rates "for Blue Cross's customers and everyone else -- while preserving or expanding Blue Cross's market share." Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *1 (6th Cir. June 7, 2016).
The Rejected Health Insurance Class Action Settlement.
In a couple of words, the settlement in this insurance class action was betrayed by many of the "red flags" on the Class Action Settlement Checklist posted here on April 26, 2016 based on an excellent article by Howard M. Erichson, "Aggregation as Disempowerment," to be published in 92 Notre Dame L. Rev. The red flags addressed by the Sixth Circuit which were flying from the insurance class action settlement in this case concentrated on the following:
Terms that Discourage Objections.
Class Representative Bonus.
The class action settlement included "so-called 'incentive awards' to the named plaintiffs," which Blue Cross agreed not to oppose. The agreed amounts were "up to $10,000 per individual and $50,000 per organization." Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *2 (6th Cir. June 7, 2016).
The Sixth Circuit also categorized these "so-called 'incentive awards' to the named plaintiffs" as a "bounty." In order for the named plaintiffs to claim entitlement to their bounty, however, the Sixth Circuit expressed its concerns for the guidance of Court and counsel upon remand after the Sixth Circuit rejected the class action settlement in this case. On remand, the class counsel requesting these bounties for their named plaintiffs "must provide the district court with specific documentation -- in the manner of attorney time sheets -- of the time actually spent on the case by each recipient of the award." Otherwise there is no basis on which any court can determine whether the incentive awards are valid. Putting proof of this kind in the record will not entitle anyone to a bounty, however; it will simply provide a basis for a court to decide whether the requested award should be made. Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *8 (6th Cir. June 7, 2016).
Fee Fund.
The class counsel's fees and expenses, and the bounties to given to the named plaintiffs, would all be given from the settlement fund without objection from the defendant. When all was said and done, the agreed settlement fund would amount to a remaining $14,661,560 to be divided "among the three to seven million class members." Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *2 (6th Cir. June 7, 2016). Although the Sixth Circuit did not display the following figure in its opinion rejecting this settlement, doing the math shows without fear of contradiction that if there were seven million class members, each would get roughly $2.00 apiece.
Now for the remaining figures, I will ask you, the reader, to please do the math. Clearly the Sixth Circuit did the math when it rejected this class action settlement.
Clear Sailing Agreements.
As noted, Blue Cross agreed not to object to class counsel's fees. The defendant's agreement not to object to fees within a certain limit is known as a clear sailing agreement. In this case, Blue Cross and the class counsel reached a clear sailing agreement for Blue Cross "not to oppose class counsel's request for fees, so long as the amount of the request did not exceed approximately $10 million; …" Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *2 (6th Cir. June 7, 2016).
But Blue Cross agreed to more clear sailing agreements in this settlement than just for class counsel's fees. Blue Cross further agreed "not to oppose class counsel's motion for expenses, which purportedly totaled $3.5 million;" and as was already noted Blue Cross also agreed not to oppose the named plaintiffs' bounties of up to $10,000 per individual and $50,000 per organization." It will be recalled from Part 1 of this article that part of class counsel's expenses was a $2 million expert's report which counsel stipulated should be sealed.
"All of these amounts -- the fees, the expenses, and the incentive awards -- would be paid out of the settlement fund." Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *2 (6th Cir. June 7, 2016).
There were many other red flags about this class action settlement that attracted the appellate court's attention. "To guide the proceedings on remand," the Sixth Circuit discussed "one very significant omission and several lesser ones in the proceedings leading up to this appeal." Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *6 (6th Cir. June 7, 2016).
Among these things to be re-addressed on remand was class counsel's request for attorney's fees. Class counsel's time records were not provided to the District Court. Their billing records were not sealed; the records were not made available at all, the Sixth Circuit pointed out. "[C]lass counsel provided no backup whatsoever -- no time records, no descriptions of work done -- in support of their hours spent working on the case." Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *8 (6th Cir. June 7, 2016).
Class counsel did provide one sheet of paper per firm listing their hourly rates, however. Their claimed rates "are exceedingly high" in the eyes of the appellate court if not the trial court. "[S]ome 20 lawyers billed the class more than $700 per hour, and some billed more than $900 per hour;" many paralegals charged even more "than the rates charged by the top 1% of paralegals nationwide." The fee request even included hourly rates for some of the staff.
On top of these rates, the trial court even multiplied the fee request by using a lodestar calculation.
This was all too much for the appellate court but it seemed to bedazzle the trial court in this case, so much so that on remand the appellate court provided some guidance for counsel and Court in regard to the attorney's fees request here:
These are Bentley rates, not Cadillac rates, and if a district court thinks they are relevant to the fees that unnamed class members should actually pay, the court must explain why.
Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *7 (6th Cir. June 7, 2016).
In sum, the Sixth Circuit sent messages to the class lawyers and the court below along the following clearly drawn lines. The lawyers must support their class action settlement and their secrecy requests with more than their conclusions if they want either their settlement or any of their requests to be approved. The trial court must consider the settlement and the requests in detail, not simply put its stamp of "perfunctory" approval on them.
PART ONE: Insurance Class Action Secrecy REVERSED. Hang on; this may be only a part of the story of this decision, but it is a LONG part. We'll discuss the background of this case first.
The background.
Blue Cross Blue Shield of Michigan is a huge player in health insurance plans in Michigan. With over 60% of the market, it can help many people. Or it can allegedly fix prices.
By 2007, or so the United States Department of Justice alleged in a complaint, Blue Cross initiated a "price-fixing scheme." Blue Cross insisted on either one of two kinds of agreements with Michigan hospitals. One was an "MFN" agreement, in which "Blue Cross agreed to raise its own reimbursement rates for each hospital's services, so long as the hospital agreed to charge other commercial health insurers rates at least as high as the hospital charged Blue Cross."
The other was an "MFN-plus agreement." Under that second kind of agreement, "Blue Cross agreed to pay higher rates to each hospital so long as the hospital agreed to charge even higher rates -- up to 40% higher, according to DOJ's complaint -- to other commercial health-insurers."
Blue Cross's two plans brought results. "Few if any of the hospital systems in Michigan can afford to turn away an insurer that brings with it more than half of the privately insured patients in Michigan." Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *1 (6th Cir. June 7, 2016).
DOJ's lawsuit soon attracted class action lawsuits filed on behalf of individuals who alleged that they and their putative classes of Michigan hospital patients were damaged by the increased fees which Blue Cross allegedly caused Michigan hospitals to charge for medical services. "Thus, the effect of Blue Cross's market power was not to lower its customers' rates, as typically advertised. Instead the effect was to raise them, for Blue Cross's customers and everyone else -- while preserving or expanding Blue Cross's market share." Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *1 (6th Cir. June 7, 2016).
The consolidated class action lawsuits ultimately resulted in secrecy agreements which were confirmed by secrecy orders, and an overall order approving a health insurance class action settlement.
This article is in two parts. This first part addresses the secrecy orders in this case which the Sixth Circuit reversed. The second part will address the Sixth Circuit's rejection and remand of the lower court's order approving the insurance class action settlement.
Part 1. The Secrecy of the Health Insurance Class Action Settlement.
Plaintiffs' class counsel attached 90 exhibits to their motion for class certification. All of it was filed in the Court file under seal.
Blue Cross attached 42 exhibits to its brief opposing the class action certification. All of these too were filed in the Court file under seal.
Later, Blue Cross filed a motion to exclude the plaintiffs' class action expert's "report and testimony, attaching his report and 34 other exhibits." All of these materials were also filed under seal. Parenthetically, the settlement provided that the expert would be paid $2 Million from the class action settlement for his sealed report. Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *4 (6th Cir. June 7, 2016).
Ultimately, the parties requested that the District Court seal certain pleadings plus 194 exhibits in the Court file, and the District Court entered the requested sealing orders during the course of approving the parties' proffered settlement.
Objectors who were not class members argued that their lack of access to the Court record, particularly to the record of materials upon which the class action plaintiffs settled with Blue Cross, deprived them of the ability to evaluate the settlement. A "group of 26 self-insured businesses with health plans administered by Blue Cross (a group we call the 'Varnum Group') also sought to unseal the court record by means of a motion to intervene for that limited purpose." The district court approved the proposed settlement and the secrecy of the sealed materials, and denied the motion to intervene. Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *3 (6th Cir. June 7, 2016).
The Sixth Circuit reversed the trial court's secrecy rulings. To the contrary, the Sixth Circuit held that the District Court "abused its discretion when, at the parties' behest, it sealed from public view most of the court filings and exhibits that underlay the proposed settlement in this case." Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *3 (6th Cir. June 7, 2016).
Without necessarily ruling on any of the secrecy stipulations and secrecy orders entered with regard to discovery in this case, the Sixth Circuit pointedly noted that there is a great difference between discovery protective orders, and orders to seal court records entered upon adjudication. Unlike "a mere protective order [which] restricts access to discovery materials," an order adjudicating the case and sealing materials in the Court file affects the public interest. Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *5 (6th Cir. June 7, 2016). There is in other words a presumption against sealing Court files and in favor of public disclosure because keeping Court files open to the public is infected with a public interest.
In the "adjudicative" stage, the public's strong interest is in having access to the Court record. "That interest rests on several grounds," said the Sixth Circuit, and none was addressed either the parties or by the trial court in this case. The grounds for the public's interest, said the Sixth Circuit, are:
The litigation's result;
The "conduct giving rise to the case," and
"[I]n any of these cases, the public is entitled to assess for itself the merits of judicial decisions."
Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *3 (6th Cir. June 7, 2016) (emphasis added).
Further, "[t]he burden of overcoming that presumption [of openness as to Court records] is borne by the party that seeks to seal them." This requires only the most compelling reasons. Further, those reasons must be articulated "'in detail, document by document,'" with legal citations. Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *3 (6th Cir. June 7, 2016). The parties all sought to seal the Court records in this case. None of the parties met their burdens.
Nor did the District Court meet its own duties before it entered orders sealing materials in the Court file in the course of approving the parties' class action settlement. Before a District Court can properly enter such orders, it must set forth its "specific findings and conclusions," regardless of whether any party objects to the sealing. A District Court's failure to set forth its detailed reasons for sealing the Court file before it enters its orders sealing the Court file "is itself grounds to vacate an order to seal." Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *4 (6th Cir. June 7, 2016).
As noted, the Sixth Circuit reversed the District Court's sealing orders which the District Court entered during the course of its order adjudicating the class action settlement with approval. However, the Sixth Circuit did not base its holding simply on the lower court's failure to state its detailed reasons for sealing. The Sixth Circuit examined the record. It noted that among other materials in the Court file which the District Court sealed from public view were "the Plaintiffs' Amended Complaint, the Plaintiffs' Motion for Class Certification and Blue Cross's Response," and a total of 194 exhibits. Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *4 (6th Cir. June 7, 2016). The District Court accepted the bases for sealing these materials which the parties put before the Court, reasons which "were brief, perfunctory, and patently inadequate." According to the Sixth Circuit, the parties and the District Court in this case "conflated" discovery protective orders with sealing a Court file as a part of a Court's adjudication of the case. The class plaintiffs, for example, asserted that sealing was proper simply because Blue Cross or a third party designated the materials as confidential.
This in short is not a proper standard for sealing a Court file when a case is adjudicated. Whether or not parties can properly designate anything and everything "confidential" during discovery does not have any bearing when a case is adjudicated. Parties do not get to seal the Court file simply because they wish it so:
One can only conclude that everyone in the district court was mistaken as to which standard to apply. But one point is unmistakable: on the showings set forth in this record, every document that was sealed in the district court was sealed improperly.
Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., Nos. 15-1544/1551/1552, ___ F.3d ___, 2016 WL 3163073, at *4 (6th Cir. June 7, 2016).
The Sixth Circuit accordingly reversed and told the parties and the District Judge to do it again if they wanted to seal the Court file again in this insurance class action case. It is well worth noting that although this case involves a health insurance class action settlement, the supposed justifications advanced by counsel and accepted by the trial Court are often found in many other types of insurance -- and other -- class action lawsuits.
… GRANTS LIABILITY INSURANCE COMPANY'S MOTION FOR SUMMARY JUDGMENT OF NO BAD FAITH IN SETTLEMENT IN "Powell CASE" IN FLORIDA.
The District Judge who held the Affordable Care Act unconstitutional and was later reversed by the U.S. Supreme Court, granted a liability carrier's motion for no bad faith failure to initiate settlement negotiations on the ground that the record did not reflect causation of the claimed bad faith damages. Welford v. Liberty Ins. Corp., No.: 3:15-cv-333/RV-CJK, 2016 WL 3360431 (N.D. Fla. June 2, 2016).
In Cohan v. Provident Life & Acc. Ins. Co., 140 F.Supp.3d 1063, page numbers to be provided by Westlaw (D. Nev. 2015), a federal District Judge held that a genuine dispute over coverage under a disability insurance policy was a good defense to claims alleged under an unspecified "unfair trade practices" act:
Unum argues that, pursuant to the genuine dispute doctrine, its handling of Cohan's claim cannot be considered either to have been in bad faith or an unfair trade practice. A claim for bad faith must fail if a genuine dispute exists whether an insured is covered under a policy. (Citation omitted.) At issue is not whether the insured was covered under the policy, but only whether a reasonable and legitimate dispute exists as to that coverage. In the context of the facts of the present case, the existence of a genuine dispute also requires dismissal of an unfair trade practices claim.
[Emphasis added.]
It is interesting to note that, as described by the carrier and by the federal judge in this Nevada case, whether a genuine dispute exists over coverage is not merely a "defense;" it is a "doctrine."
A divided court confronted a liability insurance policy provision banning unauthorized settlements in a case presenting bad faith claims alleged against the liability carrier. The differences between the majority and the dissent mirror the differences between the skiing patrons of Vail and the rugged residents of Colorado Springs.
A majority of the Colorado Supreme Court held that the carrier did not need to support its defense with proof that it was prejudiced by the policyholder's alleged violation of a clause in its liability policy which bars any insured from settling claims without the liability carrier's consent. The defendant carrier needed to show only that the clause was violated in order to prevail on that defense. A majority of the court declined to superimpose a "prejudice" requirement similar to the prejudice requirement in late notice cases, for example. The majority called the provision "the no-voluntary-payments clause of the policy in this case." Travelers Prop. Cas. Co. of Am. v. Stresscon Corp., 370 P.3d 140, ¶ 11, at 143 (Colo. 2016).
Where a homeowner's insurance company has a duty to investigate, this includes a duty in Georgia and most other States to assess the value that homeowners lose because of physical damage to their homes, even if their homes are repaired. Thompson v. State Farm Fire & Cas. Co., No. 5:14-CV-32 (MTT), 2016 WL 951537 (M.D. Ga. March 9, 2016).
In a lengthy opinion, a federal District Court in Georgia dealt with several big issues in a third-party-bad-faith-failure-to-settle case, including several issues reminiscent of Florida cases. Indeed, the plaintiff's attorneys in the Georgia case were involved in some of the same issues in Florida cases.
For example, the Georgia federal court dealt with:
the issue of settlement with a party who presents claims that would ordinarily belong to an estate, except that no estate has yet been established at the time, thereby raising purported issues of whether the insurance company could make a settlement offer to a party who does not have the legal authority to settle at that time (this court, like the Florida Supreme Court, held that an offer should be made anyway where the circumstances otherwise warrant an offer to protect the insured);
the ramifications of an "equal consideration" test of bad faith, whereby a liability insurance carrier is held to account for settlement decisions that tend to prefer its own interests to the interests of its policyholder-insured (as a jury found and the court determined was so on the evidence presented in this case), and
the ultimate issue treated the same way in Florida and Georgia bad faith law, that ultimately bad faith by a liability insurance company is a jury question, i.e., a question of fact for the trier of fact. Camacho v. Nationwide Mut. Ins. Co., ___ F. Supp. 3d ___, 2016 WL 3059833 (N.D. Ga. May 25, 2016).
For my money, the most significant feature of this decision flew under the radar, so to speak. The federal court itself mentioned it in passing at the beginning of its long opinion:
Following the jury's verdict in the state court wrongful death suit, Park assigned his right to bring a claim for negligent and bad faith failure to settle against Nationwide to Plaintiffs Jesus Camacho and LaJean Nichols. Plaintiffs filed suit against Nationwide in this court on September 14, 2011, alleging that Nationwide acted negligently and in bad faith in failing to accept their demand for settlement of all claims against its insured within the policy limits and exposing Park to a $5.83 million excess jury verdict. This case was tried before a jury from August 31, 2015 to September 8, 2015. On September 8, 2015, the jury returned a verdict in favor of Plaintiffs finding that Nationwide “acted negligently or in bad faith in failing to settle the claims made by the Plaintiffs against Nationwide's insured, Seung Park.” (Doc. 168.) The Parties had agreed that the jury would determine liability only and the Court would determine the amount of the verdict as a matter of law, including attorney's fees.
Camacho v. Nationwide Mut. Ins. Co., ___ F. Supp. 3d ___, 2016 WL 3059833, at *1 (N.D. Ga. May 25, 2016). [Emphasis added.]
The emphasized language illustrates the federal court's complete acceptance of what in Florida is called a "Cunningham agreement," by which the issue of a liability carrier's bad faith in settlement or not, is tried first by a jury, and either the agreement itself sets the compensatory damages award or a court later determines the issue of damages including attorney's fees.
Now apparently Cunningham agreements are prospering in Georgia, too, whether they were used there before or not.
Does this sound familiar to you? My experience with ERISA was limited pretty much to preemption. It is a defense to certain insurance bad faith claims. If the claim is preempted by ERISA, then the court cannot hear it. That was pretty much the sum total of my knowledge of ERISA.
Plus one other thing: The standard (or so I thought) for ERISA conduct was fiduciary. To be liable under ERISA (again, or so I thought) the defendant had to breach fiduciary obligations imposed under ERISA.
In Pandarakalam v. Liberty Mut. Ins. Co., 137 A.D.3d 1234, 29 N.Y.S.3d 413 (N.Y. App. Div., 2d Dep't, New York, 2016), the parties went to an appraisal of an otherwise covered fire loss to determine the damages to the policyholders' home from the loss. The homeowner's carrier refused to pay for continuing "ALE" or additional living expenses after the appraisal process dragged on. As reported by a New York Appellate Division:
The plaintiff thereafter commenced this action against the defendant alleging, inter alia, that the defendant breached the insurance policy by acting in bad faith in its handling of the plaintiff's claim. The complaint sought, among other things, damages for debris removal that the plaintiff incurred during the rebuilding of his house, as well as consequential damages for the plaintiff's additional living expenses.
Pandarakalam v. Liberty Mut. Ins. Co., 137 A.D.3d 1234, 29 N.Y.S.3d 413, 414 (N.Y. App. Div., 2d Dep't, New York, 2016). The homeowner's carrier-defendant challenged the policyholder's entitlement to consequential damages by filing a motion for summary judgment. Unfortunately for the carrier, this put it in the position of in effect proving a negative, i.e., it thereby assumed a burden of proof that consequential damages were not within the contemplation of the parties at the time they contracted for the homeowner's insurance contract, which is the applicable standard for recovering consequential damages where a breach of any contract including the covenant of good faith and fair dealing is proven.
The New York Appellate Division held that the homeowner's insurer had not met its burden of proof which it assumed when it filed a motion for summary judgment that the homeowner was not entitled to consequential damages in this case, even if the homeowner proves a breach of contract or bad faith:
A defendant insurer moving for summary judgment dismissing a claim for consequential damages must make a prima facie showing that the damages sought were “a type of damage not within the contemplation of the parties when they executed the insurance policy” (citation omitted). A defendant does not meet its burden of affirmatively establishing its prima facie entitlement to judgment as a matter of law “by merely pointing to gaps in the plaintiff's case; rather, it must affirmatively demonstrate the merits of its defense” (citations omitted). Here, the defendant failed to make a prima facie showing that the consequential damages sought by the plaintiff were “not within the contemplation of the parties when they executed the insurance policy” (citation omitted).
Pandarakalam v. Liberty Mut. Ins. Co., 137 A.D.3d 1234, 29 N.Y.S.3d 413, 415 (N.Y. App. Div., 2d Dep't, New York, 2016).