Coverage Pointers - Volume XII, No. 15

Dear Coverage Pointers Subscribers:

Greetings again and thanks for being here.

Fifty Years Ago, John F. Kennedy's Inaugural
January 20, 1961

And so, my fellow Americans: ask not what your country can do for you, ask what you can do for your country.

My fellow citizens of the world: ask not what America will do for you, but what together we can do for the freedom of man.

Reminder - Dance with Us

We're not just a bunch of errant pixels in a newsletter.  As a reminder, for LinkedIn social network subscribers, we were the founders and are the moderators of the New York Insurance LinkedIn discussion group and feel free to post and discuss there.  If you are not a LinkedIn subscriber, simply click here and then join.  No cost, no obligation. 

And Introducing . Ashley Westbrook

We are delighted to welcome recent law school graduate Ashley Westbrook who will be sworn in as a new attorney in a matter of weeks and will be joining the firm's litigation department. Ashley brings her positive outlook and excellent client relations skills to the firm fresh off a stint as a law clerk for U.S. Magistrate Judge Marian Payson in the Western District of New York where she performed analysis, research and preparation of legal files and documents. Not at all new to the legal scene, Ashley served as a legal intern working on civil rights matters for a Latino community organization, a farm worker advocacy group, a refugee shelter and was an articles editor on human rights at the University of Buffalo School of Law where she graduated with her J.D. in International Law. She also has served as a counselor to at-risk youth and is fluent in Spanish and proficient in Japanese. We welcome her to the firm!  

How Much Wood Can a Woodchuck Chuck?

GEICO, with top-notch coverage lawyer Sheila Carmody, toting the freight, successfully chucked wood at a law school professor who sued the insurer in a consumer class action in Illinois.  Read all about it in Kathie Fijal's Federal Focus column.

Insurance Coverage Mediation
Resolving the Complex Without the Substantial Costs of Litigation and Risks of Precedent

There are times, more often recently than not, when insurers wish to resolve complex insurance coverage disputes without the expense and costs of trial and without the risk of potentially adverse judicial precedent. We have encouraged the mediation and/or arbitration of complex insurance coverage claims and our office can assist insurers and insureds in bringing reasoned resolution to coverage disputes.

We offer mediation services and I regularly serve as a mediator, helping craft resolutions to coverage disputes between and amount insurers. Why spend the money and the time to litigate these questions when resolution by mediation can bring closure to hotly contested matters in relatively short order for substantially reduced costs, without risking dangerous precedent?

Having been an active coverage practitioner for 30 years, with formal mediation training and lots of practical experience, an insurer or coverage counsel might consider that alternative to costly and sometimes dangerous coverage litigation.

The best resolution, sometimes, is the one that is secured efficiently and creatively. Experience, scholarship, practicality and common sense sometimes trump a judicial determination.

For information, contact me at 716.849.8942.

One Hundred Years Ago:  Gentlepeople, Start Your Engines

 On January 21, 1911, the first Monte Carlo Automobile Rally is held. Twenty-three cars starting out from 11 different locations around Europe eventually converge on the tiny Principality of Monaco. The event, officially the Rallye Monte Carlo, was organized at the behest of Prince Albert I, great-grandfather of current Prince Albert II and grandfather of Prince Rainier III, who married American actress Grace Kelly. Like many motoring contests of the time, it was seen primarily as a way for auto manufacturers to test new cars and new technologies, much like the Indy 500 and 24 Hours of LeMans.

The rally was held again the following year, but then not again until 1924. World War II and its aftermath interrupted the annual event, with no rallies from 1940 through 1948.

 

Peiper's Postulations:

 Twenty-five days...that's it...twenty-five days until pitchers and catchers report to Spring Training.  Good news for those of us staring at a projected weekend high of 6 degrees.  Better news now that my in-laws have relocated to Fort Myers, which is the February/March home of the Red Sox and Twins, respectively.

 For the first time in weeks, we've got first party decisions aplenty for your review.  Four of them, in fact.  Take a moment to review the Kittner v. Eastern Mutual decision which discusses one of our favorites...the defense of judicial estoppel.  I am always amazed that someone will take a position before a different court (presumably doing so under oath), and then take an entirely different position before a second court (also presumably under oath) on the exact same issue.  In Kittner, the insured's second attempt at calculations resulted in a loss claim that was 40 times greater than its first estimate.  Although this makes for a poor litigant in a coverage dispute, I am sure that the number cruncher that came up with this estimate would have fit in perfectly with his or her sisters and brethren at Enron.  We're just sayin'!

 Steve Peiper
[email protected]

 

Earl's Pearls - "Red Flags of Fraud" Series Commences

 Due to numerous comments and suggestions received from carriers, adjusters and claims administrators, during 2011 Earl Cantwell, the author of our "Earl's Pearls" segment, will feature items and ideas on detecting and reporting INSURANCE FRAUD.  Statistics and anecdotal evidence suggest a large up-tick in fraudulent claims, and Earl will focus on general hallmarks or "RED FLAGS" of fraud (this issue), and then on red flags of fraud for specific categories of claims such as auto, property damage, personal injury, No Fault/PIP,  Workers Compensation, etc.

 Look for this continuing series of articles starting with this issue, and following in subsequent issues of Coverage Pointers.

 

Notes from the Land of Seeley:

 If you only read one item from my column this week please choose the Insurance Department Opinion Letter regarding the amendment to the No-Fault endorsement regarding intoxication and drug impairment that takes effect January 26, 2011. 

 I want to thank Premier Prism Solutions - www.premierprizm.com for inviting me to their New Jersey office last week for training.  Premier Prism provides medical management services to many top automobile insurance carriers.  It has great management and staff that are dedicated to ensuring that its clients are in compliance with the No-Fault regulations and obtaining high quality Independent Medical Examinations and Peer Reviews across the country for insurers.  It truly was nice to work with Premier Prism and it was clear from my training that it has a sincere and dedicated interest in providing high quality representation of auto insurers.

 If you are interested in training please feel free to contact me at [email protected].

 Finally, mark your calendar -  DRI's Insurance Law Committee is presenting the Insurance Coverage and Claims Institute on March 30 through April 1, 2011, at the Fairmont Chicago Millennium Park in Chicago.  This is an excellent insurance coverage and claims seminar for attorneys, in-house counsel, and insurance representatives of any level and experience. 

 The Wednesday afternoon session will address issues such as strategy with regard to insurance coverage litigation, the discoverability of confidential insurance settlement agreements, attorney-client privilege and work product doctrine and its impact on insurance companies in-house counsel program as well as the interrelationship between insurance carriers and their coverage counsel. 

 The plenary session on Thursday includes topics such as construction defect claims, insurance implications on social media, as well as new defenses in insurance litigation.   The Friday session includes two separate tracks, one focusing on catastrophic losses under first and third party policies and another focusing on everything you need to know about the duty to defend. 

Further, please note if you are in-house counsel, as defined by DRI, then you may be eligible for free registration.  Also, if you are a DRI member who wants to invite in-house counsel, as defined by DRI, who is not a DRI member you may qualify to invite them as your guest at no cost to him or her. 

 Audrey

 

 A Century Ago, New Mexico Constitution Adopted by the People

 The Constitution guaranteed universal suffrage, with minor exceptions:

 Every citizen of the United States, who is over the age of twenty-one years, and has resided in New Mexico twelve months, in the county ninety days, and in the precinct in which he offers to vote thirty days, next preceding the election, except idiots, insane persons and persons convicted of a felonious or infamous crime unless restored to political rights, shall be qualified to vote at all elections for public officers.

 Apparently, the rule relating to "idiots" has been repealed.  Many appear to be voting throughout the country.

 Highlights of This Week's Edition:

 

KOHANE'S COVERAGE CORNER
Dan D. Kohane
[email protected]

•         Blanket Additional Insured Coverage Requires Contract Executed Prior to Loss
•         Conspiracy Claim Against Equitas Can Continue in State Court

 

MARGO'S MUSINGS ON SERIOUS INJURY UNDER NEW YORK NO FAULT
Margo M. Lagueras
[email protected]

•         It Is Sufficient to Present Different, but Plausible, Cause of Injury to Rebut Opinion That Injuries Are Degenerative and/or Congenital
•         Complaint Reinstated as Court Finds It Cannot Determine Extent to Which Disability Is Related to Elbow Injury Rather Than Dismissed Back Problems

AUDREY'S ANGLES ON NO-FAULT
Audrey A. Seeley
[email protected]

ARBITRATION

•         IME Report Sufficiently Supports Denial of Chiropractic Treatment
•         "Unprofessional Exchange" with Peer Reviewer Not Appreciated and Fails to Focus on Why Patient Was Prescribed a Device
•         Insurer Could Not Rely upon Prior Orthopedic IME to Deny Device Chiropractor Prescribed

 

LITIGATION 

•         30th Day Follow-up Letter to Outstanding Verification Not Without Effect, under These Circumstances
•         Again, 30th Day Follow-up Letter to Outstanding Verification Not Without Effect, under These Circumstances
•         MVAIC Failed to Demonstrate, for Summary Judgment, That Applicant Was Not a "Qualified Person"
•         IME Requirement under Policy Not Limited to Just Physicians
•         Outstanding Verification Request Was Unrebutted Warranting Summary Judgment
•         Plaintiff Seemingly Upset by Insurer's Counsel Participating in Mandatory Arbitration Without Witnesses and Seeks to Strike Trial De Novo Demand
•         Amendment of Permissible Exclusions Addresses Emergency Treatment for Intoxicated Persons

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]

Of Property

• A Third-Party Administrator Cannot Be Held Liable for Breaching a Contract to Which it Was Never a Party in the First Place
• Insured's Failure to Cooperate, Results in the Loss of Coverage
• Policy Means What it Says:  Insureds are Entitled to Fair Market Value of the Premises to be Calculated at the Time of Loss
• Pick Your Lie Wisely:  Judicial Estoppel Locks Plaintiffs in to their Claimed Chapter 7 Loss which was Substantially Less than Claim Presented in the Subsequent Insurance Claim

 

Of Potpourri

• Car vs. Horse = No Liability for the Owner of the Horse

 

FIJAL'S FEDERAL FOCUS
Katherine A. Fijal
[email protected]

•         Applying Illinois Law - Conflict of Interest and Bad Faith
•         In Consumer Fraud Lawsuit Score This:  Gecko 1, Law School Prof 0

 

JEN'S GEMS
Jennifer A. Ehman

[email protected] 

•        Court Found Sufficient Physical Contact Where Cardboard Box Flew Off Pickup Truck and Struck Respondents to Deny Stay of Arbitration on Uninsured Motor Vehicle Claim
•         Coverage Found for Property Owner Where, Irrespective of Allegations in Underlying Complaint, Evidence Established That Property Damage Was Continuous and Defendant Knew Excavation Work Commenced During Policy Period
•         Under Disability Policy, Court Found a Question of Fact as to Whether Disability Preceded Suspension of Medical License
•         Subcontractor Denied Insurance Coverage Where Damage Occurred After It Started Work, but Before Written Contract Executed and Enrollment in OCIP Policy

 

EARL'S PEARLS
Earl K. Cantwell
[email protected] 

General Hallmarks of Insurance Fraud

 One Day Closer 

Well, that's all the news for this issue.  Remember, every day is one day closer to Spring.

 Whether you believe in Punxsutawney Phil, Staten Island Chuck, General Beauregard Lee,  Wiarton Willie, Buckeye Chuck of Ohio, Balzac Billy, Octoraro Orphie,  Shubenacadie Sam,  Brandon Bob, Jimmy the Groundhog, "Hoggy" the Groundhog,  Gary the Groundhog, Tutor of Michigan (actually a llama), or Connecticut's Chuckles, please keep them all in the shade so the warm weather comes sooner.

 

Dan

 

Hurwitz & Fine, P.C. is a full-service law firm
providing legal services throughout the State of New York

NEWSLETTER EDITOR
Dan D. Kohane
[email protected]

INSURANCE COVERAGE TEAM
Dan D. Kohane, Team Leader
[email protected]
Michael F. Perley
Katherine A. Fijal
Audrey A. Seeley
Steven E. Peiper
Margo M. Lagueras
Jennifer A. Ehman
Diane F. Bosse

FIRE, FIRST-PARTY AND SUBROGATION TEAM
Andrea Schillaci, Team Leader
[email protected]
Jody E. Briandi
Steven E. Peiper

NO-FAULT/UM/SUM TEAM
Audrey A. Seeley, Team Leader
[email protected]
Tasha Dandridge-Richburg
Margo M. Lagueras
Jennifer A. Ehman

APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]
 Scott M. Duquin
Diane F. Bosse

Index to Special Columns
Kohane’s Coverage Corner
Margo’s Musings on “Serious Injury”
 Audrey’s Angles on No Fault
Peiper on Property and Potpourri
Fijal’s Federal Focus
Jen’s Gems
Earl’s Pearls
Across Borders

KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]

01/20/11       Arthur Kill Power, LLC, v. American Casualty Safety Ins. Co.
Appellate Division, First Department
Blanket Additional Insured Coverage Requires Contract Executed Prior to Loss
Arthur Kill (“Kill”) sought additional insured coverage under a commercial general liability policy issued by defendant to Wing Environmental, Inc. (Wing), an asbestos abatement contractor issued by American Casualty (“American”). The issue is whether American has a duty to defend and indemnify Kill in a personal injury action brought by Barros, a Wing employee, who slipped on grease on the floor of Kill’s premises. Coverage would be primary to Kill as an additional insured if there was a “written contract [executed] prior to the start of the project." The court found that the contract between Kill and Wing was not executed until after Barros's accident; therefore, Kill was not entitled to primary coverage under the American policy.
The Court also addressed the Employer's Liability Exclusion of defendant's policy which excludes coverage for bodily injury to any employee of any insured arising from and in the course of employment by any insured. The exclusion, however, does not apply to liability assumed by an insured under an "insured contract." The policy defines an insured contract as a written contract by which an insured assumes the tort liability of another because of bodily injury or property damage to a third person caused by the insured's negligence.
In deciding the case under Georgia law, the appellate court found that there was no evidence that the grease on the floor was caused by Wing’s negligence and determined that because no negligence was attributable to Wing the indemnification clause in the contract was not an insured contract and the exception to the Employers Liability Exclusion did not apply. 
A strong dissent held that the allegations were clear that the claim arises out of the named insured’s work and therefore this was an insured contract for which indemnity was required.  
01/18/11       Global Reinsurance v. Equitas
Appellate Division, First Department
Conspiracy Claim Against Equitas Can Continue in State Court
The complaint alleges that the Equitas defendants are the hub of a conspiracy that violates New York's antitrust law (General Business Law § 340 et seq. [the Donnelly Act]). It is claimed that the product market is one for property and casualty lines of insurance business and in particular retrocessional reinsurance coverage, that is the coverage provided to reinsurers. The geographic scope of the market is alleged to be worldwide, but a submarket also is alleged, the Lloyd's marketplace, in n two principal areas: premiums charged and claims handling.
Plaintiff contends that beginning in 1996, when the insurance and financial market was in a tailspin, the syndicates conspired to cut claim payments on pre-1993 and created Equitas for that purpose.
While a dissenting justice does not believe that the state courts should deal with a foreign entity that has the approval of other nation’s governments, the majority finds that, at least, a claim is stated for anti-trust violations under state law.

MARGO’S MUSINGS ON SERIOUS INJURY UNDER NEW YORK NO FAULT
Margo M. Lagueras
[email protected]

01/20/11       Quinones v. Ksieniewicz
Appellate Division, First Department
Plaintiff’s 90/180 Claim Survives Where Defendants’ Experts’ Examinations Were Performed Two Years After the Accident
Defendants’ medical experts did not examine plaintiff until two years after the accident and only addressed his condition at that time rather than during the 180 days following the accident.  In addition, the MRI studies they reviewed were performed 10 months after the accident and therefore did not serve to defeat plaintiff’s 90/180-day claim.  As such, on appeal the 90/180-day claim was reinstated while the dismissal of plaintiff’s claims under the permanent consequential and/or significant limitation of use categories were affirmed due to plaintiff’s failure to rebut with admissible evidence.

01/13/11       Yuen v. Arka Memory Cab Corp.
Appellate Division, First Department
It Is Sufficient to Present Different, but Plausible, Cause of Injury to Rebut Opinion That Injuries Are Degenerative and/or Congenital
Plaintiff allegedly sustained a left torn rotator cuff and cervical disc herniations.  He submitted affirmations of two doctors who submitted underlying reports and imaging films.  His treating doctor averred that he personally reviewed the MRI films and reports which made them admissible. 

In opposition to defendant’s assertion that the cervical injuries were degenerative and that the left should injury was degenerative and congenital, plaintiff’s expert also opined that plaintiff’s injuries were causally related because plaintiff was asymptomatic prior to the accident and the accident was sufficiently forceful to produce injuries such as those alleged.  The court found that, although not expressly addressing defendant’s expert’s opinion, it was sufficient that plaintiff’s expert attributed the injuries to another different, but plausible cause, namely, the accident.  The court additionally determined that plaintiff’s treatment for an unrelated condition sufficiently explained the 10-month gap in treatment for the accident-related injuries.

01/13/11       D’Auria v. Kent
Appellate Division, Third Department
Complaint Reinstated as Court Finds It Cannot Determine Extent to Which Disability Is Related to Elbow Injury Rather Than Dismissed Back Problems
Plaintiff had a collision with one defendant’s vehicle and nineteen days later was rear-ended by the other defendant.  It was also established that she had treated numerous times for back pain and muscle spasms due to two falls and an exercise injury prior to the two accidents.  The trial court dismissed the complaint which alleged injuries under the significant limitation of use and the 90/180-day categories.

With regard to the significant limitation of use category, on appeal the court affirmed the dismissal finding that the affidavit of defendants’ peer review orthopedic surgeon, who opined that there were no objective findings that plaintiff’s back condition was changed by either accident, was sufficient to show that the alleged back injuries were pre-existing and not related to the accidents.

However, with regard to the left elbow injury, defendant’s orthopedic surgeon summarily stated that it was a subjective complaint with no objective findings.  He failed, however, to address an MRI performed one year prior to his peer review and which may have supported the opinions of plaintiff’s treating physician and another medical examiner which attributed her disability to the elbow injury, although to an unspecified degree.  Nevertheless, the court determined that this failure to address the MRI was fatal to defendants’ motions and that it was impossible to determine as a matter of law, based on the record, to what extent her disability arose from the elbow, rather than the alleged back injury, and whether the elbow injury was “serious”. 

AUDREY’S ANGLES ON NO-FAULT
Audrey A. Seeley
[email protected]

ARBITRATION
01/13/11       Chiropractic Care of WNY LLC v. New York Cent. Mut. Fire Ins. Co.
Arbitrator Veronica K. O’Connor, Erie County
IME Report Sufficiently Supports Denial of Chiropractic Treatment
Our own Jennifer Ehman, Esq. handled this case successfully for the insurer.  Great job Jen!!

The Applicant’s assignor was involved in a December 12, 2008, motor vehicle accident and sought chiropractic care from Applicant.  The insurer denied further chiropractic care based upon an August 10, 2009, independent medical re-examination (“IME”) conducted by John Gaiser, DC.  Mr. Gaiser opined that the Applicant’s assignor advised she was symptomatically worse and her objective findings did not correlate with her subjective complaints.  Mr. Gaiser’s objective testing revealed no evidence of necessary chiropractic care.

The assigned arbitrator upheld the denial upon the basis that Applicant failed to submit evidence, including the assignor’s testimony at the hearing, to refute Mr. Gaiser’s findings and conclusions.

01/12/11       Elite Medical Supply of NY v. GEICO
Arbitrator Thomas J. McCorry, Erie County
“Unprofessional Exchange” with Peer Reviewer Not Appreciated and Fails to Focus on Why Patient Was Prescribed a Device
The eligible injured person (“EIP”) was involved in two motor vehicle accidents – July 3, 2009 and February 27, 2010.  The EIP came under the care of a chiropractor for the second accident who opined that 75% of his spinal injuries were as a result of the 2009 accident and 25% of his overall condition was attributed to the 2010 accident.  The treating chiropractor prescribed a lower back traction support belt.

The insurer denied this durable medical equipment based upon the peer review of Robert Sohn, DC.  Mr. Sohn’s report indicated that perhaps the treating chiropractor meant to prescribe a support belt but actually billed for a traction belt which the EIP already possessed.  Irrespective, Mr. Sohn opined that the device was not necessary.

The assigned arbitrator upheld the denial.  While not diving into the substance of the exchange between experts, the assigned arbitrator did note that he would have preferred to see the treating chiropractor explain why his patient needed another traction belt instead of engaging in an unprofessional exchange with Mr. Sohn.

01/11/11       Elite Medical Supply of NY v. Liberty Mutual
Arbitrator Veronica O’Connor, Erie County
Insurer Could Not Rely upon Prior Orthopedic IME to Deny Device Chiropractor Prescribed
The Applicant’s assignor began chiropractic care after a March 2, 2010, motor vehicle accident.  The Applicant prescribed a TENS unit and supplies with a medical necessity letter that identified the reason for the supplies was for relief of chronic pain and muscle spasm.

The insurer denied the durable medical equipment based upon an orthopedic IME that was conducted almost a month earlier which recommended physical therapy and orthopedic follow up visits.  The IME report listed as one of the items no long necessary – durable medical equipment.

The arbitrator declined to uphold the denial in this case because the durable medical equipment was prescribed by a chiropractor and the reliance upon the orthopedic IME was not proper. 

LITIGATION

01/11/11       St. Vincent Med. Care, PC v. Country Wide Ins. Co.
Appellate Division, Second Department
30th Day Follow-up Letter to Outstanding Verification Not Without Effect, under These Circumstances
The insurer’s cross-motion for summary judgment should have been granted on the issue of lack of ripeness.  The insurer’s mailing, under this case’s circumstances, to the plaintiff on the 30th day after the insurer sent its initial verification request was not premature or “without effect.”  The plaintiff failed to fully comply with the request.  Thus, the insurer’s time to pay or deny did not begin to run.

01/11/11       Delta Diagnostic Radiology, PC v. Country Wide Ins. Co.
Appellate Division, Second Department
Again, 30th Day Follow-up Letter to Outstanding Verification Not Without Effect, under These Circumstances
Yet again, the insurer’s cross-motion for summary judgment should have been granted.    The insurer’s mailing, under this case’s circumstances, on the 30th day a follow up verification letter requesting outstanding verification from plaintiff was not premature or without effect.

01/11/11       Englington Med., PC v. MVAIC
Appellate Division, Second Department
MVAIC Failed to Demonstrate, for Summary Judgment, That Applicant Was Not a “Qualified Person”
On July 10, 2004, a 16-year old girl, while operating her “mini-bike,” was struck by a motor vehicle that fled the accident scene.  The infant sought No-Fault benefits through MVAIC who denied same on the grounds that she was not a qualified person at the time of the accident since she was operating an uninsured motorcycle. 

The Court held that MVAIC’s summary judgment motion was properly denied as it failed to submit sufficient evidence that the “mini-bike” was within a class of motorcycles, under the Vehicle and Traffic Law, which required insurance.  Thus, rendering the infant outside the definition of a “qualified person” entitled to receive No-Fault benefits. MVAIC’s submission of the claim form was insufficient since the only information regarding the “mini-bike” was that it was a “mini-bike.”  Likewise, MVAIC’s reliance upon a police report indicating three prior citations of the infant for driving without insurance was not sufficient to establish a prima facie case entitlement to summary judgment.  The Court reasoned that the mere issuance of the citation is not proof that the infant committed the allegations.

01/10/11       Allstate Social Work and Psychological Services, PLLC v. Utica Mut. Ins. Co.
Appellate Term, Second Department
IME Requirement under Policy Not Limited to Just Physicians
The insurer properly denied the plaintiff’s claim for failure to appear for a scheduled psychological independent medical examination.  The plaintiff’s challenge to the insurer’s ability under the policy endorsement, which follows the regulatory language, to conduct an IME of the eligible injured person with a physician was rejected.  The Court relied upon the No-Fault regulation, the rules of construction of that regulation, and the Insurance Department’s opinion letter, which was noted to be afforded great deference.  The Court reasoned that any contrary conclusion would only frustrate the objective of No-Fault and prompt payment of claims.

01/10/11       Sound Shore Med. Ctr. a/a/o Barbara Kocurek v. New York Cent. Mut. Fire Ins. Co.
Appellate Term, Second Department
Outstanding Verification Request Was Unrebutted Warranting Summary Judgment
The insurer’s summary judgment motion on lack of ripeness due to outstanding verification should have been granted.  The insurer established timely mailing of the verification request and follow up request remained without response.  The plaintiff failed to rebut the insurer’s showing as it never asserted non-receipt of the requests or that plaintiff responded to the requests.

01/10/11       B.Y., M.D., PC a/a/o Jessica Celestin v. GEICO Indem. Co.
Appellate Term, Second Department
Plaintiff Seemingly Upset by Insurer’s Counsel Participating in Mandatory Arbitration Without Witnesses and Seeks to Strike Trial De Novo Demand
The plaintiff’s motion to strike the insurer’s demand for trial de novo after a mandatory arbitration was properly denied.  The plaintiff argued that the insurer’s counsel provided minimal participation at mandatory arbitration which equated to taking a default judgment.  Relying upon the Rules of the Chief Judge §28.12(a), a trial de novo can only be filed so long as a party is not in default.  What is default?  Well, the Court explains that when a party appears through counsel at an arbitration without his or her client and refuses to participate in the hearing it is default.  In this case, the insurer’s counsel appeared for the hearing without any witnesses but participated in the hearing to refute plaintiff’s case.  The Court held that this is not default.

Insurance Department – Circular Letter No. 4, January 12, 2011
Amendment of Permissible Exclusions Addresses Emergency Treatment for Intoxicated Persons
On January 26, 2011, an amendment to Insurance Law §5103(b)(2) will take effect which amends the PIP endorsement and its permissible exclusions.  This amendment applies to all insurance policies issued, renewed, modified, altered or amended after January 26, 2011. 

The amendment will prohibit an insurer from excluding from coverage necessary emergency health services rendered in a general hospital (as Public Health Law §2801(10) defines), including ambulance services attendant thereto and related medical screening, for any person injured as a result of operating a motor vehicle while in an intoxicated condition or while their ability to operate the vehicle is impaired by use of a drug within the meaning of Vehicle and Traffic Law §1192.  The insurer can maintain a cause of action against the covered person for amount of first party benefits paid or payable if that person is found to have violated Vehicle and Traffic Law §1192.

The Insurance Department provided its interpretation of “necessary emergency health services.”  The Department defines it as:

Services rendered to a person by or under the supervision of a physician, paramedic, or emergency medical technician to treat the onset of sudden pain or injury and to stabilize the person, provided the person is transported directly from the scene of the motor vehicle accident to the general hospital.

Furthermore, the Department indicated that No-Fault coverage ceases once the person’ is treated and stabilized, generally in the emergency room.  The Department suggested that a hospital, to facilitate timely payment, should provide the insurer with a bill that specifies which portion is “necessary emergency health services.”  In the event the hospital fails to do so then the insurer may request this information.

Also, the Department views “related medical screening” to include those tests for intoxication and drug use as necessary emergency health service.

Turning to the issue of the insurer’s right to recover payment from the person benefits were paid to or on behalf of if found in violation of the Vehicle and Traffic Law.  The Department indicated that it believes the Legislature’s intent was that a condition precedent to the insurer having a viable cause of action was a final finding of the eligible injured person (“EIP”) guilty of driving while intoxicated or driving while under the influence.  Further, the finding is not final until all appears are resolved.

The Department reaffirmed the prior rule that the intoxicated or drugged condition must be a, not the, contributing cause of the accident to invoke the exclusion.

In the event that the insurer receives a judgment against the EIP then the private health insurer may be responsible for payment.  Importantly, the Department indicates that the No-Fault insurer may with the EIP’s written consent seek recovery directly from the private health insurer.  The private health insurer can attempt to deny coverage by invoking an exclusion under the policy for treatment arising out of participation in a felony or those exclusions, which were not enumerated, relevant to health insurers.  The exclusions for intoxication or under the influence of any narcotic does not appear to be available to an HMO, municipal cooperative health benefit plan or corporations licensed pursuant to Article 43 of the Insurance Law.

The Department further acknowledged that the No-Fault endorsement contains an exclusion if any person is injured while committing an act that would constitute a felony.  The Department concluded that a Vehicle and Traffic Law §1192 violation could constitute a felony but only as to the person operating the vehicle while intoxicated or while impaired by a drug.

Finally, a No-Fault insurer that uses the recovery provision provided in Insurance Law §5103(b) against the EIP cannot pursue loss transfer under Insurance Law §5105 if the No-Fault insurer has actually recovered under Insurance Law §5103(b).

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]

Of Property

01/18/11       Bhugra v Massachusetts Cas. Ins. Co.
Appellate Division, First Department
A Third-Party Administrator Cannot Be Held Liable for Breaching a Contract to Which it Was Never a Party in the First Place. 
Plaintiff commenced the instant action seeking coverage under a disability policy issued by Centre Life Insurance Company.  In plaintiff’s Complaint, it is alleged that Disability Management Services (“DMS”) served as the third-party administrator for Centre’s disability program.  Plaintiff further alleged that as the third-party administrator, DMS breached its duties under the contract.  However, where, as here, DMS was not a party to the policy, the First Department held that no breach of contract cause of action could maintained against DMS.

01/11/11       Conf. Assocs., Inc. v Travelers Casualty and Surety Co. of Am. 
Appellate Division, Second Department
Insured’s Failure to Cooperate, Results in the Loss of Coverage
Unfortunately, the Second Department does not provide much by way of details in this decision.  Essentially, plaintiff instituted a claim for recovery under its Commercial Crime Policy with Travelers.  Travelers later denied the claim after plaintiff breached its contractual duty to cooperate with Travelers’ investigation.  In upholding the denial premised upon the insured’s failure to cooperate, the Second Department ruled that Travelers owed no coverage obligations to Conference.

01/11/11       Appleby v. Chicago Title Ins. Co.
Appellate Division, Second Department
Policy Means What it Says:  Insureds are Entitled to Fair Market Value of the Premises to be Calculated at the Time of Loss
Plaintiff purchased the implicated premises in 1997.  In the course of preparing closing documents, plaintiff learned that access to the parcel was only provided by way of an easement across the adjoining landowner’s property.  At that time, and prior to closing on the property, plaintiff notified Chicago Title of the peculiar access arrangement.  As a result, the policy of title insurance was amended to provide:

"This policy does not insure against loss or damage (and the Company does not pay costs, attorney's fees or expenses) which arise by reason of:
. . .
"9. Insured premises as described in Schedule A' is benefited [sic] by a Right of Way as described in Deed from ROBERTA FREED to SADIE P. SABRE dated July 22, 1947 and recorded August 20, 1947 in Liber 4549 of Deeds at Page 68.
"Policy, however, shall except from coverage the cost of any and all litigation expense, including, but not limited to attorney's fees, court costs or expenses relevant to the defense or enforcement of the insureds [sic] rights under said Right of Way, through all courts of the State of New York, including the Appellate Division and Court of Appeals.
"Policy, however, shall insure that the outcome of said litigation shall be favarable [sic] to the Insured and confirm a Right of Vehicular ingress and egress to the insured premises"
In addition, the Policy also contained a “Market Value” Rider which provided, in relevant part, that plaintiff would have the option of collecting the Market Value of the Loss, or the agreed to Policy Limit of approximately $59,000 should the Policy be triggered. 

In or about 2004, plaintiff commenced an action seeking to confirm that it had a permanent easement for vehicular traffic.  At the conclusion of a non-jury trial, however, the Trial Court held that the easement only provided for pedestrian traffic to the parcel.  As a result, plaintiff immediately presented a claim for coverage under its title insurance policy with Chicago Title.

Upon receipt of the claim, Chicago Title appears to have offered the initially agreed to Policy Limit of $59,031.  However, armed with the language of the “Market Value” Rider, plaintiff rejected this offer.  Instead, plaintiff sought to avail itself of the option to elect market value of the loss which was to be calculated from the date of the loss.  The Third Department determined that the loss did not accrue under the Policy until plaintiff had exhausted all appellate remedies (which was in 2006).  As such, the Court ruled that plaintiff was entitled to the fair market value of the premises as it stood on the 2006 date of loss.

01/06/11       Kittner v. Eastern Mutual Ins. Co.
Appellate Division, Third Department
Pick Your Lie Wisely:  Judicial Estoppel Locks Plaintiffs in to their Claimed Chapter 7 Loss which was Substantially Less than Claim Presented in the Subsequent Insurance Claim
Design Science Toys (“DST”) was owned by plaintiff Cary Kittner and non-party Stuart Quimby.  Kittner and Quimby then formed a separate company under the name of QK Properties, LLC (“QK”).  QK purchased a commercial building in Dutchess County, and leased the premises to DST. 

In 2005, QK sold its interest in the building to another non-party.  However, DST continued to keep its inventory at the location.  In late 2005, DST filed for Chapter 7 Bankruptcy, and therein declaring that the company only possessed slightly over $5,000 in assets. In March of 2006, the building and all contents therein were destroyed by fire.  As a result, QK and DST submitted sworn proofs of loss which alleged a loss of more than $212,000.  Obviously, this was a stark departure from its initial position that DST/QK only possessed a little more than $5,000 in assets. 

Not surprisingly, Eastern denied the claim.  As a result, DST/QK and Kittner all commenced the instant action.  In response, Eastern moved for summary judgment on three different grounds. 

The first sought dismissal of any claims asserted by Kittner.  The policy only provided that business property of QK and/or DST was covered.  Kittner, on the other hand, did not have an insurable interest in any of the damaged inventory.  Citing the rule that a party may not recover for losses to property to which they had no interest, the Third Department dismissed any and all claims asserted by Kittner. 

In addition, Eastern sought to limit plaintiffs’ damages evaluation premised upon the theory of judicial estoppel.  Essentially, Eastern argued that because DST/QK had taken a position that their total assets were only $5,000 in a previous legal proceeding, they were now estopped from increasing the claimed value of the loss.  The Third Department readily agreed with this argument, and ruled that DST/QK were locked into the $5,000 claimed in the preceding Chapter 7 proceedings. 

Finally, Eastern sought dismissal of the DST/QK Complaint on the basis that plaintiffs’ had willfully and purposefully submitted fraudulent proofs of loss.  In support of this claim, however, Eastern only submitted the positions previously taken by DST/QK in the bankruptcy court.  In response, DST/QK submitted affidavits arguing that the submissions presented to the Bankruptcy Court were different than the current projections due the niche market of the toys, and the difficulty in valuing the damaged toys at the time of the claim.  Holding that the insurer had the burden of establishing intent to establish fraud, the Third Department ruled that Eastern had not met its burden with respect to this issue; thereby preserving what was left of DST/QK’s claim.

Of Potpourri

 01/06/11      Vicot v. Day
Appellate Division, Third Department
Car vs. Horse = No Liability for the Owner of the Horse
Plaintiff sustained injury when the car she was driving tragically collided with defendant’s horse.  Holding that a negligence cause of action does not arise against the owner of a domestic animal (where there is not knowledge of vicious propensities), the Third Department found no liability was assignable to the defendant.  Where, as here, the Complaint only asserted a negligence cause of action, plaintiff’s lawsuit was dismissed accordingly.

Huzzah!  Well done, Sean Tomko!

FIJAL’S FEDERAL FOCUS
Katherine A. Fijal
[email protected]

 

01/14/11       Wegman Construction Co v. Admiral Insurance
United States Court of Appeals for the Seventh Circuit
Applying Illinois Law – Conflict of Interest and Bad Faith
Wegman was an additional insured on a policy issued by Admiral Insurance Company [“Admiral”].  While the policy was in effect, Brian Budrik, a worker at a construction site managed by Wegman was injured in a fall and sued Wegman.  The subject policy was issued to Budrik’s employer. The policy had liability limits of $1,000,000.

The case went to trial, Burdick prevailed and received a judgment of a little more than $2,000,000 against Wegman. Wegman then filed a suit against Admiral claiming that Wegman would not have been liable for damages in excess of the $1,000,000 policy limit had Admiral discharged the implied contractual duty of good faith that insurance companies owe to their insureds. The district court granted Admiral’s motion to dismiss and the Seventh Circuit reversed for the following reasons.

By virtue of the insurer’s right to control the defense, the insurer’s duty to the insured includes not only the hiring of competent counsel but also keeping abreast of progress and status of litigation in order that it may act intelligently and in good faith on settlement offers.  The court determined that it is likely that at the time that Burdick was deposed Admiral learned, from the lawyer whom it had hired, the extent of Burdick’s injuries and knew at that point that if the case went to trial, or was settled, the judgment or the settlement might well exceed $1,000,000.  The court determined that knowledge of this likelihood created a conflict of interest by “throwing the interests of Admiral and Wegman out of alignment”.  The court stated that this gambling with an insured’s money is a breach of fiduciary duty; and, when a potential conflict of interest between insured and insurer arises, the insurance company’s duty of good faith requires it to notify the insured. Once notified of the conflict, the insured has the option of hiring a new lawyer, one whose loyalty is exclusively to him.  Moreover, since Wegman had excess insurance, notification to it of the risk of an excess judgment would have enabled Wegman to notify its excess insurer promptly, in order to preserve the protection that the excess coverage provided.

Admiral argued that an insurance company has no duty to notify the insured of a potential conflict of interest, only of an actual one, and that no conflict arises until settlement negotiations begin or the insured demands that the insurance company try to settle the case.  Admiral also argued that until settlement negotiations begin the insurer has no duty of notice to the insured because it would be unethical for it to interfere with the lawyer’s representation of the insured because an insurance company isn’t allowed to practice law.

The court disagreed, stating that Admiral misunderstood the concept of “conflict of interest”.  The court noted that the term doesn’t mean that the conflicted party is engaged in conduct harmful to another party.  It means that their interests are divergent, which creates a potential for such harm.  The court continued stating that the conflict in this case arose when Admiral learned that an excess judgment, and therefore a settlement in excess of the policy limits, was a nontrivial probability in the Budrik suit.

In remanding the case, the Seventh Circuit pointed out that ordinarily in a case such as this the insured would have prove that had it not been for the breach of duty by the insurance company, the case could have been settled within the policy limit, or a least for a lower amount than the judgment; but, in this case there is an additional wrinkle that may make such proof inessential.  Specifically, had Admiral warned Wegman of the likelihood of an excess judgment, Wegman would have sought and obtained coverage under its excess policy, and thus been freed from liability regardless of the outcome of Budrik’s suit.

Although the court recognized that there was decisional law in the Seventh Circuit, and elsewhere, holding that the loss of an opportunity to trigger excess coverage is not the kind of loss that the duty of good faith is intended to prevent, and so that duty was not breached by Admiral, that argument would fail. The court stated that when a conflict of interest arises, so that the insured can no longer count on the insurance company and its lawyer to defend his interests but must fend for himself, the hiring of his own lawyer is only one option that is opened up to him.  Another is to seek additional coverage from another insurance policy; and that alternative was foreclosed by the failure of notice-assuming Wegman was indeed innocently ignorant of the substantial risk of an excess judgment until the eve of trial, as it alleges.

01/10/11       Greenberger v. GEICO Gen. Ins. Co.
Seventh Circuit Court of Appeals
In Consumer Fraud Lawsuit Score This:  Gecko 1, Law School Prof 0
A law school professor, Steven Greenberger's car was damaged in an accident, and the next day his insurer, GEICO General Insurance Co., estimated the damage and wrote him a check to cover his claim. Greenberger accepted this payment but never repaired the car. Instead, he donated the car to charity and later sued GEICO in state court alleging breach of contract, consumer fraud in violation of a Illinois consumer fraud statute and common-law fraud. The suit was filed as a class action, so GEICO removed it to federal court under the Class Action Fairness Act, 28 U.S.C. § 1332(d).

The plaintiff contended that GEICO systematically omits necessary repairs from its collision-damage estimates in violation of the promise to restore the policyholder's vehicle to its pre-loss condition.  In affirming a dismissal of the lawsuit, the Circuit Court of Appeals held that all of plaintiff's claims are foreclosed by the Illinois Supreme Court's decision in Avery v. State Farm Mutual Automobile Insurance Co., 835, N.E.2d 801 (Ill. 2005), which established the proposition that a policyholder's suit against his insurer for breach of its promise to restore his collision-damages car to its pre-loss condition cannot succeed without an examination of the car.  Here, the plaintiff donated his car to charity so the plaintiff would be unable to prove that, in fact, his car wasn’t restored properly. Moreover, these fraud claims were merely restated claims of breach of contract and that isn’t enough  to support a claim for statutory or common law fraud.
Editor’s Note:  Kudos to my good friend Sheila Carmody, a nationally recognized coverage lawyer with Snell & Wilmer LLP in Phoenix.

JEN’S GEMS
Jennifer A. Ehman
[email protected]

01/07/11       Matter of State Farm Mut. Auto Ins. Co. v. Beddini
Supreme Court, New York County
Court Found Sufficient Physical Contact Where Cardboard Box Flew Off Pickup Truck and Struck Respondents to Deny Stay of Arbitration on Uninsured Motor Vehicle Claim
Petitioner sought to stay the arbitration of an uninsured hit-and-run claim made by Respondents.  On the date of the accident, Respondent Mr. Beddini was driving his motor scooter with Respondent Ms. Cho as his passenger when a cardboard box flew off the back of a pickup truck and into his scooter, causing it to collapse.  The sole issue here was whether the contact made by the box was sufficient to meet the “physical contact” requirement. 

Petitioner argued that there was no physical contact with an uninsured or unidentified vehicle as physical contact did not include objects cast off or falling from a speeding or insecurely lade hit-and-run vehicle. 

In making its decision, the court reviewed the Court of Appeals case, In re Allstate Ins. Co. v. Killakey, 78 N.Y.2d 325, which set forth the principle that “physical contact” occurs when the accident originates in collision with an unidentified vehicle, or an integral part of an unidentified vehicle.  In Killakey, the court held that a detached wheel and tire constituted an integral part of the vehicle.  The court also considered a case cited by Petitioner which held that snow and ice was not an integral part of a vehicle.  

Accordingly, the court denied the stay and held that the cardboard box should be considered an integral part of the unidentified vehicle as it was cargo which was purposefully placed and transported in the vehicle.  The court further determined that the scenario was closer to a wheel and tire than snow and ice. 

01/04/11       Gershon Co., Inc. v. New York Marine & Gen. Ins. Co.
Supreme Court, New York County
Coverage Found for Property Owner Where, Irrespective of Allegations in Underlying Complaint, Evidence Established That Property Damage Was Continuous and Defendant Knew Excavation Work Commenced During Policy Period
Defendant issued Plaintiffs a commercial general liability policy covering premises located at 242 East 25th Street in Manhattan, effective July 12, 2004 through January 12, 2006.  The policy was specifically issued in contemplation of the construction of a 54-unit, 13 story residential building at the site. 

Subsequently, an action was brought by the owner of adjacent property against Plaintiffs, Plaintiffs’ construction manager, and its contractors/subcontractors.  The action alleged that at or around March of 2004 Plaintiffs were engaged in a construction project involving the excavation and removal of earth and rock.  As a result of the excavation and removal of earth and rock, the adjacent owner suffered physical damage to his property including movement, cracks and shifting.  Further, the complaint alleged that, in or around June of 2004, the construction project included the installation of underpinning beneath the foundation of Plaintiffs’ premises.  Upon receipt of the complaint, Plaintiffs tendered their defense to Defendant who disclaimed coverage stating that the alleged injuries were sustained before the policy went into effect. 

Thereafter, an amended complaint was filed.  The amended complaint alleged that the excavation work involving the removal of earth and rock occurred in or after March of 2004, but that the underpinning was actually performed in or around the fall of 2004.  The change purportedly stemmed from information gathered during discovery.  Plaintiffs again tendered their defense to Defendant. 

In response, defendant advised that there was still no coverage under the policy based on three provisions:  Endorsement No. 2, which stated that the policy applied solely with respect to the following designated projects – ground up construction of the thirteen story 54 unit building, Endorsement No. 6, which put forth the continuous damage exclusion, and Exclusion No. 20, which excluded “property damage” by a subcontractor, unless Plaintiffs were provided contractual indemnification or additional insured coverage.

In considering both parties’ motions for summary judgment, the court began by addressing the validity of the first denial letter.  It held that the initial complaint raised a reasonable possibility of coverage under the policy.  Specifically, the policy provided coverage for “property damage” if it was caused by an “occurrence” that took place in the coverage territory during the policy period.  An “occurrence” was defined as “an accident, including continuous or repeated exposure to substantially the same harmful condition.  The initial complaint alleged that the damage to the adjacent premises was continuing as of the commencement of the action, which occurred in August 2005, a date within the policy period.  The court also pointed to an e-mail in Defendant’s underwriting file, which showed that it knew that, as of July 2004, excavation work had not yet commenced on the site.  Thus, the court held that Defendant was obligated to defend and indemnify Plaintiffs, unless one of the three exclusions cited in the second denial were triggered.   

The court first considered Exclusion No. 2 and noted that the term “ground up construction” was not a defined term in the policy.  According to the court, as the new construction of a thirteen story building necessarily involved excavation, the underpinning of adjoining buildings, and the creation of a foundation, none of which was expressly excluded, Defendant failed to meet its burden of establishing that the alleged property damage was excluded. 

With regard to Exclusion No. 6, which provided that “[t]his policy does not apply to any claim for ‘property damage’ arising out of ‘your work’ within the ‘products –completed operations hazard’ if: (1) The ‘property damage’ arises out of or is alleged to have arisen out of ‘your work’ at a ‘single location’ under a ‘single contract’, and (2) Such claim is at any time presented to a commercial general liability policy under which you are insured that has an attachment date prior to the attachment date of this policy.”  The term “products-completed operations hazards” was defined as “’property damage’ occurring away from premises you own or rent and arising out of…’your work’ except…(2) [w]ork that has not yet been completed…”  According to the court, as the facts showed that the construction project was not completed at the time of the property damage, this exclusion did not apply. 

Lastly, the court considered Exclusion No. 20, which provided that the policy did not apply to “property damage” “arising out of work performed on [Plaintiffs’] behalf by a subcontractor,” unless the subcontractor provided contractual indemnification or additional insured coverage to Plaintiffs. The court determined that, in fact, Plaintiffs made a prima facie showing that the requirements and conditions of this endorsement had been met, because the contract with the construction manager contained an indemnification provision running in favor of Plaintiffs.  Likewise, there was already a ruling on this issue and a determination that both the construction manager and contractor charged with the excavation and underpinning work obtained insurance naming Plaintiffs as additional insureds.  Thus, the court granted Plaintiffs’ motion and denied Defendant’s cross-motion. 

12/23/10       Jacobs v. Northwestern Mut. Life Ins. Co.
Supreme Court, Nassau County
Under Disability Policy, Court Found a Question of Fact as to Whether Disability Preceded Suspension of Medical License
Defendant issued plaintiff nine disability insurance policies.  Essentially, the policies provided the following coverage: 

Benefits are provided for the Insured’s total or partial disability only if:

• The Insured becomes disabled while this policy is in force;
• The Insured is under the Regular Care of a Licensed Physician during disability;
• The disability results from an accident or sickness; and
• The disability is not excluded under Section 3.

Under the terms of the policies, “the Insured is totally disabled when unable to perform the principal duties of the regular occupation.”  The term “regular occupation” was defined as “the occupation of the Insured at the time the Insured became disabled.” 

The sole question here was whether the Insured was disabled as contemplated by the insurance policy.  Plaintiff, the insured, asserted that he suffered from a factual disability and presented evidence that, for at least four years prior to the disability claim, he was abusing crystal methamphetamine, as well as self-medicating his addiction with Xanax and Fentanyl.  Further, he presented evidence that he was diagnosed with Bipolar II Disorder.  Defendant asserted that plaintiff suffered from a legal disability.  In other words, he was precluded from performing his occupation as a plastic surgeon because his medical license was suspended.   

The court found a question of fact as to whether the Plaintiff’s Bipolar disorder preceded the suspension of his medical license and whether this disorder impeded his ability to carry out his responsibilities as a plastic surgeon.  The court examined that where it is determined that an insured is afflicted with both a factual and a legal disability and the factual disability clearly arose at a point in time prior to the legal disability, that the legal disability arose thereafter will not serve so as to preclude the insured from receiving benefits under the policy.  

In a bit of humor by the court, it indicated that it found unpersuasive Defendant’s argument that, because Plaintiff was practicing medicine until the day his medical license was suspended, he was therefore fully engaged in the principal duties of his occupation and not totally disabled.  According to the court, “to adopt the position urged by [Defendant], would be to conclude that a physician, diagnosed with Bipolar Disorder two months after his license was suspended and who testified that between January and June 2007, was ‘self-medicating with crystal meth almost on a daily basis,’ was nonetheless unquestionably capable of performing the principal duties of a medical doctor.”  

12/23/10       Zurich Am. Ins. Co. v. Illinois Natl. Ins. Co.
Supreme Court, New York County
Subcontractor Denied Insurance Coverage Where Damage Occurred After It Started Work, but Before Written Contract Executed and Enrollment in OCIP Policy
In a different “damage to adjacent property” case, Defendant moved for summary judgment on a lawsuit brought by Plaintiffs Moretrench American Corporation and its insurer, Zurich.  The lawsuit arose out of a construction project, in which Moretrench was hired to perform “dewatering.” 

On or about August 18, 2006, the owner of the building adjacent to the construction project reported that significant property damage had occurred to its property, including the formation of major cracks in the foundation, allegedly due to the activities at the construction site.  The owner brought an action against the project’s owner, general contractor, excavation subcontractor and Moretrench. 

Prior to the commencement of the project, Defendant issued an “owner controlled insurance policy”, which included as named insureds:  “[a]ll contractors and/or subcontractors and/or subconsultants for whom the owner or the owner’s agents are responsible to arrange insurance to the extent of their respective rights and interests.”  Moreover, the policy defined “contractor” as “contractor who have executed a written agreement pertaining to said Contractors’ performance of work at the Project Site, have been enrolled in the insurance program, and who perform operations at the Project site in connection with the Project.” 

Defendant agreed to defend and indemnify all parties except Moretrench on the ground that Moretrench was not a “contractor” as that term was used in the policy.  Defendant pointed to the fact that the damage was reported in August 2008; yet, it was not until September 18, 2006 that Moretrench received a written contract, and it was not until September 14, 2006 that Moretrench filed out a “Form-3 Application” for OCIP insurance coverage with Defendant.  

In response, Moretrench argued that there was nothing in the policy which required that Moretrench be actually enrolled in the OCIP Policy prior to the loss, and that the delay in filing the proper paper work was unimportant, as such delays were common on the project. 

The court, in granting Defendant’s motion for summary judgment, held that there was nothing ambiguous about the policy language as it clearly required, as a condition precedent, both that a contractor be bound by a written construction contract, and that it be enrolled in the OCIP program. 

EARL’S PEARLS
Earl K. Cantwell
[email protected]

General Hallmarks of Insurance Fraud

Insurance fraud is the second most costly white-collar crime in America, after only tax evasion.  It is estimated that $80 Billion is paid out each year in fraudulent insurance claims.  The Coalition Against Insurance Fraud believes that the average American household pays over $950 a year in additional premium to cover costs of insurance fraud.  The recent economic recession has increased the incidence of fraud and questionable claims by at least 15%.

An important step in detecting insurance fraud is to identify certain “red flags” that may signal possible dishonesty or inflation of an insurance claim.  The two key points  are to LOOK AT THE CLAIM and LOOK AT THE CLAIMANT:

• There are no witnesses to an accident.
• There is no police report for the accident or loss event.
• Property was repaired or disposed of before inspection or report of the loss.
• The documentation provided consists only of photocopies.
• Claimant uses post office box, hotel/motel room, or some other “mail drop” as an address.
• Claimant threatens to go to an attorney or “file a complaint” if claim is not quickly settled.
• Claimant is familiar with insurance terms and procedures, medical language, vehicle repair terminology, and “legalese”.
• Claimant is unemployed, or has a history of personal, financial or business problems.
• Claimant has an active prior claims history.
• There is no evidence of prior insurance coverage.
• The insurance policy is in effect only a short time before a loss.
• There is a sharp increase in coverage just before the loss.
• There is duplicate coverage, multiple policies, or an otherwise over-insured loss.
• The claimant is willing to settle quickly for less than the claimed full amount of damages.
• The insured contacted agent or insurer to confirm coverage just before the loss.
• Information on the policy application is incomplete, outdated or false.
• Insured provides receipts for inexpensive items, but lacks receipts for items of significant value.
• Insured provides receipt(s) with no store name or logo (blank receipt), or only cancelled checks.
• Insured provides receipts/invoices from the same supplier in numbered sequence.
• Insured provides receipts from same supplier with sequence numbers in reverse order to date of purchase.

ACROSS BORDERS
Courtesy of the FDCC Website
www.thefederation.org
01/06/11       Chadwell v. New Jersey Manufacturers Insurance Company
Superior Court of New Jersey, Appellate Division
New Jersey Appellate Court Enforces Mold Exclusion in Homeowner’s Policy
The policyholder filed a declaratory judgment complaint against his homeowner’s carrier seeking coverage for mold-related loss alleged to be caused by ice-damming. The trial court dismissed his complaint and he appealed. The mold endorsement in question added a twelfth “Additional Coverage,” but limited this additional coverage to the sixteen perils insured against in the broad form policy and modified the twelfth peril insured against (“Accidental Discharge Or Overflow Of Water Or Steam”). The insurance carrier relied on the unambiguous language of the mold endorsement in declining coverage. The appellate court affirmed the trial court’s decision, holding that the language of the broad form and the mold endorsement did not preclude the average policyholder from discerning the boundaries of coverage. The policyholder presented no argument to bring his mold condition, attributable to ice-damming, within the basic terms of the policy covering a loss or cost for loss or costs that are “a result of a Peril Insured Against.”
Submitted by: Anthony J. Zarillo, Jr. [Bevan, Mosca, Giuditta & Zarillo, P.C.]

12/30/10       C.S. v. D. V. v. New Jersey Manufacturers Insurance Co.
Superior Court of New Jersey, Appellate Division
Insurer Properly Denied Defense and Indemnification for Plaintiff’s Transmission of Sexually Transmitted Disease as Conduct Could Not Be Characterized as “Accidental”
C.S. sued D.V., alleging that D.V. wrongfully transmitted the herpes simplex virus to C.S. C.S. sought a declaration that her insurer, New Jersey Manufacturers (“NJM”), had a duty to defend and indemnify her. The trial judge granted summary judgment in favor of NJM, reasoning that based on precedent the conduct was reprehensible and the resulting injury was presumed to be intended or expected (i.e. not the result of an accident). On appeal, the Appellate Division relied on precedent and the legislature’s criminalization of the type of conduct in which C.S. engaged. The Appellate Division reasoned that since D.V. knew of her condition and knew that the disease could be transmitted through intercourse, D.V.’s conduct was “reprehensible,” since she violated C.S.’s fundamental right to self-determination. Thus, the Appellate Division determined, there was nothing “accidental” about D.V.’s conduct which would warrant coverage.
Submitted by: Elizabeth F. Lorell and Jeffrey A. Kopco of Gordon & Rees LLP - Posted: 01/18/2011
REPORTED DECISIONS
Yuen v. Arka Memory Cab Corp.

Baker, McEvoy, Morrissey & Moskovits, P.C., New York
(Steven N. Feinman of counsel), for appellants.
Ateshoglou & Aiello, P.C., New York (Steven D. Ateshoglou
of counsel), for respondent.
Order, Supreme Court, New York County (George J. Silver, J.), entered April 29, 2010, which, insofar as appealed from as limited by the briefs, denied defendants' motion for summary judgment dismissing plaintiff's claim that he sustained a serious injury as defined by Insurance Law § 5102(d) to include a significant limitation of use of a body function or system and/or a permanent consequential limitation of use of a body organ or member, unanimously affirmed, without costs.
Contrary to defendants' contention, plaintiff submitted medical evidence in admissible form, including medical affirmations of two doctors who submitted underlying reports, MRI films, notes and records (see Thompson v Abbasi, 15 AD3d 95, 97 [2005]; Gonzalez v Vasquez, 301 AD2d 438 [2003]). Moreover, plaintiff's treating physician and medical expert, Andrew Brown, MD, averred that he personally reviewed the MRI films and reports, rendering them admissible (see Thompson, 15 AD3d at 97; see Dioguardi v Weiner, 288 AD2d 253 [2001]). Plaintiff also presented evidence that his injuries, consisting of a rotator cuff tear in the left shoulder and cervicial disc herniations, with objective, quantified range of motion limitations and continuing pain years after the accident, constitute serious, permanent injuries (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350 [2002]). Plaintiff adequately explained a ten-month gap in treatment during which time he was being treated for an unrelated condition (see Jacobs v Rolon, 76 AD3d 905 [2010]).
Defendant presented the expert opinions of a radiologist who found degenerative changes in the spine and of an orthopedist, Gregory Montalbano, MD, who opined that the alleged injuries to plaintiff's cervical spine were degenerative in origin and that the injury to the left shoulder rotator cuff was degenerative and congenital in origin, and could be related to his work as a bus driver and to his obesity.
In opposition, plaintiff presented the expert medical report and opinion of Dr. Brown, who opined that plaintiff's injuries were causally related to the accident, because he was asymptomatic before the accident and the accident involved sufficient force to cause the types of injuries sustained. The record also contains the unsworn post-operative report of the surgeon who operated on plaintiff's shoulder, who confirmed that plaintiff had a rotator cuff tear which was consistent with the accident. Although plaintiff's expert did not expressly address Dr. Montalbano's non-conclusory opinion that the injuries were degenerative and/or congenital in origin, "by attributing the injuries to a different, yet altogether equally plausible, cause, that is, the accident," he rejected the defense expert's opinion and his opinion was entitled to equal weight (Linton v Nawaz, 62 AD3d 434 [2009], affd 14 NY3d 821, 822 [2010]; see also Peluso v Janice Taxi Co., Inc., 77 AD3d 491 [2010]; Jacobs, 76 AD3d 905; Torain v Bah, _ AD3d _, 2010 NY Slip Op 8779 [2010]; Feaster v Boulabat, 77 AD3d 440 [2010]; contra Farrington v Go On Time Car Serv., 76 AD3d 818 [2010]; Lopez v American United Transp., Inc., 66 AD3d 407 [2009]).
D'Auria v. Kent

Calendar Date: October 12, 2010
Before: Cardona, P.J., Mercure, Lahtinen, Stein and Garry, JJ.

DeLorenzo Law Firm, L.L.P., Schenectady (Thomas E.
DeLorenzo of counsel), for appellant.
O'Connor, McGuinness, Conte, Doyle & Oleson,
White Plains (Matthew E. Kelly of counsel), for Richard W.
Kent and another, respondents.
Burke, Scolamier, Mortati & Hurd, L.L.P., Albany
(John D. Holt of counsel), for Mahadeo Dinghoor, respondent.
MEMORANDUM AND ORDER
Garry, J.
Appeal from an order of the Supreme Court (Reilly Jr., J.), entered February 4, 2010 in Schenectady County, which granted defendants' motions for summary judgment dismissing the complaint.
In June 2007, plaintiff's vehicle was struck by a vehicle owned and driven by defendant Mahadeo Dinghoor. Nineteen days later, her vehicle was rear-ended by a vehicle driven by defendant Richard W. Kent and owned jointly with his wife, defendant Susan M. Kent. Plaintiff subsequently commenced personal injury actions against Dinghoor and the Kents [FN1] . The actions were consolidated and defendants thereafter moved for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury (see Insurance Law § 5102 [d]). Supreme Court granted the motions, and plaintiff appeals.
For the first time on appeal, plaintiff contends that defendants' motions were procedurally defective in that copies of all pleadings were not included (see CPLR 3212 [b]; Bonded Concrete v Town of Saugerties, 3 AD3d 729, 730 [2004], lv dismissed 2 NY3d 793 [2004]). Had this claim been preserved for review (see Chapman v Pyramid Co. of Buffalo, 63 AD3d 1623, 1624 [2009]; Goodspeed v Adirondack Med. Ctr., 43 AD3d 597, 598 [2007]), we would find it meritless. Dinghoor's failure to include a bill of particulars was not the omission of a pleading (see CPLR 3011, 3041; Plante v Hinton, 271 AD2d 781, 783 [2000]), and the Kents' omission was excusable as we find the record "sufficiently complete to address the merits" (Sanacore v Sanacore, 74 AD3d 1468, 1469 [2010]; see Welch v Hauck, 18 AD3d 1096, 1098 [2005], lv denied 5 NY3d 708 [2005]).
Plaintiff contends that she sustained a serious injury within the significant limitation and 90/180-day categories (see Insurance Law § 5102 [d]) consisting of injuries to her cervical, thoracic and lumbar spine, and her left elbow [FN2] . In support of their summary judgment motions, defendants were required to submit competent medical evidence that plaintiff did not suffer a causally-related serious injury (see CPLR 3212 [b]; Tracy v Tracy, 69 AD3d 1218, 1219 [2010]). Defendants submitted the affidavit of Louis Benton Jr., an orthopedic surgeon, who reviewed plaintiff's medical records and noted that, before the two subject accidents, she had sought medical treatment on numerous occasions for back pain and muscle spasms resulting from two falls and an exercise injury in 2006 and 2007 [FN3] . Benton further noted that plaintiff's back symptoms were adversely affected by her weight, and opined that there was no objective evidence that her back condition was altered by either of the vehicle accidents. This evidence was sufficient to establish on a prima facie basis that plaintiff's back problems resulted from her preexisting condition and were not causally related to the vehicle accidents (see Anderson v Capital Dist. Transp. Auth., 74 AD3d 1616, 1616-1617 [2010], lv denied 15 NY3d 709 [2010]; Coston v McGray, 49 AD3d 934, 934-935 [2008]).
As to the elbow injury, however, Benton merely opined in a single paragraph that plaintiff's diagnosis was "a subjective complaint and there are no objective findings to support the same." As plaintiff argues, Benton thus wholly failed to consider or address an MRI study obtained approximately one year prior to his medical record review. Further, it appears from the face of the affirmed MRI report that the results of this objective test may support the findings of plaintiff's treating physician and the report of another medical examiner upon which plaintiff relies, both of whom attributed her disability, to some unspecified degree, to the elbow injury and resulting limitation of use and function of her left arm and elbow. This failure thus presented a fatal flaw in defendants' motions; it is simply not possible to determine, as a matter of law upon the record presented, to what extent plaintiff's alleged disability related to the elbow injury, as opposed to the claimed back and spine injuries, nor whether the limitations arising from the elbow injury were more than "minor, mild or slight" (Parks v Miclette, 41 AD3d 1107, 1109-1111 [2007] [internal quotation marks and citations omitted])[FN4] . Therefore, finding that defendants failed to meet their burden of demonstrating a right to judgment in their favor as a matter of law, we reverse the order granting defendants' motions dismissing the complaints.
Cardona, P.J., Mercure, Lahtinen and Stein, JJ., concur.
ORDERED that the order is reversed, on the law, with costs, and motions denied.
Footnotes

Footnote 1: The second action also included a claim against another individual which was subsequently dismissed.

Footnote 2: Plaintiff's bill of particulars asserts additional categories, but these were unaddressed and thus abandoned (see Mrozinski v St. John, 304 AD2d 950, 951 [2003]).

Footnote 3: These records reveal that plaintiff sought treatment at least 14 times for back problems that prevented her from sitting, standing upright or sleeping, and caused pain that she described as "sawing" and "stabbing."

Footnote 4: Though it appears the elbow injury may be attributed to only one of the subject accidents, this is similarly not clearly revealed on the record presented.
Global Reinsurance Corporation v. Equitas

Plaintiff appeals from the judgment of the Supreme Court, New York County (Bernard J. Fried, J.), entered March 11, 2009, which dismissed the second amended complaint, from the order, same court and Justice, entered March 4, 2009, which granted defendants' motion to dismiss the second amended complaint, and from the order, same court and Justice, entered May 27, 2009, which denied plaintiff's motion for reargument.

Cahill Gordon & Reindel LLP, New York (Edward P.
Krugman of counsel), for
appellant.
Simpson Thacher & Bartlett LLP, New York (Kevin
J. Arquit of counsel), for
respondents.

McGUIRE, J.
The complaint alleges that the Equitas defendants are the hub of a conspiracy that violates New York's antitrust law (General Business Law § 340 et seq. [the Donnelly Act]). The product market alleged is the market for non-life (property, casualty and related lines of insurance business) retrocessional reinsurance coverage — the coverage provided by retrocessionaires to retrocedents, i.e., the reinsurers that provide coverage to the insurers, or cedents, that provide the coverage to the underlying policyholders — and the market is alleged to include the purchase, sale and servicing of this retrocessional reinsurance coverage. The geographic scope of the market is alleged to be worldwide, but a submarket also is alleged, the Lloyd's marketplace, i.e., the collection in London of the hundreds of syndicates (composed of individual underwriting members or "Names") that annually compete for the placement of new insurance, reinsurance and retrocessional business. Prior to the formation of the conspiracy, syndicates that provide retrocessional coverage, like syndicates that provide the other forms of non-life insurance coverage, are alleged to have competed with each other in two principal areas: premiums charged and claims handling. With respect to claims handling, plaintiff essentially contends in the complaint, and in affidavits submitted in opposition to the motion to dismiss, that for decades the culture of the Lloyd's marketplace, a culture that helped it win business, has been that claims should be paid on terms that are favorable to claimants (be they policyholders, cedents or retrocedents), i.e., even when the policy's terms would permit the claims to be rejected. In other words, obtaining new business depends not only on having the ability to pay claims submitted on past contracts but on having a reputation for not making "hardheaded" decisions when those claims are submitted.
The alleged conspiracy originated in 1996, when the Names were faced with financial ruin because of potentially crippling losses stemming from unexpectedly large claims on certain pre-1993 non-life lines of business, i.e., long-tail asbestos and environmental coverage (the pre-1993 business). As the syndicates could not retroactively increase the premiums they received on the pre-1993 business, they could meet the threat only by cutting claims payouts. The problem with cutting claims payouts, however, was that if only some syndicates sinned, all others would be saints. That is, individual syndicates of Names that cut claims payments would lose current and future business to syndicates that adhered to the culture that helped Lloyd's achieve its preeminent stature.
The solution was concerted action in 1996 that permitted all syndicates both to cut claims payments on the pre-1993 business and to compete as they historically had on new business. Through the Reconstruction and Renewal Plan (the R & R Plan), the Lloyd's marketplace was restructured. The Equitas entities were established, as the complaint alleges, "to reinsure and perform claims-handling responsibilities for certain pre-1993 liabilities of the Names, including liabilities under retrocessional agreements with retrocedents such as [plaintiff]." Pursuant to a Reinsurance and Run-Off Contract (the RROC) that the Equitas entities entered into with most of the Names, Equitas purportedly was granted "exclusive and irrevocable responsibility" for the liabilities of the Names that arose from the pre-1993 business. Thus, instead of the syndicates making their own independent decisions on the validity of claims and whether, when and how much to pay, under the RROC those decisions were the sole province of Equitas. The reserves held by or on behalf of the Names to meet their individual liabilities under the pre-1993 business were pooled into a separate fund (the Fund) solely managed and controlled by Equitas. By reinsuring the liabilities of the Names under the pre-1993 business, each of the Names effectively capped its liabilities at the amount of the reserves contributed to the Fund (provided, presumably, that Equitas was able to pay all claims). The effect of the restructuring was to place all the syndicates simultaneously into runoff with respect to the pre-1993 business. Equitas's exclusive claims-handling authority permitted it to cut claims payouts on the pre-1993 business (and thus tended to ensure the adequacy of the reserves in the Fund).
In its main brief in this Court, plaintiff is understandably quick to point to the rationale for Equitas articulated by a Lloyd's executive in another litigation:
"One of the premises behind [Equitas] is that the efficient management of long tail liabilities is hindered, not helped, by the structure of Lloyd's. Internal competition provided by Lloyd's syndicate structure has helped the market win business over the years. But in handling long tail liabilities, the decentralised syndicate system is flawed. Centralisation promises major savings" (Allen v Lloyd's of London, 1996 WL 490177, *52, 1996 US Dist LEXIS 12300, *159-160 [1996][internal quotation marks omitted]).

Or, as the principal of the current owner of Equitas reportedly stated in explaining its multi-billion dollar investment in Equitas: "[B]y concentrating all of the liabilities into one place, [Equitas] had the advantage of eliminating much of the costly intramural squabbling that went on among syndicates." Also understandably, plaintiff states in its main brief that "[t]he correct name for such squabbling' is competition.'"
Although the complaint goes on to allege in considerable detail the ongoing consequences of the concentration in Equitas of claims-handling authority for the pre-1993 business, those consequences need not be detailed here. Suffice it to say, plaintiff alleges that cost savings from the elimination of claims service competition with respect to the pre-1993 business were realized over the ensuing years at its expense and that of retrocedents generally. According to plaintiff, Equitas engaged in claims payment behavior — i.e., denying claims and, when they were not denied, paying less and later — that retrocessionaires subject to competitive constraints could not have engaged in, and that it (plaintiff) has suffered millions of dollars in damages as a result.
In upholding the dismissal of the complaint, the dissent first accepts an argument —- that plaintiff fails to allege an antitrust injury —- rejected by Supreme Court when it denied Equitas's prior motion to dismiss under CPLR 3211(a)(7) and (8) for failure to state a claim and want of personal jurisdiction. Legal analysis of that argument begins with the precept that the provisions of the Donnelly Act "should generally be construed in light of Federal precedent and given a different interpretation only where State policy, differences in the statutory language or the legislative history justify such a result" (Anheuser-Busch, Inc. v Abrams, 71 NY2d 327, 335 [1988]). Antitrust injury is "injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful" (Brunswick Corp. v Pueblo Bowl-O-Mat, Inc., 429 US 477, 489 [1977]). Antitrust laws "are meant to protect competition" and "[t]o demonstrate harm to competition, a plaintiff must show that there has been an adverse effect on prices, output, or quality of goods in the relevant market as a result of the challenged actions" (Aventis Envtl. Science USA LP v Scotts Co., 383 F Supp 2d 488, 503 [SD NY 2005]). The antitrust plaintiff, accordingly, "must assert harm to competition as a whole" (New York Medscan LLC v New York Univ. School of Medicine, 430 F Supp 2d 140, 146 [SD NY 2006]). In determining whether a plaintiff has suffered antitrust injury, the conduct causing the injury is assumed to be a violation of the antitrust laws (see IIA Phillip E. Areeda et al., Antitrust Law: An Analysis of Antitrust Principles and Their Application, ¶ 335 at 74 [1975]; see also SAS of Puerto Rico, Inc. v Puerto Rico Tel. Co., 48 F3d 39, 43 [1st Cir 1995]).
Immediately before stating its conclusion that plaintiff does not allege antitrust injury, the dissent writes that plaintiff "simply states a claim for breach of the relevant retrocessional treaties" when it alleges that its claims were settled on less favorable terms because of the concentration of claims-handling authority in Equitas. The dissent is wrong, however, if it means to suggest that plaintiff contends that it is entitled by contract law to all the favorable practices it and other retrocedents historically had enjoyed. Rather, plaintiff's position is that certain of the practices arose because of competition among the retrocessionaires, not because they are required by contract law, and that antitrust law bars the retrocessionaires from agreeing to stop engaging in any of the practices, not just those that are required by contract law. Moreover, even if plaintiff did contend that all the favorable practices were required by contract law, the dissent's implicit premise —- that no antitrust violation could be stated —- is wrong (cf. Puerto Rico Tel., 48 F3d at 44 ["Not every antitrust claim in a contract case is simply a contract claim masquerading as a candidate for treble damages"]). Indeed, that premise entails the self-refuting proposition that conduct otherwise constituting a violation of federal and state antitrust laws is nonetheless not actionable if it constitutes a breach of contract under state law.
The other linchpin in the dissent's conclusion that plaintiff fails to allege antitrust injury is the undisputed fact that plaintiff itself has been in runoff and has not purchased retrocessional coverage since the alleged unlawful restraint of trade went into effect. Thus, the dissent cites Puerto Rico Tel. (supra) for the proposition that "the presumptively proper antitrust plaintiff is a customer who obtains services in the threatened market or a competitor who seeks to serve that market" and stresses that plaintiff "does not allege that it participated in any market where retrocessional insurance coverage was sold — either as purchaser or competitor — at any point after 1996 (when Equitas was formed), the period of the alleged conspiracy."[FN1]
Consistent with the appropriate methodology of assuming an antitrust violation, the dissent (and Equitas in its brief) all but expressly states that plaintiff would be a proper antitrust plaintiff if it had purchased retrocessional coverage after Equitas was formed and began exercising its exclusive claims-handling authority over pre-1993 business. But to hold that only then would plaintiff suffer antitrust injury would make no sense, because plaintiff would suffer no qualitatively different injury on account of that purchase; indeed, it would suffer no additional injury at all. No additional injury could be suffered precisely because the unlawful conspiracy does not — a condition of its success is that it must not — have any adverse consequences for purchasers of post-1993 non-life retrocessional coverage.
The dissent appears to be of the view that for a customer to be a proper antitrust plaintiff, the customer must be a purchaser after the unlawful agreement goes into effect. The dissent does not expressly adopt that view, however, and the parties do not discuss it. If that is the dissent's view, it cannot easily be reconciled with precedent holding that an antitrust plaintiff need not be a purchaser at all (see e.g. New York Medscan, 430 F Supp 2d at 148 ["there is no requirement that a plaintiff be a consumer or competitor to assert an antitrust claim"]). A customer who purchases after sellers enter into an illicit agreement to restrain trade and pays more for the product than it otherwise would is no doubt a paradigmatic antitrust plaintiff. But neither the dissent nor Equitas provides any reason grounded in the law or economics for concluding that only a customer injured by a purchase made after the illegal agreement takes effect suffers antitrust injury and is a proper antitrust plaintiff. Plaintiff alleges that through Equitas the Names "created a horizontal restraint — an agreement among competitors on the way in which they will compete with one another" (NCAA v Board of Regents of Univ. of Okla., 468 US 85, 99 [1984]). A post-purchase horizontal restraint that deprives the purchaser of economic benefits it otherwise would obtain affects the quality of the product or service purchased, thereby causing economic injury just as real as a pre-purchase horizontal restraint that increases the price the customer pays. Just as obviously, sellers can obtain economic benefits from a horizontal restraint that are no less real when the restraint takes effect after rather than before purchases are made.
Plaintiff sustained antitrust injury because the quality of what it purchased, retrocessional coverage with the attendant claims-handling service, was adversely affected by an agreement eliminating competition over claims-handling (see Atlantic Richfield Co. v USA Petroleum Co., 495 US 328, 339 [1990] ["Antitrust injury does not arise . . . until a private party is adversely affected by an anticompetitive aspect of the defendant's conduct"] [emphasis deleted]). We recognize that although such a pre-restraint purchaser will not invariably be injured —- because, for example, a retrocedent like plaintiff will not necessarily have a claim that its retrocessionaire must handle —- all post-restraint purchasers who pay a price inflated by a horizontal restraint necessarily are injured. But that hardly seems an adequate justification for concluding that no pre-restraint purchasers who are injured are proper antitrust plaintiffs, especially given that the horizontal restraint can be, as alleged here, one designed to impose costs directly on the purchasers so as to enable the sellers to avoid those costs.[FN2]
We turn to the ground on which Supreme Court granted the motion to dismiss the second amended complaint. In determining a prior motion to dismiss the first amended complaint, Supreme Court construed the complaint to allege only a market of limited geographic scope, a Lloyd's of London market. Supreme Court found that plaintiff's allegations were sufficient but also allowed plaintiff to move within a prescribed period for leave to amend the complaint to allege a worldwide market. On consent, plaintiff filed the second amended complaint, which in relevant part only added to the allegations of the first amended complaint by including allegations of a worldwide market for non-life retrocessional reinsurance and identifying the Lloyd's of London market as a submarket within that worldwide market. Equitas again moved to dismiss, challenging, inter alia, the sufficiency of the allegations of a worldwide market and a Lloyd's submarket. With respect to the challenge to the submarket allegations, Supreme Court rejected plaintiff's argument that the law of the case doctrine alone required that it be rejected. Supreme Court went on to rule that the second amended complaint failed sufficiently to allege a "true submarket" because it did not "allege that the products sold at Lloyd's are not interchangeable with other reinsurance products sold outside the Lloyd's market." Supreme Court dismissed the second amended complaint for this reason; despite expressly noting that plaintiff had alleged a worldwide market, Supreme Court did not mention or discuss the issue of whether the allegations of a worldwide market were sufficient. Although it was dismissing the antitrust allegations for the first time, and although it did not find that the specific deficiencies of the submarket allegations it relied upon were incurable, Supreme Court dismissed the complaint with prejudice. Moreover, it did so sua sponte.
On appeal, although plaintiff defends the sufficiency of the submarket allegations, its principal argument is that the second amended complaint pleads a worldwide market and that its express allegation that "the Lloyd's syndicates collectively had market power in the worldwide market for retrocessional coverage" was more than adequately supported by the specific allegations of paragraph 36. The second amended complaint unquestionably alleges a worldwide market and we agree with plaintiff that the allegations of market power are sufficient.[FN3]
In subparagraphs of paragraph 36 of the second amended complaint, plaintiff alleges that at all relevant times: the Lloyd's marketplace "was the single most significant seller of most forms of non-retrocessional coverage to reinsurers worldwide"; the Lloyd's marketplace "provide[d] the benchmark for prices, terms, and conditions for most forms of non-life retrocessional coverage"; any reinsurer or broker seeking to purchase such coverage "would have to at least consider approaching Lloyd's for quotes and would have to take into account the terms and conditions offered by various Lloyd's syndicates"; and that "[f]or many lines of retrocessional business . . . competition within the Lloyd's marketplace is more significant to prospective purchasers of retrocessional coverage than is competition between Lloyd's as a whole and other sellers because Lloyd's is expected to, and does, set the lead in establishing coverage."
Equitas's challenge to the sufficiency of these allegations of market power rests on a divide and conquer approach. That is, it analyzes each one separately and, after concluding, plausibly enough, that each is alone insufficient, it pronounces the whole insufficient. But the allegations must be viewed as a whole, and plaintiff is entitled to all reasonable inferences (Leon v Martinez, 84 NY2d 83, 87-88 [1994]). For these reasons, the allegations are sufficient because they support a reasonable inference that at all relevant times the Lloyd's syndicates had market power, i.e., "the ability to raise price significantly above the competitive level without losing all of [their] business" (CDC Tech., Inc. v IDEXX Labs., Inc., 186 F3d 74, 81 [2d Cir 1999][internal quotations and citations omitted])[FN4]. Moreover, any doubt on this score should be resolved so as to permit the fact-intensive question of market power to be resolved after discovery (see Todd v Exxon Corp., 275 F3d 191, 199-200 [2d Cir 2001] [Sotomayor, J.] ["Because market definition is a deeply fact-intensive inquiry, courts hesitate to grant motions to dismiss for failure to plead a relevant product market"]). Although Equitas protests that the allegations of paragraph 36 are conclusory, evidentiary detail is not required (id. at 198 ["No heightened pleading requirements apply in antitrust cases"]).
As plaintiff points out, Equitas's position that plaintiff cannot show market power is ironic. After all, Equitas offers, as it states, "a significant procompetitive justification for its formation — the preservation of competition that would have otherwise exited the market if Lloyd's had ceased to exist." But if Equitas is correct that the demise of Lloyd's would cause the worldwide market to suffer in a competitively significant way, it is in an awkward position when it nonetheless argues that an agreement among virtually all the Names to stop competing over claims handling does not cause worldwide competition to suffer in a competitively significant way.
Equitas offers three alternative grounds for affirmance, one the dissent does not discuss and the other two it accepts. We reject the first, that plaintiff's antitrust claims are barred by the Donnelly Act's four-year statute of limitations (General Business Law § 340[5]), for essentially the reasons stated by Supreme Court in an order entered July 7, 2008 denying, inter alia, Equitas's motion to dismiss the first amended complaint.
The second argument is that New York courts lack subject matter jurisdiction over plaintiff's antitrust claims under the Foreign Trade Antitrust Improvements Act (FTAIA) (15 USC § 6a), as interpreted in F. Hoffman-LaRoche Ltd. v Empagran S.A. (542 US 155 [2004]). In accepting that argument, the dissent concludes that plaintiff has not alleged that the anticompetitive conduct has had sufficiently direct effects on the domestic market. That conclusion is founded on a misreading of the complaint. According to the dissent, plaintiff "alleges that a conspiracy among the Lloyd's syndicates caused anticompetitive effects in a worldwide market —- including, presumably, New York —- for the underwriting of new retrocessional reinsurance business because insurers worldwide follow a benchmark' set by Lloyd's" (emphasis added). Contrary to the dissent, plaintiff makes no claim at all that the anticompetitive conduct has had any effect on the pricing or any other aspect of competition over "new" retrocessional business, i.e., coverage provided in and after 1993. Rather, plaintiff complains about the effects on it and other retrocedents of the claims-handling conduct of Equitas relating to pre-1993 business.
Assuming the applicability of the FTAIA, the jurisdictional question is whether the challenged conduct has a "direct, substantial and reasonably foreseeable effect" (F. Hoffman-LaRoche, 542 US at 59). Plaintiff's allegations of injury to it in New York are sufficient to support a reasonable inference of such effects. We do not doubt that under the federal statute that governs the determination of corporate citizenship for purposes of federal diversity jurisdiction (28 USC § 1332 [c]), plaintiff is a citizen of Germany. But as plaintiff argues, it is recognized by New York law to have a legal status as a U.S. branch (see Insurance Law § 107[a][44] [" United States branch' means . . . the business unit through which business is transacted within the United States by an alien insurer"]), it is regulated by the New York State Insurance Department (id. § 1106[e]), and it maintains separate financial statements (id. § 307[a][3]) which governs its capacity to take on risk without reference to the foreign insurer as a whole (id. §§ 1115[a], 1313[b][1]). Relatedly, plaintiff alleges that the financial losses caused by Equitas's conduct are reflected on its distinct balance sheet as a branch. For purposes of determining whether the requisite anticompetitive effects occurred in New York, surely the legal status of plaintiff under New York law as a "branch" is at least relevant. Indeed, focusing on just one of the requirements of the Insurance Law applicable to United States branches of foreign insurers, the Third Department has stated that the "requirement places the branch in essentially the same position as if it were formally incorporated in this State" (see Matter of Zurich Ins. Co. v New York State Tax Commn., 144 AD2d 202, 203 [1988], lv denied 74 NY2d 602[1989]). We note, too, that the complaint alleges that Equitas engaged, and continues to engage, in anticompetitive claims handling in New York, and plaintiff asserts that it, qua branch, entered the insurance contracts and submitted the subject claims. Furthermore, in the procedural posture of this case, dismissal of the complaint on this ground is particularly inappropriate (see Todd v Exxon Corp., 275 F3d 191, 199-200 [2d Cir 2001], supra).
Finally, without citation to any authority, the dissent states that it "do[es] not believe that New York antitrust law should be applied extraterritorially to challenge the creation of a U.K. entity that has met with the approval of the U.K. insurance and antitrust authorities." In the first place, however, plaintiff challenges not the creation of Equitas but its post-creation conduct. That Her Majesty's government blessed the existence of Equitas does not license Equitas to violate New York laws with impunity. Moreover, as plaintiff stresses, comity is not an issue here because the anticompetitive conduct of Equitas was not mandated by British law (see Hartford Fire Ins. Co. v California, 509 U.S. 764, 799 [1993] [rejecting comity argument of London reinsurers against application of Sherman Act; "the London reinsurers do not argue that British law requires them to act in some fashion prohibited by the law of the United States
. . . or claim that their compliance with the laws of both countries is otherwise impossible"] [emphasis added]).
Accordingly, the judgment of the Supreme Court, New York County (Bernard J. Fried, J.), entered March 11, 2009, which dismissed the second amended complaint should be reversed, on the law, with costs, and the complaint reinstated. Appeal from the order, same court and Justice, entered March 4, 2009, which granted defendants' motion to dismiss the second amended complaint, should be dismissed, without costs, as subsumed in the appeal from the judgment. Appeal from the order, same court and Justice, entered May 27, 2009, which denied plaintiff's motion for reargument, should be dismissed, without costs, as taken from a nonappealable order.
All concur except Manzanet-Daniels, J.
who dissents in an Opinion:
MANZANET-DANIELS, J. (dissenting)
Because I believe that the New York antitrust statute, the Donnelly Act, may not be applied extraterritorially in the manner advocated by the majority, to govern the alleged anticompetitive practices of the London reinsurance market, a market that operates under the auspices of U.K. regulators, I respectfully dissent. The complaint herein fails to allege, nor does it purport to allege, a direct and substantial effect on the local domestic market, and the case involves fundamentally foreign commerce, as a result of which subject matter jurisdiction under the antitrust laws is lacking.
Plaintiff, Global Reinsurance Corporation, is not a domestic corporation but the United States branch of a German reinsurance company. Like other reinsurance companies, Global further reinsured its obligations, as "retrocedents," to other reinsurers, known as "retrocessionaires," under retrocessional agreements, further spreading the risk assumed by the cedents and reinsurers. One retrocessional reinsurance product, called non-life retrocessional reinsurance (NLRRI), pertaining to property and casualty insurance, is the product at issue in this case. Global entered into certain retrocessional treaties with groups of underwriters, known as syndicates, in the London insurance market. Pursuant to these treaties, the syndicates agreed to pay a specified percentage of Global's risk under its various insurance obligations. In the late 1980s and 1990s, the individual underwriters, or "Names," as they are known in the London market, faced financial ruin after large losses outpaced the collection of premiums. The London market was restructured, pursuant to a Reconstruction and Renewal Plan, to "fix and cap" the liabilities of the Names on pre-1993 business. The Equitas defendants were established, with the blessing of British insurance regulators, to reinsure and perform claims-handling responsibilities for certain pre-1993 liabilities of the Names, including liabilities under retrocessional agreements the Names had with retrocedents such as plaintiff Global. By agreement dated September 3, 1996, the Equitas defendants entered into a "Reinsurance and Run-off Contract" with certain Names which granted Equitas exclusive and irrevocable responsibility for managing, evaluating and paying out on certain pre-1993 non-life liabilities of the Names.
Global contends, in the instant suit, that centralizing the Names' claims-handling obligations with respect to pre-1993 liabilities in a single entity, i.e., Equitas, provided Equitas with an anticompetitive advantage to renegotiate and/or discount the percentage liabilities owing to Global under the retrocessional treaties, in violation of the Donnelly Act (General Business Law § 340). Global alleges, by way of example, that Equitas sought to impose "extra-contractual conditions" on Global's right to payment under the treaties by refusing to render payment of certain claims unless plaintiff furnished Equitas and the underwriters with releases of future liabilities, contrary to industry custom. Global alleges that the underwriters have refused to indemnify Global or delayed payment, or both, for certain asbestos-related claims under the treaties absent compliance with certain Reinsurance Documentation Requirements drafted and imposed by Equitas. Plaintiff alleges that Equitas' ability to engage in these practices "stems directly from the combination effected by the R & R Plan, by which the previously independent Syndicates have been — illegally and in violation of the Donnelly Act — replaced by a single, combined entity that has no economic or business incentive to cause the Underwriters to honor their obligations under the Treaties." Global asserts that the concentration of claims-handling responsibility in Equitas has affected competition in the NLRRI market on a prospective basis. However, plaintiff concedes that the current NLRRI product offered on the London market is interchangeable with other NLRRI products in the world-wide marketplace. In any event, plaintiff concedes that it no longer purchases the NLRRI product. Thus, the injury plaintiff Global sustained by virtue of any alleged noncompetitive conduct is confined to the effects of alleged concentrated claims-handling responsibility in Equitas by virtue of the restructuring of the London market pursuant to the 1996 Reinsurance and Run-off Contract.
I do not doubt that plaintiff Global was "injured" in the sense that its claims were not settled on as favorable a basis as they had been previously, owing to consolidation of claims-handling responsibility in Equitas. However, this simply states a claim for breach of the relevant retrocessional treaties. Plaintiff fails to allege an antitrust injury as that term is understood (see SAS of Puerto Rico, Inc. v P.R. Tel. Co., 48 F3d 39 [1st Cir 1995] [the presumptively proper antitrust plaintiff is a customer who obtains services in the threatened market or a competitor who seeks to serve that market]). Plaintiff does not allege that it participated in any market where retrocessional insurance coverage was sold — either as purchaser or competitor — at any point after 1996 (when Equitas was formed), the period of the alleged conspiracy.
More fundamentally, plaintiff Global fails to allege any facts that would permit a New York court to exercise subject matter jurisdiction over the alleged Donnelly Act violation. The Donnelly Act (General Business Law § 340) proscribes monopolization and certain restraints of trade and applies to primarily intrastate conduct. The Donnelly Act is intended to apply to conduct "alleged to have a significant intrastate or local anticompetitive impact in violation of State antitrust law with minimal interstate consequences" (Two Queens, Inc. v Scoza, 296 AD2d 302, 304 [2002] [emphasis added]; H-Quotient, Inc. v Knight Trading Group, Inc., 2005 WL 323750, *4 [SDNY 2005]; see also People v Coventry First LLC, 52 AD3d 345, 345 [2008] [Donnelly Act claim properly dismissed to the extent that defendants' alleged conduct did not take place "in this state"], affd 13 NY3d 108 [2009]). Nothing in the history of the Act or its application suggests that it was meant to have the extraterritorial effect urged by the majority.
Plaintiff alleges a "world-wide" conspiracy, not one directed at the U.S. market, let alone the local market. The majority would find the Act applicable to alleged anticompetitive conduct that occurred entirely abroad — i.e., the claims-handling practices of an entity created under the auspices of the British insurance regulators — which happens to have an indirect effect on plaintiff Global, a branch office of a German reinsurance company. The majority cites no authority for the proposition that the Act was intended to have so broad a scope.
Furthermore, the majority's construction of the statute would give the state antitrust statute broader applicability than its federal counterpart, the Sherman Act, a result that cannot be reconciled with the constitution. In order for an antitrust plaintiff to allege jurisdiction under the Sherman Act (upon which the Donnelly Act is based),[FN1] it must demonstrate that the alleged anticompetitive conduct (1) has a direct, substantial and reasonably foreseeable anticompetitive effect on United States commerce and (2) that such conduct gave rise to the antitrust claim. The anticompetitive conduct must be directed at the domestic market and not merely at a domestic plaintiff.
Plaintiff Global is "a branch of a foreign reinsurance company organized under the laws of Germany, with its principal place of business in Cologne, Germany." For purposes of subject matter jurisdiction, U.S. branches of foreign companies are deemed to be foreign entities (see Colonia Ins., A.G. v D.B.G. Prop. Corp., 1992 WL 204376 [SDNY 1992]). Lloyd's of London and Equitas are U.K. entities. The complaint alleges conduct involving a German entity and U.K. entities that occurred in the London marketplace and that is regulated by the U.K. government. Thus, this case does not involve domestic commerce.
Whether or not Global is considered to be a U.S. entity, the complaint still fails to allege a sufficiently direct effect upon U.S. commerce giving rise to plaintiff's antitrust claim. Plaintiff Global alleges that a conspiracy among the Lloyd's syndicates caused anticompetitive effects in a worldwide market — including, presumably, New York — for the underwriting of new retrocessional reinsurance business because insurers worldwide follow a "benchmark" set by Lloyd's. However, such a roundabout, "but for" effect on the domestic market is insufficiently direct to confer subject matter jurisdiction under the federal statute. Where alleged anticompetitive effects in the U.S. are based on a theory that the globally interconnected nature of the marketplace enabled foreign conduct to affect the U.S. market, that effect is not considered "direct" within the meaning of the federal statute (see Boyd v AWB Ltd., 544 F Supp2d 236, 246 [SDNY 2008] ["although plaintiffs [U.S. wheat farmers] may have alleged a plausible theory of causation based on the global interrelatedness of the wheat markets in Iraq and the United State, [defendant's] extraterritorial conduct in Iraq was, at most, only a but for' cause of the alleged drop in wheat prices in the United States"); In re Intel Corp. Microprocessor Antitrust Litig., 452 F Supp2d 555, 561 [D. Del. 2006] [dismissing suit by U.S. computer chip microprocessor against U.S. competitor which manufactured components and assembled them into final products abroad] ["While the Court understands the nature of a global market, the allegations of foreign conduct here result in nothing more than what courts have termed a ripple effect' on the United States domestic market, and [federal law] prevents the Sherman Act from reaching such ripple effects.'")][FN2]
Plaintiff procured retrocessional insurance from the London market. Plaintiff alleges that the centralization of claims-handling responsibility in Equitas, an entity created under the auspices of British insurance regulators, has resulted in unfavorable and alleged anticompetitive settlement of claims under its treaties of retrocessional insurance. Global alleges that but for Lloyd's conduct in the United Kingdom, other market players, presumably including domestic market players, would offer retrocessional reinsurance at more competitive prices, terms and conditions. The alleged anticompetitive conduct is "in significant part foreign," and rests on a foreign harm, even assuming, arguendo, that it has caused some attenuated domestic injury (see F. Hoffman La Roche, Ltd. v Empagran S.A., 542 US 155 [2004]).
Further, I do not believe that New York antitrust law should be applied extraterritorially to challenge the creation of a U.K. entity that has met with the approval of the U.K. insurance and antitrust authorities. The R & R Plan by which Equitas was formed was cleared through the relevant British insurance regulatory authorities at the Department of Trade and Industry. The R & R Plan was also reported to the relevant antitrust regulators in the United Kingdom and Europe, including the U.K. Office of Fair Trading and the European Commission. Indeed, the R & R plan was even evaluated by the New York Insurance Department. For all of the foregoing reasons, the second amended complaint was properly dismissed.
The Decision and Order of this Court entered herein on January 11, 2011 is hereby recalled and vacated.

Judgment, Supreme Court, New York County (Bernard J. Fried, J.), entered March 11, 2009, reversed, on the law, with costs, and the complaint reinstated. Appeal from order, same court and Justice, entered March 4, 2009, dismissed, without costs, as subsumed in the appeal from the judgment. Appeal from order, same court and Justice, entered May 27, 2009, dismissed, without costs, as taken from a nonappealable order.
CLERK
Footnotes
Footnote 1:Inexplicably, the dissent also states that plaintiff "apparently also asserts that by concentrating claims-handling responsibility in Equitas, competition in the [non-life retrocessional reinsurance] market was affected on a prospective basis" (emphasis added). In fact, however, plaintiff asserts that an essential attribute of the alleged scheme is that on a prospective basis the syndicates would compete in that market just as they historically had, freely and without restraint.

Footnote 2:Because plaintiff apparently has been in runoff at all relevant times since Equitas was established, its claims under pre-1993 business arguably would have been subjected to the same unfavorable treatment even if Equitas had not been established. Its retrocessionaires, after all, would not have been motivated by competitive considerations to accord it the favorable treatment it accorded to retrocedents who were or might be purchasing coverage on an ongoing basis. Equitas does not make this causality argument, however, and it could not in any event be resolved on the pleadings.

Footnote 3:As plaintiff also argues, market power need not be pleaded where actual adverse effects on competition are alleged (see FTC v Indiana Fed. of Dentists, 476 US 447, 460-461 [1986] ["Since the purpose of ... inquiries into market definition and market power is to determine whether an arrangement has the potential for genuine adverse effects on competition, proof of actual detrimental effects ... can obviate the need for an inquiry into market power, which is but a surrogate for detrimental effects" [internal quotation marks omitted]). Accordingly, plaintiff also argues that a "naked agreement among the Names to coordinate claims handling of pre-1993 claims so as to reduce payment on those claims, followed by coordinated unreasonable claims handling[,] [is] subject to quick look' condemnation." Given the conclusion that the allegations of market power are sufficient, we need not address plaintiff's argument that it has adequately pleaded an unreasonable restraint of trade independent of the existence of market power. Nor need we address the dispute arising from that argument over whether "quick look" analysis is precluded by Texaco, Inc. v Dagher (547 US 1 [2006]).

Footnote 4:In the typical case, that is surely the appropriate definition of market power. As the unreasonable restraint alleged in this case has nothing to do with concerted action raising the price for purchasers, it is not obvious that whether an antitrust violation can be established should depend on whether the Names could do what they did not try to do, significantly raise price above the competitive level without losing all their business. The parties appear to agree, however, that to the extent plaintiff relies on market power, it must show market power in this sense. Presumably, such a showing would tend to satisfy the requirement under the rule of reason test of "an actual adverse effect on competition as a whole in the relevant market" (Capital Imaging Assoc., P.C. v Mohawk Valley Med. Assoc, P.C., 996 F2d 537 [2d Cir 1993], cert denied 510 US 947 [1993][emphasis deleted]). At one point in its brief, however, Equitas suggests that the appropriate market power showing in this case "would be the ability to drive down payments to reinsurers below the payments that would prevail in a competitive market" (internal quotation marks omitted). Of course, that is precisely what plaintiff alleges that Equitas was able to do with respect to pre-1993 business.

Footnote 1: The Donnelly Act, or "Little Sherman Act," should generally be construed in light of federal precedent and given a different interpretation only where state policy, differences in the statutory language or the legislative history justify such a result (see Anheuser-Busch, Inc. v Abrams, 71 NY2d 327 [1988] [citations omitted]).

Footnote 2: The allegations found wanting in these cases are virtually indistinguishable from the allegations in the amended complaint. For example, in Intel, the plaintiff alleged that "[i]n maintaining its monopoly by unlawfully denying rivals a competitive opportunity to achieve minimum levels of efficient scale, Intel must necessarily exclude them from the product market worldwide. As the domestic U.S. market is but an integral part of the world market, successful monopolization of the U.S. market is dependent on world market exclusion, lest foreign sales vitalize a rival's U.S. competitive potential." The court rejected these allegations, reasoning "[plaintiff] places great weight on its allegations that it is an American company engaged in a world-wide market; however, such allegations do not create jurisdiction without substantial, direct effects on the domestic market."
Arthur Kill Power, LLC, v. American Casualty Safety Insurance Company

Rawle & Henderson LLP, New York (James R. Callan of
counsel), for appellants-respondents.
Gartner & Bloom, P.C., New York (Susan P. Mahon of
counsel), for respondent-appellant.
Order, Supreme Court, New York County (Michael D. Stallman, J.), entered March 9, 2010, which, inter alia, denied that portion of plaintiffs' motion for summary judgment declaring that defendant had a duty to defend and indemnify plaintiff Arthur Kill Power, LLC (Arthur Kill) and that defendant's coverage was primary, and denied that portion of defendant's motion for summary judgment declaring that the "Employer's Liability Exclusion" in its general liability insurance policy excluded coverage to Arthur Kill, modified, on the law, to declare that the Employer's Liability Exclusion did exclude coverage to Arthur Kill, and, as so modified, affirmed, without costs. Appeal from order, same court and Justice, entered June 11, 2010, which, to the extent appealed from, granted plaintiffs' motion to reargue the aforesaid order, and upon reargument, adhered to its prior decision, unanimously dismissed, without costs, as academic.
Arthur Kill is an additional insured under a commercial general liability policy issued by defendant to nonparty Wing Environmental, Inc. (Wing), an asbestos abatement contractor. This is an action for a judgment declaring that defendant has a duty to provide Arthur Kill with a defense and indemnification in a personal injury action brought by Jose Barros, Wing's employee. Barros, who allegedly slipped on grease on the floor of Arthur Kill's premises, asserts in the underlying action that Arthur Kill negligently maintained the premises. Defendant's policy provided that the coverage available thereunder was to have been primary with respect to additional insureds "with whom the Named Insured executes a written contract prior to the start of the project." As correctly found by the motion court, Arthur Kill's coverage under defendant's policy would not have been primary because the purported written contract between Arthur Kill and Wing was not executed until after Barros's accident.
The Employer's Liability Exclusion of defendant's policy excludes coverage for bodily injury to any employee of any insured arising from and in the course of employment by any insured. The exclusion, however, does not apply to liability assumed by an insured under an "insured contract." The policy defines an insured contract as a written contract by which an insured assumes the tort liability of another because of bodily injury or property damage to a [*2]third person caused by the insured's negligence.
Under applicable Georgia law, "[a]n insurer's duty to defend is determined by comparing the allegations of the complaint with the provisions of the policy" (Nationwide Mut. Fire Ins. Co. v City of Rome, 268 Ga App 320, 601 SE2d 810 [2004])[FN1]. Here, the motion court concluded that the employer's liability exclusion did not apply to Arthur Kill's liability to Barros because such liability was assumed by Wing under an insured contract. This was error. The Barros complaint provides no basis for an inference that the presence of grease on Arthur Kill's floor would have been the result of negligence on Wing's part. Therefore, Barros's claim does not involve tort liability assumed by Wing because of injury caused by its own negligence. The dissent misplaces reliance on the fact that Barros was on Arthur Kill's premises "in furtherance of the work described by the parties' agreement." Absent an inference of negligence on Wing's part, the purpose of Barros's presence on the premises would be irrelevant. On the other hand, although Arthur Kill is an insured and was allegedly negligent, its liability to Barros, if any, would not have stemmed from any contract by which it assumed the tort liability of another. As such, the Employer's Liability Exclusion applies because Arthur Kill's liability to Barros, if any, did not arise out of an insured contract. We have considered the parties' remaining contentions and find them unavailing.
All concur except Tom, J.P. and Román, J. who dissent in part in a memorandum by Román, J. as follows:

ROMÁN, J. (dissenting in part)
To the extent the majority concludes that plaintiff Arthur Kill Power, LLC is not entitled to coverage under defendant's insurance policy because of the "Employee Injury Exclusion" contained within defendant's policy, I respectfully dissent.
Whether plaintiff is entitled to coverage under defendant's insurance policy, and indeed whether the abovementioned exclusion applies is, under Georgia law, "a matter of contract and the parties to the contract of insurance are bound by its plain and unambiguous terms" (Blue Cross & Blue Shield of Georgia, Inc. v. Shirley, 305 Ga App 434, 437 [2010]). Accordingly, when the policy is clear and unambiguous it must be enforced in accordance with its express terms (id.).
Here defendant's claim that coverage to plaintiff Arthur Kill Power, LLCis precluded by the "Employee Injury Exclusion" contained within its policy is unavailing, since such an assertion is belied when the policy's express and clear terms are read together with the purchase order between Arthur Kill Power, LLC and Wing Environmental Inc. While the policy excludes coverage for bodily injury claims to an employee of any insured when the same arise during the course of employment of any insured, the exception to the exclusion, which follows thereafter, clearly states that the exclusion does not apply when the insured assumes liability pursuant to an "insured contract." The policy defines an insured contract as "that part of any written contract or agreement under which you assume the tort liability of another party to pay damages not [*3]otherwise excluded under the policy because of bodily injury or property damage' to a third party or organization and caused by your negligence." The indemnification portion of the purchase order between Wing Environmental Inc. and Arthur Kill Power, LLC, is clearly such an insured contract insofar as it states that "[t]he Supplier [Wing Environmental Inc.] shall defend, indemnify and hold harmless buyer [Arthur Kill Power, LLC ] . . . against all claims suits or proceedings . . . arising out of or resulting from the Supplier's performance or failure to perform under this Purchase Order." Thus, the policy's exception to the exclusion applies because, the defendant's named insured, Wing Environmental Inc., assumed Arthur Kill, LLC's liability by virtue of an insured contract containing language compliant with the policy.
Plainly, the exception to the exclusion is made applicable solely by virtue of the existence of an insured contract, which complies with the policy's definition of the same, rather than the actual allegations asserted against the insured in any subsequent action brought against it. Therefore, the allegations asserted against Arthur Kill Power, LLC in the underlying personal injury action cannot, as the majority maintains, have a bearing on the applicability of the exception. Had the parties wished to exclude coverage based on allegations in any subsequent action asserted against a party whom defendant's insured is obligated to indemnify by virtue of an insured contract, as is urged here, then the policy should have so stated. Since the policy does not preclude coverage under these circumstances, the majority essentially seeks to exclude coverage on a basis not contained in the insurance policy and thus not agreed to by the parties. The majority's other conclusion, namely that Arthur Kill Power, LLC's liability in the underlying personal injury action did not arise from the insured contract mentioned in the Purchase Agreement, finds little support in the record. After all, insofar as the plaintiff in the underlying personal injury claim was employed by Wing Environmental Inc., he necessarily was at premises owned by Arthur Kill Power, LLC, solely in furtherance of the work described by the parties' agreement, the very agreement containing the insured contract.
Quinones v. Ksieniewicz

Leonard Zack & Associates, New York (Leonard Zack of
counsel), for appellant.
Brand Glick & Brand, P.C., Garden City (Peter M. Khrinenko
of counsel), for respondents.
Order, Supreme Court, New York County (Paul Wooten, J.), entered January 27, 2010, which granted defendants' motion for summary judgment dismissing the complaint on the ground that plaintiff did not suffer a serious injury within the meaning of Insurance Law § 5102(d), unanimously modified, on the law, to deny the motion as to plaintiff's 90/180-day claim, and otherwise affirmed, without costs.
The affirmed reports of defendants' orthopedic surgeon and neurologist concerning plaintiff's range of motion and lack of evidence of disability established prima facie that plaintiff suffered no "significant limitation" or "permanent consequential limitation of use" (Insurance Law 5102[d]), and shifted the
burden to plaintiff to raise an issue of fact (see Franchini v Palmieri, 1 NY3d 536 [2003]; Smith v Brito, 23 AD3d 273 [2005]). Likewise, defendants' radiologist's finding of a pre-existing degenerative condition had to be refuted by plaintiff (see Pommells v Perez, 4 NY3d 566, 580 [2005]; Rodriguez v Abdallah, 51 AD3d 590, 592 [2008]). Plaintiff failed to meet his burden because the unaffirmed and unsworn medical reports he submitted in opposition were in inadmissible form and therefore without probative value (see Grasso v Angerami, 79 NY2d 813 [1991]).
However, defendants failed to establish prima facie that plaintiff did not sustain a medically determined injury "of a non-permanent nature" that prevented him from performing substantially all of his customary and daily activities for 90 of the 180 days immediately following the accident (see Toussaint v Claudio, 23 AD3d 268 [2005]; Feaster v Boulabat, 77 AD3d 440, 441 [2010]). The reports of defendants' medical experts were based on examinations of plaintiff conducted nearly two years after the subject accident, and addressed plaintiff's condition as of the time of the examination, not during the six months immediately
after the accident. The MRI studies that the defense experts reviewed were performed 10 months after the accident.
Bhugra v Massachusetts Casualty Insurance Company

Rivkin Radler LLP, Uniondale (Cheryl F. Korman of counsel),
for appellant.
Maninder Bhugra, respondent pro se.
Order, Supreme Court, New York County (Debra A. James, J.), entered October 17, 2008, which to the extent appealed from as limited by the brief, denied defendant Disability Management Services's (DMS) motion to dismiss the first cause of action as against it, unanimously reversed, on the law, without costs, and the motion granted. The Clerk is directed to enter judgment dismissing the complaint as against DMS.
The complaint alleges that DMS is a corporation that administers disability insurance claims on behalf of insurers, including defendant Centre Life Insurance Company (CLIC), which issued a disability policy to plaintiff. The first cause of action alleges that this policy constitutes a contract, that plaintiff sustained a total disability within the meaning of the policy, and that DMS breached the policy by failing to pay the benefits owed to her. However, there is no allegation in the complaint that plaintiff ever entered into a contract with DMS, and there is no showing that DMS, as CLIC's agent, intended to be personally bound by the policy issued to plaintiff by CLIC (see Hall v Lauderdale, 46 NY 70, 74 [1871] [agent of a disclosed principal will be personally bound by a contract only upon "clear and explicit evidence" of an intent to be so bound]). Thus, the complaint fails to state a cause of action for breach of contract against DMS.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: JANUARY 18, 2011

 

Conference Associates, Inc. v. Travelers Cas. and Surety Co. of Am.

Russ & Russ, P.C., Massapequa, N.Y. (Jay Edmond Russ of
counsel), for appellant.
Frenkel Lambert Weiss Weisman & Gordon, LLP, New York,
N.Y. (Arthur N. Lambert and Dennis
O'Neil Cowling of counsel), for
respondent.


DECISION & ORDER
In an action, inter alia, for a judgment declaring that the defendant is obligated to reimburse the plaintiff under a certain commercial crime insurance policy without an offset, and to recover damages for breach of contract, the plaintiff appeals from (1) an order of the Supreme Court, Suffolk County (Emerson, J.), entered October 2, 2009, which, among other things, granted the defendant's cross motion for summary judgment, in effect, declaring that the defendant is not obligated to reimburse it under the insurance policy and dismissing the second and third causes of action, and (2) a judgment of the same court entered November 27, 2009, which, upon the order, is in favor of the defendant and against it declaring that the defendant is not required to reimburse it under the insurance policy and dismissing the second and third causes of action.
ORDERED that the appeal from the order is dismissed; and it is further,
ORDERED that the judgment is affirmed; and it is further,
ORDERED that one bill of costs is awarded to the respondent.
The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from the order are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501[a][1]).
On the defendant's cross motion for summary judgment, in effect, declaring that it is not obligated to reimburse the plaintiff under a certain commercial crime insurance policy and dismissing the second and third causes of action, inter alia, to recover damages for breach of contract, the defendant established its prima facie entitlement to judgment as a matter of law (see Alvarez v Prospect Hosp., 68 NY2d 320, 324) by demonstrating that the plaintiff breached its obligation under the policy to cooperate in the investigation of the claim (see Evans v International Ins. Co., 168 AD2d 374). Since, in opposition, the plaintiff failed to raise a triable issue of fact, the Supreme Court properly granted the defendant's cross motion, declared that the defendant is not obligated to reimburse the plaintiff under the policy, and dismissed the second and third causes of action (see Alvarez v Prospect Hosp., 68 NY2d at 324).
The plaintiff's remaining contentions either are without merit or have been rendered academic in light of our determination.
MASTRO, J.P., FLORIO, LEVENTHAL and SGROI, JJ., concur.
Appleby v  Chicago Title Ins. Co.  

Law Offices of Paul D. Stone, P.C., Tarrytown, N.Y., for appellant.
DelBello Donnellan Weingarten Wise & Wiederkehr, LLP,
White Plains, N.Y. (Lee S. Wiederkehr
and Robert Hermann of counsel), for
respondent.


DECISION & ORDER
In an action for a judgment declaring that the plaintiff is entitled to recover, under a policy of title insurance, the diminution in the market value of certain premises from the date of the plaintiff's purchase of the premises until March 23, 2006, and to recover damages for breach of contract, the plaintiff appeals, as limited by her brief, from so much of an order of the Supreme Court, Westchester County (Loehr, J.), entered October 9, 2009, as, in effect, granted the defendant's motion for summary judgment declaring that its obligation under the policy is limited to the sum of $59,031 and, in effect denied her cross motion for summary judgment on the complaint, inter alia, declaring that the defendant is obligated to her under the policy for the diminution in the market value of the premises from the date of her purchase of the premises until March 23, 2006.
ORDERED that the order is reversed insofar as appealed from, on the law, with costs, the defendant's motion for summary judgment declaring that its obligation under the policy is limited to the sum of $59,031 is denied, the plaintiff's cross motion for summary judgment on the complaint, inter alia, declaring that the defendant is obligated to her under the policy for the diminution in the market value of the premises from the date of her purchase of the premises until March 23, 2006, is granted, and the matter is remitted to the Supreme Court, Westchester County, for the entry of a judgment, among other things, declaring that the defendant is obligated to indemnify the plaintiff for her loss or damages arising from the diminution in the market value of the premises from the date of her purchase of the premises until March 23, 2006, and for further proceedings in accordance herewith.
In 1997 the plaintiff and her former husband became aware that the owner of premises located at 49A Old Albany Post Road in Ossining (hereinafter the premises), wished to sell the premises. According to the plaintiff, the owner of the premises told her that the premises did not have direct access to Old Albany Post Road, but was benefited by an easement which allowed a car to be driven across the neighboring property at 49B Old Albany Post Road in order to reach the street. Prior to purchasing the premises, the plaintiff became aware that the owner of the property at 49B Old Albany Post Road did not agree that the premises were benefitted by an easement permitting vehicles to be driven across his property in order to reach the street. Prior to the purchase of the premises, the plaintiff informed her attorney who, in turn, informed the defendant, Chicago Title Insurance Company (hereinafter Chicago Title), of the potential issue involving the easement.
On or about April 10, 1997, the plaintiff and her former husband purchased the premises, and secured, from Chicago Title, a title insurance policy (hereinafter the policy) in the face amount of $59,031. Schedule B of the policy provides, in pertinent part:
"This policy does not insure against loss or damage (and the Company does not pay costs, attorney's fees or expenses) which arise by reason of:
. . .
"9. Insured premises as described in Schedule A' is benefited [sic] by a Right of Way as described in Deed from ROBERTA FREED to SADIE P. SABRE dated July 22, 1947 and recorded August 20, 1947 in Liber 4549 of Deeds at Page 68.
"Policy, however, shall except from coverage the cost of any and all litigation expense, including, but not limited to attorney's fees, court costs or expenses relevant to the defense or enforcement of the insureds [sic] rights under said Right of Way, through all courts of the State of New York, including the Appellate Division and Court of Appeals.
"Policy, however, shall insure that the outcome of said litigation shall be favarable [sic] to the Insured and confirm a Right of Vehicular ingress and egress to the insured premises"
The policy also included a Market Value Policy Rider (hereinafter the rider) executed by Chicago Title which provides that, in consideration for the payment of an additional premium, "the Company [Chicago Title] insures the named homeowner [the plaintiff] against loss or damage not exceeding the market value of the premises at the time of loss, in accordance with the conditions of the Policy not inconsistent with the provisions of this Rider." The rider also states that "[a]ll other provisions of the Policy, not inconsistent with the provisions of this Rider, shall remain in full force and effect." Additionally, the Rider provides that "in the event of a loss, partial or total, the insured shall have the option to elect to value such loss under the terms of this Rider or under the terms and amount of the Policy."
The plaintiff commenced an action pursuant to RPAPL article 15 for a judgment declaring that the disputed easement is valid, and for a permanent injunction preventing interference with her use of the easement (see Appleby v Evans, 23 AD3d 323). In a judgment entered May 18, 2004, rendered after a nonjury trial, the Supreme Court, inter alia, declared that the easement was limited solely to use as a pedestrian right-of-way (id.). In a decision and order dated November 7, 2005, this Court affirmed the judgment insofar as appealed from (id.). In an order dated March 23, 2006, the Court of Appeals denied leave to appeal (see Appleby v Evans, 6 NY3d 708).
Thereafter, the plaintiff filed a claim under the policy with Chicago Title. In response, Chicago Title asserted that the plaintiff was entitled to the sum of $59,031. The plaintiff disputed the amount offered to her and subsequently commenced the instant action for a judgment declaring the rights of the parties under the policy, and to recover damages for breach of contract.
Chicago Title moved for summary judgment declaring that its obligation under the policy was limited to $59,031, and dismissing the second cause of action. The plaintiff cross-moved for summary judgment on the complaint, inter alia, declaring, among other things, that she had a valid policy, and that she was entitled to recover the diminution in the market value of the premises from the date of her purchase of the premises until March 23, 2006. The Supreme Court, in effect, awarded summary judgment in favor of the defendant declaring that its obligation under the policy is limited to the sum of $59,031, and, in effect, denied the plaintiffs' cross motion. The plaintiff appeals, and we reverse the order insofar as appealed from.
"[A] policy of title insurance is a contract by which the title insurer agrees to indemnify its insured for loss occasioned by a defect in title" (L. Smirlock Realty Corp. v Title Guar. Co., 52 NY2d 179, 188; Brucha Mtge. Bankers Corp. v Nations Tit. Ins. of N.Y., 275 AD2d 337, 338).
"As with any contract, unambiguous provisions of an insurance contract must be given their plain and ordinary meaning . . . [A] contract is unambiguous if the language it uses has a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion . . . Thus, if the agreement on its face is reasonably susceptible of only one meaning, a court is not free to alter the contract . . . If the terms of a policy are ambiguous, however, any ambiguity must be construed in favor of the insured and against the insurer" (White v Continental Cas. Co., 9 NY3d 264, 267 [citations and internal quotation marks omitted]; see Vigilant Ins. Co. v Bear Stearns Cos., Inc., 10 NY3d 170, 177; Antoine v City of New York, 56 AD3d 583, 584; see also 1 NY Jur 2d Abstracts § 48).
Chicago Title's liability to the plaintiff for her loss is determined by the terms of the rider, and not by any contrary provisions of the policy. The rider provides that the insured homeowner is insured "against loss or damage not exceeding the market value of the premises at the time of loss." The "time of loss" is defined in the rider as "such date as the homeowner shall have actual knowledge of facts giving rise to a claim under the Policy."
Since the policy "insure[d] that the outcome of said litigation shall be favarable [sic] to the Insured and confirm a Right of Vehicular ingress and egress to the insured premises," the plaintiff could not have had "actual knowledge of the facts giving rise to a claim" unless and until the litigation concerning the purported easement had resulted in an outcome unfavorable to her, and denied her a right of vehicular ingress and egress to the premises. Under the facts of the instant matter, the time of loss was March 23, 2006, the date when the Court of Appeals denied leave to appeal (see Appleby v Evans, 6 NY3d 708). To the extent that the "time of loss," as defined in the rider, presents an ambiguity, such ambiguity must be construed against Chicago Title, as the drafter of the language and the issuer of the policy and rider (see White v Continental Cas. Co., 9 NY3d at 267; Antoine v City of New York, 56 AD3d 583). Accordingly, Chicago Title is liable to the plaintiff for her "loss or damage not exceeding the market value of the premises at the time of loss," namely, March 23, 2006.
We note that the rider provides that arbitrators are to determine the market value at the time of loss.
Since this is, in part, a declaratory judgment action, we remit the matter to the Supreme Court, Westchester County, for the entry of a judgment, inter alia, declaring that Chicago Title is obligated to reimburse the plaintiff for the diminution of the market value of the premises from the date of her purchase of the premises until March 23, 2006, not exceeding the market value of the premises as of that latter date (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
MASTRO, J.P., DILLON, ENG and CHAMBERS, JJ., concur.

KITTNER v. EASTERN MUTUAL INSURANCE COMPANY


Calendar Date: October 20, 2010
Before: Cardona, P.J., Peters, Spain, Kavanagh and Egan Jr., JJ.


McCabe & Mack, L.L.P., Poughkeepsie (Kimberly
Hunt Lee of counsel), for appellant.
Basch & Keegan, L.L.P., Kingston (Derek J. Spada of
counsel), for respondents.
MEMORANDUM AND ORDER
Egan Jr., J.
Appeals (1) from an order of the Supreme Court (Pulver Jr., J.), entered July 29, 2009 in Greene County, which denied defendant's motion for summary judgment dismissing the complaint, and (2) from an order of said court, entered December 17, 2009 in Greene County, which denied defendant's motion to renew and/or reargue.
Plaintiff Design Science Toys, Ltd. (hereinafter DST) was a domestic corporation formed in 1986 to design, manufacture and distribute toys. DST's officers were plaintiff Cary Kittner and her then husband, Stuart Quimby. In 2003, Kittner and Quimby, as sole principals, formed plaintiff QK Properties, LLC, which then purchased a building located in the Village of Tivoli, Dutchess County and rented it to DST to house its operations. In October 2005, QK sold the building, but DST continued to store its inventory and equipment in a portion of the building with the permission of its new owner. In December 2005, DST filed a chapter 7 bankruptcy petition and valued the equipment and inventory stored in the building at $5,052.93. DST's bankruptcy proceeding was concluded the following month, with the trustee abandoning the equipment and inventory. DST then transferred its post-bankruptcy assets to QK. In March 2006, a fire broke out at QK's former building, destroying it and QK's equipment and inventory that was still stored therein. Shortly after the fire, DST and QK made a claim under their insurance policy, which was issued by defendant. In a sworn statement in proof of loss signed by Kittner and Quimby, DST and QK valued the equipment and inventory loss at $212,427 [FN1]. In October 2006, defendant denied plaintiffs' claim in full.
In January 2008, plaintiffs commenced this action. Defendant moved for summary judgment dismissing the complaint, arguing, among other things, that Kittner lacked standing to recover under the insurance policy, that the insurance policy was rendered null and void because the proof of loss contained material misrepresentations and, in the alternative, that plaintiffs were judicially estopped from claiming that the property was valued higher than the amount claimed in the bankruptcy petition. Supreme Court denied that motion and defendant's subsequent motion for leave to renew and/or reargue. Defendant now appeals from both orders.[FN2] We agree with defendant that Kittner lacked standing. "In New York, '[n]o contract or policy of insurance on property made or issued in this state . . . shall be enforceable except for the benefit of some person having an insurable interest in the property insured' and an 'insurable interest' is 'any lawful and substantial economic interest in the safety or preservation of property from loss, destruction or pecuniary damage'" (Cassadei v Nationwide Mut. Fire Ins. Co., 21 AD3d 681, 682 [2005], quoting Insurance Law § 3401). Here, defendant established its prima facie entitlement to summary judgment dismissing Kittner's claim based on lack of standing through evidence that the insurance policy at issue only covers the business property of DST and QK, the named insureds(see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). In opposition, plaintiffs failed to present sufficient evidence to create a question of fact as to Kittner's interest in the proceeds of the insurance policy (see Zuckerman v City of New York, 49 NY2d at 562). While it is true that in May 2008 Quimby, as president of DST, assigned all of DST's interests in any claims arising out of the fire loss to Kittner, she could only acquire those rights that DST possessed (see Matter of Stralem, 303 AD2d 120, 123 [2003])[FN3]. Because DST had, some two years earlier, already transferred all of its post-bankruptcy assets to QK, DST had nothing to transfer. Accordingly, Kittner has no insurable interest in the policy proceeds and, therefore, no standing to maintain this action [FN4]. Accordingly, defendant's motion seeking summary judgement based on Kittner's lack of standing should have been granted (see Zuckerman v City of New York, 49 NY2d at 562).
Defendant also contends that the denial of its motion for summary judgment on the issue of damages was in error under the doctrine of judicial estoppel. We agree. "'[W]here a party assumes a position in [one] legal proceeding and succeeds in maintaining that position, that party may not subsequently assume a contrary position [in a second proceeding] because [its] interests have changed'" (Popadyn v Clark Constr. & Prop. Maintenance Servs., Inc., 49 AD3d 1335, 1336 [2008], quoting McIntosh Bldrs. v Ball, 264 AD2d 869, 870 [1999]). Here, in conjunction with the filing of its petition in bankruptcy, DST valued its equipment and inventory at $5,052.93. Eight months later and after the intervening fire, DST and QK valued the same items at $212,427.
While plaintiffs attempt to explain the far lower bankruptcy valuation by pointing out that its toys were sold unassembled to a small niche market around the world and thus the remaining inventory was difficult to value or market, their argument is unavailing because any such difficulties in valuation would be equally present, whether for bankruptcy or insurance claim purposes. In any event, having overcome these obstacles and assumed a position as to the value of the equipment and inventory in the prior bankruptcy proceeding, DST was judicially estopped from claiming, eight months later, that the same equipment and inventory had a value some 40 times that as previously asserted (see McIntosh Bldrs. v Ball, 264 AD2d at 870; Clifton Country Rd. Assoc. v Vinciguerra, 252 AD2d 792, 793 [1998]; Madden v Corey, 251 AD2d 257, 258 [1998]; Moore v County of Clinton, 219 AD2d 131, 135 [1996], lv denied 89 NY2d 851 [1996]). Likewise, as assignee of DST's post-bankruptcy assets, QK is also judicially estopped from claiming valuations exceeding those listed in the bankruptcy proceeding (see Matter of International Ribbon Mills [Arjan Ribbons], 36 NY2d 121, 126 [1975]; Secured Equities Invs. v McFarland, 300 AD2d 1137, 1138 [2002]; Richard T. Blake & Assoc. v Aetna Cas. & Sur. Co., 255 AD2d 569, 570-571 [1998]).
Next, a policy of insurance will be voided where the insured has "'willfully and fraudulently placed in the proofs of loss a statement of property lost which he [or she] did not possess, or has placed a false and fraudulent value upon the articles which he [or she] did own'" (Saks & Co. v Continental Ins. Co., 23 NY2d 161, 165 [1968], quoting Domagalski v Springfield Fire & Mar. Ins. Co., 218 App Div 187, 190 [1926]; see Ingarra v General Acc./PG Ins. Co. of N.Y., 273 AD2d 766, 768 [2000]). However, "unintentional fraud or false swearing or the statement of any opinion mistakenly held are not grounds for vitiating a policy" (Sunbright Fashions v Greater N.Y. Mut. Ins. Co., 34 AD2d 235, 237 [1970], affd 28 NY2d 563 [1971]; see Deitsch Textiles v New York Prop. Ins. Underwriting Assn., 62 NY2d 999, 1001 [1984]). As the proponent for summary judgment, defendant bore the burden of demonstrating plaintiffs' material misrepresentation (see Precision Auto Accessories, Inc. v Utica First Ins. Co., 52 AD3d 1198, 1200 [2008], lv denied 11 NY3d 709 [2008]). Here, while defendant relies on DST's bankruptcy filing listing the value of its property to total $5,052.93, which is in sharp contrast to the $212,427 figure set forth in the proof of loss, defendant tendered no proof of plaintiffs' intent to defraud - "a necessary element to the defense" (Deitsch Textiles v New York Prop. Ins. Underwriting Assn., 62 NY2d at 1001). Accordingly, Supreme Court properly denied defendant's motion seeking summary judgment based on plaintiffs' alleged material misrepresentations.
Finally, in light of our determination, defendant's challenge to Supreme Court's denial of its motion for leave to renew, addressing QK's and Kittner's interests in the property, has been rendered academic.
Cardona, P.J., Peters, Spain and Kavanagh, JJ., concur.
ORDERED that the order entered July 29, 2009 is modified, on the law, without costs, by reversing so much thereof as (1) denied defendant's motion for summary judgment dismissing the claim asserted by plaintiff Cary Kittner and (2) denied defendant's motion limiting the damages recoverable based on the theory of judicial estoppel; motion granted to said extent and claim asserted by Kittner dismissed; and, as so modified, affirmed.
ORDERED that the appeal from the order entered December 17, 2009 is dismissed, as academic, without costs.
Footnotes


Footnote 1:After application of the insurance deductible, however, the proof of loss listed the recoverable claim to be $91,250.

Footnote 2:Defendant concedes that the denial of its motion to reargue is not appealable (see Mortgage Elec. Registration Sys., Inc. v Schuh, 48 AD3d 838, 840 [2008], appeal dismissed 10 NY3d 951 [2008]).Furthermore, defendant's argument, advanced before Supreme Court, that it is entitled to summary judgment because plaintiffs failed to file a timely proof of loss is not addressed in defendant's brief and is, therefore, deemed abandoned (see Rochester Linoleum & Carpet Ctr., Inc. v Cassin, 61 AD3d 1201, 1202 n 1 [2009]).

Footnote 3:Contrary to defendant's argument, while the insurance policy contains a provision that the "[a]ssignment of this policy is not valid without [defendant's] written consent," this anti-assignment provision applies only to assignments before loss (see Globecon Group, LLC v Hartford Fire Ins. Co., 434 F3d 165, 171 [2d Cir 2006]; Travelers Indem. Co. v Israel, 354 F2d 488, 490 [2d Cir 1965]; Ardon Constr. Corp. v Firemen's Ins. Co. of Newark, N.J., 16 Misc 2d 483, 488 [1959], affd 11 AD2d 766 [1960]).

Footnote 4:The parties do not contest Supreme Court's determination that Kittner does not have standing to raise claims with respect to property owned by QK (see Limited Liability Company Law § 610; Katz v Katz, 55 AD3d 680, 684 [2008]).

VICHOT v DAY


Calendar Date: November 16, 2010
Before: Mercure, J.P., Peters, Rose, Malone Jr. and Garry, JJ.


Taylor and Associates, Albany (Sean A. Tomko of
counsel), for appellant.
MEMORANDUM AND ORDER


Rose, J.
Appeal from an order of the Supreme Court (Muller, J.), entered November 23, 2009 in Clinton County, which denied defendant's motion for summary judgment dismissing the complaint.
Plaintiff was driving on a public highway when her vehicle collided with a horse owned by defendant. Seeking to recover damages for the injuries she sustained, plaintiff commenced this negligence action. After joinder of issue and discovery, defendant moved for summary judgment on the ground that he could not be held liable for ordinary negligence and he had no notice of the horse's propensity to escape from its stall and roam free. Supreme Court denied the motion and defendant appeals.
We reverse. "[A] cause of action for ordinary negligence does not lie against the owner of a domestic animal which causes injury" (Alia v Fiorina, 39 AD3d 1068, 1069 [2007]). Plaintiff's ability to recover is now limited to strict liability, which requires evidence that the owner knew or should have known of the animal's vicious propensities (see Petrone v Fernandez, 12 NY3d 546, 550 [2009]; Bard v Jahnke, 6 NY3d 592, 601 [2006]). As plaintiff's complaint sounds only in ordinary negligence, and there is no evidence in the record that the horse in question had a propensity to escape the confines of defendant's barn or pasture and roam free, the motion for summary judgment should have been granted (see Collier v Zambito, 1 NY3d 444, 446 [2004]; Rose v Heaton, 39 AD3d 937, 938 [2007]; Alia v Fiorina, 39 AD3d at 1069).
Mercure, J.P., Peters, Malone Jr. and Garry, JJ., concur.
ORDERED that the order is reversed, on the law, without costs, motion granted, summary judgment awarded to defendant and complaint dismissed.