Dear Coverage Pointers Subscribers:

You have a situation?  We love situations.

Happy Thanksgiving:

Regular subscribers know that our Friday issues are generally posted on Thursday evening, so that you can enjoy the issue with your morning coffee.  This issue is being posted a few hours earlier than usual so that your erstwhile editor can prepare his traditional mushroom and candied walnut stuffing, start on the gravy, and then enjoy his time with family and friends at the dinner table.

We have so much for which to be thankful, from good health, to a loving family, to terrific law partners and hopefully, to improving conditions in Long Island, New Jersey and Connecticut and to diminishing strife in the Middle East.  At this time, on behalf of your CP family, we send our thanks to you, our loyal and good-humored subscribers, many of you who have stayed with us for many years, for your dedicated readership, your constant feedback, your patience with my wilted humor and your commitment to education. 

It is truly a joy to bring these bi-weekly missives to you and we’ll keep at it!

Super Storm Aftermath and Concurrent and Successive Causation:

The H&F Cat and Coverage Teams have been engaged to assist insurers in the New York metropolitan area.  From analyzing Hurricane deductibles, to crafting reservation of rights letters, to developing Cat protocols, to retaining and coordinating SIU investigations, to defending claims already filed, we have already helped and can provide you with assistance if you need it.

The most significant insurance issues facing policyholders and insurers in the wake of Sandy’s destructive force are those of concurrent and successive causation.  In Steve Peiper’s letter below and in much greater detail, in his Steve on Sandy columnin the attached issue, Steve provides a practical and useful outline, with case authority, to the key New York precedent that is likely to guide judicial determinations on causation.

 

The Coverage Pointers App:

The reaction to the Coverage Pointers App continues to be robust, with hundreds of downloads and installations already. The  COVERAGE POINTERS APPis available in the iPhone App Store and the Android Marketplace, for free, of course. Search for it there or for iPhone or iPad users, click here.

We received a very complimentary review of our application in a recent edition of the Buffalo Law Journal.

 

S.O.S. (Steve on Sandy), Property and Potpourri:

Another two weeks have passed, and if our own practice is any indication, there has been no rest in processing the thousands of claims created by, and subsequently arising from, Superstorm Sandy. Initially, we recognize all of those claims professionals working seemingly ‘round the clock to inspect, adjust and resolve claims as quickly and fairly as possible. From what we have heard, and seen first-hand, those of you handling the claims are doing a remarkable job. We hope you (and your families) enjoy a brief respite this Thanksgiving.

We were glad to see the positive feedback from our previous SOS installment, and at the risk of boring you again, offer another primer in today’s issue, attached. This time we focus on New York’s standards for determining Current Causation and Successive Causation, respectively. We note, of course, that our primers are for educational purposes only. We would strongly encourage consultation with the friendly coverage counsel of your choosing prior to making any claim determinations.

We also remind you to take a look at this week’s Potpourri. Interestingly, the First and Second Departments, respectively, both issued decisions on “special employee” status, and its impact on Labor Law § 240(1) claims. Although there is nothing particularly earth shattering in either opinion, it is interesting to see how two different Departments addressed the same issue.

In the meantime, just click here to contact us.

Steven E. Peiper
sep@hurwitzfine.com

 

Introducing, Jonathan Gorski and Jon’s Journal:

Marc Schulz has been ably reporting on lower court decision in his Marc’s Remarks column for some months.  However, Dave Adams needed help in the Labor Law arena and Andrea Schillaci needed assistance with the commercial litigation team and claimed Marc in the latest expansion draft.  You will see his insights, I’m sure, in Dave’s Labor Law Pointers publication, a must read for anyone who handles construction accident litigation in New York.  Send Dave a note to subscribe: dra@hurwitzfine.com.

To fill the gap, we introduce our latest hire, Jonathan M. Gorski.  Jon is a recent graduate of the Buffalo Law School where he had the distinction of scoring the highest grade in the most important class taught there, my Insurance Law course.  Audrey Seeley had that distinction about a decade ago (and in fact, still holds the record as having the highest numerical grade EVER in that class).  Jen Ehman is still bitter that she had only the second-highest grade in the semester she was in the class.

Accordingly, Jon’s Journal replaces Marc’s Remarks, but there wasn’t a single lower court decision on insurance coverage related issues in the past two weeks, so Jon gets a pass this week.

 

Coverage Opinions: Judicial Opinions Today – Impact On Counsel’s Opinions Tomorrow – Randy Maniloff’s Newsletter:

My friend Randy Maniloff, a nationally admired coverage guru from the Philadelphia firm of White and Williams, is respected for so many things, including his “Top 10 Coverage Cases of the Year” article that has appeared in Mealey’s Insurance for the past eleven years and his book, General Liability Insurance Coverage -- Key Issues In Every State (with Prof. Jeffrey Stempel of UNLV Law School) (Oxford University Press; 2nd Edition 2012) which I have touted on previous occasions in this column.  I have had the privilege of sharing a podium with Randy at CLE programs and enjoy his wit, intellect, insight and bowties. 

Randy has embarked on a new venture, an excellent insurance coverage newsletter which I recommend highly.  You can subscribe, see the current issue and review back issues at www.coverageopinions.info /  

 

Court of Appeals Rules That Insured May Maintain Claim Against Insurance Agent Even if It Had Received Policy and Lodged No Complaint:

In a major change in approach to E&O Claims against insurance agents and brokers, the Court of Appeals, in a split decision, has sustained a claim against an insurance agent for allegedly missing coverage even where the insured had received a copy of the policy and chose not to read it.  See Kathie Fijal’s review of American Bldg. Supply Corp. v Petrocelli Group, Inc.decided this past Monday and consider this very important language from the decision:

The facts as alleged here, that plaintiff requested specific coverage and upon receipt of the policy did not read it and lodged no complaint, should not bar plaintiff from pursuing this action. While it is certainly the better practice for an insured to read its policy, an insured should have a right to "look to the expertise of its broker with respect to insurance matters"… The failure to read the policy, at most, may give rise to a defense of comparative negligence but should not bar, altogether, an action against a broker.

 

From Audrey Seeley, Thanksgiving Cheer:

I hope that you and your family had a great Thanksgiving.  I was fortunate to spend my Thanksgiving with my entire immediate family in Ohio.  My nephews and nieces are excited for a new cousin and my youngest nephews, who are six and seven years old, can’t wait to take him under their wing and teach him everything he needs to know about life.  Should I be worried?

I have officially taken on my role as Vice Chair of DRI’s Insurance Law Committee and am fortunate to work with such a great group of people at DRI.  If you have not signed up yet for the December 6-7 Insurance Coverage and Practice Symposium in New York there is still time.  Please note that you can walk in the day of the seminar, register and attend.  We are again at record breaking attendance for this conference and have a number of insurers holding panel counsel meetings.  You can download a brochure and registration form at www.dri.org or email me at aas@hurwitzfine.com

I hope you are able to relax and enjoy your Friday or that you have snagged some great black Friday deals.

Audrey

 

One Hundred Years Ago – Would-Be Presidential Assassin Found Insane:

As the new Lincoln movie reaches the theatres, many remember that there were four United States Presidents assassinated while in office, Lincoln (by John Wilkes Booth), Garfield (by Charles J. Guiteau), McKinley (by Leon Czolgosz) and Kennedy (by Lee Harvey Oswald, most would agree.)

However, the unsuccessful attempts have a less important place in history:

  • Andrew Jackson was attacked by Richard Lawrence, whose guns misfired.  Declared insane, Lawrence spent the rest of his life in an insane asylum;
  • Giuseppe Zangara took six shots at FDR.  None hit Roosevelt, but he shot and killed the Mayor of Chicago, Anton Cernak. He was convicted and died in the electric chair;
  • Harry Truman was attacked in the Blair House by two Puerto Rican nationalists seeking independence for the island.  Grieselio Torresola killed a police officer and he was killed in the gunfight.  Oscar Collazo was arrested, convicted and sentenced to death.  Truman commuted the sentence to life in prison and President Carter freed him from prison in 1979;
  • Gerald Ford has two attempts on his life.  Lynette “Squeaky” Fromme, a Charles Manson follower, pointed a gun at him but did not fire.  She was sentenced to life in prison and was released on Parole, after 34 years, in August of 2009.  Sara Jane Moore fired a shot at President Ford, 17 days after Fromme’s attempt, deflected by a bystander.   She was convicted and remained in prison until released on December 31, 2007, after serving 32 years of a life sentence;
  • Ronald Reagan was shot by John Hinckley in 1981, who was trying to impress Jodie Foster.  He injured both the President, Press Secretary James Brady along with an officer and security guard.  Hinckley remains in prison, although is allowed family leave.

 

And then there was President Theodore Roosevelt, who was the subject of an assassination attempt while he was trying to regain the office of the Presidency, in 1912.  He had succeeded to the office in 1901 when McKinley was assassinated here in Buffalo and promised not to serve more than two terms.  True to his word, he did not run in 1908, when Taft was elected, but then sought to return to office in the 1912 election.  During this race, his life was placed in peril:

Colorado Springs Gazette
November 23, 1912
Page 1

Schrank Insists He Is Sane, But Doctors Say No

MILWAUKEE, Nov. 22. John Schrank who shot Colonel Theodore Roosevelt on the night of October 14 in Milwaukee, is insane He was today committed, by Municipal Judge Backus to the Northern Hospital for the Insane.

Judge Backus’ ruling said:

The court now finds that the defendant, John Schrank is insane and therefore incapacitated to act for himself.  It is, therefore ordered and adjudged that the defendant, John be committed to the Northern Hospital for the Insane near Oshkosh, in the County of Winnebago, State of Wisconsin, until such time when he has recovered from such Insanity, when he shall be returned to court for further proceedings according to law.

Before being led back to jail to preparations for the trip to asylum Schrank said:

I had expected that they would find me insane because it was in the papers two days ago.  I want to say now that I am sane and knew what I was doing all the time.  I knew they would find me insane because it was in the papers two days ago.  I want to say now that I am sane and knew what I was doing all the time..

Schrank found to be insane by a board of five physicians in Milwaukee, who wrote that he was "suffering from insane delusions, grandiose in character and of a systematized variety... we are of the opinion he is unable to converse intelligently with counsel on the conduct of his defense.”

The 1912 Presidential election campaign was characterized by a serious split in the Republican Party between the conservative wing under President Taft and the liberal/reform wing under ex-President Theodore Roosevelt. After a bitter confrontation at the Republican Convention, Taft won renomination. Roosevelt led a bolt of his followers, who held a convention and nominated him for President on the ticket of the Progressive Party, nicknamed the "Bull Moose Party." Taft and his supporters attacked Roosevelt for being power-hungry, and seeking to break the tradition that U.S. Presidents only serve up to two terms in office.

On October 14, while Theodore Roosevelt was campaigning in Milwaukee, Wisconsin, Schrank attempted to assassinate him. The bullet-damaged speech and eyeglass case are on display at the Theodore Roosevelt Birthplace.

Roosevelt was at the Gilpatrick Hotel at a dinner provided by the hotel's owner, a supporter. The ex-President was scheduled to deliver a speech at the Milwaukee Auditorium. News had circulated that Roosevelt was at the hotel, and Schrank (who had been following Roosevelt from New Orleans to Milwaukee) went to the hotel. The ex-President had finished his meal, and was leaving the hotel to enter his car when Schrank acted.

Schrank did shoot Roosevelt, but the bullet lodged in Roosevelt's chest only after hitting both his steel eyeglass case and a 50-page copy of his speech he was carrying in his jacket. Roosevelt decided the bullet could not have penetrated to his lung because he coughed no blood and, declining suggestions that he go to the hospital, delivered his scheduled speech. He spoke for ninety minutes, but sometimes managed no more than a whisper. His opening comments to the gathered crowd were:

Friends, I shall ask you to be as quiet as possible. I don't know whether you fully understand that I have just been shot; but it takes more than that to kill a Bull Moose. But fortunately I had my manuscript, so you see I was going to make a long speech, and there is a bullet - there is where the bullet went through - and it probably saved me from it going into my heart. The bullet is in me now, so that I cannot make a very long speech, but I will try my best.

Theodore Roosevelt, Address at Milwaukee, Wis., October 14, 1912

Afterwards, doctors determined that he was not seriously wounded and that it would be more dangerous to attempt to remove the bullet than to leave it in his chest. Roosevelt carried it with him until he died. In later years, when asked about the bullet inside him, Roosevelt would say, "I do not mind it anymore than if it were in my waistcoat pocket."

The would-be assassin died in custody 29 years later, of pneumonia.

 

Jens’s Gems – Extra Contractual Damages:

When Jen Ehman returned to active duty after the birth of her darling daughter, she took on a new column here in Coverage Pointers.  Marc Schulz had ably assumed her duties covering significant lower court decisions, and your CP team decided it was time to introduce a column on bad faith and extracontractual damages.

For those new to New York, you may not realize how rare it is for an appellate court to hold an insurer liable for bad faith in the Empire State.  Actually, by our reckoning, it has been 14 years since any appellate court in this state has affirmed a finding of bad faith against a first party or casualty insurer in New York.

That being said, when we reported on the watershed decisions by the Court of Appeals in the “consequential damage” cases” Bi-Economy and Panasia Estates, in our February 22, 2008 edition of this publication, Vol. IX, No. 17, we peered through the looking glass into the future:

WHAT’S NEXT?

From the decision of Panasia, it is clear that an insured must establish that the carrier knew, or should have known, what damages could arise if the policy is breached. In this vein, the lengthy discussion in Bi-Market clearly establishes which factors should be considered when either making the argument that the carrier was aware, or conversely opposing a plaintiff’s allegations that a carrier should have been aware.

What we do not yet know is how a breach of the covenant of good faith and fair dealing will be defined. The Court of Appeals has previously noted that it is characterized as a “pledge that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.” Justice Smith’s dissent in Bi-Economy Market, Inc., characterizes the covenant as a breach where the one party has complied with the terms of the policy, but has done so in a way that injures the insured’s rights.

Previously, the Court of Appeals has indicated that bad faith is characterized by a breach of the covenant of good faith. Thus, the terms were used interchangeably. In Gordon v. Nationwide Mut. Ins. Co., the Court of Appeals held in a third-party context that a breach of the covenant of good faith constituted bad faith. However, a breach of contract where there was an “arguable case of coverage responsibility,” bad faith was not found to lie.

The question not addressed by the Court of Appeals is what standard will be applied for a breach of the covenant, and it is precisely the question asked in Judge Smith’s dissent.

Is it the Rocanova standard? Is it the “arguable case of coverage standard” applied in third-party bad faith? Or is it something different altogether?

Let us assume, as we do, that a carrier undertakes a legitimate, honest evaluation of a loss and takes a fair amount of time to do so. Will the next policyholder argue that any delay, even a reasonable one, is a breach of the implied duty of good faith and fair dealing? The Court provides no guidance as to what constitutes a breach. Do you we want to punish honorable carriers for doing just want other policyholders would want them to do? Conduct a reasonable investigation? We hope not.

Equally as important is the issue of whether the arguments made on foreseeable consequential damages will be appended to other kinds of insurance policies – life, health and disability, liability, directors & officers, etc. Surely, the last chapter has not been written.

In Jen’s column today, she discusses two recent New York decisions that demonstrate that the answers to the questions we raised almost five years ago were the right ones and the Courts are beginning to craft answers.

Watch her column regularly for continuing insight.

 

One Hundred Years Ago – NYC Prepared for the Holidays:

 

Fort Wayne (Indiana) News
November 23, 1912

Page 5

THE NEW YORK JAILS WILL ALL BE CROWDED

LOAFERS AND PAN HANDLERS
LOOK UPON THEM AS WINTER RESORTS

NEW YORK, Nov. 23.—That New York jails will be crowded to capacity this winter is already becoming apparent.

The crowding, however, will be due neither to gunmen, gangsters nor one of the crime waves which seem to be so prevalent here of late.  In fact it is estimated that fifty per cent, of the occupants of the city jails for the next four months will be voluntary charges who will spend the winter in comfortable quarters as guests of the city. While the old-time loafers and pan handlers who find the jails the most comfortable place to spend the winter generally do not put in an appearance until after the Christmas round of free dinners and clothing, they have already begun to troop in this year two months ahead of the regular time reports are already coming in of old offenders who are brazenly attempting to steal goods in the large shops and then waiting to be arrested in order that they may be sure of food and shelter for the winter at the city's expense.

As a result of the early stampede to get into jail police officials estimate that the voluntary inmates far outnumber those of any preceding year and tax the jail to the limit.

 

This Issue’s Headlines:

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

  • Agent or Brokers Errors & Omissions – An Insured’s Duty to Read (See Kathie’s Column Below)
  • UM Arbitration Award Can be Overturned on the Basis of Misconduct of Arbitrator, but None Shown Here
  • Conditions of Coverage Were Clear and No Coverage Available When Conditions Are Not Satisfied
  • No Need to Disclaim Timely When the Claim Does Not Fall Within the Grant of Coverage
  • Long-Term Asbestos Carrier Has Defense Obligation and Can Seek Contribution from Others on a Pro Rata Basis
  • Court Uses Equitable Powers to Limit Recovery of Defense Costs, Subject to Recoupment
  • E&O Claim Against Insurance Broker Fails Where No Specific Request for Coverage
  • Late Reporting by Insured, and No Reporting by Injured Party, Leads to Loss of Coverage

 


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

mml@hurwitzfine.com

  • Expert’s Quantification of Loss of ROM, Corroborated by MRI Results, and Correlation Between the Two, and Rebuts Defendants’ Prima Facie Showing
  • Defendants’ Failure to Relate Findings to Relevant Period Dooms Motion with Respect to 90/180-Day Category
  • Experts’ Distinction Between Pre and Post-Accident injuries Sufficiently Rebuts Finding of Degeneration
  • 90/180-Day Claim Fails Absent Evidence Establishing Causation
  • Re-evaluation for Purpose of Opposing Defendants’ Motion Does Not Cure Gap in Treatment
  • Plaintiff Establishes Serious Injury Under 90/180-Day Category
  • Plaintiff Fails to Raise Triable Issue of Fact
  • Subjective Complaints of Pain Do Not Support Decision to Remain Out of Work

 

AUDREY’S ANGLES ON NO-FAULT
Audrey A. Seeley

aas@hurwitzfine.com

ARBITRATION

  • Failure to Provide Timely Requested Verification Results in Denial Without Prejudice as Arbitration Is Premature
  • Applicant Established Intent to Return to Work from Pre-existing Injury Which Was Delayed Because of Accident

LITIGATION

  • Issues of Fact Regarding Denial’s Timeliness and Medical Necessity Preclude Summary Judgment
  • Insurer Entitled to Summary Judgment as Plaintiff Failed to Rebut Peer Review

 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

sep@hurwitzfine.com

  • Steve on Sandy -- Solving New York’s Causation Conundrums’
    • Successive Causation
    • Concurrent Causation 

 

Property

  • Failure to Tender Proofs of Loss Within 60 Days is Fatal to Insured’s Claim

 

Potpourri

  • Special Employee – Part I = Failure to Establish Manner, Details and Result of Work Product a Hallmark of Special Employee Relationship
  • Special Employee – Part II = Failure to Establish Direction, Supervision or Control is Fatal to Special Employee Argument


CASSIE’S CAPITAL CONNECTION
Cassandra A. Kazukenus
cak@hurwitzfine.com

  • Insurance Disaster Hotline to Help New Yorkers with Insurance Issues from Hurricane Sandy
  • Proposed Changes to the MSPA Passes the Energy and Commerce Committee on Health

 


FIJAL’S FEDERAL FOCUS

Katherine A. Fijal

kaf@hurwitzfine.com

  • Agent or Brokers Errors & Omissions – An Insured’s Duty to Read

 

KEEPING THE FAITH WITH JEN’S GEMS
Jennifer A. Ehman
jae@hurwitzfine.com 

  • Two Recent New York Cases on Consequential Damages Reflect an Ongoing Struggle
  • Bad Faith Cause of Action Dismissed Under Idaho Law Where Insurer Was Not Provided Sufficient Information to Evaluate Claim
  • Court Declines to Address Whether Insurer Has an Affirmative Duty Under California Law to Initiate Settlement Discussions in the Absence of a Settlement Demand

 

JON’S JOURNAL
Jonathan M. Gorski
jmgorski@hurwitzfine.com

  • No decisions from the lower courts on which to report.

 

EARL’S PEARLS
Earl K. Cantwell

ekc@hurwitzfine.com

LIMITS ON STATUTE OF REPOSE

 

That’s all for now.  Hoping health and joy for your holiday season.

 

Dan
Dan D. Kohane
Hurwitz & Fine, P.C.
1300 Liberty Building
Buffalo, NY 14202    
Phone: 716.849.8942
Fax:      716.855.0874
E-Mail:  ddk@hurwitzfine.com
H&F Website:  www.hurwitzfine.com
LinkedIn: www.linkedin.com/in/kohane

 

You will find back issues of Coverage Pointers on the firm website listed above.

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

NEWSLETTER EDITOR
Dan D. Kohane
ddk@hurwitzfine.com

ASSOCIATE EDITOR
Audrey A. Seeley
aas@hurwitzfine.com

ASSISTANT EDITOR
Margo M. Lagueras
mml@hurwitzfine.com

INSURANCE COVERAGE TEAM
Dan D. Kohane, Team Leader
ddk@hurwitzfine.com

Michael F. Perley
Katherine A. Fijal
Audrey A. Seeley
Steven E. Peiper
Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman

Marc A. Schulz
Diane F. Bosse

FIRE, FIRST-PARTY AND SUBROGATION TEAM
Andrea Schillaci, Team Leader
as@hurwitzfine.com

Jody E. Briandi
Steven E. Peiper

NO-FAULT/UM/SUM TEAM
Audrey A. Seeley, Team Leader
aas@hurwitzfine.com

Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman

APPELLATE TEAM
Jody E. Briandi, Team Leader
jeb@hurwitzfine.com
 

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

Cassie’s Capital Connection
Fijal’s Federal Focus
Keeping the Faith with Jen’s Gems
Jon’s Journal
Earl’s Pearls
Across Borders

KOHANE’S COVERAGE CORNER
Dan D. Kohane
ddk@hurwitzfine.com

Agent or Brokers Errors & Omissions – An Insured’s Duty to Read (See Kathie’s Column Below)

11/21/02       Matter of Allstate Insurance Company v. GEICO  
Appellate Division, Second Department
UM Arbitration Award Can be Overturned on the Basis of Misconduct of Arbitrator, but None Shown Here
Allstate appeals an arbitration award in favor of GEICO that arises out of an uninsured motorist claim.  Allstate insists that by failing to consider certain evidence, the arbitrator committed misconduct.

Judicial review of arbitration awards is extremely limited and an award must be upheld when the arbitrator offers even a barely colorable justification for the outcome reached'.  An arbitrator's award should not be vacated for errors of law and fact committed by the arbitrator and the courts should not assume the role of overseers to mold the award to conform to their sense of justice.  An arbitrator is not bound by principles of substantive law or rules of evidence, and may do justice and apply his or her own sense of law and equity to the facts as he or she finds them to be.

A refusal by an arbitrator to hear pertinent material evidence may constitute misconduct but he party seeking to vacate the arbitration award has the burden of proving by clear and convincing evidence that the arbitrator committed misconduct.  Here, there is no indication in the record that the arbitrator refused to consider pertinent material evidence.

11/14/02       Navarro v. PC Group, LLC
Appellate Division, Second Department
Conditions of Coverage Were Clear and No Coverage Available When Conditions Are Not Satisfied
In the course of real estate development, Navarro, an employee of Total Building, fell off a ladder and sustained injuries. The general contractor was Trades and it, Trades, sought a defense and indemnification from its insurer, the third-party defendant, Mt. Hawley Insurance Company (Mt. Hawley). However, Mt. Hawley denied coverage on the ground that Trades had not complied with certain conditions to coverage under endorsement 102A of the Mt. Hawley policy.

The conditions to coverage outlined in endorsement 102A, Contractors – Conditions of Coverage Endorsement, were found to be clear and unambiguous.  Each of the requirements in endorsement was an express condition precedent to coverage, and the failure to comply with any one of them formed a sufficient basis to disclaim coverage.
Editor’s Note:  Once again, a Contractors Condition Endorsement, a more and more popular endorsement in the Surplus Lines market, has been upheld.  With congratulations and thanks to Tim Dellahunt and Jessica Foscolo from the Kenney Shelton firm here in Buffalo, we offer you that Endorsement

CONTRACTORS - CONDITIONS OF COVERAGE

It is hereby understood and agreed that conditions of coverage under this policy are:

  • Insured warrants that it has obtained or will obtain certificates of insurance with limits of liability equal to or greater than those provided by this policy from all subcontractors prior to commencement of any work performed for the insured.
  • Insured warrants that it has confirmed or will confirm that the subcontractors' insurance policies are valid and have not been cancelled prior to commencement of any work by the subcontractors performed for the insured.
  • Insured warrants that it has obtained or will obtain hold harmless agreements from subcontractors indemnifying against all losses from the work performed for the insured by any and all subcontractors.
  • Insured warrants that it has confirmed or will confirm that it is named as additional insured on all subcontractors general liability policies.
  • Insured warrants that it has given or will give notice of claim to all "potential insurers" as soon as practicable.

"Potential insurers" means all insurance companies who may be obligated to defend the insured as either a named insured or an additional insured. "Potential insurers" includes the insurers of all subcontractors who were contractually obligated to name the insured as an additional Insured on their own insurance policy(ies).

In the event the insured fails or failed to comply with the above conditions, for a subcontractor whose work directly or indirectly gives rise to a claim, coverage for such claim will be voided under this policy. Insured agrees that we need not demonstrate any prejudice to us in order to enforce these conditions of coverage.

Nothing herein contained shall be held to vary, alter, waive or extend any of the terms of the conditions, provisions, agreements or limitations of the above mentioned policy, other than as above stated.

11/14/12       State Farm v. Raabe
Appellate Division Second Department
No Need to Disclaim Timely When the Claim Does Not Fall Within the Grant of Coverage
State Farm commenced a declaratory judgment action seeking a declaration that it was not obligated to defend or indemnify Alessi in personal injury action arising from an altercation between Alessi and Raabe and Bisignano in a church parking lot.  After discovery, Raabe moved for summary judgment declaring that State Farm is obligated to defend and indemnify Alessi in the underlying action.

Raabe established his prima facie entitlement to judgment as a matter of law by submitting evidence that State Farm failed to give written notice of disclaimer to all interested parties in the underlying action pursuant to Insurance Law § 3420.  However, State Farm raised triable issues of fact.

State Farm conceded that it did not provide timely written notice to all interested parties in the underlying action but claims but contended that it was not required to do so because the incident did not arise out of an accident or occurrence and thus was not within the scope of coverage in the first place.  There is no obligation to provide notice of disclaimer when the claim is not within the grant of coverage.

The policy defines "occurrence" as an "accident . . . which results in . . . bodily injury" and expressly provides that it does "not apply to (a) bodily injury or property damage: (1) which is either expected or intended by an insured; or (2) which is the result of willful and malicious acts of the insured."  Thus, to the extent that any injuries sustained by the plaintiff in the underlying personal injury action arose from intentional acts, the policy here affords no coverage, and compliance with the disclaimer requirement of Insurance Law § 3420(d) was unnecessary.

Summary judgment was properly denied as there are questions of fact on the intentional v. accidental nature of the injuries.
Editor’s Note:  the duty to disclaim promptly in a personal injury action exists where the basis for denial is a policy exclusion or breach of policy condition.

11/13/12       Travelers Casualty v. Alfa Laval Inc.
Appellate Division, First Department
Long-Term Asbestos Carrier Has Defense Obligation and Can Seek Contribution from Others on a Pro Rata Basis
Alfa seeks insurance coverage under policies issued by several companies, including Travelers, for underlying asbestos bodily injury claims brought against Alfa and its predecessor in name, DeLaval, as well as Alfa Laval's competitor, a company named Sharples, Inc. (the underlying claims), which assets Alfa Laval acquired in 1988.

The duty to defend is broader than the duty to indemnify, requiring each insurer to defend if there is an asserted occurrence covered by its policy.  The insured should not be denied initial recourse to a carrier merely because another carrier may also be responsible.  Pro rata sharing of defense costs may be ordered when more than one policy is triggered by a claim.  Here, the appellate court ordered that Travelers, Alfa Laval's longest standing insurer, must defend and may later obtain contribution from other insurers on applicable policies

However, OneBeacon is correct that the court's ruling was inconsistent to the extent that both Travelers and OneBeacon cannot viably provide Alfa Laval's complete defense if both their policies are implicated by the same underlying action.  In that case, Travelers, as the long standing insurer, should provide a complete defense, and OneBeacon may eventually be required to contribute to both defense costs and indemnification on a pro rata basis (id. at 655).

11/13/12       Dupree v. Scottsdale Insurance Company
Appellate Division, First Department
Court Uses Equitable Powers to Limit Recovery of Defense Costs, Subject to Recoupment
Action was brought to compel insurer to pay defense costs, incurred in civil and criminal litigation arising out of plaintiffs' actions as corporate officers, under a director's and officer's policy.  The court considered the irreparable harm and the equities and limited the defense costs that the insurer was required to pay.

Plaintiffs seek to recover additional defense costs which can be compensated by damages.  The motion court properly determined that directing the payment of past defense costs may deplete the $5,000,000 limit on the policy thereby depriving plaintiff of coverage under the policy and disturbing, rather than maintaining, the status quo.  The payment of defense costs is subject to later recoupment.
Editor’s Note:  A more detailed description of this case can be found in the lower court decision.

11/13/12       46th Street Development, LLC, v. Marsh, USA, Inc.
Appellate Division, First Department
E&O Claim Against Insurance Broker Fails Where No Specific Request for Coverage
Plaintiff failed to state a cause of action based on defendant's failure to procure insurance coverage.  Absent a specific request for the insurance, defendant, as broker, had no duty to obtain coverage.

11/09/12       Szczukowski v. Progressive Northeastern Ins. Co.
Appellate Division, Fourth Department
Late Reporting by Insured, and No Reporting by Injured Party, Leads to Loss of Coverage
Justice prevails, even though we had to achieve it from the Fourth Department.  We represented Progressive in the trial and on the appeal.

Plaintiff, Daniel Szczukowki (“Daniel”) was traveling westbound, approaching a controlled intersection with the right of way.  Wendy, the Progressive insured, was heading southbound into the same intersection had the stop sign and entered the intersection, failing to yield to the driver coming from her left.  Daniel swerved and avoided contact with the southbound car, but he lost control of his vehicle and slammed into a light post on the southwest corner of the intersection and suffered serious injuries.  Wendy was cited for failure to yield the right of way.

Despite Wendy’s traffic citation and her knowledge of Daniel’s injuries, she did not give Progressive notice of the accident until she was sued, eight months later.  Daniel, the injured party, knew Wendy’s name, believed she was liable for the accident and had a copy of the police report containing the three digit insurance code which identified Progressive Northeastern as Wendy’s auto insurer.  He retained counsel within 30 days of the accident.  Yet, neither Daniel nor his lawyer gave notice to Progressive.  Again, Progressive’s first notice did not come until the lawsuit,

While this was a pre-prejudice decision, the injured party commenced a declaratory judgment action on the notice issue, as is now permitted.  This was tried, non-jury, and Daniel’s lawyer conceded that he could not prove Wendy ever gave notice and, in fact, stipulated that her notice was not an issue in the trial.  The trial judge, nonetheless, found that Wendy had a reasonable belief of non-liability (even though she never testified) and found lack of notice justified.

Daniel’s main contention was that his notice, eight months later, was timely.  In reality, neither he nor his counsel ever gave notice, although they had every opportunity to do so.  The trial court found that his notice was also timely. Notice?  What notice? [Do I sound annoyed at the trial court’s ruling?]

Reason returned on appeal. The Fourth Department set aside both findings and awarded summary judgment to Progressive.  First, it found that neither Wendy nor Daniel claimed that the insured's failure to report the accident to defendant was reasonable and therefore, the court should not have ruled that it was.  In any event, it found that as the insured was issued a citation for failure to yield the right of way and she was aware that plaintiff had sustained serious injuries, the insured was not justified in believing that there would not be a lawsuit, and thus the delay in notifying defendant was not reasonable.

On the question of Daniel’s notice, the court noted that he never gave notice, despite his right to do so.  The injured party had the burden of proving that he, she, or counsel, acted diligently in attempting to ascertain the identity of the insurer, and thereafter expeditiously notified the insurer.

Here, while Daniel promptly sought legal counsel, he admitted that he did not attempt to ascertain the identity of the insurer and that he did not notify defendant of the accident.  

 

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

mml@hurwitzfine.com

11/21/12       Flottemesch v. Contreras
Appellate Division, Third Department
Expert’s Quantification of Loss of ROM, Corroborated by MRI Results, and Correlation Between the Two, and Rebuts Defendants’ Prima Facie Showing
In August 2005, plaintiff was allegedly rear-ended at high speed on the Kingston-Rhinecliff Bridge in Ulster County.  Defendants conceded liability but made a prima facie showing that plaintiff did not sustain a serious injury to his neck under the significant limitation of use category through the submission of the affidavit of an orthopedic surgeon who examined plaintiff in 2006 and noted full range of motion and reported that the strains were fully resolved, and the records from plaintiff’s primary physician who reported, in November 2005, that plaintiff’s neck was almost 100% better. 

In opposition, plaintiff proffered the affirmation of a neurologist who began treating him in October 2008.  He reported a broad-based right-sided intraforaminal disc bulge and moderate to severe degenerative foraminal stenosis and nerve root compression.  He compared an October 2008 MRI to an October 2007 MRI and found plaintiff’s degenerative changes had worsened.  He examined plaintiff again in January 2009 and July 2010 and, based on these examinations and the MRIs, he opined that plaintiff suffered from cervical spondylosis as a result of cervical arthritis that was precipitated and aggravated by the 2005 whiplash injury.  He quantified plaintiff’s loss of function due to the cervical arthritis at 30%.  This was sufficient to raise a triable issue of material fact and, on appeal; the trial court’s order was modified to deny defendants’ motion.
Note:  Perhaps the decision does not refer to some other objective medical evidence contemporaneous with the 2005 accident proffered by the plaintiff in addition to noted favorable submissions, the earliest of which was from 2007.  If, in fact, the plaintiff submitted nothing to contradict his own physician’s report from just three months after the accident stating that his neck was almost 100% better, or the findings of the 2006 IME, this decision is surprising, and a Happy Thanksgiving for the plaintiff. 

11/16/12       Hint v. Vaughn
Appellate Division, Fourth Department
Defendants’ Failure to Relate Findings to Relevant Period Dooms Motion with Respect to 90/180-Day Category
While plaintiff’s claim under the permanent loss of use category was dismissed on appeal, the remainder of his claims under the permanent consequential and/or significant limitation of use, and the 90/180-day categories, survive.  In opposition to defendants’ motion, plaintiff submitted an affirmation from his treating physician and an affidavit from his chiropractor, both containing the requisite objective findings.  In addition, defendants failed to meet their burden with respect to the 90/180-day category because their examining neurologist did not relate his findings to the first 180 days following the accident, and plaintiff’s deposition testimony was not sufficient to support defendants’ motion because it did not establish that plaintiff had not sustained an injury under that category.

11/15/12       Santana v. McQueen
Appellate Division, First Department
Experts’ Distinction Between Pre and Post-Accident injuries Sufficiently Rebuts Finding of Degeneration
Plaintiff claimed injury under the permanent consequential and/or significant limitation of use categories and submitted the reports of a radiologist and an orthopedic surgeon stating that the tear to the infraspinatus tendon of his right shoulder was directly related to the accident.  Their conclusions were based in part on a review of an MRI of the right shoulder from before the subject accident which did not reveal the tear, and two MRIs taken after the accident that did.  This established that the prior injury was distinct from the present tear and was sufficient to establish that the tear was caused by the subject accident and not degeneration as asserted by defendants’ radiologist.  As such, the trial court was reversed and the complaint reinstated.

11/15/12       Rampersaud v. Eljamali
Appellate Division, First Department
90/180-Day Claim Fails Absent Evidence Establishing Causation
Defendant’s expert radiologist and orthopedist both determined that plaintiff did not sustain injury under the permanent consequential and/or significant limitation of use categories because they found that the injuries had resolved, and were thus not permanent, and plaintiff had full range of motion in his cervical and lumbar spine.  The radiologist also noted that plaintiff had an unrelated pre-existing degenerative condition.

In opposition, plaintiff failed to raise a triable issue of fact as the MRI and chiropractic reports and other medical records were not in admissible form.  In addition, his medical expert did not explain why plaintiff’s prior injuries and degenerative condition were ruled out as the cause of his current alleged limitations.  Because plaintiff failed to establish causation, his 90/180-day claim was similarly dismissed on appeal, as well as any issue regarding liability.

11/13/12       Merrick v. Lopez-Garcia
Appellate Division, First Department
Re-evaluation for Purpose of Opposing Defendants’ Motion Does Not Cure Gap in Treatment
In opposition to defendants’ motion, plaintiff raised an issue of fact with respect to his claim of significant limitation in his cervical, thoracic and lumbar spine by submitting MRI and EMG/NCV reports and the affirmed report of recent limitation findings by Dr. Sloan.  However, Dr. Sloan, who was not plaintiff’s treating physician, evaluated plaintiff in 2011, more than three and a half years after plaintiff last treated in 2008, and did not address this gap in treatment which was, in reality, a cessation of treatment.  Plaintiff’s explanation was that he could not afford to continue with his physical therapist after his no-fault benefits ended but he did not explain why he did not continue treatment through his private health insurance, other than to state that his therapist did not take his plan.  Because he did not adequately explain the gap in treatment, Dr. Sloan’s opinion as to permanency, significance and causation was speculative and appeared tailored to meet the statutory definition of serious injury.

In addition, defendants established that plaintiff did not sustain a serious injury under the 90/180-day category as plaintiff’s bill of particulars stated that he was not confined to bed or home and his deposition testimony was that he was only confined for two months.  Furthermore, even though plaintiff submitted a note from his employer stating that he did not work for four months, plaintiff testified that the company was operating in Florida and that it went bankrupt five months after his accident.  Although the report of his physician, three months after the accident, stated that plaintiff would be able to go to Florida and work when he improved, this is not determinative, particularly where plaintiff testified that he was only unable to lift “things” and perform household chores.  This was insufficient to establish that he was unable to perform “substantially all” his “usual and customary daily activities” and, therefore, the trial court correctly dismissed the complaint.

11/09/12       Limardi v. McLeod
Appellate Division, Fourth Department
Plaintiff Establishes Serious Injury Under 90/180-Day Category
Plaintiff established serious injury under the 90/180-day category by submitting evidence that he was out of work for nine months following the accident and testifying at his deposition that he was unable to perform his customary job duties, like lifting five-gallon buckets of paint, climbing ladders etc., as well as being unable to do the physical activities around the house, such as mowing the grass, cleaning, shopping and doing laundry, that he had done prior to the accident.

Plaintiff also supported his claims under the permanent consequential and/or significant limitation of use categories by submitting objective evidence, such as x-rays, MRI and doctors’ reports documenting a herniation at L4-5 which his treating chiropractor attributed 100% to the accident.  However, the trial court’s decision was modified to dismiss plaintiff’s claim under the permanent loss of use category as he did not sustain a “total loss of use of a body organ, member, function or system.” 

11/07/12       Hernandez v. Raffetto
Appellate Division, Second Department
Plaintiff Fails to Raise Triable Issue of Fact
On appeal, the trial court is reversed and the complaint dismissed where defendants submitted competent medical evidence that plaintiff did not sustain a serious injury to his left shoulder, left elbow or right knee, and plaintiff failed to raise a triable issue of fact in opposition.

11/01/12       DeHaas v. Kathan
Appellate Division, Fourth Department
Subjective Complaints of Pain Do Not Support Decision to Remain Out of Work
Plaintiff allegedly sustained serious injury when a van backed into her vehicle while she was stopped.  She moved for partial summary judgment and defendants cross-moved to dismiss the complaint.  The trial court denied plaintiff’s motion and granted defendants’ cross motion finding that plaintiff did not sustain a serious injury under the 90/180-day category as plaintiff’s decision to not return to work was based entirely on subjective complaints of pain and not as a result of any objective findings.  The trial court additionally noted that she did not allege injury under any other category in her pleadings, although plaintiff later argued that she sustained injury under the fracture, permanent consequential and/or significant limitation of use categories as well.

In support of their cross motion, defendants submitted an affidavit from their examining physician who in addition reviewed plaintiff’s medical records, including diagnostic and laboratory reports, as well as the notes of her treating physician.  He noted that the ER diagnosis was of a contusion to the right shoulder and lumbar strain, that x-rays were normal, and that her prior history documented treatment for back pain.  He also noted that other diagnostic tests, including three MRIs and a bone scan, were all normal and her physical therapy notes indicated that she had full range of motion and rotation.  He therefore concluded that plaintiff did not sustain a serious injury.

In opposition, plaintiff submitted an affidavit from her treating physician who opined that the ER x-rays revealed a possible avulsion fracture.  However, none of the subsequent studies supported his opinion and his own notes not only confirmed that the subsequent imaging studies were normal but made no mention of a fracture.  In addition, although he mentioned spasms, he did not indicated what if any tests were performed to induce the spasms or that he actually observed them.  Similarly, her physical therapy notes failed to identify the objective or diagnostic tests used to measure plaintiff’s range of motion.

 

AUDREY’S ANGLES ON NO-FAULT
Audrey A. Seeley
aas@hurwitzfine.com

ARBITRATION
11/15/12       RS Medical v. Liberty Mut. Fire Ins. Co.
Arbitrator Kent L. Benziger, Erie County
Failure to Provide Timely Requested Verification Results in Denial Without Prejudice as Arbitration Is Premature

The Applicant sought reimbursement for an interferential muscle stimulator and lumbar brace prescribed and dispensed for injuries allegedly arising out of a June 14, 2011, motor vehicle accident.  The insurer argued that the case was premature as there was outstanding verification in the form of a narrative, wholesale invoice, and smart data card.

The assigned arbitrator determined that the Applicant only supplied the requested wholesale invoice.  Further, the narrative report and smart data card, the latter of which is used to track usage and effectiveness of the device, were timely requested and never supplied by Applicant.  The assigned arbitrator also stated that if the Applicant deemed the verification requests irrelevant or ambiguous then it is incumbent upon the Applicant to make its position known to the insurer.  Accordingly, the claim was denied without prejudice as premature.

11/14/12       Applicant v. Nationwide Ins. Co.
Arbitrator Kent L. Benziger, Erie County
Applicant Established Intent to Return to Work from Pre-existing Injury Which Was Delayed Because of Accident

The Applicant, eligible injured person, sought lost wage benefits in the amount of $16,000.00 from June 15, 2011 through September 2012, due to a disability allegedly related to a June 15, 2011, motor vehicle accident.

The insurer denied the lost wage claim on the ground that the Applicant was not working at the time of the accident due to a March 11, 2011, injury and that her disability notes indicated that she was disabled due to a March 11, 2011, injury.

The Applicant had a March 11, 2011, work related injury but contended that she was scheduled to return to work in September 2011.  The Applicant further claimed that the June 15, 2011, accident aggravated her back injury preventing her from returning to her teaching position in September 2011.  She used her sick bank leave until it was exhausted in January 2012.  Once the sick bank leave was exhausted the Applicant submitted a lost wage claim to the insurer.

The assigned arbitrator determined that the insurer’s denial was untimely.  This is because the insurer admitted to being provided with telephonic notice of the lost wage claim on December 12, 2011, but did not issue the blanket denial until January 27, 2012.  Further, the medical reports indicated that the Applicant was responding to facet blocks pre-accident and that she was returning to work in September 2011.  Since the Applicant’s sick bank leave provided her with full pay, the award was only from the time her sick bank leave expired until she returned to work in September 2012.

LITIGATION

10/25/12       Complete Radiology, PC v. Progressive Ins. Co.
Appellate Term, Second Department
Issues of Fact Regarding Denial’s Timeliness and Medical Necessity Preclude Summary Judgment

The plaintiff’s summary judgment motion was properly denied save one service date wherein an issue of fact as to the denial’s timeliness existed precluding summary judgment.  With regard to the one service date there was a discrepancy between the bill’s sent date and the bills received date between the parties thus creating an issue of fact as to the denial’s timeliness.  Likewise, the insurer’s two affirmed peer review reports raised an issue of fact as to medical necessity for the service.

10/25/12       Quality Psychological Servs., PC v. Travelers Ins. Co.
Appellate Term, Second Department
Insurer Entitled to Summary Judgment as Plaintiff Failed to Rebut Peer Review

The insurer’s cross-motion for summary judgment should have been granted on lack of medical necessity.  The insurer established issuance of timely denials and, through two sworn peer review reports, that the services were not medically necessary.  The plaintiff’s opposition consisted of a psychologist’s affidavit which failed to meaningfully refer to or rebut the conclusions set forth in the peer review reports.

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper
sep@hurwitzfine.com

Steve on Sandy


This, That, or The Other!
Solving New York’s Causation Conundrums

Stop us if you’ve heard this before.  The problem with catastrophic losses is that we often have a hard time distinguishing how, what, and to what extent the loss occurred. For instance, was it the wind, the water, the fire or something else which resulted in a loss of premises.  The maddening part of that analysis is that every case, every loss, presents its own unique set of facts.  This is regardless of how close in time, or space, to another loss the claim falls. 

After your engineers and consults have reviewed the loss, we’d expect that, in most circumstances, a claims department is presented with a fairly good description of what occurred and when it happened. 

More maddening still is after one determines what actually happened, a carrier’s job is only half done.  At that point, one must review the actual terms of the policy to see if the loss, as reconstructed, falls within the scope of coverage.  This requires an analysis of Concurrent Causation doctrine, or, Successive Causation doctrine.

Successive Causation

Successive Causation applies where there are a series of events with one leading directly into the other; the ultimate result of which is a loss at the end of the day.  To explain successive causation, we will use the example that the Court of Appeals elected to use in its Album decision. (Album Realty Corp. v. American Home Assur. Co., 80 NY2d 1008 [1992]),

Imagine, if you will, a water supply pipe located in a premises.  That pipe eventually becomes exposed to cold air, and that water inside said pipe froze.  When the water froze, it expanded and ultimately burst a gaping hole in the water supply pipe.  Having nothing to contain the flow of water that had not yet frozen, the remaining water poured into the house causing substantial property damage.

The question posed to the Court of Appeals was: What was the actual cause of the damage?  The frozen pipe (for which coverage was excluded) or the water which escaped from the pipe (for which coverage was available).  In addressing the question, the Court first noted “[t]he answer depends on whether the parties contemplated that the exclusion would apply in a circumstance such as that presented; that is, did they expect a loss arising in this manner to be characterized as being caused by freezing?”  

The Court went on to note that while the loss could be traced back to the frozen pipe, Courts are not required to return to the “metaphysical” point of origin of the event.  In other words, the Court of Appeals rejected the line of thought that one must return to the event that set in motion a series of subsequent events.  Rather, the Court instructed that the analysis is only required to “follow the chain of causation so far, and so far only, as the parties meant that we should follow it.” That determination, the Court held, is decided under the ordinary business person standard.

In Album, the Court found that an ordinary business person would have believed the damage was caused by water (and stopped its investigation at that point).  Accordingly, the freezing exclusion was held inapplicable, and coverage affirmed for the insured.  However, the application of the Court’s standard in Album does not always result in coverage being confirmed.

  • Water and Steam lead to a breakdown of insulation material.  The breakdown of the insulation material ultimately results in an arching event which causes a loss.  The Policy covers losses caused by steam, but excludes losses caused by the electrical arching.  The Second Department holds that the dominant and efficient cause of loss is caused by the arching.  The Court is not required to travel farther back the causal chain.

Home Ins. Co. v Am. Ins. Co., 147 AD2d 353 [1st Dept., 1989]

  • Insured sustains property damage due to rainwater that overflows gutters.  The insurer disclaims on the basis of a “rainwater” exclusion.  Insured opposes the denial on the basis that the loss was actually caused by construction debris from a neighboring premises.  In affirming the denial, the Appellate Division stated “the ‘efficient physical cause’ was the rainwater itself.  A reasonable business person would conclude in this case that the interior property was damaged by rainwater from the previous evening's storm, and would look no further for alternate causes. The claim as it might apply to roof damage should proceed.”

Kennel Delites, Inc. v T.L.S. NYC Real Estate, LLC, 49 AD3d 302 [1st Dept., 2008].

Concurrent Causation

Unlike successive causation which sets forth a series of events leading to a loss, concurrent causation occurs when multiple factors are at work at the same time.  Further, unlike successive causation, New York courts have not conclusively addressed this issue.

As described herein, we would anticipate that a Court would apply a similar version of the standard set forth in Album, and we note several appellate decisions appear to indicate just that.  However, at least one appellate ruling (Ginsberg, referenced infra) indicates that there are substantive differences between the two standards. 

  • Rain water results in surface water buildup.  Water eventually enters the premises from under door and through the foundation.  Plaintiff argues that the rain entered the premises through wind damage.  In affirming the denial, the Second Department noted “We note that  “[a]s read by the ordinary and reasonable business person” (Album Realty Corp. v. American Home Assur. Co., 80 N.Y.2d at 1010, 592 N.Y.S.2d 657, 607 N.E.2d 804), a loss caused by “water below the surface of the ground” would certainly be found to encompass water that entered the soil from above, i.e., in the form of rain water, as posited by the plaintiffs in their bill of particulars.

Neuman v US Auto Assoc., 74 AD3d 925 [2d Dept, 2010]. 

  • Rain water results in surface water buildup.  Water eventually enters the premises from under door and through the foundation.  Plaintiff argues that the rain entered the premises through a wind damaged door.   Insured’s position denied as overly speculative, and coverage was affirmed.

Kannatt v Valley Forge Ins. Co., 228 AD2d 564 [2d Dept., 1996].

  • Loss caused by asbestos contamination.  In affirming the denial, the Appellate Division, Fourth Department noted “[t]o determine causation, one looks to the ‘efficient or dominant cause of the loss”, not the event that “merely set the stage for that later event’.”

Kosich v Metro. Prop. & Cas. Ins. Co., 214 AD2d 992 [4th Dept., 1995];
see also Kula v State Farm Fire & Cas. Co., 212 AD2d 16 [4th Dept., 1995 [holding “[o]nly the most direct and obvious cause should be looked to for purposes of the exclusionary clause.”)

  • Wind vs. Flood.  Insured sought coverage under a wind policy, and the carrier denied on the basis that the loss was caused by flood.  At the conclusion of trial, the Appellate Division, Second Department provided the following critique on the jury instruction

 

[a]lthough the successive causation question in Album Realty is distinguishable from the concurrent causation question here, the trial court's charge pursuant to the general rules of causation articulated in Album—that the jury ‘must consider which of the two causes [wind or flood] was the proximate, direct, dominant and efficient cause of the loss’, taking into account the reasonable expectations of the parties as to the scope of the exclusion for flood-caused losses—though imperfect, does not warrant a new trial.

Ginsberg v NY Prop. Ins. Underwriters Assoc., 210 AD2d 130 [2d Dept., 994].

Importantly, while this issue may remain unsettled in New York law, a review of other jurisdictions around the Country reveals a distinct majority rule.  (see Current Causation Versus Efficient Cause of Loss in First Party Property Insurance Coverage Analysis, Michael C. Phillips & Lisa L. Coplen, The Brief, American Bar Association, Winter 2007 issue).  Upon review of other jurisdictions, it is revealed that 40 States employ a test that is similar to the dominant and efficient cause of loss approach favored by the Court of Appeals in Album.  Only 7 jurisdictions have declined to follow the dominant and efficient cause of loss school of thought (Fla., Kentucky, Minnesota, North Carolina, Pennsylvania, Texas & Wyoming).  Finally, three jurisdictions, including possibly New York, have not squarely addressed this issue.  The remaining jurisdictions are Delaware and Nevada. 

In light of the foregoing, it appears that New York courts are trending toward applying the Album standard to both concurrent and successive causation losses.  Coverage decisions, we would propose, should be guided by those standards accordingly.

Property

11/14/12       Going 2 Extremes, Inc. v Hartford Financial Serv. Group, Inc.
Appellate Division, Second Department
Failure to Tender Proofs of Loss Within 60 Days is Fatal to Insured’s Claim
Pretty straight-forward on this one.  Trumbull Insurance Company forwarded a demand for Proofs of Loss to plaintiff after the latter sustained a fire loss at their premises.  When plaintiff failed to serve the executed Proofs of Loss on Trumbull within the proscribed 60 day deadline, Trumbull responded by denying the claim.

In affirming the denial, the Appellate Division noted plaintiff’s argument that it had
substantially completed the Proofs of Loss did not excuse the failure to tender the documents within the time period allotted.  In addition, the Court noted that plaintiff’s allegations of waiver on the part of Trumbull were unsubstantiated. 

Potpourri

11/14/12       Gonzalez v Woodbourne Arboretum, Inc.
Appellate Division, Second Department
Special Employee – Part I = Failure to Establish Manner, Details and Result of Work Product a Hallmark of Special Employee Relationship
Plaintiff’s decedent was killed when a 1 ton water cannon fell on him.  At the time of the incident, decedent was attempting to move the cannon into a garage area for overnight storage.  The cannon was at the location for repairs to/replacement of its rear-axle.

Plaintiff commenced this claim alleging violations of Labor Law §§ 240 (1) and 241(6), respectively.  Plaintiff argued, essentially, that the cannon qualified as a “structure” that fell while it was being improperly hoisted or secured. 

Defendant’s cross-moved to dismiss the Labor Law § 240(1) on the basis that repair/replacement of a rear-axle amounted to nothing more than “routine maintenance” which would not give rise to an cognizable cause of action.  The Second Department agreed with this analysis, and dismissed the Labor Law §240(1) claim accordingly.

With regard to the Labor Law § 241(6) claim, the Court noted that the incident did not involve the enumerated acts of construction, demolition or excavation.  Accordingly, plaintiff’s Labor Law §241(6) failed as well.

However, defendant’s argument that plaintiff’s claim should be dismissed by operation of Workers’ Compensation Law § 11, was denied by the Appellate Division.  In support of its position, defendant argued that decedent was acting as a “special employee” at the time of his death.  In denying this argument, the Court noted that defendant was not an alter-ego of decedent’s actual employer.  In addition, and more importantly, defendant did not control the manner, detail and/or ultimate result of decedent’s work.  Accordingly, there was no basis to conclude that a special employment relationship had been formed. 

11/13/12       Amill v Lawrence Ruben Company, Inc.
Appellate Division, Third Department
Special Employee – Part II = Failure to Establish Direction, Supervision or Control is Fatal to Special Employee Argument
Plaintiff was injured when he fell from an extension ladder at the Blair Perrone Steakhouse.  The premises was owned by Tower, and was managed by Ruben.  Tower leased the premises to Four Little.  Four Little, in turn, contracted with Blair Perrone to operate a restaurant at the premise. 

At the time of the incident, plaintiff was paid by CJ Service who was a payroll company formed by the principals of Blair and funded by the principals of Four Little. 

Tower and Rubin moved for summary judgment on the basis that they were, in effect, out of possession landlords with no right of reentry.  Where, as here, the incident did not involve a structural defect known to either party it followed that there was no basis for liability. 

Four Little also moved for summary judgment on the basis that the Workers’ Compensation Law barred any action.  In support of its position, Four Little argued that it was the alter-ego of CJ Service, or, in the alternative, plaintiff was its special employee.  As with the earlier case from the Second Department, the First Department noted that there was no evidence that Four Little qualified as an alter-ego of CJ Service.  Moreover, there was likewise no evidence to conclude that Four Little directed, controlled or supervised plaintiff’s work.  Accordingly, there was no basis to conclude a special employment relationship existed. 



CASSIE’S CAPITAL CONNECTION
Cassandra A. Kazukenus
cak@hurwitzfine.com

Insurance Disaster Hotline to Help New Yorkers with Insurance Issues from Hurricane Sandy
DFS Employees Operate a Disaster Hotline 7 Days a Week from 8-8 During the Week and 9-4 on the Weekends
Governor Cuomo and DFS jointly announced the above hotline in an effort to help New Yorkers “receive their insurance assistance as quickly as possible.”  The purpose of the hotline is to allow New Yorkers to get help at any time of day or night.  Superintendent Lawsky stated “People pay for insurance so it will protect them from disasters such as Storm Sandy.  The Department of Financial Services is monitoring the insurers’ response and will step in whenever necessary to aid homeowners.”

In addition to the above, DFS has mobilized its mobile command center to provide essentially the same services. 

The press release also reminds New Yorkers that Governor Cuomo has taken several measures to protect homeowners which include:

  • Hurricane deductibles will not apply to any damage from Storm Sandy covered by homeowners’ insurance because the Storm did not have hurricane force winds when it reached New York
  • Directed DFS to instruct insurers to accept homeowners’ documentation, including photos and video, of losses so residents can discard debris.
  • Directed DFS to impose a 30-day moratorium on cancelling or terminating homeowners’ and small business owners’ insurance policies in storm stricken areas

 

SMART Act (Revisions to Medicare Secondary Payer Act)
Proposed Changes to the MSPA Passes the Energy and Commerce Committee on Health
As you may recall, we reported in September that the SMART Act passed the Energy and Commerce Subcommittee on Health and was to go before the full committee.  You may have guessed already, the SMART Act also passed the full committee as well.  Thus, the SMART Act may be considered by the House.

Below is the summary of the legislation we had previously provided:

The SMART Act seeks to:

  • Require Medicare to provide the conditional payment amount due within 65 days of a request along with an appeal right if it is believed Medicare was incorrect.
  • Will set a threshold limit below which the MSP will not apply because the cost of recovery exceeds the amount that will be recovered.
  • The Section 111 $1,000 per day per claim penalties applied when a claim was improperly or not reported would be amended to be an up to a $1000 per day per claim penalty.  It would also direct the Department of Health and Human Services (HHS) to establish safe harbors that will provide companies with protection for good faith compliance efforts.
  • Would direct Medicare to identify an alternative method of identifying individuals (such as the last four digits of an SSN) for the purpose of MSP reporting. 
  • The legislation will clarify that the three-year MSP statute of limitations (measured from the date of reporting) covers all MSP claims.

 

FIJAL’S FEDERAL FOCUS
Katherine A. Fijal
kaf@hurwitzfine.com

11/19/12       American Bldg. Supply Corp. v. Petrocelli, Inc.
Court of Appeals – New York
Agent or Brokers Errors & Omissions – An Insured’s Duty to Read
Although I generally report only on insurance decisions rendered in the Circuit Courts of Appeals, this week I am reporting on an important decision rendered by the New York Court of Appeals which addressed whether an insured’s failure to read its policy and inform its agent of inaccurate of incomplete coverage precludes an insured from maintaining a viable negligence and/or breach of contract claim against its agent or broker.

American Building Supply Corp. [“ABS”] is a business which sells and furnishes building materials to general contractors. ABS had a sublease agreement with DRK, LLC [‘DRK”] for a premises located in the Bronx.  Pursuant to the agreement ABS was required to procure liability insurance in the minimum amount of $5,000,000. 

Prior to October 2004, ABS procured its insurance from Pollack Associates.  The policy was issued by Burlington Insurance Company [“Burlington”], an excess carrier, not licensed in the State of New York.  DRK was named as an additional insured on the policy.  The policy did not comply with the requirements set forth by the lease agreements and was subsequently cancelled due to nonpayment of premiums.

In October, 2004, ABS hired defendant, Petrocelli Group, Inc. [“Petrocelli”] as its insurance broker.  Petrocelli arranged to reinstate the Burlington policy.  ABS claims that in its discussions with defendant regarding a new policy, it specifically requested general liability coverage for its employees in case of injury, as required by the lease agreement.  ABS also alleged that it informed Petrocelli that only employees entered the premises, never customers, as no retail business was conducted at the Bronx location. In addition, ABS stated that Petrocelli visited the premises and had assured the property owned that the insurance deficiencies would be corrected when the policy was up for renewal.

Petrocelli renewed the Burlington policy for the period June 14, 2005 to June 14, 2006.  The policy was essentially the same as plaintiff had previously received through its previous broker. As relevant here, the policy contained a Cross Liability Exclusion which provided that, “This insurance does not apply to any actual or alleged “bodily injury”, “property damage,” “personal injury” or “advertising injury” to  . . . A present, former, future or prospective partner, officer, director, stockholder or employee of any insured”.  Plaintiff did not read the policy upon receipt, nor did Petrocelli.

In October, 2005, one of ABS’s employees was injured at the Bronx facility.  Burlington disclaimed based on the Cross Liability Exclusion and DRK sought declaratory relief as a potential additional insured on the policy.  The Supreme Court denied Burlington’s motion for summary judgment but the Appellate Division reversed.

Next, ABS commenced an action against Petrocelli for negligence and breach of contract.  Petrocelli later moved for summary judgment and the lower court denied its motion.  The Court found that ABS testified that it informed defendant it required coverage if any employee injured himself and that a jury could rationally conclude that ABS made a specific request for such coverage to Petrocelli. The Appellate Division reversed, holding that although issues of fact may exist as to ABS’s request for specific coverage, ABS’s failure to read and understand the policy precludes recovery in this action.  For the following reasons the Court of Appeals [“Court”] reversed.

First, the Court agreed that questions of fact existed as to whether ABS specifically requested coverage for its employees in case of accidental injury. The evidence indicated that no one but employees ever entered the premises and as such the insurance procured by Petrocelli hardly made sense.

Next, the Court disagreed with the Appellate Division that ABS’s claim was barred by receipt of the insurance policy without complaint. The Court noted that the various Appellate Departments in New York were split on this issue, noting that the First and Fourth Departments have held that one an insured has received his policy, he is presumed to have read and understood it and cannot rely on the broker’s word that it covers what is requested.  On the other hand, the Second Department has held that receipt and presumed reading of the policy does not bar an action for negligence against the broker. 

The Court concluded that the facts as alleged here, i.e., that ABS requested specific coverage and upon receipt of the policy did not read it and lodged no complaint, should not bar ABS from pursuing an action against its broker.  The Court noted that although it is better practice for the insured to read the policy, the insured should have a right to look to the expertise of its broker with respect to insurance matters.  The Court concluded that the failure to read the policy, at most, may give rise to a defense of comparative negligence but should not altogether bar an action against its broker.

There was a strong dissent in this case which cited to long standing precedent pointing out that an a party to any contract, not only an insurance policy, should not be permitted to complaint about the contents of the contract until that party has at least read it.  Further pointing out that in the past the Court of Appeals, in its own decisions, has made clear that an insured is in a better position to know their own assets and protect themselves than an agent or broker.  The dissenting justice did point of that there may be some exceptions, as when an agent or broker misrepresents the coverage provided, but other than that, an insured must take some responsibility to protect its own assets.
Editor’s Note:  This decision also erodes long standing decisional law in New York which holds that an agent or broker is not a “professional” and as such, may not be held to a higher duty of care without meeting the criteria that there was a “special relationship” between the insured and its agent or broker.

 

KEEPING THE FAITH WITH JEN’S GEMS

Jennifer A. Ehman
jae@hurwitzfine.com 

Two Recent New York Cases on Consequential Damages Reflect a Ongoing Struggle
At the start of this column, I wanted to take a minute to discuss two cases that we reported on last week involving insureds asserting claims for consequential damages.  Steve reported on the Third Department’s decision in Gauthier v. Countryway Ins. Co., and I reported on the Fourth Department decision in Stein, LLC v. Lawyer Tit. Ins. Corp.   

I would submit that these two decisions represent the ongoing struggle within the courts to define the parameters of consequential damages.  Since the Court of Appeals decision in Bi-Economy, and its companion case Panasia Estates, the question that has always been left open is what constitutes a breach of the duty of good faith and fair dealing in this context.  While the Court of Appeals clearly did not provide a carte blanche argument that every breach of every insurance policy constitutes a breach of the covenant, we are stilling struggling to define what standard should be applied.  It seems clear that insureds are not required to satisfy the four prong bad faith test outlined by the court in Rocanova (i.e.that defendant’s conduct must be actionable as an independent tort; that the tortious conduct must be of an egregious nature; that the egregious conduct must be directed to the plaintiff; and that the egregious conduct must also be part of a pattern of conduct directed to the public generally).  But, if egregious conduct by the insurer is not required, what type of showing is required?

In Gauthier, the insureds alleged that defendant breached the covenant of good faith and fair dealing by failing to investigate and pay their claim in a timely and good faith manner.  In support of this claim, the insureds submitted an affidavit from an expert adjuster attesting that defendant’s adjuster, in handling the claim, deviated from accepted adjusting practices and standards in numerous respects.  Defendant then submitted a contrary affidavit.  When faced with these two affidavits, the court found that the question of defendant's bad faith in settling the insurance claim remained open.  In reviewing this decision, what is absent is any discussion of what elements a court will look at to determine whether the carrier acted in good faith.  Clearly, there is no indication that the carrier acted in an egregious manner.  So, what is the standard to prove a breach of the covenant that would potentially entitle the insured to consequential damages?
In Stein, the court articulated the standard for consequential damages, but again declined to try to interpret it.

Ultimately, these cases still leave open the haunting question of what standard should be applied.  It appears that it must be something more than mere breach of contract (since both the Gauthier and Stein case mention that consequential damages result from the breach of the covenant of good faith and fair dealing), but less than the bad faith standard discussed in Rocanova.   

11/14/12       Lakeland True Value Hardware, LLC v. The Hartford Ins. Co.
Supreme Court of Idaho
Bad Faith Cause of Action Dismissed Under Idaho Law Where Insurer Was Not Provided Sufficient Information to Evaluate Claim
In this decision, the insured brought an action against its insurer for bad faith and breach of contract, alleging that the insurer failed to pay its claims for business personal property loss and loss of business income arising from collapse of building roof.  In dismissing the insured’s bad faith claim, the court explained, applying Idaho law, that a claim for bad faith exists where “(1) the insurer intentionally and unreasonably denied or withheld payment, (2) the claim was not fairly debatable, (3) the denial or failure to pay was not the result of a good faith mistake, and (4) the resulting harm is not fully compensable by contract damages.”

The crux of this decision hinged on the second element.  An insurer does not act in bad faith if it declines to pay sums that are reasonably in dispute. Rather, under Idaho law, a claim for bad faith arises only where an insurer intentionally denies or delays payment, even though the insured's claim is not fairly debatable.

In affirming the lower court’s grant of summary judgment, the Court held that whether a claim is fairly debatable is dependent on whether the insurer possesses sufficient information to make a reasonably certain valuation of the claim.  In this case, a review of the record revealed that defendant repeatedly requested information from the insured relating to both the insured’s business personal property claim and its claim for lost business income.  The record further revealed that the delay in payment of the insured’s claims was directly related to the absence of the requested information. Thus, the record was devoid of evidence that the insured’s claim was not fairly debatable, and in turn the insured’s bad faith claim was fairly dismissed.

10/05/12       Yan Fang Du v. Allstate Ins. Co.
United States Court of Appeals, Ninth Circuit
Court Declines to Address Whether Insurer Has an Affirmative Duty Under California Law to Initiate Settlement Discussions in the Absence of a Settlement Demand
This decision applies California law to a situation involving an underlying motor vehicle accident that occurred on June 17, 2005.  Plaintiff and three others individuals allegedly sustained injury. 

Defendant issued a personal automobile policy to the purported tortfeasor with limits of $100,000 per individual and $300,000 per occurrence.  After reviewing notice of the incident, defendant attempted to obtain medical documentation from the injured plaintiff and a statement from its insured.  Although neither party was cooperating with the investigation, defendant still evaluated the claim and accepted its insured’s liability. 

No settlement demands or offers were made until June 9, 2006.  At that point, plaintiff’s attorney, who also represented the other three injured individuals, submitted a policy limits demand.  Defendant’s adjuster told the attorney that she had insufficient information about the other three individuals and suggested settling only plaintiff’s claim.  The attorney rejected this suggestion, and indicated that defendant had to pay the full $300,000 policy limit and settle all claims.  In August 2006, the attorney rejected defendant’s $100,000 settlement offer to plaintiff “as too little too late.”  Notably, this all occurred before a lawsuit was even commenced. 

Two years later, the case went to trial and plaintiff was awarded over four million dollars.  The insured then assigned his right to bring a bad faith action against defendant.  In this action, plaintiff alleged that that defendant failed to affirmatively settle the claim within the limits even after the insured’s liability for a judgment in excess of the policy limits became clear. 

As relevant here, at trial, plaintiff requested a jury instruction that stated “[i]n determining whether [defendant] breached the obligation of good faith and fair dealing owed to [the insured], you may consider whether the defendant did not attempt in good faith to reach a prompt, fair, and equitable settled of [plaintiff’s] claim after liability [of its insured] had become reasonably clear.”  The trial court declined to charge the jury in that manner concluding that an insurer has no duty to initiate settlement discussions in the absence of a settlement demand.  

Instead of determining whether the instruction was appropriate, the Court avoided this question and instead found that the instruction lacked any factual foundation because the issue of settlement was broached at a sufficiently early time in the litigation that it vitiated any claim.  The record supported defendant’s contention that it initiated settlement talks in a timely faction in view of the circumstances. 

Take Away:  This case seems like an attempt by plaintiff’s counsel to set up the insurer for bad faith just because he knew that his client was severely injured and there was limited coverage.  It is good to see that the court did not let him.

 

JON’S JOURNAL

Jonathan M. Gorski
jmgorski@hurwitzfine.com

 
No decisions from the lower courts on which to report.

 

EARL’S PEARLS
Earl K. Cantwell

ekc@hurwitzfine.com

LIMITS ON STATUTE OF REPOSE

Many states as part of “Tort Reform” have adopted various statutes of repose which go beyond traditional statutes of limitations and bar certain claims after a period of time regardless of issues such as date of breach, date of discovery, date of accident, etc.  A New Hampshire statute was analyzed in the case of Phaneuf Funeral Home v Little Giant Pump Company, 2012 N.H. Lexis 88 (N.H. June 29, 2012) with the result that one defendant was allowed to take advantage of the statute, but three others were not.  This case also addresses a collision at the intersection of product liability law, construction law, and the statutory law.

The case involved a decorative fountain installed on the wall of a funeral home in January 1999.  Little Giant Pump manufactured the fountain.  It was purchased from Elegant Earth, a retailer, and installed by Boyer Interior Design using a power cord made by Leviton Manufacturing.  In March 2007, a fire broke out allegedly caused by the water fountain’s defective pump and power cord.  The funeral home sued Boyer, Elegant, Leviton, and Little Giant.  Each defendant moved for summary judgment based on an eight year statute of repose found in New Hampshire Revised Statutes §508:4-b.  The trial court granted each defendant’s motion for summary judgment, and that decision was appealed.

The plaintiff first argued that the statute of repose did not apply to “product liability actions”, but the court declined the occasion to adopt a categorical rule excluding product liability actions from the statute’s ambit.

The plaintiff next argued that the fountain per se did not constitute an improvement to “real property”, the exact language of the statute.  However, the court disagreed finding that, while as initially purchased and manufactured the fountain may not have been an improvement, it became an improvement once Boyer integrated the fountain into the building structure, in effect making it a fixture. 

The plaintiff’s third argument was more successful.  Plaintiff contended that the statute affords protection to manufacturers and sellers of products but only bars claims against those who provide products “particular” to the real property improvement at issue.  In essence, the plaintiff tried to restrict the interpretation of the statute to those who participated in the work and enterprise of working on and improving the real property.  The appellate court noted this was a question of first impression in New Hampshire, and that other jurisdictions had split on whether to interpret similar statutes generally to protect product manufacturers or more narrowly.

The appellate court ruled that, because the water fountain was a generic product that was not manufactured to be an improvement, nor specifically designed to be one, it was not inherently related to “improving real property”.  The fountain was designed simply to be hung on a wall.  Elegant, Little Giant, and Leviton were not involved in the process of improving the value or use of the real property.  The court therefore held that the trial court erroneously granted summary judgment to Elegant, Little Giant, and Leviton.  It did rule that Boyer, the interior design firm, could rely upon the statute since it installed the fountain and transformed it from a product into an improvement to the real estate.  In part, this interpretation was based on an opinion that the statute was intended to grant added protections to those involved in the construction trade, which here applied most directly to Boyer.

This case raises several points and questions:

  1. This product (the fountain) seems uniquely and specially manufactured for use in real property and construction, so the conclusion that it was not “specifically designed” to be a real property improvement is questionable.  Lighting fixtures, wall sockets, power outlets, plumbing fixtures, etc. are all generic, manufactured products, but they are specifically intended and designed for the construction industry.  Purchase, installation and use of those products would seem to inherently relate to the “creation of an improvement to real property” which is the triggering language in the statute.
  2. This case represents an example of the difficulty in determining what parties and what claims may be entitled to the benefit of such statutes of repose.  Here, for example, the statute was interpreted to primarily benefit those “involved in the construction trade” so the party that was closest to the “construction trade” was entitled to the benefit of the statute, whereas product manufacturers and retailers removed from the actual real property improvement were not.
  3. A good strategy on appeal is to assert a number of alternative theories since, in this case, two primary theories offered by the plaintiff were rejected but the third was accepted to allow suit to go forward against the three of the four defendants. 
  4. This case also appears to have been decided as much upon the legislative history or perceived “purpose” of the particular statute of repose as somehow illustrating and defining the actual statutory language.

 

ACROSS BORDERS
Courtesy of the FDCC Website
www.thefederation.org

Nothing of consequence on which to report.

REPORTED DECISIONS

Szczukowski v. Progressive Northeastern Ins. Co.


Appeal from a judgment (denominated order and judgment) of the Supreme Court, Chautauqua County (James H. Dillon, J.), entered December 13, 2011 in a declaratory judgment action. The judgment, inter alia, declared that defendant is obligated to provide coverage to its insured in the underlying action.

Hurwitz & Fine, P.C., Buffalo (Dan D. Kohane of Counsel), for Defendant-Appellant.
Sakowski & Markello, LLP, Elma (Joseph A. Sakowski of Counsel), for Plaintiff-Respondent.

It is hereby ORDERED that the judgment so appealed from is unanimously reversed on the law without costs and judgment is granted in favor of defendant as follows:

It is ADJUDGED AND DECLARED that defendant is not obligated to provide coverage to its insured in the underlying action.

Memorandum: Defendant appeals from a judgment declaring that it is obligated to provide insurance coverage to its insured in the underlying personal injury action. Plaintiff was involved in a one-vehicle accident on April 22, 2005 when he tried to avoid colliding with a vehicle driven by defendant's insured. It is undisputed that defendant's insured did not provide notice of the accident to defendant and that defendant received notice of the accident from its agent when the insured provided the agent with the summons and complaint in the underlying action, which was commenced on December 6, 2005. Supreme Court erred, following a nonjury trial, in implicitly determining that the insured was justified in failing to provide defendant with notice because she reasonably believed that she was not liable (cf. Argentina v Otsego Mut. Fire Ins. Co., 86 NY2d 748, 751). The insured or the party otherwise seeking to impose the obligation to provide coverage "bears the burden of establishing the reasonableness of the proffered excuse" (Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 744) and, here, neither the insured nor plaintiff alleged that the insured's failure to report the accident to defendant was reasonable. In any event, we note that the insured was issued a citation for failure to yield the right of way and she was aware that plaintiff had sustained serious injuries. We therefore conclude that the insured was not justified in believing that there would not be a lawsuit, and thus the delay in notifying defendant was not reasonable.

It is also undisputed that plaintiff did not exercise his "independent right" to notify defendant of the accident (Potter v North Country Ins. Co., 8 AD3d 1002, 1004). "[T]he injured party has the burden of proving that he, she, or counsel, acted diligently in attempting to ascertain the identity of the insurer, and thereafter expeditiously notified the insurer" (Spentrev Realty Corp. v United Natl. Specialty Ins. Co., 90 AD3d 636, 637). Here, although plaintiff promptly sought legal counsel, he admitted that he did not attempt to ascertain the identity of the insurer and that he did not notify defendant of the accident.

State Farm v. Raabe

Baxter Smith & Shapiro, P.C., Hicksville, N.Y. (Arthur J. Smith and Anne Marie Garcia of counsel), for appellant.
Nicolini, Paradise, Ferretti & Sabella, Mineola, N.Y. (John J. Nicolini of counsel), for plaintiff-respondent.

DECISION & ORDER
In an action for a judgment declaring that the plaintiff is not obligated to defend or indemnify the defendant Joseph Alessi in an underlying personal injury action entitled Bisignano v Raabe, pending in the Supreme Court, Nassau County, under Index Number 17128/08, the defendant Sean Raabe appeals, as limited by his brief, from so much of an order of the Supreme Court, Nassau County (Feinman, J.), dated August 23, 2011, as denied his motion for summary judgment declaring that the plaintiff is obligated to defend and indemnify the defendant Joseph Alessi in the underlying action.

ORDERED that the order is affirmed insofar as appealed from, with costs.

The plaintiff, State Farm Fire and Casualty Company, commenced this action seeking a judgment declaring that it was not obligated to defend or indemnify the defendant Joseph Alessi in an underlying personal injury action arising from an altercation between Alessi and the defendants Sean Raabe and Anthony Bisignano, Jr., that occurred in the parking lot of the defendant St. Rose of Lima Roman Catholic Church. Issue was joined by each defendant and, after discovery was completed and a note of issue was filed, Raabe moved for summary judgment declaring that State Farm is obligated to defend and indemnify Alessi in the underlying action. State Farm opposed the motion. In an order dated August 23, 2011, the Supreme Court, inter alia, denied the motion, determining that in opposition to Raabe's showing that State Farm failed to comply with Insurance Law § 3420(d)(2), State Farm raised triable issues of fact as to whether the underlying incident was an accident or an intentional act and, thus, whether it was a covered occurrence under the subject insurance policy. Raabe appeals. We affirm.

Raabe established his prima facie entitlement to judgment as a matter of law by submitting evidence that State Farm failed to give written notice of disclaimer to all interested parties in the underlying action pursuant to Insurance Law § 3420. In opposition, however, State Farm raised triable issues of fact. [*2]

While State Farm does not dispute that it did not provide timely written notice to all interested parties in the underlying action, it contends that it was not required to do so. "A disclaimer pursuant to Insurance Law § 3420(d) is unnecessary when a claim does not fall within the coverage terms of an insurance policy" (York Restoration Corp. v Solty's Constr., Inc., 79 AD3d 861, 863; see Markevics v Liberty Mut. Ins. Co., 97 NY2d 646, 648; Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 188; Siragusa v Granite State Ins. Co., 65 AD3d 1216, 1217). "An insurer is not required to deny coverage where none exists" (York Restoration Corp. v Solty's Constr., Inc., 79 AD3d at 863; see Hargob Realty Assoc., Inc. v Fireman's Fund Ins. Co., 73 AD3d 856, 858). "Therefore, when a claim is denied because the claimant is not an insured under the policy, there is no statutory obligation to provide prompt notice of the disclaimer" (York Restoration Corp. v Solty's Constr., Inc., 79 AD3d at 863; see Hargob Realty Assoc., Inc. v Fireman's Fund Ins. Co., 73 AD3d at 858; Siragusa v Granite State Ins. Co., 65 AD3d at 1217; Matter of Nationwide Ins. Co. v Smaller, 271 AD2d 537, 537-538; Matter of Fireman's Fund Ins. Co. v Freda, 156 AD2d 364, 366).

We reject Raabe's contention that the policy at issue is ambiguous. The policy issued by the plaintiff defines "occurrence" as an "accident . . . which results in . . . bodily injury" and expressly provides that it does "not apply to (a) bodily injury or property damage: (1) which is either expected or intended by an insured; or (2) which is the result of willful and malicious acts of the insured." Thus, to the extent that any injuries sustained by the plaintiff in the underlying personal injury action arose from intentional acts, the policy here affords no coverage, and compliance with the disclaimer requirement of Insurance Law § 3420(d) was unnecessary (see Matter of Nassau Insurance Co. [Bergen—Superintendent of Ins.], 78 NY2d 888; Desir v Nationwide Mut. Fire Ins. Co., 50 AD3d 942; John Hancock Prop. & Cas. Ins. Co. v Warmuth, 205 AD2d 587, 588).

Here, State Farm's submissions raised a triable issue of fact as to whether the incident giving rise to the injuries fell beyond the coverage terms of its policy (see Desir v Nationwide Mut. Fire Ins. Co., 50 AD3d 942; Allstate Ins. Co. v Schimmel, 22 AD3d 616; Tangney v Burke, 21 AD3d 367; Diviney v Aetna Life & Cas. Co., 257 AD2d 643).

Accordingly, the Supreme Court properly denied Raabe's motion for summary judgment declaring that State Farm is obligated to defend and indemnify Alessi in the underlying action.

46th Street Development, LLC, v. Marsh, USA, Inc.

Greenberg, Trager & Herbst, LLP, New York (Stuart Rosen of counsel), for appellant.
Seyfarth Shaw LLP, New York (Jonathan P. Wolfert of counsel), for respondent.

Appeal from order, Supreme Court, New York County (Eileen Bransten, J.), entered on or about August 25, 2011, which granted defendant's motion to dismiss the complaint for failure to state a cause of action, deemed an appeal from the judgment, same court and Justice, entered October 18, 2011, dismissing the complaint (CPLR 5501 [c]), and, so considered, the judgment unanimously affirmed, with costs.

Plaintiff failed to state a cause of action based on defendant's failure to procure insurance coverage for a delay in obtaining temporary certificates of occupancy (TCO coverage) for the subject condominiums. Absent a specific request for the insurance, defendant, as broker, had no duty to obtain coverage (see Hoffend & Sons, Inc. v Rose & Kiernan, Inc., 7 NY3d 152, 157-158 [2006]). Here, there is no evidence that plaintiff specifically requested that defendant obtain TCO coverage. Nor was there a special relationship between the parties (see Murphy v Kuhn, 90 NY2d 266, 272 [1997]).

We have considered plaintiff's remaining arguments and find them unavailing.

Dupree v. Scottsdale Insurance Company

Schlam Stone & Dolan LLP, New York (Bradley J. Nash of counsel), for Courtney Dupree, appellant.
DePetris & Bachrach, LLP, New York (Marion Bachrach of cousel), for Rodney Watts, respondent-appellant.
Boundas, Skarzynski, Walsh & Black, LLC, New York (Alexis J. Rogoski and Aron M. Zimmerman of counsel), for respondent.

Order, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered on or about June 29, 2012, which, to the extent appealed from, granted plaintiffs' motions for a preliminary injunction directing defendant insurance company to pay plaintiffs' defense costs but declined to direct defendant to pay costs accrued by plaintiff Courtney Dupree prior to January 4, 2012, and costs accrued by plaintiff Rodney Watts prior to June 7, 2012, unanimously affirmed, without costs.

In this action brought to compel defendant insurance carrier to pay defense costs, incurred in civil and criminal litigation arising out of plaintiffs' actions as corporate officers, under a director's and officer's policy issued by defendant, the motion court properly considered irreparable harm and the equities (Gliklad v Cherney, 97 AD3d 401, 402 [1st Dept 2012]) and did not improvidently exercise its discretion (see Doe v Axelrod, 73 NY2d 748, 750 [1988]), in limiting the defense costs which defendant is required to pay.

The additional defense costs that plaintiffs seek to recover constitute monetary harm which can be compensated by damages and does not constitute irreparable injury for which injunctive relief will be granted (Matter of J.O.M. Corp. v Department of Health, 173 AD2d 153 [1st Dept 1991]). The motion court properly determined that directing the payment of past defense costs may deplete the $5,000,000 limit on the policy thereby depriving plaintiff Watts of coverage under the policy and disturbing, rather than maintaining, the status quo (see Morris v. Port Auth. of N.Y. & N.J., 290 AD2d 22, 26 [1st Dept 2002]).

Navarro v. PC Group, LLC


Kenney Shelton Liptak Nowak LLP, Buffalo, N.Y. (Timothy E. Delahunt of counsel), for third-party defendant-appellant.

DECISION & ORDER

In an action to recover damages for personal injuries, and a third-party action for a judgment declaring that the third-party defendant is obligated to defend and indemnify the defendant third-party plaintiff in the main action, the third-party defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Bunyan, J.), dated August 2, 2011, as denied its motion for summary judgment declaring that it is not obligated to defend and indemnify the defendant third-party plaintiff in the main action, and granted that branch of the defendant third-party plaintiff's cross motion which was for summary judgment declaring that it is so obligated.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, the third-party defendant's motion for summary judgment declaring that it is not obligated to defend and indemnify the defendant third-party plaintiff in the main action is granted, that branch of the defendant third-party plaintiff's cross motion which was for summary judgment declaring that the third-party defendant is so obligated is denied, and the matter is remitted to the Supreme Court, Kings County, for the severance of the third-party action and the entry of a judgment declaring that the third-party defendant is not obligated to defend and indemnify the defendant third-party plaintiff in the main action.

In the course of the development of a residential property on Staten Island, the plaintiff, an employee of Total Building & Condo Maintenance, allegedly fell off a ladder and sustained injuries. The general contractor, the defendant third-party plaintiff, Trades Construction Services Corp. (hereinafter Trades), sought a defense and indemnification from its insurer, the third-party defendant, Mt. Hawley Insurance Company (hereinafter Mt. Hawley). However, Mt. Hawley denied coverage on the ground that Trades had not complied with certain conditions to coverage under endorsement 102A of the Mt. Hawley policy. After the plaintiff commenced an action against, among others, Trades, Trades commenced a third-party action against Mt. Hawley for a judgment declaring that Mt. Hawley is obligated to defend and indemnify it in the main action. Mt. Hawley moved for summary judgment declaring that it is not obligated to defend and indemnify Trades in the main action, and Trades cross-moved, inter alia, for summary judgment declaring that Mt. ]Hawley is so obligated. The Supreme Court denied the motion and granted the aforementioned branch of the cross motion.

Contrary to the Supreme Court's conclusion, the conditions to coverage outlined in endorsement 102A are clear and unambiguous (see Mt. Hawley Ins. Co. v Liberato, 2010 WL 2653326, 2010 US Dist LEXIS 63600 [ED NY]; Mt. Hawley Ins. Co. v National Bdrs., LLC, 2009 WL 1919611, 2009 US Dist LEXIS 58215 [SD NY]; see also Mt. Hawley Ins. Co. v Van Cortlandt Vil., LLC, 2011 WL 5834255, 2011 US Dist LEXIS 134558 [SD NY]). Each of the requirements in endorsement 102A is an express condition precedent to coverage, and the failure to comply with any one of them is a sufficient basis to disclaim coverage (see Mt. Hawley Ins. Co. v National Bldrs., LLC, 2009 WL 1919611, 2009 US Dist LEXIS 58215 [SD NY]). Mt. Hawley established, prima facie, that Trades did not comply with all of the conditions outlined in endorsement 102A, and, in opposition, Trades failed to raise a triable issue of fact (see generally Zuckerman v City of New York, 49 NY2d 557, 562).

Accordingly, the Supreme Court should have granted Mt. Hawley's motion for summary judgment and denied that branch of Trades' cross motion which was for summary judgment on the third-party complaint.

Since the third-party action is a declaratory judgment action, the matter must be remitted to the Supreme Court, Kings County, for the severance of the third-party action and the entry of a judgment declaring that Mt. Hawley is not obligated to defend and indemnify Trades in the main action (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

Travelers Casualty v. Alfa Laval Inc.

Graham Curtin, P.A., New York (Stephen V. Gimigliano of counsel), for Travelers Casualty and Surety Company and The Standard Fire Insurance Company, appellants.
Hardin, Kundla, McKeon & Poletto, P.A., New York (Stephen P. Murray of counsel), for Onebeacon America Insurance Company, appellant.
Anderson Kill & Olick, P.C., New York (William G. Passannante and Cort T. Malone of counsel), for respondent.

Order, Supreme Court, New York County (Debra A. James, J.), entered November 22, 2011, which, to the extent appealed from as limited by the briefs, granted defendant Alfa Laval Inc.'s motion for partial summary judgment declaring that plaintiff Travelers Casualty and Surety Company and defendant OneBeacon American Insurance Company are obligated to provide it with a complete defense against those claims that fell within the applicable scope of their policies, and denied Travelers' and OneBeacon's cross motions for summary judgment declaring that they have a duty to defend the underlying asbestos claims only on a pro rata "time on the risk" basis, unanimously modified, on the law, to vacate the declaration as to OneBeacon, as premature, and otherwise affirmed, with costs, to be paid by Travelers to Alfa Laval.

In this declaratory judgment action, Alfa Laval seeks insurance coverage under policies issued by several companies, including Travelers, for underlying asbestos bodily injury claims brought against Alfa Laval and its predecessor in name, DeLaval, as well as Alfa Laval's historical competitor, a company named Sharples, Inc. (the underlying claims), which assets Alfa Laval acquired in 1988.

The duty to defend is broader than the duty to indemnify, requiring each insurer to defend if there is an asserted occurrence covered by its policy; the insured should not be denied initial recourse to a carrier merely because another carrier may also be responsible (see Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 655 [1993]). Although the pro rata sharing of defense costs may be ordered when more than one policy is triggered by a claim, the court, in the interest of judicial economy, did not err in declining to order such sharing at this time, with the understanding that Travelers, Alfa Laval's longest standing insurer, may later obtain contribution from other insurers on applicable policies (id. at 655-656).

However, OneBeacon is correct that the court's ruling was inconsistent to the extent that both Travelers and OneBeacon cannot viably provide Alfa Laval's complete defense if both their policies are implicated by the same underlying action. In that case, Travelers, as the long standing insurer, should provide a complete defense, and OneBeacon may eventually be required to contribute to both defense costs and indemnification on a pro rata basis (id. at 655).

On this record, it cannot be determined whether any of the underlying actions implicate only OneBeacon's policy and not Traveler's.

Merrick v Lopez-Garcia


Sim & Record, LLP, Bayside (Sang J. Sim of counsel), for appellants.
McCabe, Collins, McGeough & Fowler, LLP, Carle Place (Patrick M. Murphy of counsel), for respondents.

Order, Supreme Court, Bronx County (Ben R. Barbato, J.), entered March 5, 2012, which granted defendants' motion for summary judgment dismissing the complaint alleging serious injury under Insurance Law § 5102(d), unanimously affirmed, without costs.

Defendants made out a prima facie showing that plaintiff did not suffer serious injury of a permanent nature. In opposition, plaintiff raised an issue of fact as to significant limitations in his cervical, thoracic and lumbar spine by submitting MRI reports, an EMG/NCV report, and Dr. Barry Sloan's affirmed report of recent findings of limitations (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350 [2002]). However, he failed to address the gap in treatment between April 2008, when he was last treated, and December 2011, when Dr. Sloan evaluated him for purposes of opposing defendants' motion. This "gap" is essentially a cessation of treatment (see Pommells v Perez, 4 NY3d 566, 574 [2008]). Plaintiff claimed that he stopped treatment because he could not afford it after his no-fault benefits ended, but he also testified that he had private health insurance. He never explained why he was unable to continue with treatment through his insurance, and testified only that the particular physical therapist he had been treating with did not accept his plan (see Ramkumar v Grand Style Transp. Enters. Inc., 94 AD3d 484 [1st Dept 2012]). Dr. Sloan was not plaintiff's treating physician, and his evaluation of plaintiff took place more than three and a half years after plaintiff was last treated. Because plaintiff did not adequately explain the gap in treatment, Dr. Sloan's opinion as to permanency, significance, and causation is speculative and seemingly tailored to meet the statutory definition of serious injury (see Arjona v Calcano, 7 AD3d 279, 280 [1st Dept 2004]).

Defendants established prima facie that plaintiff did not sustain a 90/180-day-category claim, by submitting plaintiff's bill of particulars alleging that he was not confined to bed or home at all and his deposition testimony that he was confined to home for only two months (see Mitrotti v Elia, 91 AD3d 449, 450 [1st Dept 2012]). Although he submitted a note from his employer stating that he did not work for four months after the accident, plaintiff testified that the company was operating in Florida during the requisite period and went bankrupt five months after his accident. His treating physician's report, dated about three months after the accident, noting that plaintiff would be able to go to Florida for work upon further improvement is not determinative of a 90/180-day injury, especially given that plaintiff testified only that he was unable to perform house chores or lift "things" after the accident, which is insufficient to show that he was unable to perform "substantially all" of his "usual and customary daily activities" during the requisite period (see Uddin v Cooper, 32 AD3d 270, 271 [1st Dept 2006], lv denied 8 NY3d 808 [2007]).

Hernandez v Raffetto


Richard T. Lau, Jericho, N.Y. (Kathleen E. Fioretti of counsel), for appellants.

DECISION & ORDER

In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Nassau County (Feinman, J.), entered January 11, 2012, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

ORDERED that the order is reversed, on the law, with costs, and the defendants' motion for summary judgment dismissing the complaint is granted.

The defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The defendants submitted competent medical evidence establishing, prima facie, that the alleged injuries to the plaintiff's left shoulder, left elbow, and right knee did not constitute serious injuries within the meaning of Insurance Law § 5102(d) (see Staff v Yshua, 59 AD3d 614).

In opposition, the plaintiff failed to raise a triable issue of fact (see Resek v Morreale, 74 AD3d 1043; Raleigh v Ram, 60 AD3d 747, 747-748). Accordingly, the Supreme Court should have granted the defendants' motion for summary judgment dismissing the complaint.

 

DeHaas v Kathan

Calendar Date: September 10, 2012
Before: Peters, P.J., Lahtinen, Kavanagh, Stein and Egan Jr., JJ.

Law Office of Jacob P. Welch, Corning (Anna Czarples of counsel), for appellants.
Bond, Schoeneck & King, PLLC, Syracuse (Stephanie M. Campbell of counsel), for respondents.

MEMORANDUM AND ORDER

Kavanagh, J.

Appeal (transferred to the Court by order of the Appellate Division, Fourth Department) from an order of the Supreme Court (O'Shea, J.), entered July 20, 2011 in Chemung County, which, among other things, granted defendants' cross motion for summary judgment dismissing the complaint.

Plaintiff Amber M. DeHaas claims that on January 30, 2004 she was seriously injured when a van owned by defendant Time Warner and operated by defendant Timothy R. Kathan backed into her vehicle while it was stopped on a public street in the Town of Southport, Chemung County. DeHaas and her husband, derivatively, commenced this action in June 2006 and subsequently moved for partial summary judgment on the issue of liability. In response, defendants cross-moved for summary judgment dismissing the complaint on the ground that DeHaas did not sustain a serious injury in this accident (see Insurance Law § 5102 [d]). Supreme Court denied plaintiffs' motion and granted defendants' cross motion, finding that plaintiffs did not raise a material question of fact as to whether DeHaas sustained a serious injury under the 90/180-day category of Insurance Law § 5102 (d). Supreme Court also found that plaintiffs, in their pleadings, had not alleged that DeHaas was seriously injured under any other category of the Insurance Law and dismissed the complaint. Plaintiffs appeal and we now affirm.

Plaintiffs argue that there are questions of fact as to whether DeHaas sustained a serious injury under the fracture, 90/180-day, permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102 (d). "On a motion for summary judgment dismissing a complaint that alleges a serious injury under Insurance Law § 5102 (d), the defendant bears the initial burden of establishing by competent medical evidence that plaintiff did not sustain a serious injury caused by the accident" (Howard v Espinosa, 70 AD3d 1091, 1091-1092 [2010] [internal quotation marks and citation omitted]; see Toure v Avis Rent A Car Sys., 98 NY2d 345, 352 [2002]; Womack v Wilhelm, 96 AD3d 1308, 1309 [2012]). In order to establish an injury under the permanent consequential limitation and significant limitation of use categories, "'the medical evidence submitted by [a] plaintiff must contain objective, quantitative evidence with respect to diminished range of motion or a qualitative assessment comparing [the] plaintiff's present limitations to the normal function, purpose and use of the affected body organ, member, function or system'" (Solis v Silvagni, 82 AD3d 1349, 1350 [2011], lv denied 17 NY3d 715 [2011], quoting John v Engel, 2 AD3d 1027, 1029 [2003]), and a plaintiff must demonstrate that the limitation of use that he or she sustained was more than mild, minor or slight (see Womack v Wilhelm, 96 AD3d at 1310; Licygiewicz v Stearns, 61 AD3d 1254, 1254-1255 [2009]). "A serious injury under the 90/180-day category[] is established through objective medical evidence, where a nonpermanent, medically-determined injury . . . prevented the plaintiff from performing substantially all of his or her usual and customary daily activities for 90 of the first 180 days following the accident" (Shackett v Nappi, 75 AD3d 709, 710 [2010] [internal quotation marks, citations and brackets omitted]; see Hildenbrand v Chin, 52 AD3d 1164, 1165 [2008]).

In support of their cross motion for summary judgment, defendants submitted an affidavit from physician David Hootnick who performed an examination of DeHaas and reviewed her medical records, including diagnostic and laboratory reports, and notes prepared by her treating physician. In concluding that DeHaas was not seriously injured in this accident, Hootnick referred to the diagnosis rendered by the emergency room physician who treated her on the day after the accident that DeHaas had sustained a "contusion to the right shoulder and lumbar strain" and cited her recent medical history, which documented treatment for back pain that she received five years prior to the accident. Hootnick also noted that an X ray performed in the emergency room was normal and simply showed "[a] slight lucency . . . in the anterosuperior corner of the L5 vertebral body . . . [that] could represent a normal variant of limbus vertebra, although a small avulsion of L5 cannot be fully excluded." In addition, Hootnick referred to other diagnostic tests performed on DeHaas, including three MRIs and a bone scan, all of which were normal, and cited reports prepared in connection with the physical therapy regimen undertaken by DeHaas in October 2005, which indicated that she enjoyed a full range of motion and normal rotation. Based upon the foregoing, Hootnick concluded that there was no objective medical evidence that DeHaas sustained a serious injury in this accident.

Hootnick's opinion — and the documents submitted in support of it — shifted the burden to plaintiffs to present objective medical evidence that raised a triable question of fact as to whether DeHaas, as a result of this accident, sustained a serious injury (see Womack v Wilhelm, 96 AD3d at 1310; Crawford-Reese v Woodard, 95 AD3d 1418, 1418 [2012]; Clark v Basco, 83 AD3d 1136, 1138 [2011]). In that regard, DeHaas submitted an affidavit from her treating physician, Mark Gibson, who, in concluding that she was seriously injured in this accident, referred to the emergency room X ray and argued that it established that DeHaas had sustained a possible avulsion fracture in the accident. However, as previously noted, radiological studies subsequently performed on DeHaas failed to confirm the presence of a fracture or any other pathology attributable to the accident, and Gibson's treatment notes not only confirm that all subsequent radiological studies performed on DeHaas were normal, but make no reference to a fracture. As for Gibson's reference to spasms noted on DeHaas through palpitations, he does not report performing any tests to induce these spasms or that he actually detected or observed them (see Toure v Avis Rent A Car Sys., 98 NY2d at 357; Peterson v Cellery, 93 AD3d 911, 913 [2012]; Houston v Hofmann, 75 AD3d 1046, 1048 [2010]). Further, while Gibson points to DeHaas's physical therapy records as evidence that her range of motion has been adversely impacted as a result of injuries she sustained in this accident, these documents fail to identify the objective or diagnostic tests used to support such a finding (see Clark v Basco, 83 AD3d at 1138).

It must also be noted that while DeHaas remained out of work until May 2004, her treatment records reflect that the decision not to return to work was based entirely on subjective complaints of pain that she made to Gibson, and not as a result of any objective findings he made while treating her (see Bowen v Saratoga Springs City School Dist., 88 AD3d 1144, 1146 [2011]). Based on the foregoing, plaintiffs have not raised a question of fact as to whether DeHaas sustained a serious injury under any of the alleged categories (see Cirillo v Swan, 95 AD3d 1401, 1402 [2011]). As a result of this conclusion, we need not address plaintiffs' motion for partial summary judgment on liability, and their remaining arguments have been found to be without merit.

 

Limardi v McLeod

Appeal from an order of the Supreme Court, Erie County (Kevin M. Dillon, J.), entered August 2, 2011 in a personal injury action. The order, insofar as appealed from, granted that part of the motion of plaintiff for summary judgment on the issue of negligence and denied the cross motion of defendants for summary judgment on the issue of serious injury.

Thomas P. Durkin, Rochester, for Defendants-Appellants.
Spadafora & Verrastro, Llp, Buffalo (Joseph C. Todoro of Counsel), for Plaintiff-Respondent.

It is hereby ORDERED that the order so appealed from is unanimously modified on the law by granting that part of defendants' cross motion for summary judgment dismissing the complaint insofar as the complaint, as amplified by the bill of particulars, alleges that plaintiff sustained a serious injury under the permanent loss of use category of serious injury within the meaning of Insurance Law § 5102 (d) and dismissing the complaint to that extent, and as modified the order is affirmed without costs.

Memorandum: Plaintiff commenced this action seeking damages for injuries he sustained when his vehicle was struck by a vehicle operated by defendant Barbara M. McLeod (defendant) and owned by defendant Leslie S. McLeod. Plaintiff moved for partial summary judgment on liability (see Ruzycki v Baker, 301 AD2d 48, 51), and defendants cross-moved for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d). Supreme Court granted that part of plaintiff's motion on the issue of negligence, denied that part of plaintiff's motion on the issue of serious injury, and denied the cross motion.

We reject defendants' contention that there is an issue of fact with respect to plaintiff's comparative negligence. Plaintiff met his initial burden on the motion of establishing that defendant was negligent as a matter of law and that her negligence was the sole proximate cause of the accident (see Whitcombe v Phillips, 61 AD3d 1431, 1431; Pomietlasz v Smith, 31 AD3d 1173, 1174). Specifically, plaintiff established that defendant violated Vehicle and Traffic Law § 1141 by turning left at an intersection directly into the path of plaintiff's vehicle and that defendant's failure to yield the right-of-way was the sole proximate cause of the accident (see Waltz v Vink, 78 AD3d 1621, 1621-1622; Pomietlasz, 31 AD3d at 1174; Gabler v Marly Bldg. Supply Corp., 27 AD3d 519, 520). In opposition to the motion, defendants failed to raise a triable issue of fact whether plaintiff was also negligent (see Pomietlasz, 31 AD3d at 1174; Berner v Koegel, 31 AD3d 591, 592; Maloney v Niewender, 27 AD3d 426, 426-427). Defendants' sole contention is that, because defendant could see plaintiff's vehicle approaching from two blocks away, plaintiff should likewise have been able to observe defendant's vehicle and to take evasive action when defendant turned in front of him. However, "[t]he record does not support [defendants'] contention that a triable issue of fact exists as to whether the plaintiff was comparatively negligent in the operation of [his] vehicle because []he failed to brake, sound [his] horn, or otherwise try to avoid the collision" (Berner, 31 AD3d at 592). "As . . . plaintiff had the right-of-way, []he was entitled to anticipate that . . . defendant would obey the traffic laws, which required . . . defendant to yield to . . . plaintiff's vehicle" (id. at 592-593; see Gabler, 27 AD3d at 520).

Although the fact that defendant made a left turn in front of plaintiff's vehicle does not absolve plaintiff of the duty to exercise reasonable care in proceeding through the intersection (see Halbina v Brege, 41 AD3d 1218, 1219; Cooley v Urban, 1 AD3d 900, 900), there is no evidence in this case that plaintiff failed to exercise such care (cf. Halbina, 41 AD3d at 1219; Strasburg v Campbell, 28 AD3d 1131, 1132; Cooley, 1 AD3d at 900-901). Instead, plaintiff testified at his deposition that he was not speeding, that his view of the intersection was unobstructed, and that he did not see defendant's vehicle until the collision, and defendants offered only mere speculation to the contrary (see Pomietlasz, 31 AD3d at 1174; Maloney, 27 AD3d at 427). We thus conclude that the court properly granted that part of plaintiff's motion on the issue of negligence (see Waltz, 78 AD3d at 1621).

Contrary to the further contention of defendants, we conclude that there is an issue of fact whether plaintiff sustained a serious injury under the significant limitation of use, permanent consequential limitation of use, and 90/180 day categories. Even assuming, arguendo, that defendants met their initial burden on the cross motion with respect to each of those three categories of serious injury, we conclude that plaintiff raised an issue of fact in opposition. With respect to the permanent consequential limitation of use and significant limitation of use categories, plaintiff submitted objective evidence of injury to his neck and back, i.e., X rays, MRI reports, and doctors' observations of muscle spasms upon palpation of his cervical and lumbar spine (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 353; Nitti v Clerrico, 98 NY2d 345, 358; see also Mancuso v Collins, 32 AD3d 1325, 1326). Among other things, an MRI of plaintiff's lumbar spine revealed a disc herniation at L4-L5, which plaintiff's treating chiropractor opined was "100% causally related" to the accident. Plaintiff further submitted records from several medical providers quantifying range of motion losses in his cervical and lumbar spine (see Austin v Rent A Ctr. E., Inc., 90 AD3d 1542, 1544).

With respect to the 90/180 day category, plaintiff submitted evidence establishing that he was out of work for approximately nine months after the accident at the direction of his treating physicians, after which he returned to work light duty. Additionally, plaintiff testified at his deposition and averred in an affidavit that, after the accident, he was unable to perform his customary job duties, including lifting five-gallon buckets of paint, climbing ladders or scaffolds, or kneeling, stooping, crouching, or extending his arms over his head. Plaintiff further stated that he was "unable to do the physical types of things that [he] could before th[e accident]," including cleaning the house, shopping for groceries, doing laundry, cutting the grass, and taking the garbage out. We thus conclude that plaintiff raised an issue of fact whether he was prevented from performing his usual and customary activities during the requisite time period as a result of the accident (see Rissew v Smith, 89 AD3d 1383, 1384; see also Downs v Kehoe, 39 AD3d 1152, 1153; Zeigler v Ramadhan, 5 AD3d 1080, 1081).

We agree with defendants, however, that they established as a matter of law that plaintiff did not sustain a serious injury under the permanent loss of use category, i.e., that plaintiff did not sustain a " total loss of use' of a body organ, member, function or system" (Schreiber v Krehbiel, 64 AD3d 1244, 1245, quoting Oberly v Bangs Ambulance, 96 NY2d 295, 297), and that plaintiff failed to raise a triable issue of fact in opposition (see Paveljack v Cirino, 93 AD3d 1286, 1286; Harris v Carella, 42 AD3d 915, 917). We therefore modify the order accordingly.

Santana v McQueen


Scarcella Law Offices, White Plains (M. Sean Duffy of counsel), for appellants.
Saretsky Katz Dranoff & Glass, L.L.P., New York (Patrick J. Dellay of counsel), for respondents.

Judgment, Supreme Court, Bronx County (Lucindo Suarez, J.), entered May 16, 2011, dismissing the complaint pursuant to an order, same court and Justice, entered March 23, 2011, which, insofar as appealed from as limited by plaintiffs' brief, granted defendants' motion for summary judgment on the ground that the injured plaintiff did not suffer a serious injury to his right shoulder within the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d), unanimously reversed, on the law, without costs, the judgment vacated, the motion denied and the complaint reinstated. Plaintiff raised an issue of fact as to whether the subject accident caused the tear of his right shoulder's infraspinatus tendon by submitting the affirmed reports of a radiologist and an orthopedic surgeon stating as much (Insurance Law § 5102[d]; see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350 [2002]). Plaintiff's radiologist opined that plaintiff's infraspinatus tear was "directly related to an acute injury that occurred" on the date of the accident, and based that opinion on, among other things, his review of an MRI of plaintiff's right shoulder, taken before the accident, which revealed no such injury, while two MRIs taken subsequent to the accident did. Plaintiff's orthopedic surgeon concurred, and specifically attributed the subject accident as the cause of the injury, ruling out plaintiff's prior injury to the supraspinatus tendon of his right shoulder.

We reject defendants' argument that plaintiffs' experts failed to rebut defendants' radiologist's finding of degeneration because plaintiffs' experts distinguished plaintiff's pre-accident injury from his post-accident injury, opining, based on objective medical evidence, that the latter was caused by the subject accident (see Fuentes v Sanchez, 91 AD3d 418 [1st Dept 2012]; compare Torres v Gamma Taxi Corp., 97 AD3d 440 [1st Dept 2012]; McArthur v Act Limo, Inc., 93 AD3d 567, 568 [1st Dept 2012]).

Rampersaud v Eljamali


Martin, Fallon & Mullé, Huntington (Stephen P. Burke of counsel), for appellant.
Law Offices of Richard M. Altman, Bronx (Alice Charles of counsel), for respondent.

Order, Supreme Court, Bronx County (Ben R. Barbato, J.), entered March 6, 2012, which denied defendant's motion for summary judgment dismissing the complaint, unanimously reversed, on the law, without costs, and the motion granted based on the failure to establish a serious injury within the meaning of Insurance Law § 5102(d). The Clerk is directed to enter judgment dismissing the complaint.

The reports of defendant's expert orthopedist and radiologist established prima facie that plaintiff's injuries were not permanent or significant because they had resolved and plaintiff had full range of motion in his cervical and lumbar spine (see Porter v Bajana, 82 AD3d 488 [1st Dept 2011]). Moreover, the radiologist affirmed that plaintiff suffered from a preexisting degenerative condition, unrelated to trauma (id.).
In opposition, plaintiff failed to raise a triable issue of fact. The MRI reports, chiropractor report, and medical records were in inadmissible form and therefore lacked probative value (see Quinones v Ksieniewicz, 80 AD3d 506, 506 [1st Dept 2011]). The medical expert's report, to the extent admissible, failed to raise a triable issue of fact as to causation, since the expert did not explain why plaintiff's prior injuries and degenerative condition were ruled out as the cause of his current alleged limitations (see Pommells v Perez, 4 NY3d 566, 580 [2005]; Jimenez v Polanco, 88 AD3d 604 [1st Dept 2011]). Absent evidence that plaintiff's injuries were caused by the subject accident, his 90/180-day claim fails (see Jimenez, 88 AD3d at 604).  Given the lack of serious injury, the issue of liability is academic (see Hernandez v Adelango Trucking, 89 AD3d 407, 408 [1st Dept 2011]).

Hint v Vaughn


Appeal from an order of the Supreme Court, Wyoming County (Michael F. Griffith, A.J.), entered October 26, 2011 in a personal injury action. The order denied the motion of defendants for summary judgment dismissing the complaint.

Bouvier Partnership, LLP, Buffalo (Norman E.S. Greene of Counsel), for Defendants-Appellants.
William Mattar, P.C., Williamsville (April J. Orlowski of Counsel), for Plaintiff-Respondent.

It is hereby ORDERED that the order so appealed from is unanimously modified on the law by granting the motion in part and dismissing the complaint, as amplified by the bill of particulars, with respect to the permanent loss of use category of serious injury within the meaning of Insurance Law § 5102 (d) and as modified the order is affirmed without costs.

Memorandum: Plaintiff commenced this action seeking damages for injuries he allegedly sustained in a motor vehicle accident when the vehicle he was driving was struck by a vehicle operated by defendant Alfred L. Vaughn and owned by defendant Melanie P. Hemenway. Defendants thereafter moved for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury in the accident within the meaning of Insurance Law § 5102 (d), and Supreme Court denied the motion in its entirety. We agree with defendants that they established as a matter of law that plaintiff did not sustain a serious injury under the permanent loss of use category, i.e., he did not sustain a "total loss of use" of a body organ, member, function or system (Oberly v Bangs Ambulance, 96 NY2d 295, 297), and we therefore modify the order accordingly.

We further conclude, however, that the court properly denied defendants' motion with respect to the remaining categories of serious injury allegedly sustained by plaintiff. Although defendants met their initial burden of proof with respect to the permanent consequential limitation of use and significant limitation of use categories of serious injury (see Roll v Gavitt, 77 AD3d 1412, 1412), plaintiff raised triable issues of fact in opposition to the motion by submitting an affirmation from his treating physician and an affidavit from his treating chiropractor, both of which contain the requisite objective medical findings (see generally Toure v Avis Rent A Car Sys., 98 NY2d 345, 350-351; Chmiel v Figueroa, 53 AD3d 1092, 1093). We further conclude that defendants failed to meet their initial burden of proof with respect to the 90/180-day category of serious injury inasmuch as the affirmed report of their examining neurologist did not specifically relate any of the neurologist's findings to that category for the relevant period of time (see Scinto v Hoyte, 57 AD3d 646, 647; Daddio v Shapiro, 44 AD3d 699, 700). Plaintiff's deposition testimony, which defendants also submitted in support of their motion, was insufficient to establish that plaintiff had no injury in the 90/180-day category (see Scinto, 57 AD3d at 647; Greenidge v Righton Limo, Inc., 43 AD3d 1109, 1109-1110).

 

Flottemesch v Contreras


Calendar Date: October 10, 2012
Before: Mercure, J.P., Lahtinen, Kavanagh, McCarthy and Garry, JJ.

Melley Platania, PLLC, Rhinebeck (Kevin J. Rumsey of counsel), for appellant.
Adams, Hanson, Rego, Carlin, Hughes, Kaplan & Fishbein, Albany (Paul G. Hanson of counsel), for respondents.

MEMORANDUM AND ORDER

Garry, J.

Appeals (1) from an order of the Supreme Court (Work, J.), entered October 11, 2011 in Ulster County, which, among other things, granted defendants' motion for summary judgment dismissing the complaint, and (2) from an order of said court, entered January 20, 2012 in Ulster County, which denied plaintiff's motion for reconsideration.

Plaintiff commenced this action to recover damages for injuries he allegedly sustained on August 7, 2005, when a vehicle owned by defendant Benito C. Lopez and driven by defendant Tomas L. Contreras struck the rear of his car at high speed while plaintiff was stopped on the Kingston-Rhinecliff Bridge in Ulster County. Defendants moved for summary judgment seeking dismissal of the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d). Plaintiff opposed and cross-moved, seeking partial summary judgment on the issue of liability and judgment in his favor on the issue of serious injury. Supreme Court granted summary judgment in favor of defendants, dismissed the complaint, and dismissed the cross motion as moot. Plaintiff moved to reargue and renew, and Supreme Court denied that motion. Plaintiff appeals from both orders.

Upon their summary judgment motion, defendants bore the burden of demonstrating, through the submission of competent medical evidence, that plaintiff did not sustain a serious injury within the parameters of Insurance Law § 5102 (d) (see Womack v Wilhelm, 96 AD3d 1308, 1309 [2012]; Larrabee v Bradshaw, 96 AD3d 1257, 1258 [2012]). Defendants supported their application with the affidavit of board-certified orthopedic surgeon Barry Katzman, who performed an examination of plaintiff in July 2006, noted that plaintiff had full range of motion of his cervical spine, and reported that plaintiff's strains were fully resolved with no need for further causally-related treatment. Defendants further relied upon the records of plaintiff's primary physician, who noted that during a November 2005 physical, plaintiff reported that his neck was "[a]lmost 100% better." Based upon this evidence, we agree with Supreme Court that defendants satisfied their initial burden of demonstrating that plaintiff did not suffer a significant limitation to his neck as a result of the 2005 accident (see Womack v Wilhelm, 96 AD3d at 1310; Clark v Basco, 83 AD3d 1136, 1138 [2011]).[FN1]

Defendants having met their burden, plaintiff was required to produce objective medical evidence supporting his claim of serious injury (see Peterson v Cellery, 93 AD3d 911, 913 [2012]). Such evidence may consist of an expert's quantification of a loss of range of motion, corroborated by the results of an MRI or other objective medical evidence, when the expert draws a correlation between the two (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350-351 [2002]; MacMillan v Cleveland, 82 AD3d 1388, 1389 [2011]; Durham v New York E. Travel, 2 AD3d 1113, 1114-1115 [2003]). To that end, plaintiff proffered an affirmation from neurologist Gerald Kufner, who began treating plaintiff in August 2008. Kufner detailed his review of an October 2008 MRI of plaintiff, on which he found broad-based right-sided intraforaminal disc bulge and moderate to severe degenerative foraminal stenosis, and described decreases in disc space and disc height in areas of plaintiff's cervical spine, as well as nerve root compression. He further compared the results of the October 2008 MRI to that of an MRI performed in October 2007, and found that plaintiff's degenerative changes had worsened. Based upon these findings, as well as his examinations of plaintiff in October 2008, January 2009 and July 2010, Kufner opined that plaintiff suffered from cervical spondylosis as the result of cervical arthritis that was precipitated and aggravated by a whiplash injury suffered by plaintiff in the 2005 motor vehicle accident, and that plaintiff's cervical arthritis had resulted in a 30% loss of function. Thus, Kufner's affirmation included a quantitative assessment of plaintiff's loss of function that was supported by objective medical evidence in the form of the MRIs. Viewed in a light most favorable to plaintiff, the evidence presented was sufficient to raise an issue of material fact (see Toure v Avis Rent A Car Sys., 98 NY2d at 350-351; Durham v New York E. Travel, 2 AD3d at 1115).

In light of this determination, we next address plaintiff's cross motion; as defendants have conceded liability, plaintiff is entitled to partial summary judgment upon his application. Finally, plaintiff's challenge to the denial of his motion for renewal has been rendered academic.

Mercure, J.P., Lahtinen, Kavanagh and McCarthy, JJ., concur.

ORDERED that the order entered October 11, 2011 is modified, on the law, without costs, by reversing so much thereof as granted defendants' motion for summary judgment dismissing the complaint and dismissed, as moot, plaintiff's cross motion for partial summary judgment on liability; motion denied and cross motion granted to said extent; and, as so modified, affirmed.

ORDERED that the appeal from the order entered January 20, 2012 is dismissed, as academic, without costs.

Footnotes

Footnote 1: The complaint alleged additional injuries and plaintiff initially asserted claims of serious injury pursuant to multiple categories under Insurance Law § 5102 (d), but, upon this appeal, his claim is limited to an injury to his neck under the significant limitation category (see Womack v Wilhelm, 96 AD3d at 1309 n 1; Peterson v Cellery, 93 AD3d 911, 913 n 1 [2012]).


Matter of Allstate Insurance Company v. GEICO 


O'Connor, McGuinness, Conte, Doyle, Oleson, Watson & Loftus,
LLP, White Plains, N.Y. (Montgomery L. Effinger of counsel), for
appellant.
Robert G. Mazeau, New York, N.Y. (Lisa G. Kim and James J.
Bonicos of counsel), for respondent.


DECISION & ORDER

In a proceeding pursuant to CPLR article 75 to vacate an arbitration award dated July 13, 2011, GEICO (Government Employees Insurance Company) appeals from an order of the Supreme Court, Rockland County (Berliner, J.), dated February 8, 2012, which granted the petition.

ORDERED that the order is reversed, on the law, with costs, the petition is denied, the arbitration award is reinstated and confirmed, and the matter is remitted to the Supreme Court, Rockland County, for the entry of an appropriate judgment (see CPLR 7511[e]; 7514[a]).

The petitioner commenced this proceeding to vacate an arbitration award rendered in favor of GEICO (Government Employees Insurance Company). The petitioner alleged, inter alia, that by failing to consider relevant evidence, the arbitrator committed misconduct. The Supreme Court granted the petition.

"[J]udicial review of arbitration awards is extremely limited" (Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471, 479; see Matter of Susan D. Settenbrino, P.C. v Barroga-Hayes, 89 AD3d 1094, 1095, cert deniedUS, 2012 WL 2807645, 2012 US LEXIS 8633[US]). "An arbitration award must be upheld when the arbitrator offer[s] even a barely colorable justification for the outcome reached'" (Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d at 479, quoting Matter of Andros Cia [Marc Rich & Co., A.G.] Maritima, S.A., 579 F2d 691, 704). In addition, an "arbitrator's award should not be vacated for errors of law and fact committed by the arbitrator and the courts should not assume the role of overseers to mold the award to conform to their sense of justice" (Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d at 479-480). "An arbitrator is not bound by principles of substantive law or rules of evidence, and may do justice and apply his or her own sense of law and equity to the facts as he or she finds them to be" (Matter of Erin Constr. & Dev. Co., Inc. v Meltzer, 58 AD3d 729, 730; see Matter of New York Cent. Lines, LLC v Vitale, 82 AD3d 1244, 1244-1245).

Pursuant to CPLR 7511(b)(1)(i), an arbitration award may be vacated if the court finds that the rights of a party were prejudiced by "corruption, fraud or misconduct in procuring the award." A refusal by an arbitrator to hear pertinent material evidence may constitute misconduct under CPLR 7511(b)(1)(i) (see Matter of State of N.Y. Off. of Mental Health [New York State Correctional Officers & Police Benevolent Assn., Inc.], 46 AD3d 1269; D'Amato v Leffler, 290 AD2d 475, 476; Matter of Lewis v County of Suffolk, 70 AD2d 107, 111). The party seeking to vacate the arbitration award has the burden of proving by clear and convincing evidence that the arbitrator committed misconduct (see Matter of Susan D. Settenbrino, P.C. v Barroga-Hayes, 89 AD3d at 1096; Matter of Westchester County Correction Officers Benevolent Assn., Inc. v County of Westchester, 81 AD3d 966, 967).

 

Here, the petitioner failed to meet its burden of proving, by clear and convincing evidence, that the arbitrator committed misconduct (see Matter of Gluck v Eastern Analytical Labs., 271 AD2d 532). Contrary to the petitioner's contention, there is no indication in the record that the arbitrator refused to consider pertinent material evidence (see Brooks v BDO Seidman, LLP, 94 AD3d 528). Indeed, the arbitration award itself states that the arbitrator considered the petitioner's submissions, which included the very evidence that the petitioner claims was not considered. Inasmuch as the petitioner failed to demonstrate any misconduct, the Supreme Court erred in granting the petition to vacate the arbitration award (see Matter of Trivino v Allcity Ins. Co., 227 AD2d 638).

In light of our determination, we need not reach the petitioner's remaining contention.

American Building Supply Corp. v. Petrocelli Group, Inc





Stuart S. Zisholtz, for appellant.
Stephen C. Cunningham, for respondent.
Defense Association of New York, Inc., amicus
curiae.

CIPARICK, J.:

In this appeal, we are asked to determine if an action for negligence and breach of contract lies against an insurance broker for failure to procure adequate insurance coverage where the insured received the policy without complaint. We hold, where issues of fact exist as to a request for specific coverage, that the insured can maintain such an action and defendant's motion for summary judgment should be denied.
I.
Plaintiff American Building Supply Corp. (ABS) is a business which sells and furnishes building materials to general contractors. Plaintiff is located both in Manhattan and the Bronx. This action only concerns the premises located in the Bronx, where plaintiff is the sole tenant of a building it subleased from DRK, LLC (DRK), which had procured the property by entering into a lease agreement with the New York City Industrial Development Agency (NYCIDA). Pursuant to the lease agreement between DRK and NYCIDA, DRK was, among other things, required to procure general liability insurance from a carrier licensed to do business in the State of New York in the minimum amount of $5,000,000 for bodily injury and property damage. The sublease agreement between ABS and DRK, both owned and managed by the same person, noted that the sublessee consented to all the terms of the lease agreement.

Prior to October 2004, Pollack Associates, not a party to this appeal, was plaintiff's insurance broker and procured a policy with the Burlington Insurance Company (Burlington), an excess line carrier not licensed in the State of New York. DRK was named an additional insured under the policy. The policy did not comply with the requirements set forth by the lease agreements and was subsequently cancelled due to nonpayment of premiums. In October 2004, plaintiff hired defendant Petrocelli Group, Inc. to replace Pollack as its insurance broker. Defendant arranged to reinstate the Burlington policy. Plaintiff claims that in its discussions with defendant regarding a new policy, it specifically requested general liability coverage for its employees in case of injury, as required by the lease agreements. Plaintiff also alleged that it informed defendant that only employees entered the premises, never customers, as no retail business was conducted at the Bronx location. Finally, plaintiff avers that defendant visited the premises and had assured NYCIDA that the insurance deficiencies would be corrected when the policy was up for renewal.

Defendant then renewed the Burlington policy for the period of June 14, 2005 through June 14, 2006. The policy was essentially the same as plaintiff had previously received through Pollack. The policy contained a cross liability exclusion clause that provided: "This insurance does not apply to any actual or alleged 'bodily injury', 'property damage', 'personal injury' or 'advertising injury' to . . . A present, former, future or prospective partner, officer, director, stockholder or employee of any insured." Plaintiff did not read the insurance policy upon receipt, nor did the broker.

In October 2005, one of plaintiff's employees was injured at the Bronx facility in the course of performing his duties. Burlington disclaimed coverage based upon the cross-liability exclusion. DRK sought a declaratory judgment against Burlington seeking a determination that Burlington was obligated to defend and indemnify plaintiff. Burlington moved for summary judgment. Supreme Court denied the motion and ordered Burlington to defend and indemnify plaintiff. The Appellate Division reversed, holding that Burlington had no duty to defend or indemnify based on the cross liability exclusion clause (see DRK, LLC v Burlington Ins. Co., 74 AD3d 693 [1st Dept 2010] lv denied 16 NY3d 702 [2011]).

Plaintiff next commenced this action against its broker for negligence and breach of contract in connection with defendant's procurement of insufficient insurance. Following discovery, defendant moved for summary judgment dismissing the complaint. Supreme Court denied the motion, holding that "an issue of fact exists which precludes summary judgment." Specifically, the court found that plaintiff testified that it informed defendant it required coverage if any employee injured himself or herself and that a jury could rationally conclude that plaintiff made a specific request for such coverage to defendant. The Appellate Division reversed, holding that although issues of fact may exist as to plaintiff's request for specific coverage, plaintiff's failure to "read and under[stand] [the] policy . . . precludes recovery in this action (American Bldg. Supply Corp. v Petrocelli Group, Inc., 81 AD3d 531, 531-532 [1st Dept 2011]). We granted leave to appeal (17 NY3d 711 [2011]) and now reverse.
II.
"[I]nsurance agents have a common-law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so; however, they have no continuing duty to advise, guide or direct a client to obtain additional coverage" (Murphy v Kuhn, 90 NY2d 266, 270 [1997]). To set forth a case for negligence or breach of contract against an insurance broker, a plaintiff must establish that a specific request was made to the broker for the coverage that was not provided in the policy (see Hoffend & Sons, Inc. v Rose & Kiernan, Inc., 7 NY3d 152, 155 [2006]). "A general request for coverage will not satisfy the requirement of a specific request for a certain type of coverage" (id. at 158).

Here, plaintiff testified, at its deposition, that it specifically requested "general liability for the employees . . . if anybody was to trip and fall and get injured in any way." Plaintiff also testified that defendant was aware of ABS's operations, i.e., that there were no retail sales to the public at the premises and that the only persons at the premises were plaintiff's employees. Defendant, of course, maintains that the procured coverage satisfied plaintiff's request. Like the courts below, we conclude that issues of fact exist as to whether plaintiff specifically requested coverage for its employees in case of accidental injury and defendant, being aware of such request, failed to procure the requested coverage.

This would be a more difficult case if it rested on plaintiff's uncorroborated word alone. Here, however, the evidence arguably supports plaintiff's claim. Since no one but employees ever entered the premises, the coverage defendant obtained, which excluded coverage for injuries to employees, hardly made sense.
III.

Defendant maintains, however, that plaintiff's claim is barred by its receipt of the insurance policy without complaint. In Hoffend we left open the question of whether a plaintiff who has received an insurance policy and had an opportunity to read it and had not requested any changes is barred from recovery (see 7 NY3d at 157). Various appellate courts have held that once an insured has received his or her policy, he or she is presumed to have read and understood it and cannot rely on the broker's word that the policy covers what is requested (see Busker on Roof Ltd. Partnership Co. v Warrington, 283 AD2d 376, 376-377 [1st Dept 2001]; Rotanelli v Madden, 172 AD2d 815, 817 [2d Dept 1991] lv denied 79 NY2d 754 [1992]; Madhvani v Sheehan, 234 AD2d 652, 654-655 [3d Dept 1996]; Chase's Cigar Store v Stam Agency, 281 AD2d 911, 912 [4th Dept 2001]). However, other appellate courts have been more forgiving and have held that receipt and presumed reading of the policy does not bar an action for negligence against the broker (see Kyes v Northbrook Prop. & Cas. Ins. Co., 278 AD2d 736, 737-738 [3d Dept 2000]; Reilly v Progressive Ins. Co., 288 AD2d 365, 366 [2d Dept 2001]). This may be such a case.

The facts as alleged here, that plaintiff requested specific coverage and upon receipt of the policy did not read it and lodged no complaint, should not bar plaintiff from pursuing this action. While it is certainly the better practice for an insured to read its policy, an insured should have a right to "look to the expertise of its broker with respect to insurance matters" (Baseball Off. of Commr. v Marsh & McLennan, 295 AD2d 73, 82 [1st Dept 2002]; see also Bell v O'Leary, 744 F2d 1370, 1373 [8th Cir 1984]). The failure to read the policy, at most, may give rise to a defense of comparative negligence but should not bar, altogether, an action against a broker (see Baseball Off. of Commr. 295 AD2d at 82).

Because there are issues of fact as to whether plaintiff requested specific coverage for its employees and whether defendant failed to secure a policy as requested, we conclude that summary judgment is inappropriate in this matter. We further conclude that plaintiff's failure to read and understand the policy should not be an absolute bar to recovery under the circumstances of this case.

 

Accordingly, the order of the Appellate Division should be reversed, with costs, and the motion by defendant Petrocelli Group, Inc. for summary judgment denied.

PIGOTT, J. (dissenting):

It seems to me elementary that before you can complain about the contents of any contract, you should at least have read it. Nearly 100 years ago we held that when an insured receives an insurance contract, he or she has a duty to read and examine its contents (see Metzger v Aetna Ins. Co., 227 NY 411, 416 [1920]). There, we held that the insured is "conclusively presumed" to know the contents of the insurance contract and assent to it, when he or she signs or accepts the contract (id.). While it is true that, until now, this Court had yet to decide whether the presumption applies to protect an insurance broker that has allegedly failed to obtain requested coverage, several appellate courts have considered the issue and appropriately applied the presumption (see McGarr v The Guardian Life Ins. Co. of Am., 19 AD3d 254, 256 [1st Dept 2005]; Laconte v Bashwinger Ins. Agency, 305 AD2d 845 [3d Dept 2003]; Busker on the Roof Ltd. Partnership Co. v Warrington, 283 AD2d 376 [1st Dept 2001]).

The majority offers no compelling reason why this basic requirement, i.e. that you read the thing, should not obtain in cases involving an insurance broker. Although an insured may claim to have relied upon the broker's experience and knowledge in certain circumstances, we have made clear that insureds are in a better position to know both their own assets and ability to protect themselves than agents or brokers (Murphy v Kuhn, 90 NY2d 266, 273 [1997]). Agents and brokers are not "personal financial counselors and risk managers, approaching guarantor status" (id.). The relationship between a broker and an insured is not one in which continuing obligations to advise might exist but, rather, is an ordinary commercial relationship that does not give rise to a duty to provide such ongoing guidance (see id. at 270-271; see also Kimmell v Schaefer, 89 NY2d 257, 263-264 [1996]).

There are, of course, limitations on the presumption rule. For example, the presumption is overcome when a broker fails to correct a clear misimpression created by a binder (see Arthur Glick Truck Sales v Spadaccia-Ryan-Haas, Inc., 290 AD2d 780 [2002]), or when a broker makes an affirmative misrepresentation regarding coverage in response to questioning by the client after reviewing the policy (Kves v Northbrook Prop. & Cas. Ins. Co., 278 AD2d 736 [2000]). Those limitations are not alleged here.

By permitting ABS to evade the conclusive presumption rule, the majority in essence allows an insured, months and possibly years after a policy is procured, to complain, following a loss, that it made a request of its broker for the relevant coverage but it was not forthcoming. This will almost always result in a "he said-she said" battle of what occurred during coverage discussions between the insured and broker.

In short, I agree with the Appellate Division that Petrocelli demonstrated its prima facie entitlement to judgment as a matter of law. It submitted the renewal policy to ABS and ABS concedes that it received it. Thus, ABS was conclusively presumed to know the contents, including the exclusions, of the policy. In opposition, ABS failed to raise a triable issue of fact. Had ABS read the policy, and claimed not to have understood the cross-liability exclusion and that Petrocelli misled it with respect to the meaning thereof, a clear question of fact would have been presented. However, ABS does not dispute receipt of the policy and admitted that it did not review it; and, as the Appellate Division noted, the record failed to demonstrate any exception to the presumption that ABS assented to the policy terms.

* * * * * * * * * * * * * * * * *

Order reversed, with costs, and motion by defendant Petrocelli Group, Inc. for summary judgment denied. Opinion by Judge Ciparick. Chief Judge Lippman and Judges Read and Smith concur. Judge Pigott dissents and votes to affirm in an opinion in which Judge Graffeo concurs.

Gonzalez v Woodbourne Arboretum, Inc.


Kelner & Kelner, New York, N.Y. (Gail S. Kelner and Gerard K.
Ryan, Jr., of counsel), for appellant-respondent.
Flynn, Gibbons & Dowd, New York, N.Y. (Lawrence A. Doris
of counsel), for respondents-appellants.


DECISION & ORDER
In an action, inter alia, to recover damages for wrongful death, the plaintiff appeals from so much of an order of the Supreme Court, Suffolk County, (Jones, Jr., J.), dated July 28, 2011, as denied his motion for summary judgment on the issue of liability on the cause of action alleging a violation of Labor Law § 240(1) and granted those branches of the motion of the defendants Woodbourne Arboretum, Inc., and Woodbourne Cultural Nurseries, Inc., which were for summary judgment dismissing the causes of action alleging violations of Labor Law §§ 240(1) and 241(6) insofar as asserted against them, and the defendants Woodbourne Arboretum, Inc., and Woodbourne Cultural Nurseries, Inc., cross-appeal from so much of the same order as denied that branch of their motion which was for summary judgment dismissing the complaint insofar as asserted against them on the ground that the action is barred by the Workers' Compensation Law and granted the plaintiff's cross motion for summary judgment dismissing their fourth and fifth affirmative defenses.
ORDERED that the order is affirmed insofar as appealed and cross-appealed from, without costs or disbursements.
In June 2005, the decedent, Ciro A. Mata, was employed by nonparty Leonard Litwin to perform landscaping work on property owned by Litwin and property owned by the defendant Woodbourne Arboretum, Inc. (hereinafter the Arboretum), a corporation of which Litwin was president. On June 28, 2005, an employee of the defendant Woodbourne Cultural Nurseries, Inc. (hereinafter the Nursery), brought an irrigation device known as a "water cannon" to a garage located on the Arboretum's grounds so that a mechanic employed by Litwin could help him replace the water cannon's rear axle, which had worn thin, causing the machine to leak. At the end of the day, the two men working on replacing the axle asked the decedent to assist them by acting as a spotter while they moved the water cannon, which was approximately 10 to 12 feet tall and weighed more than one ton, off two jack stands in order to get it completely inside the garage for the night. Just after the move was completed, the water cannon tipped over and fell on the decedent, causing his death. After the accident, the decedent's family received Workers' Compensation benefits through an insurance policy maintained by Litwin. The plaintiff, as administrator of the decedent's estate, subsequently commenced this action against, among others, the Nursery and the Arboretum (hereinafter together the defendants) alleging violations of Labor Law §§ 200, 240(1), and 246(1), and common-law negligence.
After the completion of discovery, the plaintiff moved for summary judgment on the issue of liability on the Labor Law § 240(1) cause of action, contending that the accident fell within the ambit of the statute because the water cannon was a structure undergoing repair which fell because it was hoisted in a dangerous manner. The defendants countered by jointly moving for summary judgment dismissing the complaint insofar as asserted against them on the ground that the action was barred by the Workers' Compensation Law either because the decedent was their special employee, or because they were Litwin's alter ego or joint venturer. In the alternative, the defendants argued that the plaintiff's Labor Law § 240(1) cause of action should be dismissed because the work being performed on the water cannon constituted routine maintenance which was not covered by the statute. The defendants also contended that the plaintiff's Labor Law § 241(6) cause of action should be dismissed because the accident did not occur in an area where construction, excavation, or demolition work was being performed. The plaintiff then cross-moved for summary judgment dismissing the defendants' fourth affirmative defense that the action was barred by the Workers' Compensation Law, and fifth affirmative defense that the decedent was the defendants' special employee. The Supreme Court denied the plaintiff's motion for summary judgment on the issue of liability on the Labor Law § 240(1) cause of action, and granted those branches of the defendants' motion which were for summary judgment dismissing the Labor Law §§ 240(1) and 241(6) causes of action insofar as asserted against them. The Supreme Court also denied that branch of the defendants' motion which was for summary judgment dismissing the complaint insofar as asserted against them on the ground that the action was barred by the Workers' Compensation Law, and granted the plaintiff's cross motion to dismiss their fourth and fifth affirmative defenses, concluding that the evidence established that the decedent was employed solely by Litwin, that the defendants were corporate entities distinct from Litwin, and that the decedent was not the defendants' special employee because they did not direct and control his work.
The Supreme Court properly denied the plaintiff's motion for summary judgment on the issue of liability on the Labor Law § 240(1) cause of action, and granted those branches of the defendants' motion which were for summary judgment dismissing the Labor Law §§ 240(1) and 241(6) causes of action insofar as asserted against them. "While the reach of section 240(1) is not limited to work performed on actual construction sites . . . the task in which an injured employee was engaged must have been performed during the erection, demolition, repairing, altering, painting, cleaning or pointing of a building or structure'" (Martinez v City of New York, 93 NY2d 322, 326). Here, the deposition testimony upon which both the plaintiff and the defendants relied in support of their respective motions established that the decedent was assisting workers who were engaged in replacing a component of the water cannon which had worn thin, causing the machine, which remained operable, to leak. The replacement of a worn-out component in an operable piece of machinery constitutes "routine maintenance" rather than "repair" or "alteration," and thus falls outside the protective scope of Labor Law § 240(1) (see Abbatiello v Lancaster Studio Assoc., 3 NY3d 46, 53; Esposito v New York City Indus. Dev. Agency, 1 NY3d 526, 528; Gleason v Gottlieb, 35 AD3d 355, 356; Wein v Amato Props., LLC, 30 AD3d 506, 507; Jones v Village of Dannemora, 27 AD3d 844, 845-846; Detraglia v Blue Circle Cement Co., 7 AD3d 872, 873). Furthermore, since the decedent's accident did not occur in connection with construction, demolition, or excavation work, Labor Law § 241(6) does not apply (see Esposito v New York City Indus. Dev. Agency, 1 NY3d at 528; Nagel v D & R Realty Corp., 99 NY2d 98; Enos v Werlatone, Inc., 68 AD3d 713, 715; Hurtado v Interstate Materials Corp., 56 AD3d 722; Irizarry v State of New York, 35 AD3d 665, 666; Goad v Southern Elec. Intl., 304 AD2d 887, 888).
The Supreme Court also properly determined that the action is not barred by the Workers' Compensation Law. Workers' Compensation Law §§ 11 and 29(6) provide that an employee who elects to receive compensation benefits may not sue his or her employer in an action at law for the injuries sustained. These exclusivity provisions have also been applied to shield persons or entities other than the injured plaintiff's direct employer from suit, including special employers (see Fung v Japan Airlines Co., Ltd., 9 NY3d 351, 357-358; Thompson v Grumman Aerospace Corp., 78 NY2d 553, 557). Thus, an injured person who elects to receive Workers' Compensation benefits from his or her general employer is barred from maintaining a personal injury action against his or her special employer (see Fung v Japan Airlines Co., Ltd., 9 NY3d at 358-359; Thompson v Grumman Aerospace Corp., 78 NY2d at 557). A significant and weighty factor in determining whether a special employment relationship exists is "who controls and directs the manner, details and ultimate result of the employee's work" (Thompson v Grumman Aerospace Corp., 78 NY2d at 558; see Persad v Abreu, 84 AD3d 1046, 1047). The exclusivity provisions of the Workers' Compensation Law also extend to entities which are alter egos of, or engaged in a joint venture with, the injured worker's employer (see Samuel v Fourth Ave. Assoc., LLC, 75 AD3d 594, 595; Degale-Selier v Preferred Mgt. & Leasing Corp., 57 AD3d 825, 826).
The defendants failed to make a prima facie showing that the decedent was their special employee at the time of his death because they did not submit sufficient evidence to establish, inter alia, that they controlled and directed the manner, details, and ultimate result of his work (see Persad v Abreau, 84 AD3d at 1047; D'Alessandro v Aviation Constructors, Inc., 83 AD3d 769, 771; George v IBC Sales Corp., 76 AD3d 950, 952-953; Franco v Kaled Mgt. Corp., 74 AD3d 1142, 1143; Pena v Automatic Data Processing, Inc., 73 AD3d 724, 725). The defendants' evidentiary submissions were also insufficient to establish that the Workers' Compensation Law bars this action because they were alter egos of the decedent's employer Litwin, or engaged in a joint venture with Litwin (see Andrade v Brookwood Communities, Inc., 97 AD3d 711; Slikas v Cyclone Realty, LLC, 78 AD3d 144, 150-151; Lee v Arnan Dev. Corp., 77 AD3d 1261, 1262-1263; Samuel v Fourth Ave. Assoc., LLC, 75 AD3d at 595; Haracz v Cee Jay, Inc., 74 AD3d 1147, 1148; Longshore v Davis Sys. of Capital District, 304 AD2d 964, 965-966). Conversely, in support of his cross motion to dismiss the defendants' fourth and fifth affirmative defenses, the plaintiff established his prima facie entitlement to judgment as a matter of law by demonstrating that the decedent, who received his salary and benefits from Litwin and was supervised by another Litwin employee, was not the defendants' special employee (see Digirolomo v Goldstein, 96 AD3d 992, 994; Charles v Broad St. Dev., LLC, 95 AD3d 814, 816), and that the defendants were not Litwin's alter egos or engaged in a joint venture with him (see Longshore v Davis Sys. of Capital District, 304 AD2d at 966; Devorin v One Wall St. Corp., 210 AD2d 37). In opposition to the plaintiff's prima facie showing, the defendants failed to raise an issue of fact. Accordingly, the Supreme Court properly denied that branch of the defendants' motion which was for summary judgment dismissing the complaint insofar as asserted against them on the ground that the action is barred by the Workers' Compensation Law, and granted the plaintiffs' cross motion for summary judgment dismissing their fourth and fifth affirmative defenses.
ENG, P.J., RIVERA, HALL and SGROI, JJ., concur.
          Going 2 Extremes, Inc. v Hartford Financial Services Group, Inc.

Tully Rinckey, PLLC, Albany, N.Y. (Douglas J. Rose of counsel),
for appellants.
Goldberg Segalla LLP, Buffalo, N.Y. (Carrie Appler and Daniel
W. Gerber of counsel), for respondent.


DECISION & ORDER
In an action to recover damages for breach of an insurance contract, the plaintiffs appeal from an order of the Supreme Court, Orange County (McGuirk, J.), dated March 21, 2011, which granted the motion of the defendant Trumbull Insurance Company for summary judgment dismissing the complaint insofar as asserted against it.
ORDERED that the order is affirmed, with costs.
The Supreme Court properly granted the motion of the defendant Trumbull Insurance Company (hereinafter Trumbull) for summary judgment dismissing the complaint insofar as asserted against it. Trumbull established its prima facie entitlement to judgment as a matter of law by demonstrating that the plaintiffs failed to submit a sworn proof-of-loss statement within 60 days after receiving a demand to do so, accompanied by a blank proof-of-loss form (see Insurance Law § 3407[a]; Anthony Marino Constr. Corp. v INA Underwriters Ins. Co., 69 NY2d 798, 800; Meserole Factory, LLC v Arch Ins. Group, 88 AD3d 967, 967; DeRenzis v Allstate Ins. Co., 256 AD2d 303, 304).
Contrary to the plaintiffs' contention, they failed to raise a triable issue of fact as to whether they substantially complied with Trumbull's demand for a sworn proof-of-loss statement (see Maleh v New York Prop. Ins. Underwriting Assn., 64 NY2d 613, 614; Darvick v General Acc. Ins. Co., 303 AD2d 540; Agora Intl. v Royal Ins. Co., 234 AD2d 489), or whether Trumbull waived the requirement to provide such a statement by repudiating liability (see generally Igbara Realty Corp. v New York Prop. Ins. Underwriting Assn., 63 NY2d 201, 217-218; cf. Matter of State Farm Ins. Co. v Domotor, 266 AD2d 219; Beckley v Ostego County Farmers Coop. Fire Ins. Co., 3 AD2d 190).
Accordingly, the Supreme Court properly granted Trumbull's motion for summary judgment dismissing the complaint insofar as asserted against it.
SKELOS, J.P., LEVENTHAL, CHAMBERS and LOTT, JJ., concur.
Amill v Lawrence Ruben Company, Inc.



The Law Office of Dino J. Domina, Garden City (Lisa M.
Comeau of counsel), for appellant.
Law Office of James J. Toomey, New York (Warren T. Harris
of counsel), for Lawrence Ruben Company, Inc., Duit Realty
Corp., and Tower Plaza Associates, L.P., respondents.
Gerard A. Falco, Harrison, for Blair Perrone Steakhouse Corp.,
respondent.
Flynn, Gibbons & Dowd, New York (Lawrence A. Doris of
counsel), for Four Little Ones LLC, respondent.
Orders, Supreme Court, New York County (Eileen A. Rakower J.), entered on January 11, 2011, which, inter alia, granted defendants' motions for summary judgment dismissing the complaint, denied plaintiff's cross motion to amend his supplemental bill of particulars, denied defendants Lawrence Ruben Company, Inc., Duit Realty Corp., and Tower Plaza Associates, L.P.'s (collectively, the landlord defendants) motion for summary judgment on their cross claims for indemnification, and granted Four Little Ones LLC's (Four Little) cross motion to dismiss the landlord defendants' cross claims, unanimously modified, on the law, to the extent of denying Four Little's motion for dismissal of the complaint as against it, reinstating plaintiff's claims against Four Little, denying Four Little's cross motion to dismiss the landlord defendants' cross claims with regard to the second cross claim, for contractual indemnification, granting the portion of the landlord defendants' cross motion seeking to convert their second cross claim against Four Little to a third-party action, and upon conversion, granting the landlord defendants' summary judgment on the third-party claim and remanding the matter for an assessment of damages, and otherwise affirmed, without costs.
Plaintiff seeks recovery for injuries allegedly sustained by him, while working at a restaurant, known as the Blair Perrone Steakhouse (Blair Perrone). Plaintiff fell from an unsecured extension ladder while exiting a mechanical room located above the kitchen. The room was being used by the restaurant for storage.
The premises was owned by Tower Plaza Associates (Tower), managed by Lawrence Ruben Company (Lawrence Ruben), and leased to Four Little. Pursuant to a management agreement, Four Little gave Blair Perrone "responsibility for all matters relating to the operation . . . of the Restaurant", including hiring, firing and directing all restaurant employees, who were to be deemed Blair Perrone's employees, and required Blair Perrone's owners to directly supervise the restaurant. The management agreement further provided that Four Little had no right to direct the restaurant's employees and was not to be deemed their employer.
The record establishes that Blair Perrone exclusively controlled and directed plaintiff's work and was his special employer, limiting plaintiff's recovery against Blair Perrone to Workers' Compensation benefits (see Workers' Compensation Law §§ 11, 29[6]; Fung v Japan Airline Co., Ltd., 9 NY3d 351, 359 [2007]; Thompson v Grumman Aerospace Corp., 78 NY2d 553, 557-558 [1991]). While plaintiff's paychecks were issued by CJ Service, Inc., a payroll company funded by Four Little, Blair Perrone's owners formed the company simply as a payroll company. In furtherance of the management agreement, Blair Perrone, through its owners, managed and operated the restaurant and supervised and controlled plaintiff's work. Additionally, Blair Perrone was listed as a named insured on the subject Workers' Compensation
policy (see e.g. Akins v D.K. Interiors, Ltd., 65 AD3d 946 [1st Dept 2009]).
In contrast, Four Little failed to establish, as a matter of law, that it was CJ Service's alter ego. While Four Little funded CJ Service's payroll and was covered by the same Workers' Compensation policy, "there is no evidence that their finances were integrated, that they commingled assets, or that the principals failed to treat the entities as separate and distinct" (Soodin v Fragakis, 91 AD3d 535, 536 [1st Dept 2012][citation omitted]). Moreover, Four Little neither controlled nor directed CJ Service's employees (see Gonzalez v 310 W. 38th L.L.C., 14 AD3d 464 [1st Dept 2005]).
The court properly granted Tower and Lawrence Ruben summary judgment dismissal of the complaint. While Tower had a contractual right to reenter the premises and make repairs, it had no duty to do so. Thus, Tower could only be held responsible for the condition of the premises "based on a significant structural or design defect that is contrary to a specific statutory safety provision" (Johnson v Urena Serv. Ctr., 227 AD2d 325, 326 [1st Dept 1996], lv denied 88 NY2d 814 [1996][citations omitted]).
Tower and Lawrence Ruben met their initial burden on the motion by the submission of, inter alia, their expert's opinion that the accident was caused by a non-structural condition and that the Building Code violations alleged were inapplicable and had not been violated. In opposition, plaintiff failed to raise a triable issue of fact as to the existence of a significant structural defect and a violation of a specific statutory safety provision. Unlike in Bouima v Dacomi, Inc., 36 AD3d 739 (2d Dept 2007), plaintiff's access to the mechanical room was not limited to an unsecured ladder. Plaintiff admitted that he could have used the stationary, steel ladder for such purpose.
Finally, Tower and Lawrence Ruben established entitlement to a recovery for expenses incurred in connection with the defense of this action. While paragraph 8 of the lease limited such recovery to expenses not reimbursed by insurance, paragraph 69, of the rider, which was "[i]n addition to" the earlier provision, did not contain such a limitation, providing for indemnity "against and from all liabilities . . . costs and expenses . . . incurred by . . . reason of any accident . . . in or about the demised premises . . . except to the extent caused by the negligence or willful misconduct of Landlord." This latter provision is broader than the provision contained in the pre-printed portion of the lease, and thus, to the extent that the two provisions are inconsistent, the terms of the lease provided that the rider's language would prevail.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: NOVEMBER 13, 2012
CLERK