Coverage Pointers - Volume XIV, No. 7

Dear Coverage Pointers Subscribers:

You have a situation?  We LOVE situations.

It is a big weekend for the Father of the Bride.  My daughter Karie marries the love-of-her life, Shawn, on Saturday so the weekend is full of wedding festivities.  Don’t expect a lot of coverage work out of me until Monday.  I am sure you understand.  Of course, for my Facebook friends, I am quite confident that scores of tagged photos will be posted all weekend.

Being that there is no rest for the wicked or weary, in the hours before the rehearsal dinner, we’ll see more than 30 of you at the Law School for Insurance Professionals program today in Buffalo. The response has been so great from CP subscribers.  For the down-staters, we’d remind you that the program will be presented in Manhattan on October 10th and in Melville on October 11th.  Click here for program information.

 

SUM Cases and Non-Duplication

If you are a SUM (Supplementary Uninsured/Underinsured Motorists) aficionado, and really, who isn’t, there’s a must-read decision in today’s issue, Weiss v. Tri-State.  Facts are simple.  Husband and wife (“H&W”) killed by a drunk driver with a $50,000/$100,000 policy, with policy limits offered.  H&W have SUM policy with Tri-State with $250,000 in coverage.

Dram shop claims were also pending against the bar and diner where the driver was served and those parties offer to pay the Estates a total of $255,000.  With $100,000 from the drunk driver’s carrier, the total recovery was $355,000.

The plaintiffs then filed a SUM claim against Tri-State.  Tri-State claims that they are entitled to offset for all dollars received ($355,000) thus leaving only $145,000 in SUM available.

Plaintiffs argue that they were entitled to $400,000 ($500,000 less $100,000 in auto coverage received). They claimed that the SUM limits could not be reduced by monies received from non-auto defendants. 

Result?  See the attached issue.

 

Blues Go Mainstream – One Hundred Years Ago Today

On September 28, 1912, the publication of William Christopher Handy's "Memphis Blues" changed the course of American popular music. Handy introduced an African-American folk tradition, the blues, into the mainstream music scene. By the 1960s, the blues sound had significantly influenced the development of jazz and rock and roll, quintessential American musical forms.

 

Pieper’s Postulations:

We're back in business.  The First and Second Departments, respectively, have awoken from their summer slumbers.  The Fourth Department is close behind with decisions being handed down tomorrow afternoon.   Good stuff to come for sure. 

For this week, take a moment to review the New York Hospital decision.  As you know, we love a creative argument.  In that case, NY Hospital argued that Section 11 of the Workers' Compensation law should be pre-empted where the employer hired undocumented, illegal workers.  It did not succeed, but we applaud the effort.  Besides, it may be the first time we've ever discussed the Supremacy Clause in Coverage Pointers. 

We also review a case that reminds us that GOL 5-322.1 does not apply where the party seeking indemnity is absolved of negligence.  You know how we consistently preach about the importance of understanding and addressing Labor Law 200 in handling workplace accident claims?  Well, the Dwyer case is a perfect example of why it is important. 

Finally, you may notice that I rarely review Labor Law decisions in this column.  If you don't already know, I have ceded those cases to our Labor Law guru, David Adams, who publishes each and every decision in his monthly Labor Law Pointers.  If you don't already subscribe, you should.  Shoot David or me a line if you'd like to be added to that distribution list.  It drops the first Wednesday of every month. 

That's it for now.   Happy Oktoberfest. 

Steve Peiper
[email protected]

 

Audrey Seeley to Serve as Vice Chair of the DRI Insurance Law Committee

Audrey has been appointed Vice-Chair of the DRI Insurance Law Committee, a tremendous professional accomplishment, earned through hard work and dedication to mission.  Atta lawyer.

 

Speaking of Audrey, Her Words for the Week:

We do not have much to report this edition in the way of interesting and thought provoking decisions and cases.  However, we do report on a must read decision in arbitration that declines to follow the Bayshore case that most insurers were elated to read.  The Bayshore case essentially permitted an insurer to retroactively deny benefits back to the date of accident, irrespective of whether the denial was timely issued, for failure to appear for an IME, which is a breach of a condition precedent to coverage under the policy.  In the reported arbitration decision, an Upstate Arbitrator would not apply the case since it was not controlling in the Fourth Judicial Department but it also was contrary to common sense and a Court of Appeals case – Chubb. 

In that decision the insurer did not issue any denial of the medical claims based upon failure to attend scheduled EUOs but relied upon a peer review report.  The insurer did not issue any specific denial for those bills after it had a basis to deny based upon a breach of the policy condition to appear for scheduled EUOs.  The assigned arbitrator determined that the insurer still had to issue a timely denial and could not raise this issue months after the bills had been denied on a different basis.  This decision should be reviewed by those handling no-fault arbitration upstate and particularly in front of the arbitrator who issued this decision.  If you have any questions regarding this decision please do not hesitate to contact me at [email protected].  

DRI’s Insurance Law Committee is holding its annual Insurance Coverage and Practice Symposium on December 6-7, 2012 in New York. This program will feature premier speakers, including Chief Justice Leah Ward Sears (Ret.), Georgia Supreme Court (global warming liability suits); Professor Tom Baker, University of Pennsylvania Law School (principles of liability insurance); Professor Ellen Waldman, Thomas Jefferson Law School (ethics of negotiation); Robert B. Dubose (legal writing in a paperless world); Randy J. Maniloff (top 10 insurance decisions of 2012); and David Turner, State Farm (discovery traps in coverage cases).  These and other presenters will discuss recent developments and trends in coverage law and offer practical advice for dealing with current issues, traps, and pitfalls for today’s coverage practitioners.  In addition to providing useful insurance law tips and tactics, you will have a multitude of opportunities for networking with insurance industry professionals, experienced coverage attorneys from across the country, and respected colleagues.  Please join us for all of this while experiencing the heart of Manhattan during the holiday season.  For more information, including registration and hotel information, and to download a brochure, please go to: http://dri.org/Event/20120140.

Audrey

 

One Hundred Years Ago – Yankees Take a Chance:

The Chicago Cubs fired Frank Chance on September 28, 1912.

Any baseball fan knows the most famous double-play combination of all time, the Chicago Cubs infielders, Joe Tinker, Johnny Evers, and Frank Chance.  Their legendary fielding was immortalized when, in 1910, New York newspaper columnist Franklin Pierce Adams published a short verse entitled:

"Baseball's Sad Lexicon"

These are the saddest of possible words:
"Tinker to Evers to Chance."
Trio of bear cubs, and fleeter than birds,
Tinker and Evers and Chance.
Ruthlessly pricking our gonfalon bubble,
Making a Giant hit into a double--
Words that are heavy with nothing but trouble:
"Tinker to Evers to Chance."

Chance took over as Chicago's manager in 1905, taking the helm of a very good team. Although his playing time decreased towards the end of the decade, as a manager he proved inspirational. The Cubs won the NL pennant in 1906, 1907, 1908 and 1910, and won the World Series in 1907 and 1908, which, is, to date, the Cubs' last World Series victory.

Having recovered from an operation for brain clots‚ Frank Chance was released by the Cubs and went on to manage the newly named New York Yankees (formerly, the Highlanders), which he did for two seasons.

 

One Hundred Years Ago Today:

Syracuse Herald
September 28, 1912
Page 1

DELEGATES MUST SELECT A MAN OF HISCOCK STANDARD

Barnes Insists Upon a Clean
Candidate for Judicial
Nomination

MAKES SITUATION CLEAR

State Chairman Says There Will
Be Another Republican Nominee
Unless the Democrats Put
Forth a Good Candidate.

Saratoga. Sept. 28.-— Unless the man whom the Democrats at Syracuse next week name as their candidate for the Court of Appeals bench measures up to the standard of Justice Frank H. Hiscock, there will undoubtedly be a second nominee of Republican faith nominated by the Republicans. This was made clear to the delegates in the closing moments of the state convention yesterday afternoon by State Chairman Barnes. He took the floor and in a speech in which he roundly rated Colonel Roosevelt, Mr. Barnes insisted that the way should be left clear for a second Republican nominee should the man named by the Democrats in Syracuse not measure up, from the Republican viewpoint, to the standard of Judge Hiscock of Syracuse. United States Senator Elihu Root also spoke briefly on the judiciary question.

Editor’s Note: Judge Hiscock was a Republican nominee for the Court of Appeals that year, but lost the race to the Democrat William Cuddeback. Hiscock was born in 1856 to L. Harris Hiscock, a lawyer and an assemblyman who founded the Hiscock & Barclay firm in Syracuse.

In 1906, Judge Frank Hiscock was appointed to an additional judge seat on the New York State Court of Appeals under special arrangement governed by the Amendment of 1899. In 1912, he did run on the Republican ticket for a regular seat, but was defeated, as indicated.  The following year he ran again and was elected on the Republican and Independence League tickets to a 14-year term. He was Chief Judge from 1917 to 1926.  He retired from the bench at the end of 1926 when he reached the constitutional age limit of 70 years. Afterwards he served as Official Referee of the Court of Appeals, and resumed his law practice at Hiscock & Barclay until his retirement in 1935. He lived for 90 years, until his passing in 1946. A biography of Judge Hiscock can be found here.

By the way, it was not Judge Hiscock, but his father, L. Harris Hiscock, a well-regarded lawyer who founded the Hiscock & Barclay law firm. L Harris Hiscock was murdered on June 3, 1867, by [Civil War] General George W. Cole (brother of the US Senator from California, and good friend of President Lincoln, Cornelius Cole) with Cole accusing L. Harris Hiscock of having an affair with Cole’s wife.  As Mrs. Cole said, in a letter to her husband:

Dearest husband: In answer to your inquiries, I acknowledge that about the summer of 1864, L. H. Hiscock, having frequently called upon my house on business, one evening in the absence of other persons, first by force, prevailed upon me to submit to his desires, and partially succeeded in his efforts.  At various times afterwards, from shame and fear of exposure, he obliged me to in part submit to his caresses, only desisting from his persecutions at last on your return.  Those assaults were always made while standing.  I have refrained from exposure, heretofore, from fear of consequences.

Cole was tried twice, the first trial resulting in a hung jury, the second in an acquittal by reason of “momentary insanity”.

Apparently Judge Hiscock fared better than Dr. Ralph H. Spangler of the Methodist Hospital in Philadelphia whose announcement of a cure for epilepsy by the use of crotalin, a component of rattlesnake venom, appeared on the same page in the Syracuse Herald.  We’ve checked and it appears that his “remarkable discovery” was not so remarkable after all.  As discussed in a June 2012 issue of Epileptic Disorders, in a comment that probably brought smiles to the faces of rattlesnakes throughout the world:

A striking illustration of the pitfalls of relying solely on uncontrolled observations is provided by crotalin, a rattlesnake venom used to treat epilepsy in the US at the same time as phenobarbital was started to be used in Germany. As with phenobarbital, crotalin utilization stemmed from serendipity, in this case a patient with epilepsy who became seizure-free for two years after being bitten by a rattlesnake. By 1913, Spangler reported as many as 250 patients treated with crotalin in Philadelphia, indicating that “not only were the virulence and number of epileptic fits favorably influenced” but also that “the general health of the patient, their mental faculties and metabolism in every respect are considerably improved” (Spangler, 1913). Despite the claim that there was “no danger in the use of crotalin”, subsequent reports of deaths from anaphylaxis and bacterial contamination led to a rapid decline in the popularity of this venom.

 

In This Week’s Issue, Attached:

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

• City Qualified as Additional Insured Under Traffic Signal Maintenance Company’s Policy Where Complaint Alleges Negligence of Both in Maintaining the Traffic Devices
• Amounts Received from Non-Auto Defendants Reduces Recovery Under SUM Policy Under Non-Duplication Provisions
• A Good Read – With Respect to Two Successive E&O Policies, Claims Made During First Policy Period Were Not for Wrongful Acts as Defined But Were Prior Existing Claims, Nonetheless

 

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

• Plaintiff Fails to Refute Lack of Causation
• Again, Plaintiff Fails to Rebut Defendants’ Prima Facie Showing
•  “The Absence of a Contemporaneous Medical Report Invites Speculation as to Causation”
• Defendants’ Motions Are Denied on Appeal Where They Fail to Address Claims Under the 90/180-Day Category

 

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

ARBITRATION

• Must Read Decision Wherein Arbitrator Will Not Apply Unitrin Advantage Ins. Co. v. Bayshore Physical Therapy Case to Retroactively Deny Bills on IME No Show

LITIGATION

• Insurer Entitled to Summary Judgment on Failure to Appear for Scheduled EUOs
• And Another Insurer Entitled to Summary Judgment on Failure to Appear for Scheduled EUOs
• Electronic Signature on Peer Review Sufficient as Long as Proper Language Is In Report
• Insurer Entitled to Summary Judgment as Affidavit Sufficient on Issuance of Timely Denial

 

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

Property

• Failure to Follow the Letter of the Law, Fatal to Carrier’s Attempt at Cancellation
• Question of Fact as to Whether Public Adjuster Provided “Valuable Service”

 

Potpourri

• Signatory to a Contract is Deemed to Know What He or She Agreed
• Violation of Immigration Control & Reform Act Does Not Preclude Protections Afforded by Section 11 of New York Workers’ Comp. Law
• GOL 5-322.1 Does Not Preclude an Indemnity Claim Unless the Party Seeking Indemnity is Actually Negligent

 

CASSIE’S CAPITAL CONNECTION
Cassandra A. Kazukenus
[email protected]

• New Regulations Will Be Implemented by DMV in an Effort to Keep Repeat Impaired Drivers Off the Roads

 

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

Personal and Advertising Injury - Telephone Consumer Protection Act (TCPA)

 

KEEPING THE FAITH WITH JEN’S GEMS
Jennifer A. Ehman
[email protected] 

• Florida Does Not Recognize a Common Law Claim for Breach of the Implied Warranty of Good Faith and Fair Dealing by an Insured Against Its Insurer

 

MARC’S REMARKS
Marc A. Schulz
[email protected]

• Defendant’s Experts Must Observe Plaintiff and Address All Alleged Injuries Before Making a Threshold Motion
• Where Defendant Meets Prima Facie Burden and Plaintiff Sufficiently Raises Triable Issues of Fact, Defendant’s Threshold Motion Denied
• Plaintiffs Failure to Proffer Valid Excuse for Failing to Timely Notify Insurer Constitutes Failure to Comply with Conditions Precedent to Coverage

 

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

• CGL Policy May Not Cover Construction Defects

 

That’s all for now.  Need to send out this issue, shine those shoes, check on the tux, find the cuff links,  and ready myself for a fun weekend.  See you in a couple of weeks and keep those nice notes coming in.

Dan

Dan D. Kohane
Hurwitz & Fine, P.C.
1300 Liberty Building
Buffalo, NY 14202    
Phone: 716.849.8942
Fax:      716.855.0874

E-Mail:     [email protected]
Website:  www.hurwitzfine.com

LinkedIn: www.linkedin.com/in/kohane

As a public service, Hurwitz & Fine, P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York State appellate courts.  The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at [email protected] or call 716-849-8900.

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
[email protected]

ASSOCIATE EDITOR
Audrey A. Seeley
[email protected]

ASSISTANT EDITOR
Margo M. Lagueras
[email protected]

INSURANCE COVERAGE TEAM
Dan D. Kohane, Team Leader
[email protected]

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

FIRE, FIRST-PARTY AND SUBROGATION TEAM
Andrea Schillaci, Team Leader
[email protected]

Jody E. Briandi
Steven E. Peiper

NO-FAULT/UM/SUM TEAM
Audrey A. Seeley, Team Leader
[email protected]

Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman

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

Index to Special Columns

Kohane’s Coverage Corner
Margo’s Musings on “Serious Injury”
Audrey’s Angles on No Fault
Peiper on Property and Potpourri
Cassie’s Capital Connection
Fijal’s Federal Focus
Keeping the Faith with Jen’s Gems
Marc’s Remarks
Earl’s Pearls
Across Borders

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

09/27/12       The City of New York v. Endurance American Ins. Co.
Appellate Division, First Department
City Qualified as Additional Insured Under Traffic Signal Maintenance Company’s Policy Where Complaint Alleges Negligence of Both in Maintaining the Traffic Devices
Daidone Electric, the City’s traffic signal maintenance company, secured a CGL policy from Endurance for the City.  The City was an additional insured for liability arising out of ongoing operations performed for it by Daidone.

The underlying complaint alleges that the plaintiff's injuries arose out of the negligence of both the City and Daidone in maintaining the "traffic and pedestrian control devices" at the intersection where the plaintiff was struck by a car.  These allegations are broad enough to give rise to the reasonable possibility of recovery under the policy.  In addition, the court considered, under Fitzpatrick v American Honda Motor Co., additional facts that potentially bring the claim within the policy's coverage such as the contract, police accident report, and repair records.
The court rejected Endurance's contention that the record evidence established that Daidone's operations at the subject intersection had been completed and thus were no longer ongoing at the time of the accident

09/26/12       Weiss v. Tri-State Consumer Ins. Co.
Appellate Division, Second Department
Amounts Received from Non-Auto Defendants Reduces Recovery Under SUM Policy
On March 4, 2003, Rifka and Anton Goldenberg were killed when a vehicle operated by a drunk driver, McGibbon, collided with their vehicle.  The insurance policy covering McGibbon's vehicle contained coverage limits of $50,000 per person and $100,000 per accident.  The Goldenbergs' automobile insurance policy with Tri-State (“Tri-State Policy”) included a supplementary uninsured/underinsured motorist (“SUM”) endorsement which contained a coverage limit of $250,000 per person and $500,000 per accident.  

A lawsuit was commenced by the Goldenbergs' daughters, on behalf of the Estates, against McGibbon's estate, the owner of McGibbon's vehicle, and a bar and a diner that had served McGibbon alcohol before the accident.  
McGibbon's carrier offered to pay the $100,000 maximum coverage limit of its policy in settlement of the claims against McGibbon's estate and the owner of his vehicle.  The bar and the diner (the Dram Shop defendants agreed to pay a total of $255,000 in settlement of the "Dram Shop" claims asserted against them.

Thus, the plaintiffs settled the prior action for a total of $355,000.

The plaintiffs then filed a SUM claim against Tri-State.  Tri-State asserted that the amount available to the plaintiffs under the SUM endorsement was limited to $145,000 ($500,000 less the $355,000 settlement). The plaintiffs argued that they were entitled to $400,000 ($500,000 less $100,000 in auto coverage received). They claimed that the SUM limits could not be reduced by monies received from non-auto defendants.  

The court addressed two Conditions in the SUM endorsement, “6” and “11”.
Condition “6” provides that:

6. Maximum SUM Payments. Regardless of the number of insureds, our maximum payment under this SUM endorsement shall be the difference between:
(a) The SUM limits; and
(b) The motor vehicle bodily injury liability insurance or bond payments received by the insured or the insured's legal representative, from or on behalf of all persons that may be legally liable for the bodily injury sustained by the insured.

The SUM limit shown on the Declarations for "Each Person" is the amount of coverage for all damages due to bodily injury to one person. The SUM limit shown under "Each Accident" is, subject to the limit for each person, the total amount of coverage for all damages due to bodily injury to two or more persons in the same accident."

Condition 11 provides:

11. Non-Duplication. This SUM coverage shall not duplicate any of the following:

(a) Benefits payable under workers' compensation or other similar laws;
(b) Non-occupational disability benefits under article nine of the Workers' Compensation Law or other similar law;
(c) Any amounts recovered or recoverable pursuant to article fifty-one of the New York Insurance Law or any similar motor vehicle insurance payable without regard to fault;
(d) Any valid or collectible motor vehicle medical payments insurance; or
(e) Any amounts recovered as bodily injury damages from sources other than motor vehicle bodily injury liability insurance policies or bonds."

SUM coverage is designed to provide the insured with the same level of protection he or she would provide to others were the insured a tortfeasor in a bodily injury accident.  With this limited purpose, SUM coverage does not function as a stand-alone policy to fully compensate the insureds for their injuries.

Here, the maximum SUM coverage of the subject policy was $500,000 per accident.  The amount payable under that coverage was reduced, under Conditions 6(a) and 6(b), by the $100,000 paid by McGibbon's insurer, inasmuch as that amount constituted a "motor vehicle bodily injury liability insurance . . . payment[ ]" that the plaintiffs received (11 NYCRR 60-2.3 [f]).  Further, the Dram Shop claims were settled for a total of $255,000.  The Dram Shop recovery constitutes, under Condition 11(e), an amount "recovered as bodily injury damages from sources other than motor vehicle bodily injury liability insurance policies or bonds."  Condition 11 does not allow duplicate recovery of such damages.

Consequently, under the terms of the SUM endorsement, the plaintiffs' receipt of the Dram Shop recovery reduces, by that same $255,000, the amount payable under the SUM endorsement. The plaintiffs are not penalized by this reduction, since they received the maximum amount for which they are covered under the SUM endorsement: $100,000 from McGibbon's policy, $255,000 from or on behalf of the Dram Shop defendants, and $145,000 from Tri-State.

The Court rejects the plaintiffs' argument that 11 NYCRR subpart 60-2, which includes the non-duplication provision, is inconsistent with Insurance Law § 3420(f)(2)(A).

A claimant has the right to submit a SUM claim upon exhaustion of the full liability limits of just one tortfeasor.  However, that does not mean that a claimant's ultimate entitlement to payment under the SUM endorsement may not be reduced or eliminated, depending on amounts recovered from additional tortfeasors.

09/18/12       Executive Risk Indemn., Inc., v. Starwood Hotels & Resorts
Appellate Division, First Department
A Good Read – With Respect to Two Successive E&O Policies, Claims Made During First Policy Period Were Not for Wrongful Acts as Defined But Were Prior Existing Claims, Nonetheless
Executive issued two successive professional liability policies to Starwood.  The period of the initial policy (the 05-06 policy) ran from April 10, 2005 to June 10, 2006.  The period of the subsequent policy (the 06-07 policy) ran from June 10, 2006 to June 10, 2007. Each policy was a "claims made" or "claims made and reported" policy under which coverage was available only with respect to claims first made and reported in writing during the applicable policy period or extended reporting period, if any.

In 2001, Starwood and Castillo entered into a contract for the construction and management of a luxury hotel.  Starwood was to provide Castillo with a design guide, and review and approve plans for the hotel and for the selection of its interior designer.  On October 25, 2005, Castillo wrote Starwood, complaining that Starwood had caused delays and cost overruns by failing to meet its responsibilities in implementing the hotel's design and demanded damages. 
In July 2006, Castillo sued Starwood in federal court with claims similar to the ones asserted in the October 25, 2005 letter.  By letter of August 16, 2006, Starwood gave Executive Risk notice of the Castillo litigation and requested a defense invoking the 05-06 policy "or any other applicable policies."  Executive Risk denied coverage with respect to the 05-06 policy citing one policy provision that required the reporting of claims during the policy period and another that required the insured to report claims as soon as practicable.  Executive Risk also denied coverage with respect to the 06-07 policy on the ground that Castillo's October 2005 letter and the July 2006 litigation were to be treated as a single claim made at the time of the October 2005 letter, eight months before the 06-07 policy period commenced.

Executive Risk therefore argued that Castillo's October 2005 letter, and its July 2006 lawsuit, represented a single claim that was made but not reported during the 05-06 policy period.  However, the 05-06 policy defines a "claim" as "any civil action, suit, proceeding or demand by any person or entity seeking to hold the Insured responsible for monetary damages as a result of a Wrongful Act actually or allegedly committed by the Insured or by any other person for whose Wrongful Acts the Insured is legally responsible."  A "wrongful act" is, in turn, defined as "any actual or alleged act, error or omission committed solely in the performance of, or failure to perform Professional Services."

Under the 05-06 policy, "Professional Services” means only services performed for others for a fee and which are listed in ITEM 6 of the Declarations."  The only professional services listed in Item 6 were "[f]ranchiser, hotel and property manager, mortgage banker, mortgage broker, travel agent, title agent, real estate agent and real estate broker as well as incidental and related computer and print publishing services."

The conduct alleged was not one of those professional services and, as a result, no claim was made in the 2005-2006 policy for a “wrongful act”.

The successor policy defined "insured services" to include "interior and exterior design and decorating consulting services."  Such services were the subject of Castillo's federal court complaint.  Accordingly, the Castillo litigation constituted a claim that was made and reported to Executive Risk during the 06-07 policy period.

However, the claims, while timely made in the second policy, fell within an exclusion.

The 06-07 policy had a "prior pending" exclusion by which no coverage under the policy was available "based upon, arising from, or in consequence of any written demand, suit, or other proceeding pending, or order, decree or judgment entered for or against any insured on or prior to [the June 10, 2006 inception date], or the same or substantially similar fact, circumstance or situation underlying or alleged therein."  Starwood argued that Castillo's demand could not have been "pending" within the meaning of the exclusion because a demand is not generally understood to be something that is undecided or awaiting decision in the same sense as a judicial proceeding.  Starwood's interpretation of the exclusion is erroneous for two reasons.  First, it renders meaningless the exclusion's use of the word "demand."  Moreover, the adjective "pending" can, in fact, describe a demand insofar as it means, among other things, "in question," "open to discussion," "under consideration" and "still in debate"

Accordingly, the prior pending exclusion of the 06-07 policy precluded coverage for the Castillo litigation.

 

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

09/26/12       Beltran v. Powow Limo, Inc.
Appellate Division, Second Department
Plaintiff Fails to Refute Lack of Causation
On appeal, the trial court is reversed and defendants’ motion is granted.  Defendants met their prima facie burden through the reports of their examining neurologist and radiologist which found that the alleged injuries to the cervical and lumbar spine did not constitute serious injuries and were not causally related to the accident.  Defendants also submitted plaintiff’s deposition testimony which defeated plaintiff’s 90/180-day claim as he admitted he did not miss any work.  In opposition, plaintiff did not submit any evidence to refute the lack of causal relationship or raise a triable issue of fact with respect to his alleged injuries.

09/19/12       Enyah v. Sherpa
Appellate Division, Second Department
Again, Plaintiff Fails to Rebut Defendants’ Prima Facie Showing
Plaintiff claimed injuries to the cervical and lumbosacral spine, right shoulder and under the 90/180-day category.  Plaintiff cross moved on the issue of liability.  On appeal, the trial court is again reversed as plaintiff failed to raise a triable issue of fact.  As such, defendants’ motion is granted, the complaint dismissed and plaintiff’s cross-motion denied.

09/19/12       Griffiths v. Munoz
Appellate Division, Second Department
“The Absence of a Contemporaneous Medical Report Invites Speculation as to Causation”
The trial court is reversed where plaintiff claimed injury to his right knee but did not seek any treatment until ten months after the accident, resulting in the allegations concerning causation being speculative.  In addition, although § 5102(d) does not set forth a temporal requirement for a claim under the significant limitation category, here plaintiff relied solely on three reports of examinations done shortly after the accident.  This was insufficient to raise a triable issue of fact as to whether the alleged limitations existed for a sufficient period of time to be “significant” and rise to the level of a significant limitation, which necessarily requires an assessment of duration as well as extent of the limitation.

09/19/12       Qader v. Babayev
Appellate Division, Second Department
Defendants’ Motions Are Denied on Appeal Where They Fail to Address Claims Under the 90/180-Day Category
On appeal, the trial court is reversed and defendants’ motions are denied as Defendants failed to adequately address plaintiffs’ claims under the 90/180-day category.  However, the fact that defendants failed to submit affidavits of a person with personal knowledge did not result in their motions being defective as plaintiffs contended.

 

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

ARBITRATION
09/24/12       Applicant v. Respondent
Arbitrator Kent L. Benziger, Erie County
Must Read Decision Wherein Arbitrator Will Not Apply Unitrin Advantage Ins. Co. v. Bayshore Physical Therapy Case to Retroactively Deny Bills on IME No Show
The Applicant sought reimbursement for two MRI studies performed upon the assignor.  The MRI bills were denied upon a chiropractic peer review.  Subsequent to the denials being issued, the assignor was noticed for chiropractic examination which the assignor failed to attend.  Consequently, the insurer issued a denial for breach of a policy condition for failing to attend scheduled IMEs.

The insurer, in addition to relying upon the peer review report, which the assigned arbitrator found unpersuasive, argued that under Unitrin Advantage Ins. Co. v. Bayshore Physical Therapy, 82 AD3d 559 (1st Dept 2011) the insurer could retroactively deny the MRI studies upon failure to attend scheduled IMEs.  The assigned arbitrator noted that this was not the basis for the denial of the MRI studies, and the insurer argued this defense is not waived under Bayshore even with an untimely denial.  The assigned arbitrator concluded that Bayshore was not controlling in the Fourth Department, where this arbitration was being heard and decided.  Furthermore, he determined that the case was contrary to common sense as well as case law in the Second Department (Westchester Med. Ctr. v. Lincoln Gen. Ins., 60 AD3d 1045 [2009]), and the Court of Appeals case in Central Gen. Hosp. v. Chubb Group, 90 NY2d 274 [1997].

In Westchester Medical, the court held that a breach of a policy condition to attend scheduled EUOs did not vitiate the medical provider’s right to recover or toll the 30 day timeframe to pay or deny.  The arbitrator concluded that not all conditions precedents to coverage are exempt from preclusion.  An insurer cannot raise a failure to attend IMEs months after a bill was denied on an unrelated ground as it would defeat the arbitration forum’s goal of prompt and fair resolution of claims.

LITIGATION

09/19/12       All Boro Psychological Services a/a/o Henry McCorkle v. Hartford Ins. Co.
Appellate Term, Second Department
Insurer Entitled to Summary Judgment on Failure to Appear for Scheduled EUOs
The insurer’s summary judgment motion was properly granted as it submitted sufficient affidavits establishing both that the EUO scheduling letters and denial of claim were timely mailed, and that the plaintiff failed to appear for the EUOs. 

09/13/12       Jamaica Med. Supply, Inc. a/a/o Kerron Alexander v. Encompass Ins. Co.
Appellate Term, Second Department
And Another Insurer Entitled to Summary Judgment on Failure to Appear for Scheduled EUOs
Again, the insurer’s summary judgment motion was properly granted as the assignor failed to appear for scheduled EUOs in breach of a condition to coverage under the policy.  The insurer submitted sufficient affidavits establishing that the EUO scheduling letters and denial of claim were timely mailed as well as the plaintiff’s failure to appear for the EUOs.  The Plaintiff did not claim that the assignors responded in any way to the EUO requests and the Plaintiff’s objections regarding the requests would not be heard on appeal.

09/05/12       Alfa Med. Supplies a/a/o Roberto Bueno v. GEICO Gen. Ins. Co.
Appellate Term, Second Department
Electronic Signature on Peer Review Sufficient as Long as Proper Language Is In Report
The insurer’s motion for summary judgment was properly granted on lack of medical necessity as it submitted unrebutted evidence that it issued timely denials based upon three sworn peer reviews.  Each peer review contained sufficient factual and medical rationale for the determination of lack of medical necessity.  The court rejected plaintiff’s argument that the peer review reports were inadmissible since they contained electronic stamped facsimile signatures because the reports indicated that the signatures were placed on the reports by the doctors who performed the review at their direction.

09/05/12       Hollis Med. Services, PC a/a/o Johnny Daceus v. GEICO Ins. Co.
Appellate Term, Second Department
Insurer Entitled to Summary Judgment as Affidavit Sufficient on Issuance of Timely Denial
The insurer’s motion for summary judgment should have been granted as the affidavit from the insurer’s employee was sufficient to establish timely mailing of denials.  The affidavit established the office where the denials were mailed and the standard mailing practice and procedure for that office.

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

09/27/12       In re Nationwide v Morgan
Appellate Division, First Department
Failure to Follow the Letter of the Law, Fatal to Carrier’s Attempt at Cancellation
Nationwide commenced the instant case to stay a SUM arbitration where it was alleged that Dairyland Insurance Company improperly cancelled Ms. Morgan’s personal automobile policy.  It appears undisputed that Dairyland issued Ms. Morgan a personal auto policy in Vermont.  At some point during the policy term, Dairyland attempted to cancel the policy for non-payment of premiums.  To accomplish this task, Dairyland mailed a cancellation notice to the insured using pre-made United States Postal Service bulk envelopes. 

However, under Vermont law, an insurer seeking to cancel a personal auto policy must do so only by certified mail.  Where that was not done, such as the instant case, Dairyland’s attempted cancellation was defective and therefore void.  In so holding, the Court noted that the fact Dairyland used its own “internal” certification system did not satisfy the requirements of Vermont statutory law. 

09/25/12       Pub. Adjustment Bureau, Inc. v Greater NY Mut. Ins. Co.
Appellate Division, First Department
Question of Fact as to Whether Public Adjuster Provided “Valuable Service”
Seward Park sustained a first party loss, and retained the services of Public Adjustment to assist with the preparation of its claim to Greater New York Mutual.  As payment for its services, Public Adjusters would receive 7% of any loss recovered.  When a dispute between Seward and Greater New York arose, the matter proceeded into litigation.  After a period of “substantial litigation,” Seward ultimately settled the claim. 

Thereafter, Seward apparently disputed what amount, if any, it owed to Public Adjustment.  Essentially, Seward argued that the claim had to be adjusted due to valuable services rendered by Public Adjustment.  Where, as here, the claim was not “adjusted”, Seward argued that the payment provision had not been triggered.

The Appellate Division, upon review of the actual contract at issue, noted that the payment clause was triggered where the claim was “adjusted or otherwise recovered.”  Accordingly, the Court rejected Seward’s triggering argument.  However, the matter was remanded to the trial court on a question of fact regarding whether Public Adjustment’s efforts constituted “valuable services.” 

Potpourri

09/26/12       Financial Services Vehicle Trust v Saad
Appellate Division, Second Department
Signatory to a Contract is Deemed to Know What He or She Agreed
Defendant Saad leased a vehicle from non-party Rallye.  The lease, particularly at Clause 33, provided that Saad would contractually indemnify Rallye for any loss or liability arising out of the use of the leased vehicle.   Rallye subsequently assigned the lease to Financial Services Vehicle Trust (FSVT).

Unfortunately, during the course of the lease, Saad struck and killed two pedestrians.  When the Estates subsequently commenced actions against FSVT, the response of FSVT was assert a cross-claim against Saad for contractual indemnification.  Saad opposed the cross-claim, ultimately moving for summary judgment, on the ground that he never read the lease and was unaware of the contractual indemnity obligation and that the cross-claims were barred by the anti-subrogation law. 

In denying Saad’s motion, the Appellate Division noted that a party is deemed to know the contents of a contract to which he or she is a signatory.  Accordingly, Saad’s argument of ignorance did not excuse his potential contractual indemnity obligations.  In addition, the Court noted that Saad did not meet his burden of establishing the protections of the anti-subrogation rule.

Peiper’s Point – We suspect that one of three things must have occurred to foil defenant’s anti-subrogation claim. Either (a) Saad did not establish, through admissible evidence, that he was insured under FSVT’s policy; (b) the potential exposure was greater than FSVT’s coverage; or, (c) FSVT did not have any coverage. 

09/26/12       NY Hosp. Med. Ctr. of Queens v Microtech Contracting Corp.
Appellate Division, Second Department
Violation of Immigration Control & Reform Act Does Not Preclude Protections Afforded by Section 11 of New York Workers’ Comp. Law. 
Defendant allegedly employed two undocumented, illegal workers at a jobsite owned by plaintiff NY Hospital.  When one of the two workers was injured at the site, NY Hospital was named as a defendant in a Labor Law action.  NY Hospital responded by asserting a common law indemnity/contribution claim against the injured worker’s employer Microtech.

Microtech moved to dismiss the claim on the basis of Section 11 of the Workers’ Compensation Law.  As there was no grave injury in the instant case, Microtech argued that it was protected from common law indemnity claims. 

In response, plaintiff argued that the injured worker had been employed in violation of the Immigration Control & Reform Act (ICRA) which the United States Congress had passed in the 1980’s.  Specifically, the ICRA provides for civil penalties against employers of undocumented, illegal, workers.  In addition, the ICRA also pre-empts all State and Local laws which purport to assert civil penalties against employers who hire undocumented, illegal workers.  Therefore, plaintiff reasoned that the ICRA pre-empted Section 11 of the Workers’ Compensation law, and Microtech had no statutory protections against a common law indemnity claim.

While the Supremacy Clause of the United States Constitution permits federal law to pre-empt state law, the Appellate Division noted that the pre-emption doctrine must be strictly construed and applied only where the intent of Congress is unmistakable.  Quite simply, the Court was unwilling to permit the ICRA to pre-empt New York’s ability to control occupational health and safety laws.  This was particularly so where, as here, the law which was alleged to be pre-empted did not even provide for penalties related to the hiring or undocumented workers.  Rather, Section 11 is only based upon the protections afforded to all workers employed in New York.   In light of the foregoing, plaintiff’s claim was dismissed in its entirety pursuant to Section 11 of the Workers’ Compensation law. 

09/18/12       Dwyer v Central Park Studios
Appellate Division, First Department
GOL 5-322.1 Does Not Preclude an Indemnity Claim Unless the Party Seeking Indemnity is Actually Negligent
Plaintiff sustained injury during the course of his employment with DPS.  Prior to the incident, DPS had been retained by Michael and Janet Slosberg to perform some construction work in condo they owned.  The condo was located in a building owned by Central Park Studios (CPS).

Plaintiff commenced an action sounding in Labor Law against CPS.  In turn, CPS commenced a third-party action against the Slosberg’s therein asserting a claim for contractual indemnification.  The Slosberg’s opposed the contractual indemnification claim by asserting that the clause in question potentially provided CPS with indemnification for its own negligence.  Thus, the Slosberg’s argued that the clause was in violation of GOL 5-322.1 and was void as a matter of law.

As noted by the Appellate Division, the trial court previously dismissed Mr. Dwyer’s Common Negligence/Labor Law 200 claim against CPS.  The result of which meant that CPS was not negligent.  Accordingly, where, as here, the only liability facing CPS was vicarious in nature, the prohibitions of GOL 5-322.1 were inapplicable. 

 

CASSIE’S CAPITAL CONNECTION
Cassandra A. Kazukenus
[email protected]

New DMV Regulations
New Regulations Will Be Implemented by DMV in an Effort to Keep Repeat Impaired Drivers Off the Roads
As DFS appears currently focused more on banking activities, we reviewed some of the other departments that our readers often deal with and found the following changes interesting:

Currently, drivers convicted of multiple alcohol or drug related driving offenses cannot permanently lose their driver’s license.  Those with multiple convictions under the current scheme may lose their license for a short time, but they may apply to be licensed.  Currently, the only time “a driver really faces losing a license permanently is when he or she has two alcohol related convictions arising from separate crashes involving a physical injury.” (Governor Cuomo press release 09/26/12). 

Under the new regulations, the DMV will be able to review the lifetime record of anyone applying to have their license reinstated after revocation.  Upon review of all the records, the DMV will deny the applicant if he or she has 5 or more alcohol or drug related convictions in their lifetime or three or more convictions in the last 25 years, plus at least one other serious driving offense.  (Serious driving offenses include fatal crashes, 20 or more points, etc.)

The DMV will also have the authority to delay re-licensing.  If the driver seeking reinstatement has three or four drug or alcohol related convictions but no serious driving offenses in the last 25 years, the DMV will:

• Deny their applications for 5 years beyond the statutory revocation if the license was revoked for a drug or alcohol related offense;
• Deny their application for 2 years if the license was revoked for another reason; and
• The license will be restored after the additional penalty period for restricted travel, i.e. work.

 

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

09/17/12       Owners Insurance Co. v. European Auto Works 
Eighth Circuit Court of Appeals – Minnesota Law Applied
Personal and Advertising Injury - Telephone Consumer Protection Act (TCPA)
Autopia, an auto repair company, hired a firm called Business to Business Solutions to fax 5,000 advertisements to prospective customers in 2005.  Percic Enterprises was one of the recipients of these fax advertisements and alleges that it never consented to receive them.

Percic brought a class action lawsuit against Autopia in Minnesota State Court, claiming that Autopia violated the TCPA and committed the common law tort of conversion by sending unsolicited fax advertisements to it and other class members.  The complaint alleged that the unsolicited faxes had “unlawfully interrupted Plaintiff’s and other class members’ privacy interests in being left alone.” 

Autopia tendered its defense to Owners and Auto-Owners (collectively “insurers”), who undertook the defense under a reservation of rights.  Autopia had purchased a commercial general liability policy and garage liability coverage from Owners, and commercial umbrella policy from Auto-Owners.  The coverage issue to be determined was whether the faxes sent to the recipients was considered “advertising injury” as that term was defined in the commercial general liability and the umbrella liability policies issued by the insurers.  Specifically, whether the faxes were “oral or written publication of material that violates a person’s right of privacy.”

While the State class action was pending, Autopia’s insurers initiated this declaratory judgment action in federal district court.  Percic filed a counterclaim and both sides moved for summary judgment.  The district court granted summary judgment to Autopia and Percic, and denied the insurers’ motion.  The district court concluded that the TCPA claim was a claim for advertising injury and was, therefore, covered under the “plain and ordinary” meaning of the policies.  The court held that sending unsolicited fax advertisements in violation of the TCPA was an “oral or written publication of material that violates a person’s right of privacy.  Since the court found coverage under the advertising injury it did not address the issue of whether the property damage provision also provided coverage.

The insurers appealed, arguing that the district court erred in determining that the TCPA violations were advertising injury.  The Eighth Circuit Court of Appeals [“Court’] affirmed for the following reasons.

On appeal the parties did not dispute that TCPA violations for sending unsolicited fax advertisements may violate some form of privacy right, but they disagreed as to whether the type of privacy violation on which Percic’s TCPA claim is based is covered by the policies.  Privacy law distinguishes between (1) secrecy based torts that punish disclosure of private information about someone other than the recipient, and (2) seclusion based torts that involve intruding on another’s solitude.

The insurer’s argued that the plain language of the policies’ advertising injury provision covers only the secrecy interest, since that provision is concerned with the content of material being published.  The insurers also argued that the TCPA and the allegations in the complaint concern only the intrusion on solitude caused by unsolicited fax advertisements, not the content of those advertisements. Essentially, the insurers contended that the unambiguous language of the policies protects only secrecy based privacy violations and not the seclusion based privacy interests protected by the TCPA.

In analyzing the issues, the Court looked at decisions rendered by circuit courts in other jurisdictions and found disagreement among the Courts but found that the majority of circuits which have considered the question have held that the phrase is not limited to secrecy based privacy violations and that the phrase covers TCPA violations.

The Court also analyzed Minnesota law regarding the interpretation of contracts noting that Minnesota courts construe ambiguities in favor of the insured because most insurance policies are presented as preprinted forms, which a potential insured must usually accept or reject as a whole.  The Court determined that since the policies did not define the key terms of “publication” and “right of privacy”, it would use their plain and ordinary meaning when interpreting the policies.

The Court concluded that the ordinary meaning of the term “right of privacy” easily includes violations of the type of privacy interest protected by the TCPA, noting that “our court has previously stated that violations of the TCPA are “invasions of privacy” under the ordinary, lay meaning of the phrase.”

The Court also concluded that the plain meaning of “publication” is broad enough to include the dissemination of fax advertisements.  The Court noted that the word “publication” has multiple definitions, including “communication (as of news or information) to the public” and the “act or process of issuing copies” for general distribution to the public. 

The Court held that the policies’ reference to violating a “right of privacy” thus encompasses the intrusion on seclusion caused by a TCPA violation for sending unsolicited fax advertisements, and the term “publication” includes dissemination of faxes.  After examining the provision as a whole, the Court concluded that “oral or written publication that violates a person’s right of privacy covers the sending of unsolicited fax advertisements.”

The Court also rejected the insurer’s contention that the provision’s placement in the policy next to other types of advertising injuries which require an evaluation of the content of the advertisement compels a judgment in their favor.  The Court held that if the insurers wanted to exclude TCPA violations from the advertising injury provision, they could have specifically so defined the term.  In support of its position, the Court pointed to a subsequent version of the policy where a specific exclusion was added for “advertising injury” arising “directly or indirectly out of any action or omission that violates or is alleged to violate the TCPA.”

Note:  There was one dissenting Justice who opined that the context shows that the definition of advertising injury “focuses on the content of an advertisement rather than harm from mere receipt of an advertisement” - the policy should be read as a whole before determining it was ambiguous.

 

KEEPING THE FAITH WITH JEN’S GEMS

Jennifer A. Ehman
[email protected] 

09/20/12       Chalfonte Condominium Apartment Association, Inc. v. QBE Ins. Co.
United State Court of Appeals, Eleventh Circuit
Florida Does Not Recognize a Common Law Claim for Breach of the Implied Warranty of Good Faith and Fair Dealing by an Insured Against Its Insurer
This is a decision out of the Eleventh Circuit in which plaintiff sustained extensive damage to its property as a result of Hurricane Wilma.  Plaintiff filed a claim with its property insurer, defendant.  After a period of time, plaintiff became dissatisfied with defendant’s investigation and processing of the claim.  Accordingly, it filed this action in federal district court.  Ultimately, the matter proceeded to trial and a jury awarded plaintiff over seven million dollars for the failure to provide coverage, and approximately three-hundred thousand for breach of the implied warranty of good faith and fair dealing. 

One of the issues in this case was whether Florida recognizes a claim for breach of the implied warranty of good faith and fair dealing by an insured against its insurer.  In considering this issue, the Eleventh Circuit certified the question to the Supreme Court of Florida, which reasoned as follows.  For many years, Florida courts imposed an independent duty on liability insurers to act in good faith when defending insureds against third-party claims, and recognized a common law cause of action for bad faith within the context of third-party actions.  However, at the time, no analogous bad-faith action existed for first-party claimants.  In 1982, the Florida Legislature enacted section 624.155, the so-called “Bad Faith Statute.”  This section created a statutory first-party bad-faith cause of action.  According to the Supreme Court of Florida, the language of this statute indicated that the Legislature recognized that, prior to the statute, case law did not permit first parties, such as those covered under uninsured motorists policies, to sue their insurance companies for bad faith refusal to pay claims.  In light of this analysis, when the matter was sent back from the Supreme Court of Florida, defendant was granted a new trial.

Take Away:  It is important to remember that a carrier’s fiduciary duties to its insured are substantially different under third-party coverage than they are under first-party coverage.  In third-party situations, the insurer must act in good faith and be as zealous in protecting the interests of the insured as it would be in protecting its own.  In contrast, a first-party policy does not create the same bond between the insurer and the insured.  Rather, a first-party policy obligates the insurer to pay claims which fall within the terms of the contract.

 

MARC’S REMARKS

Marc A. Schulz
[email protected]

09/18/12       Hibbert v Palmieri
Supreme Court, Suffolk County
Defendant’s Experts Must Observe Plaintiff and Address All Alleged Injuries Before Making a Threshold Motion
Hibbert sought to recover damages for personal injuries allegedly sustained after he was involved in an accident as a passenger in a vehicle owned and operated by Green that collided with another vehicle owned by J&J Towing and operated by Palmieri.  Hibbert alleges he sustained serious injuries.  Green moved for summary judgment contending Hibbert did not sustain a serious injury, and J&J Towing and Palmieri cross-moved for same.

Green’s examining orthopedist performed range of motion tests on Hibbert and found among other things, restrictions of 70 degrees (90 normal) in cervical spine and 110 degrees flexion (150 normal) in left elbow.  Although Hibbert alleged stiffness/numbness in cervical spine, left upper extremity, arm, hand, and fingers, Green failed to submit a report from a neurologist ruling out the claimed neurological injury.  Thus, the court held Green failed to meet her prima facie burden establishing Hibbert did not sustain a serious injury.

J&J Towing and Palmieri attempted to “join in” Green’s motion and submitted a report from a radiologist who reviewed and MRI of Hibbert’s cervical spine.  The radiologist found degenerative disc bulging and small degenerative bone spurs, and concluded the disc changes in spine were pre-existing and causally unrelated to the accident.  However, the radiologist “merely reviewed the MRI” and “was not paired with his observations of [Hibbert] during a physical exam.”  Consequently, the court denied J&J Towing and Palmieri’s cross-motion.

09/18/12       Francios v Socci
Supreme Court, Suffolk County
Where Defendant Meets Prima Facie Burden and Plaintiff Sufficiently Raises Triable Issues of Fact, Defendant’s Threshold Motion Denied
Plaintiff sought to recover for injuries allegedly sustained in a rear-end accident by claiming “limitation of use.”  Defendant filed summary judgment motion on issue of serious injury by submitting expert reports of neurologist, an orthopedic surgeon, and radiologist.  After examining Plaintiff, the neurologist found Plaintiff normal and diagnosed cervical, thoracic and lumbar spine sprain/strain resolved, opining no indication of neurologic disability and Plaintiff can perform all daily activities without restriction/limitation.  Similarly, the orthopedic surgeon diagnosed Plaintiff cervical and thoracic strains resolved, noted the MRI of cervical spine indicated degenerative changes, and opined Plaintiff capable of daily living.  The radiologist reviewed MRI and found no disc herniations or bulges.  Thus, the court held Defendant met prima facie burden of demonstrating plaintiff did not suffer a serious injury.

In opposition, Plaintiff submitted reports of osteopathic physician, chiropractor, orthopedist, and radiologist.  Radiologist reviewed x-ray five days after accident and opined film revealed straightening of upper cervical lordosis.  An MRI a month later revealed disc bulges.  Plaintiff’s physician evaluated her four days after the accident and found straightening of upper cervical spine and opined she was totally disabled and unable to work.  Plaintiff’s chiropractor asserted that throughout treatment, Plaintiff’s complaints of pain in neck, upper and mid-back regions consistent with findings of spasms, palpated tenderness, trigger points, and among others, fixed segments/restricted range of motion and as a result of accident, Plaintiff totally disabled and unable to return to work.  Orthopedist found restricted movement and muscle spasms and tenderness to spinal region after each visit and after treatment became ineffective, referred Plaintiff to PT.  He opined Plaintiff sustained serious permanent disabling injuries to her neck and back with permanent limitation and loss of use of neck and back.  Recently, the chiropractor and physician opined range of motion limitations as permanent, significant and causally related.  Thus, the court held Plaintiff sufficiently raised an issue of fact as to whether she sustained a serious injury and denied Defendant’s threshold motion. 

09/21/12       Eleventh Ave. LP v Harleysville Ins. Co.
Supreme Court, New York County
Plaintiffs Failure to Proffer Valid Excuse for Failing to Timely Notify Insurer Constitutes Failure to Comply with Conditions Precedent to Coverage
Plaintiffs Eleventh Ave., Levine Family, DD 11th and Levine brought suit against Harleysville seeking defense and indemnification in underlying action where laborer working at construction site allegedly slipped and fell on an electric conduit.  DD 11th was lessee of property for the construction site.  Levine was construction manager who contracted with co-defendant SJ Electric for electrical work at the construction site.  SJ Electric was required to include on its policy an additional insured endorsement for DD 11th and Levine.  In underlying action, Laborer testified he tripped over gray half-inch pipe used by electricians to run wire through flooring.  SJ Electric’s witness testified they did all the wiring for the construction site, including conduit through the floors.

Thus, Plaintiff’s contend SJ Electric’s insurance obligations are triggered because laborer’s complaint, allegations, and testimony implicate SJ Electric.  In response, Harleysville contends there has been no judicial determination in underlying action and insufficient proof that its insured, SJ Electric’s acts or omissions, caused the accident as there were other potentially responsible parties such as subcontractors.  As we all are well aware, “an insurer’s duty to defend arises whenever the allegations with the four corners of the underlying complaint potentially give rise to a covered claim … however groundless, false, or fraudulent.”  The court determined that based on the testimony, laborer fell on electrical conduit and SJ Electric was the electrician running conduit through concrete.  As the policy is for “liability caused, in whole or part, by the acts or omissions” of SJ Electric, the court held laborer’s accident triggered coverage.

Although the duty to defend was triggered, questions remained as to whether (1) Plaintiffs gave Harleysville timely notice of claim and/or (2) whether Harleysville properly disclaimed coverage.  The court stated “where there is an unambiguous notification policy, claims are to be reported ‘as soon as practicable if they are to become the basis of a claim’…  Absent a valid excuse, a failure to satisfy the notice requirement vitiates the policy.”  Plaintiffs offered no explanation for their failure to timely notify Harleysville.  Moreover, Harleysville timely disclaimed coverage to Eleventh Ave. and Levine Family via denial letter with six days, and to DD 11th and Levine via Answer within twenty days.  Consequently, Plaintiffs failed to comply with conditions precedent to insurance coverage which precludes coverage.

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

CGL Policy May Not Cover Construction Defects

The interplay of standard CGL insurance policy terms and construction law was involved in the case of Ewing Construction Co., Inc. v Amerisure Insurance Co., 2012 U.S. App. LEXIS 12154 [5th Circuit, June 15, 2012].  The contractor built tennis courts at a Texas school which cracked, flaked, and became unfit for use after completion.  The school district sued the contractor for breach of contract, negligence, etc.  The federal District Court held that Amerisure owed no duty to defend or indemnify the contractor because of the policy’s contractual liability exclusion, and that ruling was upheld on appeal.  The primary dispute was whether the policy contractual liability exclusion applied which barred coverage for property damage “…for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement.” 

Reviewing Texas state law, the federal court concluded that the main analytical point was that the contractual liability exclusion excluded coverage for property damage when the insured assumed liability for property damage via a contract.  Here, the contractor assumed “liability” for defective construction by agreeing by its contract to install the tennis courts.  The federal court further reasoned that its decision was in line with the longstanding concept that a CGL policy is not intended as reimbursement for an insured’s bad performance of a contract.

The contractor tried to argue that the exclusion did not apply because the underlying lawsuit also alleged “negligence”.  However, the court disagreed based upon the source of liability and the nature of the plaintiff’s loss was clearly damage to the subject matter of the contract. 

The Fifth Circuit affirmed the Ruling that Amerisure had no duty to defend the contractor, but vacated the lower court ruling that there was no duty to indemnify on technical grounds that the underlying lawsuit had not yet been resolved (but the same ruling and reasoning would obviously apply to bar any indemnity loss payment).

Since this case involved federal court interpretations of Texas law, the effect of the decision on future cases, and whether Texas law may ultimately agree may await further rulings by the Texas Supreme Court and other courts in Texas.

It is also noteworthy that the contractor in this case enlisted amicus briefs from several trade organizations in an effort to support its claim that there was insurance coverage, which briefs were ultimately unavailing. 

 

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

09/20/12       G&S Holdings, LLC v. Continental Casualty Company
Seventh Circuit Court of Appeals
Plaintiffs, Who Were Not the Insureds Claiming Damages for Insurer’s Failing to Pay Claims, Were Not Real Parties in Interest and Cannot Sue the Insurer
In 2007, an explosion occurred at a processing plant in Georgia owned by G & S who was insured through Continental for damage to the plant. Pursuant to the policy, Continental made some payments but G & S subsequently filed suit alleging the payments were inadequate. G & S went into bankruptcy and was not a party to this litigation and instead the case was filed by others claiming that the failure of Continental to pay adequate damages to G & S in a timely manner caused them damages. Suit was brought against Continental and Hylant Group, the former insurance broker.

The crux of the complaint was as a result of the failure to receive timely and adequate payment, G & S experienced financial difficulties and the plaintiffs were adversely affected by the ensuing loss of business with G & S.  In affirming the dismissal of the action, the Court found the plaintiff did not allege that any property damage or business loss claim was made by any of the additional named insureds from the explosion.  In this case, the damage sustained by the plaintiffs did not occur due to the explosion at the plant, but instead as a result of Continental allegedly failing to timely and fully pay the claim owed to G & S. Plaintiffs’ damages arose only indirectly from Continental’s failure, and the plaintiffs were seeking damages based on the failure to fulfill duties owed to G & S rather than themselves, and for injuries that arose from G & S’s subsequent business failure.  The District Court held that the plaintiffs were not real parties in interest and therefore lacked standing to pursue these claims.
Submitted by: Russell Q. Allison Carr Allison

09/11/12       White v. State Farm Fire & Cas. Co.
Eleventh Circuit Court of Appeals
Policy Provision Imposing One-Year Limitation Period Upheld
The case involved a dispute about the enforceability under Georgia law of an insurance policy requirement that a lawsuit be brought against the insurer within one year of the date of loss or damage.  The issue with this provision arose from the fact that Georgia law included a regulation requiring that a multiple-line insurance policy providing coverage for first-party theft-related property damage claims must be reformed to conform with the two-year limitations period provided for under Georgia’s Standard Fire Policy.

After certifying questions to the Georgia Supreme Court and receiving answers, the Eleventh Circuit upheld the district court’s entry of summary judgment in favor of the Defendant insurer, confirming that the Georgia Insurance Commissioner did not have authority to promulgate the regulation requiring the reformation of the policy to comply with the two-year limitations period in Georgia’s Standard Fire Policy.  As such, the insured was required to bring the lawsuit within the one-year limitations period provided for in the policy, and because it did not, the insured’s action was barred.
Submitted by: Sam Cooley Traub Lieberman Straus & Shrewsberry LLP

 

REPORTED DECISIONS

Executive Risk Indemnity v. Starwood Hotels & Resorsts.

Kaufman Borgeest & Ryan LLP, New York (Joan M. Gilbride of counsel), and Hogan Lovells US LLP, Washington, DC (Christopher T. Handman of the bar of the District of Columbia, admitted pro hac vice, of counsel), for appellant.
Bickel & Brewer, New York (William A. Brewer III of counsel), for respondents.

Order, Supreme Court, New York County (Eileen Bransten, J.), entered August 1, 2011, which, insofar as appealed from as limited by the briefs denied a motion by plaintiff, Executive Risk Indemnity, Inc. (Executive Risk), for summary judgment and granted a cross motion by defendants Starwood Hotels & Resorts Worldwide, Inc. and Sheraton Operating Corporation (jointly "Starwood") for partial summary judgment, unanimously reversed, on the law, with costs, Executive Risk's motion granted, Starwood's cross motion denied, and it is declared that Executive Risk has no duty to defend or indemnify Starwood in the underlying action that was brought against it by nonparty Castillo Grand, LLC (Castillo).

This appeal involves disputed claims for coverage under two successive professional liability policies issued by Executive Risk to Starwood. The period of the initial policy (the 05-06 policy) ran from April 10, 2005 to June 10, 2006. The period of the subsequent policy (the 06-07 policy) ran from June 10, 2006 to June 10, 2007. Each policy was a "claims made" or "claims made and reported" policy under which coverage was available only with respect to claims first made and reported in writing during the applicable policy period or extended reporting period, if any.

In 2001, Starwood and Castillo entered into a contract for the construction and management of a luxury hotel. The contract required Starwood to, among other things, provide Castillo with a design guide, and review and approve plans for the hotel and for the selection of its interior designer. On October 25, 2005, Castillo wrote Starwood, complaining that Starwood had caused delays and cost overruns by failing to meet its responsibilities in implementing the hotel's design. Castillo demanded $18,294,500 in damages, stating that it was prepared to resort to arbitration, mediation or litigation if its differences with Starwood could not be resolved.

On July 21, 2006, Castillo brought the underlying action against Starwood in federal court. Like the October 25, 2005 letter, Castillo's complaint set forth allegations of Starwood's failure to discharge its duty to implement the hotel's design. By letter dated August 16, 2006, Starwood gave Executive Risk notice of the Castillo litigation and requested a defense invoking the 05-06 policy "or any other applicable policies." Claiming that the notice was untimely, Executive Risk denied coverage with respect to the 05-06 policy citing one policy provision that required the reporting of claims during the policy period and another that required the insured to report claims as soon as practicable. Executive Risk also denied coverage with respect to the 06-07 policy on the ground that Castillo's October 2005 letter and the July 2006 litigation were to be treated as a single claim made at the time of the October 2005 letter, eight months before the 06-07 policy period commenced. Executive Risk made the same assertions in the instant amended complaint for declaratory judgment. The motion court denied Executive Risk's motion for summary judgment and granted Starwood's cross motion to the relevant extent of finding that Castillo's October 2005 letter did not constitute a claim within the meaning of the 05-06 policy and that Castillo's July 2006 litigation was a claim that was made and reported during the 06-07 policy period. The court therefore declared that Executive Risk was obligated to defend and indemnify Starwood under the 06-07 policy in connection with "the various litigations commenced by Castillo." We reverse.

It is undisputed that Castillo's October 25, 2005 letter and its July 16, 2006 federal court complaint involved the same allegations of Starwood's defaults in designing the hotel. As noted above, coverage under a "claims made" policy applies to claims made and reported during a given policy period. Executive Risk therefore argues that Castillo's October 2005 letter and its July 2006 lawsuit represented a single claim that was made but not reported during the 05-06 policy period. This argument is refuted by the 05-06 policy itself.

The 05-06 policy defines a "claim" as "any civil action, suit, proceeding or demand by any person or entity seeking to hold the Insured responsible for monetary damages as a result of a Wrongful Act actually or allegedly committed by the Insured or by any other person for whose Wrongful Acts the Insured is legally responsible." A "wrongful act" is, in turn, defined as "any actual or alleged act, error or omission committed solely in the performance of, or failure to perform Professional Services." Under the 05-06 policy, "Professional Services' means only services performed for others for a fee and which are listed in ITEM 6 of the Declarations." The only professional services listed in Item 6 were "[f]ranchiser, hotel and property manager, mortgage banker, mortgage broker, travel agent, title agent, real estate agent and real estate broker as well as incidental and related computer and print publishing services."

A court interpreting an insurance policy must give its words their plain and ordinary meaning (Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390, 398 [1983]). Therefore, based on the policy's language elaborating on what was meant by the term "Professional Services," we reject Executive Risk's argument that the professional services set forth under Item 6 encompassed the design work Castillo complained about in its October 2005 letter. Because Starwood's design work was not a professional service under the 05-06 policy declarations, Castillo's October 2005 letter did not set forth a wrongful act. No claim was therefore made under the 05-06 policy.

Similar to the 05-06 policy, the 06-07 policy defined a claim as a written demand or civil proceeding against an insured for a "Wrongful Act." The two policies differed to the extent that the 06-07 policy defined a "wrongful act" as an act, error or omission committed or allegedly committed or attempted "solely in the performance of or failure to perform Insured Services." Unlike the definition of "professional services" under the 05-06 policy, the definition of "insured services" under the 06-07 policy included "interior and exterior design and decorating consulting services." Such services were the subject of Castillo's federal court complaint. Accordingly, we find that the Castillo litigation constituted a claim that was made and reported to Executive Risk during the 06-07 policy period. For reasons that follow, the motion court should have nevertheless found the claim fell within an exclusion of the 06-07 policy.

The 06-07 policy had a "prior pending" exclusion by which no coverage under the policy was available "based upon, arising from, or in consequence of any written demand, suit, or other proceeding pending, or order, decree or judgment entered for or against any insured on or prior to [the June 10, 2006 inception date], or the same or substantially similar fact, circumstance or situation underlying or alleged therein." The motion court concluded that the prior pending exclusion did not apply to Castillo's October 2005 demand letter. Here, Starwood argued that Castillo's demand could not have been "pending" within the meaning of the exclusion because a demand is not generally understood to be something that is undecided or awaiting decision in the same sense as a judicial proceeding. Starwood's interpretation of the exclusion is erroneous for two reasons. First, it renders meaningless the exclusion's use of the word "demand." It is settled that "[a]n insurance contract should not be read so that some provisions are rendered meaningless" (County of Columbia v Continental Ins. Co., 83 NY2d 618, 628 [1994]). Moreover, the adjective "pending" can, in fact, describe a demand insofar as it means, among other things, "in question," "open to discussion," "under consideration" and "still in debate" (Burton's Legal Thesaurus 448 [4th ed 2006]). Without doubt, these synonyms all describe the status of Castillo's demand when the 06-07 policy commenced on June 10, 2006. Accordingly, the prior pending exclusion of the 06-07 policy precluded coverage for the Castillo litigation.

Weiss v. Tri-State Consumer Ins. Co.

Crafa & Sofield, P.C., Rockville Centre, N.Y. (Joseph R. Crafa of counsel), for appellant.
Gregory J. Cannata, New York, N.Y. (Alison Cannata Hendele of counsel), for respondents.

DECISION & ORDER

In an action to recover damages pursuant to the supplementary uninsured/underinsured motorist endorsement of an insurance policy, the defendant appeals from an order of the Supreme Court, Kings County (Bunyan, J.), dated March 10, 2011, which granted those branches of the plaintiffs' motion which were, in effect, for summary judgment determining that the amount of supplementary uninsured/underinsured motorist coverage available to the plaintiffs pursuant to the subject insurance policy is $400,000 and to dismiss the third and fourth affirmative defenses pursuant to CPLR 3211, and denied its cross motion, in effect, for summary judgment determining that the amount of supplementary uninsured/underinsured motorist coverage available to the plaintiffs pursuant to the subject insurance policy is limited to $145,000.

ORDERED that the order is reversed, on the law, with costs, those branches of the plaintiffs' motion which were, in effect, for summary judgment determining that the amount of supplementary uninsured/underinsured motorist coverage available to the plaintiffs pursuant to the subject insurance policy is $400,000 and to dismiss the third and fourth affirmative defenses pursuant to CPLR 3211 are denied, and the defendant's cross motion, in effect, for summary judgment determining that the amount of supplementary uninsured/underinsured motorist coverage available to the plaintiffs pursuant to the subject insurance policy is limited to $145,000 is granted.

On March 4, 2003, Rifka and Anton Goldenberg were killed when a vehicle operated by a drunk driver, Michael McGibbon, collided with their vehicle. The insurance policy covering McGibbon's vehicle contained coverage limits of $50,000 per person and $100,000 per accident. The Goldenbergs' automobile insurance policy (hereinafter the subject policy), issued by the defendant, Tri-State Consumer Insurance Company (hereinafter Tri-State), included a supplementary uninsured/underinsured motorist (hereinafter SUM) endorsement which contained a coverage limit of $250,000 per person and $500,000 per accident. The plaintiffs in this action, the Goldenbergs' daughters, who are the administrators of their estates, commenced an action to recover damages from, among others, McGibbon's estate, the owner of McGibbon's vehicle, and a bar and a diner that had served McGibbon alcohol before the accident. The insurer of McGibbon's vehicle agreed to pay the $100,000 maximum coverage limit of its policy in settlement of the claims against McGibbon's estate and the owner of his vehicle. The bar and the diner (hereinafter together the Dram Shop defendants), and their insurers, agreed to pay a total of $255,000 in settlement of the "Dram Shop" claims asserted against them (hereinafter the Dram Shop recovery). Thus, the plaintiffs settled the prior action for a total of $355,000.

The plaintiffs submitted a claim to Tri-State for recovery under the SUM endorsement of the subject policy. Tri-State asserted that the amount available to the plaintiffs under the SUM endorsement was limited to $145,000 (the $500,000 coverage amount less the total amount of the $355,000 settlement in the prior action). Thereafter, the plaintiffs commenced this action against Tri-State seeking to recover damages pursuant to the SUM endorsement in the amount of $400,000. In the complaint, they alleged that the SUM endorsement's $500,000 coverage limit could properly be reduced only by the $100,000 attributable to McGibbon's policy, and not by the amount of the Dram Shop recovery. In its answer, the defendant alleged, under the third and fourth affirmative defenses, that the amount of SUM coverage available to the plaintiffs is reduced by the amount of the Dram Shop recovery. The plaintiffs moved, inter alia, in effect, for summary judgment determining that the amount of SUM coverage available to them pursuant to the subject policy is $400,000 and to dismiss the third and fourth affirmative defenses pursuant to CPLR 3211, and Tri-State cross-moved, in effect, for summary judgment determining that the amount of such coverage is limited to $145,000. The Supreme Court granted the aforementioned branches of the plaintiffs' motion and denied Tri-State's cross motion. Tri-State appeals, and we reverse.

The subject policy contained the standard SUM endorsement prescribed by the Superintendent of Insurance in Regulation No. 35-D (11 NYCRR 60-2.3[c], [f]).

Two conditions in the endorsement are directly at issue in this appeal. Condition 6 provides:

"6. Maximum SUM Payments. Regardless of the number of insureds, our maximum payment under this SUM endorsement shall be the difference between:
"(a) The SUM limits; and
"(b) The motor vehicle bodily injury liability insurance or bond payments received by the insured or the insured's legal representative, from or on behalf of all persons that may be legally liable for the bodily injury sustained by the insured.
"The SUM limit shown on the Declarations for "Each Person" is the amount of coverage for all damages due to bodily injury to one person. The SUM limit shown under "Each Accident" is, subject to the limit for each person, the total amount of coverage for all damages due to bodily injury to two or more persons in the same accident."

Condition 11 provides:

"11. Non-Duplication. This SUM coverage shall not duplicate any of the following:
"(a) Benefits payable under workers' compensation or other similar laws;
"(b) Non-occupational disability benefits under article nine of the Workers' Compensation Law or other similar law;
"(c) Any amounts recovered or recoverable pursuant to article fifty-[*3]one of the New York Insurance Law or any similar motor vehicle insurance payable without regard to fault;
"(d) Any valid or collectible motor vehicle medical payments insurance; or
"(e) Any amounts recovered as bodily injury damages from sources other than motor vehicle bodily injury liability insurance policies or bonds."

SUM coverage in New York is a converse application of the golden rule; its purpose is "to provide the insured with the same level of protection he or she would provide to others were the insured a tortfeasor in a bodily injury accident" (Matter of Prudential Prop. & Cas. Co. v Szeli, 83 NY2d 681, 687; see Matter of Allstate Ins. Co. v Rivera, 12 NY3d 602, 608; Raffellini v State Farm Mut. Auto. Ins. Co., 9 NY3d 196, 204; see generally Norman H. Dachs and Jonathan A. Dachs, SUM Insurance Dilemma Hits the Mainstream, NYLJ, Sept. 19, 2012 at 3, col 1). With this limited purpose, SUM coverage does not function as a stand-alone policy to fully compensate the insureds for their injuries (cf. Bauter v Hanover Ins. Co., 247 NJ Super 94, 96-97, 588 A2d 870, 872, cert denied 126 NJ 335, 598 A2d 893). The conditions quoted above make this clear, as do other conditions not directly at issue in this case.

Here, the maximum SUM coverage of the subject policy was $500,000 per accident. The amount payable under that coverage was reduced, under Conditions 6(a) and 6(b), by the $100,000 paid by McGibbon's insurer, inasmuch as that amount constituted a "motor vehicle bodily injury liability insurance . . . payment[ ]" that the plaintiffs received (11 NYCRR 60-2.3 [f]). Further, the Dram Shop claims were settled for a total of $255,000. The Dram Shop recovery constitutes, under Condition 11(e), an amount "recovered as bodily injury damages from sources other than motor vehicle bodily injury liability insurance policies or bonds." Condition 11 does not allow duplicate recovery of such damages. Consequently, under the terms of the SUM endorsement, the plaintiffs' receipt of the Dram Shop recovery reduces, by that same $255,000, the amount payable under the SUM endorsement. The plaintiffs are not penalized by this reduction, since they received the maximum amount for which they are covered under the SUM endorsement: $100,000 from McGibbon's policy, $255,000 from or on behalf of the Dram Shop defendants, and $145,000 from Tri-State.

We reject the plaintiffs' argument that 11 NYCRR subpart 60-2, which includes the non-duplication provision, is inconsistent with Insurance Law § 3420(f)(2)(A). When the Legislature enacted the no-fault structure in 1977, its concern about duplicate payments was reflected in the law itself (see L 1977, ch 892, § 7; see also Mem of State Executive Department, 1977 McKinney Session Laws, at 2448). The adoption by the Superintendent of Insurance of additional provisions regarding duplication furthers the Legislature's goal, and is not inconsistent with it (cf. Raffellini v State Farm Mut. Auto. Ins. Co., 9 NY3d at 201-202).

Finally, as the plaintiffs point out, a claimant has the right to submit a SUM claim upon exhaustion of the full liability limits of just one tortfeasor (see e.g. S'Dao v National Grange Mut. Ins. Co., 87 NY2d 853). However, that does not mean that a claimant's ultimate entitlement to payment under the SUM endorsement may not be reduced or eliminated, depending on amounts recovered from additional tortfeasors (see Matter of Central Mut. Ins. Co., 12 NY3d 648, 657-659; Matter of Liberty Mut. Ins. Co. v Walker, 84 AD3d 960, 961).

Accordingly, the Supreme Court should have denied those branches of the plaintiffs' motion which were, in effect, for summary judgment determining that the amount of SUM coverage available to them pursuant to the subject insurance policy is $400,000 and to dismiss the third and fourth affirmative defenses pursuant to CPLR 3211, and should have granted the defendant's cross motion, in effect, for summary judgment determining that the amount of such coverage is limited to $145,000.

Enyah v. Sherpa

Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y. (Timothy M. Sullivan and James A. Domini of counsel), for appellants.
The Bostany Law Firm, PLLC, New York, N.Y. (John P. Bostany and Stephanie A. Prince of counsel), for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendants appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Schmidt, J.), dated September 26, 2011, as 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, and granted the plaintiff's cross motion for summary judgment on the issue of liability.
ORDERED that the order is reversed insofar as appealed from, on the law, with costs, the defendants' motion for summary judgment dismissing the complaint is granted, and the plaintiff's cross motion for summary judgment on the issue of liability is denied.
In support of their motion for summary judgment dismissing the complaint, 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 established, prima facie, that the alleged injuries to the cervical and lumbosacral regions of the plaintiff's spine did not constitute serious injuries within the meaning of Insurance Law § 5102(d) (see Rodriguez v Huerfano, 46 AD3d 794, 795), and, in any event, were not caused by the subject accident (see Jilani v Palmer, 83 AD3d 786, 787). The defendants also established, prima facie, that the alleged injuries to the plaintiff's right shoulder did not constitute a serious injury within the meaning of Insurance Law § 5102(d) (see Staff v Yshua, 59 AD3d 614). Finally, the defendants established, prima facie, that the plaintiff did not sustain a serious injury under the 90/180-day category of Insurance Law § 5102(d) (see McIntosh v O'Brien, 69 AD3d 585, 587).
In opposition, the plaintiff failed to raise a triable issue of fact. Accordingly, the defendants' motion for summary judgment dismissing the complaint should have been granted. Moreover, since the plaintiff failed to make a prima facie showing of his entitlement to judgment as a matter of law, his cross motion for summary judgment on the issue of liability should have been denied.
Griffiths v. Munoz

Robert P. Tusa (Sweetbaum & Sweetbaum, Lake Success, N.Y. [Marshall D. Sweetbaum], of counsel), for appellants Alex Munoz and Brielle Vodovoz.
Marjorie E. Bornes, New York, N.Y., for appellants Mohamed Namous and Followme Transit, Inc.
Paul Ajlouny & Associates, P.C., Garden City, N.Y. (Neil Flynn of counsel), for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendants Alex Munoz and Brielle Vodovoz appeal, and the defendants Mohamed Namous and Followme Transit, Inc., separately appeal, from so much of an order of the Supreme Court, Kings County (Schmidt, J.), dated September 27, 2011, as denied those branches of their respective motions which were for summary judgment dismissing the complaint insofar as asserted against each of them by the plaintiff Ancil Griffiths on the ground that he 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 insofar as appealed from, on the law, with one bill of costs, and those branches of the defendants' respective motions which were for summary judgment dismissing the complaint insofar as asserted against each of them by the plaintiff Ancil Griffiths are granted.
The defendants met their prima facie burden of showing that the plaintiff Ancil Griffiths (hereinafter the injured plaintiff), who allegedly sustained certain injuries to the cervical and lumbar regions of his spine, as well as to his right knee, as a result of the subject accident, 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 evidence establishing that the alleged injuries to the cervical and lumbar regions of the injured plaintiff's spine and his right knee did not constitute a serious injury under the permanent consequential limitation of use and the significant limitation of use categories of Insurance Law § 5102(d) (see Staff v Yshua, 59 AD3d 614; Rodriguez v Huerfano, 46 AD3d 794, 795). The defendants also established that the injured plaintiff did not sustain a medically determined injury or impairment that prevented him from performing substantially all of the material acts constituting his customary daily activities during at least 90 of the first 180 days following the subject accident (see McIntosh v O'Brien, 69 AD3d 585, 586).
In opposition, the injured plaintiff failed to raise a triable issue of fact as to whether the alleged injuries to the cervical and lumbar regions of his spine constituted a serious injury under the permanent consequential limitation of use category of Insurance Law § 5102(d), as he did not offer any objective medical findings from a recent examination of those regions of his spine (see Lively v Fernandez, 85 AD3d 981). Moreover, "while a significant limitation of use of a body function or member need not be permanent in order to constitute a serious injury,' . . . any assessment of the significance' of a bodily limitation necessarily requires consideration not only of the extent or degree of limitation, but of its duration as well, notwithstanding the fact that Insurance Law § 5102(d) does not expressly set forth any temporal requirement for a significant limitation'" (id. at 982, quoting Partlow v Meehan, 155 AD2d 647, 648 [some internal quotation marks and citation omitted]). Here, in opposition to the defendants' prima facie showing that the injured plaintiff did not sustain a "significant limitation" of use of the cervical or lumbar regions of his spine, the injured plaintiff relied solely on records of three medical examinations, all of which were conducted shortly after the accident. These records were insufficient to raise a triable issue of fact as to whether the alleged limitations in the range of motion of the cervical and lumbar regions of the injured plaintiff's spine existed for a sufficient period of time to rise to the level of "significance" and, thus, whether the injured plaintiff sustained a significant limitation of use of a body function or system (see Fernandez v Lively, 85 AD3d at 982).
The injured plaintiff also failed to raise a triable issue of fact as to whether the alleged injury to his right knee was caused by the subject accident, as he did not seek medical treatment for his right knee for approximately 10 months after the accident. "[A] contemporaneous doctor's report is important to proof of causation" (Perl v Meher, 18 NY3d 208, 217-218). The absence of a contemporaneous medical report invites speculation as to causation. The plaintiff also failed to raise a triable issue of fact as to whether he sustained a serious injury under the 90/180-day category of Insurance Law § 5102(d) (see McIntosh v O'Brien, 69 AD3d at 587).
Accordingly, those branches of the defendants' respective motions which were for summary judgment dismissing the complaint insofar as asserted against each of them by the injured plaintiff should have been granted.
Qader v. Babayev

Andrew J. Spinnell, LLC, New York, N.Y. (Andrei A. Popescu of counsel), for appellants.
Baker, McEvoy, Morrissey & Moskovits, P.C., Brooklyn, N.Y. (Stacy R. Seldin of counsel), for respondents Natanel Babayev and Keap St. Taxi, Inc.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiffs appeal, as limited by their brief, from so much of an order of the Supreme Court, Queens County (Weiss, J.), entered July 15, 2011, as granted the motion of the defendants Natanel Babayev and Keap St. Taxi, Inc., and that branch of the motion of the defendants Baljit Singh and Joe & Mike Taxi, Inc., which were for summary judgment dismissing the complaint insofar as asserted against each of them on the ground that neither plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.
ORDERED that the order is reversed insofar as appealed from, on the law, with one bill of costs payable by the defendants Natanel Babayev and Keap St. Taxi, Inc., and the defendants Baljit Singh and Joe & Mike Taxi, Inc., respectively, and the motion of the defendants Natanel Babayev and Keap St. Taxi, Inc., and that branch of the motion of the defendants Baljit Singh and Joe & Mike Taxi, Inc., which were for summary judgment dismissing the complaint insofar as asserted against each of them on the ground that neither plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident, are denied.
The plaintiffs' contention that the defendants' respective motions were procedurally defective because they lacked an affidavit of merit by someone with personal knowledge of the facts is without merit (see Zuckerman v City of New York, 49 NY2d 557, 563). The plaintiffs' remaining contentions as to the procedural propriety of the defendants' motions are not properly before this Court.
However, we agree with the plaintiffs' contention that the defendants failed to meet their respective prima facie burdens of showing that neither plaintiff sustained 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 failed to adequately address the plaintiffs' claims that they each sustained a medically-determined injury or impairment of a nonpermanent nature which prevented them from performing substantially all of the material acts which constituted their usual and customary daily activities for not less than 90 days during the 180 days immediately following the subject accident (see Aujour v Singh, 90 AD3d 686, 686-687; Bangar v Man Sing Wong, 89 AD3d 1048, 1049).
Accordingly, the Supreme Court should have denied the motion of the defendants Natanel Babayev and Keap St. Taxi, Inc., and that branch of the motion of the defendants Baljit Singh and Joe & Mike Taxi, Inc., which were for summary judgment dismissing the complaint insofar as asserted against each of them on the ground that the plaintiffs did not sustain a serious injury within the meaning of Insurance Law § 5102(d), without regard to the sufficiency of the papers submitted by the plaintiffs in opposition (see Aujour v Singh, 90 AD3d at 687; Bangar v Man Sing Wong, 89 AD3d at 1049).
Beltran v. Powow Limo, Inc.

Baker, McEvoy, Morrissey & Moskovitz, P.C., New York, N.Y. (Stacy R. Seldin of counsel), for appellants.
Friedman & Moses, LLP, New York, N.Y. (I. Bryce Moses of counsel), for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendants Powow Limo, Inc., and Walter Alberto Svauijana appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Schmidt, J.), dated July 28, 2011, as denied their motion for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed insofar as appealed from, on the law, with costs payable by the plaintiff, and the motion by the defendants Powow Limo, Inc., and Walter Alberto Svauijana for summary judgment dismissing the complaint insofar as asserted against them is granted.
In support of their motion for summary judgment dismissing the complaint insofar as asserted against them, the defendants Powow Limo, Inc., and Walter Alberto Svauijana (hereinafter together the moving defendants), met their prima facie burden of establishing 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 moving defendants made a prima facie showing, through the affirmed reports of their examining neurologist and radiologist, that the injuries the plaintiff allegedly sustained to the cervical and lumbar regions of his spine did not constitute a serious injury under the permanent consequential limitation of use and/or the significant limitation of use categories of Insurance Law § 5102(d) and were not causally related to the subject accident (see Bamundo v Fiero, 88 AD3d 831; Jilani v Palmer, 83 AD3d 786; Staff v Yshua, 59 AD3d 614). The defendants also demonstrated, prima facie, that the plaintiff did not sustain a serious injury under the 90/180 day category of Insurance Law § 5102(d) by submitting the plaintiff's deposition testimony, which revealed that he did not miss any days from work in the first 180 days following the subject accident (see Bamundo v Fiero, 88 AD3d at 831; McIntosh v O'Brien, 69 AD3d 585, 587).
In opposition, the plaintiff failed to come forward with competent medical evidence refuting the lack of causal connection between the claimed injuries and the subject accident (see Pommells v Perez, 4 NY3d 566, 579-580). Moreover, the plaintiff failed to raise a triable issue of fact as to whether his injuries meet the serious injury threshold of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d at 350-351; Bamundo v Fiero, 88 AD3d 831; Acosta v Alexandre, 70 AD3d 735).
Accordingly, the Supreme Court should have granted the moving defendants' motion for summary judgment dismissing the complaint and, in effect, all cross claims insofar as asserted against them.

The City of New York v. Endurance American Ins. Co.

Michael A. Cardozo, Corporation Counsel, New York (Dona B. Morris of counsel), for appellant.
Newman Myers Kreines Gross Harris, P.C., New York (Olivia M. Gross of counsel), for respondent.

Order, Supreme Court, New York County (Geoffrey D. Wright, J.), entered July 18, 2011, which denied the City's motion for summary judgment declaring that Endurance American Insurance Company is obligated to defend it in the underlying personal injury action and to reimburse it for its incurred attorneys' fees and expenses, unanimously reversed, on the law, without costs, the motion granted, and it is so declared, and the matter is remanded for a determination of the attorneys' fees and expenses to be reimbursed.

The commercial general liability insurance policy obtained from Endurance by nonparty Daidone Electric, Inc., the City's traffic signal maintenance contractor, covers the City as an additional insured for liability arising out of ongoing operations performed for it by Daidone. The underlying complaint alleges that the plaintiff's injuries arose out of the negligence of both the City and Daidone in maintaining the "traffic and pedestrian control devices" at the intersection where the plaintiff was struck by a car. These allegations "give[] rise to the reasonable possibility of recovery under the policy" (see Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 65 [1991]; Ruder & Finn v Seaboard Sur. Co., 52 NY2d 663, 669-670 [1981]; Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66, 73 [1989]). In any event, additional facts that potentially bring the claim within the policy's coverage are provided by Daidone's contract with the City, the police accident report, and Daidone's repair records (see Fitzpatrick, 78 NY2d at 66).

We reject Endurance's contention that the record evidence establishes that Daidone's operations at the subject intersection had been completed and thus were no longer ongoing at the time of the accident (compare New York City Hous. Auth. v Merchants Mut. Ins. Co., 44 AD3d 540 [1st Dept 2007]).

In re Nationwide Insurance Company v Morgan

Cottrell Solensky & Semple, P.A., Elmsford (Ebony L. Riley
of counsel), for appellant.
Law Offices of Epstein, Gialleonardo & Rayhill, Elmsford
(Karen Queenan of counsel), for Nationwide Insurance
Company, respondent.

Order, Supreme Court, Bronx County (Lucindo Suarez, J.), entered July 11, 2011, which granted petitioner Nationwide Insurance Company's petition to, among other things, permanently stay an uninsured motorist arbitration, unanimously affirmed, without costs.

Respondent Dairyland Insurance Company attempted to cancel respondent Turner's automobile insurance policy, issued in Vermont, for nonpayment of the premium by mailing the notice of cancellation via the United States Postal Service's (USPS) 31-digit Intelligent Mail barcode (IMB) for sending bulk mail. Vermont statute requires that a notice of cancellation for nonpayment of premium "be by certified mail or certificate of mailing" (8 Vt Stat Ann § 4226). Although the statute does not require that a certificate of mailing be on a USPS-provided form (see Loiselle v Barsalow, 180 Vt 531, 533, 904 A2d 1168, 1172 [2006]),

Dairyland's "register of mail" (i.e., its self-generated documentation to prove compliance with 8 Vt Stat Ann § 4226) failed to constitute a certificate of mailing as required by the statute. Indeed, there is no indication that the notice of cancellation was ever received by the USPS, since there were no stamps, postmarks, or signature of a recipient postal employee on Dairyland's register (cf. Loiselle, 180 Vt at 533, 904 A2d at 1172). The affidavits submitted by Dairyland also failed to demonstrate that the register and the IMB tracking record for the notice of cancellation comply with the certificate of mailing requirement (cf. Loiselle, 180 Vt at 532-533, 904 A2d at 1171-1172). Accordingly, Dairyland failed to show that Turner's insurance policy was properly cancelled before the subject accident.

Public Adjustment Bureau, Inc. v Greater New York Mut. Ins. Co.

Weg and Myers, P.C., New York (Joshua L. Mallin of counsel),
for appellant.
Anderson & Ochs, LLP, New York (Mitchel H. Ochs of
counsel), for respondent.

Order, Supreme Court, New York County (Louis B. York, J.), entered August 22, 2011, which granted defendant Seward Park Housing Corp.'s motion for summary judgment dismissing the complaint, and denied plaintiff's cross motion for summary judgment on its breach of contract claim, unanimously modified, on the law, to deny defendant's motion, and otherwise affirmed, without costs.

Defendant Seward Park retained plaintiff, a public adjuster, to assist and advise it in the preparation, submission and adjustment of a property damage claim against its insurance carrier, defendant Greater New York Mutual Insurance Company. Pursuant to the written retainer agreement, Seward Park agreed to pay plaintiff 7% of the amount of loss "when adjusted or otherwise recovered." The claim was not adjusted; following extensive litigation, Seward Park settled with Greater New York.

We reject Seward Park's argument that plaintiff is not due any fee under the contract because it neither adjusted the claim nor provided "valuable services" that resulted in the adjustment of the claim (see 11 NYCRR 25.10). In light of the "otherwise recovered" language in the retainer agreement, we find that adjustment of the claim is not a condition precedent to plaintiff's recovery of a fee (see GS Adj. Co., Inc. v Roth & Roth, L.L.P., 85 AD3d 467 [1st Dept 2011]; see also Goldstein Affiliates v Affiliated FM Ins. Co., 178 AD2d 301 [1st Dept 1991]). However, the record presents an issue of fact whether plaintiff performed valuable services.

 

New York Hosp. Medical Center of Queens v Microtech Contracting Corp.

Farley, Holohan & Glockner, LLP, Mineola, N.Y. (Robert J.
Farley and David A. Rosen of counsel), for appellant.
Wade Clark Mulcahy, New York, N.Y. (Cheryl Fuchs of
counsel), for respondent.

DECISION & ORDER
In an action for contribution and indemnification, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Suffolk County (Rebolini, J.), entered August 19, 2011, as granted that branch of the defendant's motion which was to dismiss the complaint pursuant to CPLR 3211(a)(7).

ORDERED that the order is affirmed insofar as appealed from, with costs.
The defendant allegedly employed two undocumented aliens (hereinafter the subject employees) to perform work on the plaintiff's property. The subject employees were injured on the job, and the defendant provided them with compensation for their injuries pursuant to the Workers' Compensation Law. The employees sued the plaintiff for damages relating to their injuries predicated upon violations of the Labor Law. The plaintiff commenced this separate action seeking contribution and indemnification from the defendant. The defendant, inter alia, moved to dismiss the complaint pursuant to CPLR 3211(a)(7) on the ground that the plaintiff's claims for contribution and indemnification were barred by Workers' Compensation Law § 11. The Supreme Court granted that branch of the motion which was to dismiss the complaint pursuant to CPLR 3211(a)(7). The plaintiff appeals. We affirm the order insofar as appealed from.

New York's Workers' Compensation Law was enacted in 1914 "for socioeconomic remediation purposes as a means of protecting work[ers] and their dependents from want in case of injury' on the job" (Matter of Johannesen v New York City Dept. of Hous. Preserv. & Dev., 84 NY2d 129, 134, quoting Matter of Post v Burger & Gohlke, 216 NY 544, 553; see Matter of Richardson v Fiedler Roofing, 67 NY2d 246, 250-251). "It was the intention of the legislature to secure such injured workmen and their dependents from becoming objects of charity, and to make reasonable compensation for injuries sustained or death incurred by reason of such employment a part of the expense of the lines of business included within the definition of hazardous employments as stated in the act" (Matter of Post v Burger & Gohlke, 216 NY at 553). The Workers' Compensation Law thus requires employers to " pay or provide compensation [to employees] for their disability or death from injury arising out of and in the course of the employment without regard to fault as a cause of the injury'" (Madiera v Affordable Hous. Found., Inc., 469 F3d 219, 229, quoting Workers' Compensation Law § 10[1]).

With very limited exceptions, the Workers' Compensation Law is intended to be the employer's exclusive liability to its employees (see Minkowitz, Practice Commentaries, McKinney's Cons Laws of NY, Book 64, Workers' Compensation Law § 11, at 444; see also Fleming v Graham, 10 NY3d 296, 299-300). "An employer may be held liable for contribution or indemnification only if the employee has sustained a grave injury as defined by the Workers' Compensation Law or when there is a written contract entered into prior to the accident or occurrence by which the employer had expressly agreed to contribution or indemnification of the claimant'" (Persaud v Bovis Lend Lease, Inc., 93 AD3d 831, 832, quoting Workers' Compensation Law § 11). The statute thus continues to reflect the original " basis of the bargain between business and labor—that workers obtain necessary medical care benefits and compensation for workplace injuries regardless of fault while employers obtain a degree of economic protection from devastating lawsuits'" (Castro v United Container Mach. Group, 96 NY2d 398, 401-402, quoting Governor's Mem approving L 1996, ch 635, 1996 NY Legis Ann, at 460; see Fleming v Graham, 10 NY3d at 299-300; Boles v Dormer Giant, Inc., 4 NY3d 235, 240).

Here, the complaint seeks contribution and indemnification from the defendant. The complaint alleges that the subject employees were employed by the defendant and were injured during the course of their employment while working on premises owned by the plaintiff. The complaint does not allege that the subject employees sustained grave injuries, or that the defendant expressly agreed to contribution or indemnification in a written contract.

In opposing that branch of the defendant's motion which was to dismiss the complaint pursuant to CPLR 3211(a)(7) for failure to state a cause of action, the plaintiff did not allege that it was entitled to contribution or indemnification pursuant to a written contract, or that the subject employees suffered a grave injury. Rather, the plaintiff asserted that the defendant failed to verify the immigration status of the subject employees and that this failure constituted a violation of the Immigration Reform and Control Act of 1986 (8 USC § 1324a; hereinafter the IRCA). The plaintiff contended that this violation should result in the loss of protections provided to employers under the Workers' Compensation Law and that the subject branch of the defendant's motion should therefore have been denied.

Congress adopted the IRCA as a means of eliminating job opportunities for undocumented aliens in an attempt to curtail illegal immigration (see Madiera v Affordable Hous. Found., Inc., 469 F3d at 231; Balbuena v IDR Realty LLC, 6 NY3d 338, 353). "To attain this goal, the most important component of the IRCA scheme was the creation of a new [e]mployment verification system' designed to deter the employment of aliens who are not lawfully present in the United States and those who are lawfully present, but not authorized to work" (Balbuena v IDR Realty LLC, 6 NY3d at 353, quoting 8 USC § 1324a[b]; see Madiera v Affordable Hous. Found., Inc., 469 F3d at 231). Before hiring an alien, the IRCA requires an employer "to verify the prospective worker's identity and work eligibility by examining the government-issued documentation. If the required documentation is not presented, the alien cannot be hired" (Balbuena v IDR Realty LLC, 6 NY3d at 353, citing 8 USC § 1324a[a][1]; see Madiera v Affordable Hous. Found., Inc., 469 F3d at 231; Coque v Wildflower Estates Devs., Inc., 58 AD3d 44, 49). "An employer who knowingly violates the employment verification requirements, or who unknowingly hires an illegal alien but subsequently learns that an alien is not authorized to work and does not immediately terminate the employment relationship, is subject to civil or criminal prosecution and penalties" (Balbuena v IDR Realty LLC, 6 NY3d at 353-354, citing 8 USC § 1324a[a][1], [2]; [f][1]; see Madiera v Affordable Hous. Found., Inc., 469 F3d at 231; Coque v Wildflower Estates Devs., Inc., 58 AD3d 44, 49).

"In order to preserve the national uniformity of this verification system and the sanctions imposed for violations, Congress expressly provided that IRCA would preempt any State or local law imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ, or recruit or refer for a fee for employment, unauthorized aliens'" (Balbuena v IDR Realty LLC, 6 NY3d at 354, quoting 8 USC § 1324a[h][2]; see Madiera v Affordable Hous. Found., Inc., 469 F3d at 231-232). "The statute is silent, however, as to its preemptive effect on any other state or local laws" (Madiera v Affordable Hous. Found., Inc., 469 F3d at 232).

The Supremacy Clause of the United States Constitution provides authority for federal preemption of state law (see US Const, art VI, cl 2; see also Madiera v Affordable Hous. Found., Inc., 469 F3d at 237-238; Balbuena v IDR Realty LLC, 6 NY3d at 356). However, "courts do not readily assume preemption" (Madiera v Affordable Hous. Found., Inc., 469 F3d at 238), and "[t]he presumption against preemption is especially strong with regard to laws that affect the states' historic police powers over occupational health and safety issues" (Balbuena v IDR Realty LLC, 6 NY3d at 356; see Coque v Wildflower Estates Devs., Inc., 58 AD3d at 50). The presumption is only overcome if Congress demonstrates a "clear and manifest intent to preempt the exercise of state police power" (Madiera v Affordable Hous. Found., Inc., 469 F3d at 238; see Balbuena v IDR Realty LLC, 6 NY3d at 356).

States enjoy an historic right to regulate employment relationships "to protect workers within the State" pursuant to the broad authority of their police powers (De Canas v Bica, 424 US 351, 356; see Balbuena v IDR Realty LLC, 6 NY3d at 358). This includes the power to enact "laws affecting occupational health and safety, and workmen's compensation laws" (De Canas v Bica, 424 US at 356; see Balbuena v IDR Realty LLC, 6 NY3d at 358). "Pursuant to this power, New York, like many states, has enacted various laws to compensate workers who sustain workplace injuries" (Madiera v Affordable Hous. Found., Inc., 469 F3d at 228-229), including, as relevant here, the Workers' Compensation Law.
The IRCA does not contain an explicit statement that Congress intended to preempt state laws such as New York's Workers' Compensation Law (id. at 232, 239-240; Balbuena v IDR Realty LLC, 6 NY3d at 357). "To the contrary, the legislative history of IRCA shows that the Act was not intended to undermine or diminish in any way labor protections in existing law'" (Balbuena v IDR Realty LLC, 6 NY3d at 357, quoting HR Rep 99-682, part I, 99th Cong, 2d Sess, at 58, reprinted in 1986 US Code Cong & Admin News, at 5662). Moreover, nothing in the relevant provisions of the Workers' Compensation Law seeks to impose "civil or criminal sanctions . . . upon those who employ, or recruit or refer for a fee for employment, unauthorized aliens" (8 USC § 1324a[h][2]; see Balbuena v IDR Realty LLC, 6 NY3d at 354; see also Madiera v Affordable Hous. Found., Inc., 469 F3d at 231-232).

While precluding the defendant from receiving the protections provided by Workers' Compensation Law § 11 for its violations of the IRCA may support the ultimate goals of the IRCA by punishing the defendant for failing to verify the subject workers' immigration status (see Madiera v Affordable Hous. Found., Inc., 469 F3d at 231; Balbuena v IDR Realty LLC, 6 NY3d at 353), affording the defendant the economic protections of Workers' Compensation Law § 11 even in light of a violation of the IRCA would not stand " as an obstacle to the accomplishment or execution of the full purposes and objectives of Congress'" such that Workers' Compensation Law § 11 should be considered preempted (Madiera v Affordable Hous. Found., Inc., 469 F3d at 238, quoting Hines v Davidowitz, 312 US 52, 67).

Furthermore, to accept the plaintiff's contention would not only effectively deny the defendant the economic protections it acquired under the Workers' Compensation Law in return for providing the subject employees with compensation for their injuries, but it would relieve the plaintiff of its responsibility to ensure a safe construction site for workers under the Labor Law (see Balbuena v IDR Realty LLC, 6 NY3d at 361 n 8). Such results would not be consistent with the legislative intent behind these statutes, which are designed to strike a balance between the needs of business and the importance of the welfare of workers (see Castro v United Container Mach. Group, 96 NY2d at 401-402; see also Balbuena vIDR Realty LLC, 6 NY3d at 357). While depriving the defendant of the protections of the Workers' Compensation Law may ultimately further the policies behind the IRCA, where, as here, no federal preemption exists, the proper course of action is not to create such a rule through a judicial determination, but, rather, to allow the New York Legislature to enact an appropriate rule based upon its policy preferences with respect to the welfare of state workers (see Morales v County of Nassau, 94 NY2d 218, 224-225).

Although prior cases have addressed the right of an undocumented alien to recover lost wages or collect Workers' Compensation benefits for personal injuries sustained on the job, finding that such claims were not precluded by the IRCA (see Matter of Ramroop v Flexo-Craft Print., Inc., 11 NY3d 160, 168; Balbuena v IDR Realty LLC, 6 NY3d at 353; Coque v Wildflower Estates Devs., Inc., 58 AD3d at 49; Matter of Amoah v Mallah Mgt., LLC, 57 AD3d 29; see also Madiera v Affordable Hous. Found., Inc., 469 F3d at 231), there have been no cases addressing the right of an employer in violation of the IRCA to have immunity from third-party claims for contribution and indemnification under Workers' Compensation Law § 11. We conclude that the IRCA does not preempt the applicable provisions of the Workers' Compensation Law and that the violations of the IRCA alleged here do not abrogate the protections provided to the defendant by Workers' Compensation Law § 11 from third-party claims for contribution and indemnification

On a motion to dismiss the complaint pursuant to CPLR 3211(a)(7) for failure to state a cause of action, the court must afford the pleading a liberal construction, accept all facts as alleged in the pleading to be true, accord the plaintiff the benefit of every possible inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Leon v Martinez, 84 NY2d 83, 87; Breytman v Olinville Realty, LLC, 54 AD3d 703). Here, the complaint fails to allege a legally cognizable exception to the provisions of Workers' Compensation Law § 11, which otherwise serve to bar the cause of action for contribution and indemnification asserted here. Since the allegations contained in the complaint fail to state a cause of action, the Supreme Court properly granted that branch of the defendant's motion which was to dismiss the complaint pursuant to CPLR 3211(a)(7).

Financial Services Vehicle Trust v Saad

Richard B. Ancowitz, Albany, N.Y., and Nan Geist Faber, P.C.,
Woodmere, N.Y., for appellant (one brief filed).
Fogarty & Duffy, P.C., Mineola, N.Y. (Garrett Duffy of
counsel), for respondents.

DECISION & ORDER

In an action for contractual indemnification, the defendant appeals, as limited by his brief, from so much of an order of the Supreme Court, Nassau County (Galasso, J.), entered August 10, 2011, as denied that branch of his cross motion which was for summary judgment dismissing the amended complaint.
ORDERED that the order is affirmed insofar as appealed from, with costs.
On December 20, 2000, the defendant leased a vehicle from Rallye Motors, which, in turn, assigned the lease to the plaintiff Financial Services Vehicle Trust (hereinafter FSVT). Paragraph 33 of the lease contained an indemnification provision requiring the defendant, as the lessee, to reimburse the lessor, FSVT, for, inter alia, any monetary loss, liability, or expenses caused by the operation or use of the vehicle.

On July 10, 2003, the defendant, while operating the leased vehicle, was involved in an automobile accident which resulted in the death of two pedestrians. Representatives of the pedestrians' estates commenced two wrongful death actions against, among others, FSVT and the defendant, which were later settled. Subsequently, FSVT and its insurer, Empire Fire And Marine Insurance Company (hereinafter together the plaintiffs), commenced this action against the defendant seeking indemnification pursuant to the lease.
The defendant did not establish his prima facie entitlement to judgment as a matter of law, as he failed to demonstrate that the indemnification provision in the lease was not binding upon him. Although he maintains that he was unaware of the indemnification provision at the time he executed the lease, "[a] party is under an obligation to read a document before signing it, and cannot generally avoid the effect of the document on the ground that he or she did not read it or know its contents" (Matter of Augustine v BankUnited FSB, 75 AD3d 596, 597; see Cash v Titan Fin. Servs., Inc., 58 AD3d 785, 788; Reznikov v Walowitz, 63 AD3d 1134, 1135; Martino v Kaschak, 208 AD2d 698, 698). The defendant also failed to demonstrate his prima facie entitlement to judgment as a matter of law on the alternative ground that the anti-subrogation rule precluded the plaintiffs from seeking indemnification from him (see Hamilton v Khalife, 289 AD2d 444, 445-446). Accordingly, since the defendant did not establish his prima facie entitlement to judgment as a matter of law, the Supreme Court properly denied that branch of his cross motion which was for summary judgment dismissing the amended complaint (see Alvarez v Prospect Hosp., 68 NY2d 320, 324; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).

The defendant's remaining contentions are without merit.

Dwyer v. Central Park Studios, Inc.

Pollack, Pollack, Isaac & DeCicco, New York (Michael H.
Zhu of counsel), for appellant-respondent.
Mischel & Horn, PC, New York (Scott T. Horn of counsel), for
Slosberg respondents-appellants.
Havkins Rosenfeld Ritzert & Varriale, LLP, Mineola (Mark J.
Volpi of counsel), for DSA Builders, respondent-appellant.
McGaw, Alventosa & Zajac, Jericho (Ross P. Masler of
counsel), for American Home Assurance Company, respondent-
appellant.
Herzfeld & Rubin, P.C., New York (Miriam Skolnik of
counsel), for respondents.

Order, Supreme Court, New York County (Judith J. Gische, J.), entered December 8, 2010, which, to the extent appealed from as limited by the briefs, denied plaintiff Steve Dwyer's cross motion for partial summary judgment on the issue of liability on his Labor Law §§ 240(1) and 241(6) claims, denied defendants/second third-party plaintiffs Michael Slosberg and Janet Cohn Slosberg's cross motion for summary judgment dismissing the cross claim for contractual indemnification brought by Central Park Studios and granted Central Park Studios's motion for summary judgment on that claim, denied third-party defendant/second third-party defendant DSA Builders's cross motion for summary judgment dismissing Central Park Studios's contractual indemnification claim, and denied intervenor American Home Assurance Company's motion for summary judgment dismissing the contribution and common-law indemnification claims asserted against DSA Builders, unanimously modified, on the law, to grant plaintiff's cross motion for partial summary judgment on the issue of liability on the Labor Law § 240(1) claim, and, upon a search of the record, to grant that part of Central Park Studios's motion for summary judgment dismissing the Labor Law § 241(6) claim predicated on a violation of 12 NYCRR 23-1.21(b)(4)(i), and otherwise affirmed, without costs.

Plaintiff Steve Dwyer was employed by third-party defendant DSA Builders (DSA), a general contractor. Defendants Michael Slosberg and Janet Cohn Slosberg retained DSA to renovate and combine their two adjoining cooperative apartment units. Defendant/third-party plaintiff Central Park Studios, Inc. (CPS) owns the apartment building. Intervenor American Home Assurance Company (AHAC) is DSA's workers' compensation and liability insurer.

On the day of the accident, plaintiff was standing on a ladder, unassisted, attempting to install a large piece of Sheetrock in the ceiling of the Slosberg's apartment. Plaintiff was holding the Sheetrock, which was several feet wide, against the ceiling with his left hand. As he reached with his right hand for the screw gun strapped to his side, the ladder collapsed, plaintiff fell backwards onto the floor, and the Sheetrock slab fell on top of him. As a result, plaintiff sustained injuries to his right hand, wrist and arm. During discovery, DSA produced a ladder in excellent condition that was purportedly used by plaintiff on the day of the accident. However, the ladder's manufacturer, in an affidavit, stated that, based on markings on the ladder, it was manufactured several years after plaintiff's accident.

Plaintiff commenced this action against the Slosbergs and CPS, alleging common-law negligence and violation of Labor Law §§ 200, 240(1), and 241(6). CPS asserted a cross claim for contractual indemnification against the Slosbergs, and commenced a third-party action against DSA, seeking contribution and common-law and contractual indemnification. The Slosbergs similarly commenced a second third-party action against DSA, seeking common-law and contractual indemnification. AHAC intervened in the first third-party action.

The court should have granted plaintiff's cross motion for partial summary judgment on the issue of liability under Labor Law § 240(1) because plaintiff's injuries were proximately caused, at least in part, by the failure to provide proper protection as required by the statute (see Cevallos v Morning Dun Realty, Corp., 78 AD3d 547, 548 [2010]; Fontaine v Juniper Assoc., 67 AD3d 608, 609 [2009]). The undisputed evidence established that plaintiff was injured when he fell from an unsecured ladder that collapsed, which is sufficient to make out a prima facie case on the § 240(1) claim (see Demaj v Pelham Realty, LLC, 82 AD3d 531, 532 [2011]). In opposition, CPS and DSA failed to raise an issue of fact. Whether or not the ladder was in good condition, as CPS and DSA claim it was, plaintiff still is entitled to summary judgment on this claim because he was not required to show that the ladder was defective in some manner (see Orellano v 29 E. 37th St. Realty Corp., 292 AD2d 289, 290-291 [2002]).

The testimony of DSA's principal that, after the accident, plaintiff stated that he lost his balance raises, at most, an issue of comparative negligence, which would not bar recovery under § 240(1) (see id. at 291). Furthermore, this alleged statement is consistent with plaintiff's claim that he fell when the ladder collapsed. There is no view of the evidence that plaintiff was the sole proximate cause of his injuries. Even if other ladders were available at the job site, there was no showing that plaintiff was expected, or instructed, to use those ladders and for no good reason chose not to do so (see Gallagher v New York Post, 14 NY3d 83, 88-89 [2010]; Torres v Our Townhouse, LLC, 91 AD3d 549 [2012]). Nor is there any evidence that plaintiff was told not to use the ladder he used.
In view of the conflicting evidence about the condition of the ladder, the court properly denied plaintiff's motion for summary judgment as to that part of the Labor Law § 241(6) claim predicated on 12 NYCRR 23-1.21(b)(4)(ii) (requiring all ladder footings to be firm). Although not addressed by the motion court, we find that issues of fact also exist as to whether there was a violation of 12 NYCRR 23-1.21(b)(3) (requiring ladders to be maintained in good condition). However, that part of the § 241(6) claim based on 12 NYCRR 23-1.21(b)(4)(i) should be dismissed, because the ladder here was not "used as a regular means of access between floors or other levels" in the building (id.).

CPS is entitled to summary judgment on its cross claim for contractual indemnification against the Slosbergs. CPS and the Slosbergs entered into an Alteration Agreement for the renovation project in which the Slosbergs agreed to indemnify CPS against "claims for damage to persons or property suffered as a result of the alterations." Since there is no question that plaintiff's injuries arose out of the alterations, CPS is entitled to be indemnified. There is no merit to the Slosberg's argument that General Obligations Law § 5-321 renders the indemnification provision unenforceable. Although the indemnification clause purports to indemnify CPS for its own negligence, it is nevertheless enforceable because there is no view of the evidence that CPS was actually negligent. The motion court dismissed the Labor Law § 200 and common-law negligence claims against CPS, and no party has appealed from that part of the court's decision. Thus, because CPS's liability is purely vicarious under Labor Law § 240(1), and potentially § 241(6), enforcement of the indemnification provision does not run afoul of General Obligations Law § 5-321 (see Itri Brick & Concrete Corp. v Aetna Cas. & Sur. Co., 89 NY2d 786, 795 n 5 [1997]; Correa v 100 W. 32nd St. Realty Corp., 290 AD2d 306, 306 [2002]).

The motion court properly denied DSA's cross motion for summary judgment dismissing CPS's contractual indemnification claim. In view of the fact that DSA signed the Alteration Agreement, and evidence showing that it procured insurance coverage naming CPS as an additional insured in order to commence the alteration work, DSA failed to establish, as a matter of law, that it did not agree to indemnify CPS under the agreement. Thus, DSA is not entitled to summary judgment at this point.

The motion court was correct in denying AHAC's motion for summary judgment dismissing the contribution and common-law indemnification claims asserted against DSA. AHAC's motion was premature, given that plaintiff was still scheduled to undergo three additional surgeries, an additional deposition of the plaintiff was still pending following the three surgeries, and plaintiff has not yet been examined by any physicians at the request of the defendants (see CPLR 3212[f]).