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02/1/00: CHASE MANHATTAN BANK v. THE TRAVELERS GROUP
New York State
Supreme Court, Appellate Division, First Department
YORK CITY HOUSING AUTHORITY v. HOUSING AUTHORITY RISK RETENTION GROUP,
01/31/00: KLINGER v.
ALLSTATE INS. CO.
01/31/00 FRIEDMAN v.
ALLSTATE INSURANCE COMPANY
01/31/00: PENN MUTUAL LIFE
INS. CO. v. REMLING
v. OPTICA MANUFACTURING CORP.
McGOVERN BOVIS, INC. v. PUBLIC SERVICE MUT. INS. CO.
01/27/00: BUSHMAN v. DI
01/27/00: STATE FARM
MUTUAL AUTOMOBILE INS. CO. v. LEVIN
01/27/00: STERNER v.
LAKE GEORGE REGIONAL WINTER FESTIVAL, INC.
01/24/00: MATTER OF
STATE FARM MUTUAL AUTOMOBILE INS. CO. v. CAMPBELL
From time to time we highlight significant cases of interest from other jurisdictions. This week we offer two decisions from California:
CONSTRUCTION CO. v. INSURANCE COMPANY OF THE
INDUSTRIES, INC. v. COMMERCIAL UNION INS.
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CHASE MANHATTAN BANK, NA v. THE TRAVELERS GROUP, INC.
Order and judgment (one paper), Supreme Court, New York County (Jane Solomon, J.), entered February 4, 1999, which granted plaintiffs ’ motion for summary judgment seeking a declaration that The Travelers Group must indemnify plaintiffs for the entire amount of the judgment in an underlying personal injury action and which denied The Travelers Group’s cross-motion for summary judgment or, in the alternative, for an order compelling disclosure, unanimously modified, on the law, plaintiffs’ motion denied, and otherwise affirmed, without costs.
The Travelers Group issued a workers compensation and employers liability policy to FTJ Environmental , Inc., headquartered in Orange, New Jersey. Two FTJ employees were injured while removing asbestos from a building owned by Chase Manhattan Bank in New York City and they subsequently recovered a judgment against Chase Manhattan Bank, Edward Gordon Co., and LVI Environmental Services for $2.3 million. The employers liability policy provides coverage for the type of personal injury action based on Labor Law § 240 brought by the FTJ employees but expressly states that "[t]he employment must be necessary or incidental to [FTJ’s] work in a state or territory listed in item 3.A. of the Information Page." Item 3.A. lists New Jersey. Policy coverage was thus expressly conditioned upon a showing that the work of the FTJ employees in New York City was necessary or incidental to FTJ’s work in New Jersey. Item 3.B. of the Information Page limits coverage to $100,000 per accident.
An insured has the burden of proving that the provisions of a policy provide coverage ( Borg-Warner Corp. v Insurance Company of North America, 174 AD2d 24, 31, lv denied, 80 NY2d 753). Standing in the shoes of FTJ as judgment creditor, plaintiffs must demonstrate that the policy provided coverage for the loss. There is nothing in the record which indicates that the work in New York City was "incidental or necessary" to work in New Jersey. Plaintiffs have not met the burden of establishing that the losses were covered under the policy. This factual issue alone requires modification. Furthermore, the order appealed from directed Travelers to indemnify for the entire amount of the judgment, i.e. $2.3 million, although the policy limits are $100,000 for each accident . An appeal from a grant of summary judgment permits a searching of the record and since there is no basis to support an award in excess of the stated policy limits, plaintiffs were not, in any event, entitled to summary judgment as entered.
LEHRER MCGOVERN BOVIS, INC. v. PUBLIC SERVICE MUTUAL INS.CO.
Order and judgment (one paper), Supreme Court, New York County (Leland DeGrasse, J.), entered July 7, 1999, which, inter alia, granted the cross motion for summary judgment of plaintiffs Lehrer McGovern Bovis, Inc. and AIU Insurance Company, declaring that Lehrer McGovern is entitled to have defendant Public Service Mutual Insurance Company (PSM) defend and indemnify it in the underlying action and that AIU is entitled to reimbursement from PSM for costs, disbursements and reasonable attorneys ’ fees expended in its defense and indemnification of Lehrer McGovern in connection with the underlying action, unanimously affirmed, with costs.
Defendant may not invoke the doctrine of collateral estoppel to defeat the claims of plaintiffs Lehrer and AIU because there is no identity between the issues in this action and those previously determined in Lehrer McGovern’s prior action against defendant's insured (see, Read v Sacco, 49 AD2d 471, 473).
The burden of proving valid cancellation of an insurance policy is upon the insurance company disclaiming coverage based on cancellation (see, Holmes v Utica Mut. Ins. Co., 92 AD2d 1045) and the court, in granting summary judgment to Lehrer and AIU, properly found that defendant failed to sustain that burden or to present evidence in admissible form sufficient to create an issue of fact as to the validity of its timely cancellation prior to the workplace accident that gave rise to this lawsuit (see, Colon v Nationwide Mut. Fire Ins. Co., 211 AD2d 579, 580).
We have reviewed defendant’s remaining arguments and find them unavailing.
MATTER OF STATE FARM MUTUAL AUTOMOBILE INS. CO. v. CAMPBELL
In a proceeding pursuant to CPLR article 75, inter alia, to stay arbitration of an uninsured motorist claim, the petitioner appeals from an order of the Supreme Court, Nassau County (McCaffrey, J.), dated October 20, 1998, which denied the petition and dismissed the proceeding.
ORDERED that the order is reversed, on the law, without costs or disbursements, the petition is reinstated, and arbitration is stayed pending an evidentiary hearing in accordance herewith, and for that purpose, Statewide Insurance Co., Margaret Cairns, Donald Freidly, and American Home Assurance Corp. are joined as party respondents.
The Supreme Court erred in holding that the petitioner State Farm Mutual Insurance Company (hereinafter State Farm), was not entitled to a stay of arbitration because it had failed to timely disclaim coverage . Where, as here, it had not yet been established that the offending vehicle was uninsured at the time of the subject accident, the uninsured motorist coverage does not attach and State Farm was under no obligation to timely disclaim (see, Matter of State Farm Mut. Ins. Co. v Vasquez, 249 AD2d 312). Accordingly, the matter must be remitted to the Supreme Court, Nassau County, for an evidentiary hearing on the issues of whether the vehicles identified as having caused the accident were actually involved in the accident and whether the alleged offending vehicle was insured on the date of the subject accident.
SANTUCCI, J.P., JOY, GOLDSTEIN, and FEUERSTEIN, JJ., concur .
Appeal from an order of the Supreme Court (Lynch, J.), entered February 18, 1999 in Schenectady County, which granted defendant Dominick N. Di Carlo's motion for summary judgment dismissing the complaint against him.
This action arises out of a motor vehicle accident occurring on December 15, 1992 during which plaintiff, a passenger in a vehicle operated by his brother, defendant William C. Bushman, allegedly sustained injuries to his back and neck when the Bushman vehicle collided with a vehicle operated by defendant Dominick N. Di Carlo (hereinafter defendant). Immediately following the accident, plaintiff was examined at the hospital and diagnosed with acute cervical and trapezius muscle strain and spasm, together with mild head trauma. X rays of plaintiff revealed disc spaces to be well maintained, no evidence of fracture or subluxation and no soft tissue abnormalities. The radiologist 's report concluded that plaintiff's cervical spine was normal. Four days after the accident, plaintiff began treating with a chiropractor, John Graham. Graham diagnosed plaintiff as suffering from a thoracic strain/sprain, a dislocation/subluxation of the cervical spine, a subluxation to the thoracic vertebrae , a prolapsed, protruding, ruptured or herniated lumbar disc/lumbar subluxation and cervical myofascitis . Plaintiff treated with his chiropractor until the end of 1993. In a letter dated May 3, 1994, Graham reported to the insurance carrier that plaintiff had reached maximum medical improvement and was very close to a point of health prior to his injury.
Defendant moved for summary judgment dismissing plaintiff's complaint alleging that plaintiff failed to sustain a serious injury as defined by Insurance Law § 5102. Supreme Court granted defendant's motion for summary judgment finding that plaintiff's evidentiary submissions in opposition did not create any genuine triable issue of fact concerning whether plaintiff sustained a "serious injury" necessary to satisfy the threshold requirement of Insurance Law § 5102 (d). Plaintiff appeals asserting that defendant's evidentiary submissions regarding plaintiff's lack of a serious injury were insufficient to shift the burden to plaintiff and that, in any event, plaintiff adequately demonstrated genuine triable issues of fact requiring the denial of defendant's motion for summary judgment.
Plaintiff's bill of particulars alleges that a "serious injury" as defined in Insurance Law § 5102 (d) existed since plaintiff was unable to perform his customary and usual daily activities for not less than 90 days out of 180 days following the accident; that he suffered from a significant limitation of use of the cervical and lumbar spine, trapezius, left arm and left hip and that he suffered a permanent limitation of use of same.
In order to prevail on this type of motion, defendant had the initial burden of establishing that plaintiff did not sustain the type of "serious injury" necessary to satisfy the threshold requirement of Insurance Law § 5102 (d) (see, Gaddy v Eyler, 79 NY2d 955, 956-957; Boehm v Estate of Mack, 255 AD2d 749, 749-750). In order to sustain this initial burden, defendant produced the hospital records in connection with plaintiff's treatment immediately following the accident , the report of an examination performed by defendant's chiropractor on plaintiff in June 1995 and the independent medical examination reports of two orthopedic surgeons resulting from examinations performed in January 1997 and April 1998. Contrary to the assertions of plaintiff, the foregoing evidence was clearly sufficient to meet defendant's initial burden on the threshold issue of serious injury and required plaintiff to come forward with evidence in admissible form creating a genuine triable issue of fact as to whether plaintiff sustained a serious injury as a result of the accident (see, Gaddy v Eyler, supra; Morgan v Beh, 256 AD2d 752; Weaver v Derr, 242 AD2d 823; Rennell v Horan, 225 AD2d 939).
In opposition to defendant's motion, plaintiff submitted as his only medical evidence an affidavit of his treating chiropractor, Graham. Although this affidavit indicated certain diagnoses, Graham claimed that these were reached through a process of elimination considering plaintiff's claimed symptoms of pain and numbness. Graham concluded, based on his examinations of plaintiff and diagnostic testing, that plaintiff's injuries were of a permanent nature, including, inter alia, a 10% loss of use of his lumbar area, a 5% loss of use of his trapezius area and a 5% loss of use of his cervical area. Clearly, this affidavit contradicted his earlier statements that plaintiff had suffered no permanent injury and that plaintiff had reached maximum medical improvement, regaining that point of health which existed prior to the accident. Ordinarily, as plaintiff contends, issues of credibility are sufficient to defeat a motion for summary judgment (see, Home Mut. Ins. Co. v Lapi, 192 AD2d 927, 929; Rickert v Travelers Ins. Co., 159 AD2d 758, 759, lv denied 76 NY2d 701). Issues of credibility may, however, be resolved as a matter of law under appropriate circumstances, such as here, where the claims are conclusory and self-serving (see, Rickert v Travelers Ins. Co., supra).
Here, the issue of credibility involved plaintiff's treating chiropractor on whom he relied to medically support his claim of "serious injury". The affidavit submitted by Graham is insufficient to overcome his prior representations concerning the lack of permanent injury to plaintiff and insufficient, in and of itself, to support plaintiff's claim of serious physical injury. Although Graham stated in his affidavit that he performed certain testing, there is no objective explanation of the testing that he claims to have performed which supports his conclusion (see, Bennett v Reed, ___ AD2d ___, 693 NYS2d 738; Fountain v Sullivan, 261 AD2d 795; Uhl v Sofia, 245 AD2d 988). There is no indication that Graham ever performed any type of diagnostic studies, X rays, CAT scans or MRIs in order to diagnose a bulging or herniated disc. Further, without an objective clinical basis for the diagnosis asserted in the affidavit, plaintiff was left to rely on his own subjective complaints which were, by themselves, insufficient to establish a serious injury under Insurance law § 5102 (d) (see, Scheer v Koubek, 70 NY2d 678, 679; Tankersley v Szesnat, 235 AD2d 1010, 1012). Without competent evidence and diagnostic testing to support the conclusory claims of permanency, Graham's affidavit was simply insufficient to create any genuine triable issue of fact concerning "serious injury".
We have examined the balance of plaintiff's contentions and find them to be without merit.
Mercure, J.P., Crew III, Peters and Carpinello, JJ., concur.
ORDERED that the order is affirmed, with costs.
STATE FARM MUTUAL AUTOMOBILE INS. CO. v. LEVIN
Cardona, P.J., Crew III, Spain, Carpinello and Mugglin, JJ.
Spain, J .
Appeal from a judgment of the Supreme Court (Lamont, J.), entered May 18, 1999 in Albany County, which dismissed petitioners' application, in a combined proceeding pursuant to CPLR article 78 and action for declaratory judgment, seeking, inter alia, a declaration that the surcharge imposed pursuant to the Health Care Reform Act of 1996 does not constitute an indemnity payment which may be applied against an eligible person's basic economic loss benefit limits under no -fault motor vehicle insurance.
Under chapter 639 of the Laws of 1996, the Legislature enacted the Health Care Reform Act (hereinafter HCRA) in an effort to improve the accessibility and affordability of health care throughout the State. HCRA established "public good" pools , or special revenue accounts, designed to fund "public good" programs for medical services to the indigent. In order to fund these public good pools, HCRA established a surcharge on payments by all payors -- including, inter alia, insurance companies -- for in- patient hospital services and certain out-patient health care services rendered by designated health care providers (see , Public Health Law § 2807-j ). Accordingly, insurers which make payments to such health care providers for covered services must pay a surcharge of 8.18% of the total cost of those services , provided the surcharge is paid directly by the payor-insurers to the administrator of the pool. However , if payor-insurers choose to pay the surcharge to the pool indirectly through the health care providers the surcharge increases to 32.18%, thereby strongly encouraging payor-insurers to pay the surcharge directly to the pool (see, Public Health Law § 2807-j ).
Public Health Law § 2807-j (1) expressly provides that the surcharge is applicable to insurers providing no-fault motor vehicle insurance (hereinafter no-fault). Insurance Law §§ 5102 and 5103 require that motor vehicle insurance policies provide no -fault insurance -- or reimbursements without regard to fault -- for a covered "basic economic loss" arising from the use or operation of a motor vehicle up to $50,000. "Basic economic loss" includes expenses incurred for, inter alia, medical, hospital, surgical, nursing, dental and ambulance services (see, Insurance Law § 5102). However, critical to this action/proceeding, the Public Health Law does not specifically address how the surcharge should be treated in relation to the payment of first -party benefits under no-fault for covered medical services provided to eligible persons, i.e., are the surcharge payments made by an insurer (whether paid directly or indirectly) to the "public good" pools, a component of "medical expense" and therefore "basic economic loss ", such that the surcharge, like the payment for the service itself, serves to reduce the total available coverage for such loss established in a given no-fault policy?
In this regard, in November 1996, the Department of Insurance issued Circular Letter 96-16 (hereinafter the Circular Letter) in which it determined that the 8.18% surcharge "can be offset against the applicant 's [i.e., the eligible person's] No-Fault benefit package." The Department's interpretation therein was confirmed in an August 22, 1997 opinion to that effect (hereinafter the Board's opinion) from the Workers' Compensation Board (hereinafter the Board) -- which had been solicited by the Department of Health -- regarding the treatment of the surcharge. Specifically, the Board's 1997 opinion states as follows:
It has always been our impression that the intent of the Health Care Reform Act was to mandate that the surcharge be applied to any existing fee. Therefore, it would be unfair for providers to absorb the surcharge, as part of the fees allowed by the Workers' Compensation Board .
In August 1998, the Department advised petitioners' attorneys that the Circular Letter constituted its "final agency action".
Significantly, the Insurance Law mandates that health care provider charges under no-fault policies "shall not exceed the charges permissible under the schedules prepared and established by the [chair] of the workers' compensation board for industrial accidents" ( Insurance Law § 5108 [a]). In practice, the Department -- in establishing the reimbursement available to health care providers under the no-fault law -- has formally adopted these existing fee schedules established by the Board (see, 11 NYCRR 68.1 [a]).
Petitioner State Farm Mutual Automobile Insurance Company is an authorized no-fault insurance carrier in New York. Petitioner National Association of Independent Insurers is a national trade association of approximately 570 member insurance companies, approximately 140 of which are authorized no- fault motor vehicle insurance carriers in this State. Petitioners commenced this combined CPLR article 78 proceeding and action for declaratory judgment and related injunctive relief seeking , inter alia, a declaration that the 8.18% surcharge imposed under HCRA does not constitute an indemnity payment, i.e., that the surcharge may not be offset against eligible persons' "basic economic loss" so as to reduce their total available coverage for "basic economic loss" ; under a no-fault policy. Supreme Court found that petitioners had standing to bring the proceeding /action, but dismissed it in its entirety finding the Department's interpretation to be reasonable and rational. Petitioners now appeal, and we affirm.
Initially, we reject respondent' s contention, raised on this appeal as an alternate ground for affirmance, that petitioners lack standing to bring this proceeding. Petitioners have standing to contest an administrative decision if they established that they have been injured in a respect different from the general public and that this injury falls within the zone of interests that the statute aims to protect or promote (see, Society of Plastics Indus. v County of Suffolk, 77 NY2d 761, 773; Matter of Hoston v New York State Dept. of Health, 203 AD2d 826, 827, lv denied 84 NY2d 8 04). Clearly, petitioners allege sufficient injuries, namely, that they have suffered increased aggregate costs because of the Department's interpretation of HCRA (see, Matter of New York State Conference of Blue Cross & Blue Shield Plans v Muhl, 253 AD2d 158, 162, lv denied 93 NY2d 807). Moreover, HCRA was enacted to enhance the accessibility and affordability of health care -- and petitioners have an interest in the extent to which their no-fault policies afford coverage for basic economic loss and how system-wide costs may affect policy premiums for their subscribers -- rendering petitioners' claims within the zone of interests protected by the statute (see, id., at 163).
Turning next to the merits, the well-established principles governing our review of an administrative agency's interpretation of a statute is whether the interpretation is arbitrary and capricious or irrational (see, Matter of Lippman v Public Empl. Relations Bd., ___ AD2d ___, ___, 694 NYS2d 510, 515). Additionally , "[g]reat deference is accorded to an agency's judgment where its interpretation 'involves knowledge and understanding of underlying operational practices or entails an evaluation of factual data and inferences to be drawn therefrom'" (id., at 513, quoting Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459). Moreover, the Department has wide authority to interpret, clarify and implement legislative policy by prescribing regulations, provided they are not inconsistent with other specific statutory provisions (see, Ostrer v Schenck, 41 NY2d 782; Matter of Health Ins. Assn. of Am. v Corcoran, 154 AD2d 61, 67, affd 76 NY2d 995; see also, Matter of New York Public Interest Research Group v New York State Dept. of Ins., 66 NY2d 444).
Inasmuch as the Public Health Law does not address how the surcharge should be treated with respect to no-fault payments for covered services, the issue raised herein is not one involving pure statutory construction (see, Matter of Gruber [New York City Dept. of Personnel - Sweeney], 89 NY2d 225, 231-232; Matter of Rosen v Public Empl. Relations Bd., 72 NY2d 42, 47-48; cf., Matter of Union Indem. Ins. Co. of N.Y. v Superintendent of Ins., 92 NY2d 107, 123-124). The question distills to whether we will accord deference to the agencies which collaborated in the interpretation contained in the Circular Letter, namely, the Department and, secondarily, the Board. In light of the expertise of the Department and, indirectly, the Board in the administration of the no-fault law, we will accept the Department's interpretation "if reasonable and not arbitrary or irrational" (Matter of Lippman v Public Empl. Relations Bd., supra , at 515).
Here, the payor-insurers' obligation to pay the surcharge arises automatically from the provision of the service to the eligible patient and is inseparable from their obligation to pay for the service itself. Thus, it is not irrational to treat the surcharge as a portion of the medical expense for which an eligible person or his or her insurer is liable. Such a medical expense, when it is deemed "necessary" under Department regulations (see, 11 NYCRR 65.1 [d]), falls within the scope of the "basic economic loss" against which no-fault insurance protects by indemnifying eligible persons for such loss up to the policy limits. It therefore makes sense to permit offset of the basic 8.18% surcharge against an eligible person's "basic economic loss" benefit package.
We are not persuaded by petitioners ' argument that the mandated surcharge is not a component of the cost of the medical services. In our view, the cost of medical services is whatever the patient or the insured is charged for them. The "public good" surcharge is a portion of the charges and, thus, reasonably treated as a component of an eligible person's "basic economic loss" under no-fault. We agree with Supreme Court' s observation that because the fee schedule is set by the Board, it would be confusing for the Department to adopt a contrary position. Accordingly, concluding that the Department's interpretation that the surcharges may be offset against no-fault policy coverage limits is rational and neither arbitrary nor capricious, we find no basis to disturb its determination.
Cardona, P.J., Crew III, Carpinello and Mugglin, JJ., concur.
ORDERED that the judgment is affirmed, without costs .
KLINGER v ALLSTATE INSURANCE COMPANY
In an action, inter alia, to recover damages for unfair claims settlement practices under 11 NYCRR 216.7, the plaintiff appeals from so much of an order of the Supreme Court, Queens County (D. Goldstein, J.), dated September 29, 1998, as granted those branches of the defendant's motion pursuant to CPLR 3211(a)(1) and (7) which were to dismiss the first, second, and fifth causes of action asserted in the amended complaint.
ORDERED that the order is affirmed insofar as appealed from, with costs.
The plaintiff filed a claim for property damage under the collision damages portion of her automobile insurance policy issued by the defendant. Her claim, minus a $500 deductible, was paid by the defendant. Thereafter, the plaintiff commenced this action, inter alia, to recover the $500 deductible, and the defendant moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the amended complaint on the ground that it fails to state a cause of action. The Supreme Court granted those branches of the defendant's motion which were to dismiss the first and second causes of action on the ground that no private right of action exists under 11 NYCRR 216.7 or Insurance Law § 2601. The Supreme Court also granted that branch of the defendant's motion which was to dismiss the fifth cause of action on the ground that no duty independent of the contractual obligation was imposed by 11 NYCRR 216.7 or Insurance Law § 2601. On appeal, the plaintiff contends that there is a private right of action under 11 NYCRR 216.7 which supported all three causes of action. We disagree.
Contrary to the plaintiff's contention, the first, second, and fifth causes of action allege unfair claims settlement practices under 11 NYCRR 216.7, which is promulgated under Insurance Law § 2601, and there is no private right of action for the violation thereof (see , Aetna Cas. & Sur. Co. v ITT Hartford Ins. Co., 249 AD2d 241; see also, Rocanova v Equitable Life Assur. Soc. of U.S., 83 NY2d 603; New York Univ. v Continental Ins. Co., 87 NY2d 308). Even assuming, as the plaintiff contends, that 11 NYCRR 216.7 was not promulgated under Insurance Law § 2601, but rather under Insurance Law § 3411, there is no private right of action thereunder. Insurance Law § 3411(n) contemplates enforcement of any statutory violations by way of administrative penalty. In such cases, there is no private right of action unless one is expressly authorized by the legislation. Here there is no such authorization (see, Rocanova v Equitable Life Assur. Soc. of U.S. , supra; Aetna Cas. & Sur. Co. v ITT Hartford Ins. Co., supra).
The plaintiff' s remaining contentions are without merit.
O'BRIEN, J.P., FRIEDMANN, FLORIO, and H. MILLER, JJ., concur.
PENN MUTUAL LIFE INSURANCE COMPANY v REMLING
In an action for a judgment declaring that the plaintiff is entitled to rescind a certain policy of disability insurance issued to the defendant based upon alleged material misrepresentations made by him, the third -party defendant appeals, as limited by his brief, from so much of an order of the Supreme Court, Queens County (Golia, J.), dated November 19, 1998, as denied his cross motion for summary judgment dismissing the third-party complaint and the plaintiff separately appeals from so much of the same order as denied its cross motion for summary judgment.
ORDERED that the order is modified, on the law, by deleting the provision thereof denying that branch of the cross motion of the third-party defendant which was for summary judgment dismissing the second cause of action in the third-party complaint , and substituting therefor a provision granting that branch of the cross motion of the third-party defendant ; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.
Insurance Law § 3105(b) provides that for a misrepresentation to warrant the voiding of an insurance policy, the misrepresentation must be material, meaning that had the insurer known the truth, it would not have issued the policy (see, Gugleotti v Lincoln Sec. Life Ins. Co., 234 AD2d 514). In this case, the claim of the defendant third-party plaintiff, William C. Remling, resulted from an allegedly disabiling shoulder injury. The plaintiff, Penn Mutual Life Insurance Company (hereinafter Penn Mutual) has not demonstrated, as a matter of law, that it would not have issued a disability policy covering injuries to Remling's shoulder had it known about his preexisting back condition. Any misrepresentations by Remling as to the condition of his back were not material misrepresentations per se, allowing Penn Mutual to void the policy based on Remling's claim for benefits as a result of his shoulder injury. Therefore, the Supreme Court properly denied Penn Mutual's cross motion for summary judgment.
The court also correctly denied that branch of the cross motion of the third-party defendant, James Nuzzi, C.L.U. (hereinafter Nuzzi), which was for summary judgment dismissing the first cause of action in the third-party complaint . Remling claims that Nuzzi advised him not to reveal the preexisting back condition to Penn Mutual when he applied for the disability policy. Therefore, if Penn Mutual is allowed to cancel the policy , Nuzzi should be responsible for payment of the disability benefits to which Remling would have been entitled (see, Soho Generation of N.Y. v Tri-City Ins. Brokers, 256 AD2d 229). In light of the sharply conflicting evidence as to whether Nuzzi, in his role as Penn Mutual's agent, urged Remling to conceal his back condition , he has failed, as a matter of law, to establish his entitlement to summary judgment dismissing the first cause of action asserted in the third-party complaint. Under the circumstances, however, Nuzzi is not responsible for the legal expenses incurred by Remling in his defense of the main action (see, Chase Manhattan Bank N.A. v Each Individual Underwriter Bound to Lloyd's Policy No. 790/004A89005, 25 8 AD2d 1). Accordingly, Nuzzi is entitled to summary judgment dismissing the second cause of action in the third-party complaint.
The parties' remaining contentions are without merit .
MANGANO, P.J., ALTMAN, SCHMIDT, and SMITH, JJ., concur.
ZIMMERMAN v OPTICA MANUFACTURING CORP.
In an action to recover damages for personal injuries, the plaintiff appeals , as limited by his brief, from so much of an order of the Supreme Court, Nassau County (Bucaria, J.) , dated November 12, 1998, as granted the defendants' motion for reargument, and upon reargument, granted that branch of the defendants' motion which was for summary judgment dismissing the complaint insofar as asserted against the defendant Martin Greshes.
ORDERED that the order is affirmed insofar as appealed from, with costs.
The plaintiff commenced this action to recover damages for injuries he allegedly sustained while dismantling an oven in a factory that manufactured optical lenses. The plaintiff concedes that the Supreme Court properly dismissed the complaint insofar as it was asserted against the two corporate defendants based upon their affirmative defense that his exclusive remedy was under the Workers' Compensation Law. Contrary to the plaintiff's contention, however , the affirmative defense also applies to the individual defendant Martin Greshes. There is sufficient uncontroverted evidence to establish that Martin Greshes was the plaintiff's coemployee. Moreover, the status of Martin Greshes as the owner of the premises where the accident occurred does not negate his immunity from suit pursuant to Workers' Compensation Law § 29(6) (see, Heritage v Van Patten, 59 NY2d 1017; Sylfa v Stupnick, 239 AD2d 570; Lapinski v Gusmar Realty Corp., 211 AD2d 762; Kinsman v McGill, 210 AD2d 659).
RITTER, J.P., FRIEDMANN, FEUERSTEIN, and SCHMIDT, JJ., concur .
STERNER v. LAKE GEORGE REGIONAL WINTER FESTIVAL INC.
Crew III, J.
Appeal from an order of the Supreme Court (Keniry, J.), entered December 10, 1998 in Saratoga County, which granted defendant Scott Boudreau's motion to vacate a default judgment in favor of plaintiff.
Plaintiff was injured during the early morning hours of February 1 7, 1996 while riding an all-terrain vehicle on the ice on Lake George in Warren County. According to plaintiff, the accident occurred when he ran into a rope that had been stretched across the ice as a barrier for a Lake George Winter Festival event. Prior to the commencement of this personal injury action, plaintiff's attorney wrote a letter to defendant Scott Boudreau (hereinafter defendant) in May 1996 concerning the incident, and defendant forwarded the letter to his insurer. Scott Draiss, an employee of Allied Adjustment Service, thereafter investigated the matter on the insurer's behalf and had numerous contacts with defendant and plaintiff's counsel. In November 1997, Draiss resigned and Allied's office closed, although mail apparently still was delivered through the mail slot.
In the interim, plaintiff commenced this action in May 1997 and effected service upon defendant shortly thereafter . Based upon his prior notification to the insurer and the investigation by Draiss, defendant did not forward the papers to the insurer or to Draiss. As a result of the closure of Allied's office, a courtesy copy of the summons and complaint, which plaintiff's attorney mailed to Draiss in October 1997, never was forwarded to the insurer. A default judgment was entered against defendant in April 1998 and defendant promptly moved to vacate the default. Supreme Court granted the motion, resulting in this appeal by plaintiff.
Defendant's reliance upon his prior notification to the insurer and his knowledge of the ensuing investigation by Draiss, together with the confusion created by Draiss' resignation and the closure of the Allied office, provides a reasonable excuse for defendant's default and demonstrates the necessary lack of willfulness (see, Kasriels v Barnard Coll. of Columbia Univ., 256 AD2d 909, 910; Wilcox v U-Haul Co., 256 AD2d 973; Steel Krafts Bldg. Materials & Supplies v Komazenski, 252 AD2d 731, 731-732). Even accepting plaintiff's contention that the proferred excuse amounted to nothing more than the insurer's law office failure, Supreme Court was not precluded from exercising its discretion to excuse the default (see , CPLR 2005). Additionally, defendant's allegations that he and his crew did not place any ropes across the ice and that no accident involving an all-terrain vehicle occurred during the early morning hours of February 17, 1996 in the vicinity of his work clearly are sufficient to demonstrate a meritorious defense. Under these circumstances, and in the absence of any prejudice to plaintiff, we are of the view that Supreme Court did not abuse its discretion in granting defendant's motion.
Mercure, J.P., Peters, Spain and Graffeo, JJ., concur.
ORDERED that the order is affirmed, with costs.
FRIEDMAN v ALLSTATE INSURANCE COMPANY
In an action to recover underinsured motorist benefits pursuant to an automobile insurance policy, the plaintiffs appeal from an order of the Supreme Court, Nassau County (McCaffrey, J.), dated January 8, 1999, which granted the defendant's motion pursuant to CPLR 3211(a)(7) to dismiss the complaint.
ORDERED that the order is affirmed , with costs.
It is undisputed that the plaintiffs failed to obtain the written consent of their insurance carrier, the defendant, Allstate Insurance Company (hereinafter Allstate), before settling the underlying negligence action with the tortfeasor, and that such consent was required by the underinsurance motorist coverage provisions of the Allstate policy. Furthermore, in executing a release in favor of the tortfeasor, the plaintiffs failed to preserve Allstate's subrogation rights . Under the circumstances, the plaintiffs are precluded from asserting a claim for benefits under the underinsurance motorist provisions of the policy (see, Aetna Cas. & Sur. Co. v Longo Prods., 247 AD2d 497; Matter of State Farm Fire & Cas. Co. v Zyburo, 215 AD2d 566).
The plaintiffs ' remaining contentions are either unpreserved for appellate review or have been rendered academic in light of our determination.
MANGANO, P.J., THOMPSON, ALTMAN, and LUCIANO, JJ., concur.