Visit the HOT CASES section of the Federation of Insurance and Corporate Counsel website for cases covering a broad range of legal issues from other jurisdictions: www.thefederation.org.

04/27/00: MARTINELLI v. TRAVELERS PROPERTY CASUALTY INS. CO.
New York State Supreme Court, Appellate Division, Third Department
Plaintiff Injured by Cement Truck Chute Entitled to No-Fault Benefits – the Chute was Part of the Vehicle and Proximate Cause of Injury

While plaintiff was working at a construction site, a cement truck owned and operated by defendant's insured arrived to unload cement . The driver, using controls inside the truck, maneuvered the chute to pour the cement in the desired locations. Plaintiff sustained injuries while raking the cement delivered through the chute, and alleged that the chute swung and struck him in the back. The insurer denied plaintiff's claim for no-fault insurance benefits on the ground that his injuries did not arise out of the use or operation of a motor vehicle. The court disagreed, holding that no-fault insurance benefits are payable if plaintiff's injuries arose out of the use or operation of the cement truck (Insurance Law § 5102 [b]; § 5103 [a] [1]). "A person engaged in loading or unloading the vehicle may be using it within the meaning of the statute, but that does not necessarily mean that his or her injuries arose out of the use of the vehicle. In such circumstances, if the injuries are caused by something other than the vehicle itself, the injuries cannot be said to have arisen out of the use of the vehicle." In other words, the vehicle must be a proximate cause of the injury before the absolute liability imposed by the statute arises. In this case, the purpose of the cement truck was to deliver cement and the chute attached to the truck was essential to the unloading of the cement. Thus, the chute as a part of the vehicle, was a proximate cause of plaintiff's injuries.

04/27/00: CROSSLAND MORTGAGE CORP. v. DOUGLAS
New York State Supreme Court, Appellate Division, Third Department
Failure to Seek Fire Insurance Proceeds is not an Affirmative Defense to Foreclosure

Defendants, owners of real property, gave plaintiff a first mortgage on the property to secure their note. Thereafter, the property was destroyed by fire. Plaintiff brought this action to foreclose its mortgage. Defendants moved for summary judgment dismissing the complaint upon the ground that plaintiff's failure to seek payment under a fire insurance policy insuring its interest in the property constituted a complete defense and setoff against plaintiff's claim. The court rejected defendants' contention, holding that the availability of fire insurance proceeds is not an affirmative defense to a foreclosure action. A mortgagee's interest under the standard mortgagee clause contained in a fire insurance policy is coextensive with the debt secured by the mortgage and there is no New York authority for the proposition that plaintiff was required to pursue one of these coextensive interests before the other. Moreover, had plaintiff initially recovered from the fire insurance proceeds, the insurer would have been subrogated to the rights of plaintiff and thus able to bring a foreclosure proceeding itself, in accordance with policy terms.

04/25/00: VILES CONTRACTING CORP. v. HARTFORD FIRE INS. CO.
New York State Supreme Court, Appellate Division, First Department
Insured Loses Coverage for Two-Month Delay in Forwarding Default Order

In this declaratory judgment action, the court held the insurer had no obligation to defend or indemnify its insured in an underlying action because the insured failed to comply with policy provisions requiring that the insured immediately forward copies of legal papers. Plaintiff asserted it did not learn of the underlying action until a conditional default order was served, and thus did not breach policy conditions requiring notice of suit. While the insured may not have learned of the underlying action until the conditional default order was served, the insured’s two-month delay in notifying its insurer of receipt of the default order violated the policy provisions to immediately send copies of any legal papers it received.

04/24/00: DIAZ v. WIGGINS
New York State Supreme Court, Appellate Division, Second Department
Physician’s Affidavit Based upon Earlier Examination and Unsworn Medical Reports of Another Physician Insufficient to Establish "Serious Injury"

Plaintiff’s personal injury action was dismissed for failure to satisfy the "serious injury" requirement of Insurance Law § 5102(d). The affidavit of the plaintiff's treating physician, submitted in opposition to a motion for summary judgment, was deficient as a matter of law because the physician’s opinion regarding a "significant limitation of use of a body function or system" was based upon an examination conducted over one year earlier rather than on a recent medical examination and upon the unsworn medical reports of another physician.

04/24/00: INSURANCE COMPANY OF EVANSTON v. MID-HUDSON CO-OPERATIVE INS. CO.
New York State Supreme Court, Appellate Division, Second Department
Antisubrogation Rule bars Insurer’s Claim against Co-Insurer for Share of Defense and Indemnification of Additional Insureds

Property owners leased premises to Papacharalambous for use as a daycare center, pursuant to which Papacharalambous obtained a commercial liability policy from plaintiff/insurer naming the property owners as "additional insureds." A personal injury action was commenced against Papacharalambous and property owners when a child at the daycare center was injured. The plaintiff/insurer then commenced this declaratory judgment action against the property owners' insurance carrier, seeking a declaration that it had a duty to share in the defense and indemnification of the property owners in the underlying action. The court dismissed the case, holding that "[a]n insurer has no right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered". Here, the antisubrogation rule barred plaintiff/insurer’s recovery from its additional insureds through their insurer for their liability in connection with the underlying action.

04/24/00: MATTER OF MERCHANTS MUTUAL INS. CO. v. ANEMONE
New York State Supreme Court, Appellate Division, Second Department
Proceeding to Stay Arbitration of UM Claim Commenced Four Months After Demand Deemed Untimely

This proceeding to permanently stay arbitration of an uninsured motorist claim, commenced four months after a demand for arbitration was served, was dismissed as untimely. The issue of whether there had been physical contact between the vehicle claimant was driving and the alleged hit -and-run vehicle relates to whether certain conditions of coverage were satisfied. Therefore, the petitioner's application to stay arbitration should have been brought within the 20-day limitation period set forth in CPLR 7503(c).

04/20/00: AAA SPRINKLER CORP. v. GENERAL STAR NATIONAL INS. CO.
New York State Supreme Court, Appellate Division, First Department
General Liability Insurer’s Failure to Notify Insured or Excess Carrier of Potential Excess Judgment was not Bad Faith

The court determined that a general liability insurer did not act in bad faith when it failed to notify its insured or the insured's excess liability carrier of the possibility of a judgment in excess of primary policy limits. The insured was contractually obligated to notify its excess carrier of the likelihood of such a judgment and, although aware of such likelihood, failed to give its excess carrier the required notice.

04/20/00: CARNEGIE HILL 90TH STREET, INC. v. GREATER NEW YORK MUTUAL INS. CO.
New York State Supreme Court, Appellate Division, First Department
Fire Policy’s Two-Year Limitations Period Bars Suit Absent Proof of Waiver or Circumstances Warranting Estoppel – Protracted Settlement Negotiations is Not Enough

The court dismissed this action to recover the proceeds of a fire insurance policy as barred by the two-year contractual limitations period. The record did not support a finding that the insurer waived reliance on the contractual limitations period or that the insurer should be estopped from such reliance. Plaintiff offered no evidence from which a clear manifestation of intent by the insurer to relinquish the protection of the limitations period set forth in the parties’ contract could be reasonably inferred, nor was there evidence that defendant, by its conduct, lulled plaintiff into sleeping on its rights under the subject insurance policy. During the entire 2½ year period the parties negotiated, the amount of damages sustained by plaintiff in the fire remained in dispute and defendant never relinquished its contention that plaintiff had submitted and was persisting in the assertion of a fraudulently exaggerated claim, and never offered more than $181,905 to settle the claim, which plaintiff found unacceptable. Under these circumstances, the insurer’s actions could not have lulled plaintiff into the belief that litigation would be unnecessary for it to collect the amount it sought under the subject policy.

04/20/00: BELARDO v. FULMONT MUTUAL INS. CO.
New York State Supreme Court, Appellate Division, Third Department
Vandalism and Burglary Damage Provisions do not Cover Stolen Property

The plaintiff/insured purchased property at a foreclosure sale and gave the occupant the option of paying rent or vacating the premises. When the occupant failed to exercise either option, the insured commenced an eviction proceeding. Prior to vacating the premises, the occupant allegedly took kitchen cabinets, bathroom fixtures, pool equipment, lights and a hot water heater. The insured sought to collect on her insurance policy, which provided coverage for vandalism and burglary damage. The insurer denied coverage for loss caused "by property taken by burglars", but paid its insured $6,000 conditioned upon her execution of a release for any and all claims for vandalism and criminal mischief which might emanate from the acts when it was later determined that part of the damages might be covered by the terms of the policy. The insured then commenced this declaratory judgment action asserting that her claims of larceny and burglary should have been included under either the vandalism or burglary damage provisions of the policy. The insurer sought summary dismissal of the claim based upon the terms of the general release, which was granted. First, the court found no basis to set aside the release. Since the language of the release was clear, effect was given to the intent of the parties as indicated by the language employed. The court also rejected any contention that coverage could have been provided under the "burglary damage clause" because the clause specifically states that only property damaged by burglars, not property taken by burglars, will be covered. Finding no ambiguity in the terminology employed, the court found no basis upon which coverage should have been provided.

04/18/00: MELBOURNE v. NEW YORK LIFE INS. CO.|
New York State Supreme Court, Appellate Division, First Department
Insurer Not Liable for Unauthorized Prostate Exam of Policy Applicant where Paramedical Exam Performed by Independent Contractor

This action arose out of an unauthorized prostate exam performed in connection with plaintiff’s application for insurance. The insurer informed the plaintiff that certain medical tests were required before the policy could be issued and retained IMR, a company engaged in the business of providing underwriting information to life and health insurance companies. IMR in turn contracted with Hudson to conduct paramedical exams of insurance applicants. On the scheduled date, an examiner went to plaintiff’s apartment and took blood, urine samples, and performed a prostate exam. In this action for intentional tort/assault, negligence, and negligent hiring and supervision, both the insurer and IMR conceded that a prostate exam is not part of a paramedical examination. Finding no evidence that the insurer had anything at all to do with the manner in which examinations were performed, and that IMR was an independent contractor, the court dismissed the claims against the insurer. Moreover, the examiner was eventually charged with sexual abuse in the third degree and later pled guilty to an attempt to commit the crime of practicing medicine without a license. Thus, IMR could not be held vicariously liable for the examiner’s conduct, as they were outside the scope of his employment. Nevertheless, the court found issues of fact precluded summary judgment in favor of IMR. Even if Hudson was an independent contractor, it is well settled that one common law exception to the independent contractor rule exists where the employer was negligent in selecting, instructing, or supervising the contractor. Here, IMR could not produce any documentation regarding its purported investigation of Hudson. Its file contained nothing more than the agreement and had no indication that an investigation of any kind was ever conducted.

ACROSS BORDERS

From time to time we highlight significant cases of interest from other jurisdictions. This week we offer decisions from California and Florida:

04/19/00: ANGUIANO v. ALLSTATE INS. CO.
United States 9th Circuit Court of Appeals (applying California law)
Insurer Must Advise Insured of Settlement Demands and Offers, Particularly if Excess Exposure Claimed, or Risk Finding of Bad Faith

California law requires that an insurer "take into account the interest of the insured and give it at least as much consideration as it does to its own interest" when evaluating settlement offers. As a result, the implied covenant of good faith and fair dealing imposes a duty upon insurers to give an "offer its intelligent and informed consideration; that the insurer advise the insured of any settlement offers, together with the results of its investigations; and that the insurer give equal consideration to the interests of its insured." A breach of any of these obligations coupled with a refusal to settle within policy limits may render an insurer liable for any judgment against its insured, including any portion in excess of the policy limits. The insurer's duty to communicate a settlement offer to the insured is particularly important when there is a conflict of interest between the insurer and the insured. A conflict of interest arises when "an offer to settle an excess claim is made within policy limits or when a settlement offer is made in excess of policy limits and the assured is willing and able to pay the excess." In this case, a conflict of interest arose the moment that an offer was made to settle the claim within the policy limits because the carrier was aware that the insureds were exposed to liability well beyond the policy limits.

04/20/00: MIZRAH v. NORTH MIAMI MEDICAL CENTER, LTD.
Supreme Court of Florida
Florida Wrongful Death Medical Malpractice Recovery Limitations Upheld as Constitutional

That part of the wrongful death statute which precludes recovery of non-pecuniary damages by a decedent's adult children, where the cause of death was medical malpractice, while allowing such children to recover in cases of ordinary negligence, is not violative of equal protection clauses of state and federal constitutions.

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REPORTED DECISIONS

VILES CONTRACTING CORP. v. HARTFORD FIRE INS. CO.

Order, Supreme Court, Bronx County (George Friedman, J.), entered on or about June 30, 1999, which, insofar as appealed from, granted defendant-respondent’s motion for summary judgment, unanimously modified, on the law, to declare that defendant-respondent is not obligated to defend and indemnify plaintiff in the underlying action, and otherwise affirmed, without costs.

Plaintiff asserts that it did not learn of the underlying action until the conditional default order was served on the person designated as its agent with the Secretary of State. While this circumstance may be sufficient to raise an issue of fact as to whether plaintiff complied with its obligation under section E(2)(b)(2) of the subject policy to give defendant notice of the suit as soon as practicable (see, Agoado Realty Corp. v United Intl. Ins. Co., __AD2d__, 699 NYS2d 335), it is not sufficient to raise an issue of fact as to whether plaintiff complied with its obligation under section E(2)(c)(1) to immediately send defendant copies of any legal papers received. No valid reason is given for plaintiff’s almost two-month delay in notifying defendant of its receipt of the conditional default order (cf., Power Auth. v Westinghouse Elec. Corp., 117 AD2d 336, 342). We have considered plaintiff’s other arguments and find them unpersuasive.

THIS CONSTITUTES THE DECISION AND ORDER

OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

AAA SPRINKLER CORP. v. GENERAL STAR NATIONAL INS. CO.

Order, Supreme Court, New York County (Barry Cozier, J.), entered January 15, 1999, which, in this breach of contract action, inter alia, granted defendant-respondent's cross motion for summary judgment dismissing the complaint and all cross claims against it, unanimously affirmed, without costs.

The motion court properly determined that defendant-respondent, a general liability insurer, had not acted in bad faith when it failed to notify its insured or the insured's excess liability carrier of the possibility of a judgment in excess of the primary policy limits (see, Monarch Cortland v Columbia Cas. Co., 224 AD2d 135, 137, lv denied 89 NY2d 807) . The insured was contractually obligated to notify its excess carrier of the likelihood of such a judgment and, although aware of such likelihood, failed to give its excess carrier the required notice. Additionally , the motion court properly denied plaintiffs additional discovery since there was no basis to conclude that such discovery might yield evidence warranting a different disposition of the instant motions ( see, Interested Underwriters at Lloyd's v H.D.I. III Assocs., 213 AD2d 246, 248).

THIS CONSTITUTES THE DECISION AND ORDER

OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

CARNEGIE HILL 90TH STREET, INC. v. GREATER NEW YORK MUTUAL INS. CO.

Order, Supreme Court, New York County (Sheila Abdus-Salaam, J.), entered June 21, 1999, which to the extent appealed from as limited by the brief, granted defendant’s motion to dismiss plaintiff’s first four causes of action as barred by a two-year contractually established limitations period, unanimously affirmed, without costs .

Plaintiff has not offered evidence from which a clear manifestation of intent by defendant to relinquish the protection of the limitations period set forth in the parties’ contract of insurance can be reasonably inferred (see, Carat Diamond Corp. v Underwriters at Lloyd’s, London, 123 AD2d 544). Nor is there evidence that defendant, by its conduct, lulled plaintiff into sleeping on its rights under the subject insurance policy (see, Kaufman v Republic Ins. Co., 35 NY2d 867). For the entire 2½ year period during which the parties negotiated, the amount of damages sustained by plaintiff in the fire at its premises remained in dispute and defendant never relinquished its contention that plaintiff had submitted and was persisting in the assertion of a fraudulently exaggerated claim, and never offered more than $181,905 to settle the claim, which plaintiff found unacceptable. Clearly, defendant’s actions could not have lulled plaintiff into the belief that litigation would be unnecessary for it to collect the amount it sought under the subject policy. Since the record does not support a finding that defendant waived reliance on the contractually established limitations period or that defendant should be estopped from such reliance, the motion court properly dismissed the first four causes of action as untimely.

We have considered plaintiff’s remaining contentions and find them unavailing.

THIS CONSTITUTES THE DECISION AND ORDER

OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

MELBOURNE v. NEW YORK LIFE INS. CO.

Order, Supreme Court, Bronx County (Barry Salman, J.), entered April 7, 1999 which, inter alia, denied the motion of defendant-appellant-respondent Insurance Medical Reporter, Inc. (" ;IMR") for summary judgment, granted the motion of defendant-respondent New York Life Insurance Co. ("New York Life") for summary judgment dismissing the complaint as against that entity, and denied plaintiff-respondent-appellant Leetoyzer C. Melbourne’s request for the imposition of sanctions against IMR, unanimously modified, on the law, the first and second causes of action of the amended complaint dismissed as against IMR, and otherwise affirmed, without costs.

This action arises out of an unauthorized prostate examination performed on plaintiff in connection with his application for insurance with New York Life. IMR is a California company engaged in the business of providing underwriting information to life and health insurance companies and, in furtherance of its business, contracts with companies to conduct paramedical examinations of insurance applicants. In September 1993, IMR entered into an "Examiner Agreement" with Hudson Medic Service of New York ("Hudson"), through its principal, Alejandro Aguilar, to conduct paramedical examinations. The agreement was entered into on IMR’s behalf by Miriam Jung, who was in charge of IMR’s affiliate office in the Bronx, New York.

In June 1996, plaintiff applied for a life insurance policy with New York Life and was informed that certain medical tests were required before a policy could be issued. New York Life thereafter retained IMR and on a scheduled date, an examiner went to plaintiff’s apartment and explained that he was there to perform certain procedures on behalf of New York Life. The examiner, later identified as Oscar Gomez , took blood and urine samples and tested plaintiff’s blood pressure. Gomez then asked the 41-year old plaintiff if he had ever had a prostate examination and, after plaintiff responded in the negative, Gomez informed him that he needed one. Plaintiff then removed his pants, as instructed, bent over and Gomez "stuck" something into his rectum for about 30 seconds. Gomez then smiled at plaintiff and allegedly told him "you have a nice prostate." New York Life and IMR concede that a prostate examination is not part of a paramedical examination.

In March 1997, plaintiff commenced this action against New York Life and IMR and thereafter served an amended complaint, with leave of court, which added Gomez as a defendant and interposed four causes of action sounding in, respectfully, intentional tort/assault, negligence, failure to properly supervise, and negligent hiring. IMR also commenced a third-party action against Aguilar d/b/a Hudson and Gomez, seeking indemnification and contribution, although the third-party defendants have not appeared. The IAS court subsequently granted New York Life ’s motion for summary judgment on the ground that plaintiff failed to proffer any evidence refuting New York Life’s assertion "that its relationship with IMR was that of an independent contractor" ; or establishing that New York Life was negligent when it entered into its contract with IMR. The IAS court denied IMR’s motion for summary judgment and found that issues of fact exist concerning IMR’s relationship with Hudson, the extent of IMR’s initial investigation into Hudson’s operations, and the extent of control , if any, that IMR maintained over Hudson and the methods Hudson used in hiring and training its examiners .

As a general rule, a principal is not liable for the acts of independent contractors because , unlike the master-servant relationship, principals cannot control the manner in which independent contractors perform their work ( Chainani v Board of Educ. of City of New York, 87 NY2d 370; Kleeman v Rheingold, 81 NY2d 270). Control of the method and means by which work is to be performed , therefore, is a critical factor in determining whether one is an independent contractor or an employee for the purposes of tort liability ( Berger v Dykstra, 203 AD2d 754, lv dismissed 84 NY2d 965), and such a determination typically involves a question of fact ( Lazo v Mak’s Trading Co., 199 AD2d 165, 166, affd 84 NY2d 896; Malamood v Kiamesha Concord, Inc., 210 AD2d 26). However, where the evidence on the issue of control presents no conflict, the matter may properly be determined by the court as a matter of law ( Lazo v Mak’s Trading Co., supra, at 166; Crage v Kissing Bridge Ski Area, 186 AD2d 987, 988, lv denied 81 NY2d 702 citing Matter of Beach v Velzy, 238 NY 100). Moreover, the mere retention of general supervisory powers over independent contractors cannot form a basis for the imposition of liability against the principal (Lazo v Mak’s Trading Co., supra, at 167; Wright v Esplanade Gardens, 150 AD2d 197, 198).

In view of the foregoing, and on the record before us, it cannot be said that New York Life exercised sufficient control over IMR, or Hudson , to raise a triable issue of fact as to whether New York Life should be held accountable for the acts of Hudson’s employee. Indeed, there is no evidence that New York Life, other than requesting the examinations be done, had anything at all to do with the manner in which they were performed.

With regard to IMR, issues of fact exist regarding the nature of the relationship between IMR and Hudson as well as the circumstances under which Hudson was engaged. We note in particular the possibility that Hudson is nothing more than a shell corporation (see, Szabados v Quinn, 156 AD2d 186), as its listed address is a fifth-floor apartment in a " run-down" five-story residential building on West 141st Street which does not have an elevator. Further, the building bears no signs or indications on the mailbox or intercom system indicating Hudson’s existence therein, and Hudson has no listing in the Manhattan telephone directory, although its principal, Aguilar, resides at the same address. In addition, there is no proof that Gomez was, in fact, employed by Hudson, and on the form completed after his examination of plaintiff, Gomez indicated that he was employed by IMR. Moreover, a letter of apology from IMR’s chief operating officer to plaintiff ’s attorney states that Gomez was terminated "from our company." We also note the requirement that IMR maintain a "minimum of $1,000,000/occurrence in malpractice/ liability coverage" to insure New York Life for any negligence arising out of the paramedical examinations IMR arranged for New York Life, yet Hudson was not required to maintain any coverage to insulate IMR. Further, the agreement between IMR and Hudson was terminable at will (see, Sikes v Chevron Cos., 173 AD2d 810). IMR also referred to Jung and its affiliate office in the Bronx as independent contractors, although they provide no evidence in support of such argument and we reject it as conclusory and self-serving.

It is clear, however, that under the doctrine of respondent superior, an employer may be held vicariously liable for torts committed by an employee when the employee acts negligently or intentionally, as long as the conduct complained of is generally foreseeable and a natural incident of the employment ( Judith M. v Sisters of Charity Hosp., 93 NY2d 932, 933; Riviello v Waldron, 47 NY2d 297, 304). If an employee "‘for purposes of his own departs from the line of his duty so that for the time being his acts constitute an abandonment of his service, the master is not liable’" ( Baker v Allen & Arnick Auto Renting Co., 231 NY 8, 13, quoting Jones v Weigand, 134 App. Div. 644, 645).

In the matter before us, there is no dispute that a prostate examination is not an authorized component of a paramedical examination and that Gomez was not qualified to perform it in any event. Further, Gomez was eventually charged with sexual abuse in the third degree and later pled guilty to "an attempt to commit the crime of practicing medicine without a license." Accordingly, IMR cannot be held vicariously liable for Gomez’s acts as they clearly were outside the scope of his employment (see, Judith M. v Sisters of Charity Hosp. , supra; Mataxas v North Short Univ. Hosp., 211 AD2d 762).

Notwithstanding the foregoing, even if we were persuaded by IMR that Hudson could be deemed an independent contractor as a matter of law, it is settled that one common law exception to the independent contractor rule is where the employer was negligent in selecting, instructing or supervising the contractor ( Maristany v Patient Support Servs., 264 AD2d 302; Goodman v 78 West 47th St., 253 AD2d 384). In this matter, IMR could not produce any documentation regarding the investigation it conducted into Hudson’s background, and IMR’s representative , Jung, who recruited and hired Hudson, states conclusorily that she got 15 to 20 excellent references for Hudson, but could not recall the names of any of these references or produce any written memoranda regarding these conversations. Further, no affidavits were produced from any of the purported references and Jung testified that she could remember almost nothing about her interview with Hudson, including the location or description of Hudson’s offices. In fact, IMR’s file on Hudson contained nothing more than the agreement which the two entities executed and bears no indicia that any investigation of any kind was ever conducted. We, therefore, conclude that issues of fact exist as to whether IMR was negligent in hiring Hudson, whether such negligence was a proximate cause of plaintiff’s injuries, and whether IMR could, as a result, be held liable for Hudson’s negligence, even if Hudson were found to be an independent contractor.

We have considered the parties’ remaining arguments and find them to be without merit.

THIS CONSTITUTES THE DECISION AND ORDER

OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

BELARDO v. FULMONT MUTUAL INS. CO.

Peters, J.

Appeal from an order of the Supreme Court (Malone Jr., J.), entered March 4, 1999 in Albany County , which granted defendant's motion for summary judgment.

James Tate owned property located in the Town of Colonie, Albany County. Upon his default of a second mortgage, the bank foreclosed and plaintiff purchased the property at a foreclosure sale. Tate, who continued to remain on the property , was given the option to either pay rent or vacate. When he failed to exercise either option, plaintiff commenced an eviction proceeding. Prior to Tate vacating as a result of such proceeding, it is alleged that he took various items from the premises including kitchen cabinets, bathroom fixtures, pool equipment , lights and possibly a hot water heater.

Plaintiff sought to collect on her insurance policy with defendant which, inter alia, provided coverage for vandalism and burglary damage. Defendant denied coverage for a loss caused "by property taken by burglars" by letter dated May 24, 1994. When it was later determined that part of the damages might, in fact, be covered by the terms of the policy, defendant paid plaintiff $6,000 conditioned upon her execution of a release for any and all claims for vandalism and criminal mischief which might emanate from these acts.

In September 1996, plaintiff commenced this declaratory judgment action asserting that her claims of larceny and burglary should have been included under either the vandalism or burglary damage provisions of the subject insurance policy. Defendant sought a summary dismissal of the complaint by relying upon the terms of the general release. The vandalism and burglary damage provisions of the policy to which the release refers indicate that such provisions "do[] not cover loss of property taken by burglars". Supreme Court granted defendant's motion, prompting this appeal.

We affirm. Concerning plaintiff's contention that the release should be set aside to allow for further coverage under the vandalism clause, we find an arguable basis for denying coverage (see, Redcross v Aetna Cas. & Sur. Co., 260 AD2d 908, 913) and a failure to have raised any viable issue that the agreement was procured by duress, illegality, fraud or mutual mistake (see, Rocanova v Equitable Life Assur. Socy. of U.S., 83 NY2d 603, 616). "[A]s the 'language of the release is clear, effect must be given to the intent of the parties as indicated by the language employed'" (id., at 616, quoting Matter of Schaefer, 18 NY2d 314, 317).

We similarly reject any contention that coverage could have been provided under the "burglary damage clause" since such clause specifically states that only property damaged by burglars, not property taken by burglars, will be covered. Finding no ambiguity in the terminology employed, rendering the issue to be a matter of law which can be decided by us upon review (see, Harrigan v Liberty Mut. Fire Ins. Co., 170 AD2d 930, 931), we find no basis upon which coverage should have been provided. As the "liability of an insurer cannot be extended beyond the express terms of the contract" ; ( Matter of New York Cent. Mut. Fire Ins. Co. v Prehoda, 231 AD2d 829, 830) and since plaintiff has failed to raise any triable issue to refute defendant's showing of its entitlement to summary judgment as a matter of law (see , Zuckerman v City of New York, 49 NY2d 557), we affirm.

Cardona, P.J., Mercure , Graffeo and Mugglin, JJ., concur.

ORDERED that the order is affirmed , with costs.

DIAZ v. WIGGINS

In an action to recover damages for personal injuries, the defendants Larry Wiggins and Isabel Castro appeal from an order of the Supreme Court, Richmond County (Cusick, J.), dated May 28, 1999, which denied their motion for summary judgment dismissing the complaint insofar as asserted against them.

ORDERED that the order is reversed, on the law, with costs, the motion is granted, the complaint is dismissed insofar as asserted against the appellants, and the action against the remaining defendants is severed .

The appellants established prima facie that the plaintiff did not suffer a serious injury within the meaning of Insurance Law § 5102(d) (see, Gaddy v Eyler, 79 NY2d 955, 956-957). The affidavit of the plaintiff's treating physician submitted in opposition to the motion failed to raise a triable issue of fact as to whether the plaintiff suffered a serious injury. The affidavit was deficient as a matter of law, inter alia, because the opinion expressed therein regarding a "significant limitation of use of a body function or system" ( Insurance Law § 5102[d]) was based upon an examination conducted over one year earlier rather than on a recent medical examination (see, Kosto v Bonelli, 255 AD2d 557; Gutierrez v Metropolitan Suburban Bus Auth., 240 AD2d 469; Attanasio v Lashley, 223 AD2d 614; Letellier v Walker, 222 AD2d 658), and upon the unsworn medical reports of another physician (see , Shay v Jerkins, 263 AD2d 475; Decayette v Kreger Trucking Renting, 260 AD2d 342; Ahmed v Yoo, 255 AD2d 345; Merisca v Alford, 243 AD2d 613; Williams v Hughes, 256 AD2d 461).

BRACKEN, J.P., JOY, THOMPSON, GOLDSTEIN and FEUERSTEIN , JJ., concur.

INSURANCE COMPANY OF EVANSTON v. MID-HUDSON CO-OPERATIVE INS. CO.

In an action, inter alia, for a judgment declaring that the defendant is obligated to share in the defense and/or indemnification of its named insureds, Fred and Dorothy Malizia , in an action entitled McGrath v Papacharalambous, pending in the Supreme Court, Sullivan County, under Index No. 1920-97, the plaintiff appeals from so much of an order of the Supreme Court, Orange County (Peter C. Patsalos, J.), dated March 30, 1999, as, in effect, denied its motion for summary judgment.

ORDERED that the order is modified by deleting the provision thereof, in effect , denying the defendant's cross motion for summary judgment, and adding thereto a provision, upon searching the record, granting the defendant's cross motion for summary judgment; as so modified, the order is affirmed insofar as appealed from, with costs, and the matter is remitted to the Supreme Court, Orange County, for the entry of a judgment declaring that the defendant has no obligation to share in the defense and/or indemnification of Fred and Dorothy Malizia in the action entitled McGrath v Papacharalambous, pending in the Supreme Court, Sullivan County, under Index No. 1920-97.

Fred and Dorothy Malizia leased their property to Cindy Papacharalambous for use as a daycare center. The plaintiff issued a commercial liability policy to Papacharalambous which named the Malizias as "additional insureds ". In 1994 Christopher McGrath, one of the children under the care of Papacharalambous at the daycare center, was injured, and he subsequently commenced a personal injury action against Papacharalambous and the Malizias. The plaintiff commenced this declaratory judgment action against the defendant, the Malizias' insurance carrier, seeking a declaration that it had a duty to share in the defense and indemnification of the Malizias. After the plaintiff settled the underlying personal injury action on behalf of Papacharalambous and the Malizias, it moved for summary judgment in this action, and the defendant cross-moved for summary judgment dismissing the complaint. The Supreme Court denied the motion and the cross motion.

Contrary to the plaintiff's contentions, the Supreme Court correctly denied its motion. It is well settled that "[a]n insurer has no right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered" ( Pennsylvania Gen. Ins. v Austin Powder Co., 68 NY2d 465, 468). Here, pursuant to the antisubrogation rule, the plaintiff cannot recover from its additional insureds through their insurer for their liability, if any, in connection with the underlying action (see, Maryland Cas. Co. v Nationwide Ins. Co., 262 AD2d 458; National Union Fire Ins. Co. of Pittsburgh, Pa. v State Ins. Fund, 213 AD2d 164).

On review of the denial of the plaintiff's motion for summary judgment, this court is empowered to search the record and may, if warranted, grant summary judgment to the defendant (see, CPLR 3212[b]; Peoples Sav. Bank of Yonkers, N.Y. v County Dollar Corp., 43 AD2d 327, affd 35 NY2d 836). Accordingly , for the reasons set forth above, the defendant is granted summary judgment dismissing the complaint and the matter is remitted for the entry of judgment in accordance herewith (see, Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

The parties' remaining contentions are without merit.

JOY, J.P., ALTMAN, GOLDSTEIN and H. MILLER , JJ., concur.

MATTER OF EAGLE INS. CO. v. McPHERSON

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, the petitioner appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (McCarty, J.) , dated June 3, 1999, as, upon reargument, adhered to a prior determination contained in an order of the same court dated February 25, 1999, denying the petition.

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

The Supreme Court properly denied the petition for a permanent stay of the uninsured motorist arbitration, as the petitioner failed to meet its initial burden of showing that the offending vehicle was insured on the date of the accident (see, Matter of Prudential Prop. & Cas. Ins. Co. v Campbell, 227 AD2d 628; Matter of Eagle Ins. Co. v Battershield, 225 AD2d 545).

MANGANO, P.J., SANTUCCI, KRAUSMAN, FLORIO and SCHMIDT, JJ., concur .

MATTER OF MERCHANTS MUTUAL INS. CO. v ANEMONE

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, Joseph Anemone appeals , as limited by his brief, from so much of an order of the Supreme Court, Kings County (G. Garson, J. ), dated February 24, 1999, as granted the petition to the extent of directing a hearing on the issue of whether there had been physical contact between the vehicle that he was driving and the alleged hit -and-run vehicle.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, the petition is denied, and the proceeding is dismissed.

Contrary to the petitioner's contention, the appellant's demand for arbitration complied with the statutory requirements of CPLR 7503(c). The issue of physical contact with the uninsured vehicle relates to whether certain conditions of coverage were satisfied. Therefore, the petitioner's application to stay arbitration should have been brought within the 20-day limitation period set forth in CPLR 7503(c) (see, Matter of Steck [State Farm Ins. Co.], 89 NY2d 1082; Matter of CNA Ins. Co. v Rosa, 253 AD2d 494; Matter of CNA Ins. Co. v Carsley, 243 AD2d 474). The proceeding was commenced more than four months after the demand was served , and thus, was untimely (see, Aetna Life & Cas. Co. v Stekardis, 34 NY2d 182, 185-186).

O'BRIEN, J.P., ALTMAN, FRIEDMANN , McGINITY and SMITH, JJ., concur.

CROSSLAND MORTGAGE CORP. v. DOUGLAS

Appeal from an order of the Supreme Court (Dawson, J.), entered February 11, 1999 in Essex County, which, inter alia, denied a cross motion by defendants William J. Douglas and Carolyn Decker for summary judgment dismissing the complaint against them.

Defendants William J. Douglas and Carolyn Decker (hereinafter collectively referred to as defendants) were the owners of real property in the Village of Ausable Forks, Essex County . Defendants gave plaintiff a first mortgage on the property to secure their note in the amount of $ 45,000. In February 1997, the house on the property was destroyed by fire. Alleging defendants' failure to make scheduled payments of principal and interest due from and after June 1, 1997, plaintiff thereafter brought this action to foreclose its mortgage. Following joinder of issue, plaintiff moved for summary judgment. Defendants cross-moved for summary judgment dismissing the complaint upon the ground that plaintiff's failure to seek payment under a fire insurance policy insuring its interest in the property constituted a complete defense and setoff against plaintiff's claim. Supreme Court granted plaintiff 's motion and denied defendants' cross motion. Defendants appeal.

We affirm. We reject defendants' contention that the availability of fire insurance proceeds is an affirmative defense to a foreclosure action. A mortgagee's interest under the standard mortgagee clause contained in a fire insurance policy (see, Insurance Law § 3404; Real Property Law §§ 254, 258) is coextensive with the debt secured by the mortgage ( see, Grady v Utica Mut. Ins. Co., 69 AD2d 668, 676-677; Moke Realty Corp. v Whitestone Sav. & Loan Assn., 82 Misc 2d 396, 398, affd 51 AD2d 1 005, affd 41 NY2d 954). Defendants have provided no New York authority for their novel position that plaintiff was required to pursue one of these coextensive interests before the other, and our research has disclosed none. Moreover, pursuant to the terms of the fire insurance policy, had plaintiff initially recovered from the fire insurance proceeds, the insurer would have been subrogated to the rights of plaintiff and thus able to bring a foreclosure proceeding itself (see, e.g., Krupp v Aetna Life & Cas. Co., 104 AD2d 857).

Peters, Spain, Carpinello and Graffeo, JJ., concur.

ORDERED that the order is affirmed, with costs.

MARTINELLI v. TRAVELERS PROPERTY CASUALTY INS. CO.

Appeal from an order of the Supreme Court (Caruso, J.), entered March 3, 1999 in Schenectady County, which, inter alia, denied plaintiff 's motion for partial summary judgment on the issue of liability.

On October 30, 19 97, while plaintiff was working as a mason at a construction site located in the Town of Rotterdam, Schenectady County, a cement truck owned and operated by defendant's insured arrived to unload cement . The driver of the cement truck connected two extensions to the chute attached to the truck and, using controls inside the truck, maneuvered the chute to pour the cement in the desired locations. Plaintiff sustained injuries while raking the cement delivered through the chute. According to plaintiff, as cement was being delivered, the chute swung and struck him in the back. On the other hand, the driver indicated that he paused the delivery of cement to allow plaintiff an opportunity to rake it and plaintiff backed into the stationary chute.

Defendant denied plaintiff's claim for no-fault insurance benefits on the ground that his injuries did not arise out of the use or operation of a motor vehicle . Plaintiff thereafter commenced this action for a declaratory judgment and/or damages for breach of the insurance contract. Following joinder of issue, plaintiff moved for partial summary judgment on the issue of liability. Supreme Court granted the motion to the extent of dismissing two of defendant 's affirmative defenses; however, the court concluded that a question of fact existed regarding plaintiff 's entitlement to no-fault benefits, resulting in this appeal.

No-fault insurance benefits are payable only if plaintiff's injuries arose out of the use or operation of the cement truck (see , Insurance Law § 5102 [b]; § 5103 [a] [1]). The Court of Appeals, in Walton v Lumbermen's Mut. Cas. Co. (88 NY2d 211, 216), stated:

A person engaged in loading or unloading the vehicle may be using it within the meaning of the statute, but that does not necessarily mean that his or her injuries arose out of the use of the vehicle. In such circumstances , if the injuries are caused by something other than the vehicle itself, the injuries cannot be said to have arisen out of the use of the vehicle * * *.

Significantly, "[t]he vehicle must be a proximate cause of the injury before the absolute liability imposed by the statute arises& quot; (id., at 215).

The fact that concrete may or may not have been pouring down the chute at the moment plaintiff was injured is irrelevant since it is undisputed that the unloading process was not completed. Regardless of whether plaintiff was injured when the chute moved and struck him or when he backed into it, the chute was the instrumentality which caused the injuries. The purpose of the cement truck was to deliver cement and the chute attached to the truck was essential to the unloading of the cement. Accordingly, we conclude that the chute as a part of the vehicle was a proximate cause of plaintiff's injuries. We further note that the fact the driver attached extensions to the chute does not convert the chute into something other than a part of the vehicle. There is nothing in the record to indicate that the extensions were anything other than normal equipment which accompanied the truck for use in unloading cement. The record establishes as a matter of law that plaintiff's injuries arose out of the use or operation of the cement truck and, therefore, Supreme Court erred in denying plaintiff's motion.

Mercure, Crew III, Peters and Mugglin, JJ., concur.

ORDERED that the order is modified, on the law, with costs to plaintiff, by reversing so much thereof as denied plaintiff's motion for partial summary judgment on the issue of liability; motion granted to the extent that it is declared that plaintiff's injuries arose out of the use or operation of the cement truck owned and operated by defendant's insured; and, as so modified, affirmed.