Coverage Pointers - Volume I, No. 24

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.

05/25/00: LEGION INS. CO. v. SINGH
New York State Supreme Court, Appellate Division, Third Department
Sex by Any Other Name is still Excluded

"Undue Familiarity" exclusion in professional liability policy excluded claims for "transference phenomenon" where psychologist claims that facts suggest patient fell in love with him and had sexual relations. That the pleading does not refer to sex is of no moment. The proper inquiry is whether, regardless of the actual words used by the drafter, the claim under consideration is so intertwined with the underlying sexual misconduct as to make the two inseparable. Applying that analysis leads to the inescapable conclusion that the cause of action fell squarely within the "undue familiarity" exclusion.


05/23/00: FORBES v. CITY OF NEW YORK
New York State Supreme Court, Appellate Division, First Department
Waiver of Subrogation Endorsement Inapplicable to Bar Third-Party Action

Subcontractor’s employee was injured on the job and commenced this action against the general contractor and others. The general contractor then commenced a third-party action against the subcontractor. The general contractor’s commercial general liability policy provided coverage to all subcontractors and contained an endorsement providing, "[w]e waive any right of recovery we may have against [the named insured] because of payments we make for injury or damages arising out of ‘your work’ done under a contract with that person or organization". The same policy excluded bodily injury to an employee of the insured arising out of and in the course of employment by the insured. The subcontractor was required to and did maintain its own worker's compensation coverage. The insurer disclaimed coverage to the subcontractor with respect to the third-party action. The parties acknowledged that the anti-subrogation rule did not bar the general contractor’s third-party complaint since the policy did not cover the general and subcontractor for the same risks arising out of plaintiff's accident. Moreover, the court held that the waiver of subrogation endorsement in the policy did not bar the claim. The waiver endorsement modified a subrogation clause in the policy whereby the insurer asserted subrogation rights to "any payment we have made under this Coverage Part". "[A] waiver of subrogation clause cannot be enforced beyond the scope of the specific context in which it appears". Here, the endorsement modifies the insurer's subrogation rights only to the extent such claims are covered under the policy. It was undisputed that the subcontractor was not covered by the policy with respect to its employee's injuries (the injuries were covered by the worker’s compensation policy). Therefore, the waiver endorsement was inapplicable to bar the third-party complaint.

05/23/00: TAGGART v. STATE FARM MUTUAL AUTO. INS. CO.
New York State Supreme Court, Appellate Division, First Department
Suit Commenced Eight Years after Denial of No-Fault Benefits Deemed Untimely

Defendant/insurer agreed to pay plaintiff no-fault medical benefits following a motorcycle accident with its insured. The insurer paid the medical bills for a period of time and later denied the claim because medical examinations indicated that plaintiff was no longer disabled. Plaintiff continued to submit bills after receipt of the denial notice, but did not commence this action challenging the insurer’s discontinuance of benefits until eight years later. The court held that the action was time-barred. Plaintiff had six years to challenge the denial of no-fault benefits and the statutory period was not extended because she continued to submit bills. The court also dismissed her causes of action alleging breaches of the policy issued to its insured because the plaintiff had no standing to sue the insurer for breach of the policy. Plaintiff was not the defendant’s insured.

05/22/00: FIDELITY NATIONAL TITLE INS. CO. OF NEW YORK v. CONSUMER HOME MORTGAGE, INC.
New York State Supreme Court, Appellate Division, Second Department
Loan Policies Insuring Mortgages Deemed Invalid and Unenforceable

Defendant was in the business of lending money for the purchase of residential homes with loans secured by mortgages. In 1996, defendant entered into mortgage commitments with several prospective buyers, agreeing to loan money secured by a note and mortgage. Prior to closing, the buyers obtained Loan Policies of Title Insurance from plaintiff for the benefit of defendant as mortgagee – the policies insured the validity and enforceability of the mortgage liens. Defendant also designated a law firm to act as settlement service provider and authorized the warehouse bank to wire interim loan funds into an escrow account held by the law firm. The law firm was authorized to supervise execution of loan documents at closing and to issue checks to the appropriate parties. The closings took place at the law firm’s offices, at which time the buyers received deeds to the properties and defendant received the notes and mortgages and the Loan Policies of Title Insurance. Shortly thereafter, the parties were notified that the checks drawn on the escrow account had been dishonored for insufficient funds. Plaintiff refused to record the mortgages for lack of consideration and moved for judgment declaring the rights of all parties and defendant moved for summary judgment declaring that the loan policies were valid and enforceable and covered the loss incurred. The court held that title insurance insures against loss regarding title to land, not the underlying debt. Moreover, where the underlying debt has not been satisfied, the mortgage it was meant to secure fails. Therefore, the court held that where there is no underlying debt, there is no mortgage, and that the loan policies purportedly insuring the mortgages were not valid and enforceable. Finally, coverage was properly denied because a provision of the loan policy expressly excluded coverage for any loss which the defendant "created, suffered, assumed or agreed to". Since defendant designated the law firm as its settlement service provider, and authorized the law firm to perform certain duties on its behalf, the law firm’s actions were properly imputed to defendant.

05/22/00: MATTER OF NATIONWIDE INS. CO. v. McDONNELL
New York State Supreme Court, Appellate Division, Second Department
SUM Arbitrator Lacks Authority to Determine Actual Contact with Hit-and-Run Vehicle

McDonnell alleged that decedent's vehicle was struck by a "hit-and-run" vehicle and demanded arbitration under the supplemental uninsured motorist (SUM) endorsement of decedent's policy with Nationwide. Nationwide moved to stay the arbitration contending there was no contact between the decedent's vehicle and the hit-and-run vehicle. In a previous decision, the court dismissed Nationwide's application to stay arbitration because it was not brought within the 20-day limitation period set forth in CPLR 7503(c). In a subsequent arbitration of the claim, the arbitrator determined that Nationwide could raise a "liability defense" based upon the issue of contact between the vehicles even though that issue had previously been waived as a "contractual coverage defense". After a hearing, the arbitrator dismissed the claim because McDonnell failed to establish that a hit-and-run vehicle struck the decedent’s vehicle. In this proceeding to confirm the arbitration award, the court vacated the award finding the arbitrator had exceeded his authority. Only a court, and not an arbitrator, may resolve the issue of whether there was actual contact with a hit-and-run vehicle and the arbitrator may not decide the issue "by creating an artificial distinction between contractual issues and liability issues."

05/18/00: FERBER v. FARM FAMILY CASUALTY INSURANCE CO.
New York State Supreme Court, Appellate Division, Third Department
Policy Cancellation Effective Despite Partial Premium Payments and History of Reinstatement

On August 9, 1996, insurer issued a partial payment notice reflecting that premium payments on the insured’s auto policy were past due. Thereafter, on August 26, 1996, the insurer issued a policy cancellation notice advising that the policy would be canceled effective 12:01 A.M. on September 16, 1996 unless the premium was paid on or before that date. In response to the notices, the insured issued two checks on August 21, 1996 and September 11, 1996 in partial payment of the premium. The insurer, in turn, generated two partial payment notices reiterating that full payment was due to avoid cancellation. Having received less than half of the premium actually due, the insurer canceled the policy on September 16, 1996. One week later, plaintiff forwarded another check to the insurer, which the insurer deposited and later reimbursed to plaintiff after computing the unearned premium on the cancelled policy. On September 26, 1996, plaintiff sustained serious injuries in a one-car accident while a passenger in a vehicle driven by his brother. In response to notification of the accident, the insurer advised that the policy had been cancelled and this action for a declaration that the policy was in effect on the date of the accident ensued. The court held that the policy had been cancelled. The court concluded that the cancellation notice dated August 26, 1996 plainly recited that the policy would be canceled if the total premium due was not paid on or before September 16, 1996, and the insured’s testimony revealed she fully understood that the policy would be canceled if she did not make the required payment by that date. The partial payment notices issued after the insured’s August 21, 1996 and September 11, 1996 payments made clear that the payments were insufficient to cover the amount due under the policy and specifically stated that coverage would be terminated on September 16, 1996 unless the full amount was received by that date. Moreover, although the insured’s history with the insurer included a series of policy cancellations and reinstatements beginning in 1989, that alone was insufficient to invoke equitable estoppel. The plain language of the policy cancellation and partial payment notices, together with the insured’s testimony, established there was no basis upon which the insured could establish a lack of knowledge that the policy would be cancelled. In addition, there was no evidence that the insurer, by words or actions following the cancellation notice on August 26, 1996, led the insured to believe that partial payment would be sufficient to keep the policy in force.

05/16/00: WALKER v. BETTS CAB CORP.
New York State Supreme Court, Appellate Division, First Department
Auto Injury Action Dismissed – Proof Insufficient to Establish "Serious Injury"

Plaintiff failed to establish a "serious injury", as required under Insurance Law §5102(d) to maintain a personal injury action arising out of a motor vehicle accident, because of substantial deficiencies in medical proof. Plaintiff’s medical evidence refuted her claims, was unsworn, and was conclusory and speculative in assessing causation. Plaintiff’s claims regarding curtailment of career and lifestyle were also unsupported by documentary evidence.

05/15/00: CHASE SCIENTIFIC RESEARCH, INC. v. NIA GROUP, INC.
New York State Supreme Court, Appellate Division, Second Department
Three-Year Statute of Limitations Applicable to Malpractice Action Against Insurance Broker

The court held that the three-year Statute of Limitations applicable to certain malpractice actions (CPLR 214(6)) applies to malpractice actions against insurance brokers (i.e., actions arising out of an alleged failure to procure appropriate insurance). In determining that such actions are not governed by the six-year period applicable to breach of contract actions, the court held that amendments to CPLR 214(6) in 1996, which provide that the three-year limitations applies to "an action to recover damages for malpractice . . . regardless of whether the underlying theory is based in contract or tort", reaffirmed the legislative intent that claims based on a failure to utilize reasonable care or negligence be governed by the three-year period. The court also concluded that malpractice actions against insurance brokers are recognized in New York and noted that the purpose of Insurance Law §2104(a)(1), which requires that brokers be licensed, is to protect the public by requiring and maintaining professional standards of conduct.

05/15/00: CUBERO v. DiMARCO
New York State Supreme Court, Appellate Division, Second Department
Chiropractor’s Unsworn Report Insufficient to Avert Summary Dismissal

The defendant moved for summary dismissal of this personal injury action on the ground that plaintiff did not sustain a "serious injury" under Insurance Law § 5102(d). Plaintiff submitted her chiropractor’s report with an unsworn statement, "I hereby affirm the truth of the foregoing". The court held that dismissal was proper. The chiropractor’s report did not constitute competent evidence because the chiropractor failed to appear before a notary or other official to formally declare the truth of the contents of the document.

05/15/00: DOLCE v. NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
New York State Supreme Court, Appellate Division, Second Department
Three-Year Statute of Limitations Governs Claims Based on Violations of Insurance Department Regulations


The court held that plaintiff’s claims that the insurer failed to comply with New York State Insurance Department Regulations concerning the sale of life insurance policies to replace existing coverage are governed by the three-year Statute of Limitations applicable to actions based on liability created by statute. This action, commenced more than three years after the policy was issued, was time-barred and dismissed accordingly.

05/15/00: MORSE DIESEL INTERNATIONAL v. CNA INS. COS.
New York State Supreme Court, Appellate Division, Second Department
Malpractice Action against Insurance Broker Accrues When Negligent Act Occurred, Not from Date of Disclaimer

Plaintiff’s employee commenced an underlying negligence action against a subcontractor for personal injuries following an accident at a construction site. The subcontractor later commenced a third-party action against the general contractor. The subcontractor was insured by CNA and was contractually obligated to include the plaintiff as an additional insured on its policy, but did not. Plaintiff commenced this action for damages against the insurance brokers for negligently failing to have it named as an additional insured on the policy. The court held that plaintiff’s action against the insurance brokers was time-barred under CPLR 214(6) because it was not commenced within three years of the date that the brokers failed to have plaintiff named an additional insured. The action accrues when the negligent acts occurred, not when CNA disclaimed coverage.

ACROSS BORDERS

From time to time we highlight significant cases of interest from other jurisdictions. This week we offer a decision from California:

05/23/00: RINGLER ASSOC. INC. v. MARYLAND CASUALTY CO.
California Court of Appeal, First Appellate District, Division Three
"First Publications" Exclusion Bars Coverage for Republication of "Substantially the Same Material" First Published Before Policy Effective

The plaintiffs in this coverage action were insured under a CGL policy which contained coverage for "personal injury", defined in the policy to include defamation. The policy excluded coverage for publication of material that first occurred prior to the inception of the policy period (the so-called "first publications" exclusion). The insured was sued for defamation and the carrier defended under a reservation of rights. Discovery revealed that the insured first published its defamatory remarks prior to the inception of the policy and the carrier withdrew from the defense; the insured sued for bad faith. The trial court granted the carrier’s summary judgment motion, ruling that the exclusion applied. The court of appeal affirmed. The issue was whether the exclusion applies only to identical reproductions during the policy period of identical material by the same person, or whether it applies to the substance of the defamatory material without regard to whether it was stated in the same words. The court adopted the latter approach, holding that the exclusion bars coverage as to any defamatory material whenever the first publication of "substantially the same material" occurred prior to the inception of the policy without regard to whether the same words were used. Limiting the scope of the exclusion to verbatim reproductions of words and phrases would render the exclusion meaningless.
[Our thanks to the Los Angeles firm of Murchison and Cumming for this summary]

AND IN DEFENSE . . .

We periodically include selected New York cases bearing on the defense of tort actions.

05/25/00: SANTIAGO v. BRISTOL

New York State Supreme Court, Appellate Division, Fourth Department

New York Continues Ban on Cameras in Courtroom -- Media Cannot Intervene

In the context of a criminal case, the Appellate Division, Fourth Department, dismissed a petition on behalf of various media sources to intervene in a criminal case in order to seek access to the courtroom to broadcast the trial. The statute allowing cameras in the courtroom expired and has not been re-enacted the Legislature. The media’s challenge on constitutional grounds was rejected – while there is a right to access, there is no constitutional right to broadcast trials. Moreover, Civil Rights Law §52 and the Rules of the Chief Judge prohibit it.

05/14/00: IBARRA v. EQUIPMENT CONTROL, INC
New York State Supreme Court, Appellate Division, Second Department
Workers’ Compensation Amendment Barring Common Law Contribution and Indemnification Claims against Plaintiff’s Employer Applies to Actions Commenced After Effective Date Irrespective of Date of Injury; Blindness in One Eye not "Grave Injury"

The court was required to determine whether the 1996 amendment to Workers' Compensation Law §11 (effective September 10, 1996) was applicable to the common-law contribution and indemnification claims asserted in a third-party action against plaintiff’s employer and involving work-related injuries suffered by its employee prior to the effective date of the amendment. The amendment bars any claim by a third party against an employer for contribution or indemnity for injuries sustained by an employee acting within the scope of employment unless the third party proves that the employee sustained a "grave injury". First, the court held that the amendment is applicable where the main action was commenced after the amendment’s effective date. The Court of Appeals previously rejected the argument that the amended statute should not be applied where the employee is injured before its effective date because, "irrespective of the date of the accident, a prospective application of the subject legislation to actions by employees for on-the-job injuries against third parties filed after the effective date of the relevant provisions is eminently consistent with the over-all and specific legislative goals behind passage of the Act". The court also held that the burden falls on the third party seeking contribution or indemnification to establish a "grave injury". In the context of a summary judgment motion, the third party opposing the motion for summary judgment must, at the very least, demonstrate the existence of a question of fact in this regard. Here, allegations of permanent blindness in plaintiff’s right eye did not constitute a "grave injury" under the statute. The term "grave injury" includes only those injuries that are listed in the statute and determined to be permanent. It means only: "death, permanent and total loss of use or amputation of an arm, leg, hand or foot, loss of multiple fingers, loss of multiple toes, paraplegia or quadriplegia, total and permanent blindness, total and permanent deafness, loss of nose, loss of ear, permanent and severe facial disfigurement, loss of an index finger or an acquired injury to the brain caused by an external physical force resulting in permanent total disability". "[L]oss of use and function of the right eye", "loss of vision in the right eye", and "[c]hronic and continual pain, dryness, and loss of vision in the right eye" are not listed in the amended statute and, while "total and permanent blindness" is listed, the plaintiff's loss of vision in only one eye, even if total, does not constitute "total and permanent blindness". The statute must be construed to mean blindness in both eyes.

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REPORTED DECISIONS

IBARRA v. EQUIPMENT CONTROL, INC.

SULLIVAN, J.P.

On the instant appeal, we must determine whether the 1996 amendment to § 11 of the Workers' Compensation Law, which became effective on September 10, 1996, is applicable to the common-law contribution and indemnification claims asserted against Atlantic Waste Disposal, Inc. (hereinafter Atlantic), and involving work-related injuries suffered by an employee of Atlantic prior to the effective date of the amendment. If applicable, we must also determine whether pursuant to that statute, as amended, which restricts common-law contribution and indemnity claims against employers to cases involving "grave" injuries, Atlantic is entitled to summary judgment dismissing those claims.

On July 5, 1996, the plaintiff Roman Ibarra (hereinafter the plaintiff), an employee of Atlantic, was injured, during the course of his employment, by a bailing machine manufactured by Equipment Control, Inc. (hereinafter Equipment). As a result, the plaintiff interposed a Workers' Compensation claim. On March 3, 1997, the plaintiff commenced this action asserting negligence, strict product liability, and breach of warranty claims against Equipment. Thereafter, on April 25, 1997, Equipment commenced a third-party action against Atlantic and Empire State Recycling Corporation (hereinafter Empire), the distributor of the bailing machine, for common-law contribution and indemnification. In turn, Empire asserted a cross claim for contribution and indemnification against Atlantic. However, as an affirmative defense, Atlantic asserted that, pursuant to Workers' Compensation Law § 11, as amended, it could not be held liable for contribution or indemnification.

In moving for summary judgment, Atlantic also argued that pursuant to Workers' Compensation Law § 11, as amended, which it claimed was applicable to this case where both the main action and the third-party action were commenced after its effective date, it could not be held to answer for contribution or indemnification. Specifically, it argued that the amended statute now restricted its liability for common-law contribution and indemnification to cases involving a "grave injury", as that term is narrowly defined in the statute. In support of its contention that the plaintiff did not suffer a "grave injury", Atlantic attached to its motion the plaintiff's bill of particulars.

In opposing Atlantic's motion, however, Equipment and Empire maintained that Workers' Compensation Law § 11, as amended, was not applicable here since the plaintiff's accident predated its effective date. Moreover, they argued that even if the amended statute were applicable, Atlantic was not entitled to summary judgment inasmuch as there were triable issues of fact as to whether the plaintiff's injuries were "grave".

The Supreme Court denied Atlantic's motion for summary judgment without reaching the question of whether Workers' Compensation Law § 11, as amended, was applicable. In short, it concluded that since the plaintiff had indeed suffered a "grave" injury, Atlantic remained liable for contribution even if Workers' Compensation Law § 11, as amended, applied. We reverse.

Section 2 of the Omnibus Workers' Compensation Reform Act (hereinafter the Act), enacted on September 10, 1996, amended Workers' Compensation Law § 11 (see, L 1996, ch 635, § 2) by restricting third-party contribution claims against employers. Prior to the amendment, pursuant to Dole v Dow Chem. Co. (30 NY2d 143), those claims were permitted even though direct actions against employers were barred by the exclusivity provisions of the Workers' Compensation Law (see, Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577; see also, Kline v E.I. DuPont De Nemours & Co., 15 F Supp 2d 299). The Act was said to "[restore] the 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" (Governor's Mem approving L 1996, ch 635, 1996 McKinney's Session Laws of NY, at 1912-1913). Workers' Compensation Law § 11, as amended, reads, in pertinent part, as follows:

"An employer shall not be liable for contribution or indemnity to any third person based upon liability for injuries sustained by an employee acting within the scope of his or her employment for such employer unless such third person proves through competent medical evidence that such employee has sustained a 'grave injury' which shall mean only one or more of the following: death, permanent and total loss of use or amputation of an arm, leg, hand or foot, loss of multiple fingers, loss of multiple toes, paraplegia or quadriplegia, total and permanent blindness, total and permanent deafness, loss of nose, loss of ear, permanent and severe facial disfigurement, loss of an index finger or an acquired injury to the brain caused by an external physical force resulting in permanent total disability".

We initially find that Workers' Compensation Law § 11, as amended, is applicable in this case where the main action, that is, the plaintiff's action against Equipment, was commenced after its effective date. In Majewski v Broadalbin-Perth Cent. School Dist. (91 NY2d 577, supra), the Court of Appeals held that the amended statute is to be applied prospectively to cases in which the main action is instituted after September 10, 1996 (see, Smith v Xaverian High School, AD2d [2d Dept., Mar. 6, 2000]; Browning v County Fence Co., 259 AD2d 578; Esposito v Bob Iko Excavation, 258 AD2d 555).

Importantly, in Majewski, the Court of Appeals specifically rejected Equipment's present claim that the amended statute should not be applied where, as here, the employee plaintiff is injured before its effective date. The Court of Appeals concluded that "irrespective of the date of the accident, a prospective application of the subject legislation to actions by employees for on-the-job injuries against third parties filed after the effective date of the relevant provisions is eminently consistent with the over-all and specific legislative goals behind passage of the Act". Further, Equipment's argument that the Court of Appeals' phrase "irrespective of the date of the accident" is mere dicta which should not be followed is not persuasive (see, Hilbert v Sahlen Packing Co., AD2d [4th Dept., Dec. 30, 1999]; Bartek v Murphy, AD2d [4th Dept., Nov. 12, 1999]; Bach v Millard Fillmore Health Sys., 179 Misc 2d 101; see also, Kline v E.I. DuPont, 15 F Supp 2d 299).

We also find that pursuant to Workers' Compensation Law § 11, as amended, Atlantic is entitled to summary judgment. We disagree with Equipment's argument that Atlantic had the initial burden of showing, by evidentiary proof, that the plaintiff did not suffer a "grave injury", and that since Atlantic failed to do so, the burden of proof did not shift to Equipment or Empire to demonstrate the existence of a "grave injury".

The Legislature, in amending Workers' Compensation Law § 11, specifically determined that an employer will not be held liable for contribution or indemnification to any third person "unless such third person proves through competent medical evidence that such employee has sustained a 'grave injury'". Thus, it is clear that the burden falls on the third party seeking contribution or indemnification against an employer to establish a "grave injury". Admittedly, as Equipment correctly notes, a party seeking summary judgment must initially show a lack of triable issues of fact and it is only then that the burden shifts to the party opposing the motion. However, in cases involving Workers' Compensation Law § 11, as amended, the third party opposing the motion for summary judgment and seeking contribution or indemnification against an employer bears the ultimate burden of showing a "grave injury". At the very least, it must demonstrate the existence of a question of fact in this regard. This burden is not dependent on whether the party moving for summary judgment made a sufficient prima facie case as to the absence of a "grave injury". To the extent that Harris v Metropolitan Life Ins. Co. ( Misc 2d [S Ct, New York Co., Feb. 1, 2000]) holds otherwise, we find it unpersuasive.

Indeed, we note that generally, a third-party plaintiff such as Equipment is in possession of medical evidence disclosed in connection with the main action asserted against it. Moreover, in cases where medical evidence has not yet been obtained, this would only serve as a basis for the denial of an employer's motion for summary judgment with leave to renew.

Accordingly, the burden fell on Equipment and Empire to demonstrate a "grave injury" justifying their contribution and indemnification claims against Atlantic. They failed to meet this burden.

The term "grave injury" has been defined as a "statutorily defined threshold for catastrophic injuries" (Kerr v Black Clawson Co., 241 AD2d 686), and includes only those injuries which are listed in the statute and determined to be permanent (see, Minkowitz, Supp Practice Commentaries, McKinney's Cons Laws of NY, Book 64, Workers' Compensation Law § 11, 2000 Pocket Part, at 46-47). The list "is exhaustive, not illustrative" (Governor's Mem approving L 1996, ch 635, 1996 McKinney's Session Laws of NY, at 1913).

The plaintiff's bill of particulars states the plaintiff's injuries to be "loss of use and function of the right eye", "loss of vision in the right eye", and "[c]hronic and continual pain, dryness, and loss of vision in the right eye". These injuries are not listed in the amended statute. While Workers' Compensation Law § 11, as amended, does list "total and permanent blindness", the plaintiff's loss of vision in only one eye, even if total, does not constitute "total and permanent blindness". In short, the phrase must be construed to mean blindness in both eyes. This conclusion is supported by the fact that the statute also lists "total loss of use or amputation of an arm, leg, hand or foot". Therefore, had the Legislature intended to include loss of vision in only one eye, it would have so stated.

In conclusion, Atlantic is entitled to summary judgment dismissing all claims and cross claims asserted against it. Pursuant to Workers' Compensation Law § 11, as amended, the plaintiff did not, as a matter of law, suffer a "grave injury" (see, Hilbert v Sahlen Packing Co., supra; see also, Brownstein v LeCroy Corp., 178 Misc 2d 197). Therefore, the order is reversed, on the law, Atlantic's motion is granted, the third-party complaint and all cross claims are dismissed insofar as asserted against Atlantic, and the third-party action against the remaining third-party defendant is severed.

LUCIANO, H. MILLER and FEUERSTEIN, JJ., concur.

ORDERED that the order is reversed, on the law, with costs, the motion is granted, the third-party complaint and all cross claims are dismissed insofar as asserted against the appellant, and the third-party action against the remaining third-party defendant is severed.

CHASE SCIENTIFIC RESEARCH, INC. v. NIA GROUP, INC.

FRIEDMANN, J.

On the instant appeal, we must determine whether the three-year Statute of Limitations set forth in CPLR 214(6), as amended in 1996 (L 1996, ch 623, § 1), which governs certain malpractice actions, applies to bar the instant action against insurance brokers to recover damages arising out of their alleged failure to procure appropriate insurance for their client, or whether the action is governed by the six-year Statute of Limitations applicable to breach of contract actions (see, CPLR 213). Stated differently, we must determine whether insurance brokers are capable of committing

malpractice within the meaning of CPLR 214(6). We hold that insurance brokers are capable of committing malpractice and, therefore, that the instant action is governed by the three-year Statute of Limitations set forth in CPLR 214(6).

In May 1995, the plaintiff Chase Scientific Research, Inc. (hereinafter Chase), retained the defendant insurance brokers to obtain commercial property insurance for its business. On May 31, 1995, the defendants procured such a policy for Chase. In or about January 1996, while that policy was in effect, a storm damaged Chase's warehouse, causing Chase to suffer a loss. Chase filed a claim with its insurance carriers, which acknowledged that the incident was a "covered occurrence" under the policy. Although Chase demanded the policy limits ($550,000) on claimed losses of over $1,000,000, its insurance carriers offered only $50,000. Chase eventually settled an action which it brought against its insurance carriers for $275,000.

On January 7, 1999, Chase commenced the instant action against the defendants, alleging, in relevant part, that the insurance policy which the defendants had procured for it had been inappropriate to its particular business and property. The complaint asserted two causes of action sounding in negligence and breach of contract, alleging that the defendants failed to recognize the nature of Chase's business and products; that they failed to secure an adequate appraisal of its property; that they had failed to procure an insurance policy which would fully indemnify it in the event of a loss; and that they failed to properly administrate its claim.

The defendants moved to dismiss the action as time-barred, asserting that the three-year Statute of Limitations applicable to certain malpractice actions (CPLR 214[6]) governed, and that the Statute of Limitations accrued when they procured the policy in May 1995. In opposition to the defendants' motion, Chase argued that the six-year Statute of Limitations applicable to contract actions (CPLR 213) applied, and that the Statute of Limitations began to run on January 19, 1996, the date of its loss. By order entered May 13, 1999, the Supreme Court, Westchester County, granted the defendants' motion to dismiss. The court concluded that the action was time-barred because (1) Chase's action sounded in malpractice and, therefore, was subject to the three-year Statute of Limitations of CPLR 214(6), as amended in 1996, and (2) the action accrued in May 1995, when the defendants procured the subject insurance policy. On June 16, 1999, a judgment dismissing the complaint was entered upon that order.

Prior to September 4, 1996, CPLR 214 provided, in relevant part, as follows:

"The following actions must be commenced within three years:

* * *

"6. an action to recover damages for malpractice, other than medical, dental or podiatric malpractice".

In Sears, Roebuck & Co. v Enco Assoc. (43 NY2d 389), the Court of Appeals held that the six-year Statute of Limitations (CPLR 213[2]) applied to what was essentially a claim to recover damages for professional malpractice against an architect. The court reasoned that the six-year Statute of Limitations applied because the action "arose out of the contractual relationship of the parties" and "all liability alleged in this complaint had its genesis in the contractual relationship of the parties" (Sears, Roebuck & Co. v Enco Assoc., supra, at 396). However, because the plaintiff in that action had not commenced the action within three years after the accrual of its claims, the court also held that the damages which the plaintiff could recover were limited to those recoverable for breach of contract, and not damages recoverable in tort (Sears, Roebuck & Co. v Enco Assoc., supra, at 396-397). Finally, the court also distinguished between actions for personal injury, to which the three-year Statute of Limitations applied, and "actions for damages to property or pecuniary interest only" (Sears, Roebuck & Co. v Enco Assoc., supra, at 395). Later, the Court of Appeals clarified its holding, stating that "an action for failure to exercise due care in the performance of a contract insofar as it seeks recovery for damages to property or pecuniary interests recoverable in a contract action is governed by the six-year contract Statute of Limitations" (Video Corp. of Amer. v Flatto Assoc., 58 NY2d 1026, 1028).

Subsequent cases applied the holding of the Court of Appeals in Sears, Roebuck & Co. v Enco Assoc. (supra) to a variety of professions and claims. For example, Video Corp. of Amer. v Flatto Assoc. (supra) was an action against an insurance broker for "failure to procure full and adequate insurance coverage" (Video Corp. of Amer. v Flatto Assoc., supra, at 1027; see also, National Life Ins. Co. v Hall & Co. of N.Y., 67 NY2d 1021). It was also applied, inter alia, to malpractice actions against attorneys (see, Santulli v Englert, Reilly & McHugh, 78 NY2d 700; Sinopoli v Cocozza, 105 AD2d 743) and accountants (see, Spingold Found. v Wallin, Simon, Black & Co., 184 AD2d 464).

Effective September 4, 1996, however, the Legislature amended CPLR 214(6) to provide that the three-year Statute of Limitations applies to:

"an action to recover damages for malpractice, other than medical, dental or podiatric malpractice, regardless of whether the underlying theory is based in contract or tort"(emphasis added).

The Legislature indicated that this amendment was necessary because the courts had "expanded the statute of limitations, in cases where the essential actions complained of consist of malpractice, to six years under breach of contract theory, thereby abrogating and circumventing the original legislative intent". Thus, the amendment served "to reaffirm the legislative intent that where the underlying complaint is one which essentially claims that there was a failure to utilize reasonable care or where acts of omission or negligence are alleged or claimed, the statute of limitations shall either be three years if the case comes within the purview of CPLR Section 214(6), or two and one-half years if it comes within the purview of CPLR Section 214-a, regardless of whether the theory is based in tort or breach of contract" (Mem of Assembly, Bill Jacket, L 1996, ch 623, 1996 NY Legis Ann, at 7590). Thus, the Legislature made it clear that any malpractice action which does not come within the purview of CPLR 214-a is governed by a three-year Statute of Limitations.

We hold that CPLR 214(6), as amended, applies to malpractice actions against insurance brokers. The Court of Appeals previously recognized the existence of an "action against an insurance broker for malpractice in the performance of contractual obligations" (National Life Ins. Co. v Hall & Co. of N.Y., 67 NY2d, supra, at 1021, 1023). This court has also recognized the existence of such a cause of action (see, Sung v Kyung Ip Hong, 254 AD2d 271; Electronic Servs. Intl. v Silvers, 233 AD2d 361). Additionally, this court has recently applied CPLR 214(6), as amended, to bar a malpractice claim against a real estate appraiser (see, Early v Rossback, 262 AD2d 601). There is no reason why the three-year Statute of Limitations should apply to a malpractice action against a real estate appraiser, but not to such an action against an insurance broker (cf., Santiago v 1370 Broadway Assocs., 264 AD2d 624; 20 Clarke Place Realty Corp. v Rudges & Co., AD2d [1st Dept., Dec. 21, 1999]; Teletdi v A.M.R. Servs. Corp., NYLJ, Feb. 14, 2000, at 36, col 2; US Dist Ct, ED NY, Dearie, J.). In connection with this, we note that the purpose of Insurance Law § 2104(a)(1), which requires that a broker be licensed, "is to protect the public by requiring and maintaining professional standards of conduct on the part of all insurance brokers acting as such within this state" (Insurance Law § 2104[a][2] [emphasis supplied]).

We also note that in the instant case, the Supreme Court correctly determined that Chase's cause of action against the defendants accrued in May 1995, when the defendants procured the allegedly inadequate policy (see, Ackerman v Price Waterhouse, 84 NY2d 535, 541), and the three-year Statute of Limitations expired before Chase commenced the instant action on January 7, 1999. In connection with this, we note that CPLR 214(6), as amended, has been applied to claims which, as here, accrued before the effective date of the amendment, but had not yet been interposed as of the effective date of the amendment. Under such circumstances, a plaintiff has a reasonable time from the effective date of the amendment (September 4, 1996) to interpose a claim (see, Early v Rossback, supra; Ruggeri v Menicucci, 262 AD2d 391). In the instant case, Chase commenced the instant action more than two years after the effective date of the amendment to CPLR 214(6). This was not within a reasonable time (see, Early v Rossback, supra; Ruggeri v Menicucci, supra).

The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see, Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from the order are brought up for review and have been considered on the appeal from the judgment (see, CPLR 5501[a][1]).

Accordingly, the appeal from the order is dismissed, and the judgment is affirmed.

BRACKEN, J.P., SANTUCCI, ALTMAN and H. MILLER, JJ., concur.

ORDERED that the appeal from the order is dismissed; and it is further,

ORDERED that the judgment is affirmed; and it is further,

ORDERED that the respondents are awarded one bill of costs.

WALKER v. BETTS CAB CORP.

Order, Supreme Court , New York County (Lorraine Miller, J.), entered February 19, 1999, which denied defendants’ motion for summary judgment in this "serious injury" case, unanimously reversed, on the law, without costs , the motion granted and the complaint dismissed. The Clerk is directed to enter judgment in favor of defendants-appellants dismissing the complaint.

Defendants’ motion for summary judgment should have been granted since they demonstrated, as a matter of law, that plaintiff did not suffer a " serious injury" pursuant to Insurance Law 5102[d], and plaintiff failed to present sufficient competent medical evidence to establish such injury or to raise any triable issue of fact (see, Eisen v Walter & Samuels, 215 AD2d 149). Defendants properly relied on the substantial deficiencies in plaintiff’s proof as the principal support for their motion (see, Torres v Micheletti , 208 AD2d 519). Plaintiff’s medical evidence in various instances refuted her claims, was unsworn , and was conclusory or speculative in assessing causation for the alleged injuries. Moreover, plaintiff ’s claims with regard to curtailment of her career and lifestyle were unsupported by documentary evidence and were refuted by the uncontroverted record. Far from demonstrating serious injury, the record shows that she required only brief emergency room treatment immediately after the accident, that she returned to work full time one week after the accident, that it was not until one year after the accident, and four months after she quit her job, that she first sought additional evaluation and treatment, and that subsequent to that cycle of treatments, which her doctor at the time deemed successful, she did not seek treatment for an additional nine years.

CUBERO v. DiMARCO

In an action to recover damages for personal injuries, the plaintiff appeals from (1) an order of the Supreme Court, Queens County (Milano, J.), dated July 6, 1999, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff failed to sustain a serious injury within the meaning of Insurance Law § ; 5102, and (2) a judgment of the same court, dated September 10, 1999, which dismissed the complaint . The notice of appeal from the order is also deemed to be a notice of appeal from the judgment (see , CPLR 5501[c]).

ORDERED that the appeal from the order is dismissed; and it is further ,

ORDERED that the judgment is affirmed; and it is further,

ORDERED that the respondent is awarded one bill of costs.

The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see, Matter of Aho, 39 NY2d 241, 248). The issues raised on appeal from the order are brought up for review and have been considered on the appeal from the judgment (see , CPLR 5501[a][1]).

The defendant's motion papers established a prima facie case for summary judgment (see, Licari v Elliott, 57 NY2d 230). In opposition to the motion, the plaintiff submitted a report prepared by a chiropractor. Although the chiropractor's report stated "I hereby affirm the truth of the foregoing", the chiropractor failed to appear before a notary or other such official to formally declare the truth of the contents of the document. Accordingly, the chiropractor's report did not constitute competent evidence (see, CPLR 2106; Doumanis v Conzo, 265 AD2d 296), and the defendant 's motion for summary judgment dismissing the complaint was properly granted.

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

DOLCE v. NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

In an action, inter alia, to recover damages for fraud and misrepresentation in the replacement of an insurance policy, the plaintiff appeals from so much of an order of the Supreme Court, Westchester County (Nicolai, J.), entered May 14, 1999, as granted the respective motions of the defendants Northwestern Mutual Life Insurance Company and Robert P. Flanagan for summary judgment dismissing the complaint insofar as asserted against them.

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

The plaintiff's claims that the defendants Northwestern Mutual Life Insurance Company (hereinafter Northwestern) and Robert P. Flanagan failed to comply with the regulations of the New York State Insurance Department concerning the sale of new life insurance policies to replace existing coverage are governed by the three-year Statute of Limitations applicable to actions seeking to recover damages for a liability created by statute (see, CPLR 214[2]; Goldberg v Manufacturers Life Ins. Co., 242 AD2d 175, 181; see also, Buccino v Continental Assur. Co., 578 F Supp 1518, 1526). Since this action was commenced more than three years after Northwestern's policy was issued, the plaintiff's causes of action to recover damages for violations of Insurance Law §§ 2123, 4226 and 11 NYCRR part 51 are time-barred (see, Goldberg v Manufacturers Life Ins. Co., supra).

The plaintiff's remaining contentions are without merit.

GOLDSTEIN, J.P., FLORIO , FEUERSTEIN and SCHMIDT, JJ., concur.

MORSE DIESEL INTERNATIONAL v. CNA INSURANCE COMPANIES

In an action, inter alia, for a judgment declaring that the defendant CNA Insurance Companies is required to defend and indemnify the plaintiff in an action entitled Kowalski v Fortunato Sons, pending in the Supreme Court, Suffolk County , under Index No. 96/4768, and to recover damages for negligence, the defendant Allied Coverage Corp. appeals from so much of an order of the Supreme Court, Suffolk County (Underwood, J.), dated January 22, 1999, as denied its motion for summary judgment dismissing the complaint and cross claims insofar as asserted against it, and the defendant A.J. Bonocore Agency, Inc., separately appeals from so much of the same order as denied its cross motion for summary judgment dismissing the complaint and cross claims insofar as asserted against it.

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

Morse Diesel International (hereinafter Morse Diesel) commenced this action against CNA Insurance Companies (hereinafter CNA), A.J. Bonocore Agency, Inc. (hereinafter Bonocore ), Allied Coverage Corp. (hereinafter Allied), and Fortunato Sons, Inc. (hereinafter Fortunato), in October 1997, inter alia, for a judgment declaring that CNA was required to defend and indemnify it in a personal injury action commenced by its employee, Michael Kowalski. Morse Diesel also sought to recover damages from the appellants, Bonocore and Allied, which are insurance brokers, on the ground that they negligently failed to have it named as an additional insured on the policy issued by CNA to Fortunato. The personal injury action involved an accident at a construction site where Kowalski was working on January 6, 19 94. Kowalski's complaint alleged that Fortunato, a subcontractor on the site, was negligent. Fortunato commenced a third-party action against Morse Diesel in February 1997. CNA issued a liability policy to Fortunato that was in effect on the date of the accident, and Fortunato was contractually obligated to have Morse Diesel named as an additional insured on the policy. However, CNA disclaimed coverage of Morse Diesel in June 1997, on the ground that Morse Diesel was not named as an additional insured on the policy issued by CNA to Fortunato. The appellants moved to dismiss the complaint and cross claims insofar as asserted against them, inter alia, on the ground that the cause of action against them was barred by the Statute of Limitations.

The three-year Statute of Limitations in CPLR 214(6), applies to a malpractice claim against an insurance broker (see, Chase Scientific Research v NIA Group, AD2d [decided herewith]). Contrary to the contention of Morse Diesel, the cause of action against the appellants accrued when the allegedly negligent acts or omissions occurred, that is, when the appellants failed to have Morse Diesel named as an additional insured prior to the accident on January 6, 1994, not when CNA disclaimed coverage in June 1997 (see, National Life Ins. Co. v Hall & Co. of N.Y., 67 NY2d 1021; Video Corp. of Amer. v Flatto Assoc. 85 AD2d 448, mod on other grounds 58 NY2d 1026; see also, Chase Scientific Research v NIA Group, supra). The three-year Statute of Limitations therefore had expired when the action was commenced.

We note that because the cause of action accrued before the effective date of the amendment to CPLR 214( 6) (September 4, 1996), but the action was not commenced until after the effective date of the amendment , although it was within the former six-year Statute of Limitations, the issue is whether the action was commenced within a reasonable time after the September 4, 1996, effective date (see, Chase Scientific Research v NIA Group, supra; Early v Rossback, 262 AD2d 601; Ruggeri v Menicucci, 262 AD2d 547; Lefkowitz v Preminger, 261 AD2d 447). We conclude that the commencement of the action approximately one year after the effective date of the amendment was not reasonable (see, Ruggeri v Menicucci, supra). Morse Diesel could have discovered that it had not been provided with the requested coverage by requesting a copy of the policy. Accordingly, the cause of action against the appellants should have been dismissed.

In view of our determination, we do not reach the appellants' remaining contentions .

O'BRIEN, J.P., FRIEDMANN, FLORIO, and H. MILLER, JJ., concur.

FERBER v. FARM FAMILY CASUALTY INSURANCE CO.

Crew III, J.

Appeal from an order of the Supreme Court (Meddaugh, J.), entered March 3, 1999 in Sullivan County, which, inter alia, granted defendants' motion for summary judgment dismissing the complaint.

The underlying action has its genesis in an automobile insurance policy issued by defendant Farm Family Casualty Insurance Company through its agent, defendant Harold E. Russell , to plaintiff Janice Ferber and her spouse. On August 9, 1996, Farm Family issued a partial payment notice reflecting that the premium payments, which were billed under the policy on an installment basis , were past due. Thereafter, on August 26, 1996, Farm Family issued a policy cancellation notice advising that the automobile insurance policy would be canceled effective 12:01 A.M. on September 16, 1996 unless the premium due in the amount of $862.25 was paid on or before that date. In response to these notices , Ferber issued two checks on August 21, 1996 and September 11, 1996 for $150 and $200, respectively . Farm Family, in turn, generated two partial payment notices reiterating that full payment was due in order to avoid cancellation. Having received less than half of the premium actually due, Farm Family canceled the subject insurance policy on September 16, 1996. One week later, on September 23, 1996, Ferber forwarded another check to Farm Family in the amount of $200, which Farm Family deposited and later reimbursed to Ferber after computing the unearned premium on the canceled policy.

Shortly thereafter, on September 26, 1996, plaintiff Nathaniel Ferber (hereinafter the infant) allegedly sustained various injuries as the result of a one-car accident. At the time of the accident, the infant was riding as a passenger in a vehicle operated by his brother and formerly insured by Farm Family. The following day, Ferber's eldest son notified Farm Family of the subject accident and was advised that the automobile insurance policy in question had been canceled on September 16, 1996 due to nonpayment of premiums.

The infant and Ferber, individually and as the infant's parent and guardian , thereafter commenced this action seeking, inter alia, a declaration that the automobile insurance policy was in full force and effect on the date of the accident. Following joinder of issue and discovery , defendants moved for summary judgment dismissing the complaint and plaintiffs cross-moved for summary judgment. Supreme Court granted defendants' motion and denied plaintiffs' cross motion, prompting this appeal.

We affirm. As a starting point, plaintiffs' assertion that the various notices issued by Farm Family during August 1996 and September 1996 were ambiguous is belied by both the text of the subject notices and Ferber's examination before trial testimony. The policy cancellation notice dated August 26, 1996 plainly recited that the policy would be canceled if the total premium due ($ 862.25) was not paid on or before September 16, 1996, and even a cursory review of Ferber's examination before trial testimony reveals that she fully understood that the policy indeed would be canceled if she did not make the required payment by that date. The partial payment notices generated following Ferber's August 21, 1996 and September 11, 1996 payments made clear that such payments were insufficient to cover the amount due and owing under the policy and specifically stated that coverage would be terminated on the date shown on the nonpayment notice of cancellation unless the full amount shown thereon as due ($862.25) was received by Farm Family by the cancellation effective date, i.e., September 16, 1996. [1] Under such circumstances, Supreme Court correctly concluded that no ambiguity existed in the notices at issue.

Plaintiffs' claim that Supreme Court improperly resolved a key credibility issue is equally unavailing. In support of plaintiffs' cross motion for summary judgment, Ferber submitted an affidavit wherein she averred that based upon her past dealings with Farm Family and Russell, she believed that partial payment would be sufficient to avoid cancellation of the underlying policy. Ferber 's averments in this regard directly contradicted her prior examination before trial testimony wherein , as noted previously, she acknowledged both receipt of the August 26, 1996 notice of cancellation and that she understood the import thereof. Simply stated, plaintiffs cannot create an issue of fact by submitting a self-serving affidavit that contradicts prior sworn testimony (see, Greene v Osterhoudt, 251 AD2d 786, 788).

Plaintiffs' remaining arguments do not warrant extended discussion. Although it appears from the record that Ferber's history with defendants included a series of policy cancellations and reinstatements beginning in 1989, such history, standing alone, is insufficient to raise a question of fact as to equitable estoppel. As the party seeking the benefit of equitable estoppel, plaintiffs were required to demonstrate (1) a lack of knowledge of the true facts, (2) reliance upon defendants' conduct, and (3) a prejudicial change in position (see, Michaels v Travelers Indem. Co., 257 AD2d 828, 829). Given the plain language of the policy cancellation and partial payment notices, together with Ferber's sworn testimony, there is no basis upon which plaintiffs could establish a lack of knowledge of the true facts -- namely, that the policy would be canceled if the premium due was not paid on the date specified. Moreover, the record is bereft of any evidence to suggest that defendants, by their words or actions following the issuance of the policy cancellation notice on August 26, 1996, led Ferber to believe that partial payment would be sufficient to keep the subject policy in full force and effect. Plaintiffs' remaining contentions, to the extent not expressly addressed, have been examined and found to be lacking in merit.

Mercure, J.P., Peters , Spain and Graffeo, JJ., concur.

ORDERED that the order is affirmed , without costs.

FORBES v. CITY OF NEW YORK

Order, Supreme Court , Bronx County (Lucindo Suarez, J.), entered July 8, 1999, which denied third-party defendant National Restoration Corporation's motion for summary judgment dismissing the third-party complaint, unanimously affirmed, without costs.

The commercial general liability insurance policy procured by the general contractor, third-party plaintiff New York City School Construction Authority (NYCSCA), which provided general liability coverage to all subcontractors, including third-party defendant National Restoration Corporation (NRC), contained an endorsement providing, "[w]e waive any right of recovery we may have against [the named insured] because of payments we make for injury or damages arising out of 'your work' done under a contract with that person or organization". Bodily injury to an employee of the insured arising out of and in the course of employment by the insured is specifically excluded under the subject policy issued by the AIU Insurance Company. NRC was required to and did maintain its own worker's compensation coverage through a separate policy and AIU has disclaimed coverage to NRC with respect to this suit.

The motion court previously held, and NRC has not disputed, that the anti -subrogation rule does not bar NYSCA's third-party complaint since the AIU policy does not cover NYSCA and NRC for the same risks arising out of plaintiff's accident (see, Rosato v Koch Erecting Co., 865 F Supp 104). We now affirm the motion court's holding that the waiver of subrogation endorsement in the AIU policy does not bar the third-party complaint. The waiver endorsement modifies a subrogation clause in the AIU policy whereby the insurer asserted subrogation rights to "any payment we have made under this Coverage Part" (emphasis added). "[A] waiver of subrogation clause cannot be enforced beyond the scope of the specific context in which it appears" (Kaf-Kaf, Inc . v Rodless Decorations, Inc., 90 NY2d 654, 660). Here, the endorsement, by its express terms, modifies the insurer's subrogation rights only to the extent such claims are covered under the policy. It is undisputed that NRC is not covered by the AIU policy with respect to NRC's employee's injuries, for which NRC is indemnified by worker's compensation, and therefore, the waiver endorsement is inapplicable to bar the third-party complaint (S.S.D.W. Co. v Risk Waterproofing Co., Inc., 76 NY2d 228; cf ., Lim v Atlas Gem Erectors Co., 225 AD2d 304).

TAGGART v. STATE FARM MUTUAL AUTO. INS. CO.

Order, Supreme Court, New York County (Charles Ramos, J.), entered April 20, 1999, which, inter alia, granted defendant 's motion for summary judgment dismissing the complaint, unanimously affirmed, without costs.

Plaintiff was injured when she was hit by a motorcycle, and defendant, the insurer of the motorcycle' s operator and owner, thereafter agreed to pay plaintiff no-fault medical benefits. After making such payments for a period, defendant, pursuant to 11 NYCRR § 65.15(g)(2)(ii), sent plaintiff a denial of claim form, dated July 13, 1990, notifying her that her no-fault medical benefits were to be discontinued in light of medical examinations indicating that she was no longer disabled. From the date of the denial of claim, plaintiff had six years to challenge the denial as a breach of defendant's agreement to pay

her no-fault benefits and may not have the applicable statutory period extended until her commencement of this action in 1998 simply because she continued to submit bills for payment subsequent to her receipt of the July 13, 1990 denial notice. Accordingly, plaintiff's first cause of action challenging the defendant 's discontinuance of the subject no-fault medical benefits was properly dismissed as time-barred. Also properly dismissed were plaintiff's remaining causes alleging breaches of the policy issued to defendant 's insureds. Plaintiff is not defendant's insured and, thus, has no standing to sue defendant for breach of that policy. We note in this regard that this is not a case in which the statutory exception set forth in Insurance Law § 3420 is applicable to the general common-law rule of standing. The conditions set forth in Insurance Law § 3420 for the assertion of a contract claim by a tort claimant under the tortfeasor's liability policy have not been met by plaintiff (see, Clarendon Place Corp. v Landmark Ins. Co., 182 AD2d 6, lv dismissed and denied 80 NY2d 918).

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

M-2243 - Taggart v State Farm Mut. Auto . Ins. Co.

Motion seeking to strike portions of reply brief denied.

FIDELITY NATIONAL TITLE INS. CO. OF NEW YORK v CONSUMER HOME MORTGAGE, INC.

In an action for a judgment declaring that certain insurance policies issued by the plaintiff Fidelity National Title Insurance Company of New York are null and void, the defendant Consumer Home Mortgage, Inc., appeals, as limited by its brief, from so much of an order and judgment (one paper) of the Supreme Court, Nassau County (Franco, J.), entered August 28, 1998, as, in effect, denied its motion for summary judgment, granted summary judgment to the plaintiffs, and declared that the plaintiff Fidelity National Title Insurance Company of New York had no contractual obligation to it.

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

The defendant, Consumer Home Mortgage, Inc. (hereinafter Consumer), is in the business of lending money for the purchase of residential homes, with those loans secured by mortgages. In order to fund the mortgage loans it offers, Consumer entered into interim loans from lending institutions known as "warehouse banks", and upon the closing of each loan, Consumer then sold the loan and mortgage to so-called "secondary market investors" such as the Federal National Mortgage Association (hereinafter Fannie Mae) and Fleet Mortgage Corp. (hereinafter Fleet).

During 1996, Consumer entered into mortgage commitments , agreeing to loan money to several prospective buyers of residential property. The loans were to be secured by a note and mortgage as a lien on each of the subject properties to be purchased. Prior to closing, the prospective buyers obtained Loan Policies of Title Insurance from the plaintiff Fidelity National Title Insurance Company of New York (hereinafter Fidelity) for the benefit of Consumer as mortagee , insuring the validity and enforceability of the lien of each proposed mortgage. Also prior to closing , Consumer designated the defendant law firm Ferrara & Associates, P.C., and the defendant attorney Perry Ferrara (collectively referred to as Ferrara), to act as its so-called "settlement service provider". Consumer then authorized the warehouse banks to wire the interim loan funds into an escrow account held by Ferrara, and authorized Ferrara to supervise the execution of loan documents at the closings and issue checks to the appropriate parties.

In October 1996, the closings took place at Ferrara's offices, as designated, at which time the prospective buyers received deeds to the properties to be purchased, and in turn, they delivered to Consumer the respective notes and mortgages, in addition to the Loan Policies of Title Insurance. Shortly thereafter, all parties were notified that the checks drawn on the escrow account of Ferrara had been dishonored for insufficient funds. Fidelity refused to record the mortgages for lack of consideration, and moved for a declaration of the rights and obligations of all the parties. Consumer moved for summary judgment declaring that the loan policies were valid and enforceable, and demanded coverage from Fidelity for the loss incurred.

Contrary to Consumer's contentions, title insurance insures against loss regarding title to the land, not the underlying debt (see, Insurance Law § 1113[a][18]; Smirlock Realty Corp. v Title Guar. Co., 52 NY2d 179, 187; Logan v Barretto, 251 AD2d 552; Citibank v Commonwealth Land Tit. Ins. Co., 228 AD2d 635). Moreover, where as here, the underlying debt has not been satisfied, the mortgage it was meant to secure must fail (see, Gerrold v Penn Tit. Ins. Co., 271 NJ Super 50, 637 A2d 1293). Thus, the court properly determined that where there is no underlying debt, there is no valid mortgage, and that the loan policies purportedly insuring said mortgages were not valid or enforceable.

Furthermore, coverage was properly denied pursuant to the exclusionary provision in the loan policy in which Fidelity expressly excluded coverage for any loss which Consumer "created, suffered, assumed or agreed to". Here, Consumer admittedly designated Ferrara as its settlement service provider by directing the funds earmarked for the mortgage loans to an escrow account maintained by Ferrara, and by authorizing Ferrara to perform certain duties on Consumer's behalf at the closings . Where a loss is caused by the fraud of a third party, in determining the liability as between two innocent parties, the loss should fall on the one who enabled the fraud to be committed (see, Hatton v Quad Realty Corp., 100 AD2d 609; see also, 60 NY Jur 2d, Fraud and Deceit, § 185). Thus, the actions of Ferrara were properly imputed to Consumer. As such, Consumer created the loss which is excluded from coverage.

BRACKEN, J.P., SULLIVAN, ALTMAN and KRAUSMAN, JJ., concur.

MATTER OF NATIONWIDE INS. CO. v. McDONNELL

In a proceeding pursuant to CPLR article 75 to confirm an arbitration award dated November 5, 1998, Nationwide Insurance Company appeals from an order of the Supreme Court, Westchester County (Barone, J.), dated May 21, 1999, which, in effect, denied the petition and granted the respondent's application to vacate the award.

ORDERED that the order is affirmed, with costs.

The respondent alleges that the decedent's vehicle was struck by a "hit-and-run" vehicle and demanded arbitration under the supplemental uninsured motorist endorsement of the decedent's insurance agreement with the petitioner, Nationwide Insurance Company (hereinafter Nationwide). Nationwide moved to stay the arbitration on the ground that there was no contact between the decedent's vehicle and the hit-and-run vehicle. In an order dated April 14, 1997, the Supreme Court granted Nationwide's motion. In Matter of Nationwide Ins. Co. v McDonnell (248 AD2d 47 6), this court reversed that order because Nationwide's application to stay was not brought within the 20-day limitation period set out in CPLR 7503(c).

The arbitrator subsequently determined that Nationwide could raise a "liability defense" based upon the issue of contact between the vehicles even though that issue had been waived as a "contractual coverage defense". After holding a hearing on the issue of liability, the arbitrator determined that the respondent failed to establish that the decedent's vehicle was struck by a hit-and-run vehicle, and dismissed the claim. Nationwide commenced this proceeding to confirm the arbitration award.

It is well settled that a court, and not an arbitrator, must resolve the issue of whether there was actual contact with a hit -and-run vehicle (see, Matter of Allstate Insurance Co. v Tauszik, 177 AD2d 486, 487). The arbitrator may not decide this issue by creating an artificial distinction between contractual issues and liability issues. Accordingly, the Supreme Court properly denied the petition and granted the respondent's application to vacate the arbitration award on the ground that the arbitrator exceeded his powers ( see, CPLR 7511[b][1][iii]).

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

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