8/19/99: AGOADO REALTY CORP. v. UNITED INTERNATIONAL INS. CO.
New York State Supreme Court, Appellate Division, First Department
Landlord’s Good Faith Belief that "No Covered Event" Occurred, Justifying its Late Notice of Claim to the Insurer, is a Question of Fact; Insurer Waives Right to Deny Coverage Based on Intentional Acts by Not Raising Defense in Initial Disclaimer
Insured landlord alleged a good faith belief that no covered event had occurred until it was sued. Although the landlord was not given notice of the murder until several days after it occurred, and the police did not question the landlord, the landlord's alleged good faith is a question of fact to be determined at trial. The insurer tried to amend its pleading to allege that the murder was intentional and not an occurrence under the policy. The Appellate Division held that since the insurer did not raise absence of occurrence and the intentional act exclusion in its disclaimer letter, it waived its right to raise those defenses under Insurance Law §3420(d).
Editor’s Note: The Court made a fundamental error in equating the lack of an occurrence with the failure to raise a policy exclusion. While it can rely on cases that have held that failure to timely raise an exclusion results in a waiver of the right to do so later the carrier cannot be charged with waiver on the issue of lack of an occurrence – if there is no occurrence, there is no coverage under the policy.
8/26/99: FEINMAN v. HOROWITZ
New York State Supreme Court, Appellate Division, First Department
Proof of Discogenic Disease and Spondylolistheis, Unconnected to Accident and Treatment for Subjective Pain, Insufficient to Satisfy No-Fault Serious Injury Threshold
In order to maintain an action for personal injury in New York, plaintiff must establish that he or she has suffered a "serious injury" within the meaning of Insurance Law § 5102(d). Here, the 75-year old plaintiff was seen in the emergency room after an automobile accident complaining of various pains in his head, arm, knee and lower back. He was treated for contusions and abrasions, although no sutures were administered. X-rays revealed discogenic disease and spondylolisthesis, but these findings were never related to the accident. Returning to the emergency room a week later (only because his designated doctor was not available for follow-up care), the patient was examined and advised that he could "continue normal activities." He next sought medical treatment from an orthopedist more than eight months later, complaining of pain in his elbow, knee and lower back.
8/30/99: CARROLL v. JENNINGS
New York State Supreme Court, Appellate Division, Second Department
Chiropractor’s Conclusory Affidavit Insufficient to Defeat Defense Motion for Summary Judgment on Issue of Serious Injury
After defendants submitted sufficient evidence in support of their motion to establish, as a matter of law, that none of the plaintiffs sustained a serious injury, the burden shifted to plaintiffs to come forward with sufficient evidence to raise a triable issue of fact that they each sustained a serious injury. The plaintiffs’ chiropractor submitted an affidavit indicating that each plaintiff demonstrated positive findings on straight leg-raising tests. However, the plaintiffs' evidence was insufficient to defeat the defense motion for summary judgment:
· While a chiropractor’s affidavit of positive finding can be objective evidence of serious injury, in this case there was no explanation of the significance of the test results or their relationship to the accident;
· In addition, there was an unexplained four-year gap between the conclusion of treatment and the examination which led to his affidavit;
· Moreover, the affidavit’s conclusory statements that mirrored the language of the statute were insufficient;
· Finally, without an objectively-diagnosed injury, the plaintiffs' subjective complaints of pain are insufficient to support a finding of serious injury
From time to time we highlight significant cases of interest from other jurisdictions. This week, we offer two California decisions.
8/30/99: VANDENBERG v. SUPERIOR COURT
Supreme Court of California
[An Internet link/url is provided due to the length of this decision.] This link is expired. For a copy of the text of this decision, please contact our office.
Private Arbitration Award Does Not Have Collateral Estoppel Effect Unless Agreement To That Effect in That Particular Case; Insured Defendant Has Coverage For Losses Pleaded As Contractual Damages
Contrary to most jurisdictions, the California Supreme Court held that a private arbitration award, even if judicially confirmed, does not have nonmutual collateral estoppel effect under California law unless there was an agreement to that effect in the particular case. Overruling years of precedent, the California high court also held that a "reasonable layperson "would certainly understand" the term "legally obligated to pay" in a liability policy to refer to any obligation which is binding and enforceable under the law, whether under contract or tort liability. Accordingly, the coverage phrase "legally obligated to pay as damages," as used in a CGL insurance policy, may provide an insured with coverage for losses pleaded as contractual damages.
8/20/99: UNITED STATE AUTOMOBILE ASSOC. v. SNAPPY CAR RENTAL, INC.
California Court of Appeal, Fourth Appellate District, Division One
[An Internet link/url is provided due to the length of this decision.]
Auto Rental Contract is Not a Policy of Insurance and Does Not Provide Primary Coverage; Renters' Personal Auto policies Are Primary and Personal Carriers Must Indemnify Rental Agency For DJ Action Costs As Well
Auto carrier for two individuals that rented cars from Snappy Car Rental unsuccessfully appeal summary judgments in favor of Snappy. Snappy's rental vehicle registration card, together with its deposit of cash with the California Department of Motor Vehicles, is not considered a "policy of automobile liability insurance" under the Insurance Code and is not to be presumed to provide primary coverage. The California Court of Appeal holds the car rental agreement signed by the renters along with Snappy's deposit of cash does not constitute a "policy of automobile liability insurance. Snappy was entitled to indemnity from renters and USAA for attorney’s fees and costs incurred in defending USAA's claims for declaratory relief, equitable subrogation, and violation of Business and Professions Code section 17200.
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Order, Supreme Court, New York County (Harold Tompkins, J.), entered on or about October 16, 1998, granting defendant United International Insurance Company's motion to add two affirmative defenses to its answer, and denying plaintiffs' cross-motion for summary judgment, unanimously modified, on the law, without costs, to deny defendant's motion to amend its answer and grant partial summary judgment to plaintiffs to the extent of dismissing defendant's second and third affirmative defenses, and otherwise affirmed, without costs.
On May 19, 1996, Miguel Felipe, a tenant of the building owned by plaintiffs, was murdered in the building by unknown assailants. Felipe's estate and family commenced a wrongful death action against plaintiffs, alleging negligent security, by service on the Secretary of State on February 10, 1997. The attorney designated to accept service for plaintiffs was deceased, and plaintiffs did not receive actual notice that a claim had been made against them until they received the summons and complaint in the mail on June 9, 1997.
Plaintiffs immediately notified their broker, which filed a notice of occurrence with the "producer" of the insurance. The producer, in turn, forwarded the notice, summons and complaint to defendant, which received it June 20, 1997.
On July 23, 1997, defendant sent a letter to plaintiffs disclaiming coverage on the grounds of late notice of occurrence and late notice of claim. The policy conditions required the insured to notify the company "as soon as practicable" of any occurrence which may result in a claim, and of any suit brought against the insured. Defendant contended that these policy conditions were breached because defendant did not receive notice of the occurrence until 397 days after it occurred, nor did it receive notice of the claim until 130 days after the Felipes' summons and complaint was served on the Secretary of State.
On August 11, 1997, plaintiffs' attorney filed an answer in the underlying wrongful death action and commenced the instant declaratory judgment action seeking a declaration that defendant was required to defend and indemnify plaintiffs. On September 22, 1997, defendant served its answer, alleging that plaintiff breached the insurance contract by virtue of the late notices of the occurrence and the lawsuit.
On June 23, 1998, defendant moved to amend its complaint to add two affirmative defenses never previously asserted. First, defendant alleged that there was no "occurrence," because "occurrence" is defined as "an accident" in the policy. Second, defendant invoked the exclusion for "expected or intended" injury, although the exclusion only applies to bodily injury "expected or intended from the standpoint of the insured" (emphasis added).
Plaintiffs opposed the motion to amend as violative of Insurance Law §3420(d), and cross-moved for summary judgment. The IAS court granted defendant's motion to add two affirmative defenses to its answer and denied plaintiffs' cross-motion for summary judgment.
The IAS court erred in permitting defendant to amend its answer to the complaint by adding new affirmative defenses based upon alleged policy exclusions. The addition of these amendments violated Insurance Law §3420(d), which requires an insurance company to give prompt notice of the grounds for disclaimer. Insurance Law §3420(d) states: "If under a liability policy delivered or issued for delivery in this state, an insurer shall disclaim liability or deny coverage for death or bodily injury arising out of a motor vehicle accident or any other type of accident occurring within this state, it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant."
Case law interpreting Insurance Law § 3420(d) has consistently held that when an insurer denies coverage on a specific ground, it is estopped from later asserting other grounds, not previously specified, for denying coverage (Haslauer v North Country Adirondack Co-op. Ins. Co., 237 AD2d 673, 674; Aguirre v City of New York, 214 AD2d 692, 694). Therefore, the insurer's additional grounds for disclaimer in the instant case were waived by its failure to assert them in its original notice of disclaimer.
Furthermore, an insurance company will not be allowed to deny coverage where all the relevant facts were known to the insurer at the outset, but it unreasonably delayed in asserting a basis for disclaimer. In Hartford Ins. Co. v. County of Nassau (46 NY2d 1028, reconsideration denied 47 NY2d 951), an unexplained delay of two months was found to be unreasonable in disclaiming coverage. In this case, the defendant waited an even longer amount of time, with an unexplained delay of approximately one year, before mentioning two new reasons for disclaimer. This is unreasonable as a matter of law (Hartford, supra, at 1030),
whether or not the insured was prejudiced (Allstate Ins. Co. v Gross, 27 NY2d 263, 269-270).
A question of fact remains regarding plaintiffs' alleged good faith belief that no covered event had occurred until they were sued. The IAS court properly denied summary judgment to plaintiffs with respect to the insurer's first affirmative defense, namely late notice of the occurrence. Although the landlord was not given notice of the murder until several days after it occurred, and the landlord was not questioned by the police, the landlord's alleged good faith is a question of fact that needs to be determined at trial. Plaintiffs cite Nalea Realty Co. v. Public Serv. Mut. Ins. Co. (238 AD2d 252, appeal dismissed 90 NY2d 927), which held that a landlord's belief of non-liability for the intentional criminal acts of a third person may be reasonable and can excuse a delay in notifying an insurer of the occurrence. While other cases similar to Nalea stand for the same proposition (see, e.g., Marinello v Dryden Mut. Ins. Co., 237 AD2d 795; D'Aloia v Travelers Ins. Co., 85 NY2d 825, recons. denied 85 NY2d 968), none of these cases, including Nalea, granted summary judgement to an insured on similar facts. Therefore, it is necessary to verify the plaintiffs' alleged good faith belief of non-liability before a fact-finder (Marinello v Dryden Mut. Ins. Co., supra, 237 AD2d 795, 798).
However, there is no issue of fact regarding defendant's second and third affirmative defenses alleging that the plaintiff unreasonably delayed giving notice of the actual lawsuit. The circumstances of the filing upon receipt of summons negate these defenses as a matter of law. For reasons beyond plaintiffs' control, plaintiffs did not get the summons till June, and then sent it to the insurer less than two weeks later.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: AUGUST 19, 1999
Order, Supreme Court, New York County (Richard Lowe, III, J.), entered January 27, 1999, which denied defendant’s motion for summary judgment, unanimously reversed, on the law, without costs, the motion granted, and the complaint dismissed. The Clerk is directed to enter judgment in favor of defendant-appellant dismissing the complaint.
The 75-year old plaintiff was seen in the emergency room after an automobile accident, complaining of various pains in his head, arm, knee and lower back. He was treated for contusions and abrasions, although no sutures were administered. X-rays revealed discogenic disease and spondylolisthesis, but these findings were never related to the accident. Returning to the emergency room a week later (only because his designated doctor was not available for follow-up care), the patient was examined and advised that he could "continue normal activities." He next sought medical treatment from an orthopedist more than eight months later, complaining of pain in his elbow, knee and lower back.
In order to survive summary judgment under New York’s no-fault law, an injured party must establish that he sustained a "serious injury" within the meaning of Insurance Law § 5102(d). As pertinent herein, this plaintiff has failed to show significant disfigurement, fracture, loss or significant limitation of use of a body part or function, or a medically determined non-permanent injury or impairment of normal daily activities for at least 90 days during the 180 days immediately following the accident. Plaintiffs have failed to make a prima facie showing of serious injury (Bandoian v Bernstein, - AD2d -, 679 NYS2d 123; Eisen v Walter & Samuels, Inc., 215 AD2d 149).
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: AUGUST 26, 1999
In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Queens County (Lonschein, J.), dated September 8, 1998, which denied their motion for summary judgment dismissing the complaint on the ground that none of the three plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed, on the law, with costs, the motion is granted, and the complaint is dismissed in its entirety.
The three plaintiffs commenced the instant action to recover damages for personal injuries which each allegedly sustained in a two-vehicle collision. The defendants moved for summary judgment dismissing the complaint on the ground that none of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d). The Supreme Court denied the motion. We reverse.
The defendants submitted sufficient evidence in support of their motion to establish, as a matter of law, that none of the plaintiffs sustained a serious injury (see, Gaddy v Eyler, 79 NY2d 955). Thus, the burden shifted to plaintiffs to come forward with sufficient evidence to raise a triable issue of fact that they each sustained a serious injury (see, Gaddy v Eyler, supra, at 957; Licari v Elliott, 57 NY2d 230, 235; Lopez v Senatore, 65 NY2d 1017).
The plaintiffs' evidence was insufficient for this purpose. In opposition to the motion, each plaintiff submitted an affidavit by Dr. David Levine, their treating chiropractor. Although he indicated that each plaintiff demonstrated positive findings on straight leg-raising tests, which this court has indicated can be objective evidence of serious injury (see, Kim v Cohen, 208 AD2d 807; Risbrook v Coronamos Cab Corp., 244 AD2d 397), Dr. Levine failed to explain the significance of these test results and relate them to the plaintiffs' injuries. In addition, neither Dr. Levine nor the plaintiffs offered any explanation for the almost four-year gap between the time that he stopped treating them in August 1994 and his examination of them in July 1998 in response to the defendants' summary judgment motion (see, Stowe v Simmons, 253 AD2d 422; Rum v Pam Transp., 250 AD2d 751; Williams v Ciaramella, 250 AD2d 763). Moreover, Dr. Levine's conclusory statements simply mirrored the statutory language, and were insufficient to defeat the defendants' prima facie showing (see, Lopez v Senatore, 65 NY2d 1017, 1019; Antorino v Mordes, 202 AD2d 528).
Finally, without an objectively-diagnosed injury, the plaintiffs' subjective complaints of pain are insufficient to support a finding of serious injury (see, Lincoln v Johnson, 225 AD2d 593; Barrett v Howland, 202 AD2d 383).
S. MILLER, J.P., SULLIVAN, FRIEDMANN, and FEUERSTEIN, JJ., concur.