Coverage Pointers - Volume I, No. 7
9/20/99:NATIONWIDE INS. CO. V. LUKAS
New York State Supreme Court, Appellate Division, Second Department
Uninsured Motorist Coverage Lost Where Insured Failed to Forward Pleadings as Required by SUM Endorsement
The insured was injured in an auto accident on October 1, 1994, and informed his insurance carrier of his claim for underinsurance coverage on October 18, 1994. The insured then commenced a lawsuit against the tortfeasor on August 15, 1995, but did not forward copies of the summons and complaint to his insurer. The insurer received confirmation of the lawsuit in February 1998 and disclaimed coverage on February 24, 1998, because the insured failed to comply with the supplementary uninsured motorists (SUM) endorsement, which required the insured forward a copy of the summons and complaint "immediately" if he commenced a lawsuit against the tortfeasor. The insurer also disclaimed coverage because the insured failed to comply with requests for medical authorizations. The court held both grounds for disclaimer were proper. The court also found the insurer’s disclaimer was timely – whether disclaimer was made "as soon as is reasonably possible" was measured from the date the insurer confirmed a lawsuit was commenced, not when first notified of the underinsurance claim. A permanent stay of arbitration under the SUM endorsement was granted accordingly.
From time to time we highlight significant cases of interest from other jurisdictions. This week, we offer decisions from California and Arizona:
9/30/99: FARMERS INS. EXCHANGE v. JACOBS This link is expired. For
a copy of the text of this decision, please contact our office.
California Court of Appeal
Insurer that Takes Up Defense of Former Insured Cannot be Held Liable For Breaching Contract if it Fails to Advise of Settlement Demand
An insurance company voluntarily undertakes to defend an insured regarding an automobile accident that occurred after the insured allowed the policy to expire. What remedy does the insured have if the insurance company in defending fails to inform the insured about a proposed settlement offer? Yesterday, the California Court of Appeal decides that an insurer cannot be held liable for breaching an insurance policy requirement of good faith and fair dealing if it does not have a contract of insurance in place with that "insured". Whether the company can be negligent is left undecided since no negligence claim was brought against the insurer.
8/31/99: PARADIGM INS.
CO. v. THE LANGERMAN LAW OFFICES, P.A.
State of Arizona, Court of Appeals, Division One
An Insurer May Sue Counsel Retained to Represent Policyholder for Malpractice
The Arizona Court of Appeals ruled that an attorney-client relationship exists between an insurer and counsel retained by the insurer to represent its policyholder. That relationship may serve as a basis for a professional negligence claim. In this case, the insurer hired defense counsel to represent its insured in a medical malpractice action. The insurer alleged that defense counsel had failed to timely tender the insured's defense to another insurer. When defense counsel sued for its fees, the insurer counterclaimed for malpractice. The Court of Appeals adopted the majority rule – that in the absence of a conflict, the attorney has two clients, the insurer and the insured because (1) defense counsel’s immunity from suit would place loss for attorney misconduct on the insurer; (2) ethical rules do not prohibit attorneys from representing multiple parties in a single action; and (3) as long as interests of insured and insurer overlap, representation by one attorney makes economic and practical sense.
AND IN DEFENSE. . .
By request, we may include selected New York cases bearing on the defense of tort actions.
9/28/99: VIGIO v. THE NEW YORK
New York State Supreme Court, Appellate Division, First Department
"Day in the Life" Video Excluded Where Plaintiff Fails to Disclose
A video depicting a day in the life of decedent was precluded from trial where plaintiff failed to disclose the video in accordance with a preliminary conference order and falsely certified in the note of issue that discovery was complete even though the video had been made but not disclosed. The court also found that defendant’s ability to refute the decedent’s condition as depicted in the video was significantly compromised by the death of decedent after the video was made and the death of defendant’s examining physician before the video was disclosed.
9/23/99:THRANE v. HANEY
New York State Supreme Court, Appellate Division, Third Department
"Waver" May be Liable to Child Who Crosses Street
Six-year old plaintiff was injured while crossing the street. The child first passed in front of a stopped vehicle driven by the defendant and then ran into a vehicle driven by another defendant, which was moving in the other lane of travel. Plaintiff alleged defendant in the stopped vehicle was negligent in making hand motions, which induced the child to cross when it was not safe. The court held that because it was inferable that defendant had voluntarily assumed a duty to direct the child, the defendant may be liable if he failed to use reasonable care – his gesturing or signaling the child raised questions of fact whether his conduct was reasonable. The court further held that the child’s independent decision to proceed after looking both ways and checking traffic was not, as a matter of law, a superceding cause which severed the causal connection between defendant’s actions and the child’s injuries, since evidence indicated that the child left the safety of the curb because of defendant’s conduct.
Hurwitz & Fine, P.C. is a full-service law firm
providing legal services throughout the State of New York.
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Insurance Coverage TeamDan D. Kohane, Team Leader
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Donna L. Burden
Jody E. Briandi
Sheri L. Keeling
David F. Powell
SUPREME COURT OF THE STATE OF NEW YORK APPELLATE DIVISION: SECOND JUDICIAL DEPARTMENT
GUY JAMES MANGANO, P.J.
FRED T. SANTUCCI
GABRIEL M. KRAUSMAN
ANITA R. FLORIO
HOWARD MILLER, JJ.
DECISION & ORDER
In the Matter of Nationwide Insurance Company, respondent, v Walter F. Lukas, appellant.
Fine Hummel, P.C., Huntington, N.Y. (Ralph A. Hummel of counsel), for appellant.
Robert Trestman, Plainview, N.Y., for respondent.
In a proceeding pursuant to CPLR article 75 to permanently stay the arbitration of a claim for underinsured motorist benefits, the appeal is from an order of the Supreme Court, Nassau County (DeMaro, J.), dated July 29, 1998, which granted the petition.
ORDERED that the order is affirmed, with costs.
On October 1, 1994, the appellant was injured in an automobile accident. On October 18, 1994, he informed his insurance carrier, the petitioner Nationwide Insurance Company (hereinafter Nationwide), of his claim for underinsurance coverage. The supplementary uninsured motorists endorsement contained in the policy issued to him by Nationwide specified that if he commenced a lawsuit against the tortfeasor, he must "immediately" forward a copy of the summons and complaint to it. Although the appellant commenced such a lawsuit on or about August 15, 1995, he did not timely forward copies of the summons and complaint. In early February 1998 Nationwide received confirmation that the lawsuit had been commenced. On February 24, 1998, Nationwide disclaimed coverage on the grounds that the appellant failed to comply with that provision, and that the appellant failed to comply with its request for authorizations to obtain relevant medical reports and records. The summons and complaint were not forwarded to Nationwide until March 1998.
The appellant then served a demand for arbitration under the supplementary uninsured motorists endorsement. Nationwide sought a permanent stay of arbitration on the ground that the appellant had failed to timely comply with the conditions precedent of that endorsement.
The Supreme Court properly granted the petition since Nationwide established that the appellant waited approximately 2 1/2 years after commencement of the underlying lawsuit before forwarding to it a copy of the summons and complaint and failed to adequately comply with the request for medical authorizations (see, Lumbermens Mut. Cas. Co. v Moyler, 211 AD2d 401; Shutter v Nationwide Mut. Ins. Co., 205 AD2d 817; Preferred Mut. Ins. Co. v Sullivan, 199 AD2d 719; Brown v MVAIC, 33 AD2d 804).
We reject the appellant's contention that Nationwide waived its right to disclaim coverage by waiting over three years after it was first notified of the underinsurance claim. An insurance carrier must give written notice of disclaimer on the ground of late notice "as soon as is reasonably possible after it first learns of the accident or of grounds for disclaimer of liability" (Matter of Firemen's Fund Ins. Co. of Newark v Hopkins, 88 NY2d 836, 837; Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1029; see, Allstate Ins. Co. v Gross, 27 NY2d 263). Here, Nationwide gave written notice of disclaimer approximately 20 days after it possessed sufficient facts upon which to base its disclaimer on the ground that the appellant had commenced the underlying action without immediately forwarding a copy of the summons and complaint (see, State Farm Mut. Auto. Ins. Co. v Clift, 249 AD2d 800).
MANGANO, P.J., SANTUCCI, KRAUSMAN, FLORIO, and H. MILLER, JJ., concur.
Martin H. Brownstein
Decided and Entered: September 23, 1999
JENNIFER THRANE, Individually and as Parent and Guardianof THEODORE THRANE JR.,
an Infant, Respondent,
LINDA HANEY et al., Defendants, and JOSEPH DE FELICE, Appellant.
Calendar Date: September 3, 1999
Before: Cardona, P.J., Yesawich Jr., Spain, Carpinello and
Pennock & Breedlove LLP (Catherine A. Spaneas of counsel), Clifton Park, for appellant.
Phelan, Burke & Scolamiero (Keith M. Frary of counsel), Albany, for respondent.
Yesawich Jr., J.
Appeal from an order of the Supreme Court (Keniry, J.), entered June 9, 1998 in Saratoga County, which denied defendant Joseph De Felice's motion for summary judgment dismissing the complaint against him.
In April 1993, Theodore Thrane Jr., then six years old, was injured while attempting to cross a street in the City of Mechanicville, Saratoga County, at a point where there was no crosswalk. In his endeavor to cross the street, the child first passed in front of a van driven by defendant Joseph De Felice (hereinafter defendant), which was one of several vehicles stopped in one lane of travel, and then he ran into the side of a vehicle driven by defendant Linda Haney, which was moving in the other lane of travel. Plaintiff commenced this action to recover damages for the injuries sustained by the child alleging, inter alia, that defendant was negligent in making hand motions which induced the child to cross the street when it was not safe to do so. Defendant moved for summary judgment dismissing the complaint against him, claiming that, as a matter of law, he was not at fault. Supreme Court denied the motion, resulting in this appeal by defendant.
It being inferable from the child's testimony that defendant voluntarily assumed the duty to direct the child, defendant may be held liable if he failed to exercise reasonable care and his conduct was a proximate cause of the child's injuries (compare, Barber v Merchant, 180 AD2d 984; Riley v Board of Educ. of Cent. School Dist. No. 1, 15 AD2d 303, with Valdez v Bernard, 123 AD2d 351; see also, Cohen v Heritage Motor Tours, 205 AD2d 105). The fact that defendant assertedly gestured or signaled to the child raises a question of fact regarding whether the care executed by defendant was indeed reasonable (see, Robbins v New York City Tr. Auth., 105 AD2d 616; Riley v Board of Educ. of Cent. School Dist. No. 1, supra, at 305).
Based upon the child's testimony that, after running in front of defendant's van, he stopped and looked both ways before continuing into the other lane of travel, defendant contends that he cannot be liable for the child's injuries because the child independently decided to continue and was not relying on defendant's gesture or signal when he was injured (see, Valdez v Bernard, supra). There is evidence in the record, however, that, because of of defendant's conduct the child left the safety of the curb and ran in front of defendant's van where he was in a more vulnerable position than he would have been if defendant had not gestured or signaled. We cannot conclude that, as a matter of law, the child's check for traffic was a superceding act which severed the causal connection between defendant's actions and the child's injuries (see, Barber v Merchant, supra, at 986- 987). As the record raises questions of fact on the issues of defendant's negligence and proximate cause (see, Shapiro v Mangio, ___ AD2d ___, 686 NYS2d 846, 847), summary judgment was properly denied.
Cardona, P.J., Spain, Carpinello and Graffeo, JJ., concur.
ORDERED that the order is affirmed, with costs.
Michael J. Novack
Rosenberger, J.P., Williams, Rubin, Saxe, Buckley, JJ.
Action No. 1
1802N Ramon Vigio, etc., et al.,
The New York Hospital, et al.,
Beth L. Kaufman
James P. Tenney
Robert W. Finke
- - - - - - -
Action No. 2
Ramon Vigio, etc., et al.,
The Mount Sinai Hospital,
Michael N. Stevens
Order, Supreme Court, New York County (Stanley Sklar, J.), entered on or about September 29, 1997, which granted defendants’ motions for a disclosure sanction precluding plaintiffs from using at trial a videotape depicting a day in the life of their decedent, unanimously affirmed, without costs.
Preclusion of the video was properly granted in view of the preliminary conference order directing the parties to exchange any photographs, "including motion pictures"; plaintiffs’ false certification in their note of issue that disclosure was complete when, in fact, the video in question had already been made but not disclosed; and the undue prejudice caused defendants by plaintiffs’ unnecessarily belated disclosure of the video shortly before the trial was scheduled to begin (see, Red Apple Supermarkets v Malone & Hyde, 251 AD2d 78). As the IAS court emphasized, the death of plaintiffs’ decedent after the video was made and the death of defendants’ examining physician before the video was disclosed, significantly compromise defendants’ ability to refute the decedent’s condition as depicted in the video.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: SEPTEMBER 28, 1999