Coverage Pointers - Volume II, No. 23
Editors Note: the California decision in Blue Ridge is a MUST READ for those who are following the case law allowing carriers to seek reimbursement from their insureds in certain cases.
05/03/01: BERKOWITZ v. NEUMAN
New York State, Appellate Division, First Department
Issue of Fact Whether Care was Medically Necessary or Merely Custodial Care
This action was commenced by nursing home to recover amounts due for nursing home services provided to Neuman. Neuman was a beneficiary under the City of Mount Vernon District Employee Health Benefit Plan. The plan covered treatment determined to be medically necessary, and excluded coverage for custodial care. The insurer disclaimed coverage for the nursing home bills claiming that the care rendered to Neuman was not medically necessary and was merely custodial care. The Appellate Court reversed the trial court’s grant of summary judgment to the insurer finding issues of fact whether Neuman’s confinement in a skilled nursing facility was medically necessary. The Appellate Court upheld the trial court’s grant of summary judgment in favor of the plan’s administrator, however, because it was not an insurer. While the plan administrator was the entity that was responsible for determining medical necessity and may have made a wrongful determination, payment of the claim would still be Mount Vernon’s responsibility.
05/03/01: SIDDIQUI v. NATIONWIDE MUTUAL INS. CO.
New York State, Appellate Division, Third Department
Issue of Fact Whether Insured’s Signature was Genuine Precluded Summary Judgment to Both Insurer and Insured
This matter arises out of an automobile accident that resulted in a total loss to plaintiff’s vehicle. Plaintiff filed a claim for collision damage with his insurer. The insurer denied coverage based on plaintiff’s failure to have the vehicle inspected for physical damage within five days of the policy’s issuance (11 NYCRR 67.4[b]). In a prior proceeding in this case, the insurer moved to dismiss the complaint producing an “Acknowledgment of Requirement for Photo Inspection” purportedly signed by plaintiff. Plaintiff opposed the motion claiming that the purported signature was a forgery and he never received the form. The Appellate Court affirmed the trial court’s decision in that proceeding finding a factual issue. Discovery was undertaken by the parties after which plaintiff brought the present proceeding seeking summary judgment for the insurer’s failure to comply with its obligation to advise him of the photo inspection requirement. The insurer crossed moved to dismiss the complaint alleging that plaintiff admitted it was his signature because in a notice to admit plaintiff responded that the signature on the form appears to be his signature. The Appellate Court reversed the trial court grant of summary judgment to the plaintiff, finding that there was still an issue of fact as to whether plaintiff’s signature on the Acknowledgment form was genuine. The Court did not find plaintiff’s response to the notice to admit an admission.
New York State Supreme Court, Appellate Division, First Department
GBL §349 Claim Not Viable in Coverage Dispute over Sufficiency of Proof of Loss
Court upheld denial of defendant’s motion to amend his answer to include a counterclaim against his insurer under General Business Law §349. The court concluded that the claim was not viable because it “essentially alleges a private contract dispute over policy coverage that is unique to the parties, rather than conduct that affects consumers at large.” This case was about a decision as to coverage, made on the basis of facts concerning this particular insured. GBL § 349 is inapplicable when all that is at issue is the sufficiency of a particular proof of loss.
05/02/01: CURRY v. ATLANTIC MUTUAL INS. CO.
New York State Supreme Court, Appellate Division, Fourth Department
Insurer Not Obligated to Indemnify Art Dealer’s Agent where Relationship Lacks Indicia of Employment
Plaintiffs commenced an underlying action against two art dealers, Roman and Heaps. Plaintiffs later obtained a default judgment against Heaps and commenced this declaratory judgment action seeking a declaration that Roman’s insurer must defend and indemnify Heaps under a commercial general liability policy because Heaps was Roman’s employee. The policy covered employees for acts within the scope of their employment. The court held that the insurer was entitled to judgment declaring that Heaps was not an employee of Roman and that defendant had no obligation to defend or indemnify Heaps in the underlying actions. The court held that even under the most generous interpretation of the relationship between these two dealers, it couldn’t be said that they had an employer-employee relationship. Heaps worked exclusively from his own premises, had no fixed work hours, paid his own expenses and was not paid a salary, and was not provided with insurance or training. Furthermore, Roman did not exercise control over the methods used by Heaps but, rather, gave only a general direction concerning the amount that Heaps could spend on his behalf on a particular item.
New York State, Appellate Division, Fourth Department
Issue of Timeliness is one for the Court, Not the Arbitrator
Claimant made a SUM claim on her auto policy and made request for arbitration. Insurer moved to stay the arbitration on the ground that the claimant failed to provide timely written notice of claim. The trial court ordered that the insurer’s application for a stay be referred to an arbitrator. The Appellate Court found the referral to be improper, as the issue of timeliness is for the court, not the arbitrator, to decide. As to the merits of the appeal, the Appellate Court found an issue of fact on whether the claimant gave notice of the claim “as soon as practicable” as required by the policy. The Appellate Court remanded the case to the trial court for a hearing on that issue.
California Supreme Court
Liability Insurer Permitted to Recover Indemnity Payments from Insured, Where Payments are Made but Later Determined Not to be Covered, holds California High Court
This case deserves a careful reading – and perhaps a New York insurer to test the theory in this State. The California Supreme Court has extended previous rulings regarding reimbursement of defense costs to now permit a liability insurer to recoup indemnity payments from its insured. In this case, the insurer had undertaken the defense under a reservation of rights. An opportunity came to allow the insurer to settle the case within the policy limits and the insurer advised the insured that it desired to do so, indicating that the insurer still didn’t believe the claim was covered and that it would thereafter seek to recoup the indemnity payments. The insured objected to a settlement conditioned upon the insurer seeking reimbursement. The carrier then gave the insured the option of assuming the defense and the insured refused that option as well. The insured also took the position that if the insurer thought the settlement was reasonable and chose not to unconditionally accept it, the insurer could be in bad faith if the verdict exceeded the policy limits.
The court ruled unanimously that an insurer that is defending under a reservation of rights and settles the claim over the objections of its policyholder is entitled to reimbursement for any reasonable settlement if it is later determined that the claims weren't covered. That right existed even if the insured objected to the settlement (so long as a court later determined that the settlement was reasonable). The court ruled that a contrary result would give the insured a windfall and discourage insurers from settling cases. The court ruled that the right to reimbursement of indemnity is implied in law and need not be expressly stated in the policy – a holding similar to its previous ruling in Buss v. Superior Court, 16 Cal.4th 35 (1997)
California Court of Appeal
Excess Insurer Who Has Notice of Competing Claims Which May Exceed Policy Limits Cannot Favor One Over Another ... or Else
This case considers the contractual obligations of an excess insurer who has notice of competing claims that may exceed the policy limits of the excess insurance coverage. In that situation, the question is whether the excess insurer may pay full benefits to the first insured who has exhausted the limits of the primary insurance coverage, or whether the insurer has a duty to protect the interests of the other insured who has not exhausted the primary insurance and is not yet entitled to claim excess insurance benefits. The court concludes that an excess insurer, with notice of potentially competing claims that exceed policy limits, has an obligation to treat both insureds fairly. That obligation encompasses the duty to refrain from favoring one insured over the other and from impairing either insured’s right to benefits. Evidence that the excess insurer paid full benefits to one insured with knowledge of the other insured’s competing claim to the same pool of funds may establish a breach of that duty, precluding summary judgment for the insurer.
Georgia Appellate Court
Business Risk Exclusion Applied to GC's Policy
The Georgia Appellate Court has affirmed a trial court decision in this construction defect case. Our insured, Triad Construction, was hired to construct a home. A slate deck attached to the home began to leak. The insured agreed to remove and reinstall the deck. Plastic sheeting used to cover the area blew away in a storm and water inundated the house, allegedly causing $165,000 in damages. Other disputes arose, and the customers cancelled their contract prior to completion of the home. Triad sued for moneys owed, and the customers counterclaimed. The counterclaim, as well as a subrogation claim by a builders’ risk insurer, were tendered to Northern, which declined coverage under its umbrella policy, after initially accepting under a reservation. Bituminous, which had issued a CGL policy, continued to defend. Bituminous then filed this contribution action against Northern. The trial court granted our motion for summary judgment, ruling that the damages that occurred to the house fell within the “business risk” exclusion from coverage under the policy. The court looked to the specific allegations in the underlying complaint: that Triad negligently allowed the unfinished residence to sustain substantial damage as a result of the removal of roof decks immediately prior to an impending, predicted storm. The loss affected only the unfinished home, and not any other property. The insured here was the general contractor and thus responsible for the entire construction project. Thus, the court affirmed the summary judgment below.
Prepared by Daina Kojelis of Zurich-American Insurance Group in Schaumburg, Illinois.
05/04/01: NORTHERN SECURITY INS. CO. v. PERRON
Vermont Supreme Court
Liability Insurance For Sexual Abuse by Minor Considered: "Inferred Intent" Rule May Not Apply to Sexual Abuse by Minor
The inferred-intent rule is inapplicable in cases where it is alleged that a minor has sexually abused another minor. Rather, the trier of fact should examine the facts and circumstances of the case before it, including the circumstances surrounding the sexual conduct, as well as the minor's “age, ability, intelligence, and experience,” to determine whether the minor alleged perpetrator expected or intended his or her actions to result in harm to the victim. By declining to apply the inferred-intent standard, insurers are not required to defend and provide coverage whenever a minor sexually abuses another minor. The minor perpetrator's intent be determined on a case-by-case basis. Coverage will be required only when a trier of fact determines, based on the particular characteristics and experience of the minor, that the minor did not intend to injure by his actions.
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Order, Supreme Court, New York County (Paula Omansky, J.), entered January 28, 2000, which, to the extent appealed from, denied defendant leave to amend his answer with respect to the second counterclaim, and paragraphs 59 to 99, of his proposed second amended answer, and order, same court and Justice, entered June 26, 2000, which, upon reargument, adhered to the January 28, 2000 order, unanimously affirmed, without costs.
The proposed counterclaim under General Business Law (GBL) § 349 is not viable because the counterclaim "essentially alleges a private contract dispute over policy coverage that is unique to the parties, rather than conduct that affects consumers at large" (see, Korn v First UNUM Life Ins. Co., ___ AD2d ___, 717 NYS2d 606). This case is about a decision as to coverage, made on the basis of facts concerning this particular insured (see, Pellechia & Pellechia, Inc. v Am. Natl. Fire Ins. Co., 244 AD2d 395). Although GBL § 349 is not necessarily inapplicable in insurance disputes (see, New York Univ. v Cont. Ins. Co., 87 NY2d 308, 321), it is here since all that is at issue is the sufficiency of a particular proof of loss (see, Schunk v New York Cent. Mut. Fire Ins. Co., 237 AD2d 913). We have not reached defendant insured's argument that the 1995 contract between plaintiff insurer and an adjuster, newly added as a party to this action pursuant to the first order on appeal, should be voided ab initio and immediate relief awarded defendant, since that argument is beyond the scope of the appeal as defined by defendant's notice of appeal (see, Watts v Gardiner, 90 AD2d 615). Were we to reach it, we would find no basis for judgment as a matter of law at this time (see, DiPasquale v Sec. Mut. Life Ins. Co., 273 AD2d 621).
ENTERED: MAY 3, 2001
Order, Supreme Court, Bronx County (Alan Saks, J.), entered September 24, 1999, which, inter alia, denied defendants/third-party plaintiffs' motion for summary judgment seeking a declaration that the third-party defendants' termination and denial of insurance coverage was invalid and granted summary judgment dismissing the third-party complaint, unanimously modified, on the law, to deny summary judgment in favor of third-party defendants Mount Vernon City School District, Mount Vernon District Employee Health Benefit Plan, Mount Vernon Public Schools' Group Health Insurance and Mount Vernon Board of Education, and, except as thus modified, affirmed, without costs or disbursements.
This is an action by plaintiff nursing home to recover amounts allegedly due for nursing home services rendered to defendant/third-party plaintiff Mildred Neuman, who, as a retired employee of the City School District of the City of Mount Vernon, was a beneficiary under the City of Mount Vernon District Employee Health Benefit Plan, which was administered by American Group Administrators (AGA) until about August 31, 1997. Thereafter, United HealthCare (United) became the insurance carrier for the Mount Vernon School District. Under the plans administered by both AGA and United, Mildred Neuman was covered for treatment determined to be "medically necessary"; coverage for "custodial care" was excluded. After AGA, the Mount Vernon third-party defendants (hereinafter Mount Vernon) and United denied coverage for services rendered subsequent to August 31, 1996, the Neumans brought a third-party action against them for, inter alia, a declaratory judgment that their termination and denial of insurance coverage was invalid and moved for partial summary judgment seeking such a declaration. Third-party defendants AGA and United separately cross-moved for summary judgment against the Neumans. The Supreme Court denied the Neumans' motion and granted summary judgment in favor of all the third-party defendants. The court found the Neumans' medical proof deficient, since the physician who examined Mildred Neuman and found that she suffered from "severe medical conditions which require continued care and treatment by skilled medical care professionals" was admittedly unfamiliar with the specific criteria used under the applicable policies in determining when benefits are to be afforded. Rather, the court relied on the affidavit of United's physician, who had reviewed Mildred Neuman's medical records and was, the court noted, "familiar with the criteria established under the appropriate policies with regard to the awarding of benefits based upon continued medical necessity." The court also held that AGA was entitled to summary judgment dismissing the third-party complaint on the additional ground that it was not an insurer but rather a plan administrator. We modify to deny summary judgment in favor of Mount Vernon.
Mount Vernon maintains that Mildred Neuman's confinement in a nursing home was not medically necessary, i.e., that her condition did not require skilled nursing care, and that her stay at the nursing home was custodial in nature. Therefore, Mount Vernon argues, the Neumans are not entitled to payment for nursing home services. Dr. Michael Rosen, a Medical Director for United, who has reviewed Mildred Neuman's medical records and agrees with this assessment, stated, however, that her medical conditions (in approximately January 1998) require twice daily wound dressing changes for Stage IV decubitis and frequent Foley catheter changes. Although Dr. Rosen recognized that both are skilled nursing services and are considered medically necessary, he maintained that such services can be performed by a visiting nurse and do not require confinement in a skilled nursing facility. But he does not state - nor does it seem likely - that the particular services Mildred Neuman required, services which must be performed at various times throughout the day, could be performed by visiting nurses. Further, while Dr. Rosen also stated that "it appears from the discharge summary that Mrs. Neuman has lost 100 pounds and . . . no longer requires either wound care treatment or Foley catheter care," the document he referred to does not support these conclusions, which, in any event, are contradicted by the physician who examined her approximately one month after the discharge summary was prepared. The record, while lengthy, is not sufficiently clear on these issues. Accordingly, since Mount Vernon has failed to demonstrate that Mildred Neuman's confinement in a skilled nursing facility was not medically necessary and that she received merely custodial care, the grant of summary judgment in its favor was erroneous.
Finally, we agree with the motion court's conclusion that since AGA was a plan administrator, not an insurer, it was entitled to summary judgment dismissing the third-party complaint. (See, Rice v Cayuga-Onondaga Health Care Plan, 190 AD2d 330, 333.) The Neumans assert that AGA's role was more than that of an administrator, since, under the Mount Vernon Employee Health Benefit Plan, AGA determined whether care is medically necessary. But even if AGA was solely responsible for determining medical necessity and made a wrongful determination in this regard, payment of the claim would still be Mount Vernon's responsibility.
ENTERED: MAY 3, 2001
Appeals (1) from an order of the Supreme Court (O'Brien III, J.), entered February 14, 2000 in Tompkins County, which, inter alia, granted plaintiff's motion for partial summary judgment on the issue of liability on its breach of contract cause of action against defendant Nationwide Mutual Insurance Company, and (2) from an order of said court, entered June 21, 2000 in Tompkins County, which denied said defendant's motion for reconsideration.
In October 1996, plaintiff sought to insure his 1995 Porsche 911 Carrera 4 through defendant M.V. Plaza Insurance Brokerage Inc., a provider of "assigned risk" insurance through the New York Automobile Insurance Plan. Plaintiff made a deposit of $1,275 toward the estimated annual premium of $5,079 and, on October 11, 1996, defendant Nationwide Mutual Insurance Company issued a policy providing plaintiff with liability and collision coverage on the vehicle. On November 2, 1996, the vehicle was involved in a collision, resulting in a total loss. Plaintiff thereafter filed a claim for the collision damage and, on November 14, 1996, Nationwide mailed plaintiff a notice indicating that his collision coverage had been suspended effective October 16, 1996 based upon his failure to have the vehicle inspected for physical damage within five days of the policy's issuance (see, Insurance Law § 3411 [d]; 11 NYCRR 67.4 [b] ). Nationwide therefore denied coverage for the accident, prompting this action by plaintiff to recover damages for Nationwide's breach of contract and M.V. Plaza's negligence.
Nationwide moved, inter alia, to dismiss the complaint upon the ground of a defense founded on documentary evidence, i.e., a document entitled "Acknowledgement of Requirement for Photo Inspection" purportedly signed by plaintiff. Plaintiff opposed the motion, asserting in relevant part that he never received notification regarding the photo inspection requirement and that his signature on the acknowledgment form was a forgery. Supreme Court denied the motion and, on appeal, this Court affirmed, finding that there were "factual disputes as to the notification regarding the vehicle inspection requirement and the authenticity of [plaintiff's] signature on the acknowledgment form" (255 AD2d 30, 32). We also rejected Nationwide's contention that, because carriers providing "assigned risk pool" insurance coverage have logistical difficulties in complying with photo inspection notification requirements, literal compliance with the governing regulations and statutes should not be required (id., at 33-34). We did not state, however, that no party other than the insurer could perform the required acts.
The parties thereafter proceeded with discovery. At his deposition, plaintiff testified that he purchased the vehicle in Connecticut and was told by the dealership that it would have someone call him regarding insurance. A few days later, an agent from M.V. Plaza telephoned plaintiff, advising him that it had a policy for him. Plaintiff thereafter received a policy in the mail and mailed checks for $1,275 to New York Automobile Insurance Plan and for $100 to M.V. Plaza. Plaintiff received insurance cards at the dealership when he went to pick up his car. Plaintiff never met the M.V. Plaza agent in person and never went to M.V. Plaza's business location. Plaintiff also indicated that he never saw, filled out or signed the New York automobile insurance application, that the signature on the acknowledgment form produced by Nationwide was not his, and that he never saw the acknowledgment form prior to initiating this action and was never told that he needed to get a photo inspection of his car.
In November 1999, plaintiff moved for partial summary judgment against Nationwide based on evidence that Nationwide failed to comply with its obligation to advise him of the photo inspection requirement. Nationwide cross-moved for summary judgment dismissing the complaint against it. At the November 2, 1999 oral argument on the motion, Nationwide presented a purported conformed copy of an affidavit of Alfredo Rivera, the broker from M.V. Plaza who had dealt with plaintiff, offered for the purpose of establishing M.V. Plaza's satisfaction of the 11 NYCRR part 67 notice requirements. According to Nationwide's counsel, the original affidavit, which had been signed by Rivera but had not yet been received, would be filed with the court as soon as it was received. Nationwide subsequently contacted Supreme Court and advised that the affidavit presented at oral argument had not in fact been signed. Subsequently, Nationwide filed with the court a signed affidavit of Rivera that varied somewhat from the one originally presented. Based upon the evidence produced on the motion and cross motion, but not the Rivera affidavit, Supreme Court granted plaintiff partial summary judgment on the issue of liability on his contract cause of action against Nationwide and granted partial summary judgment in favor of Nationwide dismissing the fraud cause of action against it. Nationwide appeals.
Subsequently, Nationwide moved for renewal and reargument. On the motion for renewal, Nationwide sought to have Supreme Court consider the Rivera affidavit, an opinion of the State Insurance Department regarding its interpretation of 11 NYCRR part 67, and the New York Automobile Insurance Plan's "Plan of Operation", all of which were alleged to constitute "newly discovered evidence". Supreme Court denied the motion for renewal and reargument in its entirety, and Nationwide appeals that order as well.
It should be noted at the outset that Nationwide's main brief fails to address the propriety of Supreme Court's order entered June 21, 2000 denying Nationwide's motion for reargument and renewal, thereby effecting an abandonment of Nationwide's appeal from that order (see, Transamerica Commercial Fin. Corp. v Matthews of Scotia, 178 AD2d 691, 692 n 1; First Natl. Bank of Amenia v Mountain Food Enters, 159 AD2d 900, 901). Nonetheless, despite Supreme Court's denial of the motion for renewal and Nationwide's failure to effectively contest that denial, on the balance of its appeal Nationwide places great reliance upon the material that it sought, and was not permitted, to introduce on the motion to renew, treating it in all respects as if it were properly before us. In our analysis, we shall give no consideration to the "evidence" that was the subject of Nationwide's unsuccessful renewal motion.
Absent the impermissibly introduced material, the sole evidence of any entity's compliance with Insurance Law § 3411 (d) and 11 NYCRR part 67 is the Acknowledgment of Requirement for Photo Inspection form, which was purportedly signed by plaintiff and formed the basis for Nationwide's original motion to dismiss. From Nationwide's perspective, the only progress since our affirmance of Supreme Court's order denying Nationwide's motion to dismiss is in the form of plaintiff's admission, given in response to a notice to admit, that "the signature on the * * * form appears to be his signature; however, as stated during previous discovery, plaintiff denies that he ever actually signed [that] form, and asserts that the signature which appears on the  form was fraudulently placed thereon". Contrary to Nationwide's representation, we do not view this response as an admission by plaintiff that the signature on the form was his. It therefore appears that, as when this matter was last before us, there exists a material question of fact as to whether plaintiff executed the Acknowledgment of Requirement for Photo Inspection form (see, 255 AD2d 30, 32, supra).
The next question for our consideration is whether that factual issue itself precluded Supreme Court's grant of partial summary judgment in favor of plaintiff. Under Supreme Court's analysis, 11 NYCRR 67.4 (c) (1) placed the burden on Nationwide, as the insurer, to come forward with competent evidence that it performed each of the following acts: (1) remind the insured of the inspection requirement on a prescribed confirmation letter or immediately obtain the prescribed acknowledgment signed by the insured, (2) at the time coverage is effected, immediately give the insured notice in person or by telephone of an inspection site where the inspection can be performed during the five‑calendar-day period, (3) at the time coverage is effected, immediately give the insured notice in person or by telephone of the consequences of the insured's failure to obtain a timely inspection, and (4) maintain documentation in the insured's policy record of the verbal notices required in (2) and (3) above. Supreme Court's analysis also required that each of those acts be performed by Nationwide, as the insurer, and considered the performance of those acts or any of them by M.V. Plaza or any other entity to be simply irrelevant. We disagree with both of Supreme Court's conclusions in that regard.
First, there is considerable merit to Nationwide's argument that, because an assigned risk carrier will likely have no knowledge of the issuance of assigned risk coverage within the requisite five-day period, it makes no sense to require the insurer to perform the tasks identified in 11 NYCRR 67.4 (c) (1). Apparently recognizing that fact, 11 NYCRR 67.8 specifically provides that "[t]he [New York Automobile Insurance Plan] shall have the same rights and obligations as an insurer to arrange for and complete inspections required by [Insurance Law § 3411 and 11 NYCRR part 67]. The plan shall forward the completed prescribed AUTOMOBILE INSURANCE INSPECTION REPORT to the designated insurer, which shall accept and be bound by such inspection."
Second, our reading of 11 NYCRR 67.4 (c) (1) and 11 NYCRR 67.6 (c) is nowhere near as restrictive as Supreme Court's. Clearly, those regulatory provisions mandate that, unless the inspection and inspection form are completed immediately upon the request for coverage, the insured be given prompt notice of the requirement that the vehicle be inspected within five days, advised of the identity and location of the inspection site or sites, and be given notice that failure to obtain the required inspection within the five-day period will result in suspension of the physical damage coverage on the automobile. That is not to say, however, that the insurer is required to come forward with multiple, and duplicative, documentation of its compliance with those requirements. In our view, a proffer of the prescribed acknowledgement signed by the insured constitutes satisfactory evidence of compliance with 11 NYCRR 67.6 (c), and we see nothing to the contrary in our prior decision in this action (255 AD2d 30, supra). In this case, Nationwide has submitted the prescribed Acknowledgment of Requirement for Photo Inspection form, containing plaintiff's purported certification that he has been informed that the vehicle being insured for physical damage coverage must be inspected by a representative of the insurer within five calendar days of the effective date of the damage coverage, that he has been provided with the location of the inspection site or sites, and that failure to obtain the required inspection within the time permitted will result in the suspension of the physical damage coverage on the sixth calendar day after the effective date thereof.
For the reasons stated above, we conclude that Supreme Court erred in granting plaintiff partial summary judgment on the issue of liability on his contract cause of action against Nationwide. Based upon the existence of a factual issue as to whether plaintiff's signature on the Acknowledgment of Requirement for Photo Inspection form is genuine, the motion should have been denied. Nationwide's remaining contentions have either been considered and found to be lacking in merit or need not be considered in view of our determination to reverse Supreme Court's grant of partial summary judgment in favor of plaintiff.
Cardona, P.J., Carpinello, Mugglin and Rose, JJ., concur.
ORDERED that the order entered February 14, 2000 is modified, on the law, without costs, by reversing so much thereof as granted plaintiff's motion for partial summary judgment on the issue of liability on his contract cause of action against defendant Nationwide Mutual Insurance Company; said motion denied; and, as so modified, affirmed.
ORDERED that the order entered June 21, 2000 is affirmed, without costs.
 11 NYCRR 67.4 (c) (1) provides in pertinent part:
* * * unless the inspection and the inspection report form are completed immediately upon the request for coverage, an insurer shall either immediately confirm physical damage coverage and remind the insured of the inspection requirement on a prescribed confirmation letter or immediately obtain the prescribed acknowledgment signed by the insured (applicant). * * * The insurer shall, at the time coverage is effected, furnish the insured with an inspection site where the inspection can be conducted during the five-calendar-day period. The location of an inspection site or sites and the consequences of the insured's failure to obtain a timely inspection shall be furnished immediately to the insured either in person or by telephone. Documentation of such verbal notice * * * must be contained in the insured's policy record.
Order unanimously modified on the law and as modified affirmed without costs and judgment granted in accordance with the following Memorandum: Supreme Court erred in denying the motion of defendant to the extent that it sought summary judgment declaring that it is not obligated to defend or indemnify Leo Heaps in plaintiffs' underlying actions against Heaps and Herbert Roman, individually and d/b/a Herbert Roman Galleries, and Herbert Roman, Inc. (collectively Roman). Defendant had issued a commercial general liability policy to Roman, which covered employees for acts within the scope of their employment. Plaintiffs obtained a default judgment against Heaps (see, Curry v Roman, 217 AD2d 314, 317-318, lv denied 88 NY2d 804) and commenced this declaratory judgment action seeking a declaration that defendant must defend and indemnify Heaps because Heaps was Roman's employee. Defendant moved and plaintiffs cross-moved for summary judgment on the issue whether Heaps was Roman's employee. The court denied the motion and cross motion, finding a question of fact on that issue.
The court should have granted defendant's motion to the extent that it sought summary judgment declaring that Heaps was not an employee of Roman and thus that defendant had no obligation to defend or indemnify Heaps in the underlying actions. The term "employee" is not defined in the policy and therefore should be given its plain meaning (see, Town of Harrison v National Union Fire Ins. Co., 89 NY2d 308, 316, rearg denied 89 NY2d 1031). Here, the record establishes that Heaps, a Toronto art dealer, was informed that a certain painting was going to be sold at an auction in Buffalo. He telephoned Roman, a New York City art dealer with whom he had a prior relationship, and informed Roman of the sale. Roman authorized Heaps to spend up to $40,000 to purchase the painting. Heaps testified at a deposition that he and Roman had engaged in this type of transaction on prior occasions, and that he expected to purchase the painting for Roman and to share in the profits when Roman sold it. Heaps traveled to the auction but was unsuccessful in purchasing the painting. Roman testified at his deposition that he and his secretary were the only two employees of his company. He used agents to purchase objects at auctions, and Heaps previously had purchased objects on his behalf. According to both Heaps and Roman, they would communicate with each other when a specific object interested them, and they would work out a deal at that time; sometimes Heaps would purchase an object with Roman and they would split the proceeds of the sale of the object. According to Heaps, on some occasions he would purchase an object that Roman would sell, and Heaps would retain a "minority interest" in the item or be paid a commission for procuring it. The agreement usually was not finalized until after the object had been acquired.
Even under the most generous interpretation of the relationship between these two dealers, it cannot be said that they had an employer-employee relationship. None of the indicia of an employment relationship articulated by the Court of Appeals is present (see, Matter of Ted Is Back Corp., 64 NY2d 725, 726; Matter of 12 Cornelia St., 56 NY2d 895, 897-898). Heaps worked exclusively from his own premises, had no fixed work hours, paid his own expenses and was not paid a salary, and was not provided with insurance or training. Roman did not exercise control over the methods used by Heaps but, rather, gave only a general direction concerning the amount that Heaps could spend on his behalf on a particular item. We therefore modify the order by granting the motion of defendant to the extent that it sought summary judgment declaring that it has no obligation to defend or indemnify Heaps in the underlying actions. (Appeal from Order of Supreme Court, Erie County, Flaherty, J. - Summary Judgment.) PRESENT: PIGOTT, JR., P. J., PINE, HAYES, KEHOE AND BURNS, JJ
Order unanimously reversed on the law without costs and matter remitted to Supreme Court for further proceedings in accordance with the following Memorandum: Petitioner commenced this proceeding seeking a permanent stay of arbitration on the ground that respondents failed to provide timely written notice of their claim for supplemental uninsured motorist (SUM) benefits under a policy issued by petitioner. Supreme Court erred in ordering that petitioner's application for a stay of arbitration be referred to an arbitrator. The issue of timeliness is for the court, not the arbitrator, to decide (see, e.g., Matter of Nationwide Ins. Co. [Brown-Young], 265 AD2d 918; Matter of Travelers Ins. Co. [DeLosh], 249 AD2d 924, 925-926; see generally, Matter of Rosenbaum [American Sur. Co. of N. Y.], 11 NY2d 310, 313-314). Concerning the merits, we conclude that this record presents an issue of fact whether respondents gave notice of the claim "[a]s soon as practicable", as required by the policy (see, Matter of Hartford Cas. Ins. Co. [Brody], 278 AD2d 830; Matter of Travelers Ins. Co. [DeLosh], supra, at 926). We therefore reverse the order and remit the matter to Supreme Court for a hearing to determine whether respondents gave notice in a timely manner (see, Matter of Hartford Cas. Ins. Co. [Brody], supra; Matter of State Farm Mut. Auto. Ins. Co. [Hernandez], 275 AD2d 989, 989-990; Matter of Travelers Ins. Co. [DeLosh], supra, at 926). (Appeal from Order of Supreme Court, Niagara County, Joslin, J. - Arbitration.) PRESENT: PIGOTT, JR., P. J., PINE, WISNER, HURLBUTT AND KEHOE, JJ