Coverage Pointers - Volume II, No. 8

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.

10/10/00: CHERRY HILL TEXTILES, INC. v. INS. CO. OF PENNSYLVANIA
New York State Supreme Court, Appellate Division, Second Department
Failure to Include Language Required by Insurance Law in Cancellation of Policy Provides Excuse for Late Notice of Loss
The Supreme Court was correct in concluding that the insurer’s notice of cancellation was facially defective, since it failed to reference Insurance Law § 3426(c)(1)(A) as required under Insurance Law § 3426(h). The court erred, however, in granting ICSP’s motion for summary judgment on the ground that the plaintiffs failed to give "prompt notice" of their loss. The plaintiffs ' four-month delay in reporting the loss to ICSP was based upon their broker's faulty advice that the policy had been cancelled, which was induced by ICSP’s error in issuing a defective notice of cancellation. Under these circumstances, the plaintiffs gave timely notice of their loss as a matter of law.

10/10/00: STEINMAN v. SILBOWITZ
New York State, Appellate Division First Department
Independent Counsel is Necessary Only where there is a Conflict of Interest between Insured and Insurer-Assigned Trial Counsel
Insured moved to discharge his insurer-assigned trial counsel alleging a conflict of interest after disagreements arose regarding trial or settlement strategy. The Court denied the motion finding no conflict of interest necessitating a substitution of counsel. Independent counsel is only necessary in cases where the defense attorney’s duty to the insured would require that he defeat liability on any ground and his duty to the insurer would require that he defeat liability only upon grounds which would render the insurer liable. Here there was no such conflict, as both the insured and his insurer shared a single common interest in defeating the claim made against the insured.

10/10/00: PROGRESSIVE v. YODICE
New York State Supreme Court, Appellate Division, Second Department
Negligent Operation of Ride Attached to Truck not Use or Operation of Auto under Auto Policy; Certificate of Insurance Conferred no Rights under Liability Policy
Numerous individuals were injured by the negligent operation of a ride, known as the "Whip", which was secured to the rear of a truck. As a result, an underlying personal injury action was commenced against the owner/operator of the truck and ride. The vehicle to which the Whip ride was secured was covered by an automobile insurance policy issued by Progressive, who disclaimed coverage in the underlying action. The owner was also insured under a commercial liability policy from Scottsdale Insurance Company. Scottsdale also disclaimed coverage, contending that while a policy was purchased to insure a ride known as the "Moonwalk", it had not been amended to include the Whip ride until after the accident. In this declaratory judgment action, the court upheld both disclaimers. With respect to the auto policy, the court concluded that, although the ride ran on the truck's engine, there were no allegations that the truck itself was used negligently. As such, it did not arise out of the use or operation of the insured truck. With respect to the policy issued by Scottsdale, the policy only covered the Moonwalk ride until it was later amended to include the Whip ride. A Certificate of Insurance to the contrary was not binding, since it stated that it was provided as a matter of information and conferred no rights upon the certificate holder.

10/05/00: MCDONOUGH v. DRYDEN MUTUAL INS. CO.
New York State Supreme Court, Appellate Division, Third Department
"Without Recourse" Provision of General Release Abolished Insurer’s Duty to Indemnify
This declaratory judgment action arose out of a motor vehicle accident that occurred when Conrade walked onto a highway and was struck by a motor vehicle after consuming alcohol at a tavern owned and operated by plaintiffs. Conrade and his wife commenced an underlying personal injury action, alleging that plaintiffs/tavern owners were negligent in serving alcohol to Conrade. The tavern owners were insured under a liability policy issued by the Defendant/insurer, who disclaimed coverage for the accident on various grounds. As part of a settlement agreement in the underlying action, the Conrades executed general releases absolving plaintiffs/tavern owners from any liability in the underlying action; however, the releases were to be held in escrow pending resolution of this coverage dispute. The settlement agreement further provided that if plaintiffs/tavern owners prevailed in the declaratory judgment action, the Conrades would not hold them personally liable for the settlement amount and would seek recovery solely from the insurer. Furthermore, the Conrades agreed to forfeit any right of recourse against the tavern owners in the event this action was unsuccessful. The court held that the insurer was not obligated to indemnify the tavern owners because the release discharging the insured tavern owners from all liability relieved the insurer from the duty of indemnification – it effectively eliminated any factual or legal grounds on which the duty to indemnify may be based. Thus, the "without recourse" provision coupled with a general release in favor of the insured abolished any present or future duty of indemnification on the part of the insurer.

10/02/00: SANTORO v. DANIEL
New York State, Appellate Division Second Department
Serious Injury Threshold: Unsworn Affirmation of Chiropractor and Unsworn Medical Reports not Competent Evidence

Plaintiff commenced this action for personal injuries following an automobile accident and defendants sought summary dismissal on the ground that plaintiff did not sustain a "serious injury" as required by Insurance Law §5102(d). The Court granted the dismissal finding that defendant made a prima facie showing that plaintiff did not sustain a serious injury. The Court rejected the unsworn affirmation of plaintiff’s treating chiropractor and unsworn medical reports submitted by the plaintiff because the material was not competent evidence necessary to defeat the motion.

10/02/00: WAZIRI v. SMALL
New York State, Appellate Division Second Department
Serious Injury Threshold: Disc Herniation Raises Issue of Fact
In this personal injury action arising out of injuries sustained in a rear-end collision, the court held that summary judgment dismissing the claim was improper. An issue of fact whether the plaintiff sustained "serious injury" was created by plaintiff’s expert, who stated that a MRI of plaintiff’s cervical spine five weeks after the accident showed a herniated disc.

10/02/00: GORRA v. NEW YORK LIFE INS. CO.
New York State, Appellate Division Second Department
Insurer Made Sufficient Showing of Material Misrepresentations on Policy Application
Plaintiff, the beneficiary on his father’s life insurance policy, brought this action to recover the proceeds of the policy following his father’s death within the two-year contestable period of the policy. The insurer denied the request because the insured had made material misrepresentations on the applications – he had failed to disclose certain medical conditions, including prior hospitalizations. The court dismissed the action, concluding that the insurer had demonstrated that material misrepresentations were made in the application, and that the omissions induced the insurer to accept the application, which might otherwise have been refused.

10/02/00 CASALE v. PROVIDENT LIFE AND CASUALTY INS. CO.
New York State, Appellate Division Second Department
Licensed Nurse under Suspension at Time of Injury Entitled to Disability Benefits
Insured sought to recover benefits under an occupational disability policy. In her application, the insured listed her occupation as "registered nurse" and indicated that her duties included intensive care nursing. After making a prima facie showing that she was disabled from her occupation as an intensive care nurse, the court granted summary judgment in her favor. The court rejected the insurer's argument that an issue of fact concerning her suspension from nursing at the time of the injury precluded summary judgment -- despite the suspension, she was a fully licensed nurse at the time of her accident.

09/29/00 PALIVODA v. SLUBERSKI
New York State, Appellate Division Fourth Department
Serious Injury Threshold: Plaintiff put forth no Objective Basis Causally Relating Injury to the Accident.
Defendants sought summary dismissal on the ground that plaintiff did not sustain a "serious injury" as required by Insurance Law §5102(d). The Court granted dismissal finding no objective medical basis for the opinions of plaintiff’s experts that the injury shown in a May 1998 MRI was causally related to the March 1992 accident. The Court found that the opinions were dependent solely upon plaintiff’s representations of continuing pain since terminating treatment in April 1992. X-rays done at the time of the accident and a MRI in June 1993 did not show an acute post-traumatic injury, but revealed only a pre-existing degenerative arthritic condition of the spine.

09/29/00: ROOFERS’ JOINT TRAINING, APPRENTICE AND EDUCATIONAL COMMITTEE OF WESTERN NEW YORK v. GENERAL ACCIDENT INS. CO. OF AMERICA
New York State Supreme Court, Appellate Division, Fourth Department
Total Pollution Exclusion does not Exclude Workplace Exposure to Toxic Fumes – Ordinary Insured would Understand Policy to Cover such Injuries
This action for a declaration of rights under a policy of commercial general liability insurance arose out of an underlying personal injury action for injuries resulting from exposure to toxic fumes during a construction safety course conducted by plaintiff. The fumes were released when a roofing membrane was applied with a hot air gun during a classroom demonstration. The insurer disclaimed coverage based on the total pollution exclusion endorsement to the policy. Court holds that exclusion does not unambiguously preclude coverage and thus rules in favor of insured. Term "pollutant" is ambiguous and an average insured could reasonably interpret that endorsement as applying only to environmental pollution.

ACROSS BORDERS

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

10/11/00: THOMPSON v. MERCURY CASUALTY CO.
California Court of Appeal, Fourth District, Division Two
Exclusionary Language Clear and Unambiguous but Unenforceable Because it was Inconspicuous
Language in auto policy, which limited liability coverage to permissive users, was written clearly and unambiguously. However, the coverage limitation was not easily found by policyholder, as it was not within the definition of insured. As such, it was unenforceable. Language was contained five pages later and in an area of the policy which could be overlooked by insured. Limiting or exclusionary language must not only be plain and clear, it must also be placed conspicuously in the contract to protect the insured’s reasonable expectation of coverage.

10/10/00: RELIANCE NATIONAL INS. CO. v. HATFIELD
Eighth Circuit (applying Michigan law)
Business Risk Exclusion Applies to Completed Operations and Products Coverages
Insured sold and then retrofitted two airplane engines, which thereafter suffered a catastrophic failure. While there would be coverage under both Completed Operations and Products Hazards coverages in the absence of exclusionary language, Business Risk exclusion applies to support carrier's claim of no coverage. Since damage was only to engines and engines were insured's product, no liability coverage available for suit by airplane owner.

AND IN DEFENSE . . .

10/05/00: BENNETT v. LEMBO
New Hampshire Supreme Court
Hedonic Damages Recoverable Where Plaintiff Suffered Permanent Injury
New Hampshire joins other states in holding that in case of permanent injury, plaintiff can recover damages for loss of enjoyment of life. Damages for loss of enjoyment of life compensate a plaintiff for the lost ability to engage in activities that once brought pleasure. The inability to engage in certain activities is the natural result of the incapacity that an impairment award is designed to compensate. As such, "the degree of a permanent injury is measured by ascertaining how the injury has deprived the plaintiff of his customary activities as a whole person." Accordingly, the court found damages for loss of enjoyment of life to be a component of permanent impairment.

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REPORTED DECISIONS

STEINMAN v. SILBOWITZ

Order, Supreme Court, New York County (Richard Lowe, III, J.), entered on or about March 22, 2000, which granted defendant’s motion to discharge his insurer-assigned trial counsel, authorized defendant’s retention of counsel of his choice, and directed defendant’s insurer to pay the reasonable costs of retaining such counsel, unanimously reversed, on the law, without costs, and the motion denied.

Contrary to the conclusion reached by Supreme Court, we perceive no conflict of interest necessitating a substitution of counsel. As a general rule, "[i]ndependent counsel is only necessary in cases where the defense attorney’s duty to the insured would require that he defeat liability on any ground and his duty to the insurer would require that he defeat liability only upon grounds which would render the insurer liable" (Pub. Serv. Mut. Ins. Co. v Goldfarb, 53 NY2d 392, 401, fn). In this action, both defendant and his insurer share a single, common interest in defeating the claim made against defendant. Hence, there is no conflict of interest. To the extent that defendant and his trial counsel may have certain disagreements regarding trial or settlement strategy, this, without more, is insufficient to warrant the relief requested (see, Pub. Serv. Mut. Ins. Co. v Goldfarb, supra; 69th St. and Second Ave. Garage Assocs., L.P. v Ticor Title Guar. Co., 207 AD2d 225, lv denied 87 NY2d 802).

PROGRESSIVE CASUALTY INS. CO. v. YODICE

DECISION & ORDER

In an action, inter alia, for a judgment declaring that the plaintiff is not required to defend and indemnify the defendants Dominick Yodice, d/b/a Mickey's Rides N More, Henry Lauterbach, and Laurana Cipolla in an underlying action entitled Nawrocki v Yodice, pending in the Supreme Court, Kings County, under Index No. 2816/98, the defendant Dominick Yodice, d/b/a Mickey's Rides N More, appeals, as limited by the briefs relied upon, and the defendants Henry Lauterbach and Laurana Cipolla, and the defendants Theresa Cipolla, Maria Nawrocki, and Julieanne Alfieri, separately appeal, as limited by their respective briefs, from so much of an order and judgment (one paper) of the Supreme Court, Richmond County, entered June 22, 1999, as, upon a decision of the same court dated April 6, 1999, (1) granted the plaintiff's motion for summary judgment and declared that the plaintiff is not obligated to defend or indemnify the defendants Dominick Yodice, d/b/a Mickey 's Rides N More, Henry Lauterbach, and Laurana Cipolla in the underlying action, and (2) granted the cross motion of the defendant Scottsdale Insurance Company for summary judgment and declared that it is not obligated to defend or indemnify the defendant Dominick Yodice, d/b/a Mickey's Rides N More, in the underlying action.

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

On March 30, 1997, the defendant Henry Lauterbach drove to a party at a home located in Staten Island in a truck which had a ride known as the "Whip" secured to its rear. The truck and the ride were owned by the defendant Dominick Yodice, d/b/a Mickey's Rides N More (hereinafter Mickey's). At one point, Lauterbach went inside the house and authorized the defendant Laurana Cipolla to operate the Whip ride. Laurana Cipolla allegedly operated the ride in a negligent manner, causing injuries to numerous individuals. Those individuals sued Mickey's to recover damages for their injuries.

The vehicle to which the Whip ride was secured was covered by an automobile insurance policy issued by the plaintiff, Progressive Casualty Insurance Company (hereinafter Progressive). Progressive disclaimed coverage in the underlying action and instituted this action. In addition to its automobile insurance policy, Mickey's had purchased a commercial liability insurance policy from the defendant Scottsdale Insurance Company (hereinafter Scottsdale). Scottsdale also disclaimed coverage, contending that while a policy with the effective date of March 16, 1997, was purchased to insure a ride known as the "Moonwalk", it had not been amended to include the Whip ride until April 2 3, 1997, after the date of the underlying incident. The Supreme Court granted summary judgment to both Progressive and Scottsdale. We affirm.

With respect to the automobile insurance policy issued by Progressive, the policy contains the standard automobile liability provision which requires the insurer to defend and indemnify the insured for accidents resulting in bodily injury or property damage caused by an occurrence arising out of the use, operation, or maintenance of the insured truck . Although the truck itself need not be the proximate cause of the injury (see, Argentina v Emery World Wide Delivery Corp., 93 NY2d 554, 563), "[n]egligence in the use of the vehicle must be shown, and that negligence must be a cause of the injury" (Argentina v Emery World Wide Delivery Corp., supra, at 562 ; see also, Eagle Ins. Co. v Butts, 269 AD2d 558).

The alleged acts of the defendants Henry Lauterbach and Laurana Cipolla involve the negligent operation of the Whip ride. Although the ride runs on the truck's engine , it is operated by a clutch in the rear of the truck. There were no allegations that the truck itself was used negligently. Under these circumstances, we agree with the Supreme Court that the plaintiff is not obligated to defend or indemnify Mickey's, Henry Lauterbach, and Laurana Cipolla (see, Eagle Ins. Co. v Butts, supra; Morris v Allstate Ins. Co., 261 AD2d 457, 458; Matter of New York Cent. Mut. Fire Ins. Co., 209 AD2d 927, 928; U.S. Oil Refining and Marketing Corp. v Aetna Cas. and Sur . Co., 181 AD2d 768, 769; Lumberman's Mut. Cas. Co. v Logan, 88 AD2d 971; United Servs. Auto. Assoc. v Aetna Cas. & Sur. Co., 75 AD2d 1022; cf., Bouchard v Canadian Pac. Ltd., 267 AD2d 899).

With respect to the policy issued by Scottsdale, it is undisputed that a policy was in effect at the time of the underlying incident. However, Scottsdale avers that the policy only covered the Moonwalk ride until it was amended to include the Whip ride on April 23, 1997. The appellants rely on a Certificate of Insurance for a commercial general liability insurance policy listing Mickey's as the insured for the period March 16, 1997, through March 16, 1998, and describing the insured's operations as the Whip ride. Notably, the certificate was prepared by Mickey's broker, and since "an insurance broker is the agent of the insured" (Incorporated Vil. of Pleasantville v Calvert Ins. Co., 204 AD2d 689), the certificate is not binding on Scottsdale (see, Shaw Temple A.M.E. Zion Church v Mount Vernon Fire Ins. Co., 199 AD2d 374; Meade v Finger Lakes-Seneca Coop. Ins. Co., 184 AD2d 952; Matco Products v Boston Old Colony Ins. Co., 104 AD2d 793). Further, where the certificate states that it is provided as a matter of information and confers no rights upon the certificate holder, as in the case at bar, the certificate is simply notice to the insured that a policy has been issued (see, Kaufman v Puritan Ins. Co., 126 AD2d 702; Taylor v Kinsella, 742 F2d 709, 711; McKenzie v New Jersey Tr. Rail Operations, 772 F Supp 146).

Accordingly, since the documentary evidence clearly indicates that Scottsdale's policy with respect to its coverage of the Whip ride was not effective until April 23, 1997, Scottsdale is not required to defend or indemnify Mickey's in connection with the underlying action.

CASALE v. PROVIDENT LIFE AND CASUALTY INSURANCE COMPANY

In an action to recover benefits pursuant to a policy of occupational disability insurance, the plaintiff appeals from so much of an order of the Supreme Court, Suffolk County (Doyle , J.), dated June 17, 1999, as denied her motion for summary judgment, and the defendant cross-appeals from so much of the same order as denied that branch of its cross motion which was for a further examination before trial of the plaintiff.

ORDERED that the cross appeal is dismissed, as the portion of the order cross-appealed from is not appealable as of right and leave to appeal has not been granted (see, Sainz v New York City Health & Hosps. Corp., 106 AD2d 500); and it is further,

ORDERED that the order is reversed insofar as appealed from, with costs, and the motion for summary judgment is granted.

In her application for an occupational disability policy, the plaintiff listed her occupation as "Registered Nurse", stating that her duties consisted of "Intensive Care Nursing". Thereafter, the defendant issued a policy which stated the following:

"Total Disability, before age 55 or before benefits have been paid for ten years for a period of disability, whichever is later, means that due to Injuries or Sickness:

"1. you are not able to perform the substantial and material duties of your occupation; and

"2. you are under the care and attendance of a Physician.

* * *

"your occupation means the occupation (or occupations, if more than one) in which you are regularly engaged at the time you become disabled".

There is no question that the plaintiff's occupation at the time she became disabled was that of intensive care nurse. Accordingly, since the defendant failed to present evidence to rebut the plaintiff's prima facie showing that she was totally disabled and unable to perform her duties as an intensive care nurse, the plaintiff's motion for summary judgment should have been granted (see, Primavera v Rose & Kiernan, 248 AD2d 842; Nickoson v Provident Life & Acc. Ins. Co., 202 F3d 269; Kinstler v First Reliance Standard Life Ins. Co., 181 F3d 243).

The defendant alleges that the plaintiff's temporary suspension, which began before her accident, and the probationary discipline that was later imposed upon her, raise an issue of fact as to whether she was disabled from her occupation . This argument is without merit. The plaintiff was a fully-licensed nurse at the time of her accident , and did not lose her license as the direct result of events occurring before the accident.

The defendant's claim that the plaintiff's motion for summary judgment was premature is without merit . The affidavit submitted in opposition to the plaintiff's motion does not reveal that "facts essential to justify opposition may exist but cannot be stated" (CPLR 3212[f]).

GORRA v NEW YORK LIFE INSURANCE COMPANY

In an action to obtain the proceeds of a life insurance policy, the defendant appeals from an order of the Supreme Court, Kings County (Held, J.), dated November 17, 1999, which denied its motion for summary judgment dismissing the complaint.

ORDERED that the order is reversed, on the law, with costs, the motion is granted, and the complaint is dismissed.

The plaintiff was the beneficiary of a life insurance policy issued to his father (hereinafter the insured) by the defendant. On the policy applications, dated November 8, 1984, and November 15, 1984, the insured failed to disclose his prior hospitalization from September 12, 1984, through September 21, 1984, as well as his hemoptysis (coughing of blood). The insured died within the two-year contestable period. After an investigation, the defendant denied the plaintiff's request for the proceeds of the life insurance policy on the ground that the insured had made material misrepresentations on the applications. The Supreme Court denied the defendant's motion for summary judgment dismissing the complaint on the basis that there are triable issues of fact. We reverse.

Contrary to the Supreme Court's determination, the defendant proffered sufficient evidence to establish, as a matter of law, that the insured made material misrepresentations on his policy applications (see, Gugleotti v Lincoln Sec. Life Ins. Co., 234 AD2d 514; Aguilar v United States Life Ins. Co., 162 AD2d 209; Meagher v Executive Life Ins. Co. of New York, 200 AD2d 720). The defendant submitted an affidavit of its assistant vice-president in charge of new business underwriting and relevant portions of its underwriting manual which established that the omissions induced it to accept the insured's applications for insurance, which it might otherwise have refused (see, Shabashev v New York Life Ins. Co., 150 AD2d 673; Gugleotti v Lincoln Sec. Life Ins. Co., supra; Geer v Union Mut. Life Ins. Co., 273 NY 261; Aguilar v United States Life Ins. Co., supra). In opposition, the plaintiff did not raise a triable issue of fact. Accordingly, the defendant was entitled to summary judgment.

SANTORO v DANIEL

In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Queens County (Durante, J.), dated October 20, 1999, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain 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.

The defendants established a prima facie case that the plaintiff's injuries were not serious through the affirmed reports of orthopedists, who, upon examining the plaintiff, found no objective evidence of any orthopedic disability (see, Gaddy v Eyler, 79 NY2d 955, 956-957). The affirmation of the plaintiff's treating chiropractor, which was not notarized, and unsworn medical reports submitted by the plaintiff in opposition to the motion did not constitute competent evidence (see, Feintuch v Grella, 209 AD2d 3 77; Pagano v Kingsbury, 182 AD2d 268). Accordingly, the plaintiff failed to raise a triable issue of fact (see, CPLR 3212[b]).

MANGANO, P.J., S. MILLER, McGINITY, LUCIANO and SMITH, JJ., concur .

WAZIRI v. SMALL

In an action to recover damages for personal injuries , the plaintiff appeals from an order of the Supreme Court, Queens County (Price, J.), dated December 22, 1999, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain 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 denied , and the complaint is reinstated.

The Supreme Court improperly granted the defendant 's motion. The plaintiff's expert found that a Magnetic Resonance Imaging (hereinafter MRI) of the plaintiff 's cervical spine performed on August 26, 1996, approximately five weeks after the subject accident, revealed a herniated disc at C6-C7. This raised a triable issue of fact as to whether the plaintiff had sustained a serious injury within the meaning of the Insurance Law (see, Chaplin v Taylor, AD2d [2d Dept., June 5, 2000]; Flanagan v Hoeg, 212 AD2d 756, 757).

McDONOUGH v. DRYDEN MUTUAL INS. CO.

Carpinello , J.

Appeal from an order of the Supreme Court (Rose, J.), entered July 1, 1999 in Broome County, which granted defendant's motion for partial summary judgment and declared that it is not obligated to indemnify plaintiffs in an underlying personal injury action.

This declaratory judgment action arises out a motor vehicle accident which occurred on November 19, 1994 when Keith Conrade walked onto a highway and was struck by a motor vehicle after consuming alcoholic beverages at a tavern owned and operated by plaintiffs. Conrade and his wife thereafter commenced an action to recover damages for personal injuries and loss of services, alleging that plaintiffs were negligent in serving Conrade alcoholic beverages while he was visibly intoxicated and in failing to properly supervise him after purportedly assuming dominion and control over his person. Defendant, who had issued plaintiffs an insurance policy in connection with their ownership of the tavern, disclaimed coverage for the accident on various grounds. As a result, plaintiffs commenced this action seeking, inter alia, a declaration that defendant is obligated to defend and indemnify them in the underlying action.

Meanwhile, as part of a settlement agreement, the Conrades executed general releases absolving plaintiffs from any liability in the underlying action. Under the terms of the settlement agreement, however, the releases would be held in escrow pending resolution of this declaratory judgment action, which plaintiffs agreed would be prosecuted to its conclusion by the Conrades' attorneys. The settlement agreement further provided that if plaintiffs prevailed in this action, the Conrades would not hold them personally liable for the settlement amount and would seek recovery solely from defendant. Notably, in the event that plaintiffs were not successful in this action, the Conrades agreed to forfeit any right to seek recourse against them for the settlement amount. Needless to say, defendant did not participate in the settlement.

Thereafter, defendant moved for partial summary judgment seeking a declaration that it is not obligated to indemnify plaintiffs in the underlying action. Finding that the general releases relieved defendant of the duty to indemnify, Supreme Court granted the motion . Plaintiffs appeal.

We affirm. As an insurer's obligation to indemnify extends only to those damages the insured is legally obligated to pay, it naturally follows that a release discharging an insured from all liability relieves the insurer from the duty of indemnification because it effectively eliminates any factual or legal grounds on which the duty to indemnify may be based (see, Westervelt v Dryden Mut. Ins. Co., 252 AD2d 877, 879; Erdman v Eagle Ins. Co., 239 AD2d 847, lv denied 90 NY2d 926; see also, Syvertsen v Great Am. Ins. Co., 267 AD2d 854, 857-858). Here, the settlement agreement explicitly provided that the Conrades would have no future recourse against plaintiffs in the underlying action, regardless of whether any recovery is obtained from defendant. In this regard, the circumstances underlying this case are closely analogous to those presented in Westervelt v Dryden Mut. Ins. Co. (supra), in which this Court concluded that such a "without recourse" provision coupled with a general release in favor of an insured abolished any present or future duty of indemnification on the part of the insurer.

We are unpersuaded by plaintiffs' attempt to distinguish Westervelt on the ground that the insured in that case assigned its right to recovery to the plaintiff in the underlying action, whereas the settlement agreement here involved no such assignment of rights. The sole issue for this Court's resolution involves whether any duty of indemnification is owed by defendant to plaintiffs. Since we conclude that the language of the settlement agreement and the releases executed by the Conrades relieved plaintiffs from any legal liability, we find that defendant's duty to indemnify plaintiffs was also thereby extinguished. Accordingly, Supreme Court properly granted defendant's motion for partial summary judgment declaring that it is not obligated to indemnify plaintiffs in the underlying action.

Plaintiffs' remaining contentions have been reviewed and rejected as lacking in merit.

PALIVODA v. SLUBERSKI

Memorandum: Supreme Court properly granted the motions of Merry L. Butler, a/k/a Merry L. Hedges, and Danella Rental Systems, Inc. (defendants) for summary judgment dismissing the complaint against them. Defendants submitted evidence in admissible form establishing as a matter of law that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d). In response, plaintiff failed to raise a triable issue of fact. There is no objective medical basis for the opinions of plaintiff’s experts that the injury shown in a May 1998 MRI is causally related to the March 1992 accident (see, Calderon v Elsenreich, 270 AD2d 380; Dimenshteyn v Caruso , 262 AD2d 348; Vitale v Carson, 258 AD2d 647). Those opinions are dependent solely upon plaintiff ’s representations of continuing pain and related problems since terminating treatment in April 1992 (see, McKnight v LaValle, 147 AD2d 902, 903, lv denied 74 NY2d 605). As of that date, plaintiff’s attending physician reported that plaintiff "had full range of motion and complained of no pain." Plaintiff was X-rayed on March 2, 1992, the day of the accident, and in December 1992 and March 1993, and he had an MRI in June 1993. None of those diagnostic tests showed an acute posttraumatic injury. They revealed only the existence of a preexisting degenerative arthritic condition of the cervical spine. Although a July 1993 EMG and nerve conduction studies showed "mild C 7 radiculopathy" ;, plaintiff failed to submit evidence in admissible form establishing a causal relationship between the accident and that injury. (Appeal from Judgment and Order of Supreme Court, Erie County, Fahey, J. - Summary Judgment.) PRESENT: GREEN, J. P., HAYES, WISNER, SCUDDER AND LAWTON, JJ. (Filed Sept. 29, 2000.)

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