Coverage Pointers - Volume II, No. 9

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.

10/26/00: WESTVIEW ASSOC. v. GUARANTY NATIONAL INS. CO.
New York Court of Appeals
Excess Policy Provided Coverage for Lead Paint Claims against Building Owner Even Though Underlying Policy Contained Exclusion; Lead Paint not Excluded by Pollution Exclusion in Excess Policy
The umbrella policy provided for two separate and distinct types of coverage -- Coverage A and Coverage B. Coverage A provided excess coverage for injuries already covered by an underlying policy and, in this regard, contained a provision specifically incorporating the "coverage provisions" of the underlying policy. By definition, "excess" coverage covered the same types of claims as the primary policy, but for additional amounts. Furthermore, the incorporation clause in Coverage A was properly read to incorporate the exclusions in the underlying policy. Coverage B, by contrast, provided additional primary coverage for injuries not covered in the underlying policy. Unlike Coverage A, Coverage B did not incorporate the exclusions contained in the underlying policy. Significantly, there was no incorporation-by-reference clause in Coverage B and no lead paint exclusion. As such, the court held that Coverage B covered lead paint claims. The court rejected the argument that the claims were excluded by a "pollution exclusion" in the umbrella policy – there was no language in the policy’s definition of "pollution" indicating that lead paint was included in the term. Moreover, both the umbrella and underlying policy contained a general pollution exclusion, while only the underlying policy contained a specific lead paint exclusion. To read the general pollution exclusion as including lead paint would render the specific lead paint exclusion in the underlying policy meaningless.

10/24/00: DARBY & DARBY, P.C. v. VSI INTERNATIONAL, INC.
New York Court of Appeals
Legal Malpractice Claim Fails – No Duty Existed to Advise Client about Possible Coverage for Patent Infringement Litigation
The issue presented by this appeal was whether a New York law firm retained to defend a corporate client in patent infringement litigation had a duty to advise the client about possible insurance coverage for litigation costs under the "advertising injury" clause of a general liability policy. The court concluded that it did not. The court held that, while attorneys should familiarize themselves with current legal developments so that they can make informed judgments and effectively counsel their clients, the firm in this case should not be held liable for failing to advise defendants about a novel and questionable theory pertaining to their insurance coverage. "A legal malpractice action is unlikely to succeed when the attorney erred because an issue of law was unsettled or debatable. The perfect vision and wisdom of hindsight is an unreliable test for determining the past existence of legal malpractice." Because the law firm acted in a manner that was reasonable and consistent with the law as it existed at the time of representation, it had no duty to inform defendants about possible advertising liability insurance coverage for their patent infringement litigation expenses.

10/26/00: IN RE STATE INS. FUND v. COUNTRY-WIDE INS. CO.
New York State, Appellate Division First Department
Claim by Workers’ Compensation Carrier Against Automobile Liability Insurer to Recover Payments Subject to Three Year Statute of Limitations that Commences to Run on Date First Payment is Made to Injured Party
Action by petitioner, State Insurance Fund to vacate an arbitration award denying its claim against Country-Wide to recover payments made to its insured’s employee. The lower court granted petitioner’s application and directed the arbitrator to rehear petitioner’s claim for payments it made to the injured worker within the three-year Statute of Limitations, after the commencement of the arbitration award. Petitioner had paid workers’ compensation and medical expenses to its insured’s employee who was injured in an automobile accident. The employee was driving a vehicle insured by Country-Wide Insurance. In upholding the lower court’s decision, the Appellate Court found that the arbitrator’s acceptance of respondent’s statute of limitations defense was subject to judicial review under an arbitrary and capricious standard. The Appellate Court then held that it was arbitrary and capricious for the arbitrator not to follow clear precedent that claims like petitioners are subject to a three year limitations period that commences from the date of the first payment to the injured party not the date of the injury. The statute of limitations defense here would only preclude recovery of payments made more than three years prior to the commencement of the suit.

10/23/00: MATTER OF EAGLE INS. CO. v. LUCERO
New York State Supreme Court, Appellate Division, Second Department
Offending Vehicle’s Insurer must be Joined in UM Carrier’s Action Challenging Policy Cancellation
In action to stay arbitration of UM claim, court held that issue of fact whether cancellation of insurance on offending vehicle was valid could not properly be litigated without joinder of offending vehicle’s insurer. A hearing was required on the issue, preceded by an order joining the offending vehicle’s insurer, as well as the owner and driver of the vehicle.

10/19/00: FIORE v. EXCELSIOR INSURANCE

New York State Supreme Court, Appellate Division, Third Department
Without an Intention to Remain, Residency is not established for Purposes of Homeowner's Policy Exclusion for Claims by Resident Relatives
Roth was injured when he fell from a ladder while removing snow from the roof of the home of his sister and her husband, the named insureds under a homeowner’s policy. Insurer disclaimed coverage on the ground that Roth was an additional insured under plaintiffs ' homeowner's policy in that Roth was a relative living in plaintiffs' home and the policy did not provide coverage for bodily injury to an insured. Plaintiffs' policy defined an "insured" as the named insured, as well as relatives who are residents of the insured's household, and excludes personal liability coverage for bodily injury to any "insured." It is settled law that where, as here, the term residency is not defined in the subject homeowners' policy, it "requires something more than temporary or physical presence and requires at least some degree of permanence and intention to remain." The uncontroverted proof established that approximately two months prior to the accident, the Roths sold their home in Florida and moved to New York. They accepted sister’s offer to stay in their three-bedroom home until they could secure employment and a new home. The Roths slept in a bed in plaintiffs' dining room where they kept their clothing in boxes, as the bedrooms were occupied by plaintiffs their family. The Roths' belongings were stored in plaintiffs' attic and basement, as well as at other relatives' homes. At the time of the accident, the Roths had secured part-time employment and had contacted real estate agents in their search for a new home. Although they used plaintiffs' address for certain purposes, they had a post office box where they received their mail. There was no indication of an intent to stay there long-term, hence they were not "resident relatives" under the policy.

10/16/00: DIMAGGIO v. ROSLYN SAVINGS BANK
New York State Supreme Court, Appellate Division, Second Department
Two-Year Contestability Clause in Original Life Insurance Policy applies to Reinstated Policy; Period Measured from Reinstatement
The insurer issued a life insurance policy containing a two-year contestability clause, which lapsed for non-payment of premium, but was later reinstated. After the insured died, the claim for benefits was rejected on the ground that the insured had made material misrepresentations regarding her health in her application for reinstatement. In this action to recover the policy proceeds, the court held that the two-year contestability period in the original policy applied to the reinstated policy, despite the fact that neither the policy nor the reinstatement application specifically provided that a reinstated policy would have a two-year contestability period. And the two-year period begins to run anew when the policy is reinstated after lapsing. 

10/16/00: GASSLER v. MONARCH LIFE INS. CO.
New York State, Appellate Division, Second Department
Insured Not Entitled to Disability Where Podiatry License was revoked Prior to Disability
Insured podiatrist brought this action to recover disability benefits. Insured’s disability policy provided benefits if he was unable to do the substantial and material duties of his regular profession as a result of a total disability and that his total disability was the result of sickness or injury and he was under a doctor’s care. Insured’s license to practice podiatry was revoked after he pleaded guilty to Medicaid fraud, and two weeks later he consulted a psychiatrist for depression. He then applied for benefits, which were denied. The court upheld the denial finding that the insured was unable to practice podiatry in New York because of a legal disability (revocation of his license) not a medical disability (depression).

10/16/00: OCASIO v. HENRY
New York State, Appellate Division, Second Department
Serious Injury Threshold: Chiropractor’s Report that was Not based on Recent Examination an did Not Quantify Limitations was Insufficient to Prove "Serious Injury"
Plaintiff commenced this action for injuries sustained in an automobile accident. The court found that defendant made a prima facie showing that the plaintiff did not sustain a "serious injury." It then became plaintiff’s burden to come forward with admissible evidence of a "serious injury", which plaintiff attempted to do with her chiropractor’s report. The court found the report insufficient to raise an issue of fact, as it was not based on a recent examination, failed to quantify any limitations of motion and did not verify any limitation by objective medical findings. The court also rejected plaintiff’s claim that she was unable to perform her customary daily activities during at least 90 out of the first 180 days based on plaintiff’s own admission that she missed only two weeks of work and school.

10/16/00: VIRGILIO v. SANTIVASCI
New York State, Appellate Division, Second Department
Serious Injury Threshold: Disc Herniation without Objective Evidence of Extent or Degree and Duration of Limitations not a "Serious Injury"
Plaintiff commenced this action for injuries sustained in an automobile accident. The Court found that defendant made a prima facie showing that the plaintiff did not sustain a serious injury. It then became plaintiff’s burden to come forward with admissible evidence of a serious injury. While the plaintiff presented evidence of a herniated disc, he failed to provide objective evidence of the extent or degree and duration of the alleged physical limitations resulting from the injury. Defendants’ motion for summary judgment granted.

ACROSS BORDERS

We regularly feature significant cases of interest from other jurisdictions. This week we offer decisions from California and Colorado:

10/25/00: RELIANCE INS. CO. v. SUPERIOR COURT
California Court of Appeal, Sixth Appellate District
Insurer Intervention in Third-Party Litigation -- Insurer Permitted to Intervene to Protect its Own Interests where Insured Has No Defenses
Reliance’s corporate insured, defendant in an action to recovery property damage, had its corporate status suspended and was thus unable to defend itself. Reliance moved to intervene, which was denied by the underlying court. Plaintiffs could obtain a default against the insured for which Reliance would then be liable. Despite a settlement of the underlying claim before the Supreme Court ruled, the Supreme Court nevertheless decided to rule on the case "due to its general importance and recurring nature". The court ruled that "Intervention by an insurer is permitted where the insurer remains liable for any default judgment against the insured, and it has no means other than intervention to litigate liability or damage issues."
Submitted by John Intondi.


10/24/00:
PIRKHEIM v. FIRST UNUM LIFE INS.
Tenth Circuit
Heart Patient who died when Pacemaker Failed did not Die Independent of Heart Disease -- Life Insurance for Accidental Death Not Available
Life insurance policy provided coverage for accidental death -- specific policy language provided: The loss must result directly and independently of all other causes from accidental bodily injury which occurs while this policy is in force as to the Insured, herein called "injury". Infant plaintiff suffered from cardiac arrhythmia and had pacemaker installed. Death was caused by the failure of the pacemaker, which in turn was caused by the battery becoming depleted. While this was clearly an accidental death, both District Court and Court of Appeals concluded that the term "directly and independently of all other causes," should be given their plain and ordinary meaning in context of this particular insuring clause and are not ambiguous. In stating the "loss must result directly and independently of all other causes from accidental bodily injury," the policy imposes two obvious conditions. First, the loss must result directly from accidental bodily injury. Second, the loss must result independently of all other causes. In short, the word "directly" modifies the phrase "from accidental bodily injury." Any other interpretation in this context is contrived. Because the death did not occur independent of all other causes, e.g., his cardiac arrhythmia, one of the two express policy conditions was not satisfied. Accordingly, the plan administrator did not err in denying accidental death benefits.

10/17/00: COMMERCIAL UNDERWRTERS INS. CO. v. SUPERIOR COURT
California Court of Appeal, Second Appellate District, Division Seven
Where Policies Allege Bodily Injuries and Emotional Distress (and an Accident) Carrier Would Have Duty to Defend, Even Though Sexual Abuse is One of the Claims
Plaintiff alleged for 12 years she and defendant had a "many-faceted relationship" in which he was her "teacher, therapist, counselor, tutor, employer and a person who undertook the responsibility, for money, to psychologically rescue and make her a better person, psychologically." She characterized this as a "consumer" relationship. She alleges varied causes of action. The insurance policy defines "bodily injury" as "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time." The complaint did not allege any facts constituting bodily injury; however, responses to interrogatories alleged as damages physical symptoms including "a brief reactive psychosis, a pre-ulcer condition in plaintiff’s stomach (including physical pain), headaches, body shaking, nervousness, shocked nervous system with resulting weakness and fatigue," and others. A court making a determination of the duty to defend may properly consider such extrinsic evidence. Physical pain is alleged in addition to emotional distress. However, business pursuits exclusion applies to preclude coverage in certain policies. Bruce D. Celebrezze with the San Francisco law firm of Celebrezze & Wesley, summarizes the holdings as follows:

1. Applying the definition of "occurrence" as meaning an "accident," the court essentially gutted current California law and found that unintended consequences from intentional acts constitute an "occurrence."
2. The court disagreed with the Mendez decision which found that the term "occurrence" meaning "accident" precludes coverage for any conduct intended by the insured as well as any unexpected or unintended consequences from that conduct. The court found this "intentional act vs. intentional harm" analysis to be "overly simplistic" and declined to follow it.
3. Relying on New Jersey and Nevada case law, the court found that the "better rule" would define "accident" to include unintended harm flowing from intentional acts.
4. The J.C. Penney case, involving Insurance Code § 533, while precluding coverage for sexual molestation and other inherently wrongful sexual acts, does not mandate a preclusion of coverage for all actions involving allegations of sexual impropriety, especially in this case where the conduct was alleged to be consensual.
5. The court found that the accidental nature of an "occurrence" is determined by analyzing whether the alleged wrongdoer intended or expected to cause an injury.

6. The court held that the focus should be on the "intent to do harm" as opposed to the "intent to do the act."
7. The court found that, because the underlying claims against were not entirely about sex, but rather alleged improper psychological treatment and failure to refer her to proper therapeutic help which could be considered "accidental," the insured could have intended to help the tort plaintiff by his conduct and unintentionally ended up harming her.

AND IN DEFENSE . . .

10/19/00: BROTHERS v. FLORENCE
New York Court of Appeals
Statute Shortening (Non-Medical) Malpractice Statute of Limitations Given Retroactive Effect; Barred Litigants Given Grace Period

On September 4, 1996, the Governor signed into law a statute amending CPLR §214 (6) to shorten the limitations period in non-medical malpractice claims to three years "regardless of whether the underlying theory is based in contract or tort". (CPLR §214 (6), as amended by L. 1996, ch. 623). The amendment was to "take effect immediately" (L. 1996, ch. 623, §2). The Court of Appeals holds that the statute is to be applied retroactively, even to pending cases, but added a one-year grace period to cases that were pending and now time-barred on the effective date of the statutory amendments. It also added the grace period to cases that were not yet time-barred, but would soon become so after the enactment.

Hurwitz & Fine, P.C. is a full-service law firm
providing legal services throughout the State of New York.


Newsletter Editor
Kevin T. Merriman
[email protected]

Insurance Coverage Team
Dan D. Kohane, Team Leader
[email protected]
Sheldon Hurwitz
Carolyn M. Henry
Kevin T. Merriman

Fire, First Party & Subrogation Team
James D. Gauthier, Team Leader
[email protected]
Donna L. Burden
Andrea Schillaci
Jody E. Briandi

© COPYRIGHT 2000 Hurwitz & Fine, P.C., ALL RIGHTS RESERVED.

 

REPORTED DECISIONS

MATTER OF EAGLE INSURANCE COMPANY v LUCERO

In a proceeding to stay arbitration of an uninsured motorist claim , the appeal is from (1) an order of the Supreme Court, Nassau County (Adams, J.), dated October 4, 1 999, which granted the petition and stayed the arbitration, and (2) an order of the same court dated December 1, 1999, which denied the appellants' motion, in effect, for leave to reargue.

ORDERED that the appeal from the order dated December 1, 1999, is dismissed; and it is further,

ORDERED that the order dated October 4, 1999, is reversed, on the law, with costs, and the matter is remitted to the Supreme Court, Nassau County, for further proceedings consistent herewith .

The appellants' motion, denominated as one for leave to renew their opposition to the petition for a stay of arbitration, which was based on supposedly new facts, did not include proof of any "reasonable justification for the failure to present such facts on the prior [application]" (CPLR 2221[e][3]). The motion was, therefore, in effect for leave to reargue, the denial of which is not appealable (see, CPLR 5701[a][2][viii]; Sallusti v Jones, AD2d [2d Dept., June 12, 2000]; Nisnewitz v Renna, AD2d [2d Dept., June 5, 2000]; McCorvey v Shoulder, AD2d [2d Dept., June 5, 2000]; Bossio v Fiorillo, 222 AD2d 476; Vaynshteyn v Cohen, 266 AD2d 280; Citibank v Olson, 204 AD2d 381).

There is an issue of fact as to whether the cancellation of insurance on the offending vehicle was invalid due to non-compliance with Banking Law § 576 ( see, 1395 Second Ave. Rest. v All City Ins. Co., 207 AD2d 271; Parkside Food Ctr. v United Int. Ins. Co., 193 AD2d 658; L.Z.R. Raphaely Galleries v Lumbermens Mut . Cas. Co., 191 AD2d 680). The issue of whether the insurance was validly cancelled before the date of the accident cannot be properly litigated without the joinder of Lumbermen's Mutual Casualty Company , the alleged insurer of the offending vehicle. A hearing must therefore be held, preceded by an order joining the alleged insurer of the offending vehicle as well as the owner and driver of that vehicle, as additional parties (see, Matter of New York Cent. Mut. Fire Ins. Co. v Paillant, 269 AD2d 451; Matter of Liberty Mut. Ins. Co. v Bohl, 262 AD2d 645).

BRACKEN, J.P., THOMPSON, S. MILLER and FLORIO, JJ., concur.

DiMAGGIO v ROSLYN SAVINGS BANK

In an action to recover the proceeds of a life insurance policy, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Dunn, J.), dated August 19, 1999, which denied his motion for summary judgment and granted the defendant's cross motion for summary judgment dismissing the complaint and on its counterclaim for rescission of the policy.

ORDERED that the order is affirmed, with costs.

On May 1, 1989, the defendant's predecessor in interest issued a life insurance policy on the life of the plaintiff's wife, Loretta DiMaggio, which contained a two-year contestability clause. The policy lapsed for nonpayment of premiums, but was reinstated by the defendant on October 5, 1993. Mrs. DiMaggio died on March 7, 1995. The defendant rejected the plaintiff's claim for benefits under the policy on the ground that Mrs. DiMaggio had made material misrepresentations regarding her health in her application for reinstatement. The plaintiff subsequently commenced this action to recover the proceeds of the policy . The Supreme Court denied the plaintiff's motion for summary judgment and granted the defendant's cross motion for summary judgment.

The Supreme Court correctly concluded that the two -year contestability period in the original policy applied to the reinstated policy, despite the fact that neither the policy nor the reinstatement application specifically provided that a reinstated policy would have a two-year contestability period. Where an original life insurance policy contains a contestability period, the period begins to run anew when the policy is reinstated after lapsing (see, Teeter v United Life Ins. Assn., 159 NY 411; Insurance Law § 3210; see also, Estate of Threatt v American Centurion Life Assur. Co., 251 AD2d 284; Kear v Prudential Ins. Co. of Amer., 2 AD2d 71, 73, affd 3 NY2d 959). Consequently, the contestability period had not expired when Mrs. DiMaggio died (see, Estate of Threatt v American Centurion Life Assur. Co., supra).

In support of its cross motion, the defendant submitted the affidavits of an underwriter, together with the relevant portion of the underwriting guidelines, which established as a matter of law that Mrs. DiMaggio made material misrepresentations in her reinstatement application. In opposition, the plaintiff failed to present evidence sufficient to raise a triable issue of fact as to the defendant's claim that the misrepresentations were material. Consequently, the Supreme Court properly granted the defendant's cross motion (see, Kroski v Long Is. Sav. Bank, 261 AD2d 136; Estate of Threatt v American Centurion Life Assur . Co., supra).

ALTMAN, J.P., GOLDSTEIN, McGINITY and LUCIANO, JJ., concur.

GASSLER v MONARCH LIFE INSURANCE COMPANY

In an action, inter alia, to recover disability benefits under two insurance policies, the plaintiff appeals from so much of an order of the Supreme Court, Nassau County (Adams, J.), dated July 26, 1999, as granted the defendant's motion for summary judgment dismissing the complaint.

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

On November 1 5, 1991, the plaintiff's license to practice podiatry in New York State was revoked after he pleaded guilty to Medicaid fraud. About two weeks later, the plaintiff consulted a psychiatrist for depression . He subsequently applied for disability benefits under two insurance policies issued to him by the defendant Monarch Life Insurance Co. (hereinafter Monarch). When Monarch rejected the plaintiff's claim , he commenced this action to recover the disability benefits and punitive damages for the wrongful breach of the insurance contracts.

The Supreme Court properly granted Monarch's motion for summary judgment dismissing the complaint. Pursuant to the clear and unambiguous language of the subject policies, the plaintiff was entitled to benefits only if he established that: (1) he was "unable to do the substantial and material duties" of his "regular profession", which was defined as his "usual work when total disability starts"; (2) his total disability started while the policies were in force ; (3) his total disability was the result of sickness or injury; and (4) he was under a doctor's care . The plaintiff was unable to practice podiatry in New York State because of a legal disability, i.e ., the revocation of his license, not a factual disability, i.e., depression. Accordingly, he was not entitled to total disability payments under the terms of the policies (see, AllAmerica Fin. Life Ins. & Annuity Co. v Llewellyn, 94 3 F Supp 1258, affd 139 F3d 664; Brumer v National Life of Vt., 874 F Supp 60, affd 133 F3d 906; Goomar v The Centennial Life Ins. Co., 855 F Supp 319, affd 76 F3d 1059). The plaintiff's conclusory assertion that his inability to practice podiatry in California was attributable to his mental condition after the loss of his New York license was insufficient to raise a triable issue of fact. Therefore, we need not address the issues regarding California law which he raises.

O'BRIEN, J.P., ALTMAN, KRAUSMAN and GOLDSTEIN, JJ., concur.

OCASIO v HENRY

In an action to recover damages for personal injuries, the plaintiffs appeal from an order of the Supreme Court, Dutchess County (Pagones , J.), dated October 19, 1999, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that neither plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d) and denied, as academic, their cross motion for summary judgment on the issue of liability .

ORDERED that the order is affirmed, with costs.

Contrary to the plaintiffs' contention, the affirmed medical reports of the physicians who examined them on behalf of the defendants were sufficient to establish a prima facie case that neither plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. Thus, the burden of proof shifted to the plaintiffs to come forward with sufficient evidence that they each sustained a serious injury (see, Guzman v Michael Mgt., 266 AD2d 508).

The plaintiffs failed to raise a triable issue of fact. The report of the plaintiff Diana Ocasio's chiropractor submitted in opposition to the motion was not based on a recent examination, did not quantify any limitations of motion, and did not verify any limitation by objective medical findings. As such, the plaintiff Diana Ocasio failed to raise a triable issue of fact (see, Grossman v Wright, 268 AD2d 79; Linares v Mompoint , 268 AD2d 79).

In light of the admission of the plaintiff Andrea Lanzetta that she missed only two weeks of work and school, she failed to raise a triable issue of fact as to whether her alleged injuries prevented her from performing substantially all of the material acts constituting her customary daily activities during at least 90 out of the first 180 days following the accident (see, Hernandez v Cerda, 271 AD2d 569; Lalli v Tamasi, 266 AD2d 266).

The plaintiffs ' remaining contention, that the Supreme Court improperly denied the cross motion, is academic in light of our determination.

O'BRIEN, J.P., SULLIVAN, KRAUSMAN, GOLDSTEIN and SCHMIDT, JJ., concur.

VIRGILIO v SANTIVASCI

In an action to recover damages for personal injuries, the plaintiff appeals, as limited by its brief , from so much of an order of the Supreme Court, Nassau County (O'Connell, J.), entered October 27, 1 999, as, upon reargument, adhered to its prior determination in an order entered June 7, 1999, granting the defendants' 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 affirmed insofar as appealed from, with costs.

The defendants made a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). Thus, it was incumbent on the plaintiff to come forward with admissible evidence to raise a triable issue of fact (see, Gaddy v Eyler, 79 NY2d 955, 956-957). While the plaintiff presented evidence that he sustained a herniated disc as a result of the accident, he failed to provide objective evidence of the extent or degree, and duration, of the alleged physical limitations resulting from the injury (see, Guzman v Michael Mgt., 266 AD2d 508). Therefore, the Supreme Court properly granted summary judgment to the defendants (see, Licari v Elliott, 57 NY2d 230).

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

IN RE STATE INSURANCE FUND v. COUNRTY-WIDE INS. CO.

Order, Supreme Court, New York County (Karla Moskowitz, J.), entered June 15, 1999, which granted petitioner workers’ compensation insurer’s application to vacate an arbitration award denying its claim against respondent automobile liability insurer as time-barred, denied respondent’s cross motion to confirm the award, and directed that the arbitrator rehear petitioner’s claim for the payments it made to the injured worker within the three-year Statute of Limitations, after the commencement of the arbitration proceeding on December 4 , 1994, unanimously affirmed, without costs.

Petitioner paid workers’ compensation and medical expense benefits to an employee of its insured injured in an automobile accident involving a car insured by respondent. It appears to be undisputed that petitioner’s claim against respondent to recover these payments must, as a matter of statute, be arbitrated. That being so, the motion court correctly held that the arbitrator’s acceptance of respondent’s Statute of Limitations defense is subject to judicial review under an arbitrary and capricious standard (see, Matter of Motor Vehicle Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 223-224), and that it was arbitrary and capricious of the arbitrator not to follow clear precedent establishing that claims like petitioner’s are subject to a three-year limitations period that commences to run from the date of the first payment to the injured party, not the date of the injury (cf., id., at 224; see, Matter of Budget Rent -A-Car v State Ins. Fund, 237 AD2d 153), and that only precludes recovery of payments more than three years prior to the commencement of suit.

Newsletter Sign-up

Fill in the form to register to receive any of our free electronic newsletters: