Coverage Pointers - Volume III, No. 1
With this issue, we commence our third year of publication! We want to thank our loyal subscribers for their positive feedback. A special thanks to our Kevin Merriman and Carolyn Henry who have toiled relentlessly to assure the most up to date cases are included for your review. If success is measured by increased subscriptions (we’ve increased our subscription list by 4000% since our first issue) or by those around the country who have followed our lead with similar publications, we believe we’ve done well in serving our readership. We welcome your comments so we can continue to strengthen our publication.
New York Court of Appeals
Landlord has Duty to Protect
Against Known Risks of Criminal Conduct
Landlords have a common-law duty to take minimal precautions to protect tenants from foreseeable harm, including foreseeable criminal conduct by a third person. A landlord has a duty to minimize the foreseeable danger from criminal acts when past experience alerts it to the likelihood of criminal conduct on the part of third persons. Whether knowledge of criminal activities occurring at various points within a unified housing complex can be sufficient to make injury to a person in one of the buildings foreseeable, must depend on the location, nature and extent of those previous criminal activities and their similarity, proximity or other relationship to the crime in question. Here, the record revealed that the assailant had relatives living in the complex, had been involved in several similar criminal acts and that the defendant kept an arrest photo of him. Court cannot conclude as a matter of law that Toole’s involvement in criminal activity on the premises was not a significant foreseeable possibility. More discovery is warranted to discern how foreseeable a risk he was and what measures defendants had in place to deal with him.
New York Court of Appeals
Loss of Multiple Fingers Means the Total Loss of Multiple Entire Fingers.
One of the categories of "grave injury" under Workers Compensation Law Section 11 (which allows third-party actions against employers in limited circumstances) is that the plaintiff suffer "loss of multiple fingers". The Court of Appeals determines that this term means total loss of multiple entire fingers. The amputation of five fingertips, therefore, is not a "grave injury".
New York State, Appellate Division, Second Department
Court Upholds Anti-Stacking Provisions of Policy.
Action to stay arbitration in which insurer moved to stay the arbitration to undertake discovery. Court granted the stay and directed claimant to comply with the insurer’s discovery demands prior to commencing any arbitration. The action also sought a declaration as to the maximum benefits payable to decedent’s estate under five insurance policies issued by the insurer. The court upholding the policies’ “anti-stacking” provisions held that the maximum benefit payable to the decedent’s estate under the five polices issued by the insurer was $100,000.
New York State, Appellate Division, Third Department
Insurer Must Show Prejudice on A Claimant’s Failure to Provide Timely Notice of Suit.
This is an action by claimant to compel arbitration on a supplementary uninsured motorist claim. The insurer cross-moved to stay the arbitration. Insurer denied the claim based on claimant’s failure to provide insurer with timely notice of the claim and failed to promptly forward a summons and complaint in his action against the other driver. The lower court granted the insurer’s petition finding that claimant failed to comply with the terms of the policy by failing to promptly forward a copy of the summons and complaint. After a hearing the lower court also held that the disclaimer was timely. The Appellate Court reversed finding that absent a showing of prejudice by the insurer, the claimant’s failure to comply with the legal notice provision of the policy does not afford the insurer a basis for disclaimer. The Court also found that the insurer did not sustain its burden of establishing that its 34-day delay in disclaiming coverage was reasonable.
ACCETTULLO v. WORCESTER INSURANCE CO.
Connecticut Supreme Court
“Offer of Judgment Interest”
Awarded Against Underinsured Insurance Carrier Even Though Not Provided in
Prior to determination of underinsurance carrier's liability, plaintiff filed an offer of judgment, expressing a willingness to accept $450,000 of the $500,000 policy limits. Insurer did not accept and hearing officer determined that plaintiff should receive $475,000. Plaintiff made application to add over $100,000 in "offer of judgment" interest which trial court granted and Supreme Court affirmed. "Offer of judgment" interest is punitive in nature and even though policy doesn't provide for it (and even though the final judgment would then exceed policy limits) it is recoverable against insurer for taking up the Court's time and attention and "precious judicial resources".
FARMERS INS. CO. v. PIERROUSAKOS
Step Down in Policy Declared Unambiguous
Court's ruling that policy limit of $500,000 applied to insured passenger sued under auto policy based upon ambiguity between definition of insured and step-down provision, is reversed because driver of insured vehicle was not family member and accordingly, $50,000 limit set for in step-down provision was unambiguous and dispositive.
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YOLANDA MASON V. U.E.S.S. LEASING CORPORATION, ET
The order of the Appellate Division should be affirmed, with costs. The certified question should be answered in the affirmative, but on the narrower grounds stated in the Memorandum.
Plaintiff resided in a Queens apartment building that was part of a larger complex known as Lefrak City. Defendant U.E.S.S. Leasing Corporation and Builders and Realtors Corporation, Inc. owned the complex, and defendant Mid-City Security Service, Inc. provided security for the premises. On July 11, 1992, shortly after 7:00 a.m., plaintiff was awakened by a phone call from her live-in boyfriend who told her that he would be upstairs in five minutes. Shortly thereafter, the apartment doorbell rang and plaintiff, thinking it was her boyfriend, opened the door without first looking through the peephole or asking who it was. Third-party defendant Lawrence Toole forced his way in and dragged plaintiff to the bedroom where he beat, raped and sodomized her at knifepoint.
Plaintiff, in her first cause of action, alleges that defendants negligently allowed Toole to enter the building so as to gain access to her apartment. The second cause of action charges that defendant Mid-City negligently performed its security contract, and the third cause of action asserts that defendants violated RPL § 235-b and breached the implied warranty of habitability by failing to properly staff the security desk or secure the complex.
Supreme Court granted defendants' motions for summary judgment and dismissed the complaint. The court reasoned that plaintiff's deposition testimony established that defendants had taken minimal security precautions and that plaintiff failed to show that defendants' negligence was a proximate cause of her injuries. A divided Appellate Division reversed, concluding that a question of fact existed as to whether defendants negligently permitted Toole, a nonresident and known troublemaker, to enter the building. The Appellate Division majority further concluded that there was an issue of fact as to whether plaintiff's act of opening the door without first looking through the peephole was an independent intervening act. The two dissenting Justices concluded that plaintiff's conduct was a superseding cause that severed the chain of causation. The Appellate Division certified to this Court the question of whether it properly reversed Supreme Court’s order. We conclude that it did.
Landlords have a common-law duty to take minimal precautions to protect tenants from foreseeable harm, including foreseeable criminal conduct by a third person (see, Jacqueline S. v City of New York, 81 NY2d 288, 293-294; Burgos v Aqueduct Realty Corp., 92 NY2d 544, 548). A landlord has a duty to minimize the foreseeable danger from criminal acts when past experience alerts it to the likelihood of criminal conduct on the part of third persons. “Whether knowledge of criminal activities occurring at various points within a unified housing complex * * * can be sufficient to make injury to a person in one of the buildings foreseeable, must depend on the location, nature and extent of those previous criminal activities and their similarity, proximity or other relationship to the crime in question" (Jacqueline S. v City of New York, supra, 81 NY2d, at 295).
On a motion for summary judgment, a plaintiff need only raise a triable issue of fact regarding whether defendant's conduct proximately caused plaintiff's injuries. Here, questions of fact remain as to whether defendants negligently failed to exclude Toole. The record reveals that Toole, who had relatives residing in the complex, had been involved in several criminal acts in the complex, including robbery, attempted rape and the beating of a security guard; that he had been arrested on the premises; and that defendants kept an arrest photo of him. We cannot conclude as a matter of law that Toole’s involvement in criminal activity on the premises was not a significant foreseeable possibility. More discovery is warranted to discern how foreseeable a risk he was and what measures defendants had in place to deal with him.
Finally, we agree with the Appellate Division majority that, on the facts of this case, plaintiff’s opening of her apartment door without looking through the peephole or inquiring who was there was not an independent intervening act that, as a matter of law, absolved defendants of responsibility.
Order affirmed, with costs, and certified question answered in the affirmative, in a memorandum. Chief Judge Kaye and Judges Smith, Levine, Ciparick, Wesley, Rosenblatt and Graffeo concur.
MARVIN CASTRO V. UNITED CONTAINER MACHINERY GROUP, INC.
Workers' Compensation Law § 11 lists specific injuries, including "loss of multiple fingers," that qualify as grave injury. At issue here is whether loss of multiple fingertips constitutes grave injury for purposes of the section. We conclude that it does not. On September 17, 1996, Marvin Castro lost five fingertips (two from his right hand, three from his left) in an accident involving a die cutting machine. The injury left the distal, or outermost, joints of the fingers intact. Castro sued the manufacturer of the machine, United Container Machinery Group. United in turn brought a third-party action against plaintiff's employer, Southern Container Corp., seeking common law contribution and indemnification. Southern moved to dismiss the third-party complaint against it, on the ground that Workers' Compensation Law § 11 barred recovery. Supreme Court denied the motion, finding questions of fact "regarding the extent and nature of plaintiff's 'grave injury.'" The Appellate Division reversed, holding that Southern was entitled to summary judgment because plaintiff's injury did not constitute "loss of multiple fingers" and was, therefore, not a grave injury under Workers' Compensation Law § 11 (273 AD2d 337). We now affirm. United and plaintiff both contend that plaintiff's injury was grave for purposes of Workers' Compensation Law § 11 and that the third-party action against Southern should not have been dismissed. Their position is based on a misguided reading of the requirements of Workers' Compensation Law § 11. First, they argue that plaintiff's loss of multiple fingertips meets the "loss of multiple fingers" requirement in the Workers' Compensation Law notwithstanding the statute's silence on the issue of partial losses. Next, United argues that the question of whether a partial loss of multiple fingertips is grave is a question of fact to be determined on a case-by-case basis. Finally, United posits that Southern failed to meet its burden of proof for summary judgment because all Southern showed was the undisputed fact that plaintiff lost five fingertips. These arguments fail because, based on the plain language and legislative history of Workers' Compensation Law § 11, plaintiff's injury cannot be classified as grave. Among the major changes to the Workers' Compensation system effected by the Omnibus Workers' Compensation Reform Act of 1996, was the abrogation of employers' liability to third parties for injuries to their employees (see, L 1996, ch 635). In amending Workers' Compensation Law § 11 to provide that an "employer shall not be liable for contribution or indemnity to any third person based upon liability for injuries sustained by an employee * * *" unless the employee's injuries are shown to be grave, the Legislature sought to limit employer's liability that existed under Dole v Dow Chem. Co. (30 NY2d 143). The central component of the reform initiative was relief in the form of immunization from tort liability to employers, such as Southern, who provide Workers' Compensation coverage. Injuries qualifying as grave are narrowly defined in Workers Compensation Law § 11. Thus, the only determination to be made is whether the injury falls within the statute's objective requirements. The term "loss of multiple fingers" cannot sensibly be read to mean partial loss of multiple fingers. Words in a statute are to be given their plain meaning without resort to forced or unnatural interpretations (see, McKinney's Cons Laws of NY, Book 1, Statutes §§ 232; Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577, 583). As a matter of standard English usage, the word "finger" means the whole finger, not just its tip. There is, similarly, no merit in United's further contention that the word "total" appearing elsewhere in the litany of injuries leads to the conclusion that its absence in the phrase under consideration was intended to mean something less than a total loss of multiple fingers. In the list of injuries contained at Workers' Compensation Law § 11, "total" is used in conjunction with the term "loss of use" and not in conjunction with "loss of multiple fingers" or any other enumerated body part. While the phrase loss of use might require some indication as to the degree of use lost, the term "loss of multiple fingers" does not. The legislative history is fully consistent with this reading of the statute. That the purpose of the amendment was to reduce the number of suits against employers is beyond cavil: "In making this change, the bill restores the basis of the bargain between business and labor -- that workers obtain necessary medical care benefits and compensation for workplace injuries regardless of fault while employers obtain a degree of economic protection from devastating lawsuits" (Governor's Mem approving L 1996, ch 635, 1996 NY Legis Ann, at 460). It is likewise apparent that the means by which the reduction in lawsuits was to be accomplished was by barring suits except in extremely limited, defined circumstances. "The grave injuries listed are deliberately both narrowly and completely described. The list is exhaustive, not illustrative; it is not intended to be extended absent further legislative action" (Governor's Mem, supra; emphasis added). While it is doubtful that any list that purported to be the complete catalog of "grave" injuries would -- or ever could -- meet with universal approval, that is not the question before us and we may not lightly alter this legitimate exercise of legislative prerogative. Appellant's remaining arguments are without merit.
Accordingly, the order of the Appellate Division should be affirmed, with costs.
Order affirmed, with costs. Opinion by Judge Ciparick. Chief Judge Kaye and Judges Smith, Levine, Wesley, Rosenblatt and Graffeo concur.
* * * * * * * * * * * * * * * * *
 Although denominated as a motion to dismiss pursuant to CPLR 3211, both Supreme Court and the Appellate Division treated the motion as one for summary judgment pursuant to CPLR 3212, as do we.
 To the extent that the parties analogize to Workers' Compensation Law § 15 for the definition of "finger," the vastly different legislative purposes of sections 11 and 15 compel us to reject the analogy.
MATTER OF FARMERS INS. EXCHANGE v. ESTATE OF KNIPPLER
In a hybrid proceeding pursuant to CPLR article 75, inter alia, to stay arbitration and an action for a judgment declaring that the maximum benefits payable to the decedent's estate under five insurance policies issued by the petitioner is $100,000, the petitioner appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Adams, J.), dated August 2, 2000, as, in effect, denied so much of the petition as sought the declaration and to direct the respondent to comply with its discovery requests prior to commencing any arbitration.
ORDERED that the order is reversed insofar as appealed from, on the law, with costs, the respondent is directed to comply with the petitioner's discovery requests prior to commencing any arbitration, and the matter is remitted to the Supreme Court, Nassau County, for the entry of a judgment declaring that the maximum benefit payable to the decedent's estate under the five insurance policies issued by the petitioner is $100,000. Contrary to the respondent's contention, the policies' "anti-stacking" provisions are enforceable. Therefore, the petitioner's maximum liability under the uninsured/underinsured provisions of the five insurance policies in question is $100,000 (see, Dudley v Allstate Ins. Co., AD2d [4th Dept., Mar. 21, 2001]; Matter of State Farm Mut. Auto Ins. Co. [Hill], 213 AD2d 976). Moreover, the Supreme Court should have directed the respondent to comply with the petitioner's discovery requests as required by the applicable policy provisions. We note that since this is a declaratory judgment action, the Supreme Court should have directed the entry of a declaration in favor of the petitioner (see, Lanza v Wagner, 11 NY2d 317, appeal dismissed 371 US 74, cert denied 371 US 901).
O'BRIEN, J.P., FLORIO, FEUERSTEIN and SMITH, JJ., concur.
Appeals from an order and judgment of the Supreme Court (McNamara, J.), entered June 16, 2000 and January 8, 2001 in Albany County, which, inter alia, granted respondent's cross application pursuant to CPLR 7503 to stay arbitration between the parties. In March 1997, petitioner was a passenger in a motor vehicle owned and operated by his son when it was struck by a vehicle owned and operated by Griselda Concel. At the time of the accident, petitioner was the holder of an automobile insurance policy issued by respondent, which included coverage for supplementary uninsured motorist benefits (hereinafter SUM). In September 1997, petitioner commenced an action against Concel to recover damages for the injuries that he sustained in the accident. In October 1998, petitioner's attorneys contacted respondent concerning petitioner's application for SUM benefits. In response, respondent authored a reservation of rights letter dated November 9, 1998 advising that petitioner had failed to provide respondent with a timely notice of the claim and, further, had failed to promptly forward a summons and complaint in his action against Concel as required by respondent's policy of insurance. Thereafter, on December 17, 1998, respondent sent a written notice of disclaimer of SUM benefits based upon petitioner's failure to timely provide notice of the underlying personal injury action against Concel.
Following respondent's notice of disclaimer, petitioner commenced this proceeding pursuant to CPLR article 75 to compel arbitration of his claim for SUM benefits. Respondent, in turn, cross-petitioned for a permanent stay of arbitration. Supreme Court found that petitioner had failed to comply with the terms of the policy, which required that he immediately forward a copy of the summons and complaint in the underlying personal injury action to respondent, but denied respondent's request for a stay on the ground that questions of fact existed as to whether respondent's delay in disclaiming was reasonable under the circumstances. Following an evidentiary hearing, Supreme Court determined that the 38-day delay between the reservation of rights letter and the disclaimer was reasonable, granted the cross petition to stay arbitration and dismissed the petition to compel arbitration. This appeal ensued.
We previously have held that the principles governing the failure of an insured to give timely notice of an accident are entirely different from those governing the requirement of notice of suit (see, Aetna Ins. Co. of Hartford, Conn. v Millard, 25 AD2d 341, 344). Failure to provide timely notice of the accident vitiates the contract, whereas late notice of suit will be excused where no prejudice has inured to the insurer (see, New York Mut. Underwriters v Kaufman, 257 AD2d 850, 851). Contrary to respondent's contention, we see no legal distinction between New York Mut. Underwriters v Kaufman (supra) and the case at bar and, inasmuch as respondent has claimed no prejudice, nor does the record reflect any, petitioner's failure to comply with the legal notice provision of the policy does not afford respondent a basis for disclaimer.
In any event, were we to hold otherwise, we nonetheless would reverse on the ground that respondent did not demonstrate that its delay in disclaiming was reasonable. At the hearing to establish the reasonableness of respondent's delay, Charles Hunter, a claims representative of respondent, testified. Hunter was assigned to investigate the matter on October 29, 1998. Although Hunter testified that he initially was attempting to determine whether petitioner had timely filed a notice of claim, it is clear that his inquiries included whether suit papers had been received by respondent. On November 4, 1998, Hunter was advised by representatives in respondent's Columbus, Ohio, office that they had located a no-fault file of petitioner and that no SUM claim or summons and complaint were contained therein. Thereafter, on November 9, 1998, Hunter was in contact with representatives of petitioner's insurance agent and determined, inter alia, that the agency had not received a summons and complaint regarding any personal injury action commenced by petitioner.
Contrary to Supreme Court's determination, it would appear that as of November 9, 1998, respondent was possessed of sufficient facts to disclaim on the basis of petitioner's failure to provide respondent with a copy of the summons and complaint in the underlying action. In any event, as noted by Supreme Court, Hunter clearly was aware of the underlying lawsuit as of November 13, 1998, as a result of conversations he had with representatives of the insurer of petitioner's son. While Hunter indicated that he then had to retrace his initial investigation to determine if a summons and complaint had been received by respondent (a somewhat questionable assumption as he already knew the Columbus, Ohio, office had no copy of a summons and complaint, nor did petitioner's insurance agent), as noted by Supreme Court, Hunter did not detail his efforts in that regard, indicate when he had completed that process or offer any explanation as to why it took 34 days to disclaim. Under those circumstances, we find that respondent did not sustain its burden of establishing that its delay in disclaiming coverage was reasonable.
Peters, Spain, Mugglin and Lahtinen, JJ., concur.
ORDERED that the order and judgment are reversed, on the law, with costs, petition granted and cross petition denied.