Coverage Pointers - Volume III, No. 4
08/16/01: COHEN v. CHUBB INDEMNITY INS. CO.
New York State Supreme Court, Appellate Division, First Department
Undefined Term “Motor Vehicle” as used in SUM Endorsement deemed Unambiguous
Plaintiff, the owner of a motorcycle, was injured in a collision with a yellow cab in New York City. His personal injury action against the Cab Company was settled for $25,000, the policy limit. He then submitted a claim under his wife’s policy for damages in excess of this amount to the limit of the supplemental underinsured motorist endorsement (SUM)(the policy insuring his motorcycle did not provided underinsured motorist coverage). Insurer denied coverage on the ground that the motorcycle was not a vehicle covered by its policy. Although plaintiff, as the spouse of the named insured, was an “insured” under that policy, the policy provided that “SUM protection does not apply: * * * to bodily injury to an insured incurred while occupying a motor vehicle owned by that insured, if such motor vehicle is not insured for SUM protection by the policy under which a claim is made”. Plaintiff argued that the SUM coverage should be read to include injuries sustained while occupying a motorcycle since, at best, the term “motor vehicle” ambiguous. The personal injury protection provision contains mutually exclusive definitions of “motor vehicle” and “motorcycle”, and the term is not defined in the SUM endorsement. The Court concluded that the use of the same term to mean more than one thing in the same insurance policy invites confusion, but the SUM endorsement stated at the outset that “statutory wording is used in lieu of simplified wording”. Moreover, the conditions under which SUM coverage is provided clearly indicate that the general provisions of the policy are inapplicable – the endorsement is discrete and internally complete. Thus, reading the policy as a whole, plaintiffs had no reasonable expectation of receiving coverage.
New York State Supreme Court, Appellate Division, Second Department
Insurer Precluded from raising Defense when it failed to Timely Deny Claim
Plaintiff commenced action to recover no-fault benefits due its assignor. The insurer denied the hospital’s claim on the ground that it failed to submit the claim within 180 days after medical services were rendered. Since the insurer did not submit its denial of claim within 30 days after receipt of the hospital’s proof of claim, it was precluded from interposing that defense in this lawsuit.
New York State Supreme Court, Appellate Division, First Department
Non-New York Consumers Who entered into Transactions Outside the State Cannot Bring GBL §349(h) Actions in New York
This case involved a class action suit brought by purchasers of defendants’ “vanishing premium” life insurance policies, alleging that defendant insurer violated GBL §349(h). At issue in this appeal was whether a nonresident plaintiff who bought a policy in another state can bring an action in New York based on GBL §349(h). Defendant sought dismissal of the claim made by a Florida resident who had bought his policy in Florida from a Florida-based insurance agent. The defendant argued that non-New York consumers who entered into transactions outside the State may not bring actions under GBL 349. The Court agreed and dismissed the non-resident plaintiff’s claim finding that plaintiff failed to state a cause of action. In order to maintain a private action under this section, a plaintiff must allege deceptive acts or practices that took place in New York.
New York State Supreme Court, Appellate Division, Second Department
Plaintiffs have Burden of Proving Damages resulting from Insurer’s Breach of the Policy
Plaintiffs brought this action to recover damages for breach of an insurance contract based upon defendants’ refusal to pay a fire loss claim. The Appellate Court reversed a jury verdict in favor of the plaintiffs and dismissed the complaint. To recover damages for beach, a plaintiff must prove damages resulting therefrom, and a failure to do so is fatal to the claim. In this case, plaintiffs offered evidence of the cost to repair the premises; however, no repairs were done to the premises and no repair costs were incurred. Thus, plaintiffs were not entitled to recover those costs. Although the insurer had breached the provision of the contract, which provided that it would determine the value of the covered property in the event of a loss, this did not relieve the plaintiffs’ of their burden of proving damages at trial. Finally, plaintiffs were not entitled to specific performance of the contract. Specific performance is not available as a remedy for a breach of contract where there is an adequate remedy at law, i.e., money damages.
08/16/01: DOHNEY v. ALLSTATE INS. COMPANY
Minnesota Supreme Court
Insurer May Not Deny UIM Claim Based on Insured's Failure to Reach Best Settlement with Tortfeasor
Court prohibits a UIM carrier from mounting a collateral attack on a settlement. A best settlement with a tortfeasor for purposes of a UIM claim is an insured’s best settlement.
Ohio Supreme Court
Workers' Compensation - Teacher Employed for Nine Months during Academic Calendar Year Elects to Receive Earnings over a Prorated Twelve-Month Period - Teacher Not Precluded During Summer Break from Receiving Temporary Total Disability Compensation
There are two issues presented in this case. The first issue is whether a teacher who contracts to teach during a school year is considered to have voluntarily abandoned his or her employment at the end of an academic calendar year for the purposes of temporary total disability compensation. The second issue is whether a teacher, who is employed for nine months of the year and elects to receive prorated compensation over twelve months, is entitled to temporary total disability compensation for summer employment that he or she is unable to perform because of the allowed conditions of a claim. A teacher does not voluntarily abandon his or her position at the end of a school year and that, although receiving prorated earnings, he or she is entitled to temporary total disability compensation as a result of the allowed conditions of her or his workers’ compensation claim. The fact that the teacher elected to be paid over a prorated, twelve-month period, as opposed to a nine-month period, is of no import.
First Circuit (applying Massachusetts law)
GL Carrier Has No Duty to Defend Insurer in Vanishing Premium Case
The origins of this dispute lie in twenty-seven lawsuits brought against MetLife by dissatisfied customers. The lawsuits fall into three groups: sixteen individual “vanishing premium” lawsuits in Alabama state courts; nine nationwide “vanishing premium” class actions in federal court; and two real estate investment cases arising out of dealings with Copley Real Estate Advisors, a MetLife subsidiary. MetLife claimed that the commercial general liability policy and umbrella excess liability policy it purchased from Liberty required Liberty to defend and indemnify MetLife. Court held that Liberty had no duty to defend or indemnify MetLife in the real estate suits because the cases were not within the advertising injury coverage and, even if they were, would be independently excluded by the “insurance and related operations exclusion”.
08/15/01: LEFLER v. GENERAL CASUALTY COMPANY
Eighth Circuit (applying Iowa law)
“Owned But Not Insured” Exclusion Upheld
Estate of deceased driver who was operating a vehicle he did not own sought to certify a challenge to the “owned but not insured” exclusion to the Iowa Supreme Court. Circuit court found that Iowa had previously upheld the exclusion, even as it applied to uninsured or underinsured motorist coverage. Therefore claim that exclusion did not coordinate with other provision of the policy had no merit, and the court would not certify the question to Iowa’s high court.
08/13/01: NATL. SURETY CORP. v. RANGER INS. CO.
Eighth Circuit (applying Iowa law)
For Pro-ration Purposes, a Blanket Policy is Not an Excess Policy
Iowa rejects the “closest-to-the-risk” approach to determination of primacy of coverage and follows more traditional approaches of matching -- and disregarding -- identical “other insurance” clauses for primary policy. Argument that a “blanket policy” is not a “primary policy” was rejected.
08/10/01: WALDROUP v. LINDMAN
Alaska Supreme Court
Insurer has Privilege to Interfere In Contractual Relationship Between Insurer's Patient and Chiropractor
The insurer of a chiropractor’s patient denied payment for treatment the insurer considered unreasonable and unnecessary. It offered to defend the patient if the chiropractor sued for payment. The chiropractor sued the insurer, alleging interference with contractual relations. Was it error to grant summary judgment to the insurer on that claim? Because the insurer had a direct financial interest in the contractual relationship between its insured and the chiropractor, and because there was insufficient evidence to raise a genuine issue of material fact to support a claim that an improper purpose motivated the insurer, the Court held that any interference by the insurer was privileged as a matter of law.
08/10/01: REGAL INS. CO. v. BOTT
Utah Supreme Court
No-Fault Benefits for Lost Income and Benefits Applies to Surviving Victim, Not to Heirs of Victim who Dies Instantly
Plaintiff Regal Insurance Company, Inc. (Regal), filed suit against defendants, Laurie and Evan Bott (the Botts) and the estate of Jesse Bott, seeking a declaratory judgment regarding the benefits due the heirs or estate of the Botts’ deceased son, Jesse, under the personal injury protection (PIP) provisions of the Utah motor vehicle insurance code. Specifically, Regal asked the district court to determine that the PIP benefits for lost income and household services applied only to an injured but surviving person, and not to the heirs or estate of a deceased person who died instantly in an automobile accident. The district court granted Regal’s motion for summary judgment. The Supreme Court affirmed.
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Order, Supreme Court, New York County (Beatrice Shainswit, J.), entered on or about August 21, 2000, which, inter alia, severed and dismissed the claim of Paul Goshen and substituted Sara M. DeFilippo and Stephen M. DePhilippo as named plaintiffs and class representatives, unanimously affirmed, without costs. Order, same court and Justice, entered October 20, 2000, which denied defendants' motion to strike plaintiffs' demand for a jury trial, unanimously reversed, on the law, without costs, and the motion granted.
This class action was brought by a number of purchasers of defendants' "vanishing premium" life insurance policies, alleging that defendants violated General Business Law (GBL) § 349(h) by marketing these policies based upon knowingly unrealistic dividend projections. This case was the companion appeal to Gaidon v Guardian Life Ins. Co. of Am. (94 NY2d 330), and a detailed recitation of the facts is set forth in that decision. In Gaidon, the Court of Appeals determined that a question of fact was presented as to whether reasonable consumers would be misled in a material way by the Goshen defendants' actions, as contemplated by GBL § 349 (Gaidon, supra, at 345), and it remanded Goshen "for further proceedings consistent with [the] opinion" (id. at 350). However, the court specifically stated that "the propriety of the class certification [in Goshen] is not before us on this appeal" (id. at 341, n 8).
At issue in the first of these consolidated appeals is the narrow question of whether the claim brought by Paul Goshen, a Florida resident who bought his policy in Florida (from a Florida based insurance agent) was properly severed and dismissed after the case was remanded, on the ground that non-New York consumers who entered into transactions outside the State cannot bring actions pursuant to GBL § 349(h). As to this issue, we affirm the motion court's determination that Mr. Goshen has failed to state a cause of action under GBL § 349, the New York Consumer Protection statute.
GBL § 349 prohibits "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in the state ...", and under § 349(h) a private right of action may be brought by "any person who has been injured by reason of any violation of this section" (emphases supplied). Applying this language, we recognize the settled rule of statutory interpretation, that unless expressly stated otherwise, "no legislation is presumed to be intended to operate outside the territorial jurisdiction of the state ... enacting it" (73 Am Jur 2d Statutes § 359 at 492; see also, McKinney's Cons Laws of NY, Book 1, Statutes § 149 at 305 ["every statute in general terms is construed as having no extraterritorial effect"]; see generally, Morgan v Bisorni, 100 AD2d 956, 956-957).
In conformity with these general principles, courts have held that to maintain a private right of action under GBL § 349(h), a plaintiff must allege deceptive acts or practices
which took place in New York State (Weaver v Chrysler Corp, 172 FRD 96, 100 [SDNY 1997]; see, e.g., Weinberg v Hertz, 116 AD2d 1, affd 69 NY2d 979 [certifying class of individuals who returned rented cars in New York State]).
Thus, here, as in Cole v Equitable Life Assur. Socy. of the United States (271 AD2d 271), the protections of GBL § 349(h) are unavailable to Mr. Goshen, a Florida resident who purchased a "vanishing premium" insurance policy from a Florida insurance agent in Tampa, Florida (see, id., at 272; cf., Meachum v Outdoor World Corp., 235 AD2d 462, 463 [GBL § 349(h) claim viable where "defendants engaged in deceptive conduct in New York by mailing misleading literature to New York residents in an attempt to induce them to travel to the defendants' facilities in Pennsylvania"]; Morelli v Weider Nutrition Group, Inc., 275 AD2d 607, 608 [GBL § 349 "afford[s] consumers within [the state's] borders a statutory remedy for injuries caused by knowingly misleading and deceptive business practices"]).
However, we reverse the second order appealed, which denied defendants' motion to strike plaintiffs' demand for a jury trial. The complaint in this action joined both legal and equitable claims, including, inter alia, rescission, restitution, reformation of the class members' insurance policies, and a class-wide mandatory injunction requiring defendants to keep plaintiffs' insurance policies in force without the payment of further premiums. Because the relief sought is primarily equitable, not incidental to legal claims for money damages, plaintiffs have waived the right to a jury trial (see, Greenfield v Philles Record, 243 AD2d 353; Daley v Related Cos., 213 AD2d 205). Further, notwithstanding the fact that the Court of Appeals dismissed all of plaintiffs' claims except their allegation that defendants' violated GBL § 349, plaintiffs have nonetheless irrevocably waived their right to a jury trial (see, Zimmer-Masiello v Zimmer, Inc., 164 AD2d 845, 846-47 ["Once the right to a jury trial has been intentionally lost by joining legal and equitable claims, any subsequent dismissal, settlement, or withdrawal of the equitable claim(s) will not revive the right to trial by jury"]).
In an action for a judgment declaring, inter alia, that the plaintiff is not obligated to indemnify T.F.D. Bus Co., Inc., and Michael A. Thomas with respect to a judgment entered against them in a action entitled Lyons v Thomas in the Supreme Court, Westchester County (Index No. 124941/92), the defendant T.F.D. Bus Co., Inc., appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Alpert, J.), dated August 25, 2000, as denied that branch of its motion which was for summary judgment declaring that the plaintiff is obligated to indemnify it with respect to a judgment entered against it in the underlying action, and the defendants Thomas E. Lyons and Celeste M. Lyons separately appeal, as limited by their respective briefs, from so much of the same order as denied their respective motions for summary judgment.
ORDERED that the order is affirmed, with one bill of costs.
The Supreme Court correctly determined that a triable issue of fact exists as to whether the plaintiff disclaimed coverage of its insured in the underlying action "with reasonable promptness" (Murphy v Hanover Ins.
Co., 239 AD2d 323, 324; see, State Farm Mut. Auto. Ins. Co. v Clift, 249 AD2d 800, 801; Royal Indem. Co. v Belcer, 242 AD2d 899). Therefore, the appellants were properly denied summary judgment.
The appellants' remaining contentions are without merit.
ALTMAN, J.P., FRIEDMANN, SMITH and ADAMS, JJ., concur.
In an action to recover unpaid no-fault benefits, the defendants appeal from a judgment of the Supreme Court, Nassau County (Martin, J.), entered September 5, 2000, which, upon an order of the same court dated April 7, 2000, granting the plaintiff's motion for summary judgment upon reargument, is in favor of the plaintiff and against them in the principal sum of $12,997.40.
ORDERED that the judgment is affirmed, with costs.
The plaintiff, New York and Presbyterian Hospital (hereinafter the hospital), commenced this action to recover certain no-fault benefits allegedly due its assignor, Dasanda Gaddy, by the defendants. The defendants denied the hospital's demand for the benefits on the ground that it failed to submit its claim within 180 days after the medical services were rendered (see, 11 NYCRR 65.15). However, the defendants failed to submit their denial of claim within 30 days after receipt of the hospital's proof of claim. Under these circumstances, the defendants are "precluded from interposing a defense to the plaintiff's lawsuit" (Mt. Sinai Hosp. v Triboro Coach, 263 AD2d 11, 16; see also, Presbyterian Hosp. v Maryland Cas. Co., 90 NY2d 274; Presbyterian Hosp. v Atlanta Cas. Co., 210 AD2d 210). Therefore, the Supreme Court properly awarded summary judgment to the plaintiff upon reargument.
The defendants' remaining contentions are without merit.
BRACKEN, P.J., FRIEDMANN, FLORIO and FEUERSTEIN, JJ., concur.
In an action to recover damages for breach of an insurance contract, the defendants appeal from (1) a judgment of the Supreme Court, Nassau County (Carter, J.), dated January 28, 2000, and (2) so much of an amended judgment of the same court, entered August 29, 2000, as upon, inter alia, the denial of their motion for judgment in their favor as a matter of law pursuant to CPLR 4401, and upon a jury verdict, is in favor of the plaintiffs and against them on the issue of liability.
ORDERED that the appeal from the judgment dated January 28, 2000, is dismissed, as that judgment was superseded by the amended judgment entered August 29, 2000; and it is further,
ORDERED that the amended judgment entered August 29, 2000, is reversed insofar as appealed from, on the law, the judgment dated January 28, 2000, is vacated, the motion pursuant to CPLR 4401 is granted, and the complaint is dismissed; and it is further,
ORDERED that one bill of costs is awarded to the defendants.
The plaintiffs brought the instant action to recover damages for breach of an insurance contract based upon the defendants' refusal to pay the claim that the plaintiffs filed after a fire at their premises. At the close of the plaintiffs' case, the defendants moved to dismiss the complaint pursuant to CPLR 4401 based on the plaintiffs' failure to prove damages. The Supreme Court denied the motion, and, after a jury verdict in favor of the plaintiffs on the issue of liability, a judgment and amended judgment were entered in their favor on that issue. On appeal by the defendants, we reverse and dismiss the complaint.
The Supreme Court improperly denied the defendants' motion pursuant to CPLR 4401 to dismiss the complaint based on the plaintiffs' failure to establish a prima facie case. In order to recover damages for breach of contract, the plaintiffs were required to prove damages resulting from that breach, and their failure to do so was fatal to that cause of action (see, Cramer v Spada, 203 AD2d 739, 741; Ruse v Inta-Boro Two-Way Radio Taxi Assocs., 166 AD2d 641). Although the plaintiffs offered evidence of the cost to repair the premises, their witness also admitted that the premises was not repaired, and that no repair costs were incurred. Thus, the plaintiffs were not entitled to recover such costs (see, Harrington v Amica Mut. Ins. Co., 223 AD2d 222, 228; DeLorenzo v Bac Agency, 256 AD2d 906, 907). The proper measure of damages was "'the difference between the actual cash value of the property * * * just preceding the fire and the market value immediately after the fire'" (Agostino v Holyoke Mut. Ins. Co., 89 AD2d 573, quoting Incardona v Home Ind. Co., 60 AD2d 749, 750). However, the plaintiffs presented no evidence as to the pre- or post- fire value of the premises.
Additionally, we note that the Supreme Court improperly directed specific performance of the contract to determine the amount of damages sustained by the plaintiffs. "Specific performance is not available as a remedy for breach of contract where, as here, there is an adequate remedy at law (i.e., money damages)" (T.F. Demilo Corp. v E.K. Constr. Co., 207 AD2d 480, 481; see, 11 Duke St. v Ryman, 280 AD2d 429). Although the defendants breached the provision of the insurance contract which provided that they would "determine the value of Covered Property in the event of loss or damage", this did not relieve the plaintiffs of their burden of proving damages at trial.
BRACKEN, P.J., FRIEDMANN, FLORIO and FEUERSTEIN, JJ., concur.
Order, Supreme Court, New York County (Walter Tolub, J.), entered September 27, 2000, which denied the motion of defendant Chubb Indemnity Insurance Company for summary judgment, granted plaintiffs' cross-motion for summary judgment and declared that defendant is obligated to provide plaintiff Murray Cohen with supplemental underinsured motorist (SUM) coverage under the automobile insurance policy issued to plaintiff Rochelle Cohen, unanimously reversed, on the law, without costs, the motion granted, the cross motion denied, and judgment granted to defendant declaring that SUM coverage under its policy number 11015722-01 does not extend to the injuries sustained by Murray Cohen while operating his motorcycle.
Plaintiff Murray Cohen is the owner of a 1975 Honda motorcycle insured by nonparty Progressive Insurance Company. Plaintiff Rochelle Cohen is the owner of a 1994 Lexus insured by defendant Chubb under a policy number 11015722-01, effective May 9, 1997. The motorcycle is not listed as an insured vehicle under the Chubb policy.
In December 1997, Murray Cohen was injured in a collision with a yellow cab in New York City. His personal injury action against the cab company was settled for $25,000, the policy limit. He then submitted a claim under his wife's policy for his damages in excess of this amount to the limit of the supplemental underinsured motorist endorsement ($300,000). Apparently, the Progressive policy provided no underinsured motorist coverage.
Defendant Chubb denied coverage on the ground that the motorcycle was not a vehicle covered by its policy. While Murray Cohen, as the spouse of the named insured, is a person "insured" by the policy, it further provides that "SUM protection does not apply: * * * to bodily injury to an insured incurred while occupying a motor vehicle owned by that insured, if such motor vehicle is not insured for SUM protection by the policy under which a claim is made".
Plaintiffs, however, argue that the term "motor vehicle" is at best ambiguous. They note that while the personal injury protection provision contains mutually-exclusive definitions of "motor vehicle" and "motorcycle", the term is not defined in that part of the Chubb policy dealing with SUM. Therefore, they contend, SUM coverage for injuries "incurred while occupying a motor vehicle" should be read to include any injuries sustained while occupying a motorcycle (see, Matter of Country-Wide Ins. Co. v Wagoner, 45 NY2d 581, 587 [term "motor vehicle" encompasses "motorcycle"]). They further argue that any ambiguity should be resolved against the insurer as the party that drafted the policy.
The use of the same term to mean more than one thing in the same insurance policy invites confusion, especially where the alternate usage is unaccompanied by an explicit definition. However, the SUM provision contained in the Chubb policy states, at the outset, that "statutory wording is used in lieu of simplified wording", and the conditions under which SUM coverage is provided clearly indicate that the general provisions of the policy are inapplicable (with certain exceptions not pertinent to the facts of this case).
Reading the policy as a whole, it is clear that plaintiffs can entertain no reasonable expectation of receiving coverage for which they have not paid. Defendant insurer's contention that the SUM policy exists separately and apart from the policy to which it is annexed is consistent with the construction accorded to coverage the insurer is obliged to offer (Matter of Knickerbocker Ins. Co. [Faison], 22 NY2d 554, 558, cert denied 393 US 1055 [former § 167]). As the Appellate Division, Second Department noted in Matter of Eveready Ins. Co. v Asante (153 AD2d 890, 891), "since the 'liability', 'no-fault' and 'uninsured motorist' portions of a comprehensive automobile insurance policy are discrete and internally complete * * * arbitration of a claim for no-fault benefits is not dispositive of whether there is liability or uninsured motorist coverage" (citations omitted).
Finally, "supplementary uninsured/underinsured motorists insurance for bodily injury" is available "at the option of the insured" (Insurance Law § 3420[f][A]) and is afforded "in an amount up to the bodily injury liability insurance limits of coverage provided under such policy" up to the statutory limit (id., emphasis added). As the personal injury portion of the policy expressly excludes from its ambit injury to "any person while occupying a motorcycle", there is no coverage to be supplemented by the statutory SUM provision.