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11/26/02:         MATTER OF EAGLE INS. CO. v PEGUERO

New York State Supreme Court, Appellate Division, First Department

Type Size Matters

In an application to stay uninsured motorist arbitration, Eagle Insurance argued that Interboro’s notice of cancellation was invalid under Vehicle and Traffic Law § 313 because the word “OVER” appearing at the bottom, right-hand corner of the Notice of Cancellation was not in 12-point type. The appellate court rejected this argument, as it was not supported with expert opinion or other competent evidence of type size. Absent a prima facie showing that the type size was less than 12-point, the issue should not be framed for hearing. In view of this ruling, the appellate court declined to review the lower court’s ruling that the word “OVER” was not part of any statutorily required language and, as such, did not have to be in 12-point type.

 

11/26/02:         ROUNDABOUT THEATRE CO. v CONTINENTAL CAS. CO.

New York State Supreme Court, Appellate Division, First Department

Business Interruption Coverage Not Available for Loss Caused by Police Closing Street Following Construction Accident

The court considered whether the business interruption clause of an insurance policy issued to a theatre company covers losses occasioned by an order of the City of New York closing the street and denying access to the insured’s theatre due to a construction accident in the area, notwithstanding the absence of any physical damage to the theatre premises. The court held that such losses were not covered by the policy, since the language of the business interruption clause clearly and unambiguously provided coverage only where there was direct physical loss or damage to the insured’s property.

 

11/15/02:         AVELLANOSA v ORAZIO

New York State Supreme Court, Appellate Division, Fourth Department

Report of “Marked Restriction” and “Disk Herniation” Supported by Objective Medical Evidence Sufficient to Create Question of Fact on Serious Injury

In this action for injuries sustained in a motor vehicle accident, defendants moved to dismiss the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d). Defendants met their initial burden of proof on the motion; however, plaintiff’s medical report raised a triable issue of fact concerning “serious injury.” Plaintiff’s report noted disc herniation and bilateral carpal tunnel syndrome supported by objective medical evidence in the form of nerve conduction tests and MRI reports. In addition, the report noted, “marked restriction” of plaintiff’s cervical spine “because of pain” and “decreased sensation in a median nerve distribution involving both hands.” Although the neurosurgeon did not thereby quantify plaintiff’s limitations, his report established a loss of normal function that was further supported by his final notation indicating that plaintiff was a candidate for surgery with respect to both his back and hands. The neurosurgeon also indicated in his report that although “residual permanency is anticipated even with surgical correction *** the degree of disability at this time obviously cannot be determined.” At this juncture in the litigation plaintiff has not concluded his treatment to such a degree that a numeric percentage can be ascribed to his limitations, and the court concluded that plaintiffs sufficiently raised an issue of fact with respect to the qualitative nature of plaintiff’s injury to defeat defendants’ motion.

 

11/15/02:         RUZYCKI v BAKER

New York State Supreme Court, Appellate Division, Fourth Department

No Finding of Liability Without Finding of “Serious Injury”

In auto accident cases, the plaintiff must plead and prove that he or she sustained a serious injury before recovering non-economic damages. “Serious injury” has been viewed both as an element of liability and an element of damages. The court held that regardless of whether the requirement is viewed as an element of liability or damages, the issue of serious injury must be decided either by the court or the trier of fact before a defendant will be held liable for damages for non-economic loss. If the issue is not raised by the plaintiff in a motion for summary judgment on liability, an appellate court will not presume that the issue was necessarily decided as part of the motion.

 

11/15/02:         CALUCCI v BAKER

New York State Supreme Court, Appellate Division, Fourth Department

Chiropractor’s Conclusory Affidavit Insufficient to Raise Question of Fact Establishing “Serious Injury”

Contrary to plaintiffs’ contentions, they failed to raise a triable issue of fact whether plaintiff sustained a “serious injury” of a permanent nature. The physician who conducted an independent neurological examination of plaintiff concluded that her disability was only mild, which is insufficient to satisfy the serious injury threshold, and the physician who conducted an electrophysiological study of plaintiff also failed to establish that she sustained more than a mild injury and failed to state that her injury was related to the accident. Finally, the sworn report of plaintiff’s chiropractor failed to raise a triable issue of fact because he failed to state how the x-rays and the electrophysiological study that he ordered supported his diagnosis that plaintiff had subluxation of the cervical and lumbar spine. Although plaintiff’s chiropractor observed muscle spasm and measured limitations of movement of the cervical and lumbar spine, he failed to specify the tests that he used to detect the spasm or to measure the limitations of movement and whether those tests were objective in nature.

 

11/15/02:         ARIDA v ESSEX INS. CO.

New York State Supreme Court, Appellate Division, Fourth Department

Insured’s Policy Surrender Doesn't End Coverage Dispute

Plaintiffs obtained a money judgment in an underlying negligence action against defendant’s insured, and commenced this action against the insurer to recover the amount of that judgment pursuant to Insurance Law §3420(b)(1). During the pendency of the negligence action against the insured, the insurer, who had provided a defense to its insured, commenced an action seeking judgment declaring that it did not owe a defense or indemnity. That action was resolved by a release pursuant to which the insured, “in consideration of the dismissal of the Declaratory Judgment Action,” released its insurer from all duties under its commercial general liability policy with respect to the negligence action, withdrew its request for a defense and indemnification in that action, and agreed that the policy “shall be considered null and void” with respect to that action. The insurer moved to dismiss this action based on the release, and the lower court granted the motion. That appellate court reversed, holding that the release could have no effect on plaintiffs’ Insurance Law §3420(b)(1) action except under the doctrine of collateral estoppel. The insurer surrendered its rights under the liability policy in settlement of the declaratory judgment action commenced by the insurer, and no notice of that action or the settlement thereof was provided to plaintiffs. Therefore, the court concluded that plaintiffs should not be estopped from litigating whether the liability policy covers plaintiffs’ claims.

 

11/15/02:         IAFALLO v NATIONWIDE MUTUAL FIRE INS. CO.

New York State Supreme Court, Appellate Division, Fourth Department

Insurer Not Required to Promptly Disclaim in Defamation Action

Plaintiff commenced this action against defendant seeking a declaratory judgment and a money judgment pursuant to Insurance Law §3420(a)(2). In 1988 plaintiff brought an underlying action against the defendant’s insured by the filing a summons with notice stating that the nature of the action was to recover damages for negligence, fraud and misrepresentations, intentional infliction of emotional distress, and libel and slander. The insurer arranged for the defense of its insured and at the same time sent its insured and plaintiff’s attorney a letter in which it denied coverage with respect to all of the noticed causes of action except negligence, and reserved its rights with respect to that cause of action. Plaintiff later served a complaint asserting causes of action for slander, fraud and misrepresentation, intentional infliction of emotional distress and negligence, all of which were predicated upon allegedly defamatory statements made by the insured. In 1997 the insurer gave written notice disclaiming coverage on the negligence cause of action and refusing both further defense and indemnification. Plaintiff settled the underlying action and commenced this action seeking a declaratory judgment and recovery of the settlement amount from the insurer. The court held that the insurer was entitled to summary judgment dismissing the complaint.  In doing so, the court rejected the plaintiff’s contention that the insurer failed to comply with Insurance Law §3420(d) by failing to give timely notice of its denial of coverage. The insurer owed no duty to give notice of disclaimer or denial of coverage with respect to any of the causes of action because the alleged defamation upon which the underlying action was based is not within the ambit of  §3420(d). That statute requires notice of disclaimer or denial of coverage only where the underlying action is for “death or bodily injury arising out of a motor vehicle accident or any other type of accident.” The court concluded that defamation does not occur by accident, and that §3420(d) was therefore inapplicable.  Furthermore, the insurer was not required to give notice of disclaimer because it was not denying coverage “based on a policy exclusion without which the claim would be covered.” The policy provided coverage only for liability arising out of an “occurrence,” defined as “bodily injury or property damage resulting from *** one accident *** or continuous or repeated exposure to the same general condition.” Defamation does not occur by accident and thus does not fall within the coverage of the policy.

 

ACROSS BORDERS

 

Visit the HOT CASES section of the Federation of Defense and Corporate Counsel website for cases covering a broad range of legal issues from other jurisdictions.

 

11/25/02:         DUNHAM v AMCO INS. CO.

Iowa Court of Appeals

Rental Property Owner’s Negligent Installation of Water Heater Precluded Coverage under Home and Business Policies Containing Rental Exclusions

For fifteen years, Gobelli and his wife owned a home in Mason City which they only used as rental property until its sale in 1992. In 1999, the minor plaintiff in this action was playing in the garage when he knocked over a container of gasoline. The gasoline spread across the floor and the gas-fired water heater, installed by Gobelli in 1986, ignited the fuel causing severe burns to the minor. AMCO Insurance Company and Farm Bureau Mutual Insurance Company insured the Gobellis for their personal residence and their farm. Both policies contained “business” and “rental” exclusions to coverage. Reversing the lower court’s grant of summary judgment in favor of the Gobellis, the Court of Appeals found that the property had only been used as a rental during the entire course of their ownership, that Leonard Gobelli only installed the heater after his tenant complained, and so the court concluded that Gobelli’s negligence was directly related to his status as a landlord. The court held that the rental exclusions preclude coverage for the minor’s injuries which arose “out of premises rented to others by an insured.”

Prepared by Bruce Celebrezze and Randall Berdan of Celebrezze & Wesley in Los Angeles

 

11/25/02:         CHENARD v COMMERCE INSURANCE COMPANY

Massachusetts Appeals Court

Insured Can Look to Highest Uninsured Motorist Limits in Household

In this appeal, the court examined the relationship between the scope of uninsured motorist coverage provided by the Sixth Edition standard Massachusetts Automobile Policy to household members of the named insured, and the statute that mandates such coverage, G.L. c. 175, § 113L. The issue arises in the context of a declaratory judgment action brought by Chenard to establish which of two companies providing automobile insurance to her mother is responsible for the payment of uninsured motorist benefits on account of injuries sustained by Chenard when the vehicle she was driving, which belonged to her mother, was struck by an uninsured auto. Court finds that while stacking is prohibited, insured can look to highest limits in household for UM coverage.

 

11/25/02:         CORT v ST. PAUL FIRE & MARINE INS. COS., INC.,

Ninth Circuit (considering California law)

Mural Covering Does Not “Advertising Injury” Make

A property insurance policy did not give rise to a duty to defend under California law because claims by artists arising from the covering of a mural on a building wall cannot be construed as alleging personal injury or advertising injury causes of action.

 

11/25/02:         CROSSMARK, INC. v DEGEORGE

Washington Appeals Court

“Fortuity Doctrine” Precluded Coverage under Advertising Injury Portion of Policy

The court held that coverage was precluded for an action alleging willful, wanton, and reckless disregard of rights, conspiracy to wrongfully take customers, and intentional disparagement and misappropriation of advertising ideas or style of doing business; the policy did not provide that intentional acts of this nature were covered.   Thus, trial court properly determined that coverage was precluded by the doctrine of fortuity.

 

11/22/02:         DANIS BUILDING CONSTR. CO. v EMPIRE FIRE INS. CO.

Ohio Court of Appeals

Additional Insured Entitled to Indemnity from Subcontractor Even Though Contractor May Have Been Negligent

A subcontractor’s employee was injured on a construction site when he fell from a scaffold when he was hit by a mortar pan attached to a crane operated by an employee of the contractor. Finding these circumstances an exception to the Ohio statute prohibiting indemnity agreements in construction-related contracts where the promisor, here the subcontractor, agrees to indemnify the promisee, the contractor, for damages by or resulting from the negligence of the promisee, the court held that the contractor was owed a defense by the subcontractor’s insurers which had listed the contractor as an additional insured. Even though the crane was owned and operated by the contractor at the time of the accident, the court found that it was an essential part of the subcontractor’s work and thus the contractor was only liable with respect to what it did to assist the subcontractor in performing its subcontract.

Prepared by Bruce Celebrezze and Randall Berdan of Celebrezze & Wesley in Los Angeles

 

11/22/02:         PORTERFIELD v AUDUBON INDEMNITY CO.

Alabama Supreme Court

Pollution Exclusion Does Not Preclude Lead Paint Claims

The Supreme Court held that lead paint qualifies as a pollutant under the terms of the absolute pollution-exclusion clause. On the other hand, the Court concluded that a reasonably prudent insured might have concluded in 1991 that the presence of lead-paint flakes, chips, and/or dust in a residential apartment would not qualify as a discharge, dispersal, release, or escape of a pollutant. The operative terms “discharge,” “dispersal,” “release,” or “escape” are ambiguous in the context of flaking and peeling lead paint in a residential apartment.  Thus, the Court construed them against Audubon and thereby determined that the absolute pollution-exclusion clause does not bar coverage in that particular setting.

 

11/21/02:         WILSON v CONTINENTAL CAS. CO.

Indiana Court of Appeals

Court Allows Third Party Declaratory Relief Action Against Tortfeasor’s Insurer Before Final Judgment where Insurer Defended Under Reservation of Rights

Indiana prohibits direct actions by third parties against a wrongdoer’s liability insurer before a final judgment is rendered except where the third party has a legally protectable interest in the insurance policy. In cases where an insurer has denied coverage, the Court of Appeals has previously held that a protectable interest exists such that the third party has standing to bring a direct action against the insurer. Finding no difference between denying coverage and defending under a reservation of rights, given its precarious defense posture, the court held that a plaintiff should be able to bring a declaratory action to determine whether the insurance carrier must indemnify its insured.

Prepared by Bruce Celebrezze and Randall Berdan of Celebrezze & Wesley in Los Angeles

 

11/20/02:         RUBRICH v PIOTRUSZEWICZ

Wisconsin Appeal Court

“Pay and Walk” (Exhaustion) Provisions in Policy Fully Enforceable By Carrier

In Wisconsin, a liability insurer generally has a contractual duty to defend its insured in an action for damages, and may be required to furnish a defense to its insured prior to the determination of coverage. An obligation to defend arises when the complaint alleges facts which, if proven, support liability covered under the terms and conditions of the policy. However, when an insurer exhausts its liability by judgment or settlement, it fully discharges its obligation to the insured. As long as the insurer carries out the terms of its insurance contract and fully protects itself and the insured from further exposure of liability, it may discharge the duty to defend upon exhaustion of the policy limits by judgment or settlement.

 

11/19/02:         FLEMMING v AIR SUNSHINE, INC.,

Third Circuit

Events Leading to Drowning After Airplane Crash Constitute One Occurrence

A settlement agreement authorized the district court to decide the issue of multiple occurrences under an airline’s insurance policy. District court’s finding, that events leading to deceased’s death from drowning after an airplane crash constituted a single occurrence under the airline’s policy, is affirmed.

 

11/18/02:         CAT INTERNET SERVICES, INC. v PROVIDENCE WASHINGTON INS. CO.

Third Circuit (applying Pennsylvania law)

Trademark Infringement Through Use of Internet Domain Name Covered by Advertising Injury Provision

CAT Internet Services was sued by Magazines.com Inc. for using the Internet domain name “Magazine.com” for the purpose and with the effect of diverting sales of magazines and other products to their own affiliates. CAT’s insurer, Providence, declined to defend under the policy’s advertising injury provisions. In the declaratory relief action filed by CAT, the District Court held, and the Court of Appeals agreed, that the advertising injury provisions covered trademark infringement as a “misappropriation of an advertising idea or style of doing business” under Pennsylvania law.

Prepared by Bruce Celebrezze and Randall Berdan of Celebrezze & Wesley in Los Angeles

 

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ARIDA v ESSEX INS. CO.

 

It is hereby ORDERED that the order so appealed from be and the same hereby is unanimously reversed on the law with costs, the motion is denied and the amended complaint is reinstated.

 

Memorandum: Plaintiffs obtained a money judgment in a negligence action against defendant's insured, Riverfront Development, Inc. (Riverfront), and commenced this action against defendant to recover the amount of that judgment pursuant to Insurance Law § 3420 (b) (1). During the pendency of the negligence action against Riverfront, defendant, which until then had provided Riverfront with a defense, commenced a declaratory judgment action seeking judgment declaring that it owed Riverfront neither defense nor indemnity. That action was resolved by a release pursuant to which Riverfront, "in consideration of the dismissal of the Declaratory Judgment Action," released defendant from all duties under its commercial general liability policy with respect to plaintiffs' negligence action, withdrew its request for a defense and indemnification in that action and agreed that the policy "shall be considered null and void" with respect to that action. Defendant moved pursuant to CPLR 3211 (a) (1) to dismiss the amended complaint based on the release, and Supreme [*2]Court granted the motion. That was error.

 

Although in seeking dismissal of the amended complaint defendant purports to rely on the defense of documentary evidence pursuant to CPLR 3211 (a) (1), the release of defendant by Riverfront can have no effect on plaintiffs' Insurance Law § 3420 (b) (1) action except under the doctrine of collateral estoppel (see generally D'Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659). Thus, defendant is in effect seeking dismissal pursuant to CPLR 3211 (a) (5). Here, Riverfront surrendered its rights under the liability policy in settlement of the declaratory judgment action commenced by defendant, and no notice of that action or the settlement thereof was provided to plaintiffs herein. We therefore conclude that plaintiffs should not be estopped from litigating the issue raised herein, i.e., whether the liability policy covers plaintiffs' claims (see Rushing v Commercial Cas. Ins. Co., 251 NY 302, 304-305; Fisons Corp. v Lumbermens Mut. Cas. Co., 229 AD2d 925; Smith & Wesson v Birmingham Fire Ins. Co., 123 AD2d 135, 137-138; cf. D'Arata, 76 NY2d at 665-669; Matter of Hofmann, 287 AD2d 119, 122-125; New York Cent. Mut. Fire Ins. Co. v Kilmurray, 181 AD2d 40).

 

We further conclude that defendant's motion should have been denied on the additional ground that there is an issue of fact whether defendant was required to give plaintiffs notice of disclaimer of liability or denial of coverage pursuant to Insurance Law § 3420 (d). Such notice is required when a claim falls within the coverage terms of the insurance policy but is denied based on a policy exclusion (see Markevics v Liberty Mut. Ins. Co., 97 NY2d 646, 648-649; Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 188-189). Injured persons may invoke the notice requirement of section 3420 (d) even where timely notice of disclaimer or denial of coverage was given to the insured (see Hartford Acc. & Indem. Co. v J.J. Wicks, Inc., 104 AD2d 289, 292-294, appeal dismissed 65 NY2d 691; John v Centennial Ins. Co., 91 AD2d 1104, 1105, lv denied 59 NY2d 605). Here, it is undisputed that defendant did not give plaintiffs notice of disclaimer of liability or denial of coverage, nor has defendant established that it denied coverage on the ground that the claim fell outside the coverage terms of the policy. We therefore reverse the order, deny defendant's motion and reinstate the amended complaint.

 

CALUCCI v BAKER

 

Appeal from an order of Supreme Court, Erie County (Whelan, J.), entered July 23, 2001, which granted defendants' motion for summary judgment dismissing the complaint.

 

It is hereby ORDERED that the order so appealed from be and the same hereby is unanimously affirmed without costs.

 

Memorandum: Plaintiffs commenced this action seeking damages for injuries sustained by Rosalie L. Calucci (plaintiff) in an automobile accident in October 1995. Supreme Court properly granted defendants' motion for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d). In support of their motion, defendants submitted plaintiff's medical records, including an x-ray and MRI. Defendants thereby established that, although plaintiff's medical records contain objective evidence of a disc degeneration, there was no causal connection between that disc degeneration and the automobile accident. Defendants also submitted a sworn report from a physician who concluded, following an independent medical examination of plaintiff, that plaintiff had no permanent injuries from the automobile accident and that any current complaints of pain were unrelated to the accident. Defendants thus met their initial burden [*2]of establishing that plaintiff did not sustain a serious injury as a result of the automobile accident.

 

Contrary to the contention of plaintiffs, they failed to raise a triable issue of fact whether plaintiff sustained a serious injury of a permanent nature. The physician who conducted an independent neurological examination of plaintiff concluded that her disability was only mild, which is insufficient to satisfy the serious injury threshold (see Pantalone v Goodman, 281 AD2d 790, 791; Thousand v Hedberg, 249 AD2d 941), and the physician who conducted an electrophysiological study of plaintiff also failed to establish that she sustained more than a mild injury and failed to state that her injury was related to the accident. Finally, plaintiffs failed to raise a triable issue of fact by the sworn report of plaintiff's chiropractor because he failed to state how the x-rays and the electrophysiological study that he ordered supported his diagnosis that plaintiff had subluxation of the cervical and lumbar spine (see Nitti v Clerrico, 98 NY2d 345, 358). Although plaintiff's chiropractor observed muscle spasm and measured limitations of movement of the cervical and lumbar spine, he failed to specify the tests that he used to detect the spasm or to measure the limitations of movement and whether those tests were objective in nature (see id. at 357-358; Brown v Wagg, 280 AD2d 891, lv denied 96 NY2d 711; Lumpkins v Kendrick, 277 AD2d 1046).

 

Also contrary to the contention of plaintiffs, they failed to raise a triable issue of fact whether plaintiff sustained an injury of a nonpermanent nature under the 90/180 category of serious injury (see Insurance Law § 5102 [d]). Plaintiff, who was retired at the time of the accident, testified that, since the accident, she can no longer perform most of the housework that she previously performed, and she can no longer go on walks or picnics or go dancing. That testimony was sufficient to establish that plaintiff's usual activities were sufficiently curtailed for at least 90 out of the first 180 days following the accident (see generally Licari v Elliott, 57 NY2d 230, 236). Plaintiffs failed, however, to submit the requisite objective evidence of "a medically determined injury or impairment of a non-permanent nature" (§ 5102 [d]; see Nitti, 98 NY2d at 357) and to establish that the injury caused the alleged limitations on plaintiff's daily activities (see Dabiere v Yager, ___ AD2d ___ [Sept. 5, 2002]). While the physician who conducted the independent neurological examination relied upon objective evidence of a degenerative condition, he failed to state that plaintiff's restrictions were medically indicated and causally related to the accident. "Instead of correlating the curtailment in plaintiff's [*3]activities to an injury sustained in the accident, plaintiffs' expert relied on that curtailment to conclude that the accident must have exacerbated the preexisting degenerative condition" (id. at ___; see also Hines v Capital Dist. Transp. Auth., 280 AD2d 768, 770).

 

RUZYCKI v BAKER

 

Appeal from an order of Supreme Court, Onondaga County (Roy, J.), entered May 24, 2001, which denied plaintiffs' motion for partial summary judgment.

 

It is hereby ORDERED that the order so appealed from be and the same hereby is unanimously modified on the law by granting partial summary judgment to plaintiffs on the issue of negligence and as modified the order is affirmed without costs. Opinion by Hayes, J.:

 

Plaintiffs commenced this negligence action seeking damages for personal injuries sustained by Kevin R. Ruzycki (plaintiff) when the vehicle that he was driving was rear-ended by a vehicle driven by defendant. Plaintiffs moved for summary judgment on the issue of liability but did not raise the issue whether plaintiff sustained a serious injury within the meaning of Insurance Law § 5102 (d). Supreme Court denied the motion on two grounds: there are issues of fact concerning the negligence of plaintiff and defendant and plaintiffs failed to establish as a matter of law that plaintiff sustained a serious injury. We conclude that the order should be modified by granting partial summary judgment to plaintiffs on the issue of negligence. [*2]

II

Plaintiffs first argue that defendant failed to offer a non-negligent excuse to rebut their prima facie showing that defendant was negligent, and thus the court erred in determining that there are issues of fact concerning the negligence of plaintiff and defendant. We agree.

 

"When a driver of an automobile approaches another automobile from the rear, he or she is bound to maintain a reasonably safe rate of speed and control over his or her vehicle, and to exercise reasonable care to avoid colliding with the other vehicle" (Power v Hupart, 260 AD2d 458, 458; see Barile v Lazzarini, 222 AD2d 635, 637). "[A] rear-end collision with a stopped vehicle establishes a prima facie case of negligence on the part of the driver of the rear vehicle" (Pitchure v Kandefer Plumbing & Heating, 273 AD2d 790, 790; see Leal v Wolff, 224 AD2d 392, 393). In order to rebut a prima facie showing of negligence, the driver of the rear vehicle must submit a non-negligent explanation for the collision (see Pitchure, 273 AD2d at 790; Leal, 224 AD2d at 393; Suitor v Boivin, 219 AD2d 799, 800).

 

In this case, plaintiffs submitted the deposition testimony of plaintiff and defendant, who presented differing versions of the accident. On this motion for summary judgment, we view the evidence in the light most favorable to defendant, the party opposing the motion (see Boyce v Vazquez, 249 AD2d 724, 726). Both parties described the traffic that afternoon at approximately 5:00 p.m. as "bumper to bumper" and slow-moving. Defendant testified that the vehicles were stopped and then began to move slowly, and he estimated that his speed prior to impact was between 10 and 15 miles per hour. Defendant further testified that, after moving less than half a block, plaintiff's vehicle came to a sudden and abrupt stop. Defendant applied his brakes but was unable to avoid rear-ending plaintiff's vehicle.

 

Plaintiffs met their initial burden of establishing a prima facie case of negligence by submitting evidence that defendant's vehicle rear-ended plaintiff's stopped vehicle (see Suitor, 219 AD2d at 799-800). Under some circumstances, evidence that the driver of the front vehicle came to an abrupt stop is sufficient to rebut the presumption of negligence by the driver of the rear vehicle and raise a triable issue of fact whether the driver of the front vehicle contributed to the accident (see e.g. Heal v Liszewski, 294 AD2d 911; Rosa v Colonial Tr., 276 AD2d 781; Tripp v GELCO Corp., 260 AD2d 925, 926). Under the circumstances of this case, however, defendant's deposition testimony [*3]was insufficient to raise a triable issue of fact (see Mascitti v Greene, 250 AD2d 821, 821-822; see also Geschwind v Hoffman, 285 AD2d 448, 449; Leal, 224 AD2d at 393-394). Defendant admitted that the traffic was heavy and slow-moving, and "[e]vidence that plaintiff's lead vehicle was forced to stop suddenly in heavy traffic does not amount to proof that plaintiff was in any way at fault for the accident" (Diller v City of New York Police Dept., 269 AD2d 143, 144). "As it can easily be anticipated that cars up ahead will make frequent stops in rush hour traffic, '[d]efendant driver's failure to anticipate and react to the slow and cautious movement of plaintiff's vehicle' is not an adequate, non-negligent explanation for the accident" (id., quoting Galante v BMW Fin. Servs. N. Am., 223 AD2d 421, 421).

 

Under the circumstances of this case, we conclude that plaintiffs are entitled to partial summary judgment on the issue of negligence.

III

 

Plaintiffs next argue that, contrary to the court's determination, they were not required to establish that plaintiff sustained a serious injury when seeking summary judgment on the issue of liability. We disagree.

 

In automobile accident cases, the plaintiff must plead and prove that he or she sustained a serious injury before recovering non-economic damages (see Insurance Law § 5102 [d]; § 5104 [a]; see generally Licari v Elliott, 57 NY2d 230). "Serious injury has been viewed as an element of liability or an element of damages" (Simone v City of Niagara Falls, 281 AD2d 923, 923). Regardless of whether serious injury is viewed as an element of liability or an element of damages, the issue of serious injury must be decided either by the court as a matter of law or by the trier of fact before a defendant will be held liable for damages for a plaintiff's non-economic loss. We agree with the Second Department that, if the issue of serious injury is not raised by the plaintiff on a motion for summary judgment on the issue of liability, an appellate court will not presume that the issue of serious injury was necessarily decided as part of the motion for summary judgment (see Zecca v Riccardelli, 293 AD2d 31; cf. Maldonado v DePalo, 277 AD2d 21).

 

Plaintiffs in this case moved for summary judgment on the issue of liability without raising the issue of serious injury, and thus we conclude that the relief sought by plaintiffs on their motion is more accurately described as a determination on the issue of "negligence," [*4]rather than "liability." A defendant is not liable for non-economic loss under Insurance Law § 5104 (a) unless the plaintiff proves that he or she sustained a serious injury, and thus the term "liability" in motor vehicle accident cases encompasses both negligence and serious injury. In DePetres v Kaiser (244 AD2d 851, 852), we determined that the court erred in granting plaintiff's motion for summary judgment on the issue of liability and we modified the order by granting plaintiff partial summary judgment on the issue of negligence. We wrote that "whether plaintiff sustained a serious injury remains an issue of fact, and defendants are not liable unless plaintiff proves at trial that she sustained a serious injury" (id.).

 

We recognize that, when the Second and Third Departments refer to "liability" in a motor vehicle accident case, they are not including the issue of serious injury within that term (see e.g. Crespo v Kramer, 295 AD2d 467; Hess v Dart, 282 AD2d 810; Pola v Nycz, 281 AD2d 839, 840; Moreno v Chemtob, 271 AD2d 585, 585-586; Skellham v Hendricks, 270 AD2d 619, 620; Kelley v Balasco, 226 AD2d 880; Perez v State of New York, 215 AD2d 740, 741-742; Ives v Correll, 211 AD2d 899; Powell v New York City Tr. Auth., 186 AD2d 728; Small v Zelin, 152 AD2d 690, 691). When the First Department refers to "liability" in a motor vehicle accident, that Court includes the issue of serious injury within that term (see e.g. Maldonado, 277 AD2d at 22). We agree with the First Department that a finding of "liability" includes the issue of "serious injury" (see Ferguson v Ozog, 288 AD2d 833, 833-834; DePetres, 244 AD2d at 852; see generally Harwood v Hinds, 295 AD2d 949; Pittman v Rickard, 295 AD2d 1003; Garwol v Bruch, 284 AD2d 940).

 

If a plaintiff moves for summary judgment on liability and establishes negligence or fault by the defendant as a matter of law, but the issue of serious injury is either not raised or not established as a matter of law, then the court should grant partial summary judgment on the issue of negligence (see e.g. DePetres, 244 AD2d at 852). In this case, plaintiffs did not raise the issue of serious injury on their motion for summary judgment on liability. Plaintiffs established that defendant was at fault for the accident, and defendant failed to raise a triable issue of fact. Plaintiffs are thus entitled to partial summary judgment on the issue of negligence, and the issue of serious injury remains to be determined at trial.

IV

 

Accordingly, we conclude that the order should be modified by granting partial summary judgment to plaintiffs on the issue of [*5]negligence.

 

AVELLANOSA v ORAZIO

 

Appeal from an order of Supreme Court, Erie County (Rath, Jr., J.), entered May 29, 2001, which denied defendants' motion for summary judgment dismissing the complaint.

 

It is hereby ORDERED that the order so appealed from be and the same hereby is unanimously affirmed without costs.

 

Memorandum: Anthony M. Avellanosa (plaintiff) was allegedly injured when the vehicle he was driving was rear-ended by a vehicle operated by defendant Mistretta Orazio. Defendants moved for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d). Although defendants met their initial burden of proof, plaintiffs raised a triable issue of fact (see generally Zuckerman v City of New York, 49 NY2d 557, 562), and thus we conclude that Supreme Court properly denied the motion.

 

In support of the motion, defendants submitted the deposition testimony of plaintiff wherein he acknowledged that he had not missed a day of work because of any injuries from the accident. In addition, defendants' medical expert affirmed that plaintiff had only "minimal" limitation of movement in the neck and "decreased sensation" in the [*2]median nerve of each hand. The expert opined that the injuries to plaintiff's neck and hands were not caused by the accident; that plaintiff had recovered from any injuries resulting from the accident; and that plaintiff had no residual disability. We conclude that defendants thereby met their initial burden of demonstrating that plaintiff did not sustain a permanent consequential limitation of use of a body organ or member or a significant limitation of use of a body function or system, the two categories of serious injury alleged by plaintiffs (see generally Insurance Law § 5102 [d]; Zuckerman, 49 NY2d at 562).

 

Although plaintiffs did not provide an "expert's designation of a numeric percentage of plaintiff's loss of range of motion" (Toure v Avis Rent A Car Sys., 98 NY2d 345, 350, citing Dufel v Green, 84 NY2d 795, 798), the Court of Appeals has made clear that an expert's affidavit does not have to "ascribe a specific percentage" to the injury so long as it "sufficiently describes the 'qualitative nature' of plaintiff's limitations 'based on the normal function, purpose and use of the body part'" (id. at 353). We conclude that the affidavit of a neurosurgeon incorporating his report raised an issue of fact sufficient to defeat defendants' motion. The report noted disc herniation and bilateral carpal tunnel syndrome supported by objective medical evidence in the form of nerve conduction tests and MRI reports. In addition, the report noted "marked restriction" of plaintiff's cervical spine "because of pain" and "decreased sensation in a median nerve distribution involving both hands." Although the neurosurgeon did not thereby quantify plaintiff's limitations, his report establishes a loss of normal function that is further supported by his final notation indicating that plaintiff is a candidate for surgery with respect to both his back and hands. Finally, the neurosurgeon indicated in his report that although "residual permanency is anticipated even with surgical correction *** the degree of disability at this time obviously cannot be determined." At this juncture in the litigation plaintiff has not concluded his treatment to such a degree that a numeric percentage can be ascribed to his limitations, and we conclude that plaintiffs sufficiently raised an issue of fact with respect to the qualitative nature of plaintiff's injury to defeat defendants' motion.

 

ROUNDABOUT THEATRE CO., INC. v CONTINENTAL CASUALTY CO.

 

Defendant Continental Casualty Company appeals from an order of the Supreme Court, New York County (Helen Freedman, J.), entered January 16, 2002, which denied its motion for summary judgment seeking dismissal of the complaint and a declaration that it is not required to insure plaintiff-respondent Roundabout Theatre Company for its business interruption losses, and granted plaintiffs-respondents' cross motion for summary judgment on the issue of coverage only.

GONZALEZ, J.

 

This appeal requires us to determine whether the business interruption clause of an insurance policy issued to plaintiff theatre company covers losses occasioned by an order of the City of New York closing the street and denying access to the insured's theatre due to a construction accident in the area, notwithstanding the absence of any physical damage to the theatre premises. Because the language of the business interruption clause in the policy clearly and unambiguously provides coverage only where there is direct physical loss or damage to the insured's property, we reverse the IAS court's determination and grant summary judgment to defendant insurer declaring that plaintiffs' losses are not covered by the subject policy.

 

In February 1998, plaintiff Roundabout, a non-profit theatre company, began staging a production of the musical Cabaret at the Kit Kat Club (the theatre), located at 124 West 43rd Street. On the morning of July 21, 1998, a portion of a 48-story exterior elevator being used in the construction of the Conde Nast building, located 65 feet west on the south side of 43rd Street, collapsed into the street and adjacent buildings. As the Conde Nast building and the theatre were separated by one building, the theatre sustained only minor damage to its roof and air conditioning system, which was repaired within one day. However, because of the substantial damage to the area and the danger from the partially collapsed scaffold, the City's Office of Emergency Management closed 43rd Street between Broadway and 6th Avenue until August 18, 1998. As a result, the theatre became inaccessible to the public and Roundabout was forced to cancel 35 performances of Cabaret. Roundabout sustained substantial monetary losses in the form of ticket and production-related sales as well as additional expenses incurred in re-opening the production.

 

At the time of the accident, defendant Continental insured Roundabout under a "Theatrical Package Policy," which included, inter alia, business interruption coverage. The "Insuring Agreement" provided:

The company agrees to pay to the insured such loss ... as the Insured shall necessarily incur in the event of interruption, postponement or cancellation of an insured Production as a direct and sole result of loss of, damage to or destruction of property or facilities (including the theatre building occupied ... by the Insured, and [certain equipment]), contracted by the insured for use in connection with such Production, caused by the perils insured against, and occurring during the term of coverage ... (emphasis added)

The "Perils Insured" clause of the policy provided: "This coverage insures against "all risks of direct physical loss or damage to the property described in Paragraph 1 [i.e., the theatre building or facilities], except as hereinafter excluded (emphasis added).

The policy further included a "War Risk and Governmental Authority and Civil Commotion Exclusion" which provided: "The company shall not be liable for any loss caused directly or indirectly by ... Civil Commotion assuming the proportions of or amounting to a popular rising, riot, martial law of (sic) the acts of any lawfully constituted authority."

On August 20, 1998, Roundabout, through its insurance broker J&H Marsh & McLennan (J&H Marsh),[FN1] provided notice of its loss to [*4]Continental. On August 31, 1998, Continental disclaimed coverage on the ground that the policy provided coverage only where there had been "physical damage to the property or facilities contracted by the Insured," and because the loss was not covered due to the civil commotion exclusion.

 

On March 4, 1999, Roundabout commenced an action against its former insurance broker DeWitt, alleging that DeWitt was negligent in failing to obtain coverage for business interruption loss resulting from off-site property damage. In its complaint, Roundabout alleged that although DeWitt had obtained from Chubb Group the necessary coverage for losses due to off-site property damage with respect to a different property, DeWitt had failed to follow its instructions to obtain the same coverage for the Kit Kat Club location [FN2]. Roundabout and DeWitt reached a settlement in this action whereby DeWitt agreed to pay Roundabout $990,063 in exchange for an assignment to DeWitt of Roundabout's rights and causes of action against Continental.

In February 2000, Roundabout and DeWitt, as assignee of the rights of Roundabout, commenced the instant action against Continental for breach of the insurance contract, and against J&H Marsh for breach of contract and negligence in failing to properly determine Roundabout's insurance needs [FN3]. In its answer, Continental's third and fourth affirmative defenses asserted, consistent with its disclaimer, that the policy did not provide coverage for business interruption loss resulting from off-site property damage or from the act of any lawfully constituted authority.

In June 2001, Continental moved for summary judgment and a for a declaration that the loss arising out of the collapse of [*5]the elevator at the Conde Nast building was not covered under the Continental policy. It argued there was no coverage because there was no direct, physical loss to Roundabout's facilities and because the loss was excluded under the policy's civil commotion exclusion. Plaintiffs cross-moved for summary judgment on the issue of coverage, arguing that coverage existed because this was an "all-risk" policy, the loss at issue was "fortuitous," and because the policy's reference to "loss of, damage to, or destruction of property or facilities" should be read to include "loss of use" of the premises. Plaintiffs also contended that the civil commotion exclusion applies only to actions by government "in violent war-like circumstances," which are not present here.

 

In its order entered January 14, 2002, the IAS court denied Continental's motion and granted summary judgment to Roundabout on the issue of coverage only. It found that because the Continental policy was an "all-risk" policy, the loss was presumptively covered and the burden shifted to the insurer to demonstrate that the loss was expressly excluded by the terms of the policy. The court rejected Continental's argument that the policy required physical damage to the insured's property, finding that the language "loss of, damage to, or destruction of [the insured's] property or facilities" encompasses a "loss of use" of the property. Otherwise, the court concluded, the phrase "loss of" would be redundant to "destruction of" the property. The court also ruled that the civil commotion exclusion did not apply since it was intended to cover occurrences arising from "war, civil insurrection or actions by government in violent, war-like circumstances." This appeal followed.

 

Continental makes two arguments in support of reversal. First, it argues that the IAS court misconstrued the unambiguous policy language requiring physical damage to the insured's property for covered losses and erroneously placed the burden on the insurer to demonstrate the applicability of a policy exclusion. Second, it contends that the civil commotion exclusion is applicable to the circumstances of this case and excludes coverage. We find sufficient merit in Continental's first argument to reverse the order on appeal, and, given this [*6]result, we do not reach the second argument.

 

At the outset, Continental argues that the IAS court erroneously held that the burden of proof lay with Continental to demonstrate that a policy exclusion was applicable. We agree. This aspect of the court's holding was premised on its characterization of the policy as an "all-risk" policy, which, the court stated, allows recovery "for all losses not resulting from misconduct or fraud unless there is a specific policy provision excluding coverage of the loss in express terms," citing M.H. Lipiner & Son, Inc. v The Hanover Ins. Co., 869 F 2d 685 [2d Cir 1989].

 

Overlooked by the IAS court, however, is the well-established principle that a policyholder bears the initial burden of showing that the insurance contract covers the loss (see Morgan Stanley Group, Inc. v New England Ins. Co., 225 F 3d 270, 276 [2d Cir 2000]; Chase Manhattan Bank, N.A. v The Travelers Group, Inc., 269 AD2d 107, 108; Simplexdiam, Inc. v Brockbank, 283 AD2d 34, 37). Continental argued before the IAS court that the loss at issue was not covered under the terms of the "Perils Insured" and "Insuring Agreement" provisions of the insurance contract. Since, as discussed below, these provisions do not provide coverage for off-site property damage, the court erred in finding that the burden of proof had shifted to Continental to prove that the loss was excluded. Labeling the policy as "all-risk" does not relieve the insured of its initial burden of demonstrating a covered loss under the terms of the policy (see Whitaker v Nationwide Mut. Fire Ins. Co., 115 F Supp 2d 612, 617 [ED Va 1999][the fact that a loss was fortuitous under an "all-risk" policy does not automatically imply that such defects were covered by the policy; the "direct physical loss" language in the policy provides a further limitation on the types of fortuitous loss covered]).

 

Turning to the issue of whether Roundabout met its burden of showing a covered loss, we are guided by the well-established rules governing the interpretation of insurance contracts. "Where the provisions of [a] policy 'are clear and unambiguous, they must be given their plain and ordinary meaning, and courts should refrain from rewriting the agreement (citations omitted).'" (United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229, 232). "Courts 'may not make or vary the contract of insurance to accomplish [their] notions of abstract justice or moral obligation'" (Teichman v Community Hosp., 87 NY2d 514, 520, quoting Breed v Ins. Co., 46 NY2d 351, 355.) Nevertheless, "[t]he policy must . . . be construed in favor of the insured, and ambiguities, if any, are to be resolved in the insured's favor and against the insurer (citations omitted)" (United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229, 232).

 

Contrary to the ruling of the IAS court, the language in the instant policy clearly and unambiguously provides coverage only where the insured's property suffers direct physical damage. The Insuring Agreement provides coverage for "loss of, damage to, or destruction of property or facilities . . . contracted by the insured for use in connection with such Production, caused by the perils insured against." The Perils Insured clause covers "all risks of direct physical loss or damage to the [insured's] property," not otherwise excluded. Reading these provisions together, the only conclusion that can be drawn is that the business interruption coverage is limited to losses involving physical damage to the insured's property (see Howard Stores Corp. v Foremost Ins. Co., 82 AD2d 398, 401, affd for reasons stated 56 NY2d 991 [no coverage under terms of policy for business interruption loss at two stores where no physical damage occurred]; Harry's Cadillac-Pontiac-GMC Truck Co., Inc. v Motors Ins. Corp., 126 NC App 698 [Ct App NC 1997] [no business interruption coverage where no "direct physical loss" to premises under terms of policy; loss occurred due to inaccessibility of plaintiff's dealership due to snowstorm]; see also 11 Couch on Insurance § 167:15 at 167-20 - 167-21 [3d ed][business interruption policies "generally require[] some physical damage to the insured business in order to permit recovery"]).

 

The IAS court's interpretation that the phrase "loss of" must include "loss of use of," because otherwise "loss of" would be redundant to "destruction of," is flawed. Initially, as Continental points out, "loss of" could refer to the theft or misplacement of theatre property that is neither damaged nor destroyed, yet still requires the cancellation of performances.

 

More importantly, the court's interpretation completely ignores the fact that the above-quoted Insuring Agreement is limited by the phrase "caused by the perils insured against," which, as noted, requires "direct physical loss or damage to the [insured's] property." The plain meaning of the words "direct" and "physical" narrow the scope of coverage and mandate the conclusion that losses resulting from off-site property damage do not constitute covered perils under the policy (see Whitaker v Nationwide Mut. Fire Ins. Co., 115 F Supp 2d at 616 [coverage for "direct physical loss" did not include defective workmanship during construction of premises]; Great Northern Ins. Co. v The Benjamin Franklin Fed. Sav. and Loan Assoc., 793 F Supp 259 [D Or 1990], affd 953 F 2d 1387 [9th Cir 1992] [cost of asbestos removal was not "direct physical loss" under policy where building undamaged and loss only economic]).

 

Other provisions in the policy support the conclusion that coverage is limited to instances where the insured's property suffered direct physical damage. In the "Definition of Loss" section of the policy, the measure of recovery is limited to "such length of time as would be required with exercise of due diligence and dispatch to rebuild, repair or replace such part of the property herein described as has been lost, damaged or destroyed (emphasis added)." If, as Roundabout argues, the policy covers losses resulting from off-site property damage, this provision would be meaningless since the insured obviously has no duty to repair a third party's property.

Similarly, the "Substitute Theatre" provision of the policy requires the insured to "exercise due diligence and dispatch to occupy a substitute theatre . . . following loss of, damage to, or destruction of the theatre," and that the new theatre must be reasonably comparable in size and quality "as the theatre which has been damaged or destroyed (emphasis added)." This provision would also make little sense were there no requirement of physical damage to the insured's premises. An insurance policy should not be read so that some provisions are rendered meaningless (see County of Columbia v Continental Ins. Co., 83 NY2d 618, 628), and such would be the result if Roundabout's position were upheld here.

 

The cases relied upon by Roundabout are inapposite as they involved policies which offered more expansive coverage than the policy in this case. For instance, in Sloan v Phoenix of Hartford, Inc. Co. (46 Mich App 46 [Mich App 1973]), the plaintiffs-insureds suffered business losses when the Governor of Michigan imposed a curfew during the 1967 riots. None of the theatres suffered any property damage. The business interruption provision of the subject policy included a "civil authorities extension" which stated "[t]his policy is extended to include the actual loss . . . not exceeding 2 consecutive weeks, when . . . access to the premises is prohibited by order of civil authority." Since other provisions of the policy required "damage to or destruction of real or personal property," but the civil authorities extension did not, the Court ruled that the business interruption losses were covered under the policy. Here, of course, the policy did not contain a civil authorities extension - in fact it included a governmental authority exclusion.

 

Similarly, in Fountain Powerboat Indust. v Reliance Ins. Co. (119 F Supp 2d 552 [EDNC 2000]), the policy contained both a civil authorities extension and an "ingress/egress clause" providing coverage for "loss[es] sustained during the period of time when . . . ingress to or egress from real and personal property . . . is thereby prevented." The District Court held that because neither provision incorporated a physical loss requirement, losses sustained due to lack of access to the property were covered under the policy. In contrast, the Perils Insured provision of the instant policy provides exactly such a limitation. Datatab, Inc. v St. Paul Fire and Marine Ins. Co. (347 F Supp 36 [SDNY 1972]), cited by Roundabout and relied upon by the IAS Court, is also distinguishable. In Datatab, the insured leased the fifth and sixth floors of a building where a water main break damaged the building's water pumps. While there was no physical damage or restricted access to the leased floors, the incident rendered Datatab's air conditioning and computer systems inoperable. The policy extended business interruption coverage to losses "when as a direct result of a peril insured against[,] [*10]the premises in which the property is located is so damaged as to prevent access to such property." The District Court found that the policy terms "premises" and "access" were ambiguous, and ruled that the policy could reasonably be construed to cover losses arising from damage to portions of the building other than the leased floors, and which impeded the actual use of, not merely physical access to, covered property.

 

In this case, there is no similar ambiguity in the coverage provisions. There is no dispute that the premises covered in this policy is the Kit Kat Club. Nor is there any provision in the policy extending coverage where access to the property is denied. Accordingly, Roundabout's reliance on Datatab is entirely misplaced.

 

Lastly, the position taken by Roundabout in its prior lawsuit against DeWitt cannot be ignored. As noted, Roundabout initially sued DeWitt arguing that it was negligent in failing to obtain from Continental business interruption coverage for the Kit Kat Club covering off-site property damage, as it had obtained from Chubb Group for a different location. Now, Roundabout makes exactly the opposite argument - that the Continental policy covers off-site property damage. Since the express provisions of the policy support Roundabout's initial position in the DeWitt lawsuit, Continental is entitled to a declaration that the loss is not covered by its policy.

In light of the foregoing, it is unnecessary for us to rule on the applicability of the governmental authority exclusion.

 

Accordingly, the order of the Supreme Court, New York County (Helen Freedman, J.), entered January 16, 2002, which denied defendant-appellant Continental Casualty Company's motion for summary judgment seeking dismissal of the complaint and a declaration that Continental is not required to insure plaintiff-respondent Roundabout Theatre Company for its business interruption losses, and granted plaintiffs-respondents' cross motion for summary judgment on the issue of coverage only, should be reversed, on the law, with costs, defendant-appellant's motion for summary judgment dismissing the complaint and for a declaration that Roundabout's loss is not covered by the Continental policy granted. The Clerk is directed to enter judgment accordingly.

All concur.

 

Footnotes



Footnote 1:The subject policy was initially procured for Roundabout by The DeWitt Stern Group (DeWitt), Roundabout's former broker. Roundabout dropped DeWitt and switched to J&H Marsh in April 1998, three months before the collapse at the Conde Nast building.

Footnote 2:The Chubb policy covered business interruption losses "which you incur due to the actual interruption of your operations ... when a civil authority prohibits access to your covered property because of direct physical loss or damage caused by a covered cause of loss to property not otherwise excluded in the vicinity of your covered property (emphasis added).

Footnote 3:The causes of action against J&H Marsh are not at issue on this appeal.

 

MATTER OF EAGLE INSURANCE CO. v PEGUERO

 

Order, Supreme Court, Bronx County (Patricia Williams, J.), entered on or about February 22, 2001, granting petitioner insurer (Eagle)'s application to stay an uninsured motorist arbitration demanded by respondent insured to the extent of directing a hearing into whether additional respondent insurer (Interboro)'s purported cancellation of its policy with additional respondent offending driver was deficient in certain respects, and which, insofar as appealed from as limited by the briefs, rejected Eagle's argument that the arbitration should be permanently stayed because the word "OVER" in Interboro's notice of cancellation, in its bottom right-hand corner and referring the reader to its back, has a typeface that is smaller than 12-point, unanimously affirmed, without costs.

 

Eagle's argument that the signal word "OVER" in Interboro's notice of cancellation is not printed in at least 12-point type, and that the notice is therefore invalid under Vehicle and Traffic Law § 313, is not supported with expert opinion or other competent evidence of type size (see Matter of Utica Mut. Ins. Co. [Bodie — Nationwide Mut. Ins. Co.], 100 AD2d 592). Absent a prima facie showing that the type is less than 12-point, the issue should not be framed for hearing. In view of the [*2]foregoing, we decline to review the IAS court's ruling that the word "OVER" is not part of any statutorily required language and therefore did not have to be in 12-point type.

 

IAFALLO v NATIONWIDE MUTUAL FIRE INSURANCE COMPANY

 

Appeal from a judgment (denominated order) of Supreme Court, Erie County (Makowski, J.), entered May 9, 2001, which, inter alia, granted that part of plaintiff's motion seeking a declaration.

 

It is hereby ORDERED that the judgment so appealed from be and the same hereby is unanimously modified on the law by denying plaintiff's motion in its entirety and granting that part of the cross motion of defendant Nationwide Mutual Fire Insurance Company seeking summary judgment dismissing the complaint and dismissing the complaint and as modified the judgment is affirmed without costs.

 

Memorandum: Plaintiff commenced this action against defendant, Nationwide Mutual Fire Insurance Company (Nationwide), seeking a declaratory judgment and a money judgment pursuant to Insurance Law § 3420 (a) (2). In 1988 plaintiff brought the underlying action against, inter alia, Mario Del Monaco, who was insured under a homeowner's policy issued by Nationwide. That action was commenced by the filing and service of a summons with notice stating that the nature of the action was to recover damages for negligence, fraud and misrepresentations, intentional infliction of emotional distress, and libel and slander. After receiving the summons with notice, Nationwide arranged for the defense of Del Monaco and at the same time sent Del Monaco and plaintiff's attorney, among others, a letter in which it denied coverage with respect to all of the noticed causes of [*2]action except negligence and reserved its rights with respect to that cause of action. Plaintiff thereafter served a complaint asserting causes of action for slander, fraud and misrepresentation, intentional infliction of emotional distress and negligence, all of which are predicated upon allegedly defamatory statements made by Del Monaco concerning plaintiff. In 1997 Nationwide gave written notice disclaiming coverage on the purported negligence cause of action and refusing both further defense and indemnification. Plaintiff settled the underlying action with Del Monaco for $100,000 and commenced this action seeking a declaratory judgment and recovery of that sum from Nationwide. Plaintiff moved and Nationwide cross-moved for summary judgment. Supreme Court granted that part of plaintiff's motion seeking a declaration that Nationwide "is obligated to defend" plaintiff and further declared that Nationwide "is obligated to reimburse the plaintiff for the Underlying Action, subject to proof of negligence." Plaintiff appeals, contending that the court erred in conditioning its declaration of an obligation to "reimburse" upon "proof of negligence." Nationwide has not appealed, but contends that it is entitled to summary judgment pursuant to CPLR 3212 (b), and we agree.

 

Plaintiff contends that Nationwide failed to comply with Insurance Law § 3420 (d) by failing to give timely notice of its denial of coverage with respect to the negligence cause of action and thus is estopped from asserting that its policy does not cover that cause of action (see Hamilton v City of New York, 256 AD2d 382, 383; see generally Markevics v Liberty Mut. Ins. Co., 97 NY2d 646). That contention is without merit. Nationwide owed no duty to give notice of disclaimer or denial of coverage with respect to any of the causes of action because the alleged defamation upon which the underlying action was based is not within the ambit of section 3420 (d). That statute requires notice of disclaimer or denial of coverage only where the underlying action is for "death or bodily injury arising out of a motor vehicle accident or any other type of accident." Defamation does not occur by accident, and thus section 3420 (d) is inapplicable (see Legion Ins. Co. v Singh, 272 AD2d 809, 811, lv denied 95 NY2d 768). In any event, a defamation cause of action is not transformed into one for negligence merely by casting it as a negligence cause of action (see Willard v Preferred Mut. Ins. Co., 242 AD2d 960, 960-961, lv denied 91 NY2d 814; see also Allstate Ins. Co. v Mugavero, 79 NY2d 153, 162-163). Nationwide also was not required to give notice of disclaimer or denial of coverage pursuant to section 3420 (d) for the further reason that it was not denying coverage "based on a policy exclusion without which the claim would be covered" (Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 189; see Zappone v [*3]Home Ins. Co., 55 NY2d 131, 134). The insurance policy at issue provides coverage only for liability arising out of an "occurrence," defined as "bodily injury or property damage resulting from *** one accident *** or continuous or repeated exposure to the same general condition." As previously noted herein, defamation does not occur by accident and thus does not fall within the coverage of the policy (see Sweet Home Cent. School Dist. of Amherst & Tonawanda v Aetna Commercial Ins. Co., 263 AD2d 949; Green Chimneys School for Little Folk v National Union Fire Ins. Co. of Pittsburgh, Pa., 244 AD2d 387; Willard, 242 AD2d at 960-961).

 

Because our dismissal of plaintiff's Insurance Law § 3420 (a) (2) cause of action fully and finally disposes of all issues between the parties, there is no need for declaratory relief and we thus grant none (see Automated Ticket Sys. v Quinn, 90 AD2d 738, 739, affd 58 NY2d 949; Walsh v Andorn, 33 NY2d 503, 507; Harris v Town of Mendon, 284 AD2d 988, 989). We therefore modify the judgment by denying plaintiff's motion in its entirety and granting that part of Nationwide's cross motion seeking summary judgment dismissing the complaint and dismissing the complaint.

 

CACCIATORE v NEW YORK CENTRAL MUTUAL FIRE INSURANCE COMPANY

 

Appeals from that part of an order of Supreme Court, Niagara County (Fricano, J.), entered July 27, 2001, that denied defendants' cross motions to dismiss the action and to compel plaintiffs to submit the matter to arbitration.

 

It is hereby ORDERED that the order so appealed from be and the same hereby is unanimously affirmed without costs. Opinion by Pigott, Jr., P.J.: The single issue on these appeals is whether Supreme Court erred in denying defendants' cross motions to dismiss the action to recover supplementary uninsured motorist (SUM) benefits based upon lack of jurisdiction and to compel plaintiffs to submit the matter to arbitration. Whether arbitration is mandatory when there is a conflict between an insured and an insurer over the value of an SUM claim is a matter of first impression in the appellate courts of this State. We conclude that the order should be affirmed.

 

Janine L. Cacciatore (plaintiff) was injured when she was struck [*2]by a motor vehicle owned by Hazel A. Gardner and insured under a motor vehicle insurance policy issued by Progressive Northwestern Insurance (Progressive) with limits of $25,000 per person. Progressive tendered the full $25,000 policy limit to plaintiff, and plaintiff, with the written consent of defendants, accepted that payment in settlement of her claim against the driver and owner. At the time of the accident, plaintiff was the named insured on a motor vehicle insurance policy with defendant New York Central Mutual Fire Insurance Company (New York Central), with SUM coverage in the amount of $50,000. Plaintiff was also insured under a separate policy issued by defendant Hanover Insurance Company (Hanover) to her husband, with SUM coverage of $500,000. Plaintiff filed claims against both defendants, who agree that New York Central's policy provides primary coverage, while Hanover's policy provides secondary coverage. Plaintiff demanded the full $25,000 of SUM coverage from New York Central, after offset of the payment by Progressive. New York Central refused, and plaintiffs then commenced the instant action.

II

Defendants contend that the SUM endorsements that appear in both policies contain language prescribed by regulation (see 11 NYCRR 60-2.3 [f]), and that arbitration is therefore mandatory with respect to any dispute over the value of an SUM claim. The policy language at issue reads in pertinent part as follows:

"12. Arbitration. If any insured making claim under this SUM coverage and we *** do not agree as to the amount of payment that may be owing under this SUM coverage, then, at the option and upon written demand of such insured, the matter *** upon which such insured and we do not agree shall be settled by arbitration, administered by the American Arbitration Association, pursuant to procedures prescribed or approved by the Superintendent of Insurance for this purpose.

"If, however, the maximum amount of SUM coverage provided by this endorsement equals the amount of coverage required to be provided by section 3420 (f) (1) of the New York Insurance Law ***, then such disagreement shall be settled by such arbitration procedures upon written demand of either the insured or us. Judgment upon the award rendered by the arbitrator may be entered in any [*3]court having jurisdiction thereof, and any such insured and we each agree to be bound by any award made by the arbitrator as to this SUM coverage [emphasis added]."

Pursuant to the plain language of the first sentence of item 12 of the SUM endorsement in both policies, if the insured and the insurer disagree upon the value of the insured's claim, then, "at the option" of the insured, the insured may by "written demand" seek arbitration that will be binding on both parties. If, however, the amount of the SUM coverage is no greater than the minimum uninsured motorist coverage that every policy must provide (see Insurance Law § 3420 [f] [1]), then such disagreement "shall be settled by such arbitration procedures upon written demand of either the insured or [the insurer]." In other words, if the limits are $25,000/$50,000, then any disagreement with respect to the value of the claim "shall" be settled by arbitration, which may be requested by the insurer as well as the insured. We agree with plaintiffs that, if arbitration were mandatory under the first sentence, which concerns SUM benefits greater than the minimum required, then there would be no need for the language mandating arbitration in the second sentence, which concerns minimum SUM coverage. Our interpretation of the policy language comports with the general principle that, "[i]n the construction of a statute, meaning and effect should be given to all its language, if possible, and words are not to be rejected as superfluous when it is practicable to give to each a distinct and separate meaning" (McKinney's Cons Laws of NY, Book 1, Statutes § 231; see Cohen v Lord, Day & Lord, 75 NY2d 95, 100). That general principle of statutory construction is equally applicable here.

III

Accordingly, the order denying defendants' cross motions to dismiss and to compel plaintiffs to submit the matter to arbitration should be affirmed.