Coverage Pointers - Volume IX, No. 10

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Dear Coverage Pointers Subscribers:

 

Raffellini Rousted

 

Rejoice.  Rejoice.  Raffellini has been roasted, rousted and revoked.  The decision has been ditched, dumped and disburdened.  The order overturned, overruled and overthrown.  The approach has been abrogated, annihilated and annulled.  Well you get the idea.

 

            Coverage aficionados will remember Raffellini v. State Farm as the 2006 decision from the Second Department holding that the an claimant filing a underinsured motorists claim (SUM) under the optional coverage did not have to establish that she or he suffered a serious injury before recovering an award for pain and suffering.  The Appellate Division had determined that there was no statutory authority for the Insurance Department's regulation (35-D) that required the claimant to prove a qualifying injury.

 

            On Thursday, November 15th the state's highest court, the Court of Appeals, disabused the Second Department and others of that notion by unanimously reversing the Second Department and holding that the regulation was indeed lawful and appropriate.  In other words, the serious injury threshold is alive and well in underinsured cases.  We do note that our friends at Progressive had convinced the Fourth Department to reject the Second Department's analysis in the Meegan case and now the rest of the state can rest just a little easier.

 

Gifting Policies

 

            We have received many noted, letters and reminders from our insurance carrier friends that we are prohibited from sending gifts of any denomination to insurers and of course, we will respect those instructions.  It's really too bad because we had ordered the 2008 Porsche Cayenne for each of you but we'll have to advise the company not to deliver them as scheduled.  You will note, however, that we have not sent out a gifting prohibition letter from our office.  We will accept gifts of any denomination (the larger the better of course) or, if you prefer, you can send over a few more files for us to handle.

 

Earl's Pearl

 

            Earl Cantwell has a very timely primer on metadata included in this week's issue.  What Earl does so very well, is take the complex and make it simple.  It's a must read.

 

Late Disclaimer Cases

 

            I am growing more and more inpatient with the courts on late disclaimer cases.  "You don't need disclaim until you conduct an investigation," says the court in one line of cases.  "You should know from the get-go, that you should disclaim and you don't NEED an investigation," says the court in another line of cases.  We offer a couple of those in this week's edition.

 

Holidays

 

            In advance of Thanksgiving, we wish you all of the best tidings for the holiday, my favorite of the year.  I was curious, of course, about the real history of this holiday.  Of course, I learned in grade school (back in the mid-1700's) that it was first celebrated in 1621, to commemorate the harvest reaped by the pilgrims after a long and cold winter or some such thing.  I wondered whether modern historians had a different view.  Delighted to find the REAL history at www.thanksgivinghistory.net, I thought it is my duty to advise you, so that you know the truth.  After all, if you read it on the Internet, it must be true:

 

According to scholars of Thanksgiving history, this autumn harvest festival was a time of overeating, dancing, drinking and merriment, which was strictly forbidden by the pilgrims' puritanical religion at the time and doomed all of the participants to an eternal life in hell or a life of wearing those ridiculous costumes with buckles on their shoes, whichever, they individually deemed harsher. The history of Thanksgiving states that pilgrims and Indians played games such as rugby, Native American soccer, badminton and Jarts. 

 

[Editor's Note:  I thought I read somewhere that the pilgrims also played Pong, but am not certain of the source material]

 

Some older accounts of Thanksgiving history state that Pocahontas joined Captain Myles Standoffish for the first Thanksgiving celebration, but revisionist history states this isn't so as Pocahontas actually died just a few short years before the first celebration. According to new data in regards to the history of Thanksgiving, it is now known that the body of Pocahontas was dug up for the celebration and propped up at the end of the table. She was regarded as the wise old aunt who barely spoke a word and probably had a buzz on as she was smiling the whole time.

 

Again in 1621, Governor William Bradford declared Thanksgiving Day as a national holiday, but since the Revolutionary War had yet to take place, no one knew what this meant. In wasn't until George Washington was President in 1789, that he had the power, after the Revolutionary War to declare Thanksgiving as a national holiday. After doing so, George promptly bit into a huge turkey leg and split in two his fine wooden teeth.

 

 

November 16th is Have a Party with Your Bear Day.  I won't be celebrating it because I do not have a bear.  Perhaps you do.

 

Insurance Coverage Arbitration & Mediation
Resolving the Complex without the Substantial Costs of Litigation

 

            This past week, along with my good friends from the Traub, Lieberman firm, we successfully mediated a very interesting fire loss subrogation claim using a New York mediator.  The case had some very interesting coverage issues relating to the liability policy issued to the contractor who was accused of burning the house down.  The Traub, Lieberman firm ably defended the insured and we represented the carrier on the coverage issues. The combination of excellent defense counsel and wizened-old coverage counsel provided our principals with an ethical and effective one-two punch that led to a very favorable outcome.    

 

There are times, more often recently than not, when insurers wish to resolve complex insurance coverage disputes without the expense and costs of trial and without the risk of potentially adverse judicial precedent.  We have encouraged the mediation and/or arbitration of complex insurance coverage claims and our office can assist insurers and insureds in bringing reasoned resolution to coverage disputes.   Why spend the money and the time to litigate these questions when resolution by mediation or arbitration can bring closure to hotly contested matters in relatively short order for substantially reduced costs.

 

We've has been handling complex insurance coverage matters for over 25 years.  For 15 years, I've been serving as an Adjunct Professor of Insurance Law at the Buffalo Law School and am frequently retained as an expert witness in insurance coverage matters throughout the United States, Canada and in the London market.

 

If you and another carrier or carrier are facing a coverage dispute and would like to resolve the matter by mediation - avoiding significant legal fees and perhaps, unfortunate precedent --  contact me and I'd be glad to try to help resolve the case, using years of experience, scholarship, practicality and common sense.  And, if we can't handle it, because of a conflict, we have a network of skilled coverage lawyers around the country who can step in to assist.

 

Audrey's Greetings:

 

            From Audrey Seeley, who is down in Westchester County, doing a No Fault program to agents and brokers, the Queen of No Fault:

 

I have a few good practice tips stemming from two arbitration decisions this edition.  Before I get started I wanted to wish you and your family a Happy Thanksgiving.

 

The first tip stems from a well reasoned decision by Arbitrator McCorry on digital motion x-rays.  Many of you are aware of what they are and many of you have heard my thoughts on them.  There are some very persuasive position papers specific to digital motion x-rays and a good decision from Arbitrator Haines discussing how it is akin to video fluoroscopy, which is not recognized as having medical utility.  These papers and the decision should be used to supplement the position on digital motion x-rays but they are not sufficient alone to support a denial of the claim.  A good peer review and a medical opinion are required to support a denial of claim on this testing.  An adjuster should not be making decision on medical necessity based upon his or her review of the medical records.

 

The second tip stems from what I categorize as an admonishment to a medical provider, who took an assignment from an EIP then lost the arbitration.  The clear message is this - if you are a medical provider who took an assignment from the EIP you have no right to send their case to collections for nonpayment or seek to recover the bill from EIP after you lost the arbitration.

 

I appear before three Upstate arbitrators on a regular basis - Arbitrator O'Connor, Arbitrator McCorry, and Arbitrator Theiss.  I have routinely heard from EIPs that they have their bills sent to collections and their credit is destroyed.  In 99% of these cases the EIP has provided the medical provider with an assignment of benefits.  The assignment of benefits provides that the EIP has no obligation to pay any bills that are denied.  The medical provider has stepped into the EIP's shoes and bears the responsibility of arbitrating the bill for payment.  All of these arbitrators make it clear to the Applicant and their counsel that this action in inappropriate.  I have seen Arbitrator Theiss make a point in many of her recent awards to place in all caps a statement that the EIP is not responsible for the bill since the provider took an assignment.  Overall, the message should be clear to the providers, if they are not going to make the effort to arbitrate the claim, that they should not send their patient's bills to collection agencies or place a lien on their personal injury lawsuit.

 

Aud

 

This week's issue includes the following interesting cases:

 

  • Raffellini Reversed; Reason Returns; Serious Injury Required for SUM Recovery
  • It's Really the Wrong Message, but Court Continues to Insist that Carrier Deny Coverage Based on Pleadings, Even Though Investigation Not Complete
  • Carrier Acknowledged Duty to Defend Additional Insured but Indemnity Responsibility Must Await Final Determination of Liability
  • Measure Twice, Cut Once.  Carrier that Agrees to Accept Repayment of Overpaid No Fault Benefits Cannot Change Mind
  • Reservation of Rights:  Bad.  Prompt Investigation and Disclaimer: Good.
  • Bad Faith Claim by Excess Carrier Against Primary Carrier Allowed to Proceed, Where Primary Carrier Failed to Raise Anti-Subrogation Defense in Order to Avoid Paying Under an OCP Policy. 
  • Malpractice Case by Excess Carrier Against Defense Counsel Dismissed Based on Lack of Privity
  • Carrier that Doesn't Do Business in New York Cannot be Subject to Jurisdiction
  • Questions of Fact Exist about Timeliness of Insured's Notice
  • UM Carrier Entitled to Authorizations for Medical Records Relating to Past and Present Injuries 

STAROSIELEC'S SERIOUS (INJURY) SIDE OF NEW YORK NO FAULT
Mark Starosielec
[email protected]

  • Failure to Offer Objective Tests of Plaintiff's Injuries Leads to SJ Affirmation
  • Doc's Claim that Plaintiff's Injuries "May Be" Related to MVA Not Enough to Survive SJ
  • No Explanation for Failing to Treat Post MVA Means No Recovery for Plaintiff
  • Conflicting Medical Opinions = Issue of Fact
  • Plaintiff's ROM Limitations Must Be Contemporaneous with the Accident
  • Successfully Pleading the Emergency Doctrine Leads to SJ for Defendant
  • Plaintiff's Motion to Set Aside Verdict is Modified in Part and Upheld in Part
  • Quality Not Quantity: P's Voluminous But Uncertified Records are w/o Probative Value
  • Herniated Disc + Permanent ROM Observations by Chiropractor  = Triable Issue of Fact
  • SJ Granted as Plaintiff's Physician Fails to Address Plaintiff's "Several" Accidents
  • Plaintiff's Getting a Second Opinion, then a Third Opinion Leads to Complaint Dismissal
  • Insult to (Non Serious) Injury: Plaintiff-Bicyclist's Complaint Dismissed Against Defendant-Pickup Truck Driver for Failure to Raise a Triable Issue of Fact
  • Significant Limitations and Comparative ROM Findings Allows Plaintiff to Survive SJ

AUDREY'S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]  

 

 

Arbitration

 

  • Lack of Medical Opinion and Specificity in Denial Fatal in Digital Motion X-Ray Claim
  • Concurrent Care Found Not to be Concurrent
  • Chiropractic Care Found Not Medically Necessary, Despite Treating Chiropractor's Testimony
  • Medical Provider Must Establish Medical Necessity for Test and Admonished Not to Pursue EIP for Bill.

 

Litigation

 

  • UM Carrier Entitled to Medical Authorizations from Subject Accident and Subsequent Accidents Where Similar Injuries
  • I Remember Mailing the Bill Three Years Ago... 

PEIPER ON PROPERTY

Steven E. Peiper

[email protected]

 

  • Two-Year Statute of Limitations in Policy Bars Insured's Claim 

EARL'S PEARLS

Earl K. Cantwell, II

[email protected]

 

Don't Let Others Mine Your Metadata

 

We love your feedback, keep in coming in.  In the meantime, do enjoy your holiday and best wishes.

 

Dan

New Page 2

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

Newsletter Editor

Dan D. Kohane
[email protected]

 

Insurance Coverage Team

Dan D. Kohane, Team Leader
[email protected]

Michael F. Perley
Audrey A. Seeley
Steven E. Peiper

Fire, First-Party and Subrogation Team
Andrea Schillaci, Team Leader
[email protected]

Jody E. Briandi
Steven E. Peiper

NO-FAULT/UM/SUM TEAM
Audrey A. Seeley, Team Leader
[email protected]
Tasha Dandridge
Mark Starosielec

APPELLATE TEAM
Dan D. Kohane
[email protected]
Scott M. Duquin

Index to Special Columns

 

Starosielec’s Serious Side of “Serious Injury”

 Audrey’s Angles on No Fault

Peiper on Property
Earl’s Pearls

Across Borders

 

11/15/05          Raffellini v. State Farm Mutual Automobile Insurance Company

New York State Court of Appeals
Raffellini Reversed; Reason Returns; Serious Injury Required for SUM Recovery
In our October 28th 2006 Special Edition of Coverage Pointers, we cried that Halloween had come early in the Second Department when that court held the portion of Insurance Department regulation (35-D) and the mandatory policy language contained in that regulation that requires the SUM (underinsured) claimant prove a serious injury in order to recover those benefits was violative of the Insurance Law.  In other words, the Appellate Division held that a SUM claimant who has settled his or her case with the other car’s insurer need not prove he or she has sustained a serious injury under the No Fault law when prosecuting the claim for SUM benefits.

 

We are delighted to report that the Court of Appeals has unanimously reversed the Second Department order and held that the regulation and mandatory endorsement are supported by New York law.  Accordingly, a claimant seeking underinsured motorist benefits must establish a serious injury under the no fault law in order to qualify for benefits. 

 

The Court’s decision reviewed the legislative history of the statute creating the optional coverage, now located in Insurance Law Section 3420(f)(2) and held that the Insurance Department’s interpretation of the statute and adoption of mandatory policy language was quite consistent with the statute.

Editor’s Note:  Kudos to the Justice Peradotto who wrote the Fourth Department’s 3-2 majority opinion in Meegan v. Progressive (reported in the June 15, 2007 edition of Coverage Pointers.  That court rejected the Second Department’s decision in Raffellni and while the Court of Appeals did not cite Meegan in its decision, one might call the Raffellini reversal, quiet redemption.

 

11/15/07          Those Certain Underwriters at Lloyds v. Gray
Appellate Division, First Department
It’s Really the Wrong Message, but Court Continues to Insist that Carrier Deny Coverage Based on Pleadings, Even Though Investigation Not Complete

These decisions really bother us.  The insurer receives a pleading on May 16, 2005, and nine days later, on May 25, 2005, retaining an investigator to review the claim and in particular to ascertain the facts surrounding the subject accident including whether the plaintiff was or was not an independent contractor retained on behalf of or by the insured.  The investigator contacted Gray by telephone on May 26, 2005, but assets that due to their "hectic schedules," he was unable to arrange for an interview until three weeks later, on June 17, 2005.  At the interview, Gray provided the investigator with a written statement in which she confirmed what was already spelled out in the verified complaint: she hired Hoover to be the general contractor on the renovation of the building and from the wording of the complaint it was her understanding that Valdez was injured while working on the premises for a subcontractor. Nineteen days later the investigator forwarded Gray's statement and his report to plaintiff and on July 11, 2006, plaintiff notified Gray in writing that it was disclaiming coverage under the policy.

Is that so awful?  Was that such a horrible delay in denying coverage?

“Well, “says the court.  The verified complaint should have drawn the carrier’s attention to the exclusionary clause for contractor’s employees. After all, it instructed its investigator to ask about that (isn’t that what an investigator is SUPPOSED to do?).  There is no reason from a fair reading of the complaint to question Valdez's assertions that at the time of the accident he was employed by a subcontractor working on the project. 

“You could have resolved the question with a phone call,” says the court.  The total of 56 days that went by before you disclaimed may be just too long.  Go back and have a trial.

Editor’s Note:  If you disclaim without an investigation, you’re a bum. If you disclaim after an investigation, you’re a bum.  There is just no getting it right these days.

11/15/07          Bovis Lend Lease LMB, Inc.  v. American Alternative Insurance Company
Appellate Division, First Department
Carrier Acknowledged Duty to Defend Additional Insured but Indemnity Responsibility Must Await Final Determination of Liability

The insurer agreed that under the recent Court of Appeals case in BP Air Conditioning [click on case for summary] it has an obligation to defend a party as an additional insured.  However, court held, and correctly so, that obligation to indemnify cannot be determined until liability is determined.

11/15/07`         Palmo v. Straub and State Farm Ins. Com.

Appellate Division, Third Department
Measure Twice, Cut Once.  Carrier that Agrees to Accept Repayment of Overpaid No Fault Benefits Cannot Change Mind

State Farm realized that it had overpaid the claimant No Fault benefits to the tune of just over $10,000 (because the claimant had also received Workers Compensation Benefits).  The carrier and the claimant agreed that the amount due would become a lien on the settlement of the personal injury action and that State Farm would be reimbursed out of the settlement proceeds.  Later, State Farm retains a different counsel who reviews the file and realizes that the overpayments totaled $19,000 or so.  When the underlying case settled, the new attorney, even after being made aware of the prior $10,000 arrangement, insisted on the full $19,000. 

 

The Appellate Division held State Farm to its original deal of $10,000 finding that a series of writings between the parties "taken together, are sufficient to establish that the parties indeed entered into a settlement" of the overpayment received by plaintiff.

 

11/9/07            Wood v. Nationwide Mutual Insurance Company

Appellate Division, Fourth Department

Reservation of Rights:  Bad.  Prompt Investigation and Disclaimer: Good.
In March 1994, an employee of plaintiff was injured in a construction site accident and in November 1994, he commenced a lawsuit against plaintiff that was eventually dismissed on stipulation.  The employee then sued the owner of the property in April 1995 and a third party action against the plaintiff was commenced in March 1996.  Nationwide insured the plaintiff and provided him with a defense under the policy. About 13 months after the third party action was commenced, Nationwide issued a disclaimer based on an “injury to employee” exclusion.

 

The insurer’s duty to disclaim is measured from the point in time when the carrier first learns of grounds for denial of coverage.  An investigation can extend the time to notify the insured of the disclaimer.

 

The carrier sent out a reservation of right dated October 19, 1995 indicating that the Nationwide was reserving its right to disclaim if it was determined that the injured party was an employee of the plaintiff.  Nationwide contends that it received a determination from the Workers Compensation Board in May 1997 that the injured party was an employee and disclaimer 13 days later.

 

The reservation of rights letter was not a substitute for a disclaimer.  Defendant was not required to await the decision of the Workers' Compensation Board before issuing a disclaimer and, indeed, defendant was required to conduct its own investigation into the matter, including obtaining a statement from plaintiff.

Nationwide fails to establish that the plaintiff did not cooperate and raised that contention, in any event, for the first time on appeal.

Editors Note:  Reservation of rights letters are, generally, useless, and are no substitute for a prompt investigation and disclaimer.  Carriers are reminded, as they have been many times in this column, that investigations must be prompt, well-documented and quickly concluded and the insured promptly advised.

11/8/07            Federal Insurance Company v. North American Specialty Insurance Co.
Appellate Division, First Department
Bad Faith Claim by Excess Carrier Against Primary Carrier Allowed to Proceed, Where Primary Carrier Failed to Raise Anti-Subrogation Defense in Order to Avoid Paying Under an OCP Policy.  Malpractice Case by Excess Carrier Against Defense Counsel Dismissed Based on Lack of Privity
Plaintiff Federal Insurance Company, as an excess carrier, claims it should have only contributed $1,000,000 to a settlement, but paid twice that amount on behalf of Galaxy General Contracting Corp., sues Rivkin Radler, LLP who represented Galaxy in the underlying action, asserting legal malpractice, and also Commercial Underwriters Insurance Company (CUIC), Galaxy's primary liability insurer, asserting as against it bad faith, indemnity and legal malpractice.

Federal claims that CUIC insured Galaxy under a CGL policy with a limit of $1,000,000. Federal followed with excess coverage up to $10,000,000 over its underlying coverage. In addition, pursuant to its contractual indemnity obligation as set forth in its contract with the owners of the property where the underlying accident took place Galaxy purchased from CUIC for the owners' benefit a separate owners and contractors protective liability policy (OCP) with a limit of $1,000,000.

The underlying action involved a scaffolding accident where one Bermejo, an employee of one of Galaxy's subcontractors, was injured.  The same counsel was retained to represent both general contractor Galaxy and the owners. Later, CUIC assigned separate counsel for Galaxy and the owners; Rivkin was assigned to represent Galaxy.

The owners then moved for leave to serve an amended answer to assert cross claims against Galaxy for contractual and common-law indemnification, and a motion was made file a late motion for summary judgment on the cross claims. Although opposing the motion on several grounds on Galaxy's behalf, Rivkin did not raise the bar of the anti-subrogation rule. The trial court granted the motion finding that the owner had no independent negligence. Rivkin subsequently raised the anti-subrogation issue in a motion to renew or reargue, the court denied the motion on the ground that Galaxy failed to offer a satisfactory explanation for failing to present the argument on the original motion.

CUIC was prepared to tender the full $1,000,000 limit of its CGL primary policy for Galaxy in settlement but refused to make a contribution on behalf of the owners under the OCP policy. At a mediation conference, Rivkin, on behalf of Galaxy, offered the full $1,000,000 limit of the CGL policy and argued that the owners' OCP policy applied and that a contribution thereunder should be made. The owners, however, refused to contribute, maintaining that they were, at most, passive tortfeasors. Bermejo rejected Galaxy's $1,000,000 settlement offer.  

Later, Federal reminded CUIC of its position that CUIC was required to exhaust the limits of both the CGL and OCP policies before it would become obligated to make any payment. It argued that, irrespective of any indemnity rights that the owners might have over against Galaxy, since CUIC, the insurer of both the CGL and the OCP policy, "was obligated to defend each of its insureds, CUIC was barred by the antisubrogation doctrine from becoming subrogated to the right of any one of its insureds against any of its other insureds." Bermejo's action was eventually settled for $3,000,000, with CUIC paying $1,000,000, the limit of its CGL primary policy, on behalf of Galaxy, and Federal paying the remaining $2,000,000 out of its excess coverage for Galaxy. In settling and discontinuing that action, the parties otherwise preserved the cross claims between the owners and Galaxy and reserved all of their rights as between each other, thus setting the stage for the commencement of this action.

Federal asserted five causes of action - three against CUIC alone and two against CUIC together with Rivkin. In its first cause of action, Federal alleged that CUIC violated the antisubrogation rule in that, as the real party in interest, it claimed in the names of the owners a right of indemnity against Galaxy, its own insured. In its second cause of action, Federal alleged that CUIC acted in bad faith in defending Galaxy against the owners' indemnity claims by failing to raise the antisubrogation rule in opposition to the owners' motion for summary judgment. Had the rule been invoked, Federal claims, the court in the Bermejo action "would have applied [it] to bar CUIC from becoming subrogated to the rights of some of its insureds . . . against another of its insureds . . . and limited any right of indemnity to the amount above the $1,000,000 limit of CUIC's OCP." Federal's third cause of action against CUIC alleged a similar theory of liability, but as Galaxy's subrogee. Federal's fourth cause of action, against both CUIC and Rivkin, alleged legal malpractice. Without asserting a client relationship with Rivkin or alleging the existence of privity or any allegations of "near privity," Federal claimed merely that CUIC and Rivkin owed Galaxy a duty to defend. Federal further alleged that Rivkin was negligent in opposing the owners' motion for summary judgment on their indemnification claims by failing to assert antisubrogation or to apprise Federal in a timely manner that the owners had asserted such cross claims. According to the complaint, had Rivkin raised the antisubrogation rule, the court would have "limited any right of indemnity to the amount above the $1,000,000 limit of CUIC's OCP." Federal's fifth cause of action, also against CUIC and Rivkin, alleged a similar theory of liability, but as Galaxy's subrogee.

The Court holds:

  • There was no privity between Rivkin and Federal, the excess carrier.  Rivkin’s only duty was to Galaxy, if there is a conflict between the interests of the insured and carrier.
  • Federal's individual claim of legal malpractice is not saved by those cases where the carrier is acting as subrogee of an insured.
  • However, Federal does state a cause of action against CUIC for bad faith in not raising the anti-subrogation defense and thus favoring one insured over another.  By allowing one of its insureds, the owners, to escape liability in violation of the antisubrogation rule, thereby removing one of its policies (OCP) from the layer of coverage that had to be exhausted before triggering Federal's excess coverage, sufficiently states a cause of action for bad faith.

Editors Note:  Very rarely do bad faith cases in New York survive a motion to dismiss.  Here, the court did not like the primary carrier’s tactics, designed, the court believed, to hide the proceeds from one of its policies from payment.

 

11/8/07            In re Amer. Transit Ins. Co. v. Hoque and American Independent Ins. Co.

Appellate Division, First Department

Carrier that Doesn’t Do Business in New York Cannot be Subject to Jurisdiction

American Transit wanted to demonstrate, in an application to stay a UM proceeding, that American Independent insured tort defendant.  The problem was that American Independent does not do business, sell policies, have agents, etc, in New York.  Accordingly, that company cannot be forced to litigate coverage questions in New York.  American Transit it not precluded from maintaining its position that UM coverage does not apply, but will have to use other means to establish it, perhaps conducting some discovery in Pennsylvania, where American Independent does do business.

 

11/07/07          100 Motor Parkway Associates, LLC v. American Motorists Ins. Company

Appellate Division, Second Department

Questions of Fact Exist about Timeliness of Insured’s Notice
Not a great deal of information provided in the opinion, but the court held that despite the carrier’s failure to provide information to the court, the insured claim that it gave timely notice of a claim was not sufficiently established by the proof submitted.  Accordingly, the matter cannot be decided on summary judgment.

 

11/7/07            In the Matter of New York Central Mutual Fire Ins. Company v. Serpico

Appellate Division, Second Department

UM Carrier Entitled to Authorizations for Medical Records Relating to Past and Present Injuries
One wonders, sometimes, how lower courts can deny what is so clearly allowable.  Here, carrier moved for a temporary stay of an uninsured motorists arbitration to give the carrier a chance to conduct some discovery.  It wanted to review medical records relating to the subject accident as well as records relating to prior claims of injuries to the same parts of the body.  Lower court refused to allow that discovery but the Appellate Division reversed and directed the production of the authorizations to aid in the arbitration.

 

STAROSIELEC’S SERIOUS (INJURY) SIDE OF NEW YORK NO FAULT
Mark Starosielec
[email protected]

 

11/15/07          Lloyd v. Green

Appellate Division, First Department

Failure to Offer Objective Tests of Plaintiff’s Injuries Leads to SJ Affirmation

The Appellate Division affirmed a lower court order granting defendants’ summary judgment motion. Here, the defendants first satisfied their burden of establishing prima facie entitlement by submitting Dr. Epstein’s affidavit in which he concluded that although the injured plaintiff’s “condition” was caused by the subject accident, no permanent injury was sustained. (see Perez v Hilarion, 36 AD3d 536 [2007]). In opposition, although the cervical MRI indicated a herniated disc, which may constitute a serious injury, an injured plaintiff “must still offer some objective evidence of the extent or degree of his alleged physical limitations and their duration, resulting from the disc injury.” (Arjona v Calcano, 7 AD3d 279, 280 [2004]). The affirmed report submitted by plaintiffs’ medical expert fails to identify or describe the objective medical tests employed in measuring the alleged restrictions in range of motion. Findings based on subjective complaints of pain are insufficient to raise a triable issue.

 

11/15/07          Fernandez v Mercedes
Appellate Division, First Department

Doc’s Claim that Plaintiff’s Injuries “May Be” Related to MVA Not Enough to Survive SJ

A lower court order which had granted defendant’s motion for summary judgment dismissing the complaint was unanimously affirmed by the Appellate Division. Plaintiff failed to show that he suffered a “serious injury.” Plaintiff alleges soft tissue injuries, but his doctor failed to identify any objective basis for the percentages attributed to the restricted ranges of motion (see Parreno v Jumbo Trucking, Inc., 40 AD3d 520 [2007]), and did not objectively relate the diagnostic findings to plaintiff's current complaints. The reviewing radiologist could only state that plaintiff’s herniations and disc bulge “may be” related to the accident. Absent any description of the objective nature of his findings, plaintiff’s doctor’s affidavit must be viewed as conclusory and insufficient to establish a serious injury (see Munoz v Hollingsworth, 18 AD3d 278, 279 [2005]).

 

 

11/13/07          Edgecomb v Ixat Tr., Inc.

Appellate Division, First Department

No Explanation for Failing to Treat Post MVA Means No Recovery for Plaintiff

In a short opinion, the Appellate Division affirmed a lower court order which granted defendants’ motions for summary judgment dismissing the complaint for lack of a serious injury. Here, plaintiff's claims of permanent and significant injuries were properly rejected where, in opposition to defendants’ prima facie showing, plaintiff offered no explanation why she did not seek any treatment starting nine months after the accident. Her claim of a 90/180 injury was therefore rejected.

 

11/7/07            Cariddi v. Hassan

Appellate Division, Second Department

Conflicting Medical Opinions = Issue of Fact
The Appellate Division affirmed a lower court order denying defendants’ summary judgment motion since the physicians had conflicting medical opinions. Here, plaintiff was allegedly injured when she was struck by a vehicle while crossing the street. She claimed to have sustained injuries to her lumbosacral spine and left ankle, as well as an injury to her left hip consisting of a tear of the superolateral acetabular labrum.

 

In support of their motion, the defendants submitted the affirmed report of Dr. Rothpearl, a radiologist. Based on his review of the MRI film of the plaintiff’s left hip, Dr. Rothpearl opined that she suffered from “joint effusion,” which he described as “a nonspecific finding which is usually idiopathic, inflammatory, infectious, or degenerative in nature,” as well as from “[d]egenerative joint disease,” which “occurs as a natural consequence of aging.” Dr. Rothpearl’s report was sufficient to establish that the plaintiff’s alleged hip injury was unrelated to the accident. In opposition, plaintiff submitted the affirmed report of Dr. Tobin, who, reading the same MRI film, opined that the plaintiff sustained a “tear of the superolateral acetabular labrum,” and specifically noted "no significant joint effusion.”

           

11/7/07            D'Onofrio v Floton

Appellate Division, Second Department 

Plaintiff’s ROM Limitations Must Be Contemporaneous with the Accident

Defendants successfully appealed a lower court order which had denied its motion for summary judgment. The Appellate Division held that contrary to the lower court’s determination, the defendants met their prima facie burden of establishing that the plaintiff did not sustain a serious injury. In opposition, the plaintiff failed to raise a triable issue of fact. The affidavit of the plaintiff’s treating neurologist showed range of motion limitations in the plaintiff's spine based on a recent examination. However, neither the plaintiff nor his treating neurologist proffered competent medical evidence that showed range of motion limitations in the plaintiff’s spine that were contemporaneous with the subject accident.

 

11/7/07            Draper v. Canada Dry Bottling of N.Y.

Appellate Division, Second Department 

Successfully Pleading the Emergency Doctrine Leads to SJ for Defendant

The Appellate Division reversed a lower court order which had denied defendants’ summary judgment motion. Here, the defendants’ truck collided with plaintiff’s SUV after the SUV swerved in an attempt to avoid contact with an unidentified third vehicle. Following the depositions of the plaintiff and the defendant truck driver Joe Fasce, the defendants moved for summary judgment dismissing the complaint, both upon the ground that the plaintiff did not sustain a serious injury and that Fasce reasonably responded to an emergency situation. The defendants made a prima facie showing by demonstrating that Fasce did not act negligently under the emergency circumstances presented. In opposition, the plaintiff failed to raise a triable issue of fact.

 

11/7/07            Hinterberger v Leslie

Appellate Division, Fourth Department 

Plaintiff’s Motion to Set Aside Verdict is Modified in Part and Upheld in Part
The Appellate Division agreed with a lower court ruling granting defendant’s summary judgment motion, denied plaintiff’s motion to set aside the jury verdict but modified the order which had granted plaintiff’s motion for a new trial. Plaintiff and defendant were involved in a motor vehicle accident. The lower court properly denied plaintiff’s motion to set aside the jury verdict and for a new trial on the issue of whether plaintiff sustained a serious injury. “Upon our review of the evidence, we cannot conclude that the proof presented so preponderated in favor of plaintiff that the verdict finding that she did not sustain a serious injury could not have been reached on any fair interpretation of the evidence.”

 

Further, the lower court erred in denying that part of defendant’s motion to vacate those parts of the order granting plaintiff’s post-verdict motion for a mistrial and ordering a new trial, and further erred in denying that part of defendant's motion for judgment on the jury verdict. The lower court abused its discretion in granting plaintiff’s motion because the reference by defendant’s expert witness on cross-examination to defendant’s insurance carrier did not warrant a mistrial. Finally, the defendant is entitled to judgment on the jury verdict.

 

11/7/07            Malave v Basikov

Appellate Division, Second Department 

Quality Not Quantity: P’s Voluminous But Uncertified Records are w/o Probative Value
Defendants’ motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury was affirmed by the Appellate Division. The defendants met their prima facie burden. In opposition, the plaintiff failed to raise a triable issue of fact by principally relying upon the submission of voluminous unaffirmed reports and uncertified medical records, which were without any probative value. The affirmation of the plaintiff’s treating physician also lacked any probative value since he relied on unaffirmed reports and failed to compare any of his own findings on range of motion to what is normal.

 

11/7/07            Nigro v. Kovac
Appellate Division, Second Department 

Herniated Disc + Permanent ROM Observations by Chiropractor = Triable Issue of Fact
The Appellate Division reversed a lower court which had granted defendant’s summary judgment motion. The defendant met her prima facie burden. The Appellate Division held in opposition the plaintiff raised a triable issue of fact as to whether she sustained either a permanent consequential or significant limitation of use of her cervical spine as a result of the subject accident. The plaintiff’s treating chiropractor opined based on her contemporaneous and most recent examinations of plaintiff, as well as upon her review of the plaintiff’s cervical MRI report, which showed, a herniated disc at C5-6, that the plaintiff’s cervical injuries and range of motion limitations observed were permanent and causally related to the subject accident.

 

11/7/07            Pazmino v. Universal Distribs., LLC

Appellate Division, Second Department 

SJ Granted as Plaintiff’s Physician Fails to Address Plaintiff’s “Several” Accidents
After defendants met their prima facie burden by establishing that the plaintiff did not sustain a serious injury, the plaintiff failed to raise a triable issue of fact. As such, the lower court order was reversed, and the defendants’ motion for summary judgment dismissing the complaint was granted. In the most recent medical report of the plaintiff’s treating neurologist, he noted that the plaintiff was involved in “several” accidents since he last examined the plaintiff a year earlier. Rather than address those accidents, the neurologist simply concluded that the significant range of motion limitations in the plaintiff’s cervical and lumbar spine, as well as the injuries noted in the plaintiff’s MRI reports, were the result of the subject accident. These conclusions were clearly rendered speculative in light of the fact that he failed to address what those prior accidents involved. The MRI reports merely showed evidence that the plaintiff had disc herniations and bulges in those regions of his spine at that time.

 

11/1/07            Motrie v.  Reid

Appellate Division, Third Department 

Plaintiff’s Getting a Second Opinion, then a Third Opinion Leads to Complaint Dismissal
The Appellate Division agrees with lower court ruling granting defendant’s summary judgment motion. Here on appeal, plaintiff argued that defendant did not demonstrate entitlement to summary judgment. In support of the motion, defendant submitted the pleadings, plaintiff's EBT testimony and various records which reveal that plaintiff’s family physician had her wrist X-rayed which revealed no fracture. Plaintiff was then examined by an orthopedic surgeon who found no significant swelling or deformity; a follow-up examination by this orthopedic surgeon revealed no swelling, good range of motion and an MRI ordered by this surgeon revealed no intrinsic lesions. A second opinion sought by plaintiff resulted in X rays with a finding of “[m]ild degenerative changes of [the] first carpal metacarpal joint.” Finally, a third orthopedic surgeon examined plaintiff and diagnosed “a very mild tenosynovitis of the right wrist [which] is truly minor and does not present with any kind of disability.” That was more than sufficient to sustain defendant’s initial burden, and in response, plaintiff submitted a second affidavit from her family physician. He concluded that plaintiff sustained a scapholunate ligament disruption. As such, plaintiff failed to submit competent evidence that raises an issue of fact.

 

11/1/07            Tubbs v. Pallone

Appellate Division, Third Department 

Insult to (Non Serious) Injury: Plaintiff-Bicyclist’s Complaint Dismissed Against Defendant-Pickup Truck Driver for Failure to Raise a Triable Issue of Fact

Here, plaintiff’s bicycle and defendant’s pickup truck collided and plaintiff sustained injuries to her left leg, knee, elbow, hand and wrist. Plaintiff commenced this action, alleging serious injuries under several categories. Defendant moved for summary judgment, proffering the report of a consulting physician who concluded that there was no objective medical evidence of impairment of function in plaintiff’s left wrist. In doing so, he made reference to records of a June 15, 2004 emergency room visit by plaintiff for left wrist tendonitis, eight days prior to the accident. In response, plaintiff submitted the affidavit of her attorney and a copy of the unsworn office notes of her treating physician for a visit on July 1, 2004. Here, defendant tendered sufficient admissible proof. Although plaintiff’s attorney asserted that plaintiff had undergone “four serious operations” which left her with a permanent defect, he failed to support this claim with any medical evidence. Therefore, plaintiff did not meet her burden of proof and summary judgment was appropriate. 

 

 10/30/07         Avrashkova v. Paul

Appellate Division, Second Department 

Significant Limitations and Comparative ROM Findings Allows Plaintiff to Survive SJ
Here, the defendant unsuccessfully appeals a lower court order which denied her motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury. On her motion, she failed to establish, prima facie, that the plaintiff did not sustain a serious injury. She relied on various medical reports which showed significant limitations in the plaintiff's spine. Further, defendant’s examining orthopedist noted range of motion findings concerning the cervical and lumbar regions of the plaintiff's spine, and the plaintiff's left knee, without comparing those findings to what is deemed normal.

 



 

AUDREY’S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]

 

The reporting of No-Fault arbitration awards is not at the same level of reported case law, meaning there is no one source to turn to for comprehensive research of arbitration awards.  We encourage you to submit to us, in a PDF format, at [email protected], any recent no-fault arbitration awards, especially Master Arbitration awards, that address interesting no-fault issues. 

 

Arbitration

 

11/9/07            In the Matter of the Arbitration Between Applicant and Respondent

Arbitrator Thomas J. McCorry (Erie County)

Lack of Medical Opinion and Specificity in Denial Fatal in Digital Motion X-Ray Claim

 

Here is the Angle:      In the past I have been successful in upholding a carrier’s denial for a digital motion x-ray.  I actually went through the first arbitration with Arbitrator Buckley in Buffalo regarding this type of x-ray.  I was fortunate because the chiropractor brought the x-ray with him and proceeded to show it to Arbitrator Buckley, despite my objections.  Where is the fortunate part you ask.  Well, his testified that the digital motion x-ray was akin to video fluoroscopy.  After some oral argument and the submission of a decision that video fluoroscopy is not recognized as being medically necessary the carrier prevailed.

 

Since then there are position papers that I routinely use, in conjunction with the peer review, that demonstrate the lack of medical utility of a digital motion x-ray.  I stress the phrase “in conjunction with a peer review.”  As this award aptly points out you may have great position papers on this x-ray but you still need the medical opinion on it.

 

Here is the Decision:  The Applicant, eligible injured person, sought reimbursement for a cervical spine MRI and a digital motion x-ray.  The insurer denied the MRI on a peer review conducted by Michael Silver, D.C.  It is noted that the MRI was conducted a little less than two months after the motor vehicle accident.  The peer review report concluded that there was no subjective or objective evidence warranting an MRI of the cervical spine.  Arbitrator McCorry found Mr. Silver’s peer review persuasive.

 

Then Arbitrator McCorry turned to the digital motion x-ray.  The denial’s box 33 stated that the claim was denied as “according to our medical consultant not reasonable and not medically necessary.”  Arbitrator McCorry stated that none of the peer reviews or IME reports commented on the digital motion x-ray.  The insurer did submit a 10 year old study referring to video fluoroscopy.  Arbitrator McCorry appropriately stated:

 

It may well be that Digital Motion X-rays are nothing more than Video-fluroscopy (sic) by another name.  However, that is (sic) call that should be made by an appropriate expert and not by a claim handler, relying on (sic) 10 year old Peer Review, that doesn’t even mention the name Digital Motion.

 

11/9/07            In the Matter of the Arbitration Between Applicant and Respondent

Arbitrator Thomas J. McCorry (Erie County)

Concurrent Care Found Not to be Concurrent

The Applicant, eligible injured person, was involved in a July 9, 2002, motor vehicle accident.  He sustained neck and back injuries.  The insurer denied massage therapy on the basis of concurrent care with chiropractic care.  It also denied a mileage claim associated with chiropractic care due to violation of the 90 day rule.

 

The insurer argued that the massage therapy was concurrent care with the chiropractic care as the chiropractor providing treatment was could also render massage therapy.  This argument was rejected since the massage therapy was prescribed by the Applicant’s orthopedist for shoulder and neck muscle problems and was conducted on a different day from the chiropractic care.  Arbitrator McCorry determined that there was no evidence that the massage therapy treatment was for the same condition during the same period of time.

 

The mileage claim denial was upheld as the claims were not submitted within 90 days, as required under the regulation, from the date the mileage was incurred.

 

11/8/07            In the Matter of the Arbitration Between Applicant and Respondent

Arbitrator Thomas J. McCorry (Erie County)

Chiropractic Care Found Not Medically Necessary, Despite Treating Chiropractor’s Testimony

The Applicant, Mark DelMonte, D.C., sought reimbursement for 156 chiropractic treatments rendered to the eligible injured person over the course of a year, purportedly arising out of a July 26, 2004, motor vehicle accident.

 

Mr. DelMonte testified that his patient did not want to undergo surgery or injections.  Instead, under his care the patient was improving and continued care was warranted.  Mr. DelMonte also relied upon a treating physician’s report that recommended continuing chiropractic care.

 

The insurer relied upon the IME of John Gaiser, D.C.  Mr. Gaiser opined that the eligible injured person (EIP) had undergone chiropractic care 3-4 times per week for more than a year.  He further opined that from a subjective standpoint there was no benefit or progression toward healing with chiropractic care.  Also, it was apparent the EIP reached an therapeutic endpoint with this type of care.

 

Arbitrator McCorry, despite having the treating chiropractic provide testimony, found the IME of Mr. Gaiser more persuasive.

 

11/7/07            In the Matter of the Arbitration Between Applicant and Respondent

Arbitrator Mary Anne Theiss (Onondaga County)

Medical Provider Must Establish Medical Necessity for Test and Admonished Not to Pursue EIP for Bill.

 

The Applicant, CMI Professional Services, sought reimbursement for an MRI of the shoulder and cervical spine it performed on an EIP two weeks after a motor vehicle accident.  There was not an indication in the award of a pre-existing problem with the shoulder or cervical spine.  The Applicant argued that it does not check for medical necessity of the MRI when the patient is referred to its office for testing.  Rather, the referring physician bears the responsibility for demonstrating medical necessity.  Here, a nurse practitioner referred the patient for the shoulder and cervical spine MRI.

 

The insurer denied both MRIs based upon two separate peer reviews.  The peer review pertaining to the shoulder MRI was conducted by orthopedic surgeon, Dr. Dante Brittis.  Dr. Brittis opined that the MRI was not warranted without evidence of a rotator cuff tear, medicanical derangement, or ligamentous instability.  Rather, Dr. Brittis opined that the EIP’s injury is typically treated with physical therapy, anti-inflammatory medication, then injections, if symptoms do not subside within eight to ten weeks.  If the injury does not improve within four months an MRI is warranted.  In this case, conservative care was never provided.

 

Likewise, Dr. Brittis performed a peer review of the cervical spine MRI and concluded that it was not medically necessary.  Dr. Brittis opined that there were no clinical herniation findings.  The EIP never underwent conservative care.  Also, the EIP was not a surgical candidate.

 

Arbitrator Theiss provided the Applicant with the opportunity to submit evidence that demonstrated the testing was medically necessary.  It does not appear from the award that much if any persuasive evidence was submitted.

 

Arbitrator Theiss denied Applicant’s claim and suggested that in the future the referring physician and the physician performing the testing take a hard look at whether this type of expensive testing is warranted two weeks post accident.  Arbitrator Theiss further explained to the Applicant that when it took an assignment of benefits from the EIP it stands in the EIP’s shoes.  The Applicant cannot by law attempt to collect from the EIP the MRI bills.

 

Litigation

 

11/7/07            In the Matter of New York Cent. Mut. Fire Ins. Co. v. Serpico
Appellate Division, Second Department

UM Carrier Entitled to Medical Authorizations from Subject Accident and Subsequent Accidents Where Similar Injuries

The uninsured motorist insurer appealed from a denial of a temporary stay of a UM arbitration under CPLR Article 75 to obtain additional discovery, specifically medical record authorizations related to the subject accident and two prior accidents.  The Appellate Court held that the lower court improvidently exercised its discretion in denying this brand of the insurer’s petition.  The insurer was entitled to medical records from the subject accident as well as the subsequent accident where the bodily injuries sustained were similar to the subject accident.  The Court relied upon Matter of State Farm Mut. Auto. Ins. Co. v. Bautista and Matter of Allstate Ins. Co. v. Moya as well as Matter of Allstate Ins. Co. v. Baez

 

11/7/07            Westmed Physician, P.C. a/a/o Alex Delgado v.

State Farm Auto Ins. Co., Appellate Term, First Department

I Remember Mailing the Bill Three Years Ago….

Plaintiff’s cross-motion for summary judgment should have been denied due to insufficient evidence that the bill was mailed to the insurer.  The plaintiff submitted an affidavit from the employee of the entity that oversees the plaintiff’s billing.  The employee attested to personally mailing the bill but the employee did not explain her employer’s office mailing practices.  Also, the employee did not state her recollection basis for mailing a bill three years before her affidavit was executed.  Accordingly, the plaintiff failed to establish that the bill was mailed and the cross-

 

PEIPER ON PROPERTY

Steven E. Peiper

[email protected]

 

11/8/07            The Beekman Regent Condominium Assoc. v. Greater N.Y. Mutual Ins. Co.

Appellate Division, First Department

Two-Year Statute of Limitations in Policy Bars Insured’s Claim

Carrier moved to dismiss its insured’s action as time barred.  The policy of insurance issued by carrier to plaintiff provided the claims set forth in plaintiff’s complaint were to be commenced within two years of the alleged covered event.  In so holding, the First Department explicitly instructed that the insured’s excuse that it did not know the two year statute of limitations existed was insufficient to overcome the carrier’s application for dismissal.

 

In support of its ruling, the Court noted the long established insurance law principle that an insured “has an obligation to read his or her policy and is presumed to have consented to its terms.”  Further, the Court held that a carrier is under no obligation to warn its insured of the shortened statute of limitations, nor is the carrier’s ability to rely upon the clause precluded by the carrier’s participation in settlement discussions prior to the expiration of the two-year period. 

 

 

EARL’S PEARLS

Earl K. Cantwell, II

[email protected]

 

Don’t Let Others Mine Your Metadata

 

The use of computers, e-mail, Blackberrys, and modern word processing and retention is a necessity and very useful, but it does not come without problems to satisfy the Luddites among us.  Electronic documents exist in and of themselves, but their electronic fingerprint contains other information known as “metadata.” Inadvertent disclosure of metadata is a great risk facing experts, claims professionals, and lawyers today.  Generally, the risk arises in two contexts: (1) in connection with legal communications; and (2) in disclosure of underlying client documents and communications in litigation. 

 

Metadata is “data about the data,” and includes information describing the history of an electronic document such as how, when, and by whom it was prepared, accessed, or modified, and how it is formatted, including data demographics such as its size, location, storage requirements, and media information.  Other examples of metadata include the file name and location, creation date, date of last modification, and who has read it.  Metadata of course has many useful purposes, and is found in most common office software products.

 

A transmitting attorney has an obligation not to send information containing metadata.  A New York Committee on Professional Ethics Opinion No. 782 (2004) holds that lawyers have an ethical duty to limit improper disclosure of metadata under DR 4-101(B), which states that a lawyer shall not “knowingly” reveal client confidences or secrets.  This Opinion noted that metadata may include editorial comments, strategy notes, and legal advice provided by the lawyer.  Although not all metadata is necessarily confidential or secret, the Ethics Committee noted that in many circumstances it may reveal information that is privileged, or the disclosure of which might be detrimental to the client. 

 

New York State Bar Association Committee on Professional Ethics Opinions  Opinion No. 749  (2001) dealt with the question of whether a lawyer may ethically use “available technology” to mine and sift through communications for metadata.  The New York Ethics Committee ruled that use of software applications to probe metadata unethically intrudes upon the attorney-client privilege and work product doctrines.  The Opinion stated that in New York a recipient of communications or documents may not ethically probe the documents in an effort to ferret out attorney-client secrets and confidential information.  The lawyer’s duty is not to examine the information, notify the sender of its receipt, and follow the sender’s instructions about return.  However, other State Bars (such as Maryland) and ethical opinions have taken a completely different approach and held (basically) that if it’s out there and in there an opponent can go get it and use it.

 

The solution to the metadata issue is twofold.  First, most word processing programs have a feature by which a document can be “copied” as a stand-alone item, and thereby “scrubbed” of its historical metadata.  Significant outside communications to clients, attorneys, courts and third parties should be reconfigured in this fashion. 

 

Another option is to re-copy a document in .PDF form, also as a stand-alone document, prior to transmission which also should remove the metadata or e-train data.  Procedures should be adopted to remove metadata from major reports, summaries, and documents, or convert them to .PDF or other graphical format, before transmission.  This will insure that prior drafts, cut and paste notes, edits, and other metadata will not be disclosed. 

 

The second part of the solution is to be careful in attaching or pasting notes, comments, and edits onto a litigation document which might be picked up as metadata if that document or report is a work in progress or working document and might get produced or disclosed in litigation. Such notes and comments might better be preserved as separate case notes, for example, rather than attaching them to or as part of a significant case summary, accident or adjuster report.

 


ACROSS BORDERS

 

Visit the Hot Cases section of the Federation of Defense & Corporate Counsel website, www.thefederation.org. Dan Kohane serves as the FDCC’s Immediate Past President and Board Chair and past Website Editor.

 

11/13/2007      L&M Brikho’s Market, Inc. v. Emerson-Prew, Inc.
Michigan Court of Appeals
Insurance Coverage Denied When Agent Acted Outside Scope Of Authority

Plaintiffs’ supermarket experienced a power outage that caused a breakdown in the refrigeration, resulting in a severe loss of inventory. Plaintiffs filed a claim with their purported insurance company, Grange Insurance Company. Grange denied Plaintiffs’ claim because they did not have insurance coverage with them. According to Grange, Plaintiffs’ application for insurance was deleted from their files and had never properly been recorded in their system. Grange claimed that Plaintiffs’ insurance agent, Bruce Lys, had failed to follow proper procedure to bind insurance coverage for the store. Plaintiffs sued Grange, claiming that Grange was vicariously liable for Lys’ actions. The evidence showed that Lys did not follow the proper procedure for binding, and he did not act in accordance with and subject to the limitations set forth by Grange. For these reasons, the Court held that Lys acted outside the scope of his authority, therefore Grange could not be bound by Lys’ actions.

Submitted by: Richard D. Chappuis, Jr. and Elisabeth Kraft Cortez (Voorhies & Labbe’)

 

11/15/07          News from Oklahoma

My good friend John Woodard, from the Tulsa, OK firm of Feldman, Franden, Woodard & Farris, dropped me this note today, and I thought I’d share it with you:

 

Oklahoma has had two cases come down recently (both in Federal Court-one in the Northern District, one in the 10th Circuit) that may be of interest to CP readers. The first was a grant of new trial in a Ford Rollover case. 2007 WL 869693 decided in March of 2007.  It is Moody v Ford Motor Company -- interesting discussion of punitive damages constitutionality. The District Court Cite is 03-CV-784-CVE-PJC.

 

The second is a case our firm tried for TIG:

10/12/2007                  Roesler et al v TIG Insurance
Tenth Circuit Court of Appeals [05-7055, on appeal from the ED of OK 02-CV-576-W]

The court reversed a bad faith judgment. One of the most telling lines was found in the discussion portion of the case when the Court of Appeals noted:

 

"Unfortunately, before we can discuss the issues and the evidence, we must take a moment to debunk many of Roesler's arguments which are unsupported by law or fact."

 

Read and prosper.

 

John

 

Reported Decisions

 

Avrashkova v. Paul

 

Wollerstein & Futoran (Sweetbaum & Sweetbaum, Lake 

Success, N.Y. [Marshall D. Sweetbaum] of counsel), for appellant. 

Igor A. Orak, LLC (Ben Lyhovsky, Brooklyn, N.Y., of counsel), for respondent. 

 

 

DECISION & ORDER

In an action to recover damages for personal injuries, the defendant Tricia L. Paul appeals from an order of the Supreme Court, Kings County (Solomon, J.), dated January 31, 2007, which denied her motion for summary judgment dismissing the complaint insofar as asserted against her on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). 

ORDERED that the order is affirmed, with costs. 

On her motion for summary judgment dismissing the complaint insofar as asserted against her, the defendant Tricia L. Paul (hereinafter the appellant), failed to establish, prima facie, that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The appellant relied on various medical reports which showed significant limitations in the plaintiff's spine (see Jenkins v Miled Hacking Corp., 43 AD3d 393; Bentivegna v Stein, 42 AD3d 555; Zamaniyan v Vrabeck, 41 AD3d 472; Brown v Motor Veh. Acc. Indem. Corp., 33 AD3d 832). Furthermore, the report of the appellant's examining orthopedist noted range of motion findings concerning the cervical and lumbar regions of the plaintiff's spine, and the plaintiff's left knee, without comparing those findings to what is deemed normal (see Nociforo v Penna, 42 AD3d 514; McNulty v Buglino, 40 AD3d 591; Osgood v Martes, 39 AD3d 516; McLaughlin v Rizzo, 38 AD3d 856; Bluth v WorldOmni Fin. Corp., 38 AD3d 817; Harman v Busch, 37 AD3d 537).

Since the appellant failed to establish her prima facie entitlement to judgment as a matter of law, it is unnecessary to consider whether the plaintiff's papers submitted in opposition to the motion were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538). 

SANTUCCI, J.P., GOLDSTEIN, DILLON and ANGIOLILLO, JJ., concur. 

ENTER: 

James Edward Pelzer 

Clerk of the Court

 

Lloyd v. Green


Yudin & Yudin, PLLC, New York (Ronald M. Yudin of counsel), for appellants.
Diamond, Rutman, Costello & Silberglitt, New York (John Burnett of counsel), for respondents.

Order, Supreme Court, Bronx County (Mary Ann Brigantti-Hughes, J.), entered December 11, 2006, which denied plaintiff's motion for renewal, unanimously affirmed, without costs. Appeal from order, same court and Justice, entered on or about June 28, 2006, which granted defendants' motion for summary judgment dismissing the complaint, unanimously dismissed, without costs.

The appeal from the earlier order is dismissed, as the court did not render a decision based on a complete record. The subsequent order, which in effect adhered to the prior determination, was based on a complete record.

Defendants satisfied their burden of establishing prima facie entitlement to summary judgment, on the ground that there was no "serious injury" under Insurance Law § 5102(d), by submitting Dr. Epstein's sufficiently detailed affidavit in which he concluded that although the injured plaintiff's "condition" was caused by the November 28, 2003 accident, no permanent injury was sustained thereby (see Perez v Hilarion, 36 AD3d 536 [2007]). Defendants also submitted a copy of the injured plaintiff's deposition in which he admitted attending classes on the Monday after the accident and continued going to classes thereafter; in short, he was able to perform his usual and customary daily activities after the accident (see Uddin v Cooper, 32 AD3d 270, 271 [2006], lv denied 8 NY3d 808 [2007]; Copeland v Kasalica, 6 AD3d 253, 254 [2004]).

Although the cervical MRI indicated a herniated disc, which may constitute a serious injury, an injured plaintiff "must still offer some objective evidence of the extent or degree of his alleged physical limitations and their duration, resulting from the disc injury" (Arjona v Calcano, 7 AD3d 279, 280 [2004]). The affirmed report submitted by plaintiffs' medical expert fails to identify or describe the objective medical tests employed in measuring the alleged restrictions in range of motion, or to pinpoint the injured plaintiff's "muscle spasm, with trigger points" (Shaw v Looking Glass Assoc., LP, 8 AD3d 100, 103 [2004]). Findings based on subjective complaints of pain are simply insufficient to raise a triable issue under § 5102[d] (see Arrowood v Lowinger, 294 AD2d 315, 316 [2002]). Plaintiffs' submissions also lacked objective findings of restriction
contemporaneous with the accident (see Thompson v Abbasi, 15 AD3d 95, 98 [2005]). Without more, the allegations raised in the injured plaintiff's affidavit — that he was unable to participate on the school's track team, or engage in other recreational sports — were insufficient to raise a triable issue
that he did, in fact, sustain a serious injury under the statute (see Grimes-Carrion v Carroll, 17 AD3d 296, 297 [2005]).

We have considered plaintiffs' remaining arguments and find them unavailing.

THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

 

Fernandez v. Mercedes



Antin, Ehrlich & Epstein, LLP, New York (Frank Trief of counsel), for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York                                                                (Holly E. Peck of counsel), for respondent.

Order, Supreme Court, Bronx County (Betty Owen Stinson, J.), entered June 30, 2006, which granted defendant's motion for summary judgment dismissing the complaint, unanimously affirmed, without costs.

Plaintiff failed to show that he suffered a "serious injury" within the meaning of Insurance Law § 5102(d) (see Licari v Elliott, 57 NY2d 230 [1982]). Plaintiff alleges soft tissue injuries, but his doctor failed to identify any objective basis for the percentages attributed to the restricted ranges of motion (see Parreno v Jumbo Trucking, Inc., 40 AD3d 520 [2007]), and did not objectively relate the diagnostic findings to plaintiff's current complaints. Indeed, the reviewing radiologist could only state that plaintiff's herniations and disc bulge "may be" related to the subject accident. Absent any description of the objective nature of his findings, plaintiff's doctor's affidavit must be viewed as conclusory and insufficient to establish a serious injury (see Munoz v Hollingsworth, 18 AD3d 278, 279 [2005]). Plaintiff's self-serving affidavit, which contradicted his deposition testimony as to his return to work, where he lifts 50- to 80-pound boxes as a meat delivery driver, was insufficient to establish a serious injury (see Gjelaj v Ludde, 281 AD2d 211 [2001]; Hewan v Callozzo, 223 AD2d 425 [1996]).

We have considered plaintiff's remaining arguments and find them unavailing.

THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

 

Edgecomb v. Ixat Tr., Inc.




The Law Firm of Steven J. Mandel, P.C., New York (James Nemia of counsel), for appellant.
The Sullivan Law Firm, New York (Timothy M. Sullivan of counsel), for Sisters Transit, Inc. and Traore Kassoum, respondents.

Order, Supreme Court, New York County (Milton A. Tingling, J.), entered April 4, 2006, which, insofar as appealed from as limited by the briefs, granted defendants' motions for summary judgment dismissing the complaint for lack of a serious injury, unanimously affirmed, without costs.

Plaintiff's claims of permanent and significant injuries were properly rejected where, in opposition to defendants' prima facie showing of no such injuries, plaintiff offered no explanation why she did not seek any treatment starting nine months after the accident (see Pommells v Perez, 4 NY3d 566, 574 (2005). Plaintiff's claim of a 90/180 injury was properly rejected for lack of evidence showing that the injuries she sustained were serious enough to keep her from working out of her home as she had been at the time of the accident.

THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: NOVEMBER 13, 2007

CLERK

 

 Cariddi v. Hassan



Marjorie E. Bornes, New York, N.Y., for appellants.
Joachim Frommer Cerrato & Levine, LLP, Garden City, N.Y.
(Stephen G. Frommer and Mary Ellen O'Brien of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the defendants Sibtul Syed Hassan and Mikhal Zaslavsky appeal from an order of the Supreme Court, Kings County (Solomon, J.), dated January 31, 2007, which denied their motion for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The plaintiff allegedly was injured when she was struck by a vehicle while crossing 27th Street at the intersection of Park Avenue South, in Manhattan. In her supplemental bill of particulars, the plaintiff claimed to have sustained injuries to her lumbosacral spine and left ankle, as well as an injury to her left hip consisting of a tear of the superolateral acetabular labrum.

In support of their motion for summary judgment, the defendants Sibtul Syed Hassan and Mikhal Zaslavsky (hereinafter the defendants) submitted, inter alia, the affirmed report of Dr. Michael J. Katz, an orthopedic surgeon. Based on his examination of the plaintiff and his review of her medical records, Dr. Katz diagnosed her with "contusion to the left ankle now resolved," "[l]umbosacral strain resolved," and "[l]eft hip derangement unrelated." While Dr. Katz provided objective medical evidence in support of his diagnoses with respect to the plaintiff's complaints regarding her ankle and lumbosacral spine, his only basis for concluding that the plaintiff's complaints regarding her hip were "unrelated" to the subject accident was that "doctors' notes reviewed do not indicate any problem to the left hip following this incident of 09/17/04 [and a]n MRI of the left hip and pelvis was not performed until 01/03/06 which is more than one year after the accident." However, Dr. Katz did not attach any of the prior medical records to his report, and the defendants otherwise failed to submit any such records in support of their motion, as they were certainly entitled to do (see Kearse v New York City Tr. Auth., 16 AD3d 45, 47 n 1; Pagano v Kingsbury, 182 AD2d 268, 271). Therefore, Dr. Katz's report, standing alone, failed to establish, prima facie, that the plaintiff's alleged hip injury was unrelated to the subject accident (see Ayotte v Gervasio, 81 NY2d 1062).

The defendants also submitted the affirmed report of Dr. Allen Rothpearl, a radiologist. Based on his review of the MRI film of the plaintiff's left hip, Dr. Rothpearl opined that the plaintiff suffered from "joint effusion," which he described as "a nonspecific finding which is usually idiopathic, inflammatory, infectious, or degenerative in nature," as well as from "[d]egenerative joint disease," which "occurs as a natural consequence of aging." We find that, unlike Dr. Katz's report, Dr. Rothpearl's report was sufficient to establish, prima facie, that the plaintiff's alleged hip injury was unrelated to the subject accident. In opposition, however, the plaintiff submitted the affirmed report of Dr. Keith Tobin, who, reading the same MRI film, opined that the plaintiff sustained a "tear of the superolateral acetabular labrum," and specifically noted "no significant joint effusion." We find that these conflicting medical opinions regarding the nature and etiology of the plaintiff's alleged hip injury raise triable issues of fact. Thus, the Supreme Court properly denied the defendants' motion for summary judgment dismissing the complaint insofar as asserted against them (see Lopez v Senatore, 65 NY2d 1017).
CRANE, J.P., RITTER, FISHER, COVELLO and DICKERSON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

D'Onofrio v. Floton, Inc.



Marjorie E. Bornes, New York, N.Y., for appellants.
Michael D. Hassin, Rockville Centre, N.Y. (Randall A. Sorscher of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Bunyan, J.), dated March 14, 2007, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is reversed, on the law, with costs, and the defendants' motion for summary judgment dismissing the complaint is granted.

Contrary to the Supreme Court's determination, the defendants met their prima facie burden of establishing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). In opposition, the plaintiff failed to raise a triable issue of fact. The affidavit of the plaintiff's treating neurologist showed range of motion limitations in the plaintiff's spine based on a recent examination. However, neither the plaintiff nor his treating neurologist proffered competent medical evidence that showed range of motion limitations in the plaintiff's spine that were contemporaneous with the subject accident (see Morales v Daves, 43 AD3d 1118; Borgella v D & L Taxi Corp., 38 AD3d 701, 702; Iusmen v Konopka, 38 AD3d 608, 609; Earl v Chapple, 37 AD3d 520, 521).

The only other evidence submitted by the plaintiff in opposition to the defendants' motion was the affirmed magnetic resonance imaging report of the plaintiff's lumbar spine which showed bulging discs at L3-4 and L4-5. The mere existence of a herniated or bulging disc is not evidence of a serious injury in the absence of objective evidence of the extent of the alleged physical limitations resulting from the disc injury and its duration (see Morales v Daves, 43 AD3d 1118; Mejia v DeRose, 35 AD3d 407, 407-408; Yakubov v CG Trans. Corp., 30 AD3d 509, 510; Cerisier v Thibiu, 29 AD3d 507, 508).
RIVERA, J.P., KRAUSMAN, FLORIO, CARNI and BALKIN, JJ., concur.

Draper v. Canada Dry Bottling of N.Y.



Christopher P. Di Giulio, New York, N.Y. (William Thymius of counsel), for appellants.
Quaranta & Associates, Mount Kisco, N.Y. (George T. Delaney
and Kevin Quaranta of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Westchester County (Lefkowitz, J.), entered December 13, 2006, which denied their motion for summary judgment dismissing the complaint.

ORDERED that the order is reversed, on the law, with costs, and the motion for summary judgment dismissing the complaint is granted.

The defendants' truck made contact with an SUV operated by the plaintiff on the Major Deegan Expressway in the Bronx, after the plaintiff's vehicle swerved in an attempt to avoid contact with an unidentified third vehicle which had just entered her lane of traffic. Following joinder of issue and certain disclosure, including the depositions of the plaintiff and the defendant truck driver Joe Fasce, the defendants moved for summary judgment dismissing the complaint, both upon the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and that Fasce reasonably responded to an emergency situation.

The defendants made a prima facie showing of entitlement to judgment as a matter of law by demonstrating that Fasce did not act negligently under the emergency circumstances presented (see Thomas v New York City Tr. Auth., 37 AD3d 821; Roviello v Schoolman Transp. Sys., Inc., 10 AD3d 356; see generally Alvarez v Prospect Hosp., 68 NY2d 320). In opposition, the plaintiff failed to raise a triable issue of fact. Accordingly, the Supreme Court should have granted the defendants' motion for summary judgment dismissing the complaint.

In light of the foregoing, we need not address the defendants' remaining contentions.
MILLER, J.P., RITTER, SANTUCCI and BALKIN, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Hinterberger v. Leslie

 



Appeal and cross appeal from an order of the Supreme Court, Erie County (Diane Y. Devlin, J.), entered July 20, 2006 in a personal injury action. The order, among other things, denied plaintiff's motion to set aside the jury verdict in part, for judgment as a matter of law on negligence and for a new trial and denied defendant's motion to vacate those parts of the prior order granting plaintiff's motion for a mistrial and ordering a new trial.


HAGELIN KENT LLC, BUFFALO (LEO T. FABRIZI OF COUNSEL),

FOR DEFENDANT-APPELLANT-RESPONDENT.
CAMPBELL & SHELTON LLP, EDEN (R. COLIN CAMPBELL OF COUNSEL),

FOR PLAINTIFF-RESPONDENT-APPELLANT.


It is hereby ORDERED that the order so appealed from be and the same hereby is unanimously modified on the law by granting defendant's motion, vacating the first ordering paragraph of the order and of the amended order entered May 9, 2006 and July 20, 2006, respectively, and directing that judgment be entered in favor of defendant and against plaintiff on the jury verdict and as modified the order is affirmed without costs.

Memorandum: Plaintiff commenced this action seeking damages for injuries she allegedly sustained when the motor vehicle she was driving collided with a vehicle driven by defendant. Supreme Court properly denied plaintiff's motion to set aside the jury verdict in part, for judgment as a matter of law on negligence and for a new trial on, inter alia, the issue whether plaintiff sustained a serious injury. "Upon our review of the evidence, we cannot conclude that the proof presented so preponderated in favor of plaintiff that the verdict finding that she did not sustain a serious injury could not have been reached on any fair interpretation of the evidence" (Holbrook v Pruiksma, 43 AD3d 603, ___). That conclusion renders moot plaintiff's further contentions with respect to the jury's findings on negligence and the apportionment of fault (see Cummings v Jiayan Gu, 42 AD3d 920, 923), and the court's failure to charge the emergency doctrine. We have considered plaintiff's remaining contentions and conclude that none requires setting aside the verdict.

We further conclude that the court erred in denying that part of defendant's motion to vacate those parts of the order granting plaintiff's postverdict motion for a mistrial and ordering a new trial, and further erred in denying that part of defendant's motion for judgment on the jury verdict. We therefore modify the order accordingly. We reject plaintiff's contention that defendant may not appeal from the order insofar as it denied that part of the motion to vacate that part of the order granting the postverdict motion for a mistrial (see generally Weinberg v Remyco, Inc., 9 AD3d 425, 426-427; Matter of Taylor, 271 App Div 947) and ordered a new trial (see CPLR 5701 [a] [2] [iii]). On the merits, we conclude that the court abused its discretion in granting plaintiff's motion because the reference by defendant's expert witness on cross-examination to defendant's insurance carrier did not warrant a mistrial (see Kowalski v Loblaws, Inc., 61 AD2d 340, 343). We further conclude that defendant is entitled to judgment on the jury verdict.
Entered: November 9, 2007
JoAnn M. Wahl
Clerk of the Court

Malave v. Basikov



Wingate, Russotti & Shapiro, LLP, New York, N.Y. (Scott A. Stern of counsel), for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Michael I. Josephs and Adams & DiStefano, LLP, of counsel), for respondents.


DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Nassau County (McCarty, J.), dated August 4, 2006, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendants met their prima facie burden on their motion for summary judgment by establishing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955; see also Meyers v Bobower Yeshiva Bnei Zion, 20 AD3d 456). In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff principally relied upon the submission of voluminous unaffirmed reports and uncertified medical records, which were without any probative value (see Rodriguez v Cesar, 40 AD3d 731, 732-733). The affirmation of the plaintiff's treating physician also lacked any probative value since he relied on unaffirmed reports of others (see Furrs v Griffith, 43 AD3d 389; Phillips v Zilinsky, 39 AD3d 728; Porto v Blum, 39 AD3d 614, 615), and failed to compare any of his own findings on range of motion to what is normal (see Nociforo v Penna, 42 AD3d 514, 515; McNulty v Buglino, 40 AD3d 591).
CRANE, J.P., RITTER, FISHER, COVELLO and DICKERSON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Nigro v. Kovac



Cannon & Acosta, LLP, Huntington Station, N.Y. (June Redeker and Roger Acosta of counsel), for appellant.
Schondebare & Korcz, Ronkonkoma, N.Y. (Amy B. Korcz of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Weber, J.), dated November 14, 2006, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is reversed, on the law, with costs, and the defendant's motion for summary judgment is denied.

The defendant met her prima facie burden by establishing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955; see also Meyers v Bobower Yeshiva Bnei Zion, 20 AD3d 456). Contrary to the Supreme Court's determination, in opposition the plaintiff raised a triable issue of fact as to whether she sustained either a permanent consequential or significant limitation of use of her cervical spine as a result of the subject accident. The plaintiff's treating chiropractor opined in her affidavit, based on her contemporaneous and most recent examinations of the plaintiff, as well as upon her review of the plaintiff's cervical magnetic resonance imaging report, which showed, inter alia, a herniated disc at C5-6, that the plaintiff's cervical injuries and range of motion limitations observed were permanent and causally related to the subject accident, and not the result of any preexisting degenerative conditions (see Green v Nara Car & Limo, Inc., 42 AD3d 430; Lim v Tiburzi, 36 AD3d 671, 672; Shpakovskaya v Etienne, 23 AD3d 368, 369; Clervoix v Edwards, 10 AD3d 626, 627; Acosta v Rubin, 2 AD3d 657, 659; Rosado v Martinez, 289 AD2d 386, 387; Vitale v Lev Express Cab Corp., 273 AD2d 225, 226).
RIVERA, J.P., KRAUSMAN, FLORIO, CARNI and BALKIN, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Pazmino v. Universal Distribs., LLC


 
Morris, Duffy, Alonso & Faley, New York, N.Y. (Anna J. Ervolina and Andrea Alonso

of counsel), for appellants.
Eric H. Green, New York, N.Y. (Marc Gertler and Hiram Anthony Raldiris of counsel),

for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Kurtz, J.), dated January 12, 2007, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is reversed, on the law, with costs, and the defendants' motion for summary judgment dismissing the complaint is granted.

The defendants met their prima facie burden by establishing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident on August 24, 2002 (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955).

In opposition, the plaintiff failed to raise a triable issue of fact. In the most recent medical report of Dr. Hausknecht, the plaintiff's treating neurologist, dated June 27, 2006, he noted that the plaintiff was involved in "several" accidents since he last examined the plaintiff a year earlier. Rather than address those accidents, Dr. Hausknecht simply concluded that the significant range of motion limitations in the plaintiff's cervical and lumbar spine, as well as the injuries noted in the plaintiff's magnetic resonance imaging reports, were the result of the subject accident. These conclusions were clearly rendered speculative in light of the fact that he failed to address what those prior accidents involved (see Moore v Sarwar, 29 AD3d 752; Tudisco v James, 28 AD3d 536; Bennett v Genas, 27 AD3d 601; Allyn v Hanley, 2 AD3d 470).

The magnetic resonance imaging reports of the plaintiff's cervical and lumbar spine, dated October 2002, merely showed evidence that the plaintiff had disc herniations and bulges in those regions of his spine at that time. This Court has held that the mere existence of a herniated or bulging disc, and even radiculopathy, is not evidence of a serious injury in the absence of objective evidence of the extent of the alleged physical limitations resulting from the disc injury and its duration (see Meija v DeRose, 35 AD3d 407; Yakubov v CG Trans. Corp., 30 AD3d 509; Cerisier v Thibiu, 29 AD3d 507; Bravo v Rehman, 28 AD3d 694; Kearse v New York City Tr. Auth., 16 AD3d 45; Diaz v Turner, 306 AD2d 241; see also Furrs v Griffith, 43 AD3d 389).
SCHMIDT, J.P., SPOLZINO, SKELOS, LIFSON and McCARTHY, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

 

 

Motrie v.  Reid

 

 

 

Calendar Date: September 7, 2007 

Before: Mercure, J.P., Peters, Spain, Carpinello and Mugglin, JJ. 

 

 

Basch & Keegan, Kingston (Derek J. Spada of counsel), for appellant. 

Hanson & Fishbein, Albany (Paul G. Hanson of counsel), for respondent. 

MEMORANDUM AND ORDER 

 

 

Mugglin, J. 

Appeal from an order of the Supreme Court (Bradley, J.), entered October 27, 2006 in Ulster County, which granted defendant Sara J. Reid's motion for summary judgment dismissing the complaint against her. 

Defendant Sara J. Reid (hereinafter defendant), while backing up her car in a store parking lot, collided with plaintiff's vehicle. Plaintiff asserts that she sustained a serious injury to her right wrist in these categories: permanent consequential limitation of use; significant limitation of use; and prevention from performing her usual and customary activities for 90 out of the first 180 days immediately following the accident [FN1] (see Insurance Law § 5102 [d]). Notably, plaintiff injured this wrist on at least three prior occasions. Supreme Court concluded that plaintiff sustained no serious injury and granted summary judgment to defendant dismissing the complaint against her. Plaintiff appeals, arguing that defendant did not demonstrate entitlement to summary judgment or, alternatively, that questions of fact exist as to both the permanent consequential limitation of use and significant limitation of use categories. 

To establish entitlement to summary judgment, defendant must submit competent medical evidence that plaintiff did not sustain a serious injury (see CPLR 3212 [b]; Snow v Harrington, 40 AD3d 1237, 1238, [2007]; Madden v Dake, 30 AD3d 932, 935 [2006]; Haddadnia v Saville, 29 AD3d 1211, 1211 [2006]; Burnett v Zito, 252 AD2d 879, 881 [1998]). Once this occurs, plaintiff is obligated to submit objective medical evidence sufficient to raise a triable issue of fact regarding the existence of a serious injury (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 351 [2002]; Snow v Harrington, 40 AD3d at 1238; Hayes v Johnston, 17 AD3d 853, 854 [2005]; Marks v Brown, 3 AD3d 648, 648-649 [2004]). In support of the motion, defendant submitted the pleadings, plaintiff's examination before trial testimony, plaintiff's employment records (which established that plaintiff missed only six weeks of work following the accident) and multiple medical records and affidavits. These records reveal that plaintiff's family physician had her wrist X-rayed and that the X rays revealed no fracture. Plaintiff was then examined by an orthopedic surgeon who found no significant swelling or deformity, normal motor and sensory functions and full radiocarpal motion; a follow-up examination by this orthopedic surgeon revealed no swelling, good range of motion and improvement from prior symptoms of tenosynovitis, and an MRI ordered by this surgeon revealed no intrinsic lesions. A second opinion sought by plaintiff resulted in X rays being taken to compare plaintiff's right wrist with X rays previously taken in 1995 with a finding of "[m]ild degenerative changes of [the] first carpal metacarpal joint." Finally, a third orthopedic surgeon examined plaintiff and diagnosed "a very mild tenosynovitis of the right wrist [which] is truly minor and does not present with any kind of disability [and t]here is certainly no reason why this amount of tenosynovitis would keep [plaintiff] out of work." 

In our view, this evidence is more than sufficient to sustain defendant's initial burden, and it then became incumbent upon plaintiff to submit objective medical evidence to raise an issue of fact with respect to whether she sustained a serious injury within the meaning of the statute. In an attempt to meet this burden, plaintiff submitted a second affidavit from her family physician. He, in reliance on a report from a physician at the Hand Center of Western New York, who examined plaintiff and conducted an MRI study, concluded that plaintiff sustained a scapholunate ligament disruption. Careful analysis of these two reports leads us to conclude that plaintiff has failed to submit competent evidence that raises an issue of fact that this ligament tear was caused by this motor vehicle accident or that the injury is serious within the meaning of Insurance Law § 5102 (d) as there appears to be no permanent consequential or significant limitation of use. 

Mercure, J.P., Peters, Spain and Carpinello, JJ., concur. 

ORDERED that the order is affirmed, with costs. 

Footnotes

 

 

Footnote 1:At oral argument, plaintiff's counsel conceded that a claim under the 90/180-day category is no longer asserted. 

 

 

Tubbs v. Pallone

 

 

Calendar Date: October 12, 2007 

Before: Cardona, P.J., Mercure, Crew III, Mugglin and Rose, JJ. 

 

 

Learned, Reilly & Learned, L.L.P., Elmira (Philip C. 

Learned of counsel), for appellant. 

Levene, Gouldin & Thompson, L.L.P., Vestal (Maria 

E. Lisi-Murray of counsel), for respondent. 

MEMORANDUM AND ORDER 

 

 

Rose, J. 

Appeal from an order and judgment of the Supreme Court (Mulvey, J.), entered March 14, 2007 in Chemung County, which granted defendant's motion for summary judgment dismissing the complaint. 

On June 23, 2004, plaintiff's bicycle and defendant's pickup truck collided and plaintiff sustained injuries to her left leg, knee, elbow, hand and wrist. Plaintiff commenced this action, contending that she had suffered a serious injury within the meaning of Insurance Law § 5102 (d) in that she had sustained a permanent loss of use of a body organ, member, function or system; a consequential limitation of use of a body organ, member, function or system; and/or a significant loss of use of a body function or system with regard to her left wrist. Defendant moved for summary judgment dismissing the complaint, proffering the report of a consulting physician who concluded that there was no objective medical evidence of impairment of function in plaintiff's left wrist as a result of this accident. In doing so, he made reference to records of a June 15, 2004 emergency room visit by plaintiff for left wrist tendonitis, eight days prior to the accident. In response, plaintiff submitted the affidavit of her attorney with exhibits including excerpts from the transcript of her deposition, a copy of the unsworn office notes of her treating physician for a visit on July 1, 2004, and a photograph of her left arm which displayed a surgical scar [FN1]. Supreme Court granted defendant's motion and dismissed the complaint. Plaintiff appeals. 

On a motion for summary judgment in a no-fault action, a defendant bears the initial burden of demonstrating that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d) (see Baker v Thorpe, 43 AD3d 535, 536 [2007]). The burden then shifts to the plaintiff to present competent medical proof to raise a triable issue of fact (see Tuna v Babendererde, 32 AD3d 574, 576-577 [2006]; John v Engel, 2 AD3d 1027, 1028 [2003]). 

Here, defendant tendered sufficient admissible proof, in the form of the affirmation of the consulting physician who examined plaintiff and reviewed her medical records, to make a prima facie showing that plaintiff had not suffered a serious injury within any of the categories of Insurance Law § 5102. The burden them shifted to plaintiff to offer proof in admissible form to create a material question of fact (see Franchini v Palmieri, 1 NY3d 536, 537 [2003]). Although plaintiff's attorney asserted that plaintiff had undergone "four serious operations" which left her with a permanent defect, he failed to support this claim with any medical evidence whatsoever. Therefore, plaintiff did not meet her burden of proof and, consequently, defendant was entitled to summary judgment dismissing the complaint (see Parks v Miclette, 41 AD3d 1107, 1110-1111 [2007]; Maye v Stearns, 19 AD3d 902, 903 [2005]). 

Cardona, P.J., Mercure, Crew III and Mugglin, JJ., concur. 

ORDERED that the order and judgment is affirmed, with costs. 

Footnotes

 

 Footnote 1: While plaintiff contends that she bears a disfiguring scar, we note that she raised no claim of significant disfigurement or scarring in her complaint or bill of particulars. 

 

Federal Insurance Company v. North American Specialty Insurance Co.

 

Defendants appeal from an order of the Supreme Court, New York County (Charles E. Ramos, J.), entered August 3, 2006, which denied the motion of defendants Bendix and Rivkin Radler to dismiss the fourth and fifth causes of action against them and so much of the cross motion of defendants North American Specialty and Allied World as sought dismissal of the first, second and third causes of action.


Wilson, Elser, Moskowitz, Edelman & Dicker LLP,
New York (Debra A. Adler
and Eugene T. BoulÉ; of
counsel), for North American
Specialty Insurance Co. and Allied
World Assurance Company
(U.S.) Inc., appellants.
Rivkin Radler LLP, Uniondale (Evan H. Krinick, Peter
C. Contino and Harris J.
Zakarin of counsel), for
Bruce A. Bendex and Rivkin Radler
LLP, appellants.
Quirk and Bakalor, P.C., New York (Timothy J. Kean
of counsel), for respondent.




SULLIVAN, J.

Plaintiff Federal Insurance Company, claiming it should have contributed only $1,000,000 to the settlement, sues individually and as subrogee of Galaxy General Contracting Corp. to recoup half of the $2,000,000 it paid as Galaxy's excess liability insurer to settle an underlying personal injury action in which Galaxy was a named defendant. In this action, Federal named as defendants Rivkin Radler, LLP and Bruce A. Bendix (collectively Rivkin), who represented Galaxy in the underlying action, asserting legal malpractice, and also Allied World Assurance Company (U.S.) Inc., formerly known as Commercial Underwriters Insurance Company (CUIC), Galaxy's primary liability insurer, asserting as against it bad faith, indemnity and legal malpractice.

In its amended complaint, Federal alleged that CUIC insured Galaxy under a commercial general liability (CGL) policy with a limit of $1,000,000. Federal provided Galaxy with excess coverage up to $10,000,000 over its underlying coverage, including CUIC's CGL policy. In addition, pursuant to its contractual indemnity obligation as set forth in its contract with the owners of the property where the underlying accident took place - NYC Partnership Housing Development Fund Company, Inc., Morningside - 117 LLC and Harlem Community Development Corporation - Galaxy purchased from CUIC for the owners' benefit a separate owners and contractors protective liability policy (OCP) with a limit of $1,000,000.

In the underlying action commenced in Supreme Court, Bronx County, Ralph Bermejo, an employee of one of Galaxy's subcontractors, who was injured when he fell from a scaffold, alleged negligence and violations of Labor Law §§ 240(1) and 241(6) in connection with construction work he was performing at the owners' premises, 371 West 117th Street in Manhattan. At the inception of that action, the same counsel represented both general contractor Galaxy and the owners, and issue was joined by interposition of a single answer on their behalf. Subsequently, CUIC assigned separate counsel for Galaxy and the owners; Rivkin was assigned to represent Galaxy.

The owners thereafter moved for leave to serve an amended answer to assert cross claims against Galaxy for contractual and common-law indemnification, leave to file a late motion for summary judgment, and for summary judgment on the cross claims. Although opposing the motion on several grounds on Galaxy's behalf, Rivkin did not raise the bar of the antisubrogation rule. Supreme Court (Bertram Katz, J.) granted leave to the owners to amend their answer and to file a late summary judgment motion as well as summary judgment, albeit conditional, on their contractual and common-law indemnification claims, holding that the record yielded no evidence of the owners' presence at the work site or of any responsibility to control or supervise the work there. While Rivkin subsequently raised the antisubrogation issue in a motion to renew or reargue, the court denied the motion on the ground that Galaxy failed to offer a satisfactory explanation for failing to present the argument on the original motion.

The parties thereafter entered into negotiations to settle the underlying action. CUIC, prepared to tender the full $1,000,000 limit of its CGL primary policy for Galaxy but adamant that it would make no contribution on behalf of the owners under the OCP policy, asked Federal, as excess carrier, to negotiate the loss beyond the $1,000,000 primary policy limit. At a mediation conference, Rivkin, on behalf of Galaxy, offered the full $1,000,000 limit of the CGL policy and argued that the owners' OCP policy applied and that a contribution thereunder should be made. The owners, however, refused to contribute, maintaining that they were, at most, passive tortfeasors. Meanwhile, Bermejo rejected Galaxy's $1,000,000 settlement offer, indicating he would settle the action for an amount between $2,500,000 and $5,000,000.

In a letter dated November 18, 2003, Federal memorialized its position that CUIC was required to exhaust the limits of both the CGL and OCP policies before it would become obligated to make any payment. According to Federal, irrespective of any indemnity rights that the owners might have over against Galaxy, since CUIC, the insurer of both the CGL and the OCP policy, "was obligated to defend each of its insureds, CUIC was barred by the antisubrogation doctrine from becoming subrogated to the right of any one of its insureds against any of its other insureds." Bermejo's action was eventually settled for $3,000,000, with CUIC paying $1,000,000, the limit of its CGL primary policy, on behalf of Galaxy, and Federal paying the remaining $2,000,000 out of its excess coverage for Galaxy. In settling and discontinuing that action, the parties otherwise preserved the cross claims between the owners and Galaxy and reserved all of their rights as between each other, thus setting the stage for the commencement of this action.

Federal asserted five causes of action - three against CUIC alone and two against CUIC together with Rivkin. In its first cause of action, Federal alleged that CUIC violated the antisubrogation rule in that, as the real party in interest, it claimed in the names of the owners a right of indemnity against Galaxy, its own insured. In its second cause of action, Federal alleged that CUIC acted in bad faith in defending Galaxy against the owners' indemnity claims by failing to raise the antisubrogation rule in opposition to the owners' motion for summary judgment. Had the rule been invoked, Federal claims, the court in the Bermejo action "would have applied [it] to bar CUIC from becoming subrogated to the rights of some of its insureds . . . against another of its insureds . . . and limited any right of indemnity to the amount above the $1,000,000 limit of CUIC's OCP." Federal's third cause of action against CUIC alleged a similar theory of liability, but as Galaxy's subrogee.

Federal's fourth cause of action, against both CUIC and Rivkin, alleged legal malpractice. Without asserting a client relationship with Rivkin or alleging the existence of privity or any allegations of "near privity," Federal claimed merely that CUIC and Rivkin owed Galaxy a duty to defend. Federal further alleged that Rivkin was negligent in opposing the owners' motion for summary judgment on their indemnification claims by failing to assert antisubrogation or to apprise Federal in a timely manner that the owners had asserted such cross claims. According to the complaint, had Rivkin raised the antisubrogation rule, the court would have "limited any right of indemnity to the amount above the $1,000,000 limit of CUIC's OCP." Federal's fifth cause of action, also against CUIC and Rivkin, alleged a similar theory of liability, but as Galaxy's subrogee.

Rivkin moved, pre-answer, pursuant to CPLR 3211(a)(1), (3) and (7), to dismiss the complaint against it. CUIC thereafter cross-moved for similar relief, arguing that Federal suffered no damages, individually or on behalf of Galaxy. It also argued that Federal failed to state a cause of action for bad faith.

In support of its motion, Rivkin argued that even assuming, arguendo, its negligence for failing to assert the antisubrogation rule in opposition to the owners' summary judgment motion on the issue of indemnification, the complaint still failed for several reasons. It reasoned that Federal could not establish that it or its subrogor, Galaxy, sustained any ascertainable damages. Although Galaxy was required by the order granting summary judgment to indemnify the owners, neither Galaxy nor Federal made any payment as a result of that order. Rather, Rivkin argued, Galaxy's settlement of the Bermejo action represented the amount that Galaxy reasonably owed to the plaintiff for his injuries. Since Galaxy's liability to Bermejo was joint and several with the owners, Bermejo could look to Galaxy for payment of his damages. Federal conceded that if the action had proceeded to trial, Galaxy would have been found liable, and the $3,000,000 settlement was reasonable. By paying Bermejo $1,000,000, the limit of its CGL policy, Galaxy, Rivkin's client, paid through its insurer what it believed it would have had to pay after a trial. It paid no more and no less, and suffered no damages as a result of the settlement. Since any loss Federal sustained was derivative of Galaxy's loss and Galaxy suffered none, Rivkin argued, then neither did Federal.

Rivkin further argued that Federal could not establish that it or its subrogor, Galaxy, could have obtained a better result in the Bermejo action "but for" its alleged negligence in failing to assert antisubrogation in response to the owners' motion for indemnification. As it explained, even if the court denied the owners' motion based upon the antisubrogation rule, Galaxy still would have been liable for 100% of Bermejo's damages, without any right of contribution or indemnity from the owners. Finally, Rivkin argued that Federal lacked standing individually to bring a legal malpractice claim either as Galaxy's subrogee or directly, given the lack of privity between Rivkin and Federal or any allegations to support a claim for negligent representation based on a relationship approaching privity. As it argued, Rivkin was retained by CUIC to serve as Galaxy's counsel in Bermejo's action, in which Federal had its own counsel.

In opposition, Federal argued that had the antisubrogation rule been asserted, it would have been applied to prevent CUIC from becoming subrogated to the owners' indemnity rights as asserted in their cross claims against Galaxy. It also argued that had the antisubrogation rule been asserted, CUIC's OCP policy would have remained exposed and its proceeds subject to execution in a judgment against each of the jointly and severally liable defendants. Finally, Federal argued that it had standing to assert a legal malpractice claim in its own right, contending that the "near privity" requirement was present.

In reply, Rivkin argued, inter alia, that any claim based on near privity is limited to negligent misrepresentation claims, and here, Federal never alleged that Rivkin made any misrepresentation to it that caused it to settle with Bermejo without contribution from the owners. Rather, Federal's claim is that Rivkin, in representing Galaxy, breached a duty to Galaxy by failing to assert the antisubrogation rule.

Supreme Court denied Rivkin's motion, sustaining Federal's cause of action as Galaxy's subrogee because, although Federal was silent as to Galaxy's damages, "Federal's damages may have led to some damages also being suffered by Galaxy." The court also determined that Federal could assert a direct malpractice claim against Rivkin, holding, "An excess insurer may sue the attorneys assigned by the primary insurer to represent the insured on the ground that the counsel owes a duty to the insured and the excess insurer, as the insured's subrogee." Finally, the court held that near privity existed between Rivkin and Federal to support a claim for legal malpractice between an attorney and a third party. As to the cross motion, Supreme Court, stating that a "primary carrier owes its insured and the excess insurer a duty to exercise good faith in handling a claim," held that Federal should have the opportunity to proceed with its claim that CUIC "managed the Bermejo case to Federal's disadvantage." It thus left standing the first three causes of action but dismissed the legal malpractice claims asserted against CUIC in the fourth and fifth causes of action. Both Rivkin and CUIC appeal from these adverse determinations.

None of the determinations reached to justify denial of Rivkin's motion withstands scrutiny, and its dismissal motion should have been granted. To state a cause of action for legal malpractice, a complaint must allege the negligence of the attorney, that the negligence was a proximate cause of the loss sustained, and actual damages (Leder v Spiegel, 31 AD3d 266, 267 [2006], affd 9 NY3d 836 [2007]). In addition, "New York courts impose a strict privity requirement to claims of legal malpractice; an attorney is not liable to a third party for negligence in performing services on behalf of his client"  (Lavanant v General Acc. Ins. Co., 164 AD2d 73, 81 [1990], affd 79 NY2d 623 [1992]; see also D'Amico v First Union Natl. Bank, 285 AD2d 166, 172 [2001], lv denied 99 NY2d 501 [2002]). Thus, absent an attorney-client relationship, a cause of action for legal malpractice cannot be stated (Baystone Equities, Inc. v Handel-Harbour, 27 AD3d 231 [2006]; Linden v Moskowitz, 294 AD2d 114, 115 [2002], lv denied 99 NY2d 505 [2003]).

In the instant matter, there is no privity between Rivkin and Federal; Rivkin's duty in the Bermejo lawsuit ran only to its client, Galaxy, and not to any third party. When counsel is assigned to defend an insured, "the paramount interest independent counsel represents is that of the insured, not the insurer" (Feliberty v Damon, 72 NY2d 112, 120 [1988]). Assigned counsel's duty is "to the insured, and if there is a conflict of interest between the carrier and the insured, . . . he cannot represent both" (Trieber v Hopson, 27 AD2d 151, 153 [1967]; see also Schneider v Canal Ins. Co., 1999 US Dist LEXIS 13618, *45 [ED NY 1999], affd 210 F3d 355 [2d Cir 2000] ["It is . . . well-settled that the counsel retained by an insurance company to represent an insured has an attorney-client relationship only with the insured and owes its entire allegiance only to the insured"]). Since legal malpractice claims by primary insurers against assigned counsel are not viable, the instant legal malpractice action by Federal, an excess insurer, fares no better. 

Nor is Federal's individual claim of legal malpractice saved by Allianz Underwriters Ins. Co. v Landmark Ins. Co. (13 AD3d 172 [2004]), in which this Court recognized the right of an excess insurer, acting as an insured's equitable subrogee, to sue a law firm for legal malpractice in its representation of an insured. The case stands for no more than a recognition of the direct relationship between an attorney and his or her client, to whose rights the client's insurer can be subrogated (see Great Atl. Ins. Co. v Weinstein, 125 AD2d 214 [1986], sustaining excess insurer's legal malpractice claim based on status as equitable subrogee of insured). Thus, Federal's fourth cause of action, which seeks relief individually, not as Galaxy's subrogee, based on Rivkin's alleged legal malpractice, does not fall within the holding of Allianz.

Strict adherence to the rule prohibiting legal malpractice claims by non-clients serves an important policy consideration. An attorney's paramount duty is to protect zealously the interests of his or her client, and if that duty is breached and the breach proximately causes injury, the attorney may be subject to a malpractice claim, but only by his or her client. While, concededly, third parties may be interested in the actions by another's attorney and even benefit therefrom, that circumstance does not give rise to a duty on the part of the attorney to the third party. Were it otherwise, the attorney would be faced with the constant burden of weighing all the competing interests attendant upon such diverse obligations to the potential detriment of his or her client, to whom he owes undivided fidelity.

Nor has Federal pleaded sufficient facts to demonstrate a relationship with Rivkin "so close as to touch the bounds of privity" (Allianz Underwriters, 13 AD3d at 175). While, as noted, strict privity is generally required to maintain a cause of action for legal malpractice, a relationship of near privity may, in limited circumstances not present here, be sufficient to sustain a legal malpractice claim (see id.). The exception applies in cases of negligent misrepresentation (see Prudential Ins. Co. of Am. v Dewey, Ballantine, Bushby, Palmer & Wood, 80 NY2d 377 [1992] [attorney may be held liable to third parties for submitting a false opinion letter upon which a third party relied]).

In reaching its determination in Prudential, the Court of Appeals relied on Credit Alliance Corp. v Andersen & Co. (65 NY2d 536 [1985]), which, in certain circumscribed circumstances, extended an accountant's liability to a third party for the preparation of misleading financial reports. As established in Credit Alliance and extended to attorneys in Prudential, an attorney may be held liable to a third party where the elements of negligent misrepresentation exist. To establish such a claim, a party must allege: "(1) an awareness by the maker of the statement that it is to be used for a particular purpose; (2) reliance by a known party on the statement in furtherance of that purpose; and (3) some conduct by the maker of the statement linking it to the relying party and evincing its understanding of that reliance" (Prudential, 80 NY2d at 384; see State of California Pub. Employees' Retirement Sys. v Shearman & Sterling, 95 NY2d 427, 434 [2000]).

Although, as noted, this Court, in Allianz, sustained a legal malpractice claim on the basis of equitable subrogation, it ruled, in dictum, that on the facts presented on the motion to dismiss, the excess insurer also stated a near privity relationship sufficient to sustain the complaint. In so doing, this Court relied on the three criteria from Prudential. In Allianz, the excess insurer of Dunlop Tire Corporation commenced a declaratory judgment action alleging breach of fiduciary duty against various insurers and Underberg & Kessler, LLP, the law firm retained by the primary insurer that represented Dunlop in the underlying action, which resulted in a substantial verdict in favor of the plaintiff. Allianz alleged that it and its insured, Dunlop, repeatedly demanded Underberg bring a third-party action against the injured person's employer on the ground, inter alia, of contractual and common law indemnification. According to Allianz, Dunlop's primary insurer, which also insured the employer, opposed bringing such an action. Underberg wrote to Dunlop's general counsel advising that a third-party action against the employer would fail. A third-party action was never commenced. In Allianz, near privity was properly alleged because (1) Underberg knew that its advice as to whether to commence a third-party action would be relied upon by third parties; (2) Allianz relied on Underberg's advice and (3) Underberg communicated its advice that a third-party action would fail to the third parties, who relied on it (13 AD3d at 175).

Here, no such allegations of near privity are found in either the complaint or the record. Federal's decision to settle the Bermejo action was not based on any affirmative Rivkin representation upon which it relied. Rather, it settled the action because, as it concedes, the case against its insured was clear and the settlement amount was reasonable. In deciding to settle, Federal was advised by its own separate counsel, upon whose advice it relied. Nothing in Federal's complaint alleges that Rivkin made misrepresentations upon which it relied. Its complaint is a plain legal malpractice pleading based on Rivkin's alleged breach of duty to Galaxy but asserted instead, improperly, by Federal. "[O]ur courts have not extended liability in situations where the negligence caused injury to a third party with whom there was no privity" (Council Commerce Corp. v Schwartz, Sachs & Kamhi, 144 AD2d 422, 424 [1988], lv denied 74 NY2d 606 [1989]). Thus, Federal has failed to allege near privity to sustain its individual claim of legal malpractice (see e.g. Aglira v Julien & Schlesinger, 214 AD2d 178, 184-185 [1995]).

Federal's fifth cause of action, asserted against Rivkin as subrogee of Galaxy, is also without merit since Galaxy has not suffered any loss. Subrogation is "an equitable doctrine [that] entitles an insurer to stand in the shoes' of its insured to seek indemnification from third parties whose wrongdoing has caused a loss for which the insurer is bound to reimburse" (Northstar Reins. Corp. v Continental Ins. Co., 82 NY2d 281, 294 [1993]; see also Federal Ins. Co. v Spectrum Ins. Brokerage Servs., 304 AD2d 316, 317 [2003]). On the facts presented, Federal has no claim in subrogation. Galaxy has not sustained any loss in the Bermejo claim because of the wrongdoing by any party for the recovery of which Federal can be subrogated. Galaxy did not sustain any damage as a result of Rivkin's failure to raise antisubrogation in opposition to the owners' claims for indemnification. Galaxy's damages in incurring a liability to Bermejo was the result of its own wrongdoing in violating the Labor Law, a fact Federal concedes. Federal also concedes the reasonableness of the settlement of Bermejo's claim for $3,000,000. Thus, Federal's payment of the loss was a result of its own insured's wrongdoing with respect to the Bermejo accident, not a result of wrongdoing by any third party for which Federal can seek recompense as Galaxy's subrogee. As is obvious, the only loss for which Federal seeks recovery is its own loss. Thus, its claim in subrogation must be dismissed (see e.g. id.).

As to the appeal from the denial of its cross motion to dismiss, CUIC argues that Federal cannot seek indemnification from CUIC since the court in the Bermejo action on the summary judgment motion found that the owners' liability was purely vicarious and that Galaxy, assuming plaintiff were to prevail at trial, would have full responsibility for the accident. Federal, on the other hand, claims that CUIC and its lawyers (Rivkin) colluded on behalf of the owners to obtain a favorable ruling on indemnification for Bermejo's accident and damages, in violation
of the antisubrogation rule, and seeks indemnification from CUIC for the $1,000,000 payment toward settlement that it claims CUIC should have made on behalf of the owners.

The first cause of action presents a collision of two competing principles: antisubrogation and the right of a party, such as a premises owner, which is only vicariously responsible by virtue of the absolute liability imposed for a violation of Labor Law § 240(1) (see e.g. Songui v City of New York, 2 AD3d 706 [2003]), to indemnification from the party actually responsible for the accident (see Kelly v City of New York, 32 AD3d 901 [2006]), such as general contractor Galaxy in the instant situation. Even though CUIC issued two separate policies (one to Galaxy and the other to the owners), the antisubrogation rule is applicable (North Star Reins. Corp. v Continental Ins. Co., 82 NY2d 281, supra). As the Court of Appeals has made clear, "a potential conflict of interest arises where the insurer that issued both policies seeks indemnification against [one of the parties to which it issued a policy]" (id. at 295-296). As relevant here, the Court observed that an insurer could manipulate the litigation in such a way as to "trigger coverage under other insurance policies held by the contractor such as a workers' compensation or excess policy" (id. at 296).

Thus, the antisubrogation rule, if asserted, would have defeated the owners' claims for indemnification from Galaxy. CUIC's exposure, at the time it entered negotiations to settle the Bermejo claim, would have been $2,000,000, not $1,000,000 as was the case after the owners successfully moved for summary judgment on their indemnification claims against Galaxy. Since, however, the conditional award of summary judgment was never appealed or vacated as part of the settlement process, it has res judicata effect and serves to bar any claim that Galaxy has an antisubrogation defense to the owners' indemnification claims (see Allstate Ins. Co. v American Home Assur. Co., __ AD3d __, 837 NYS2d 138 [2007]) or that Federal has an indemnification claim against CUIC based on that non-asserted defense.

In the second cause of action, Federal alleges that it suffered damages of $1,000,000 as a result of CUIC's bad faith in failing to defend Galaxy against the owners' indemnification claims on the basis of the antisubrogation rule. Thus, the same conflict of principles as is manifest in the first cause of action is presented in this claim. Since the North Star decision would have barred these claims, Federal's claim that CUIC manifested a "conscious disregard" for Federal's rights (cf. Pavia v State Farm Mut. Auto. Ins. Co., 82 NY2d 445, 453-454 [1993]) by allowing one of its insureds, the owners, to escape liability in violation of the antisubrogation rule, thereby removing one of its policies (OCP) from the layer of coverage that had to be exhausted before [*9]triggering Federal's excess coverage, sufficiently states a cause of action for bad faith.

Federal's third cause of action, asserted against CUIC as subrogee of Galaxy, alleging bad faith should be dismissed for the same reason as warrants dismissal of its fifth cause of action against Rivkin. Galaxy has suffered no loss as the result of the wrongdoing of another, for the recovery of which Federal could be subrogated. In point of fact, Federal seeks to recover for its own loss.

We have examined the other contentions raised and find that they are without merit.

Accordingly, the order of the Supreme Court, New York County (Charles E. Ramos, J.), entered August 3, 2006, which denied the motion of defendants Bendix and Rivkin Radler to dismiss the fourth and fifth causes of action against them and so much of the cross motion of defendants North American Specialty and Allied World as sought dismissal of the first, second and third causes of action should be modified, on the law, the motion granted dismissing the fourth and fifth causes of action, the cross motion granted to the extent of dismissing the first and third causes of action, and otherwise affirmed, without costs or disbursements.

 

In re American Transit Ins. Co. v. Hoque and  American Independent Ins. Co.,



Freiberg & Peck, LLP, New York (Evan M. Wegrzyn of
counsel), for appellant.

Order, Supreme Court, New York County (Walter B. Tolub, J.), entered March 21, 2007, which, in a proceeding by an insurer to stay an uninsured motorist arbitration demanded by respondent, insofar as appealed from, granted respondent's motion to add appellant, an insurer, as an additional respondent, and denied appellant's motion to dismiss the proceeding as against it for lack of personal jurisdiction, unanimously reversed, on the law, without costs, appellant's motion granted, and respondent's motion denied.

Appellant demonstrated, without rebuttal, that it is not doing business in New York (CPLR 301), since it is a Pennsylvania company not licensed to do business in New York, it maintains no offices in New York, has no bank accounts here, has no agents operating out of or representatives soliciting business in New York and does not own or possess real property in New York. Nor is appellant transacting business in New York (CPLR 302); that the driver of the offending vehicle, which was registered in Pennsylvania, drove in this state is not "purposeful activity" on the part of appellant. Accordingly, New York does not have personal jurisdiction over appellant (see Matter of Government Empls. Ins. Co. v Basedow, 28 AD3d 766 [2006]). While not mentioned by the parties, we note that our decision in Matter of Preferred Mut. Ins. Co. (Fu Guan Chan) (267 AD2d 181 [1999]) is not to the contrary. In Preferred, we directed a hearing to determine whether there was jurisdiction over the insurer since, while the evidence that it did not do business in New York was the same as here, the driver of the offending vehicle was a New York resident, so the insurer may have been transacting business in this state by knowingly issuing policies to New York drivers (see Bunkoff Gen. Contrs. v State Auto Mut. Ins. Co., 296 AD2d 699 [2002]).

Wood v. Nationwide Mutual Insurance Company





It is ADJUDGED AND DECLARED that defendant has a duty to defend and indemnify plaintiff in the underlying third-party action.

Memorandum: An alleged employee of plaintiff was injured in a construction site accident in March 1994 and in November 1994 commenced an action against plaintiff that was subsequently dismissed upon stipulation. The alleged employee then commenced an action against the owner of the property in April 1995, and the property owner commenced a third-party action against plaintiff in March 1996. Upon the record before us, it appears that the latter actions remain pending. At the time of the accident, plaintiff was insured under a policy issued by defendant. Although defendant initially provided a defense to plaintiff in the two actions commenced against him, defendant issued a disclaimer of coverage on June 5, 1997 based on a policy exclusion barring coverage for injuries sustained by an employee of plaintiff. Plaintiff then commenced this action seeking, inter alia, a determination that defendant's notice of disclaimer was untimely and a declaration that defendant has a duty to defend and indemnify plaintiff in the underlying third-party action. Before answering the complaint, defendant moved to dismiss it pursuant to CPLR 3211 (a) (1) and (7). In addition, defendant asked Supreme Court to treat its motion as one for summary judgment pursuant to CPLR 3211 (c) and to declare, inter alia, that it has no duty to defend or indemnify plaintiff in the underlying third-party action. In opposing the motion, plaintiff asserted that he is entitled to summary judgment in his favor in the event that the court treated defendant's motion as one for summary judgment. We conclude that the court should have granted the relief sought by plaintiff, and we therefore modify the order accordingly and grant judgment in favor of plaintiff. 

Pursuant to Insurance Law § 3420 (d), defendant was required to "give written notice as soon as is reasonably possible" of the disclaimer of coverage. The " timeliness of an insurer's disclaimer is measured from the point in time when the insurer first learns of the grounds for . . . denial of coverage,' " and the insurer has the burden of justifying the delay (First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 68-69). An "investigation into issues affecting an insurer's decision whether to disclaim coverage obviously may excuse delay in notifying the policyholder of a disclaimer" (id. at 69).

Here, the record contains a letter from defendant to plaintiff dated October 19, 1995 indicating that defendant was reserving its right to disclaim coverage if it was determined that the injured party was an employee of plaintiff. Defendant contends that it did not receive a decision from the Workers' Compensation Board determining that the injured party was an employee of plaintiff until May 23, 1997, and that its notice of disclaimer 13 days after receipt of that decision was timely. We reject that contention. Defendant was not required to await the decision of the Workers' Compensation Board before issuing a disclaimer and, indeed, defendant was required to conduct its own investigation into the matter, including obtaining a statement from plaintiff.

To the extent that defendant contends that its delay was caused by plaintiff's conduct in failing to cooperate, defendant is not entitled to raise that contention for the first time on appeal (see General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864; Allstate Ins. Co. v Moon, 89 AD2d 804, 806; see also Campos v Sarro, 309 AD2d 888, 889). In any event, mere inaction by an insured does not by itself justify a disclaimer of coverage on the ground of lack of cooperation (see New York State Ins. Fund v Merchants Ins. Co. of N.H., 5 AD3d 449, 451), and defendant offered no explanation for the failure of its field investigator to travel to plaintiff's house, for the failure of its private investigator to obtain a statement from plaintiff, or for its failure to attempt to obtain a transcript of the hearing before the Workers' Compensation Board, which was conducted in October 1996. We thus conclude that, although ordinarily the reasonableness of an insurer's explanation for the delay in disclaiming coverage is an issue of fact (see Matter of Cosgriff v Progressive Ins. Co., 303 AD2d 680; Vecchiarelli v Continental Ins. Co., 277 AD2d 992, 993), here defendant's explanation for the 19-month delay is unreasonable as a matter of law (see Bovis Lend Lease LMB, Inc. v Royal Surplus Lines Ins. Co., 27 AD3d 84, 88; Dependible Janitorial Servs. v Transcontinental Ins. Co., 212 AD2d 946, lv denied 85 NY2d 811).

100 Motor Parkway Associates, LLC v. American Motorists Insurance Company


Clifton Budd & DeMaria, LLP, New York, N.Y. (Robert J. Tracy,
Daniel W. Morris, and Diane M. Pietraszewski of counsel), for
appellants.
Curtis, Vasile, Devine & McElhenny, LLP, Merrick, N.Y.
(Michael J. Dorry of counsel), for
respondents.


DECISION & ORDER

In an action for a judgment declaring that the defendants American Motorists Insurance Company and Lumbermens Mutual Casualty Company are obligated to defend and indemnify the plaintiffs as additional insureds in an underlying action entitled Payne v 100 Motor Parkway Associates, LLC, pending in the Supreme Court, Suffolk County, under Index No. 03-22469, the plaintiffs appeal from an order of the Supreme Court, Suffolk County (Spinner, J.), dated April 3, 2006, which denied their motion for summary judgment.

ORDERED that the order is affirmed, with costs.

Summary judgment should only be granted if the pleadings, together with the affidavits, show that there are no triable issues of fact (see CPLR 3212; Zuckerman v City of New York, 49 NY2d 557, 562; Alvarez v Prospect Hosp., 68 NY2d 320). Failure to tender sufficient evidence to eliminate any triable issues of fact requires denial of the motion, regardless of the sufficiency of the opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d at 853).

Here, contrary to the appellants' contention, triable issues of fact exist, inter alia, as to the timeliness of the "their" notice of the claim to the respondents (see White v City of New York 81 NY2d 955; SSBSS Realty Corp. v Public Serv. Mut. Ins. Co., 253 AD2d 583, 584).

In the Matter of New York Central Mutual Fire Insurance Company v. Serpico



Cullen and Dykman, LLP, Brooklyn, N.Y. (Joseph Miller of
counsel), for appellant.
Sweeny & Sweeny, Westbury, N.Y. (Dennis J. Sweeny of
counsel), for respondent.


DECISION & ORDER

In a proceeding, inter alia, pursuant to CPLR article 75 to temporarily stay arbitration of an uninsured motorist claim to allow for discovery in aid of arbitration, the petitioner appeals, as limited by its brief, from stated portions of an order of the Supreme Court, Nassau County (Alpert, J.), dated May 22, 2006, which, inter alia, denied that branch of its motion which was to direct the respondent to provide all medical authorizations for the medical records and reports relative to the subject accident and two prior automobile accidents.

ORDERED that the order is modified, on the facts and in the exercise of discretion, by deleting the provision thereof denying that branch of the petitioner's motion which was to direct the respondent to provide all medical authorizations for the medical records and reports relating to the subject accident and two prior automobile accidents and substituting therefor a provision granting that branch of the motion; as so modified, the order is affirmed insofar as appealed from, with costs to the appellant.

The Supreme Court improvidently exercised its discretion in denying that branch of the petitioner's motion which was to direct the respondent to provide all medical authorizations to obtain relevant medical reports and copies of relevant medical records pertaining to those bodily injuries that the respondent claims to have sustained as a result of the subject motor vehicle accident, including medical reports and medical records pertaining to bodily injuries sustained before the subject accident occurred which were similar to those allegedly sustained in the subject accident (see CPLR 3102 [c]; Matter of State Farm Mut. Auto. Ins. Co. v Bautista, 11 AD3d 471; Matter of Allstate Ins. Co. v Moya, 288 AD2d 309; Matter of Allstate Ins. Co. v Baez, 269 AD2d 392).

Raffellini  v. State Farm Mutual Automobile Insurance Company


Harris J. Zakarin, for appellant.
Michael A. Forzano, for respondent.
New York State Trial Lawyers' Association; New York
Insurance Association, Inc., amici curiae.


GRAFFEO, J.:

The issue in this case is whether a "serious injury" exclusion in a supplementary uninsured/underinsured motorist endorsement to an automobile liability policy is enforceable. We conclude that it is.

In April 1998, plaintiff Nicholas Raffellini suffered back injuries when his vehicle was struck by a car that had driven through a red traffic light. Plaintiff's medical expenses and other basic economic loss damages were paid through no-fault insurance. He then pursued recovery for his pain and suffering from the driver of the car that caused the accident. The driver's insurance carrier agreed to pay plaintiff a settlement of $25,000 — the limit of coverage under that policy. Plaintiff's own insurer, defendant State Farm Mutual Automobile Insurance Company, did not object to the settlement.

After he received the $25,000 settlement payment, plaintiff demanded that State Farm pay him $75,000 in pain and suffering damages under the supplementary uninsured/underinsured motorist (SUM) endorsement, a component of plaintiff's policy that provided up to $100,000 in coverage. When State Farm refused the demand, plaintiff commenced this breach of contract action. State Farm answered the complaint and asserted, among other defenses, that plaintiff could not recover under the SUM endorsement because he "did not sustain a serious injury" and his exclusive remedy was, therefore, the receipt of no-fault benefits.

Plaintiff moved to strike the serious injury defense from State Farm's answer, claiming that Insurance Law  § 3420(f)(2), which addresses SUM benefits, does not impose serious injury as a condition precedent to recovery. State Farm countered that Insurance Law § 3420(f)(2) must be read in tandem with Insurance Law § 3420(f)(1), which contains a serious injury requirement for uninsured motorist benefits. The insurer further submitted that an Insurance Department regulation, Regulation  35-D, requires that SUM recovery be conditioned on a finding of serious injury.

Supreme Court granted plaintiff's motion to strike State Farm's serious injury defense on the basis that Insurance Law § 3420(f)(2) does not reference a serious injury exclusion and Regulation 35-D is inconsistent with the statute. The Appellate Division affirmed and granted State Farm's motion for leave to appeal to this Court, certifying the question: "Was the opinion and order of this court dated June 30, 2005, properly made?" We answer this question in the negative and reverse the order of the Appellate Division, thereby reinstating State Farm's serious injury defense.

The controversy concerning application of a serious injury requirement in these circumstances stems from the statutory framework. Insurance Law § 3420(f)(1) mandates that insurers provide uninsured motorist coverage in every New York motor vehicle liability policy. The payment of mandatory uninsured motorist benefits is conditioned on a finding that the insured suffered a serious injury as defined in Insurance Law  § 5102(d). Section 3420(f)(1) states: "No payment for non-economic loss shall be made undersuch policy provision to a covered person unless such person has incurred a serious injury, as such terms are defined in" the No-Fault Law.

Insurance Law § 3420(f)(2) addresses additional, optional personal injury coverage that can be purchased by a policyholder:

"Any such policy shall, at the option of the insured, also provide supplementary uninsured/underinsured motorists insurance for bodily injury, in an amount up to the bodily injury liability insurance limits of coverage provided under such policy . . ."


Under this statute, the coverage is not triggered unless "the limits of liability of all bodily injury liability bonds or insurance policies applicable at the time of the accident shall be exhausted by payment of judgments or settlements" (Insurance Law § 3420[f][2]). Unlike subsection (f)(1), subsection (f)(2) is silent as to whether an insured must prove serious injury in order to receive supplementary benefits. Plaintiff contends that, by referencing serious injury in subsection (f)(1) and not subsection (f)(2), the Legislature permitted insurers to condition recovery of mandatory uninsured motorist benefits on the existence of a serious injury but intended to preclude them from conditioning recovery of supplementary benefits on such a finding.

Plaintiff's argument runs contrary to the interpretation of the Superintendent of Insurance expressed in Regulation 35-D, codified at 11 NYCRR subpart 60-2. Regulation 35-D was promulgated in 1992 "to interpret section 3420(f)(2) of the Insurance Law, in light of ensuing judicial rulings and experience, by establishing a standard form for SUM coverage, in order to eliminate ambiguity, minimize confusion and maximize its utility" (11 NYCRR 60-2.0[c]). The regulation requires that "[e]very SUM endorsement issued shall be the Supplementary Uninsured/Underinsured Motorists Endorsement prescribed by subdivision (f) of this section" (11 NYCRR 60-2.3[c]). Subdivision (f) sets forth the precise language insurers are to use in the endorsement, including an "Exclusions" section which reads: "This SUM coverage does not apply . . . for non-economic loss, resulting from bodily injury to an insured and arising from an accident in New York State, unless the insured has sustained serious injury as defined in Section 5102(d) of the New York Insurance Law" (11 NYCRR 60-2.3[f], Exclusions). State Farm asserts that it incorporated the form language in the SUM endorsement it issued to plaintiff, as it was required to do.

It is well settled that the Legislature may authorize an administrative agency "to fill in the interstices in the legislative product by prescribing rules and regulations consistent with the enabling legislation" (Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854, 865 [2003], quoting Matter of Nicholas v Kahn, 47 NY2d 24, 31 [1979]). "In so doing, an agency can adopt regulations that go beyond the text of that legislation, provided they are not [*4]inconsistent with the statutory language or its underlying purposes" (General Elec. Capital Corp. v New York State Div. of Tax Appeals, Tax Appeals Trib., 2 NY3d 249, 254 [2004]). A duly promulgated regulation that meets these criteria has the force of law.

We have previously recognized that the Legislature has vested the Superintendent of Insurance with "broad power to interpret, clarify, and implement the legislative policy" by promulgating regulations (Medical Society, 100 NY2d at 863, quoting Ostrer v Schenck, 41 NY2d 782, 785 [1977]) and has directed the Superintendent to "prescribe forms" (see Insurance Law § 301). Thus, in Medical Society, where the Superintendent's power to adopt regulations imposing strict time requirements on the filing of no-fault claims was challenged, this Court found the regulations valid, even though the No-Fault Law itself is silent on the question of time periods. We noted that the time frames, intended to combat an escalating fraud problem, were consistent with the policy underlying the No-Fault Law — to provide prompt compensation to legitimate claimants. In other contexts, we have relied on the Superintendent's interpretation of New York insurance law, expressed in Regulation 35-D, as "persuasive authority" (see Matter of Allstate Ins. Co. (Stolarz New Jersey Mfrs. Ins. Co.), 81 NY2d 219, 224 [1993]) and we have specifically cited Regulation 35-D when identifying the exclusions authorized for uninsured/underinsured motorist benefits (see Matter of Liberty Mut. Ins. Co. (Hogan), 82 NY2d 57, 60 [1993]).

Plaintiff argues that, insofar as Regulation 35-D imposes a serious injury requirement on the recovery of supplementary benefits, it is inconsistent with Insurance Law § 3240(f)(2) and is therefore unenforceable. There is no question that "if [a] regulation runs counter to the clear wording of a statutory provision, it should not be accorded any weight" (Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459 [1980] [citation omitted]). But in this case, the relevant statutory provision and the regulation are not contradictory. Insurance Law § 3420(f)(2) is silent on the issue of whether an insured can recover SUM benefits absent a serious injury and that silence does not, in this case, imply that the Legislature intended to permit such recovery.

The legislative history of the relevant provisions refutes the argument that, by placing the serious injury exclusion in the mandatory benefits provision but not the supplementary benefits provision, the Legislature intended to preclude the Superintendent from authorizing application of a serious injury exclusion for supplementary benefits. Before uninsured motorist coverage was developed almost 50 years ago, it was not uncommon for a person injured in a motor vehicle accident by an uninsured tortfeasor to be unable to recover any damages. To redress this problem, in 1958 the Legislature created the Motor Vehicle Accident and Indemnification Corporation to provide compensation for individuals injured by uninsured motorists, whether or not the injured individuals possessed automobile insurance themselves (L 1958, ch 759; see Matter of Lloyd (Motor Veh. Acc. Indem. Corp.), 23 NY2d 478 [1969]). At the same time, legislation was passed requiring the inclusion of mandatory uninsured motorist coverage in every automobile liability policy issued in New York (L 1958, ch 759, § 4). "The primary objective of this legislation was to afford the innocent victims of uninsured motorists the same protection available to victims of insured motorists with respect to their relative ability to obtain compensation for losses sustained in an automobile accident" (Fox v Atlantic Mut. Ins. Co., 132 AD2d 17, 21 [2d Dept 1987]). The Legislature's mandatory uninsured motorist coverage provision — the predecessor to Insurance Law § 3420(f)(1) — was codified at Insurance Law § 167(2-a).

Mandatory uninsured motorist coverage therefore significantly predated the No-Fault Law, which was not enacted until 1973 (L 1973, ch 13). The No-Fault Law changed the legal landscape by imposing a distinction between basic economic loss (primarily medical expenses and lost wages up to $50,000), which would be covered regardless of fault in an accident, and non-economic loss (pain and suffering), recoverable only through a personal injury claim against a tortfeasor responsible for the injuries (Insurance Law § 5102[a], [b], [c]). As to the latter, the No-Fault Law required that injured parties be precluded from pursuing personal injury claims unless they suffered a "serious injury" (Insurance Law § 5104[a]).[FN1]

In 1977, the Legislature amended the mandatory uninsured motorist benefits statute — Insurance Law § 167(2-a) — toclarify that the recovery available under this coverage was not to be diminished by an insurer's payment of no-fault benefits (L 1977, ch 892, § 3). At the same time, the Legislature added a new paragraph to section 167(2-a) establishing supplementary uninsured/underinsured motorist coverage. This new paragraph — the predecessor to Insurance Law § 3420(f)(2) — gave an insured the option of purchasing additional uninsured motorist coverage beyond the mandatory minimum as well as "underinsurance" coverage to guard against the possibility of injury by a tortfeasor who was insured but in an amount insufficient to fully compensate the [*6]injured party. The newly-added second paragraph read as a continuation of the first, providing that "[a]ny such policy shall, at the option of the insured, also provide supplementary uninsured/underinsured motorists insurance . . ." (L 1977, ch 892, § 3 [emphasis added]). As is the case with mandatory benefits, the purpose of supplementary benefits was "to provide the insured with the same level of protection he or she would provide to others were the insured a tortfeasor in a bodily injury accident" (Matter of Prudential Prop. & Cas. Co. v Szeli, 83 NY2d 681, 687 [1994]). Rather than characterizing supplementary benefits as a distinct type of coverage, our Court has viewed underinsured motorist coverage as an extension of uninsured motorist coverage: "The statutory allowance for supplementary uninsured motorists insurance coverage expands the 'uninsured motorist' category to include one who, while maintaining proof of financial responsibility as required by law, and thus being an 'insured motorist,' nevertheless may be considered an 'uninsured motorist' because he is 'underinsured' when compared to the coverage of an insured who has exercised the option to purchase supplementary insurance" (Reichel v Government Empls. Ins. Co., 66 NY2d 1000, 1003 [1985]).

The serious injury exclusion at the heart of this dispute was added to the statutory scheme in 1981 (L 1981, ch 435) when mandatory and supplementary benefits were still addressed in adjoining paragraphs of the same subsection — Insurance Law § 167(2-a). The Legislature inserted the serious injury language in the first paragraph — the mandatory coverage portion — of that subsection. But there is no indication in the legislative history of the amendment that the Legislature decided to apply a serious injury exclusion solely to mandatory coverage and not to supplementary benefits. Because both paragraphs of section 167(2-a) related to uninsured motorist benefits and supplementary coverage was framed as an extension of the mandatory coverage outlined in the first paragraph, the exclusion can reasonably be viewed as having been intended to apply to both categories of benefits. Based on the structure of section
167(2-a), we cannot say that the Legislature's failure to restate the serious injury provision in the second paragraph evinced an intent to preclude application of such an exclusion to supplementary benefits.

It was not until 1984, when the Insurance Law was recodified and renumbered in its entirety (L 1984, ch 367), that the two paragraphs were separated into two subsections, resulting in the placement of the serious injury exclusion in Insurance Law § 3420(f)(1) and not in Insurance Law § 3420(f)(2). This recodification was not meant to effect a substantive change in the law — certainly, there is no reason to conclude that the Legislature split the two paragraphs into separate subsections to create a distinction between the two types of coverages that did not already exist. Given this legislative evolution, we are unpersuaded that the placement of the serious injury exclusion in Insurance Law § 3420(f)(1) but not 3420(f)(2) reflects a legislative determination to restrict the serious injury exclusion to mandatory benefits. 

Indeed, as the Superintendent apparently concluded, such a distinction would not be consistent with the policy underlying supplementary benefits, which are designed to give insureds the same level of protection that would have been available to others under the policy if the insureds were the tortfeasors who caused personal injuries. When an insured injures someone in a motor vehicle accident, the injured party is subject to the serious injury requirement in the No-Fault Law and cannot sue for non-economic loss unless the serious injury threshold is met (see Insurance Law § 5104[a]). Since the purpose of supplementary coverage is to extend to the insured the same level of coverage provided to an injured third party under the policy, the insured must also meet the serious injury requirement before entitlement to supplementary benefits. If this were not the case, the insured would receive coverage more comprehensive than that available to a third party injured by the insured.

It is evident from the facts of this case that the application of the serious injury exclusion is consistent with the policy supporting supplementary benefits. Here, plaintiff received payment for his basic economic loss through no-fault benefits. When he sued the negligent party who caused the collision, he was seeking recovery for non-economic loss. Having obtained the $25,000 limit of coverage from the negligent driver's insurer, he then sought additional non-economic loss damages under the SUM endorsement to his State Farm insurance policy. Since a third party injured as a result of plaintiff's negligence would have had to demonstrate serious injury to obtain non-economic loss damages under plaintiff's policy, it follows that plaintiff himself must prove serious injury to recover under his SUM endorsement — as Regulation 35-D requires. State Farm is therefore entitled to pursue its serious injury defense.

Accordingly, the order of the Appellate Division should be reversed, with costs, plaintiff's motion to strike defendant's fifth affirmative defense denied, and the certified question answered in the negative.
* * * * * * * * * * * * * * * * *
Order reversed, with costs, plaintiff's motion to strike defendant's fifth affirmative defense denied and certified  question answered in the negative. Opinion by Judge Graffeo.
Chief Judge Kaye and Judges Ciparick, Read, Smith, Pigott and Jones concur.

Footnotes



Footnote 1: "'Serious injury' means a personal injury which results in death; dismemberment; significant disfigurement; a fracture; loss of a fetus; permanent loss of use of a body organ, member, function or system; permanent consequential limitation of use of a body organ or member; significant limitation of use of a body function or system; or a medically determined injury or impairment of a non-permanent nature which prevents the injured person from performing substantially all of the material acts which constitute such person's usual and customary daily activities for not less than ninety days during the one hundred eighty days immediately following the occurrence of the injury or impairment" (Insurance Law § 5102[d]).

 

Palmo v. Straub and State Farm Ins. Com.

 

Calendar Date: September 7, 2007
Before: Mercure, J.P., Peters, Spain, Carpinello and Mugglin, JJ.


Friedman, Hirschen & Miller, L.L.P., Schenectady
(Carolyn B. George of counsel), for appellant.
Bendall & Mednick, Schenectady (Gary P. Delisle of
counsel), for respondents.

MEMORANDUM AND ORDER


Carpinello, J.

Appeal from an order of the Supreme Court (Reilly Jr., J.), entered July 25, 2006 in Schenectady County, which granted plaintiff's motion to require State Farm Insurance Company to accept a certain sum in full satisfaction of its claim for overpayment.

Following an October 2002 car accident with defendant Erik J. Straub, plaintiff Joseph D. Palmo (hereinafter plaintiff), who was insured by State Farm Insurance Company, collected both workers' compensation benefits and no-fault benefits for lost wages. By letter dated June 24, 2004, State Farm's then attorney notified plaintiff that he received an overpayment slightly in excess of $10,857 and demanded reimbursement of same. In this letter, State Farm indicated that it would file suit against plaintiff if the overpayment was not paid within a specified period of time, but further indicated its willingness to "contract a lien on [his] personal injury suit wherein payment will be made to State Farm when [such] personal injury suit is settled." In a subsequent letter dated July 12, 2004, State Farm reaffirmed, based in part on "the information received from [workers' compensation]," that the overpayment of wages "to date" was slightly in excess of $10,857. In this letter, State Farm requested a signed written statement from plaintiff reflecting his agreement to reimburse State Farm in this amount from the settlement of his personal injury action.

Plaintiff acceded to this request. Specifically, on July 15, 2004, plaintiff confirmed in writing that he agreed to accept a lien on his personal injury action in the amount of $10,857.03. In a letter dated the same date to State Farm, plaintiff's attorney also indicated his willingness "to treat [the] overpayment of $10,857.03 as a lien against [plaintiff's] net recovery on his third-party action against Straub." The letter further stated that, "[a]s per our agreement, you [i.e., State Farm] will resume no-fault payments due to [plaintiff] and not proceed with any direct legal action against him to recover the claimed overpayment." A subsequent letter dated August 10, 2004 again confirmed "an agreement" between these parties.

In December 2004, State Farm obtained new counsel. In February 2005, this new attorney, obviously unaware of the parties' prior agreement, wrote to plaintiff's counsel and advised him that an overpayment had been made to plaintiff. The overpayment was alleged to be over $19,000 (there is no explanation in the record for the discrepancy in the two figures other than an indication that a more thorough review of the matter was undertaken by the new attorney). A few months later, the personal injury action was settled for $60,000.

State Farm's subsequent refusal to accept any amount less than $19,000, even after its new attorney was educated about the previous agreement, prompted a motion by plaintiffs for an order precluding State Farm from pursuing recovery of its lien beyond the agreed-upon amount. In support of the motion, both plaintiff and his attorney averred that, in settling the underlying personal injury case, plaintiff relied upon State Farm's representation that the payment of $10,857.03 would constitute a full satisfaction of its claim. Supreme Court, finding a binding agreement between plaintiff and State Farm, granted the motion. This appeal ensued.

The primary issue before us concerns whether plaintiff and State Farm entered into a binding agreement concerning the overpayment of no-fault insurance benefits. We find that they did and thus affirm Supreme Court's order enforcing that agreement. In short, the series of writings between June 2004 and August 2004 between and among plaintiff, his attorney and State Farm's then attorney "taken together, are sufficient to establish that the parties indeed entered into a settlement" of the overpayment received by plaintiff (Della Rocco v City of Schenectady, 278 AD2d 628, 630 [2000], lv denied 96 NY2d 709 [2001]). We find that the settlement agreement was adequately described in these writings, namely, the agreement was clear, the product of mutual accord and contained all material terms (i.e., plaintiff agreed to a lien in the amount of approximately $10,857 and State Farm agreed to resume no fault payments and forego litigation to recover the overpayment) (see Bonnette v Long Is. Coll. Hosp., 3 NY3d 281, 286 [2004]). That State Farm thereafter obtained a new attorney who then, apparently, more thoroughly investigated the matter and came up with a different calculation of the overpayment does not render the otherwise clear and enforceable settlement unenforceable.

As a final matter, we are unpersuaded by State Farm's attempt to vitiate the binding effect of the parties' agreement by invoking plaintiff's failure to comply with CPLR 2104 (see e.g. Kleinmann v Bach, 239 AD2d 861, 862 [1997]; Buckingham Mfg. Co. v Frank J. Koch, Inc., 194 AD2d 886, 888 [1993], lv denied 82 NY2d 658 [1993]; Van Ness v Rite-Aid of N.Y., 129 AD2d 931, 932 [1987]), particularly since plaintiff relied upon the agreement in settling his personal injury case (see e.g. Conlon v Concord Pools, 170 AD2d 754, 754-755 [1991]; Smith v Lefrak Org., 142 AD2d 725 [1988]; La Marque v North Shore Univ. Hosp., 120 AD2d 572, 573 [1986]; Rhulen Agency v Gramercy Brokerage, 106 AD2d 725, 727-728 [1984]).

Mercure, J.P., Peters, Spain and Mugglin, JJ., concur.

ORDERED that the order is affirmed, with costs.

Those Certain Underwriters at Lloyds, v. Gray

Plaintiff appeals from an order of Supreme Court, Bronx County (Mary Ann Brigantti-Hughes, J.), entered December 19, 2006, which, upon reargument, vacated the court's prior order and denied its motion for summary judgment.


Abrams, Gorelick, Friedman & Jacobson, P.C., New
York (Michael E. Gorelick
and Allison G. Leff of
counsel), for appellant.
Nicoletti Gonson Spinner & Owen LLP, New York
(Jamie T. Packer of counsel),
for respondent.


KAVANAGH, J.

On this record, it cannot be said that plaintiff has established as a matter of law that the 56 days it took it to issue its disclaimer was reasonable. Factual issues abound as to what plaintiff knew about the claim and when it learned it, barring entry of such a judgment.

While much is in dispute, what has been established is that on April 13, 2004, respondent Cathy Gray obtained, through an independent broker, a general commercial liability policy from plaintiff Lloyds of London to insure a vacant brownstone she owned and was about to have renovated. The policy period ran for three months, and contained a clause that excluded from coverage any claims involving personal injuries sustained on the premises by "any employee of an independent contractor contracted by you or on your behalf"[FN1]. Gray retained respondent Hoover Construction Inc. to serve as general contractor on the project. On November 6, 2004 respondent Elizaro Valdez, an employee of a subcontractor retained by Hoover on the project, fell from a ladder while working on the premises and was injured. Valdez subsequently commenced a Labor Law action against Hoover and Gray, and, in his verified complaint, claims upon information and belief that at the time of the accident he "was an independent contractor hired and/or retained by defendant Hoover, Inc. to perform work" at Gray's premises.

The complaint was served on Gray on or about April 13, 2005, and she claims to have forwarded it to the broker who procured the policy within one week of her being served. Since there have been no depositions conducted and little performed by way of pretrial discovery in this action, it is not yet known when exactly the broker first contacted plaintiff and informed it of the specifics of the claim. Plaintiff acknowledges receiving a copy of the verified complaint on May 16, 2005, and nine days later, on May 25, 2005, retaining an investigator to review the claim and in particular to ascertain the facts surrounding the subject accident including whether Valdez was an independent contractor retained on behalf of or by Gray. The investigator contacted Gray by telephone on May 26, 2005, but assets that due to their "hectic schedules," he was unable to arrange for an interview until three weeks later, on June 17, 2005.

At the interview, Gray provided the investigator with a written statement in which she confirmed what was already spelled out in the verified complaint: she hired Hoover to be the general contractor on the renovation of the building and from the wording of the complaint it was her understanding that Valdez was injured while working on the premises for a subcontractor. Nineteen days later the investigator forwarded Gray's statement and his report to plaintiff and on July 11, 2006, plaintiff notified Gray in writing that it was disclaiming coverage under the policy.[FN2]

An insurer must serve written notice on the insured of its intent to disclaim coverage under its policy "as soon as is reasonably possible" (Insurance Law § 3420[d]). The reasonableness of the timing of a disclaimer is measured from the date when the insurer knew or should have known that grounds for the disclaimer existed (see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 68-69 [2003]). If such grounds were, or should have been, "readily apparent" to the insurer when it first learned of the claim, any subsequent delay in issuing the disclaimer is unreasonable as a matter of law (id. at 69). If it is not readily apparent, the insurer has the right, albeit the obligation, to investigate , but any such investigation must be promptly and diligently conducted (see id.,; see also Ace Packing Co., Inc. v Campbell Solberg Assoc., Inc., 41 AD3d 12 [2007]; Structure Tone, v Burgess Steel Prods. Corp., 249 AD2d 144, 145 [1998]; Norfolk & Dedham Mut. Fire Ins. Co. v Petrizzi, 121 AD2d 276, 278 [1986], lv denied 68 NY2d 611 [1986]).

There is no objective standard against which the time it takes an insurer to issue its disclaimer can be measured. It is a fact-sensitive inquiry that is based upon all of the surrounding circumstances and focuses on the period between when the insurer first learned of the grounds for the disclaimer and finally served its written notice disclaiming coverage on the insured. However, there is no doubt that the insurer has an obligation to expedite the process and act promptly, and it bears the burden of justifying any ensuing delay (see First Fin. Ins. Co., 1 NY3d at 69; Matter of Firemen's Fund Ins. Co. Of Newark, v Hopkins, 88 NY2d 836, 838 [1996]). Only in an exceptional case will an insurer's written notice of disclaimer be determined to have been served in a timely manner as a matter of law (Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1030 [1979]). Here, there are significant factual issues surrounding the 56 days it took plaintiff to formally notify Gray of its intent to disclaim after it says it first learned of the existence of the claim. The existence of these issues require that the motion for a summary judgment be denied.

For plaintiff to prevail on the facts presented it must establish as a matter of law that 1) it was not "readily apparent" from the content of the verified complaint that grounds for the disclaimer in fact existed; and 2) the investigation, which took a total of 51 days to complete and appears to have only involved the taking of a single statement from one witness, was promptly and diligently conducted.

There can be little doubt that plaintiff's attention was immediately drawn to the applicability of the exclusionary clause contained in the policy when it first received a copy of the verified complaint on May 16, 2005. Its instructions to its investigator and the limited focus of his investigation are stark proof of that fact. While it is true that the complaint is couched in terms of "information and belief," the fact is that the allegations made by the injured worker are in affidavit form and, as they relate to the exclusion, involve facts that are clearly within his personal knowledge. Valdez's employment status was not then, and never has been, an issue in this litigation. Simply stated there is no reason from a fair reading of the complaint to question Valdez's assertions that at the time of the accident he was employed by a subcontractor working on the project (see Squires v Robert Marini Bldrs., 293 AD2d 808, 810 [2002], lv denied 99 NY2d 502 [2002]). Even Gray in her statement to petitioner's investigator acknowledged that she learned that Valdez was employed by a subcontractor "from Hoover and reading the lawsuit." Surely, what she was able to glean from the wording of the complaint should have been readily apparent to plaintiff when it first received a copy of this document on May 16, 2005. At a bare minimum, a legitimate question exists as to whether at that time it should have been readily apparent to plaintiff that grounds for disclaimer of coverage under this policy did indeed exist.

But even if Valdez's employment status when injured were not obvious from the complaint, plaintiff must still justify why it took 56 days to notify Gray that it was denying coverage under the policy. Beyond its investigator's personal assertion that "hectic schedules" prevented him from interviewing Gray any earlier than June 17, 2005, or more than three weeks after he was retained, plaintiff makes no effort to account for this delay. What is known is that Gray, at the time, was a single registered nurse living in the Bronx and was contacted by the investigator by telephone on May 26, 2005, or one day after he received his assignment. It is not now known what, if anything, the investigator learned from this initial conversation or why the interview of Gray could not be conducted over the telephone. It is also not known what it was about their schedules that required such a long delay between the date of this phone call and the ensuing interview, or why it took the investigator an additional three weeks after obtaining Gray's statement to complete and forward his final report to plaintiff. On these facts, we just do not know if plaintiff's investigator used his best efforts to diligently perform this investigation and complete it within a reasonable period of time after receiving the assignment.

Coincidently, it is impossible to determine from this record why plaintiff, if, as it claims, it first received notice of the claim on May 16, 2005, did not seek to disclaim on the grounds that Gray failed to notify it of the claim as soon as practical after she learned of its existence [FN3]. Gray acknowledges being served with the verified complaint on or about April 13, 2005, claims that she then forwarded the papers to her broker within the week, and does not claim to have ever personally notified plaintiff. It is well established that an insured's failure to provide timely notice of a claim relieves the insurer of its obligation under the policy regardless of whether the insurer can demonstrate that it was prejudiced by the delay (Rekemeyer v State Farm Auto Mut. Ins. Co., 4 NY3d 468, 474-475 [2005]). Even relatively short periods of time, if not justified by the insured, have been found to be unreasonable as a matter of law, and thus worked to deprive the insured of the benefits of the policy (RMD Produce Corp. v Hartford Cas. Ins. Co., 37 AD3d 328, 331 [2007], lv denied 8 NY3d 816 [2007]; see e.g., Deso v London & Lancashire Indem. Co. of Am., 3 NY2d 127 [1957] [51 days for insured to provide carrier with notice of claim]; Rushing v Commercial Cas. Ins. Co., 251 NY 302 [1929] [22 days]; Haas Tobacco Co. v American Fid. Co., 226 NY 343 [1919] [10 days]; Doe Fund, Inc. v Royal Indem. Co., 34 AD3d 399 [2006] [8 months after the accident, 3 months after service of summons and complaint]; Power Auth. of N.Y. v Westinghouse Elec. Corp., 117 AD2d 336 [1986] [53 days]).

Given that Gray concedes that she did not notify plaintiff petitioner for more than a month after she received the complaint and first learned of the claim herself, one must wonder why plaintiff did not choose to disclaim on this basis [FN4]. Gray did promptly notify her broker some time in mid-April, and the broker, over a month later, faxed plaintiff a copy of the verified complaint. What is not known is what contact, if any, the broker had with plaintiff regarding this claim prior to faxing it a copy of the complaint on May 16, 2005. If in fact the broker did make contact with plaintiff before faxing it a copy of the complaint, that may well explain why plaintiff has not sought to disclaim for failure of its insured to promptly notify it of the complaint. And that in turn raises additional questions as to the timeliness of the disclaimer that plaintiff did issue.

Until the issues raised by these questions have been fully resolved, plaintiff has not established as a matter of law that its notice of disclaimer was timely.

Accordingly, the order of Supreme Court, Bronx County (Mary Ann Brigantti-Hughes, J.), entered December 19, 2006, which, upon reargument, vacated the court's prior order and denied plaintiff's motion for summary judgment, should be affirmed, with costs.

All concur except Sweeny and McGuire, JJ. who concur in a separate Opinion by McGuire, J.


McGUIRE, J. (concurring)

Plaintiff issued to defendant Cathy Gray a policy of general liability insurance, providing Gray with liability insurance coverage for a building she owned in Manhattan. The policy contained an independent contractor endorsement excluding from coverage personal injuries sustained by employees of independent contractors retained by Gray. Gray subsequently hired defendant Hoover Construction, Inc. to serve as the general contractor of renovation work to be performed at the insured premises. Hoover, in turn, hired defendant Elizardo Valdez to work on the project. On November 6, 2004, Valdez sustained personal injuries while working at the insured premises.

On April 11, 2005, Valdez commenced an action in Supreme Court, Kings County, against Gray and Hoover to recover damages he sustained as a result of the accident. In his complaint, Valdez alleged on "information and belief" that he "was an independent contractor hired and/or retained by ... Hoover." Gray, who asserted that she did not learn of Valdez's accident until she was served with the summons and complaint in that action, notified her "insurance agent [i.e., nonparty Nancy Hardy Insurance Agency] within a week after getting the lawsuit." It is unclear when exactly plaintiff learned of Valdez's action. By letter dated July 11, 2005, plaintiff disclaimed coverage based on the independent contractor exclusion.

On August 3, 2005, plaintiff commenced this action against Gray, Hoover and Valdez seeking a declaration that plaintiff is not obligated to defend or indemnify Gray. In support of its motion for summary judgment, plaintiff submitted the pleadings in both this action and Valdez's action, the policy, the disclaimer letter, and an unsworn statement by Gray. Supreme Court granted the motion and declared that plaintiff had no duty to defend or indemnify Gray.

Hoover moved for reargument claiming that Supreme Court erred in granting the motion because plaintiff failed to submit evidence in admissible form demonstrating that the disclaimer was timely. Specifically, Hoover asserted that plaintiff failed to substantiate when it first became aware of the ground for disclaimer. Hoover also asserted that plaintiff failed to justify its delay in issuing its disclaimer. Supreme Court granted the motion for reargument and, upon reargument, denied plaintiff's motion for summary judgment.

As the party seeking summary judgment, plaintiff bore the initial burden of making a prima facie showing of entitlement to judgment as a matter of law (see CPLR 3212[b]). Here, plaintiff was required to make a prima facie showing that it issued its disclaimer "as soon as [wa]s reasonably possible" (Insurance Law § 3420[d]). In this regard, plaintiff needed to show (1) the amount of time it took to disclaim coverage, measured from the point in time when it first learned of the ground for disclaimer, and (2) an excuse for any delay in notifying Gray of the disclaimer (see Hartford Ins. Co. v County of Nassau, 46 NY2d 1028 [1979]; see also First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 68-69 [2003]).

Plaintiff failed to meet its initial burden because it did not submit evidence in admissible form demonstrating when it first learned of the ground for disclaimer, i.e., the independent contractor exclusion. While plaintiff's counsel asserted that Gray notified plaintiff of Valdez's action on May 16, 2005, no evidence in admissible form supported that assertion (see Zuckerman v City of New York, 49 NY2d 557, 563 [1980] [affirmation of attorney who did not have personal knowledge of facts lacks evidentiary value]; Batista v Santiago, 25 AD3d 326 [2006]; Puritan Ins. Co. v Continental Cas. Co., 195 AD2d 291 [1993]). Similarly, plaintiff's counsel's recitation of the steps plaintiff allegedly took to investigate the claim and the timing of those steps was not corroborated by evidence in admissible form, except for a reference in the disclaimer letter to the effect that on June 17, 2005 an independent adjuster confirmed that Valdez was the employee of an independent contractor. While plaintiff submitted the independent adjuster's affidavit with its reply papers, this affidavit could not be used to remedy basic deficiencies in plaintiff's prima facie showing (see Rengifo v City of New York, 7 AD3d 773 [2004]; Migdol v City of New York, 291 AD2d 201 [2002]). For similar reasons, such deficiencies could not be remedied by the notice of claim form, dated May 16, 2005, which was completed by Gray's insurance agent and notified plaintiff of Valdez's accident and claim, since it was submitted by plaintiff for the first time in opposition to Hoover's motion for reargument [FN5].

Accordingly, I would affirm the order granting Hoover's motion for reargument which, upon reargument, denied plaintiff's motion for summary judgment [FN6].

THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: NOVEMBER 15, 2007

CLERK

Footnotes


Footnote 1:The clause detailing the grounds for the exclusion was entitled "Employees of Independent Contractors Endorsements" and was located on the 67th page of the 89 page policy.

Footnote 2:The investigator's report was not included in the record and has not been provided to respondents. Counsel for plaintiff at oral argument before this Court stated that the report simply contained a cover letter and a copy of Gray's statement.

Footnote 3:The insurance policy contains a clause that requires the insured to notify the insurer of the existence of any claim or suit as soon as practical after the insured learns of it.

Footnote 4:It appears to be conceded that the broker who was notified by Ms. Gray was her agent for these proceedings.

Footnote 5:Valdez's allegation that he was an "independent contractor" was conclusory and, even if factually supported, would not have been binding on plaintiff. To the contrary, plaintiff had the right to investigate the claim before determining whether to disclaim (see Ace Packing Co. Inc. v Campbell Solberg Assoc., Inc., 41 AD3d 12, 15-16 [2007] [policy of "disclaim now and investigate later" not in insurers' or insureds' interests]).

Footnote 6:Why plaintiff did not disclaim on the ground that Gray failed timely to notify plaintiff of Valdez's claim is an issue that has no bearing on whether the disclaimer was issued as soon as was reasonably possible. The majority's speculation on this issue, accordingly, is irrelevant.

 

Bovis Lend Lease LMB, Inc.  v. American Alternative Insurance Company


Newman Fitch Altheim Myers, P.C., New York (Howard B.
Altman of counsel), for appellants.
Rubin, Fiorella & Friedman LLP, New York (Paul Kovner of
counsel), for respondent.

Order, Supreme Court, New York County (Jane S. Solomon, J.), entered December 11, 2006, which granted plaintiffs' motion to reargue and renew to the extent of granting reargument, and, upon reargument, adhered to the order entered April 11, 2006 denying plaintiffs' motion for summary judgment declaring that defendant must defend and indemnify plaintiffs in the underlying action, unanimously modified, on the law and the facts, to grant renewal as well as reargument, and, upon reargument, to grant plaintiffs' motion for summary judgment to the extent of declaring that defendant must defend plaintiffs in the underlying action, and, upon renewal, to adhere to the prior order denying summary judgment declaring that defendant must indemnify plaintiffs in the underlying action, and otherwise affirmed, without costs.

Defendant's policy with a nonparty subcontractor (ETS) names plaintiffs as additional insureds for claims arising out of ETS's work; the injured party in the underlying action was an employee of another subcontractor. As defendant now concedes that it is obligated to reimburse plaintiffs for their defense costs in the underlying action (see BP Air Conditioning Corp. v One Beacon Ins. Group, 8 NY3d 708 [2007]), we modify the granting of reargument to reflect that concession. Concerning renewal, we reject the motion court's characterization of plaintiffs' failure to submit the ETS deposition at the time of their original motion for summary judgment, and find that, given ETS's history of defaults in the underlying action, at the time of the original motion, plaintiffs had no reason to expect ETS's eventual appearance, and reasonably submitted the evidence it then had. Thus, renewal should have been granted so as to permit consideration of ETS's deposition (see Metcalfe v City of New York, 223 AD2d 410 [1996]). As issues of fact remain as to whether the accident arose out of ETS's work, summary judgment declaring that defendant has a duty to indemnify plaintiffs was properly denied (see id.).

The Beekman Regent Condominium Assoc. v Greater New York Mutual Ins. Co.


Lederman Abrahams & Lederman, LLP, Massapequa (Bruce
H. Lederman of counsel), for appellants.
Thomas D. Hughes, New York (Richard C. Rubinstein of
counsel), respondent.

Order, Supreme Court, New York County (Judith J. Gische, J.), entered March 19, 2007, which granted defendant's motion to dismiss the action as time-barred by a two-year contractual limitations period, unanimously affirmed, with costs.

Defendant insurer conclusively established a defense to the asserted claims as a matter of law by submitting documentary evidence (see CPLR 3211[a][1]) that the policy contains a two-year limitations period and that plaintiffs' action was commenced after the expiration of that period (see Gilbert Frank Corp. v Federal Ins. Co., 70 NY2d 966, 967 [1988]; Blitman Constr. Corp. v Insurance. Co. of N. Am., 66 NY2d 820, 823 [1985]). Plaintiffs' contention that they were unaware of the contractual limitations clause because of the length of the policy is insufficient to raise a factual issue as to the applicability of the contractual limitations period, since "an insured has an obligation to read his or her policy and is presumed to have consented to its terms" (Katz v American Mayflower Life Ins. Co. of N.Y., 14 AD3d 195, 198 [2004], affd 5 NY3d 561 [2005]). Defendant was under no obligation to call plaintiffs' attention to the limitations clause (Blitman, 66 NY2d at 823), and the insurer's participation in settlement negotiations "either before or after expiration of a limitations period contained in a policy is not, without more, sufficient to prove waiver or estoppel" (Gilbert Frank, 70 NY2d at 967; see also Carnegie Hill 90th St. v Greater N.Y. Mut. Ins. Co., 271 AD2d 333 [2000]).

We have considered and rejected plaintiffs' remaining claims.

THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

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