Coverage Pointers - Volume IX, No. 12

Dear Coverage Pointers Subscribers:

 

Special kudos to our partner Harry Mooney who was honored by the Defense Trial Lawyer of the Year by the Defense Trial Lawyers Association of Western New York on Wednesday.  We're so proud of him and it is such a well deserved honor.

 

I bring you greetings from New York City and the DRI Insurance Coverage and Practice Symposium.  For those reading this on Friday morning, please avoid tossing tomatoes or eggs at the podium this morning, because neither will match with the blue tie.  For anyone interested in receiving a copy of my paper or Power Point presentation entitled "What Can't We Just Get Along - the Duty to Defend Under a Liability Policy," drop me an e-mail and I'll send either or both along.

 

Please don't forget to celebrate National Bouillabaisse Day today.  I know you wouldn't.

 

So what do you think of the John Darwin who pretended he was killed in a kayak accident and vanished for five years?  Of course, it turns out that he did this so that his wife could cash in on life policies and pay off family debt.  The courts declared that he was dead, the policies were paid out.  All was ok, until the deceased suddenly appeared, very much alive, in a police station and pictures of he and he wife, taken a year or two ago, surfaced as well. 

 

Of course, I wondered about the other insurance implications of the return to life of someone declared dead.

 

"Imagine," I said to myself (getting my attention), "what would have happened if he had fallen at home, after the courts declared him dead and decided to sue the women he married, and whom he widowed, for personal injuries."  Were they still married?   Does a declaration of death end wedded bliss?  If a dead person comes to life, does the marriage automatically resume?  (If she had married after his declared death, could she then be charged with bigamy?)  Is your reborn spouse still a resident relative under a homeowner's policy?  Do inter-spousal or intra-insured exclusions apply, if your dead spouse comes back to life?   Those are the kinds of coverage questions for which I live.

 

I want to spend a moment on a troubling Insurance Department Opinion of General Counsel which has been posted to the NYS Insurance Department website.  To be transparent, I am involved in discussions with the Department on behalf of a client with regard to the issues raised in the Opinion and hopefully, with the input of those of you who be affected by it, the Department will consider modifying and clarifying its Opinion.

 

The question involves the settlement of third party property damage claims by liability carriers.  In practice, carriers negotiate third party settlements, in both the automobile and general liability arena, and ask for and secure releases from the party bringing the claim.  The releases identify the accident and release the insured or insureds from all property damage claims, known, unknown and unforeseen, that arise out of the accident, and once provided, the insurer pays off the property damage claim.

 

I've seen releases used by many carriers and every release I've seen does just that:  property damage releases given by liability carriers to third parties finally settle all property damage claims by that claimant   Of course, the claimant may have a bodily injury claim that isn't released, but as far as property damage claims are concerned, they are finally concluded by the release.

 

A recent Office of General Counsel Opinion - included in this issue -- takes issue with carriers who seek to release unknown or unforeseen claims.  Citing the Fair Claim Settlement Regulations, Part 216.6(g) which provides:  No insurer shall require execution of a release on a first- or third-party claim that is broader than the scope of the settlement, the Insurance Department asserts that such releases are impermissible.  The Office of General Counsel Opinion opines that the regulatory language means that releases may not be used to settle unknown, unforeseen or unanticipated property damage claims.  In other words, an insurer settling a third-party property damage claim may not negotiate for and secure a release that finally resolves property damage claims.  A release that would prohibit a claimant from returning to the insurer, months or years later, and presenting new property damage claims arising out of the same accident is not allowed. 

 

The implications are frightening.  How does a carrier settle a third party claim with a claimant, knowing that the claimant can come back for another bite at the policy limits later?  How can an insurer settle multiple claims?  How does an insurer protect the interests of its insured that wants finality of claims?

 

You may wish to contact the Office of General Counsel if you take issue with this opinion.  If the Department does not modify its opinion, it may require you to reconsider and alter the language you use in settling third party property damage claims and rethink settlements that may leave you to face future claims and your insured to face potentially uncovered claims.

 

What else can you find here?

 

You'll find a great column from Earl Cantwell, as promised, on the recent Arons decision from the Court of Appeals that permits defendants and carriers to seek releases to have private chats with plaintiff's treating doctors. A must read.

 

Now, for a word for our authors:

 

From Audrey Seeley, the Queen of No Fault:

 

Greetings from New York at the DRI Insurance Coverage Symposium! I am meeting lots of great people from across the country and learning even more about insurance coverage. 

 

This edition has a number of decisions but they are reiterating evidence rules we already know OR should know by now.

 

I hope you and your family have a Happy Holiday! 

 

Audrey

Audrey A. Seeley

 

And Mark's Mark from Mark Starosielec, our Serious Injury surgeon:

 

What's Normal? Inquiring Courts Want to Know!
 
This edition has several cases that further demonstrate the Appellate Division's disdain for defendant's doctors that note slight limitations in plaintiff's range of motion but fail to compare those findings to what's considered a normal range of motion. It is simply not enough to find that the plaintiff's range of motion is not all that limited, defendant's doctors must compare those findings too. Don't let this oversight ruin what might otherwise be an effective summary judgment motion. Make sure limitations in range of motion are adequately quantified and qualified too. 

Mark

Mark A. Starosielic 

           

And our highlights from this week's issue:

 

• New York State Insurance Department:  Liability Insurance Company May Not Negotiate Release for Unknown or Unforeseen Damages in Third-Party Property Damage Cases
• Is Responding to a Regulatory Subpoena a "Claim" Under a D&O (Government Liability) Policy?
• Carrier had Right to Investigate Circumstances Surrounding Late Notice but Question of Fact About Insured's Timeliness
• No Good Deed Goes Unpunished - Trying to Secure Cooperation is Not an Excuse for Failing to Deny on Lack of Cooperation
• Professional Services Do not Include Sexual Assault
• Kohane's Mantra:  A Reservation of Rights Letter is Not Substitute for a Disclaimer
• Clever Carrier for Subcontract Assumes Defense on Owner and GC and Passes Liability Off to Another Subcontractor; Indemnity Agreement Broadly Interpreted
• Framed Issue Hearing Ordered in Application to Stay Uninsured Motorist Arbitration

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

 

• Reversed: Defendant's Doctor Must Compare Plaintiff's ROM to What is Deemed Normal
• A Chiropractor May Help, But Not on a Summary Judgment Motion
• SJ Denied as Defendant's Doctor's Examination of Plaintiff was (Two Years) Too Late  
• Defendants Get the 'Goldstar' (and SJ too) by Showing Plaintiff's Pre-Existing Condition
• Mere Existence of a Disc Bulge is Not Enough to Raise a Triable Issue of Fact
• Ain't That a Kick! Plaintiff Wins the Battle, But Loses the SJ War
• Missing Just One Month of Work is not Enough under Insurance Law's  90/180 Category
• Different Reasons, Same Result: Plaintiff Survives Summary Judgment  
• Finding Limitations is Not Enough; Findings Must Be Compared to Normal ROM
• Read and React: Plaintiff's Doctors Must Address Defendant's Doctor's Findings
• Plaintiff's Expert Can Testify About MRIs Because They are "Clearly Central" to the Case 

AUDREY'S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]

 

Arbitration

 

• EMG/NCV Testing Properly Denied 

Litigation

 

• Insurer may Prevail on Intoxication Defense but Conditional Summary Judgment Inappropriate Pending Receipt of Certified Hospital Records
• Plaintiff's Insufficient Affidavit Results in Denial of Summary Judgment
• Arbitrator's Award not Arbitrary and Capricious When Insurer Fails to Timely Submit Answer and Appear at Hearing
• Another Insufficient Affidavit from Plaintiff Equates to Denial of Summary Judgment
• Insurer's Affidavit from Investigator on Whether Injuries Arose out of Insured Incident Raise Issue of Fact
• Summary Judgment in Insurer's Favor Reversed but Insurer's Cross-Motion for Severance Upheld
• Yet Another Plaintiff Fails to Submit Sufficient Evidence to Establish Prima Facie Case
• Summary Judgment Granted to Unopposed Motion, Despite Attached Denial Raised Issues of Fact
• Insurer Precluded from Asserting Defenses as Failed to Establish Issuance of Timely Denial - Even Though Issue not Contested by Plaintiff
• Insurer's Affidavit from Investigator on Whether Injuries Arose out of Insured Incident Raise Issue of Fact
• Arbitration Award will not be Vacated
• And Another One - Plaintiff's Motion Denied for Failure to Submit Sufficient Affidavit 

PEIPER ON PROPERTY

Steven E. Peiper

[email protected]

 

Sadly, I am again without a decision regarding the vibrant world of property damage.  However, for your reading enjoyment, I have summarized an interesting and instructive opinion from the Court of Appeals that addresses the application of the exclusive remedy provision of the Workers' Compensation Law (what we all know as Section 11). 

 

• Section 11 Protection is Only Available to Employers, and NOT Agents of Employers

EARL'S PEARLS

Earl K. Cantwell, II

[email protected]

Court of Appeals Watches "Law and Order" - Makes It Reality TV

 

This being our last issue until after Christmas, we do wish you the healthiest and happiest of holiday seasons, a Happy Chanukah, a very Merry Christmas and all the best to your families.

 

Dan

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
Jody E. Briandi, Team Leader
[email protected]
Dan D. Kohane
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

 

10/7/07            Release for Third-Party Property Damage Claim
New York State Insurance Department – Office of General Counsel Opinion No. 07-10-02

Liability Insurance Company May Not Negotiate Release for Unknown or Unforeseen Damages in Third-Party Property Damage Cases
May an automobile insurer include a clause in a release for a third-party claim that releases the insurer and the insured from “any other relating thing whatsoever, on account of, or in any way growing out of, an accident”?  OGC answers: “No.”

11 NYCRR § 216.6(g) sets forth standards for prompt, fair, and equitable settlements. The provision states:

Checks or drafts in payment of claims; releases. No insurer shall issue a check or draft in payment of a first-party claim or any element thereof, arising under any policy subject to this Part, that contains any language or provision that expressly or impliedly states that acceptance of such check or draft shall constitute a final settlement or release of any or all future obligations arising out of the loss. No insurer shall require execution of a release on a first- or third-party claim that is broader than the scope of the settlement. (Emphasis added.)

With respect to both first- and third-party claims, an insurer may not require a claimant to execute a release that is broader than the scope of the settlement. The release must describe the claim with specificity, and include an explanation and calculation of the payment that the insurer will make to settle the claim. See Office of General Counsel (OGC) Opinion 02-05-01 (May 1, 2002).

However, the Insurance Department has taken a new approach to releases for unexpected, unknown or unanticipated property damage.

Previous Insurance Department OGC Opinions [OGC Opinion 87-28 (NILS) (Jun. 18, 1987) and OGC Opinion 87-37 (NILS) (Aug. 13, 1987) (which opines on a revised version of a release that was previously submitted and discussed in OGC Opinion 87-28)] implicitly authorized the used of third-party releases that releases the insurer from any unknown property damage claims. However, now the Insurance Department suggests otherwise:

Nonetheless, it is the Department’s position that a release may not set forth language that releases an insurer from all unexpected, unknown, and/or unanticipated property damage claims without violating 11 NYCRR § 216.6(g). Thus, to the extent that OGC Opinion 87-28 (NILS) (Jun. 18, 1987) and OGC Opinion 87-37 (NILS) (Aug. 13, 1987) appear to imply otherwise, these opinions should no longer be followed.

This Regulation applies to all third-party property damage settlements (and arguably bodily injury cases as well). 

Editor’s Note:  We are involved in discussions with the Department on behalf of a carrier impacted by this Opinion.  We would suggest a very close reading and, if you have a view on this interpretation, contact with the OGC may be worthwhile.

12/11/07          Catholic Health Services of Long Island, Inc.,  v.  National Union Fire Ins.
Appellate Division, Second Department
Is Responding to a Regulatory Subpoena a “Claim” Under a D&O (Government Liability) Policy?
The plaintiff expended over $2 million is responding to Attorney General investigatory subpoenas and argued that it was a “claim” as defined in a government liability policy (basically, a director’s and officers liability policy with a government focus).  Was the response, a response to a “claim?”  The Appellate Division did not answer, finding that the plaintiff was not an insured under the policy and therefore the question need not be answered.

 

12/11/07          Hermitage Insurance Company v. Arm-ing, Inc.

Appellate Division, Second Department
Carrier had Right to Investigate Circumstances Surrounding Late Notice but Question of Fact About Insured’s Timeliness
Odd decision.  Rightly so, the court found that a carrier had a right to investigate whether notice of an accident was or was not late and properly documented, a two month delay in denying coverage while an active investigation was being undertaken was not too long.  However, after finding so, the court determined that it was not clear, or not, whether notice by the insured was late in the first place and a framed issue hearing will take place on that question.

12/11/07          Continental Casualty Company v. Stradford  

Appellate Division, Second Department
No Good Deed Goes Unpunished – Trying to Secure Cooperation is Not an Excuse for Failing to Deny on Lack of Cooperation
The dissent describes the carrier’s efforts to secure the insured’s cooperate as Herculean.  The majority agrees that the insured’s lack of cooperation was blatant, intelligent and designed to thwart the ability of the carrier to defend.

 

Yet the carrier lost its right to disclaim on lack of cooperation?  Why, because it tried for too long and should have disclaimer earlier on lack of cooperation. 

Editor’s Note:  Sheesh.  There’s just no winning.

 

12/6/07            Elashker v. Medical Liability Mutual Ins. Co. (MLMI)

Appellate Division, Third Department
Professional Services Do not Include Sexual Assault
The plaintiff was accused of sexually assaulting a nurse employed by a nursing home at which he was an attending physician.  MLMI disclaimed coverage and plaintiff sought to have that carrier, he professional liability carrier, defend him.  He claimed that not only was the nurse his co-worker but also his patient and at the time of the incident, he claims to have been “palpating her thyroid.”

Carrier convinced court that these claims did not arise “because of Professional Services which [he] provided (or should have provided)." The nurse had not alleged any professional services being undertaken at the time, only that she was sexually assaulted while a co-employee.

Since the claim did not fall within the grant of coverage, whether the disclaimer was late or not was of no consequence.

Editor’s notes:   On the serious side, this is an interesting case.  There have been a number of recent decisions where appellate courts have looked to the insured’s “take” on the facts – even if outside the complaint -- to expand coverage.  Here, the fact that the insured claimed that professional services were being rendered was rejected as a reason to consider coverage.   On another note, I do wonder whether the “I was merely palpating her thyroid defense” will become all the rage…

12/6/07            NYAT Operating Corp., etc.,  v. GAN National Insurance Company

Appellate Division, First Department
Kohane’s Mantra:  A Reservation of Rights Letter is Not Substitute for a Disclaimer
You’ve heard this from me before, and some of you just don’t accept it.
The claim against NYAT was that it negligently hired and retain an employee who eventually sexually assaulted the victim, Cabrera. Cabrera obtained a $1 million judgment against NYAT and the carrier, GAN, refused to pay it, just as it refused to defend NYAT in the lawsuit.

A direct action was brought to enforce the judgment against GAN. Because NYAT's liability in the underlying action was based on its negligent hiring and retention of the employee, not respondeat superior, the sexual assault was a covered "accident" within the meaning of the policy, and the exclusion for injuries expected or intended from the standpoint of the insured does not apply. GAN claims that the assault was foreseeable but did not timely disclaim on that ground.  That GAN had such ground to disclaim was readily apparent as soon as it learned of Cabrera's lawsuit against NYAT commenced two and half years earlier and GAN only served a reservation of right lesster on NYAT, which has no relevance to the question of timely notice of disclaimer.

 

Editor’s Note:  OK, don’t believe me, but at least believe the courts.

 

12/6/07            Urbina v. 26 Court Street Associates, LLC
Appellate Division, First Department
Clever Carrier for Subcontract Assumes Defense on Owner and GC and Passes Liability Off to Another Subcontractor; Indemnity Agreement Broadly Interpreted
Bear with me on this one:

 

Urbina, an electrician, was injured at construction site when Baker scaffold on which he was working collapsed.  Court Street was owner and TSI was lessee.  TSI was renovating property and was acting as general contractor on the property and R&J was the drywall contractor. Usual Labor Law violations alleged, TSI asserted cross claims against R & J for contractual indemnity, common-law indemnity and contribution; it also commenced a third-party action against plaintiff Urbina's employer, Absolute Electrical Contracting, Inc. (Absolute), the electrical subcontractor, seeking, inter alia, contractual indemnity. Court Street asserted cross claims against TSI for contractual indemnity, common-law indemnity and contribution. R & J brought cross claims against Court Street, TSI and Absolute for common-law indemnity and contribution. In turn, Absolute asserted cross claims for negligence and breach of warranty against R & J.

Urbina was grant summary judgment against Court and TSI, as owner and general contractor, pursuant to Labor Law § 240(1). Prior to trial, Court Street and TSI each tendered its defense to Absolute, which took over their representation. In particular, Absolute's insurer appointed as counsel for Court Street and TSI the attorney who had been representing only Absolute. Pursuant to a stipulation signed on behalf of TSI by that attorney, TSI's third-party action against Absolute was dismissed with prejudice. At trial, R & J's cross claim against Absolute was dismissed on the ground that plaintiff Urbina had not sustained a "grave injury" within the meaning of Worker's Compensation Law § 11.

You can see what is about to happen.  Absolute’s carrier is plotting to dump this case on R&J and its insurer! Absolute’s carrier, now controlling the defense of the owner and GC (and having discontinued their claim against Absolute) will press the claim only against R&J and that’s just what happens. During the trial Court Street and TSI moved for a directed verdict against R & J based upon the indemnity clause in the contract between R & J and TSI. To resolve the motion, the parties submitted a "Stipulation of Agreed Facts." According to the stipulation, the accident occurred at 2:45 p.m. after R & J's employees had left the work site, having completed their work for that day. When the platform of the Baker scaffold collapsed, plaintiff Urbina was performing electrical work required under Absolute's contract with TSI, not "dry wall/rough carpentry" work required under R & J's contract with TSI. The Baker scaffold was owned by R & J and had been erected by R & J solely for its work. When R & J's employees left the job site on the day of the accident, the scaffold was left in place for the continuation of R & J's work the next day. The parties stipulated that plaintiff Urbina did not have R & J's permission to use the scaffold, that TSI contended it was customary to share equipment at the job site and that R & J denied that contention.

The indemnity provision of the contract obligated R & J to "indemnify and hold TSI, the owner of the club and landlord, harmless from all claims, suits, liability, damages, losses, and expenses including reasonable attorney's fees arising out of the work performed under this contract to the fullest extent permitted by law." Under the heading "Scope Of Work," Exhibit B detailed the specific carpentry/drywall work R & J was to perform (such as, "[m]etal track studs, furring strips, fasteners," "[a]coustical ceiling grid, hanging wires and tiles," "[d]rywall partitions, ceilings, soffits, fascias and porticos") and also required R & J to "[f]urnish and install all materials, equipment, personnel, tools, scaffolding, layout lines, and benchmarks . . . ."

R & J argued that its contractual indemnity was triggered only if the accident arose out of the work it was performing under its contract with TSI. Because plaintiff Urbina was injured while performing electrical work pursuant to the contract between Absolute and TSI for electrical work, not the drywall or carpentry work called for in its contract with TSI, R & J contended that its contractual indemnity obligation had not been triggered. Supreme Court disagreed. The lower court ruled and the Appellate Division agreed, that R & J's contractual obligation to provide the scaffold was sufficient to trigger its indemnity obligations under the contract. .

The indemnity provision to which R & J agreed is a broad one, as it obligates R & J to indemnify TSI and Court Street against "all claims, . . . liability [and] damages . . . arising out of the work performed under th[e] contract" and contains no language limiting the scope of that obligation.

R&J did not like the fact that Absolute’s carrier conspired to pass this lawsuit onto R&J’s carrier only.  However, the claim of allegedly unethical conduct by counsel was not preserved for review as it was not raised before the trial court.

12/4/07            In the Matter of Mercury Insurance Group v. Ocana  
Appellate Division, Second Department
Framed Issue Hearing Ordered in Application to Stay Uninsured Motorist Arbitration
Application by Mercury filed to stay Uninsured Motorist arbitration and police accident report offered to demonstrate Progressive insured vehicle.  Police accident report with insurance code is enough to shift burden to claimant to prove lack of coverage. Evidence of Progressive disclaimer, while not conclusive, was enough to require formal framed issue hearing of validity of that disclaimer.

 

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

 

12/11/07          Doherty v. Galla

Appellate Division, Second Department

Reversed: Defendant’s Doctor Must Compare Plaintiff’s ROM to What is Deemed Normal

Plaintiffs successfully appealed a lower court order, which had granted the defendants' motion for summary judgment dismissing the complaint because plaintiff did not sustain a serious injury.  The Appellate Division held that the defendants failed to establish their prima facie entitlement to judgment as a matter of law. The report of the defendants' examining neurologist noted the existence of a limitation in the range of motion of the injured plaintiff’s lumbar spine that was not adequately quantified or qualified so as to establish that it was insignificant. Further, the defendants’ examining orthopedic surgeon set forth range of motion findings regarding the plaintiff's lumbar spine, but failed to compare those findings to what is deemed normal.

 

12/11/07          Guzman v. Bowen

Appellate Division, Second Department

A Chiropractor May Help, But Not on a Summary Judgment Motion

A lower court order which had denied defendants’ summary judgment motion was affirmed. The defendants failed to meet their prima facie burden. Defendants relied on the report of a  chiropractor but pursuant to CPLR 2106, he cannot affirm the contents of a medical report. The report of a physiatrist, merely stated that upon examination of the plaintiff, the plaintiff’s cervical and thoracic-lumbar spine ranges of motion were within "functional" limits.

 

12/11/07          Joissaint v. Starrett-1 Inc.

Appellate Division, Second Department

SJ Denied as Defendant’s Doctor’s Examination of Plaintiff was (Two Years) Too Late  

Echoing the theme throughout this edition, the Appellate Division affirmed a lower court order denying defendant’s motion for summary judgment as they failed to satisfy their prima facie burden. The affirmed medical report of their examining orthopedist identified significant limitations in the ranges of motion of the plaintiff’s cervical and lumbar spines. However, the  examination of the plaintiff took place almost two years after the subject accident.

 

12/11/07          Larkin v. Goldstar Limo Corp.

Appellate Division, Second Department

Defendants Get the ‘Goldstar’ (and SJ too) by Showing Plaintiff’s Pre-Existing Condition

The Appellate Division reversed a lower court order and granted the motion of the defendant for summary judgment dismissing the complaint. The defendant met its prima facie burden by establishing that the plaintiff did not sustain a serious injury. In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff’s medical submissions were insufficient  since none were based on a recent examination. Also, the plaintiff’s submissions failed to address the finding of defendant’s examining radiologist that the condition of the plaintiff’s cervical spine resulted from pre-existing degeneration and was not caused by the subject accident. The examining radiologist also noted that the MRI studies of the plaintiff’s lumbar spine predisposed him to abnormal movements and premature degenerative disc disease. The failure of the plaintiff’s experts to address these findings rendered their conclusions speculative.

 

12/11/07          Siegel v. Sumaliyev

Appellate Division, Second Department

Mere Existence of a Disc Bulge is Not Enough to Raise a Triable Issue of Fact

An order granting summary judgment was affirmed as the defendants established their prima facie entitlement to judgment as a matter of law and plaintiff failed to raise a triable issue of fact. Defendants’ burden was established by the submission of the report of their examining orthopedic surgeon who found, that the plaintiff had a normal range of motion of her cervical and lumbar spine. She also had no disability causally related to the subject accident. In opposition, the plaintiff failed to raise a triable issue of fact. The MRI reports of plaintiff’s cervical spine which showed herniated and bulging discs did not, alone, raise a triable issue of fact. The mere existence of a bulging or herniated 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. Finally, the plaintiff’s treating orthopedist failed to address the findings in the report of the respondents' radiologist, including the findings of degenerative disease.

 

12/6/07            Gibbs v Harp

Appellate Division, Third Department

Ain’t That a Kick! Plaintiff Wins the Battle, But Loses the SJ War
Here, plaintiff got her report admitted and reviewed, but Appellate Division ultimately granted defendants’ motion for summary judgment dismissing the complaint. Plaintiff had twice been kicked by horses which afflicted many of the same areas of her body that she asserted were injured in the subject accident. Defendants successfully moved for summary judgment before the lower court. In its decision, the court stated that it was not considering a report submitted by plaintiff of David Gamburg, a pain management specialist, since it was unsworn.

Plaintiff moved for leave to renew and reargue asserting that she had submitted to the court clerk a sworn report by Gamburg, which ostensibly was not forwarded. Plaintiff further urged reargument upon the ground that the court had misapplied facts and/or law in finding that defendants had met their threshold burden as to the 90/180-day category of serious injury. Renewal was properly granted as to the report of Gamburg, the sworn copy of which was not before the court through no fault of plaintiff. And, upon reconsideration, such report, which failed to address plaintiff’s numerous preexisting conditions involving the same areas allegedly injured in the subject accident, did not provide a basis for deviating from the original decision.  

Further, the record reveals that the court properly applied the law to the facts as set forth by the parties, including defendants’ shifting of the burden with the submission of extensive medical records and reports regarding preexisting conditions similar to those alleged to have occurred in the underlying accident, as well as proof of plaintiff’s preaccident diminished activities.  

12/4/07            Hamilton v Rouse
Appellate Division, Second Department
Missing Just One Month of Work is not Enough under Insurance Law’s  90/180 Category
In a lengthy opinion, the Appellate Division reversed a judgment in favor of plaintiff and dismissed the complaint instead. This action arises from a two-car collision. Plaintiff alleged that he sustained a herniated disc in the cervical spine and a bulging disc in the lumbosacral spine. Following the close of the plaintiff’s case, the defendant made an oral application pursuant to CPLR 4401 for judgment as a matter of law on the ground that the plaintiff had failed to establish, prima facie, that he sustained a serious injury. The Supreme Court denied the application. The jury thereafter determined that the plaintiff had suffered a permanent consequential limitation of the use of a body organ or member, and had also sustained a serious injury under the 90/180 category.

Viewing the evidence in the light most favorable to the plaintiff, no rational jury could have found in his favor. The plaintiff testified that he missed only one month of work, that he then returned to work on a part-time basis, and that, after another month, he had resumed working on a full-time basis. While a bulging or herniated disc may constitute a serious injury, a plaintiff must provide objective evidence of the extent or degree of the alleged physical limitations resulting from the disc injury and its duration. In this case, the testimony adduced at trial from the plaintiff’s medical expert failed to satisfy this requirement.

12/4/07            Pomaquiza v Sibri
Appellate Division, Second Department
Different Reasons, Same Result: Plaintiff Survives Summary Judgment  
The Appellate Division affirmed a lower court order which denied defendant’s motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury. While the order was affirmed, the Appellate Division held the supreme court incorrectly concluded that the defendant made a prima facie showing. The defendant’s motion papers did not adequately address the plaintiff’s claim, that he sustained a serious injury under the 90/180 category. The plaintiff alleged that he was incapacitated for a period of 7 ½ months after the accident. The defendant’s examining orthopedist conducted an examination of the plaintiff almost a year and a half after the accident. He failed to relate his medical findings to this category of serious injury for the period of time immediately following the accident. As such, it is unnecessary to consider whether the papers submitted by the plaintiff in opposition were sufficient to raise a triable issue of fact.

12/4/07            Umar v Ohrnberger
Appellate Division, Second Department
Finding Limitations is Not Enough; Findings Must Be Compared to Normal ROM
Here, a lower court order, which granted summary judgment, was reversed. The Appellate Division found the defendant failed to make a prima facie showing that the plaintiff did not sustain a serious injury since the affirmed report of defendant’s examining neurologist disclosed that he found a 50% limitation in the plaintiff’s range of motion in her lumbar spine. However, defendant’s examining orthopedist failed to compare his findings as to the range of motion of the plaintiff’s cervical and lumbar spines with normal ranges of motion.

 

12/4/07            Roman v Fast Lane Car Serv., Inc.
Appellate Division, Second Department

Read and React: Plaintiff’s Doctors Must Address Defendant’s Doctor’s Findings
In order to raise a triable issue of fact and defeat summary judgment, a plaintiff’s doctor must respond to defendant’s doctor’s findings. That did not happen here. As a result, the Appellate Division reversed a lower court order which had denied defendant’s motion for summary judgment on the ground that the plaintiff did not sustain a serious injury.

Here, the defendants established their prima facie entitlement. In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff principally relied upon the affidavit of his treating physician, who concluded that, the plaintiff sustained significant and permanent injuries to the cervical and lumbar regions of his spine. He failed to address, however, the findings of the defendants’ examining radiologist that the injuries were the result of pre-existing degenerative disc disease and were unrelated to the subject accident. This omission rendered speculative the physician’s conclusions that the cervical and lumbar injuries and limitations he noted in his affidavit were the result of the subject accident.

12/4/07            Moreno v Fabre

Appellate Division, First Department

Plaintiff’s Expert Can Testify About MRIs Because They are “Clearly Central” to the Case
The Appellate Division upheld a jury verdict, awarding plaintiff damages as the trial court properly permitting plaintiff’s medical expert to testify about plaintiff's MRI films. Defendant was properly notified that the expert would be called to testify and was given his reports. Further, the expert’s opinion of the MRI films and his conclusion about plaintiff’s condition was substantially the same as the MRI report. Defendant was not surprised or prejudiced by plaintiff’s failure to disclose that his expert would offer an opinion of the MRI films since the MRI report and the expert’s reports were clearly central to plaintiff’s case. Viewing the evidence in the light most favorable to plaintiff, it cannot be said that no valid line of reasoning and permissible inferences supports the conclusion reached by the jury that plaintiff sustained a serious injury.

 

 

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

 

12/3/07            In the Matter of the Arbitration Between Applicant and Respondent

Arbitrator Thomas J. McCorry (Erie County)

EMG/NCV Testing Properly Denied

The eligible injured person (“EIP”) was involved in a February 21, 2006, motor vehicle accident and came under the chiropractic care of Scott Croce, D.C. In April 2006, the EIP was referred to Anthony Garmone, D.C. for EMG/NCV testing.  Mr. Croce, only after the bill was denied based upon a peer review, stated that the EMG/NCV testing was necessary to rule out radiculopathy of the lower extremities.  In addition, after the testing was performing Mr. Croce recommended continued conservative chiropractic care.

 

The insurer denied the testing based upon a peer review of Edward Weiland, M.D.  Dr. Weiland opined that the testing was not medically necessary.  Further, Dr. Weiland noted that Dr. Huckell’s June 8, 2006, record revealed no thoracic or midback pain.  There was no subjective complaint of numbness and paresthesias in either lower extremity.  The objective tests noted normal gait with somewhat impaired range of motion in the lumbar spine.  There was no documentation of focal motor weakness in the proximal or distal muscle groups of the lower extremities.  Also, there was no description of any dermatomal, peripheral nerve or posterior column distribution sensory abnormality.  Dr. Weiland concluded that there was no justification for “the invasive electrophysiologic testing of the lumbar paraspinous” which would alter a treatment protocol based upon the physical examination notes.

 

Arbitrator McCorry held that Dr. Weiland’s report was more persuasive and upheld the denial.  NOTE:            It is not clear to me how Mr. Croce had standing to proceed with this arbitration when he was seeking reimbursement for EMG/NCV testing performed by someone else??

 

 

Litigation

 

12/11/07          Westchester Med. Ctr. v. Progressive Ins. Co.

Appellate Division,  Second Department

Insurer may Prevail on Intoxication Defense but Conditional Summary Judgment Inappropriate Pending Receipt of Certified Hospital Records.

 

Plaintiff, hospital, sought reimbursement for medical treatment provided to the eligible injured person arising out of a motor vehicle accident on March 24, 2006.  The insurer sent a timely verification request for medical records and was also awaiting medical records from the initial hospital that the eligible injured person, including blood alcohol serum toxicology results.  Upon receipt of the initial hospital’s records the insurer issued a denial of the claim based upon the intoxication exclusion.  Prior to receiving the insurer’s denial the plaintiff filed suit.

 

Plaintiff filed a motion for summary judgment and the insurer filed a cross-motion for summary judgment.  The lower court denied plaintiff’s motion, which was affirmed by the Appellate Court, as the insurer raised an issue of fact whether verification was timely requested delaying the insurer’s 30 days to pay or deny the claim.  The lower court conditionally granted the insurer’s motion pending admissible hospital records demonstrating that the intoxication exclusion applies barring coverage for the claim.  The appellate court held that the this decision was in error as the insurer failed to lay the proper foundation to establish a prima facie case entitlement to summary judgment on the intoxication defense.

 

12/7/07            Gentle Care Acupuncture, P.C. a/a/o Renee Bryant v. Allstate Ins. Co.,

Appellate Term, Second Department

Plaintiff’s Insufficient Affidavit Results in Denial of Summary Judgment

The plaintiff failed to submit a sufficient affidavit to demonstrate that the annexed documents were business records.

 

12/4/07            In the Matter of Fireman’s Fund Ins. Co. v. Allstate Ins. Co.,

Appellate Term, Second Department

Arbitrator’s Award not Arbitrary and Capricious When Insurer Fails to Timely Submit Answer and Appear at Hearing

The arbitration awards were not vacated as they had evidentiary support and were not arbitrary and capricious.  Here, the Court held that the Appellant’s failure to timely file an answer and evidence submission in this no-fault arbitration, which was rejected by the Arbitrator was not arbitrary and capricious.  The Appellant failed to provide the assigned Arbitrator with any explanation for failing to timely submit an answer and the Appellant further failed to send any representative to the arbitration to offer evidence.  Therefore, the Arbitrator’s refusal to hear the Appellant’s lack of coverage defense in the untimely answer was not arbitrary and capricious.

 

12/4/07            Impulse Chiropractic, P.C. a/a/o Anna Sandoval v. Countrywide Ins.

Appellate Term, Second Department

Another Insufficient Affidavit from Plaintiff Equates to Denial of Summary Judgment

Plaintiff failed to establish a prima facie case entitlement to summary judgment as it failed to submit an affidavit from an officer with sufficient personal knowledge of the plaintiff’s practices and procedures to lay the proper foundation for admission of documents as business records.

 

12/4/07            A.M. Med. Services, P.C. a/a/o Vladimir Popov v. State Farm Mut. Ins. Co.

Appellate Term, Second Department

Insurer’s Affidavit from Investigator on Whether Injuries Arose out of Insured Incident Raise Issue of Fact

The Court held that the insurer submitted sufficient evidence to create an issue of fact precluding summary judgment that the eligible injured person’s injuries did not arise out of an insured incident.  The insurer submitted an affidavit from its investigator that established a well founded belief the injuries did not arise out of an insured incident. 

 

Yet, the dissent reasoned that the investigator’s affidavit was conclusory and insufficient since it stated that the “loss was not caused by (an) accident.”  In addition, the affidavit mentions conversations with the policyholder and the driver of the motor vehicle but fails to attach a copy of the purported statements.  The lone dissenter felt that this was insufficient to raise a triable issue of fact.

 

12/4/07            Astoria Quality Med. Supply a/a/o Collado Eliadio, et. al. v.

MVAIC, Appellate Term, Second Department

Summary Judgment in Insurer’s Favor Reversed but Insurer’s Cross-Motion for Severance Upheld

The plaintiff commenced this action to recover no-fault benefits as assignee of six eligible injured persons arising out of separate motor vehicle accidents.  The plaintiff moved for summary judgment and the defendant cross-moved for summary judgment or in the alternative severance.  The plaintiff’s motion was denied and the defendant’s cross-motion for severance was granted and summary judgment was granted as to assignor, Collado Eladio.

 

The plaintiff, while conceding that its moving papers were insufficient, argued that upon search of the record it was entitled to summary judgment as to assignor, Pagoada Carlos.  The appellate term refused to search the record and award plaintiff summary judgment on this claim.

 

Further, the appellate term held that summary judgment in the defendant’s favor as to assignor, Collado Eladio, must be reversed.  The Court reasoned that the record did not support a finding that plaintiff failed to comply with Insurance Law §5208.

 

Finally, the Court held that the cross-motion to sever the causes of action was appropriate because the plaintiff failed to oppose the defendant’s motion.

 

12/4/07            Walter Karpinski Acupuncture, P.C. a/a/o Mona Petion v.

Progressive Casualty Ins. Co., Appellate Term, Second Department

Yet Another Plaintiff Fails to Submit Sufficient Evidence to Establish Prima Facie Case

The plaintiff’s summary judgment motion was properly denied as it failed to submit sufficient evidence to establish a prima face case.  The plaintiff’s affidavit, with various documents attached, was conclusory and did not establish that the annexed documents were business records.

 

12/4/07            Forrest Chen Acupuncture Services, P.C.  a/a/o Igor Makler v.

Allstate Ins. Co., Appellate Term, Second Department

Summary Judgment Granted to Unopposed Motion, Despite Attached Denial Raised Issues of Fact

The Court granted plaintiff summary judgment on its unopposed motion reversing the lower court.  The Court reasoned that plaintiff established its prima facie case and there was no opposition thereto.  Interestingly, the lower court denied summary judgment to the plaintiff after reviewing a denial from the insurer included in the plaintiff’s papers.  The lower court found that the denial form raised an issue of fact precluding summary judgment even though the plaintiff was found to have established its prima facie case.

 

12/4/07            Delta Diagnostic Radiology, P.C. a/a/o Ronald Plummer v.

Farmers New Century Ins. Co., Appellate Term, Second Department

Insurer Precluded from Asserting Defenses as Failed to Establish Issuance of Timely Denial – Even Though Issue not Contested by Plaintiff

The insurer cross-moved for summary judgment on the ground that the action was barred due to the submission of a claim to arbitration arising out of the same accident.  The Court denied the cross-motion as the insurer failed to establish that the plaintiff elected to arbitrate its claim.  In other words, while some provider the assignor chose to arbitrate a portion of this claim there was no evidence that this plaintiff previously chose to arbitrate its claim.

 

Thereafter, the Court granted the plaintiff’s summary judgment motion as the defendant failed to establish that its denials were timely issued.  The defendant’s representative’s affidavit did not state that he personally mailed the denials or what the insurer’s standard office practice or procedure was in mailing denials.  Accordingly, the Court held that the defendant was precluded from asserting most of its defenses, including lack of medical necessity and fees in excess of the Workers’ Compensation fee schedule.

 

Interestingly, the dissenter asserted that plaintiff’s motion should have been denied as it was undisputed that the insurer issued a timely denial since the plaintiff submitted the denials as part of its evidence.

 

12/4/07            Bedford Park Med. Practice, P.C. a/a/o Blanca Martinez v.

State Farm Mut. Ins. Co., Appellate Term, Second Department

Insurer’s Affidavit from Investigator on Whether Injuries Arose out of Insured Incident Raise Issue of Fact

Plaintiff’s summary judgment motion should have been denied as the insurer presented a founded belief that the alleged injuries did not arise out of an insured incident through an investigator’s affidavit.

 

12/4/07            Better Health Med., PLLC v.

Empire/Allcity Ins. Co., Appellate Term, Second Department

Arbitration Award will not be Vacated

The Master Arbitrator’s award, confirming the award in the insurer’s favor, was upheld as there was a rational basis for the award.

 

12/4/07            V.S. Med. Services, P.C. a/a/o Clara Crespo v. Farm Family Ins.,

Appellate Term, Second Department

And Another One – Plaintiff’s Motion Denied for Failure to Submit Sufficient Affidavit

Summary judgment in plaintiff’s favor was reversed as plaintiff failed to submit an affidavit from an officer with sufficient knowledge to establish documents were business records.

 

 

PEIPER ON PROPERTY

Steven E. Peiper

[email protected]

 

 

Sadly, I am again without a decision regarding the vibrant world of property damage.  However, for your reading enjoyment, I have summarized an interesting and instructive opinion from the Court of Appeals that addresses the application of the exclusive remedy provision of the Workers’ Compensation Law (what we all know as Section 11). 

 

12/13/07          Fung v. Japan Airlines Company, Ltd.

Court of Appeals

Section 11 Protection is Only Available to Employers, and NOT Agents of Employers

Plaintiff was an electrician employed by the Port Authority of New York and New Jersey (“Port Authority”) at the John F. Kennedy International Airport in New York.  While in the course of his employment, plaintiff slipped and fell on snow and ice.  As a result, plaintiff sustained injuries to his back and was forced to undergo surgery to correct the damage.

 

The area where plaintiff fell was owned by his employer, the Port Authority.  However, the Port Authority leased this area to the defendant.  The defendant, in turn, sub-leased most of the premises back to the Port Authority.

 

As part of the lease agreement, defendant identified itself as the “agent” of the Port Authority.  As the Port Authority’s agent, defendant retained responsibility over maintaining snow and ice removal contracts with third-party vendors. 

 

Plaintiff commenced the current action against defendant, and also directed claims against the snow removal contractor, Aero Snow Removal Corp. (“Aero”), as well.  After being named as a defendant in the current lawsuit, defendant moved for summary judgment against plaintiff under two theories. 

 

The first being that under Section 11 of the Workers’ Compensation Law an employee was barred from suing his or her employer for injuries sustained while in the course of his or her employment.  Defendant argued that because it was the agent of plaintiff’s employer, it was permitted protection under the “exclusive remedy doctrine” which comprises Section 11.

 

The second position advanced by defendant argued that pursuant to Section 29(6) of the Workers’ Compensation Law it was a “co-employee” with plaintiff at the time of the accident giving rise to his injuries, and accordingly the tort action as barred.  Importantly, Section 29(6) provides that when an employee is injured by a co-worker, such injured worker is only permitted to recover benefits from his employer’s Workers’ Compensation coverage. 

 

Aero (the snow removal contractor) also moved for summary judgment against plaintiff.  Aero’s position focused on the fact that it was not in privity of contract with plaintiff, and therefore owed no duty to the plaintiff with respect to snow removal at the premises.

 

With regard to defendant’s argument that it was a co-employee of plaintiff and therefore the lawsuit was barred pursuant to Workers’ Compensation Law § 29(6), the Court of Appeals noted that defendant did not “seriously argue” its entitlement to judgment on this ground.  Accordingly, the Court declined to extend the exclusive remedy protection offered by Section 29(6) to defendant.

 

With regard to defendant’s assertion that the plaintiff’s claim was barred by Section 11 of the Workers’ Compensation Law, the Court of Appeals noted that people and entities other than the injured party’s employer have been given the benefit of Section 11 protection in the past.  However, in situations where Section 11’s applicability was extended beyond the plaintiff’s employer, the party seeking protection was able to establish an “actual working relationship between the party and the purported ‘employee’.” 

 

In the current matter, defendant has no relationship with, or supervisory control over, plaintiff’s work.  Rather, other than being the plaintiff’s employer’s agent, defendant is not connected in anyway with plaintiff.  Accordingly, the Court of Appeals stated that the Port Authority and defendant were “separate legal entities with separate day-to-day control over their respective employees’ work.”  As such, extending Section 11 protection to the defendant under these circumstances was not appropriate.

 

Finally, in a related appeal, the Court of Appeals quickly affirmed the Second Department’s ruling that the plaintiff was unable to proceed in an action directly against the snow removal contractor.  Absent a special duty, the snow removal contractor could not be  held liable to parties with whom it was not in privity contract (see Espinal v Melville Snow Contrs., 98 NY2d 136 [2002]).

 

 

EARL’S PEARLS

Earl K. Cantwell, II

[email protected]

 

Court of Appeals Watches “Law and Order” – Makes It

Reality TV

 

            One of the more amazing things that causes lawyers to burst into laughter when watching “Law and Order” on TV is the number of times police and prosecutors just walk in and talk with parties and witnesses who should be represented by counsel.  A large portion of each episode consists of such ex parte witness interviews.  The Court of Appeals apparently likes this show, and with respect to New York practice, recently made it reality TV in the decision of Arons v. Jutkowitz, decided November 27, 2007.  The specific holding of Arons is that defense counsel may interview a plaintiff’s treating physician privately when the plaintiff has affirmatively placed his or her medical condition in controversy.  The Court did lay down some guidelines for doing so, and noted that HIPAA imposes some procedural prerequisites unique to informal discovery of health care professionals. 

 

            The lead case, Arons, involved a post- Note of Issue defendant request via HIPAA-compliant authorization to interview a plaintiff’s treating physician.  Plaintiff steadfastly refused to sign the authorization, defendant moved to compel, which motion was granted, but the Appellate Division, Second Department reversed on grounds that such a “discovery device” was not explicitly sanctioned by Article 31 of the CPLR.   Like a TV miniseries, this issue arose in the context of two other related cases, so the Court of Appeals took them all up as a trilogy, including Kish v. Graham, a Fourth Department case which strongly held that such ex parte interviews were prohibited. 

 

            The basis for the decision is that the Court of Appeals sanctioned as useful  ”informal discovery practices” such as private witness interviews, an issue previously dealt with in cases involving employees and former employees of corporations, and now applying similar logic to treating physicians.  The Court of Appeals noted that the CPLR does not expressly authorize or forbid ex parte discussions with non-party witnesses. 

 

            Relying on previous cases in this field, again usually involving former corporate employees, the Court of Appeals cautioned that such a witness must not reveal privileged or confidential information, including conversations with attorneys or a party’s legal team.  The witness must also understand and acknowledge that proscription and admonition.  The interviewer must also reveal their client’s identity and interest in the matter, inform the witness that their cooperation is entirely voluntary, and the interview must be limited to medical conditions placed at issue in the litigation.

 

            In some of the cases under review, the lower courts had imposed certain other conditions which the Court of Appeals expressly refused to apply as not required by state law or HIPAA.  For example, there is no need for the interviewer to surrender copies of statements received from such a witness, or notes, transcripts, or audio or video recordings of the interview. 

 

            The Court briefly discussed the HIPAA statute and concerns, and noted that the statute allows disclosure per authorization and for litigation purposes under 45 CFR 164.502.  The Court of Appeals concluded that, so long as HIPAA-compliant authorizations are presented, there is no preclusion on talking with treating physicians. 

 

            The end result was that the Court of Appeals granted the motions to compel authorizations in HIPAA-compliant form, allowing such interviews with treating physicians. 

 

A likely short-term fallout may be discussion at the legislative level to fashion some response, probably limiting this ruling.  A second issue likely to arise is that the cases under immediate discussion at the Court of Appeals involved post-Note of Issue discovery.  However, the Court’s logic for the ruling does not seem dependent upon whether the interview request is pre- or post-Note of Issue. 

 

            To take advantage of this ruling, the following steps should be taken:

 

            1.         Serve HIPAA-complaint authorizations seeking an interview with a specific treating physician for purposes of the medical conditions and treatments involved in the litigation.

 

            2.         If an interview is granted, on the record tell the doctor that he or she is not to reveal attorney-client privileged material, or information they may have learned from a party’s attorney or legal team.  The doctor should affirmatively state that they understand that admonition and will not divulge attorney-client information.

 

            3.         The interviewer must reveal their client’s identity and interest in the litigation.

 

            4.         The interviewer should advise the doctor that their cooperation and statement is entirely voluntary.

 

            5.         Questions and answers should be limited to medical conditions, or the key medical conditions at issue in the case, as established, for example, by deposition testimony and the Bill of Particulars. 

 

            The Court of Appeals expressly rejected any requirement that the interviewer surrender copies of statements or notes taken during the interview, and any such requirement sought to be imposed by a court or requested by plaintiff’s counsel may be rejected. 

 

            Armed with this decision and these caveats, defense counsel can now proceed like Sam Waterston and resume banging on doors and walking into medical offices attempting to seek such interviews from doctors who are usually not eager to even be around attorneys, much less actually talk to them.

 

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

12/10/2007

12/10/07          Shuford v. Fidelity National Property and Casualty Ins. Co.
11th Circuit Court of Appeals

"May" Does Not Mean Filing of Proof of Loss is Optional
Shuford's property was damaged by a flood caused by Hurricane Ivan. After the hurricane, the Federal Insurance Administrator imposed a one year timeline for the filing of proofs of loss for contested claims. Shuford failed to file a proof of loss within the one year time frame, resulting in summary judgment to the defendant. The 11th Circuit affirmed the decision of the district court. Shuford filed a claim, but never filed a proof of loss. After her claim was denied, she filed a breach of contract claim, as well as a bad faith resusal to pay claim against Fidelity. Rendering its decision of the breach of contract claim, the district court opined that the permissive term "may" in the phrase "a policyholder may submit to the insurer a proof of loss" meant that the policyholder had a choice whether to challenge the insurer's decision, not that filing the proof of loss was optional. Relating to the tort claim, the Court found that the claim was preempted by federal law.

Submitted by: Debra Herron (McNeer Highland McMunn & Varner, L.C.) Clarksburg, WV

 

12/04/2007      Garcia v. Federal Insurance Co.

Eleventh Circuit
Coverage for Additional Insured Limited to Vicarious Liability for Acts of the Named Insured
This dispute over coverage under the insured’s homeowner’s policy arose after Garcia, an employee of the insured, struck and injured a pedestrian, when her foot slipped off a worn brake pedal while doing errands for the insured in a car belonging to the insured’s son-in-law. Garcia sought coverage alleging the insured failed to maintain the brake pedal in proper condition. The Court of Appeals certified to the Florida Supreme Court two questions: whether the policy terms were ambiguous, and whether coverage was limited to instances in which the additional insured is vicariously liable for the acts of the named insured. Held: the policy was not ambiguous, and since Garcia was sued for her own negligence, not the negligence of the named insured, she was not covered by the terms of the policy.

Submitted by: Joseph Gill and Joanna Gomez (Currie Johnson Griffin Gaines & Myers, P.A.)

 

Reported Decisions

 

In the Matter of Mercury Insurance Group v. Ocana  

Larkin, Axelrod, Ingrassia & Tetenbaum, LLP, Newburgh, N.Y.
(Mark P. Cambareri of counsel), for respondent.


DECISION & ORDER

In a proceeding, inter alia, pursuant to CPLR article 75 to permanently stay arbitration of a claim for uninsured motorist benefits, the petitioner appeals, as limited by its brief, from so much of an order of the Supreme Court, Orange County (Horowitz, J.), dated February 5, 2007, as denied that branch of the petition which was to permanently stay the arbitration.

ORDERED that the order is reversed insofar as appealed from, on the law, and the matter is remitted to the Supreme Court, Orange County, for an evidentiary hearing to determine whether Progressive Insurance Company validly disclaimed coverage of the offending vehicle for the subject accident, and thereafter, for a new determination on that branch of the petition which was to permanently stay the arbitration; and it is further,

ORDERED that the temporary stay of arbitration contained in the decision and order on motion of this Court dated June 20, 2007, is continued pending the evidentiary hearing and the new determination on the petition; and it is further,

ORDERED that one bill of costs is awarded to the appellant.

Contrary to the determination of the Supreme Court, the petitioner, Mercury Insurance Group (hereinafter Mercury), made a prima facie showing that the offending hit-and-run vehicle was insured by Progressive Insurance Company (hereinafter Progressive) on the date of the accident through the submission, inter alia, of the police accident report containing the vehicle's insurance code (see Matter of Nationwide Ins. Enter. v Harris, 44 AD3d 947; Matter of Utica Mut. Ins. Co. v Colon, 25 AD3d 617, 618; Matter of New York Cent. Mut. Fire Ins. Co. v Licata, 24 AD3d 450, 451; Matter of AIU Ins. Co. v Nunez, 17 AD3d 668; Matter of Eagle Ins. Co. v Beauvil, 297 AD2d 736, 737; Matter of Government Empls. Ins. Co. v McFarland, 286 AD2d 500; Matter of Liberty Mut. Ins. Co. v Bohl, 262 AD2d 645, 646; Matter of State Farm Ins. Co. v Vanblarcom, 226 AD2d 732). In this regard, the challenge to the admissibility of the report by Noemi Ocana, who was injured when the offending vehicle struck her vehicle, and sought uninsured motorist benefits from Mercury, is improperly raised for the first time on appeal, and we decline to reach the issue, since the petitioner did not have an opportunity to present opposing evidence on this question before the Supreme Court (see Sarva v Chakravorty, 34 AD3d 438, 439; Weber v Jacobs, 289 AD2d 226; Fresh Pond Rd. Assoc. v Estate of Schacht, 120 AD2d 561; Orellano v Samples Tire Equip. & Supply Corp., 110 AD2d 757, 758). The burden thus shifted to Ocana to establish either a lack of insurance coverage or a timely and valid disclaimer of coverage by Progressive (see Matter of Eagle Ins. Co. v Rodriguez, 15 AD3d 399, 400; Matter of Liberty Mut. Ins. Co. v McDonald, 6 AD3d 614, 615; Matter of American Cas. Ins. Co. v Walcott, 300 AD2d 478; Brogan v New Hampshire Ins. Co., 250 AD2d 562; Country Wide Ins. Co. v Allstate Ins. Co., 223 AD2d 664; Matter of Centennial Ins. Co. v Capehart, 220 AD2d 499). The disclaimer letter issued by Progressive, while not establishing as a matter of law that Progressive validly disclaimed coverage due to a lack of cooperation on the part of its insured (see generally Matter of Empire Mut. Ins. Co. [Stroud & Boston Old Colony Ins. Co.], 36 NY2d 719; Matter of Liberty Mut. Ins. Co. v Roland-Staine, 21 AD3d 771; Matter of Eveready Ins. Co. v Mack, 15 AD3d 400), sufficed to raise factual questions as to the validity of the disclaimer which warrant a hearing (see Matter of Allstate Ins. Co. v Anderson, 303 AD2d 496; Matter of Lumbermens Mut. Cas. Co. v Beliard, 256 AD2d 579; see generally Matter of Nationwide Ins. Co. v Sillman, 266 AD2d 551; Matter of Eagle Ins. Co. v Sadiq, 237 AD2d 605). Accordingly, we remit the matter to the Supreme Court, Orange County, for a hearing on that issue, and, thereafter, for a new determination on that branch of the petition which was for a permanent stay of arbitration.

Elashker v. Medical Liability Mutual Ins. Co.

Calendar Date: October 17, 2007
Before: Crew III, J.P., Peters, Mugglin, Rose and Kane, JJ.


Edward J. Carroll, Kingston, for appellant.
Carter, Conboy, Case, Blackmore, Maloney & Laird,
P.C., Albany (William J. DeCaire of counsel), for respondent.

MEMORANDUM AND ORDER


Rose, J.

Appeal from an order of the Supreme Court (Bradley, J.), entered November 2, 2006 in Ulster County, which, among other things, granted defendant's motion for summary judgment dismissing the complaint.

When plaintiff was accused of sexually assaulting a nurse employed by the nursing home where he was an attending physician, he referred the nurse's claim to defendant, his medical malpractice insurance carrier. Defendant investigated and disclaimed coverage. Plaintiff then commenced this action to obtain a judgment declaring that his malpractice insurance covered the nurse's claim because, while she was a coworker at the time of the alleged assault, she had also been his patient and she had testified in her underlying action that he had been palpating her thyroid when the attack occurred. Defendant moved for summary judgment dismissing the complaint on the ground that its policy afforded no coverage of the claim in the nurse's underlying action alleging sexual assault. Supreme Court granted defendant's motion, prompting this appeal by plaintiff.

It is well settled that "[t]he duty of an insurer to defend its insured arises whenever the allegations within the four corners of the underlying complaint potentially give rise to a covered claim, or where the insurer 'has actual knowledge of facts establishing a reasonable possibility of coverage'" (Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169, 175 [1997], quoting Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 67 [1991]; see Maroney v New York Cent. Mut. Fire Ins. Co., 10 AD3d 778, 780 [2004], affd 5 NY3d 467 [2005]; Physicians' Reciprocal Insurers v Loeb, 291 AD2d 541, 542 [2002]). Here, on its motion for summary judgment, defendant sustained its initial burden to show that there was no coverage by citing its policy which described the claims covered as only those "brought against [plaintiff] because of Professional Services which [he] provided (or should have provided)." Defendant also showed that the nurse had not alleged such a claim because the complaint in her underlying action against her employer and others, including plaintiff, described only sexual assaults perpetrated by plaintiff as a coworker while she was performing her duties at her place of employment.

In response, plaintiff failed to raise a question of fact as to whether the claim of sexual assault came within the coverage of defendant's policy. While plaintiff submitted a few pages of deposition testimony in which the nurse described an intentional sexual contact that occurred while plaintiff was purporting to palpate her thyroid in the nursing home conference room where they had gone to work on patient files, there is no evidence that she ever complained about his professional services or asserted that his conduct was professional malpractice. In such circumstances, the thyroid examination described by the nurse merely provided the occasion for the alleged assault and did not convert plaintiff's acts into professional malpractice (see Physicians' Reciprocal Insurers v Loeb, 291 AD2d at 544; compare Chung v Physicians Reciprocal Insurers, 221 AD2d 907 [1995]). There being no coverage, any failure to timely disclaim is academic (see State Farm Mut. Auto. Ins. Co. v Bentley, 262 AD2d 739, 741 [1999]; Smedes v Liberty Mut. Ins. Co., 206 AD2d 814, 815 [1994], lv denied 84 NY2d 812 [1994]).

Urbina v. 26 Court Street Associates, LLC

Judgment, Supreme Court, New York County (Carol R. Edmead, J.), entered June 8, 2005, after a jury verdict, insofar as appealed from, awarding plaintiff Carlos Urbina $1 million for past pain and suffering, $2.5 million for future pain and suffering (over 41.5 years), $5 million for future lost wages (over 27 years) and $55,000 for future medical expenses, unanimously modified, on the facts, to vacate the awards for past and future pain and suffering, and otherwise affirmed, without costs, and the matter remanded for a new trial solely as to damages for past and future pain and suffering unless plaintiffs, within 30 days of service of a copy of this order with notice of entry, stipulate to reduce the award for past pain and suffering to $700,000 and future pain and suffering to $1.5 million, and to entry of an amended judgment in accordance therewith. Judgment, same court and Justice, entered July 14, 2005, granting contractual indemnity to defendant Town Sports International, Inc. (TSI) and 26 Court Street Associates, LLC (Court Street) against defendant R & J Construction Corp. (R & J), and dismissing the claims of TSI and Court Street against R & J for common-law indemnity and contribution, unanimously affirmed, with costs.

Plaintiffs Carlos Urbina and his wife, Lucy Nunez, commenced this action to recover damages for injuries sustained by plaintiff Urbina, an electrician, at a construction site when the plywood platform of a Baker scaffold on which he was kneeling collapsed, causing him to fall some eight feet to the concrete floor and suffer a fractured patella and other injuries. TSI, which leased the premises where the accident occurred from Court Street, the owner of the premises, was renovating the premises to open a New York Sports Club and acted as general contractor for the project. Plaintiffs commenced this action against Court Street, TSI and R & J, the drywall subcontractor, alleging causes of action for common-law negligence, violations of Labor Law
§ 200, § 240(1) and § 241(6) and loss of consortium. TSI asserted cross claims against R & J for contractual indemnity, common-law indemnity and contribution; it also commenced a third-party action against plaintiff Urbina's employer, Absolute Electrical Contracting, Inc. (Absolute), the electrical subcontractor, seeking, inter alia, contractual indemnity. Court Street asserted cross claims against TSI for contractual indemnity, common-law indemnity and contribution. R & J brought cross claims against Court Street, TSI and Absolute for common-law indemnity and contribution. In turn, Absolute asserted cross claims for negligence and breach of warranty against R & J.

Summary judgment was granted to plaintiff Urbina pursuant to Labor Law § 240(1) against Court Street and TSI. On a prior appeal in this action (12 AD3d 225 [2004]), this Court upheld the dismissal of plaintiff Urbina's Labor Law § 241(6) claim against R & J and reinstated plaintiff Urbina's common-law negligence claim against R & J, holding, in the latter regard, that issues of fact were raised as to whether R & J was negligent in erecting the scaffold, precluding summary judgment in its favor. Nonetheless, plaintiff Urbina abandoned all his claims against R & J, and all his remaining claims against Court Street and TSI, and proceeded to a damages only trial. Prior to trial, Court Street and TSI each tendered its defense to Absolute, which took over their representation. In particular, Absolute's insurer appointed as counsel for Court Street and TSI the attorney who had been representing only Absolute. Pursuant to a stipulation signed on behalf of TSI by that attorney, TSI's third-party action against Absolute was dismissed with prejudice. At trial, R & J's cross claim against Absolute was dismissed on the ground that plaintiff Urbina had not sustained a "grave injury" within the meaning of Worker's Compensation Law § 11.

After plaintiffs testified, Court Street and TSI moved for a directed verdict against R & J based upon the indemnity clause in the contract between R & J and TSI. Although it appears that Court Street never asserted a cross claim against R & J for contractual indemnity, R & J did not oppose the motion on this ground. To resolve the motion, the parties submitted a "Stipulation of Agreed Facts." According to the stipulation, the accident occurred at 2:45 p.m. after R & J's employees had left the work site, having completed their work for that day. When the platform of the Baker scaffold collapsed, plaintiff Urbina was performing electrical work required under Absolute's contract with TSI, not "dry wall/rough carpentry" work required under R & J's contract with TSI. The Baker scaffold was owned by R & J and had been erected by R & J solely for its work. When R & J's employees left the job site on the day of the accident, the scaffold was left in place for the continuation of R & J's work the next day. As for the accident itself, the stipulation provided that plaintiff Urbina testified both that "while he was kneeling down on the platform of the Baker scaffold, the plywood platform collapsed straight through the rails of the scaffold causing him to be injured," and that he "inspected the scaffold including the platform . . . before using it and thought it was okay." In addition, the parties stipulated that there was no evidence anyone had used or touched the scaffold after R & J's employees left the job site and before the accident. Finally, as to the scaffold itself, the parties stipulated that plaintiff Urbina did not have R & J's permission to use the scaffold, that TSI contended it was customary to share equipment at the job site and that R & J denied that contention.

The stipulation also set forth the indemnity provision of the contract and the relevant provisions of Exhibit B to the contract setting forth the "Scope Of Work." The indemnity clause obligated R & J to "indemnify and hold TSI, the owner of the club and landlord, harmless from all claims, suits, liability, damages, losses, and expenses including reasonable attorney's fees arising out of the work performed under this contract to the fullest extent permitted by law." Under the heading "Scope Of Work," Exhibit B detailed the specific carpentry/drywall work R & J was to perform (such as, "[m]etal track studs, furring strips, fasteners," "[a]coustical ceiling grid, hanging wires and tiles," "[d]rywall partitions, ceilings, soffits, fascias and porticos") and also required R & J to "[f]urnish and install all materials, equipment, personnel, tools, scaffolding, layout lines, and benchmarks . . . ."

In opposing the motion for a directed verdict, R & J argued that its contractual indemnity was triggered only if the accident arose out of the work it was performing under its contract with TSI. Because plaintiff Urbina was injured while performing electrical work pursuant to the contract between Absolute and TSI for electrical work, not the drywall or carpentry work called for in its contract with TSI, R & J contended that its contractual indemnity obligation had not been triggered. Supreme Court disagreed. In an oral decision, Supreme Court, relying on Keena v Gucci Shops (300 AD2d 82 [2002]) and Velez v Tishman Foley Partners (245 AD2d 155 [1997]), ruled that R & J's contractual obligation to provide the scaffold was sufficient to trigger its indemnity obligations under the contract. We agree with Supreme Court.

R & J continues to maintain that "unless Urbina, an electrician, was injured while performing the drywall work R & J agreed to perform, no indemnity is owed to TSI." Under this cramped reading of the indemnity clause, R & J's contractual indemnity would not be triggered if, with or without negligence by R & J, a wall it was erecting collapsed and injured a worker performing the work of one of the other trades. As long as the worker struck by the collapsing wall was not performing drywall work at the time of the injury, R & J would have no indemnity obligation under the contract. R & J's position, moreover, ignores the express provision of the contract requiring it to "furnish and install all . . . scaffolding" and including that work within the "Scope Of Work" to be performed. Because the liability to plaintiff Urbina "aris[es] out of" the furnishing and installing of the Baker scaffold, it "aris[es] out of the work performed under th[e] contract."

Our decision in Masciotta v Morse Diesel Intl. (303 AD2d 309 [2003]), is instructive. There, the plaintiff carpenter was injured when he fell from a ladder that "just kicked out" from under him. Morse Diesel, the construction manager, moved for summary judgment on its claim for contractual indemnity from the plaintiff's employer, one of the construction subcontractors, pursuant to an indemnity provision that obligated the subcontractor to indemnify Morse Diesel and hold it harmless from all liability, damages, claims and actions " of any nature whatsoever which arise out of or are connected with, or are claimed to arise out of or be connected with: . . . [t]he use, misuse, erection, maintenance, operation or failure of any machinery or equipment'" (303 AD2d at 310-311). Just as R & J agreed to provide all scaffolding, the subcontractor had agreed in its contract with Morse Diesel to provide all materials for its work (id. at 309). Although there were independent grounds under the indemnity clause to trigger the subcontractor's indemnity obligation, we held that because the plaintiff's "claim relates to use, misuse, erection, maintenance, operation or failure of a ladder . . ., the indemnification provision holds [the subcontractor] responsible to Morse for this accident" (id. at 311).^[FN1]

As Supreme Court correctly recognized, R & J's position is inconsistent with Velez v Tishman Foley Partners (supra) and Keena v Gucci Shops (supra). In Velez, the plaintiff ironworker was injured when the cross bracing of a hoist tower gave way beneath him as he was climbing down the tower. The owner and general contractor, TFP, sought contractual indemnity from Universal, which had entered into a subcontract with it for the construction of the hoist tower. The indemnity clause obligated Universal to indemnify TFP against " any and all loss, damages, injury or liability . . . however caused and of whatever nature, arising directly or indirectly from the acts or omissions of [Universal] . . . in the performance of the work under this Subcontract'" (245 AD2d at 156). The fact that the plaintiff was performing work other than that required by Universal's contract played no role in our decision. Rather, because the accident occurred "when the cross-bracing of the hoist tower gave way and . . . the hoist tower was being erected by Universal at the time of the plaintiff's injuries, the accident came within the parameters of the broadly worded contractual indemnification agreement with Universal" (id.).

Similarly, in Keena, the plaintiff was injured when "the plank upon which he was walking, supplied by defendant Glenn Partition as part of its contractual undertaking to provide work site protection, gave way" (300 AD2d at 82). We held that Glenn's contractual indemnity was triggered because Glenn "agreed in its subcontract . . . to indemnify . . . [the] owner for all claims . . . arising in whole or in part and in any manner' from Glenn's acts, omissions, breach or default' in connection with any work' performed by Glenn pursuant to the subcontract" (id.). As the record on appeal makes clear, moreover, the plaintiff was an employee of the general contractor and was not performing the work that Glenn was required to perform at the time he was injured.

Greco v Archdiocese of N.Y. (268 AD2d 300 [2000]) does not require a different conclusion. In Greco, the plaintiff, an employee of the general contractor, fell when the step of the ladder on which he was standing broke. The ladder was owned by Peeples, the HVAC subcontractor, and the owner sought summary judgment on its claim against Peeples for contractual indemnity. We upheld the denial of summary judgment on the ground that "[t]riable issues of fact exist with respect to . . . whether plaintiff's injury arose out of or in connection with' the work Peeples had subcontracted to perform" (268 AD2d at 302). Nothing in our opinion states or suggests that the provision of ladders or other equipment was included within the scope of the work Peeples was required to perform under the subcontract.

Our decision in Brown v Two Exch. Plaza Partners (146 AD2d 129 [1989], affd 76 NY2d 172 [1990]) is also distinguishable. The plaintiff in Brown was injured by the unexplained collapse of a scaffold erected by a subcontractor, Heydt, for the use of all the trades involved in the construction project, pursuant to a subcontract with the general contractor, Fuller. An indemnity clause required Heydt to indemnify Fuller against personal injury " arising out of, in connection with or as a consequence of the performance of the [subcontractor's] Work and/or any act or omission of the Subcontractor or any of its subcontractors . . . as it relates to the scope of this Contract'" (id. at 133). The scaffold collapsed, however, one week after it was inspected and accepted by Fuller, which was to control its use and maintain it following its acceptance. Although Heydt had moved or straightened the scaffold some four days prior to its collapse, we rejected Fuller's contention that the accident arose out of, was in connection with or was a consequence of Heydt's erection or straightening of the scaffold. To accept that contention, "without any showing of a particular act or omission in the performance of such work causally related to the accident, would be to make Heydt a virtual insurer of the scaffold. Heydt would be responsible for an unexplained collapse of the scaffold at a time when it had no control over its use or responsibility for its maintenance, and, as contemplated by its contract with Fuller, was not even present at the site" (id. at 136).  By contrast, prior to the collapse of the Baker scaffold, neither Court Street nor TSI had accepted, was in possession of or was responsible for maintaining the scaffold.^[FN2]

The extent to which the indemnity clauses in Masciotta, Velez and Keena are broader rather than more verbose than the indemnity clause in this case is a matter we need not address. In any event, the indemnity provision to which R & J agreed is a broad one, as it obligates R & J to indemnify TSI and Court Street against "all claims, . . . liability [and] damages . . . arising out of the work performed under th[e] contract" and contains no language limiting the scope of that obligation (cf. People v Young, 220 AD2d 872, 874 [1995] [construing the term "arising out of" in Executive Law § 63(3); "the term arising out of', in its most common sense, has been defined as originating from, incident to or having connection with"] [citation omitted], lv denied 87 NY2d 909 [1995]; United States Fire Ins. Co. v New York Mar. & Gen. Ins. Co., 268 AD2d 19, 21-22 [2000] ["when used in automobile exclusion clauses, the words arising out of the . . . use' are deemed to be broad, general, comprehensive terms ordinarily understood to mean originating from, incident to, or having connection with the use of the vehicle"] [internal quotation marks and citations omitted]). For this reason, we are not persuaded by R & J's argument that the accident did not "aris[e] out of the work" performed under the subcontract because plaintiff Urbina was not authorized by it to use the Baker scaffold. Without deciding the issue of whether a different conclusion would be appropriate if there were evidence that R & J had taken steps to prevent the use of the scaffold by employees of other trades or that plaintiff Urbina knew he was not authorized to use it, we note that there was no such evidence.

On the basis of allegedly unethical conduct by counsel for Court Street and TSI, R & J also contends that it is entitled either to a new trial or to an order deeming Absolute & R & J co-indemnitors of TSI with equal responsibility for satisfying plaintiff's judgment against TSI. R & J's claim of unethical conduct, however, is not preserved for review as it was not raised before the trial court. Moreover, to the extent R & J thus seeks an order that would affect Absolute adversely, we note that Absolute is not a party to this appeal and that R & J, not having appealed from the order dismissing its claim for common-law indemnity against Absolute, has no surviving claims against Absolute.

With respect to the issue of damages, plaintiff, who was 31 years old at the time of the accident, sustained a comminuted, displaced transverse fracture of the patella, as well as a tear of the lateral meniscus. Plaintiff underwent surgery on the day of the accident and was discharged the following day. Plaintiff used crutches for approximately two months following the surgery and underwent extensive physical therapy. Thereafter, a second procedure removed the surgical hardware installed during the first operation, and the surgeon repaired plaintiff's injured meniscus, and performed a chondroplasty of the patella and the anterior femur of the right knee. Following the second procedure, plaintiff continued physical therapy, took pain medication, used crutches for at least one month, and then began wearing a heavy knee brace that he still wears. Plaintiff continued to experience pain as well as clicking and popping sounds in his right knee, and a third surgical procedure was subsequently performed. Plaintiff's expert stated that future surgeries will be necessary, including at least two knee replacement procedures. Plaintiff, who now walks with a limp, is no longer able to work as an electrician and is restricted to sedentary work, and also can no longer perform household chores. In addition, plaintiff cannot walk for long periods of time, run, walk fast or play soccer.

Unquestionably, significant damages awards for both past and future pain and suffering are warranted. However, the awards for such damages as provided by the jury deviate materially from reasonable compensation (see CPLR 5501[c]). Looking to awards approved in cases involving injuries similar to those sustained by plaintiff (Reed v City of New York, 304 AD2d 1, 7 [2003], lv denied 100 NY2d 503 [2003]), we conclude that the awards for past and future pain and suffering are excessive to the extent indicated above (cf. Bridges v City of New York, 18 AD3d 258 [2005]; Green v City, 308 AD2d 408 [2003], lv denied 1 NY3d 505 [2004]; Alvarado v City of New York, 287 AD2d 296 [2001]; Schultz v Turner Constr. G., 278 AD2d 76 [2000]; Cruz v Manhattan & Bronx Surface Tr. Operating Auth., 259 AD2d 432 [1999]; Osoria v Marlo Equities, 255 AD2d 132 [1998]; Salop v City of New York, 246 AD2d 305 [1998]). The award for future lost wages, however, is supported by the evidence.

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

ENTERED: DECEMBER 6, 2007

CLERK

Footnotes

Footnote 1:Our decision in Torres v Morse Diesel International, Inc. (14 AD3d 401 [2005]) is also on point. The plaintiff, an employee of a roofing subcontractor, was injured when the ladder he was working on suddenly collapsed, causing him to fall. Westmont, the general roofing contractor, had subcontracted the roofing work to plaintiff's employer and had agreed in its contract with the owner to indemnify the owner and the construction manager, Morse Diesel, for all liability or injury " caused by, resulting from, arising out of, or occurring in connection with the execution of the [contract] Work'" (id. at 402). We held that Westmont's contractual indemnity was triggered because "the work plaintiff was performing . . . at the time he was injured plainly constituted Work' required under the [owner-]Westmont contract" (id. at 403). Moreover, in the course of rejecting the contention that issues of fact regarding Morse Diesel's alleged negligence precluded the granting of summary judgment to Morse Diesel on its claim for contractual indemnity, we noted that "the record shows that Westmont was contractually obligated to supply the necessary equipment for the roofing work" (id.).

Footnote 2:Negligence by either Court Street or TSI in connection with the collapse of the Baker scaffold would defeat its claim for contractual indemnity (see Pardo v Bialystoker Ctr. & Bikur Cholim, Inc., 10 AD3d 298, 301 [2004] [under General Obligation Law § 5-322.1, negligence by general contractor in connection with plaintiff's fall from scaffold would render unenforceable the provision of the subcontract between the general contractor and plaintiff's employer requiring the latter to provide full indemnification against all claims caused in whole or in part by its acts or omissions]). R & J does not assert any such negligence by Court Street or TSI.

 

NYAT Operating Corp., etc.,  v. GAN National Insurance Company

Katten Muchin Rosenman LLP, New York (Philip A. Nemecek
of counsel), for appellants.
Sivin & Miller, LLP, New York (Edward Sivin of counsel), for
respondent.

Judgment, Supreme Court, New York County (Debra A. James, J.), entered July 25, 2006, in a declaratory judgment action involving defendant insurers' (GAN's) obligation to defend and indemnify plaintiff insured (NYAT) in an underlying action in which plaintiff-intervener (Cabrera) obtained a judgment against NYAT for having negligently hired and retained an employee who sexually assaulted her, in favor of Cabrera and against GAN in the principal amount of $997,448, plus interest, costs and disbursements, unanimously affirmed, with costs. Appeal from order, same court and Justice, entered May 31, 2005, which, inter alia, on NYAT's default, granted GAN's motion pursuant to CPLR 3126 to dismiss the action to the extent of dismissing NYAT's complaint, and granted Cabrera's cross motion for summary judgment on her cause of action against GAN under Insurance Law § 3420(b)(1), and appeal from order, same court (Steven E. Liebman, Special Referee), entered July 11, 2006, which computed Cabrera's damages and interest, unanimously dismissed, without costs.

The dismissal of NYAT's complaint as a result of its default in opposing GAN's CPLR 3126 motion does not estop Cabrera from asserting NYAT's coverage under the subject commercial general liability policy for the sexual assault committed against her by NYAT's employee (Zimmerman v Tower Ins. Co. of N.Y., 13 AD3d 137 [2004]; see Stumpf AG v Dynegy Inc., 32 AD3d 232, 233 [2006]). On the merits, because NYAT's liability in the underlying action was based on its negligent hiring and retention of the employee, not respondeat superior, the sexual assault was a covered "accident" within the meaning of the policy, and the exclusion for injuries expected or intended from the standpoint of the insured does not apply (RJC Realty Holding Corp. v Republic Franklin Ins. Co., 2 NY3d 158 [2004]). It does not avail GAN to argue that the assault was foreseeable (cf. id. at 164). Any right GAN had to disclaim on the ground that it did not receive timely notice of the assault was lost when it did not give either NYAT or Cabrera notice of disclaimer on such ground as soon as reasonably possible (Tully Constr. Co., Inc. v TIG Ins. Co., __ AD3d __, 2007 NY Slip Op 06983, *2 [2d Dept 2007]); see Milbank Hous. Dev. Fund v Royal Indem. Co., 17 AD3d 280, 280-281 [2005]). That GAN had such ground to disclaim was readily apparent as soon as it learned of Cabrera's lawsuit against NYAT commenced two and half years earlier (see Milbank, id. at 281); yet, GAN never served a notice of disclaimer. Instead, it served a reservation of rights letter on NYAT, which has no relevance to the question of timely notice of disclaimer (Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1029 [1979]), and, if its answer herein be deemed a notice of disclaimer, it was untimely as a matter of law (see id. at 1029-1030). Accordingly, Cabrera was properly granted summary judgment for the compensatory portion of the underlying judgment, up to the $1 million limit of the policy, plus interest from the date of entry of the underlying judgment (see Kleynshvag v GAN Ins. Co., 21 AD3d 999, 1000-1001 [2005]; Levit v Allstate Ins. Co., 308 AD2d 475, 477 [2003]). We have considered GAN's other arguments and find them unavailing.

Doherty v. Galla

Decolator, Cohen & DiPrisco, LLP, Garden City, N.Y. (Joseph L. Decolator of counsel),                for appellants.
Connors & Connors, P.C., Staten Island, N.Y. (Robert J. Pfuhler of counsel), for respondents.


DECISION & ORDER

In an action to recover damages for personal injuries, etc., the plaintiffs appeal from an order of the Supreme Court, Suffolk County (Doyle, J.), dated August 24, 2006, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff Lisa Doherty 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 denied.

Contrary to the Supreme Court's determination, the defendants failed to establish their prima facie entitlement to judgment as a matter of law by demonstrating that the plaintiff Lisa Doherty 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, 956-957). The report of the defendants' examining neurologist noted the existence of a limitation in the range of motion of the injured plaintiff's lumbar spine that was not adequately quantified or qualified so as to establish that it was insignificant (see Dzaferovic v Polonia, 36 AD3d 652, 653; Iles v Jonat, 35 AD3d 537, 538; Whittaker v Webster Trucking Corp., 33 AD3d 613). The affirmed medical report of the defendants' examining orthopedic surgeon set forth range of motion findings with respect to the injured plaintiff's lumbar spine, but failed to compare those findings to what is deemed normal (see Hypolite v International Logistics Mgt., Inc., 43 AD3d 461; McNulty v Buglino, 40 AD3d 591, 592; Osgood v Martes, 39 AD3d 516; McLaughlin v Rizzo, 38 AD3d 856, 857; Bluth v WorldOmni Fin. Corp., 38 AD3d 817, 818). Since the defendants failed to satisfy their burden on this motion, it is unnecessary to consider whether the plaintiffs' submissions raised a triable issue of fact (see Dzaferovic v Polonia, 36 AD3d at 653; Hypolite v International Logistics Mgt., Inc., 43 AD3d 461; McNulty v Buglino, 40 AD3d at 592; Coscia v 938 Trading Corp., 283 AD2d 538).
SCHMIDT, J.P., SPOLZINO, SKELOS and McCARTHY, JJ., concur.

Guzman v. Bowen

Althea F. Richardson, White Plains, N.Y., for appellant Chesterfield
Bowen, and Kathleen E. Gill, Deputy Corporation Counsel, New Rochelle, N.Y.,                                  for appellant City of New Rochelle (one brief filed).
Osorio & Associates, LLC, White Plains, N.Y. (Michael H. Joseph of counsel), for respondent.


DECISION & ORDER

In an action, inter alia, to recover damages for personal injuries, the defendants appeal from so much of an order of the Supreme Court, Westchester County (Smith, J.), dated March 8, 2007, as denied those branches of their separate motions which were for summary judgment dismissing the complaint insofar as asserted against each of 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 insofar as appealed from, with costs.

While we affirm the order insofar as appealed from, we do so on grounds other than those relied upon by the Supreme Court. Contrary to the Supreme Court's determination, the defendants failed on their separate motions to meet their respective prima facie burdens establishing 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, 956-957). In support of their motions, the defendants relied on the report of Alan R. Belsky, which was not in proper form. Dr. Belsky was a chiropractor and pursuant to CPLR 2106 he cannot affirm the contents of a medical report (see Kunz v Gleeson, 9 AD3d 480; Santoro v Daniel, 276 AD2d 478).

The report of Dr. Gary J. Florio, a physiatrist, merely stated that upon examination of the plaintiff on March 24, 2005, the plaintiff's cervical and thoraco-lumbar spine ranges of motion for flexion, extension, lateral flexion, and rotation were within "functional" limits. This statement was, at best, vague and conclusory.

The affirmation of Dr. Ronald L. Mann, the defendants' examining orthopedist, stated that the plaintiff, upon examination, had "full" range of motion in the lumbar and cervical regions of her spine. Despite so stating, Dr. Mann failed to set forth the objective tests performed to arrive at his conclusion that the plaintiff did not suffer from any range of motion limitations in those regions of her spine (see Cedillo v Rivera, 39 AD3d 453; McLaughlin v Rizzo, 38 AD3d 856; Geba v Obermeyer, 38 AD3d 597).

Since the defendants failed to establish their respective prima facie burdens, it is unnecessary to address the issue of whether the papers submitted by the plaintiff in opposition were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538).
SCHMIDT, J.P., SPOLZINO, SKELOS, LIFSON and McCARTHY, JJ., concur.

Joissaint v. Starrett-1 Inc.

Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Holly E. Peck of counsel), for appellants.
Stephen H. Frankel, Woodbury, N.Y. (Nicholas E. Tzaneteas of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the defendants Starrett-1 Inc., and Eddie Harris appeal from an order of the Supreme Court, Kings County (Saitta, J.), dated April 12, 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 defendants Starrett-1 Inc., and Eddie Harris (hereinafter the appellants) failed to satisfy 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 (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). Among the medical submissions relied upon by the appellants was the affirmed medical report of their examining orthopedist. In his report, the examining orthopedist identified significant limitations in the ranges of motion of the plaintiff's cervical and lumbar spines based upon his examination of the plaintiff, which took place almost two years after the subject accident (see Zamaniyan v Vrabek, 41 AD3d 472, 473; Smith v Delcore, 29 AD3d 890; Sano v Gorelik, 24 AD3d 747). Since the appellants failed to meet their initial burden, it is unnecessary to consider whether the plaintiff's papers, submitted in opposition, were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538).
CRANE, J.P., RITTER, FISHER, COVELLO and DICKERSON, JJ., concur.

 

Larkin v. Goldstar Limo Corp.

Baker, McEvoy, Morrissey & Moskovitis, P.C., New York, N.Y.
(Stacy R. Seldin of counsel), for appellant.
Sanders, Sanders, Block, Woycik, Viener & Grossman, P.C., Mineola, N.Y.                            (Michael F. Villeck and Melissa C. Ingrassia of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the defendant Goldstar Limo Corp. appeals from an order of the Supreme Court, Queens County (Kelly, J.), dated February 9, 2007, which denied its motion for summary judgment dismissing the complaint insofar as asserted against it 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 motion of the defendant Goldstar Limo Corp. for summary judgment dismissing the complaint insofar as asserted against it is granted.

The defendant Goldstar Limo Corp. (hereinafter Goldstar) met its 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, 956-957).

In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff's medical submissions were insufficient to raise a triable issue of fact since none were based on a recent examination (see Ali v Mirshah, 41 AD3d 748; Mejia v DeRose, 35 AD3d 407; Laruffa v Yui Ming Lau, 32 AD3d 996). Moreover, the plaintiff's submissions failed to address the finding of Goldstar's examining radiologist that the condition of the plaintiff's cervical spine resulted from pre-existing degeneration and was not caused by the subject accident. Goldstar's examining radiologist also noted that the magnetic resonance imaging studies of the plaintiff's lumbar spine evinced that he had a transitional vertebra, which was congenital, and predisposed him to abnormal movements and premature degenerative disc disease. The failure of the plaintiff's experts to address these findings rendered speculative any conclusions they made that the plaintiff's spinal restrictions were causally related to the subject accident (see Philips v Zilinsky, 39 AD3d 728; D'Alba v Yong-Ae Choi, 33 AD3d 650). The plaintiff also failed to proffer competent medical evidence that he sustained a medically-determined injury of a nonpermanent nature which prevented him, for 90 of the 180 days following the subject accident, from performing his usual and customary activities (see Sainte-Aime v Ho, 274 AD2d 569).
RIVERA, J.P., FLORIO, CARNI and BALKIN, JJ., concur.

Siegel v. Sumaliyev

William J. Rita, New York, N.Y., for appellant.
Zaklukiewicz, Puzo & Morrissey, LLP, Islip Terrace, N.Y.
(Candace M. Bartone 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, Kings County (Harkavy, J.), dated June 7, 2006, which granted the motion of the defendants Kenny Basnight and MV Transportation, Inc., 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 respondents established their prima facie entitlement to judgment as a matter of law by demonstrating that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955; Kearse v New York City Tr. Auth., 16 AD3d 45, 49-50). This burden was established by the submission of the report of the respondents' examining orthopedic surgeon, Dr. Lawrence Miller, who found, inter alia, that the plaintiff had a normal range of motion of her cervical and lumbar spine and that she had no disability causally related to the subject accident (see Kearse v New York City Tr. Auth., 16 AD3d at 49-50). In opposition, the plaintiff failed to raise a triable issue of fact.

The magnetic resonance imaging reports of the plaintiff's cervical spine which showed herniated and bulging discs did not, alone, raise a triable issue of fact as to whether she sustained a serious injury (see Yakubov v CG Trans Corp., 30 AD3d 509, 510; Cerisier v Thibiu, 29 AD3d 507, 508; Kearse v New York City Tr. Auth., 16 AD3d at 49). The mere existence of a bulging or herniated 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 Yakubov v CG Trans Corp., 30 AD3d at 510; Kearse v New York City Tr. Auth., 16 AD3d at 49). Further, the plaintiff's treating orthopedist, Dr. Fred Montas, failed to address the findings in the report of the respondents' radiologist, including the findings of degenerative disease (see Passaretti v Ping Kwok Yung, 39 AD3d 517; Khan v Finchler, 33 AD3d 966, 967; Giraldo v Mandanici, 24 AD3d 419, 420). As a result, his opinion that the plaintiff's injuries were causally related to the subject accident was speculative (see Passaretti v Ping Kwok Yung, 39 AD3d at 517; Tudisco v James, 28 AD3d 536, 537; Giraldo v Mandanici, 24 AD3d at 420). Moreover, neither his affirmation nor the plaintiff's affidavit adequately explained the gap in treatment evident in the record (see Waring v Guirguis, 39 AD3d 741, 742; Li v Woo Sung Yun, 27 AD3d 624, 625; Neugebauer v Gill, 19 AD3d 567, 568). SCHMIDT, J.P., SPOLZINO, SKELOS, LIFSON and McCARTHY, JJ., concur.

 

Gibbs  v. Harp

 

Calendar Date: October 19, 2007
Before: Mercure, J.P., Peters, Carpinello, Lahtinen and Kane, JJ.


Eisenberg & Kirsch, Saratoga Springs (Jeffrey D. Wait of counsel), for appellants.
Basch & Keegan, L.L.P., Kingston (Derek J. Spada of counsel), for respondent.

MEMORANDUM AND ORDER


Lahtinen, J.

Appeal from an order of the Supreme Court (Lynch, J.), entered January 10, 2007 in Ulster County, which, upon reconsideration, partially denied defendants' motion for summary judgment dismissing the complaint.

Plaintiff commenced this action for injuries allegedly sustained when the car that she operated was in an accident with a car driven by defendant Stacey L. Harp and owned by defendant David L. Harp Jr. Disclosure revealed that plaintiff had suffered for many years prior to the accident from numerous physical ailments that had rendered her unable to work. These problems apparently flowed from twice being kicked by horses and afflicted many of the same areas of her body that she asserted were injured in the subject accident. Defendants moved for summary judgment dismissing the complaint arguing that plaintiff did not suffer a serious injury (see Insurance Law § 5102 [d]) in the accident, and Supreme Court (Kavanagh, J.) granted the motion. In its decision, the court stated that it was not considering a report submitted by plaintiff of David Gamburg, a pain management specialist, since it was unsworn.

Plaintiff moved for leave to renew and reargue asserting that she had submitted to the court clerk a sworn report by Gamburg, which ostensibly was not forwarded to Supreme Court. Plaintiff further urged reargument upon the ground that the court had misapplied facts and/or law in finding that defendants had met their threshold burden as to the 90/180-day category of serious injury. The judge who originally heard the motion had since been appointed to the Appellate Division, First Department, and, thus, the motion was heard by another judge (see CPLR 2221 [a]). Supreme Court (Lynch, J.) granted renewal as to the report of Gamburg, but upon considering the report, concluded that the content of the report was insufficient to establish a factual issue as to a serious injury. However, the court further granted reargument as to the 90/180-category issue, apparently finding that Supreme Court (Kavanagh, J.) had overlooked or misapprehended a fact or misapplied the law, and denied defendants' motion as to such category of serious injury. Defendants appeal.

We agree that Supreme Court (Lynch, J.) properly granted renewal as to the report of Gamburg, the sworn copy of which was not before the court (Kavanagh, J.) through no fault of plaintiff. And, upon reconsideration, such report, which failed to address plaintiff's numerous preexisting conditions involving the same areas allegedly injured in the subject accident, did not provide a basis for deviating from the original decision (see Franchini v Palmieri, 1 NY3d 536, 537 [2003]; Maye v Stearns, 19 AD3d 902, 903 [2005]).

It was error, however, to grant reargument and address the 90/180-day category. Supreme Court (Kavanagh, J.) did not overlook significant facts or misapprehend the law (see Peak v Northway Travel Trailers, 260 AD2d 840, 842 [1999]; Grassel v Albany Med. Ctr. Hosp., 223 AD2d 803, 805 [1996], lv dismissed and denied 88 NY2d 842 [1996]; Matter of Mayer v National Arts Club, 192 AD2d 863, 865 [1993]). The record reveals that the court (Kavanagh, J.) properly applied the law to the facts as set forth by the parties, including defendants' shifting of the burden with the submission of, among other things, extensive medical records and reports regarding preexisting conditions similar to those alleged to have occurred in the underlying accident, as well as proof of plaintiff's preaccident diminished activities (see Tuna v Babendererde, 32 AD3d 574, 575-576 [2006]; Gonzalez v Green, 24 AD3d 939, 940 [2005]).

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

ORDERED that the order is modified, on the law, without costs, by reversing so much thereof as granted reargument and as partially denied defendants' motion for summary judgment; motion for summary judgment granted in its entirety and complaint dismissed; and, as so modified, affirmed.

 

Hamilton v. Rouse

Rivkin Radler LLP, Uniondale, N.Y. (Harris J. Zakarin, Evan H. Krinick, Cheryl F. Korman,     and Melissa M. Murphy of counsel), for appellant-respondent.
Harmon, Linder & Rogowsky (Pollack, Pollack, Isaac & De Cicco, New York, N.Y.                [Brian J. Isaac] of counsel), for respondent-appellant.


DECISION & ORDER

In an action, inter alia, to recover damages for personal injuries, the defendant appeals (1), as limited by her brief, from so much of an order of the Supreme Court, Kings County (Ruchelsman, J.), dated September 19, 2006, as denied that branch of her motion which was, in effect, pursuant to CPLR 4404(a) to set aside a jury verdict in favor of the plaintiff and against her on the issue of damages, awarding the plaintiff the sums of $46,500 for past pain and suffering and $150,000 for future pain and suffering and for judgment as a matter of law or, in the alternative, to set aside the verdict on the issue of damages as against the weight of the evidence and for a new trial on that issue, and granted that branch of her motion which was to set aside the award of damages as excessive, only to the extent of granting a new trial on that issue unless the parties executed and filed a written stipulation with the Clerk of the Supreme Court, Kings County, reducing the award for past pain and suffering from the sum of $46,500 to the sum of $30,000, and the award for future pain and suffering from the sum of $150,000 to the sum of $100,000, (2) from an order of the same court dated November 21, 2006, which granted the plaintiff's motion, in effect, to resettle so much of the order dated September 19, 2006, as required both of the parties to execute the stipulation and, upon resettlement, vacated that provision and substituted therefor a provision requiring the stipulation to be executed by the plaintiff only, and (3) from a judgment of the same court entered February 6, 2007, which, upon the jury verdict, upon the denial of her oral application pursuant to CPLR 4401 for judgment as a matter of law made at the close of the plaintiff's case, upon the orders dated September 19, 2006, and November 21, 2006, respectively, and upon the plaintiff's stipulation entered December 14, 2006, is in favor of the plaintiff and against her in the principal sums of $30,000 for past pain and suffering and $100,000 for future pain and suffering, and the plaintiff cross-appeals from the order dated September 19, 2006.

ORDERED that the appeals from the orders and the cross appeal from the order dated September 19, 2006, are dismissed; and it is further,

ORDERED that the judgment is reversed, on the law, with costs, the orders dated September 19, 2006, and November 21, 2006, respectively, are vacated, the defendant's oral application pursuant to CPLR 4401 for judgment as a matter of law is granted, and the complaint is dismissed.

The appeals by the defendant from the intermediate orders and the cross appeal by the plaintiff from the intermediate order dated September 19, 2006, must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). Although the issues raised on the appeals and the cross appeal from the orders are brought up for review and ordinarily would be considered on the appeal from the judgment (see CPLR 5501[a][1]), the issues raised have been rendered academic in light of our determination on the appeal from the judgment, and therefore need not be reviewed.

This action arises from a two-car collision which occurred in Brooklyn on April 16, 2002. In his verified complaint, the plaintiff alleged that he sustained personal injuries which met the statutory definition of "serious injury" as set forth in Insurance Law § 5102(d) and, in his verified bill of particulars, he alleged that he sustained, inter alia, a herniated disc in the cervical spine and a bulging disc in the lumbosacral spine. Following the close of the plaintiff's case, the defendant made an oral application pursuant to CPLR 4401 for judgment as a matter of law on the ground that the plaintiff had failed to establish, prima facie, that he sustained a serious injury. The Supreme Court, in effect, ultimately denied the oral application. The jury thereafter determined that the plaintiff had suffered a permanent consequential limitation of the use of a body organ or member, and had also sustained a medically-determined injury which prevented him from performing substantially all of his daily activities for 90 of the first 180 days immediately following the accident. The Supreme Court denied the defendant's subsequent motion pursuant to CPLR 4404(a) to set aside the verdict, inter alia, on the ground that the plaintiff failed to establish, prima facie, that his injuries qualified as "serious" under the foregoing two statutory categories.

"A motion for judgment as a matter of law pursuant to CPLR 4401 or 4404 may be granted only when the trial court determines that, upon the evidence presented, there is no valid line of reasoning and permissible inferences which could possibly lead rational persons to the conclusion reached by the jury upon the evidence presented at trial, and no rational process by which the jury could find in favor of the nonmoving party" (Tapia v Dattco, Inc., 32 AD3d 842, 844). In considering such a motion, "the trial court must afford the party opposing the motion every inference which may properly be drawn from the facts presented, and the facts must be considered in a light most favorable to the nonmovant" (Szczerbiak v Pilat, 90 NY2d 553, 556).

Viewing the evidence in the light most favorable to the plaintiff, no rational jury could have found in his favor on the issue of whether he sustained an injury under the "90/180 day" or "permanent consequential limitation" categories, and thus whether he sustained a serious injury within the meaning of Insurance Law § 5102(d). The plaintiff testified at trial that he missed only one month of work, that he then returned to work on a part-time basis, and that, after another month, he had resumed working on a full-time basis (see Rodriguez v Virga, 24 AD3d 650, 650-651). The plaintiff further acknowledged that he was never directed by his treating physician to refrain from working following the accident (see Pierre v Nanton, 279 AD2d 621, 622).

Moreover, "[a]lthough a bulging or herniated disc may constitute a serious injury within the meaning of Insurance Law § 5102(d), a plaintiff must provide objective evidence of the extent or degree of the alleged physical limitations resulting from the disc injury and its duration" (Monette v Keller, 281 AD2d 523, 523-524; see Diaz v Turner, 306 AD2d 241, 242). In this case, the testimony adduced at trial from the plaintiff's medical expert, Dr. Aric Hausknecht, failed to satisfy this requirement. Indeed, in addition to his failure to specify the objective means he used to ascertain the plaintiff's cervical and lumbosacral range of motion, Hausknecht acknowledged that "[r]ange of motion is not his problem. He has not lost a lot of motion in his neck or back." Consequently, the trial court should have granted the defendant's oral application pursuant to CPLR 4401 for judgment as a matter of law made at the close of the plaintiff's case.

In light of our determination, we need not address the parties' remaining contentions.
CRANE, J.P., RIVERA, ANGIOLILLO and DICKERSON, JJ., concur.

Pomaquiza v. Sibri

Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Michael I. Josephs of counsel), for appellant.
E. Abel Arcia, Jackson Heights, N.Y., and Tumelty & Spier, LLP, New York, N.Y.                  (Michael J. Andrews of counsel), for respondent (one brief filed).


DECISION & ORDER

In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Kings County (Bunyan, J.), dated November 29, 2006, which denied his 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.

While we affirm the order appealed from, we do so on grounds other than those relied upon by the Supreme Court. The Supreme Court incorrectly concluded that the defendant made a prima facie showing on his motion 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, 956-957). The defendant's motion papers did not adequately address the plaintiff's claim, clearly set forth in his bill of particulars, that he sustained a medically-determined injury or impairment of a nonpermanent nature which prevented him from performing substantially all of the material acts which constituted his usual and customary daily activities for not less than 90 days during the 180 days immediately following the accident. The subject accident occurred on November 12, 2004. The plaintiff alleged in his supplemental bill of particulars that he was incapacitated for a period of 7 ½; months after the subject accident. The defendant's examining orthopedist conducted an examination of the plaintiff almost a year and a half after the accident. He failed to relate his medical findings to this category of serious injury for the period of time immediately following the accident (see DeVille v Barry, 41 AD3d 763; Torres v Performance Auto. Group, Inc., 36 AD3d 894). Since the defendant failed to meet his prima facie burden, it is unnecessary to consider whether the papers submitted by the plaintiff in opposition were sufficient to raise a triable issue of fact (see DeVille v Barry, 41 AD3d 763; Kouros v Mendez, 41 AD3d 786; Coscia v 938 Trading Corp., 283 AD2d 538).
SANTUCCI, J.P., GOLDSTEIN, DILLON and ANGIOLILLO, JJ., concur.

Umar v. Ohrnberger

Mallilo & Grossman, Flushing, N.Y. (Jessica Kronrad of counsel), for appellant.
Russo & Apoznanski, Westbury, N.Y. (Susan J. Mitola of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals, as limited by her brief, from so much of an order of the Supreme Court, Nassau County (Robbins, J.), dated June 21, 2006, as granted that branch of the motion of the defendant June Ohrnberger which was 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 reversed insofar as appealed from, on the law, with costs, and that branch of the motion of the defendant June Ohrnberger which was for summary judgment dismissing the complaint insofar as asserted against her is denied.

The defendant June Ohrnberger failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), since the affirmed report of her examining neurologist disclosed that he found a 50% limitation in the plaintiff's range of motion in her lumbar spine (see Strong v ADF Constr. Corp., 41 AD3d 1209; Scudena v Mahbubur, 39 AD3d 620, 621), and her examining orthopedist failed to compare his findings as to the range of motion of the plaintiff's cervical and lumbar spines with normal ranges of motion (see Sullivan v Dawes, 28 AD3d 472; see also Caracci v Miller, 34 AD3d 515). Under the circumstances, it is unnecessary to consider the sufficiency of the plaintiff's opposition papers (see Lameni v Verizon, 34 AD3d 535; Mariaca-Olmos v Mizrhy, 226 AD2d 437, 438).
GOLDSTEIN, J.P., SKELOS, DILLON and McCARTHY, JJ., concur.

 

 

 

Roman v. Fast Lane Car Serv., Inc.

Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Thomas Torto and Jason Levine of counsel), for appellants.
Yankowitz Law Firm, P.C., Great Neck, N.Y. (Jack Yankowitz 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 (Schack, J.), dated February 16, 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 established their prima facie entitlement to summary judgment by showing 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, 956-957; see also Kearse v New York City Tr. Auth., 16 AD3d 45, 49-50; 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 affidavit of his treating physician, Dr. Emil Stracar, which incorporated therein many of his reports. Dr. Stracar concluded in his affidavit that, as a result of the subject accident, the plaintiff sustained significant and permanent injuries to the cervical and lumbar regions of his spine. Dr. Stracar failed to address, however, the findings of the defendants' examining radiologist that the injuries to the plaintiff's cervical and lumbar regions of his spine were the result of pre-existing degenerative disc disease and were unrelated to the subject accident. This omission rendered speculative Dr. Stracar's conclusions that the cervical and lumbar injuries and limitations he noted in his affidavit were the result of the subject accident (see Giraldo v Mandanici, 24 AD3d 419; Lorthe v Adeyeye, 306 AD2d 252; Pajda v Pedone, 303 AD2d 729; Ginty v MacNamara, 300 AD2d 624).

The magnetic resonance imaging reports on the cervical and lumbar regions of the plaintiff's spine were insufficient to raise a triable issue of fact since they merely noted that as of April 2004 the plaintiff had bulging and herniated discs in his cervical spine, and a malalignment of L5-S1. 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 Mejia 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 at 50; Diaz v Turner, 306 AD2d 241). The plaintiff's self-serving affidavit did not raise a triable issue of fact (see Fisher v Williams, 289 AD2d 288, 289). The plaintiff also failed to proffer competent medical evidence that he sustained a medically-determined injury of a nonpermanent nature which prevented him, for 90 of the 180 days following the subject accident, from performing his usual and customary activities (see Sainte-Aime v Ho, 274 AD2d 569).
SANTUCCI, J.P., GOLDSTEIN, DILLON and ANGIOLILLO, JJ., concur.

Moreno v. Fabre

Kelly, Rode & Kelly, LLP, Mineola (Daniel E. Cerritos of counsel), for appellant.
Mitchell Dranow, Mineola, for respondent.

Judgment, Supreme Court, New York County (Donna M. Mills, J.), entered December 6, 2005, after a jury verdict, awarding plaintiff the aggregate principal sum of $75,000 for past and future pain and suffering, unanimously affirmed, without costs.

The trial court providently exercised its discretion in permitting plaintiff's medical expert to testify about plaintiff's MRI films (St. Hilaire v White, 305 AD2d 209 [2003]). Defendant was properly notified that the expert would be called to testify at trial and was given his reports, which noted that he had reviewed plaintiff's previous medical reports that defendant knew included the MRI report. Furthermore, the expert's opinion of the MRI films and his conclusion about plaintiff's condition was substantially the same as the MRI report. In any event, defendant was not surprised or prejudiced by plaintiff's failure to disclose that his expert would offer an opinion of the MRI films at trial since the MRI report and the expert's reports were clearly central to plaintiff's case and since the "expert's testimony did not transcend the scope of information set forth in the applicable expert disclosure form or the previously exchanged medical reports, received well before trial" (Farrell v Gelwan, 30 AD3d 563 [2006]).

Viewing the evidence in the light most favorable to plaintiff, it cannot be said that no valid line of reasoning and permissible inferences supports the conclusion reached by the jury that plaintiff sustained a serious injury (Toure v Avis Rent A Car Sys., 98 NY2d 345 [2002]).

The trial court improperly refused the defendant's request for a missing witness charge, since the physician who treated plaintiff during the four months following the accident was the only potential witness who could testify regarding plaintiff's condition during the six months following the accident. However, such testimony was only material to plaintiff's 90/180 claim, i.e., his ability to resume his usual and customary activities for at least 90 days during the 180 days following the accident. Inasmuch as the jury was asked to return a special verdict in this case, the question of "serious injury" (Insurance Law § 5102[d]) was established with its affirmative answer to the first question ("significant limitation of use of a body function or system"), regardless of the alternative 90/180 test of the statute.

New York State Insurance Department – Office of General Counsel Opinion

07-10-02     Release for Third-Party Property Damage Claim

 

The Office of General Counsel issued the following opinion on October 10, 2007, representing the position of the New York State Insurance Department.

Re: Release for Third-Party Property Damage Claim

Question Presented:

May an automobile insurer include a clause in a release for a third-party claim that releases the insurer and the insured from “any other relating thing whatsoever, on account of, or in any way growing out of, an accident”?

Conclusion:

No. § 216.6(g) of N.Y. Comp. Codes R. & Regs. tit. 11, Part 216 (2003) (Regulation 64) prohibits an insurer from requiring a claimant to execute a release that is “broader than the scope of the settlement.”

Facts:

While making a left-hand turn, John Doe struck the right rear side of Jane Smith’s vehicle. Mr. Doe’s vehicle sustained damages totaling $3,710.53. After evaluating the accident and circumstances surrounding it, ABC Insurance Company (ABC), which insured Jane Smith, offered to settle with Mr. Doe for 20% of his total damages ($742.11). After Mr. Doe sent a letter to ABC and filed a complaint with the Department’s Consumer Services Bureau (CSB) objecting to the settlement offer, ABC made a new offer of 70% of the total damages ($2,597.37). As a condition of settling, ABC asked Mr. Doe to sign a release that states in relevant part:

PROPERTY DAMAGE RECEIPT AND RELEASE

The undersigned, _____________, for and in consideration of the payment of the sum of __________, the receipt of which is hereby acknowledged, do/does hereby release, acquit and forever discharge __________ and (his, her or their) heirs, successors and assigns from any and all actions, causes of action, claims or demands for property damage, and associated costs, loss of use, expenses, compensation, consequential damage or any other relating thing whatsoever, on account of, or in any way growing out of, an accident which happened on or about the _____ of ______ _____ on ____________ in the City/Town/Village ______ County of ________ State ______. (Emphasis added.)

Any claim for bodily injury is hereby reserved unto the undersigned and is not released.

ABC’s claim administration manager explained the meaning of the phrase, “any other relating thing whatsoever, on account of, or in any way growing out of, an accident.” She stated that:

the intention of the release is not to specifically rule out hidden damage, it is to finalize the agreement between the claimant and us as to the amount of the settlement. If the claimant agrees to sign the release, then they have agreed that no more money is owed to them as a result of this claim. That would include hidden damages (if they existed) whether it be one week or years after the signing of the release.

Analysis:

11 NYCRR § 216.6(g) sets forth standards for prompt, fair, and equitable settlements. The provision states:

Checks or drafts in payment of claims; releases. No insurer shall issue a check or draft in payment of a first-party claim or any element thereof, arising under any policy subject to this Part, that contains any language or provision that expressly or impliedly states that acceptance of such check or draft shall constitute a final settlement or release of any or all future obligations arising out of the loss. No insurer shall require execution of a release on a first- or third-party claim that is broader than the scope of the settlement. (Emphasis added.)

Thus, with respect to both first- and third-party claims, an insurer may not require a claimant to execute a release that is broader than the scope of the settlement. The release must describe the claim with specificity, and include an explanation and calculation of the payment that the insurer will make to settle the claim. See Office of General Counsel (OGC) Opinion 02-05-01 (May 1, 2002).

In the situation presented here, the release appears to describe the claim with specificity. However, in the Department’s estimation, it does not include an explanation and calculation of the payment that ABC will make to settle Mr. Doe’s claim. Furthermore, the release is broader than the scope of the settlement. The purpose of prohibiting a release that is broader than the scope of the settlement is to guarantee that the claimant can recover for all damages to the claimant’s property arising from a particular accident, whether the claimant discovers the damages at the initial inspection, or subsequent to the initial repair and signing of the release. ABC, like Mr. Doe, had an opportunity to inspect Mr. Doe’s vehicle. Thus, any damages that are hidden from ABC are also hidden from Mr. Doe. It therefore would be unfair to preclude Mr. Doe from recovering for any hidden damages arising from the accident that Mr. Doe discovers after signing ABC’s release. Because the release in question here prevents Mr. Doe from recovering any damages discovered subsequent to the initial repair of his automobile and the signing of the release, the release is broader than the scope of the settlement, and thereby violates 11 NYCRR § 216.6(g).

In defense of ABC’s release, the inquirer argues that nothing in OGC Opinion 87-28 (NILS) (Jun. 18, 1987), OGC Opinion 87-37 (NILS) (Aug. 13, 1987), and OGC Opinion 2002-122 (NILS) (May 1, 2002) prohibits “an insurance carrier and a third-party claimant from negotiating, settling and releasing any and all claims resulting from an automobile accident, including those for future damages.” In addition, the inquirer asserts that “OGC Opinion No. 87-28, indicates that the use of a ‘Release of Property Damage Claim’ form, which is limited to the settlement of a third-party property damage claim and does not limit any potential bodily injury liability, does not violate the above regulation.”

While OGC Opinion 87-28 (NILS) (Jun. 18, 1987) and OGC Opinion 87-37 (NILS) (Aug. 13, 1987) (which opines on a revised version of a release that was previously submitted and discussed in OGC Opinion 87-28) do not explicitly state that an insurer can use a third-party release that releases the insurer from any unknown property damage claims, the Department can understand how the insurer could interpret those opinions to support such a proposition.

Nonetheless, it is the Department’s position that a release may not set forth language that releases an insurer from all unexpected, unknown, and/or unanticipated property damage claims without violating 11 NYCRR § 216.6(g). Thus, to the extent that OGC Opinion 87-28 (NILS) (Jun. 18, 1987) and OGC Opinion 87-37 (NILS) (Aug. 13, 1987) appear to imply otherwise, these opinions should no longer be followed.

Therefore, ABC’s “Property Damage Receipt and Release” violates 11 NYCRR § 216.6(g) because it is broader than the scope of the settlement. If Mr. Doe has not already signed the release, then ABC must revise the release to comply with 11 NYCRR § 216.6(g). In addition, from this point forward, ABC: may not include language in its releases that release ABC from all unexpected, unknown, and/or unanticipated property damage claims; must describe each claim with specificity; and must include an explanation and calculation of the payment that ABC will make to the claimant to settle the claim. We ask that the inquirer please confirm in writing within ten (10) business days of receipt of this letter that ABC will comply with the above.

For further information you may contact Assistant Attorney Joana Lucashuk at the New York City Office.

 

Catholic Health Services of Long Island, Inc.,  v.  National Union Fire Insurance Company of Pittsburgh, P.A

Anderson Kill & Olick, P.C., New York, N.Y. (John B. Berringer,
Dennis J. Artese, and Jennifer D. Katz of counsel), for appellant.
D'Amato & Lynch, New York, N.Y. (Kevin J. Windels and
Stephen F. Willig of counsel), for
respondent.


DECISION & ORDER

In an action, inter alia, for a judgment declaring that the defendant is obligated to defend the plaintiff in certain underlying antitrust investigations by the New York State Attorney General and the United States Department of Justice, the plaintiff appeals from an order of the Supreme Court, Nassau County (Warshawsky, J.), entered September 18, 2006, which denied its motion for summary judgment, in effect, declaring that the defendant is so obligated and granted the defendant's cross motion for summary judgment dismissing the complaint.

ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Nassau County, for the entry of an appropriate declaratory judgment.

In March 1998 the plaintiff, its five subsidiary hospitals, and several other parent corporations and their subsidiary hospitals entered into a joint venture agreement, and thereafter into an amended joint venture agreement, to deliver cost-effective quality healthcare on Long Island. Pursuant to the joint venture agreement, individual hospitals shared a governance structure, clinical planning strategies, and financial risks. The plaintiff provided 43% of the stated capital for the venture. The joint venture was called Long Island Healthcare Network (hereinafter LIHN), but it was not registered as a separate legal entity. [*2]

In October 1998 the plaintiff purchased a not-for-profit insurance policy (hereinafter the policy) from the defendant, and the plaintiff and its five subsidiary hospitals were named insureds under the policy. The policy provided, among other things, defense coverage for "claims" against an "insured" for "wrongful acts." A "claim" was defined, inter alia, as "a formal administrative or regulatory proceeding commenced by the filing of a notice of charges, formal investigative order or similar document." A "wrongful act" was defined, among other things, as a violation of the Sherman Antitrust Act or similar federal or state law.

In November 2002 the New York State Attorney General addressed an investigative subpoena to LIHN and served it upon LIHN. The subpoena stated that the material sought was relevant to "a confidential investigation into whether the activities of [LIHN] and the joint activities of hospitals within LIHN" violated certain provisions of the Sherman Antitrust Act (see 15 USC §§ 1, 2) or the Donnelly Act (see General Business Law § 340). The accompanying interrogatories defined LIHN broadly as including, inter alia, not only LIHN, but also any entity owning at least a 20% ownership interest in LIHN. Subsequently, the United States Department of Justice (hereinafter the DOJ) also served interrogatories on LIHN.

The plaintiff expended the sum of $2,300,877.77 in answering the interrogatories and on legal fees. The plaintiff sought coverage under the policy upon the theory that the subpoena and interrogatories were "claims" within the meaning of the policy. The defendant disclaimed coverage.

The plaintiff commenced this action alleging, among other things, that the subpoena and interrogatories were "claims" within the meaning of the policy, and thus, that the defendant owed it a defense and should pay the costs incurred by it in answering the subpoena and interrogatories. The plaintiff moved for summary judgment, in effect, declaring that the defendant was obligated to defend it under the policy, and the defendant cross-moved for summary judgment dismissing the complaint.

The Supreme Court denied the plaintiff's motion and granted the defendant's cross motion, reasoning, inter alia, that insofar as LIHN was the designated recipient of the subpoena and interrogatories, it was the target of the investigation, and insofar as LIHN was not a named insured under the policy, the plaintiff's claim for its costs and attorney's fees was not covered under the policy. The court reasoned that the plaintiff had only incurred attorney's fees and costs indirectly and "solely by virtue of an independently imposed contractual obligation contained" in the joint venture agreement to pay a share of the fees proportionate to its ownership interest (43%). The court reasoned that it was not necessary to reach the plaintiff's additional contention that the subpoena constituted a "claim" within the meaning of the policy. We agree.

Coverage extends only to named entities and/or individuals defined as insured parties under the relevant terms of the policy (see Sanabria v American Home Assur. Co., 68 NY2d 866, 868; Seavey v James Kendrick Trucking, 4 AD3d 119; Mitchell v County of Jefferson, 217 AD2d 917; National Gen. Ins. Co. v Hartford Acc. & Indem. Co., 196 AD2d 414, 415). "Where the insurance contract does not name, describe, or otherwise refer to the entity or individual seeking the benefit thereof as an insured, there is no obligation to defend or indemnify" (State of New York v American Mfrs. Mut. Ins. Co., 188 AD2d 152, 155).

Here, since LIHN is not named, described, or otherwise referred to as an insured in [*3]the policy, the coverage provisions of the policy are inapplicable and there is no duty to defend (see State of New York v Liberty Mut. Ins. Co., 23 AD3d 1084).

In light of our determination, it is not necessary to reach the plaintiff's contention that the subpoena constituted a "claim" within the meaning of the policy.

Since this is, in part, a declaratory judgment action, we remit the matter to the Supreme Court, Nassau County, for entry of an appropriate declaratory judgment (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

Continental Casualty Company v. Stradford  

White, Fleischner & Fino, LLP, New York, N.Y. (Janet P. Ford and
Nancy Davis Lyness of counsel), for respondent.


DECISION & ORDER

In an action for a judgment declaring that the plaintiff is not obligated to defend or indemnify the defendant Terrance D. Stradford in an underlying action entitled Gunaratne v Stradford, pending in the Supreme Court, Richmond County, under Index No. 98-13406 and an underlying action entitled Perera v Stradford, pending in the same court, under Index No. 98-13407, the defendants Hector Gunaratne, Rose Gunaratne, and Sumandasa Perera, parent and natural guardian of Prashan Perera, appeal from an order of the Supreme Court, Richmond County (Minardo, J.), entered March 31, 2006, which granted the plaintiff's motion for summary judgment and denied their cross motion for summary judgment.

ORDERED that the order is reversed, on the law, with costs, the motion is denied, the cross motion is granted, and the matter is remitted to the Supreme Court, Richmond County, for the entry of a judgment declaring that the plaintiff is obligated to defend and indemnify the defendant Terrance D. Stradford in the underlying actions entitled Gunaratne v Stradford, pending in the Supreme Court, Richmond County, under Index No. 98-13406, and Perera v Stradford, pending in the same court under Index No. 98-13407.

To effectively deny insurance coverage based upon lack of cooperation, "an insurance carrier must demonstrate (1) that it acted diligently in seeking to bring about the insured's cooperation, (2) that the efforts employed by the carrier were reasonably calculated to obtain the insured's cooperation, and (3) that the attitude of the insured, after his cooperation was sought, was one of willful and avowed obstruction" (Physicians' Reciprocal Insurers v Keller, 243 AD2d 547, 547-548; see Thrasher v United States Liab. Ins. Co., 19 NY2d 159; Hyer v Travelers Ins. Co., 297 AD2d 707; Commercial Union Ins. Co. v Burr, 226 AD2d 416; Pawtucket Mut. Ins. Co. v Soler, 184 AD2d 498).

The plaintiff, Continental Casualty Company (hereafter Continental), provided counsel for the defendant Terrance D. Stradford in two underlying actions. During the course of the investigation and defense of both actions, Stradford ignored a series of written correspondence and telephone calls from Continental's representatives and from defense counsel. In addition, Stradford repeatedly refused to provide requested documents, records, and evidence and unreasonably refused to consent to a recommended settlement based on adverse findings of experts retained to review the underlying actions. Notwithstanding his own request for new counsel, Stradford refused to execute stipulations consenting to a change of attorney. He also failed to appear for scheduled depositions and meetings. On July 8, 2004, Continental's claims consultant sent Stratford two separate letters advising him that he was in breach of the policy's cooperation clause and risked a disclaimer of coverage on the underlying actions if he continued to fail to cooperate. Both letters were returned to Continental's office on August 11, 2004, marked "Unclaimed."

Moreover, the same claims consultant acknowledged that he had been assigned by Continental to handle two other professional liability claims against Stradford (hereafter the O'Halloran/Shields claims). On June 1, 2004, Continental obtained an order signed by Justice Thomas P. Aliotta of the Supreme Court, Richmond County (hereafter Justice Aliotta's order), in a declaratory judgment action relieving it of its obligation to defend and indemnify Stradford in dental malpractice actions arising out of the O'Halloran/Shields claims. Contrary to the suggestion of our dissenting colleagues, the record belies any substantial distinction between Stradford's willful noncooperation in any of the four claims. Among the documents Continental submitted to establish what its counsel described as "a clear pattern of non-compliance and obstruction on the part of Stradford, and Continental's reasonable, and indeed quite vigorous efforts to elicit Stradford's cooperation" are numerous letters sent to Stradford either by Continental, or counsel assigned by Continental to represent Stradford, reminding him of his obligation to cooperate in the investigation and defense of the underlying claims and actions. At least 10 of those letters, sent over a period of time dating back to early 1999, make reference to Stradford's lack of cooperation in actions involving the O'Halloran/Shields claims in addition to his failure to cooperate in the investigation and defense of the claims of the appellants herein. The record demonstrates that Stradford's failure to cooperate equally permeated all four claims. In fact, Continental submitted Justice Aliotta's order in support of its application in this declaratory judgment action and argued that the facts which justified the June 2004 order were "absolutely identical" to Stradford's willful noncooperation in the claims underlying this declaratory judgment action. Moreover, Continental argued that Stradford should be foreclosed from contending otherwise by the doctrine of collateral estoppel. There is no indication that the Supreme Court relied on the doctrine of collateral estoppel in this action. Nevertheless, in view of the numerous letters jointly addressing all four claims and counsel's assertion that the facts involved in both declaratory judgment actions were "absolutely identical," there is no basis to now conclude that Stradford's conduct in the two sets of claims was so distinct as to justify the need for extensive consultation with coverage counsel over a period of two months.

Under these circumstances, although Continental carried its burden to establish that it acted diligently in seeking to bring about Stradford's cooperation, that its efforts were reasonably calculated to obtain Stradford's cooperation, and that the attitude of Stradford, its insured, after his cooperation was sought, was one of willful and avowed obstruction (see Utica First Ins. Co. v Arken, Inc., 18 AD3d 644; Hyer v Travelers Ins. Co., 297 AD2d 707), Continental failed to make out a prima facie case that its disclaimer of coverage on that basis was timely (see Insurance Law § 3420[d]).

A cogent argument could be made that in March 2004, when it moved for declaratory relief with respect to the O'Halloran/Shields claims, Continental had sufficient knowledge of the facts on which it could reasonably disclaim coverage for willful noncooperation in the claims underlying this action as well. Certainly, in June 2004 when Continental received Justice Aliotta's order granting the requested declaratory relief in actions arising out of the O'Halloran/Shields claims, Continental was in receipt of a judicial imprimatur that Stradford's conduct permitted a disclaimer. Nevertheless, acknowledging that Continental was continuing to pursue its heavy burden to diligently bring about Stradford's cooperation in the claims underlying this declaratory judgment action (see Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168-169) we find that Continental had sufficient information to support a disclaimer of coverage not later than August 11, 2004, the date of the return of the letters marked unclaimed. The lapse of in excess of two months from August 11, 2004, the date it was readily apparent that its efforts to obtain the cooperation of its insured were fruitless, until October 13, 2004, the date Continental sent its disclaimer letter, without adequate explanation, was not "as soon as is reasonably possible" within the contemplation of the statute (Insurance Law § 3420 [d]; see Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1030; Matter of Allstate Ins. Co. v Cruz, 30 AD3d 511; Utica First Ins. Co. v Arken, Inc., 18 AD3d 644; Hyer v Travelers Ins. Co., 297 AD2d 707). Other than the undocumented and conclusory assertion that it was consulting with claims counsel to determine whether the six-year-long, well-documented pattern of willful noncooperation warranted a disclaimer of coverage, Continental has offered no evidence to justify its delay. Accordingly, the Supreme Court should not have granted Continental's motion for summary judgment.

Moreover, the appellants, under these circumstances, established their prima facie entitlement to summary judgment declaring that Continental is obligated to defend or indemnify the defendant Terrance D. Stradford in an action entitled Gunaratne v Stradford, pending in the Supreme Court, Richmond County, under Index No. 98-13406 and an action entitled Perera v Stradford, pending in the same court, under Index No. 98-13407. Continental's failure to disclaim coverage on the ground of lack of cooperation until October 13, 2004, was unreasonable (see Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1029; New York State Ins. Fund v Merchants Ins. Co. of N. H., 5 AD3d 449, 451). In opposition, Continental failed to raise a triable issue of fact as to the timeliness of its disclaimer. Accordingly, the Supreme Court should have granted the appellants' cross motion.

Since this is a declaratory judgment action, the matter must be remitted to the Supreme Court, Richmond County, for the entry of a judgment declaring that the plaintiff is obligated to defend and indemnify the defendant Terrance D. Stradford in the underlying actions (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
SANTUCCI, J.P., SKELOS, and FISHER, JJ., concur.

 

GOLDSTEIN, J., dissents and votes to affirm the order appealed from, with the following memorandum, in which SCHMIDT, J., concurs:

As the Supreme Court properly concluded, the plaintiff insurance carrier established that the insured failed to cooperate with it in his defense (see Utica First Ins. Co. v Arken, Inc., 18 AD3d 644). Further, under the circumstances, the insurance carrier's disclaimer was timely.

Insurance Law § 3420(d) provides that in a case involving personal injuries, the insurance carrier must disclaim liability "as soon as is reasonably possible." In a case where the reason to disclaim is apparent as soon as the claim is made - such as where the insurance carrier did not receive timely notice of the accident - short unexplained delays may render the disclaimer invalid (see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 70).

However, in a case where the ground for disclaimer is noncooperation of the insured, the reason to disclaim is not apparent as soon as the claim is made. Even where it is apparent that the insured has not cooperated, the insurance carrier has a "heavy" burden of "diligently . . . seeking to bring about the insured's co-operation" and demonstrating that its efforts were "reasonably calculated" to secure that cooperation; a disclaimer is only permissible when it is apparent that the noncooperation constitutes "willful and avowed obstruction" (Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 167-168; see Utica First Ins. Co. v Arken, Ins., 18 AD3d 644; Matter of New York Cent. Mut. Fire Ins. Co. [Saloman], 11 AD3d 315, 318).

In the instant case, the underlying actions to recover damages for dental malpractice were commenced in 1998. The carrier first requested the insured's cooperation in February 1999. Thereafter the insured, without explicitly repudiating his duty to cooperate with the carrier, engaged in a pattern of noncooperative conduct which became "increasingly more egregious with the passage of time." He appeared for one deposition and then failed to appear for other depositions and meetings and failed to provide requested documents while continuing to promise to provide documents in his possession. After a settlement was suggested by the attorney provided by the carrier to defend the insured, the insured attributed his lack of cooperation to his loss of confidence in that attorney.

In July 2003 the insurance carrier agreed to the insured's request for a new attorney to defend him. The original attorney moved to be relieved, the motion was granted, and the insured was notified of the name and address of his new attorney in April 2004. In July 2004, after the insured failed to sign the authorization for substitution of counsel and failed to return counsel's telephone calls, the insurance carrier sent letters to the insured by regular and certified mail, asking him to meet with the carrier on or before August 13, 2004, and to consent to allowing the carrier to settle the claims, and warning that further noncooperation "may imperil your coverage under the Policy for this claim."

On August 11, 2004, the letters from the insurance carrier were returned unclaimed. The fact that the letters were returned unclaimed was insufficient to support an inference that the failure to cooperate was deliberate (see Matter of Liberty Mut. Ins. Co. v Roland-Staine, 21 AD3d 771, 773; Matter of New York Cent. Mut. Fire Ins. Co. [Salomon], 11 AD3d 315, 318). As noted by the appellants on appeal, "there is no proof" that the insured received these letters, since they were returned "unclaimed."

According to the insurance carrier's claims consultant, the "normal protocol" for disclaiming in cases such as this was for him to make a recommendation to his director who, in turn, would make a recommendation to coverage counsel. After consulting with "coverage counsel," the carrier concluded that the insured's pattern of conduct justified an inference that the failure to cooperate was willful.

On October 13, 2004, two months after the letters were returned unclaimed, the insurance carrier's attorney disclaimed coverage based upon the insured's "pattern of non-cooperation" and advised the insured that the carrier "in conjunction with this disclaimer letter" was "initiating a declaratory judgment action against you which seeks a judicial declaration that on account of your non-cooperation, you are not entitled to any further defense or indemnification coverage." On or about October 29, 2004, the carrier commenced the instant action against the insured and the claimants in the underlying actions for a judgment declaring the validity of its disclaimer. The insured defaulted in appearing in the action.

The carrier moved for leave to enter a default judgment against its insured, and for summary judgment against the claimants in the underlying actions. The claimants cross-moved for summary judgment, arguing that the carrier failed to prove a willful failure to cooperate and failed to timely disclaim on those grounds. The Supreme Court granted the carrier's motion and denied the cross motion.

On appeal, the appellants take the inherently inconsistent positions that the carrier should have done more to encourage the insured's cooperation after its letters were returned unclaimed on August 11, 2004, and should have disclaimed liability sooner - perhaps years sooner. The majority concurs with the Supreme Court that the insured's pattern of conduct was sufficient to satisfy the carrier's "heavy" burden of establishing "willful and avowed obstruction" on the part of its insured (Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168; Hyer v Travelers Ins. Co., 297 AD2d 707, 708; Commercial Union Ins. Co. v Burr, 226 AD2d 416, 417). However, the majority further concludes that the disclaimer was untimely as a matter of law.

The majority's position places the carrier in an untenable dilemma: the carrier must diligently seek to bring about the insured's cooperation and may only disclaim after the insured has demonstrated willful and avowed obstruction, while adhering to time constraints applicable to situations where the reason to disclaim is "immediately apparent" upon receipt of the claim (Matter of Allstate Ins. Co. v Cruz, 30 AD3d 511, 513). Requiring the carrier to adhere to such time constraints would encourage precipitous disclaimers, contrary to the public policy of requiring the carrier to make diligent efforts and to defer the decision to disclaim until after the insured has demonstrated "willful and avowed obstruction" (Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168). The requirement that the carrier make such efforts is "to protect an innocent injured party, who may well have relied upon the fact that the insured had adequate coverage, from being penalized for the imprudence of the insured, over whom he or she has no control" (Mount Vernon Fire Ins. Co. v 170 E. 106th Street Realty Corp., 212 AD2d 419, 420-421; see Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168; Hanover Ins. Co. v DeMato, 143 AD2d 807, 808). In the instant case, the appellants are the very persons whom this requirement seeks to protect.

While it is true that the carrier must act "as soon as is reasonably possible" (Insurance Law § 3420[d]), the Court of Appeals noted in Hartford Ins. Co. v County of Nassau (46 NY2d 1028, 1030) that "a two-month delay may often be easily justified" (see Norfolk & Dedham Mut. Fire Ins. Co. v Petrizzi, 121 AD2d 276, 277). In the instant case, the question of whether a disclaimer based upon noncooperation was warranted required an analysis of whether the insured's pattern of conduct over a period of nearly six years met the stringent legal standards for disclaimer on that basis. This analysis required consultation with the carrier's attorney, who issued the disclaimer letter in conjunction with a determination that commencement of a declaratory judgment action against the insured was warranted. Accordingly, the two-month delay was explained and was reasonable under the circumstances (see Generali-U.S. Branch v Rothschild, 295 AD2d 236, 237-238; New York Cent. Mut. Fire Ins. Co. v Riley, 234 AD2d 279, 280; Matter of Prudential Prop. & Cas. Ins. Co. [Mathieu], 213 AD2d 408).

The cases involving unreasonable delays in disclaiming based upon noncooperation typically involve delays substantially longer than in the instant case. For example, in Consolidated Edison Co. of N.Y. v Hartford Ins. Co. (203 AD2d 83, 84), a delay of 4½; months after "the point in time when the insurer becomes aware of sufficient facts upon which to base a decision to disclaim coverage" was deemed unreasonable as a matter of law. In Allcity Ins. Co. v 601 Crown St. Realty Corp. (264 AD2d 315, 316), relied upon by the appellants, the carrier's delay of over two years after the final letter attempting to secure the insured's voluntary cooperation was unreasonable as a matter of law. In New York State Ins. Fund v Merchants Ins. Co. of N.H. (5 AD3d 449, 451), cited by the majority, the carrier disclaimed coverage 18 months after commencement of a third-party action against its insured and the disclaimer was based upon the insured's "mere inaction" which was insufficient to demonstrate noncooperation.

As further support for its conclusion that the disclaimer was untimely, the majority notes that in June 2004, in another declaratory judgment action relating to different claims against the same insured, the Supreme Court, Richmond County, declared that the carrier was not obligated to defend or indemnify the insured based upon his noncooperation. In that case, the insured failed to appear on scheduled trial dates, which constitutes a particularly egregious form of noncooperation (see Allstate Ins. Co. v United Intl. Ins. Co., 16 AD3d 605, 606). The claimants in the instant case took the position that the determination in that prior case was not binding here "inasmuch as different facts and evidence are before the Court on the instant application." The fact that the carrier prevailed in the prior action did not mean that it immediately should have disclaimed in all cases involving the same insured. Since the carrier met the insured's demands to replace his attorney in April 2004 - which the insured claimed was the stumbling block to his cooperation - the carrier cannot be faulted for taking further time and making further efforts to secure his cooperation in the months thereafter.

Perhaps, with hindsight, an argument could be made that there was sufficient evidence of noncooperation earlier in the proceedings. However, no authority is cited for the proposition that the carrier was required to do the legal minimum and no more, assuming arguendo it could judge what the legal minimum was under these circumstances. Imposing a requirement that the carrier immediately disclaim after it has done the legal minimum to sustain its "heavy" burden (Thrasher v United States Liab. Ins. Co., 19 NY2d at168) is an oxymoron which would not serve the interests of innocent claimants such as the appellants who have no control over the conduct of the insured.

Nevertheless, cognizant that the carrier is trapped between the proverbial rock and a hard place, the appellants maintain that the carrier could have and should have done still more to meet its heavy burden of demonstrating lack of cooperation. In their reply brief, they cite the carrier's arguments that it satisfied this heavy burden as "support" for their argument that the disclaimer was untimely.

It is true that the carrier made Herculean efforts to secure the insured's cooperation, which included appointment of a new attorney to represent him, negotiating proposed settlements to which the insured refused to agree, and scheduling and rescheduling meetings which the insured failed to attend. The carrier should not be penalized for these efforts, which were in the best interest of the appellants themselves. When the carrier's final letters were returned unclaimed, a reasoned determination was made in consultation with coverage counsel that further efforts were futile and commencement of the instant action for declaratory relief was required. The insured and the claimants were promptly notified of that determination and the extensive reasons therefor. Under the circumstances of this case, it cannot be said that the disclaimer was untimely.

 

Hermitage Insurance Company v. Arm-ing, Inc.

Gold, Stewart, Kravatz, Benes & Stone, LLP, Westbury, N.Y.
(Jeffrey B. Gold and James F. Stewart of counsel), for appellant-
respondent.
Michael J. Strenk, Commack, N.Y., for respondents-appellants.


DECISION & ORDER

In an action for a judgment declaring that the plaintiff is not obligated to defend or indemnify the defendants Arm-ing, Inc., and Roseann Caceres in an underlying action entitled Santiago v Caceres, pending in the Supreme Court, Kings County, under Index No. 36451/05, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Westchester County (Smith, J.), entered June 5, 2006, as, in effect, denied its motion for summary judgment declaring that it is not obligated to defend and indemnify the defendants Arm-ing, Inc., and Roseann Caceres in the underlying action, and the defendants Arm-ing, Inc., and Roseann Caceres cross-appeal, as limited by their brief, from so much of the same order as, in effect, denied their cross motion for summary judgment declaring that the plaintiff is obligated to defend and indemnify them in the underlying action.

ORDERED that the order is affirmed insofar as appealed and cross-appealed from, without costs or disbursements.

An insurer waives its affirmative defense of late notice if it fails to disclaim coverage "as soon as is reasonably possible" (Insurance Law § 3420[d]) after it "first learns of the grounds for disclaimer of liability or denial of coverage" (Matter of Allcity Ins. Co. [Jimenez], 78 NY2d 1054, 1056; see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 68-69; Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1029; Reyes v Diamond State Ins. Co., 35 AD3d 830, 831, lv deniedNY3d [Nov. 19, 2007]; New York Cent. Mut. Fire Ins. Co. v Majid, 5 AD3d 447, 448). Here, the delay of two months, occasioned by the insurer's need to investigate the claim to determine when its insureds received notice of the accident, was reasonable under the circumstances (see Halloway v State Farm Ins. Cos., 23 AD3d 617, 618; Farmbrew Realty Corp. v Tower Ins. Co. of N.Y., 289 AD2d 284, 285; Silk v City of New York, 203 AD2d 103, 103-104). Thus, the plaintiff made out a prima facie case that its denial of coverage was timely (see Halloway v State Farm Ins. Cos., 23 AD3d at 618; Farmbrew Realty Corp. v Tower Ins. Co. of N.Y., 289 AD2d at 285; Silk v City of New York, 203 AD2d at 104).

In opposition, however, the defendants Arm-ing, Inc., and Roseann Caceres raised a triable issue of fact as to whether they notified the plaintiff of the claim as soon as practicable, as required by the relevant insurance contract. The reasonableness of "a good-faith belief of nonliability" is a matter ordinarily left for determination by the finder of fact (see Argentina v Otsego Mut. Fire Ins. Co., 86 NY2d 748, 750; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 441; Morris Park Contr. Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 33 AD3d 763; Jordan Constr. Prods. Corp. v Travelers Indem. Co. of Am., 14 AD3d 655, 656; see also 875 Forest Ave. Corp. v Aetna Cas. & Sur. Co., 37 AD2d 11, 13, affd 30 NY2d 726). Accordingly, the Supreme Court properly, in effect, denied the motion and cross motion for summary judgment.

Fung v Japan Airlines Company, Ltd.
AND

Brent F. Fung v Aero Snow Removal Corp.

 

Brian J. Isaac, for appellants.
David H. Fromm, for respondent Aero Snow Removal Corp.
Andrew D. Polin, for respondent Japan Airlines Management Corp.

JONES, J.:

            In this consolidated negligence action, we are required to consider the relationship between the exclusive remedy provisions of Workers' Compensation Law §§ 11 and 29(6), and principles of agency. Specifically, we are asked whether Japan Airlines Management Corporation (JAMC), as the Port Authority of New York and New Jersey's (Port Authority) putative managing agent, may benefit from the exclusive remedy defense in an action by plaintiff Brent Fung, a Port Authority employee, against JAMC. In a related action, Fung seeks to recover damages against Aero Snow Removal Corporation arising out of the same alleged injuries.

I. Facts and Procedural History

 

            Plaintiff Brent Fung is employed by the Port Authority as an electrician. Plaintiff claims that at approximately 6:00 A.M. on January 22, 2001, he slipped and fell on a patch of ice shortly after arriving in the parking lot of Building 14 at John F. Kennedy International Airport and that he sustained back injuries requiring surgery, for which he began collecting Workers' Compensation payments a year later. The Port Authority owned the Building 14 premises, which it leased to JAMC. JAMC simultaneously subleased 70% of the premises — which encompasses the subject parking lot — back to the Port Authority. The lease/sublease declared that "[t]his agreement does not constitute [JAMC] as agent or representative of the Port Authority for any purpose whatsoever," and that "[n]either a partnership nor any joint venture" is created. This statement of the parties' relationship is repeated elsewhere in the lease.

            The lease obligated JAMC to contract with other entities for snow removal and electrical lighting work for the entire premises, among other maintenance responsibilities. Pursuant to the lease, JAMC contracted with Aero to commence "push and pile" snow removal operations when one inch of snow accumulated. Further, Aero would provide "ice/snow control" services — such as salting or sanding — at JAMC's request. Finally, the contract provided that JAMC was to release Aero upon the satisfactory completion of the snow removal. The Port Authority and JAMC share maintenance expenses on a 70%/30% basis. In 2002, Fung, and his wife suing derivatively (plaintiffs), commenced a negligence action against JAMC, among others (Action No. 1). JAMC subsequently commenced a third-party action against Aero and a fourth-party action against the Port Authority, each for common law and contractual indemnification. Plaintiffs thereafter commenced a separate negligence action against Aero (Action No. 2). At his examination before trial, Fung testified that he did not notice any snow on top of or near the ice patch after he fell, nor did he know for how long the ice patch existed. Moreover, Fung testified that he had complained to his supervisor about poor or inadequate lighting in the parking lot.

            JAMC's representatives also testified. Rudolph Auslander, JAMC's president, indicated that he signed the snow removal contract with Aero on behalf of JAMC as "the agent for [the] Port Authority." JAMC's signature line on its contract with Aero says that JAMC acted 'As Agents [sic] for the Port Authority.'" Sameer Sikander, a facilities manager at JAMC, testified as to the snowstorm that occurred during the two days preceding Fung's accident, January 20 and 21, 2001. Relying on his "snow logs" created during the storm, Sikander testified that salting of the Building 14 parking lot occurred between 10:30 P.M. on January 20 and 1:30 A.M. on January 21, but that subsequent salting may have taken place. He further testified that heavy snow fell in the early morning hours of January 21 and that snow clearing operations began around 3:00 A.M. and continued into the afternoon. Further, Aero's operations manager, Joseph Boccio, testified that the JAMC/Aero contract did not require Aero to affirmatively salt or sand any area; that, based on Aero's records, all of Aero's work concerning the snow storm in question occurred on January 21, between 12:30 A.M. and 3:15 P.M., a day before Fung's accident; and that Aero did not sand or salt the parking lot on January 21.

            Following discovery, JAMC moved for summary judgment dismissing the complaint and all cross claims asserted against it. JAMC argued that, as the Port Authority's agent responsible for maintenance of the parking lot and lighting fixtures, it was immune from liability under the exclusive remedy provisions of the Workers' Compensation Law. Additionally, JAMC argued that, in any event, it did not have actual or constructive notice of the alleged ice patch or of the parking lot's allegedly poor lighting.

            Aero subsequently moved for summary judgment dismissing JAMC's third-party complaint against it in Action No. 1 and separately moved for summary judgment dismissing plaintiffs' complaint in Action No. 2. Further, the Port Authority moved for summary judgment dismissing JAMC's fourth-party complaint against it in Action No. 1, and JAMC cross-moved for the same relief on the second and third causes of action for contractual indemnification, apparently abandoning its common law indemnification claim.

            Supreme Court denied JAMC's and Aero's motions to dismiss plaintiffs' claims, and Aero's motion to dismiss JAMC's third-party complaint. Further, the court granted the Port Authority's motion to the extent of dismissing JAMC's common law indemnification claim in the fourth-party complaint in Action No. 1, but denied its motion, and JAMC's cross motion, as to the contractual indemnification claim, noting that questions of fact existed as to JAMC's liability in the underlying personal injury action. The court rejected JAMC's exclusive remedy defense because JAMC and Fung's employer, the Port Authority, "are separate legal entities" with "separate income tax returns, separate budgets, and separate day-to-day control" even though they may have "some financial interrelation."

            JAMC appealed from so much of Supreme Court's order as denied its motion for summary judgment dismissing the complaint in Action No. 1 and denied its cross motion for summary judgment on the contractual indemnification claim in its fourth-party complaint against the Port Authority. Aero cross-appealed from so much of Supreme Court's order as denied its motions for summary judgment dismissing JAMC's and plaintiffs' complaints against it.

            The Appellate Division reversed Supreme Court's order, insofar as appealed from, granted JAMC's motion and dismissed the complaint and all cross claims asserted against it in Action No. 1, granted Aero's motion and dismissed the third-party complaint in Action No. 1 and the complaint in Action No. 2, and "severed" Action No. 1 "against the remaining defendants"^[FN1] (Fung v Japan Airlines Co., Ltd., 31 AD3d 707, 707-708 [2d Dept 2006]). As to the injured plaintiff's underlying action against JAMC, the court relied on Seudath v Mott (202 AD2d 658 [2d Dept 1994], lv dismissed 85 NY2d 890 [1995]) and determined that because JAMC "was serving as the Port Authority's managing agent when the accident occurred, the plaintiffs' claims against [JAMC] are barred pursuant to the exclusivity provisions of the Workers' Compensation Law § 29" (id. at 708).

            As to Aero in Action No. 2, the court concluded that plaintiffs failed to raise a triable issue of fact in response to Aero's demonstrated entitlement to judgment as a matter of law. The court determined that the parties' remaining contentions were either rendered academic or were without merit. This Court granted plaintiffs' motion for leave to appeal.

 

II. Discussion

 

            A.         Action No. 1: Fung v Japan Airlines Co., Ltd., et al

            Workers' Compensation Law §§ 11 and 29(6) restrict an employee from suing his or her employer or co-employee for an accidental injury sustained in the course of employment. However, the workers' compensation remedy is generally not exclusive if the employee is injured by a third person (see Minkowitz, Practice Commentaries, McKinney's Cons Laws of NY, Book 64, Workers' Compensation Law § 29[6], at 196). Central to the issue before us is whether JAMC was Fung's employer entitled to claim exclusivity.

            Plaintiffs argue that in finding that JAMC acted as the Port Authority's managing agent, the Appellate Division disregarded the clear statement of intent in the JAMC/Port Authority lease; that, in any event, the court misapplied the exclusivity defense to bar their action against JAMC because even if JAMC may be considered the Port Authority's agent, JAMC was neither "in the same employ" as Fung, a Port Authority employee (see section 29[6]), nor Fung's employer within the meaning of Workers' Compensation Law § 11. JAMC, in turn, contends that it was effectively the Port Authority's agent, noting that the JAMC/Aero contract states that JAMC "represents that all charges under this Agreement are incurred by [JAMC] as agent for the Port Authority" and that it signed the contract "As Agents for the Port Authority."

            Initially, we note that whether or not JAMC actually served as the Port Authority's managing agent, on this record its defense must fail as a matter of law (see Thompson v Grumman Aerospace Corp., 78 NY2d 553, 557 [1991]). The Appellate Division here relied on its decision in Seudath, concluding that JAMC is entitled to the exclusive remedy defense simply because it is the Port Authority's managing agent. We do not read Seudath as supporting this conclusion and, in any event, the purported managing agency status in the present case does not establish a relationship between JAMC and Fung that would allow JAMC to assert the Workers' Compensation Law defense. In Seudath, plaintiff was the superintendent of a building co-owned by a married couple. Plaintiff received workers' compensation payments and then sued the building's co-owner, a managing agent and a company that "manage[d] the premises." Critically, the defendants were deemed to have "'operated', 'maintained', and 'controlled' the premises" and were thus held to be either plaintiff's "coemployees or special employers" (202 AD2d at 659). This conclusion necessarily implies that the defendants had some cognizable working relationship with the plaintiff or his employer that rendered them either the plaintiff's employer or co-employee for Workers' Compensation Law purposes.

            The exclusive remedy doctrine has been previously extended to persons or entities other than the injured plaintiff's direct employer (see e.g., Thompson, 78 NY2d 553 [special employers]; Ugijanin v 1 W. 45th St. Joint Venture, 43 AD3d 911 [2d Dept 2007] [same]; Alvarez v Cunningham Assoc., L.P., 21 AD3d 517 [2d Dept 2005] [same]; Kramps v Goldbetter, 292 AD2d 571 [2d Dept 2002] [employer in alter ego context]; Gonzalez v Lovett Assoc., 228 AD2d 342 [1st Dept 1996] [special employer in managing agency context]; Reynoso v Kensington Mgt. Servs., 181 AD2d 415, 415 [1st Dept 1992] [same]; Felder v Old Falls Sanitation Co., 47 AD2d 977 [3d Dept 1975], affd 39 NY2d 855 [1976] [employer in joint venture context]; Fallone v Misericordia Hosp., 23 AD2d 222 [1st Dept 1965], affd 17 NY2d 648 [1966] [same]) or co-employee (see e.g., Hanford v Plaza Packaging Corp., 2 NY3d 348, 350 [2004]; Macchiorle v Giamboi, 97 NY2d 147 [2001]; Sojka v Romeo, 293 AD2d 522 [2d Dept 2002]).

            Essential to all of these decisions is a working relationship with the injured plaintiff sufficient in kind and degree so that the third party, or the third-party's employer, may be deemed plaintiff's employer. In Thompson, for example, we reaffirmed the principle that an employee "of one employer may also be in the special employ of another" when certain factors exist (78 NY2d at 557). A special employee is "one who is transferred for a limited time of whatever duration to the service of another," and limited liability inures to the benefit of both the general and special employer (id.; see also Schramm v Cold Spring Harbor Lab., 17 AD3d 661, 662 [2d Dept 2005]). Although no one factor is determinative, a "significant" and "weighty feature" in deciding whether a special employment relationship exists is "who controls and directs the manner, details and ultimate result of the employee's work" — in other words, who determines "all essential, locational and commonly recognizable components of the [employee's] work relationship" (78 NY2d at 558; see also Ugijanin, 43 AD3d at 911 [discussing "(p)rincipal factors in determining the existence of a special employment relationship," including control, direction and supervision, payment of wages and furnishing of equipment, hiring and discharging, among others]). Thus, we have always looked to the underlying facts of the parties' relationship, and the same considerations govern a section 11 claim to immunity in other contexts, regardless of title.

            Similarly, in Macchirole, we reiterated the basic principles for assessing an immunity defense under section 29(6). "Parties are coemployees in 'all matters arising from and connected with their employment'" (id. at 150 [quoting Heritage v Van Patten, 59 NY2d 1017, 1019 (1983)]). Among other limitations not relevant here, the parties must have been "acting within the scope of their employment, as coemployees, at the time of injury" (id.; see also Hanford, 2 NY3d at 350).

Thus, it is not the title of the purported "employer" — in this case, a putative managing agent — that controls, but rather the actual working relationship between that party and the purported "employee." Here, JAMC argues agency but stops conspicuously short of explaining its working relationship with Fung or his employer. The title alone, however, does not suffice (see Thompson, 78 NY2d at 557; Bynog v Cipriani Group, 1 NY3d 193, 200 [2003]; Macchiorle, 97 NY2d at 150; see also Smith v Delta Intl. Mach. Corp., 2007 WL 1540958, * 5 [E.D.N.Y.] ["regardless of the (managing agency) title, the entity must demonstrate that it controlled and directed the manner, details and ultimate result of the employee's work"]; Dashnau v Coulston Found., 1997 WL 305255, * 3 [S.D.N.Y.] [noting that managing agency status "begs the question of the actual 'degree of control exercised over the employee' and, more importantly, whether the (agent) enjoyed 'exclusive daily control over the direction and manner' of (the employee's) work"]).

            If, on the other hand, JAMC argues by implication, as it appears to do, that it had a working relationship with Fung or the Port Authority sufficient to be deemed his special employer, no record evidence exists to support that conclusion. Instead, the record reflects that the Port Authority directed, supervised and controlled all aspects of Fung's employment as an electrician. As plaintiffs argued, "there has been no evidence that [JAMC] had any contact with plaintiff at all." Moreover, JAMC does not seriously argue that it is Fung's co-employee (see section 29[6]). We thus conclude, as did Supreme Court, that the Port Authority and JAMC are separate legal entities with separate day-to-day control over their respective employees' work. Accordingly, neither section 11 nor 29(6) serves to bar plaintiffs' action against JAMC.

 

            B. Action No. 2: Fung v Aero Snow Removal Corp.

 

            In their direct action against Aero, plaintiffs concede that the JAMC/Aero contract to provide snow removal services does not, standing alone, trigger a duty of care running to them. They argue, nevertheless, that Aero's failure to salt or sand the area of snow it plowed left open the possibility that the mounds of snow may have melted and refrozen, or that its plowing left a thin sheet of snow, thus creating or exacerbating a dangerous condition. This argument is without merit.

            We have recognized three exceptions to the general rule that "a breach of a contractual obligation will not be sufficient in and of itself to impose tort liability to noncontracting third parties upon the promisor" (Church v Callanan Indus., Inc., 99 NY2d 104, 111 [2002]). While plaintiffs urge the exception based on negligent performance of a service required under a contract, we have previously rejected a similar argument in Espinal v Melville Snow Contrs. (98 NY2d 136 [2002]). As we noted in Espinal, by merely plowing the snow, as required by the contract, defendant's actions could not be said "to have created or exacerbated a dangerous condition" (id. at 142). Here, as in Espinal, plaintiffs point to no term of the JAMC/Aero contract that required Aero to salt or sand the parking lot absent JAMC's request to do so, nor to record evidence that such a request was made. Therefore, because Aero owed no duty of care to Fung, plaintiffs' claim against Aero must fail.

            Accordingly, the Appellate Division order should be modified, with costs to plaintiffs against Japan Airlines Management Corp., by remitting to the Second Department for consideration of issues raised but not determined on the appeal to that court that pertain to plaintiffs and Japan Airlines Management Corp. and, as so modified, affirmed, with costs to Aero Snow Removal Corp. against plaintiffs.

* * * * * * * * * * * * * * * * *

 

            Order modified, with costs to plaintiffs against Japan Airlines Management Corp., by remitting to the Appellate Division, Second Department, for consideration of issues raised but not determined on the appeal to that court that pertain to plaintiffs and Japan Airlines Management Corp. and, as so modified, affirmed, with costs to Aero Snow Removal Corp. against plaintiffs. Opinion by Judge Jones. Chief Judge Kaye and Judges Ciparick, Graffeo, Read, Smith and Pigott concur.

Decided December 13, 2007

Footnotes

Footnote 1: In dismissing plaintiffs' claims against JAMC in Action No. 1, the Appellate Division neither considered on the merits, nor expressly dismissed, JAMC's fourth-party contractual indemnification claims against the Port Authority. Accordingly, on remittal the Appellate Division must consider JAMC's action against the Port Authority in light of our holding. Although in its purported severance the Appellate Division order suggests that actions against defendants other than the Port Authority remained pending, the actions against all other defendants originally named in plaintiffs' complaint had been dismissed in earlier proceedings at Supreme Court.