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Coverage Pointers - Volume IX, No. 13

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Dear Coverage Pointers Subscribers:
 

Two numbers for consideration: 651 and 1.  More below.

 

We surely hope that you had a wonderful holiday season and that your New Year will be filled with health and prosperity.  I must say, however, that I am profoundly saddened by the developments in Pakistan and the assassination of former Prime Minister Benazir Bhutto who became a martyr for democracy.  Let us hope and pray that the New Year brings a greater sense of peace to our troubled world.

Speaking of New Year's, I know that many of you wondered about the history of New Year's celebrations.  I've received hundreds of cards and letters (OK, OK, I wished I received even a single request from my cat, Abigail) wondering about the origin of the New Year's holiday.

It is said that the celebration of the commencement of the year is the oldest of all holidays, even older than Ground Hog's Day.  Historians tell us that it was first observed in Babylon about 4000 years ago, and coins, carrying the date 2000 BC have been found with etchings of Babylonian gods with funny New Year's hats.  At that time, the Babylonian's celebrated New Year at the time of the first new moon after the Vernal Equinox, the first day of spring. However, like Washington's Birthday thereafter, the holiday was moved to an arbitrary date, January 1, 153 BC, when the Romans started fooling around with the calendars.  When Julius Caesar established what is now known as the Julian calendar in 46 BC, he again established January 1 as the celebratory day of the New Year.  However, to fix up the mischief caused by previous emperors who had tampered with the calendar, he had to let one of the years last 445 days.  Caesar celebrated New Year's that year, with salad and anchovies, and the rest is history. 

And in case you're wondering about the song, "Auld Lang Syne," a song everyone sings and nobody has ever understood, it was written by Robert Burns in the 1700's, and first published in 1796.  A Scottish song, it is well known that not a single person who has sung the song at the stroke of midnight actually understands any of it, but the tradition of making sounds that appear to be the words continues nonetheless.  After all, who can really understand what the final verse really means:

And here's a hand, my trusty friend
And gie's a hand o' thine
We'll tak' a cup o' kindness yet
For auld lang syne

            Well, enough of that.  Happy New Year.

Oh yeah.  The numbers: 651 and 1.

Being it's the last issue of Coverage Pointers for 2007 and curiosity abounded, I decided to look back over this year and count.  Why?  I was bored this afternoon.  The numbers look something like this: during the calendar year 2007, I provided 276 decision summaries in my Coverage Pointers columns. Mark reviewed 226 "serious injury" cases and Audrey gave angles on 123 No Fault arbitration and litigation decisions.  In addition to those, Steve reviewed about 26 first party (and other miscellaneous) cases; we've had several pearls from Earl and about 50 across border reviews.  All in all, Coverage Pointers has reviewed some 651 New York appellate decisions in 2007 and if you have read our issues faithfully, you have seen summaries of every opinion involving insurance coverage rendered by a New York appellate court since the year began. 

OK, now here's the bonus question: of the 651 appellate decisions issued by the New York courts during this calendar year, in how many of those decisions did an appellate court allow a bad faith case against a liability carrier, seeking damages beyond the coverage limits, to go forward?  The answer?  One. We had to search back to February 1, 2007, to find the one decision of the Second Department, in Diamond State, where a court permitted discovery to proceed in a bad faith case.  That's the only one we could find.  There was not a single case where an appellate court affirmed an extra-contractual bad-faith verdict against a liability carrier.

 

So, New York may have its idiosyncrasies, but bad faith isn't one of them.

 

From Audrey Seeley, our No Fault guru, her message to you:

 

The year is coming to a close and I cannot help but reflect on what were the common issues and trends.  We gained a bit more insight into what is a plaintiff's prima facie case (then sighed in frustration).  Yet we saw many summary judgment motions for the plaintiff denied for failure to provide a sufficient affidavit from the provider to admit documents as business records.  Then we saw motions for the plaintiff granted because the insurer could not demonstrate that verification was timely requested.  There were entire arbitrations lost on the basis that the insurer failed to completely fill out the denial of claim form.  Arbitrators are scrutinizing peer review reports to ensure that they comply with Citywide.  Recently we learned what additional defenses are lost if a timely denial is not issued.  Finally, it still rings true (perhaps it's the optimist in me -yes, I still am one and reject the notion that it will eventually be beaten out of me) that arbitrators can tell when there is some funny business (that is a legal phrase) occurring. We all know of and have had those cases. 

 

Our final issue of the year continues with these common issues.  There is an appellate term, first department case granting the insurer's summary judgment motion because the plaintiff only annexed an unsworn medical report to the attorney affirmation.  Another arbitration was lost (partially this time) because the insurer failed to completely fill out the denial of claim form.

 

I hope that the coming year brings you and your family happiness and prosperity.  Happy New Year!

 

Audrey A. Seeley

[email protected]

 

And now Mark's Mark, courtesy of  one of the few  people (perhaps the only one) who has read and reviewed every New York threshold decision rendered by the Court of Appeals and the four Appellate Departments.  If you need assistance in considering whether a motion is winnable, Mark's the guy to call:

 

Do Your Homework!

 

Even though most students are off this week, the above directive should not be taken lightly even when it comes to preparing summary judgment motions. This edition's lesson comes from a Third Department case (Scarano v Wehrens), that must have had defense counsel salivating at the outset. Husband and wife plaintiffs were rear-ended in the subject motor vehicle accident. However, both had been involved in prior accidents, both had previously sustained spinal injuries, and both were currently receiving Social Security Disability benefits, based on disabling back injuries. Summary judgment was denied however, because the defendants failed to negate the existence of a triable issue of fact. Namely, they failed to clear up whether the plaintiffs' injuries from prior accidents predating the subject accident were exacerbated by the subject accident and necessitated the surgeries which they underwent shortly after the accident. While summary judgment is never a slam dunk, even in this case, make sure the doctors opine and distinguish prior, and subsequent, motor vehicle accidents and its impact on plaintiffs' alleged injuries.

 

Mark A. Starosielec
[email protected] 

 

What kinds of offerings do we have for you in this last issue of 2007?  A potpourri, for sure:

 

  • While Damage Caused by Raw Sewage May be Excluded Under a Total Pollution Exclusion, Damages Caused by Rushing Water May Not
  • Seek and Ye Shall Find; Ask and it Shall be Answered.  Don't, and We Need Not Respond.  If You Want to Make a Claim for SUM Coverage Under a Policy, Tell the Insurer
  • If Carrier Wants to Escape Duty to Defend, it Must Submit Evidentiary Proof that it Would Have No Duty to Indemnify
  • While Reinsurer Must "Follow the Fortunes," Certain Defenses Still Exist
  • Criminal Act Exclusion:  I Shot an Arrow in the Area, and When it Fell, I Lost My Coverage
  • Bonus Case:  Question of Fact Exists About "Mutual Mistake" in Settlement
  • Subcontract Required Insurance for Contractor's Negligence but Subcontractor's Policy Only Provided for Insurance for Subcontractor's Negligence.  Subcontractor Liable for Breach
  • In Life Insurance Case, Presumption Against Suicide Remain Intact and Insurer Required to Pay Benefits
  • Discovery Allowed on Insurer's Attempt to Secure Cooperation
  • Findings After Hearing that Certain Driver Caused Accident will Not be Disturbed on Appeal of Stay Granted in Uninsured Motorists Proceeding
  • Failure to Timely Notify of Uninsured Motorist Claim is Breach of Policy, No Fault Application Notwithstanding
  • Ineffective Evidence of Policy Cancellation Offered, so Motorist is Not Uninsured 

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

 

  • SJ Denied: Defendants Failed to Show Plaintiff's Injuries Were Preexisting
  • No Acute Injury + No ROM Percentage = No Serious Injury
  • Quick and to the Point: SJ Granted as Plaintiffs Failed to Raise a Triable Issue of Fact
  • Surgeon's Review of Pre and Post Accident MRI Films Allows Plaintiff to Survive SJ
  • Multiple Plaintiffs Result in Modified Summary Judgment Decision
  • Reversed! Plaintiffs' Prior Back Disability is No Summary Judgment Slam Dunk!
  • Bicyclist's Complaint Bounced For Not Providing Objective & Recent Evidence of Injury
  • Court to Defendants: No Objective Evidentiary Basis for Doctor's Opinion, then No SJ
  • Failure to Address Plaintiffs' Preexisting Injuries Leads to Summary Judgment  

AUDREY'S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]  

Arbitration

 

  • You MUST Fill Out the Denial Completely
  • Applicant Denied Lost Wages Due to Lack of Proof of Complete Disability
  • You Must Submit Your Bills, Even if You Paid Them Out of Your Personal Injury Proceeds 

Litigation

 

  • Unsworn Medical Report Attached to Attorney Affirmation Inadmissible Evidence of Medical Necessity
  • Summary Judgment for Insurer Denied - Strategy of Throw Everything Against the Wall to See What Sticks not Effective 

PEIPER ON PROPERTY

Steven E. Peiper

[email protected]  

 

  • Breach of Warranty of Merchantability can be Satisfied by Purely Circumstantial Evidence
  • Civil Unions Are Recognized in Vermont, but New York Workers' Compensation Law will Await Instruction from Legislature
  • Stipulations Beware, CPLR can Institute Interest Regardless of the Parties' Original Agreement

OK, that's a wrap for the year.  Best wishes for a peaceful and healthy 2008 and we look forward to seeing you after the first.

 

Dan

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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

 

12/27/07          City of Kingston v. Harco National Insurance

Appellate Division, Third Department
While Damage Caused by Raw Sewage May be Excluded Under a Total Pollution Exclusion, Damages Caused by Rushing Water May Not
In January 2004, a sewer main ruptured in the City of Kingston, discharging a flood of water and sewage into multiple homes and forcing evacuations. All manner of bodily injury and property damage claims were filed against the City.  The City turned over the claims to its CGL carrier, Harco. In April 2004, Harco disclaimed coverage upon the basis of the total pollution exclusion contained within the policy. The City challenged the denial in a declaratory judgment action.

The appellate court first rejected Harco's contention that the fungi or bacterial exclusion contained in the policy provides an alternate basis for denying coverage, since it was never raised in the disclaimer letter and therefore waived.

The court then went on to hold that while “raw sewage” might be a “contaminant” under the pollution exclusion, there may be some damages that were not caused by the raw sewage.  The testimonial evidence in the depositions suggested that the force of the rushing water – described as a “flood” or a “river” or “Niagara Falls” may have caused some of the damage. Since the erosion and structural damage may not have been caused by sewage or contaminants but by rushing water, the City is entitled to a defense with the issue of indemnity to await the proof at trial.

12/27/07          Matter of the Arbitration between New York Cent. Fire Ins. Co. and Gordon

Appellate Division, Third Department

Seek and Ye Shall Find; Ask and it Shall be Answered.  Don’t, and We Need Not Respond.  If You Want to Make a Claim for SUM Coverage Under a Policy, Tell the Insurer

Respondent individual was injured in a car accident while driving his 1996 Pontiac insured by New York Central.  He lived with his father, who has a separate policy with New York Central that provided underinsured (SUM) coverage.  The Pontiac was not listed on his father’s policy. When the injured man notified NY Central of a potential SUM claim, he referenced only his own policy and not his father’s.  There was reference to his father’s policy in the form, but no request for coverage under that policy.  Later, a demand for arbitration was made for coverage under the father’s policy (which clearly excluded claims for non-listed vehicles).  When an application was brought by NY Central to stay arbitration on the grounds that the father’s policy did not cover this car, the injured respondent claimed that the disclaimer was untimely, because the insurer should have denied coverage when first put on notice of the claim under the son’s policy.  The Appellate Division disagreed and held that the application to stay arbitration was timely made.  When the original SUM notice was given, there was no suggestion of a claim to be made under father’s policy and accordingly, New York Central had not obligation to disclaim at that time.

 

12/27/07          Judlau Contracting, Inc. v. Westchester Fire Ins. Co.
Appellate Division, First Department

If Carrier Wants to Escape Duty to Defend, it Must Submit Evidentiary Proof that it Would Have No Duty to Indemnify
In April 2004, Judlau was impleaded in an underlying action in which Bloomingdales alleged it had incurred property damage in February 2002 as a result of work performed by the New York City Transit Authority. Four months later, it tendered its defense to as an additional insured in to Westchester Fire, which had issued an insurance policy to Judlau’s subcontractor, Janus Industries, for the period August 13, 2001 to August 13, 2002.

 

Three months after that, in November 2004, Judlau impleaded Janus in the underlying action, alleging that Janus had entered into a contract dated October 1, 1998, which was in effect in 1999, and performed work on the Transit Authority project. In August 2005, plaintiff tendered its defense in the underlying action to defendant Commercial Underwriters, which had issued a policy to Janus that was in effect for the period June 18, 1999 through June 18, 2000, and also named plaintiff as an additional insured.

Westchester Fire rejected the tender and Commercial Underwriters disclaimed coverage so this action was commenced. Westchester Fire contended that although Bloomingdales alleged the damage occurred in February 2002, under the terms of the insurance policy, the damage had actually occurred in September 1999, which was prior to the effective date of its policy. Commercial Underwriters contended that its coverage was not implicated by the pleadings in the underlying action, and in any event, plaintiff failed to provide timely notice of the lawsuit.

The appellate court found that the delay of nine months in giving Commercial Underwriters notice was unreasonable as a matter of law, so Commercial’s disclaimer was upheld.  However, even if Westchester had proof that the damage occurred prior to its policy being incepted, and it did not provide that proof to the court, the duty to defend is based on the allegations. An insurer may escape its duty to defend under the policy "only if it could be concluded as a matter of law that there is no possible factual or legal basis on which [the insurer] might eventually be held to be obligated to indemnify the insured under any provision of the insurance policy.  Westchester failed to present such proof.

12/27/07          Granite State Insurance Co. v. ACE American Reinsurance Co.

Appellate Division, First Department
While Reinsurer Must “Follow the Fortunes,” Certain Defenses Still Exist
The insured was in the process of settling mass tort cases that occurred over multiple policy years.  ACE reinsured an AIG policy and AIG apparently and accidentally paid out more than its policy limits required.  AIG moved its overpayments around to different policies until it apparently found one that had reinsurance protection.  ACE resisted paying on the reinsurance claim, suggesting that AIG did not properly document its claim as well as claiming that AIG had no obligation to make the payments it did and that there was a lack of good faith in charging the payments to the reinsured policy.

 

The purpose of the "follow the fortunes" or "follow the settlements" doctrine in reinsurance law is to prevent the reinsurer from "second-guessing" the settlement decisions of the ceding company.  However, if the settlement may be gratuitous or not in good faith, the carrier is permitted to challenge the underlying settlement.

 

Here, there were questions of fact that needed to resolve on those two issues.

 

12/21/07          Allstate Insurance Company v. Swanson

Appellate Division, Fourth Department

Criminal Act Exclusion:  I Shot an Arrow in the Area, and When it Fell, I Lost My Coverage

I remember a Sopranos episode like this, involving Ralph’s kid.  Insured shot an arrow in the air and it struck the plaintiff.  The insured eventually pled guilty to First Degree Assault. Allstate’s homeowner’s policy has an exclusion for injuries "intended by, or which may reasonably be expected to result from the intentional or criminal acts or omissions of an insured person." Appellate Division agreed that insurer has no obligation to defend or indemnify insured.


12/21/07          Schoreder v. Connelly

Appellate Division, Fourth Department
Bonus Case:  Question of Fact Exists About “Mutual Mistake” in Settlement
Insurance adjuster secured a release from plaintiff for claims of bodily injury.  Some time later, plaintiff brings an action against the insured for bodily injuries arising out of same accident.  Naturally, release is raised as a defense to the lawsuit.  Plaintiffs contended that the release signed by plaintiff was the result of mutual mistake and therefore should be set aside. Generally, a release will not be set aside unless plaintiff demonstrates duress, illegality, fraud, or “mutual mistake," and in the instance of mutual mistake, the burden of proof is on the one who would set the release aside. The court holds that in resolving claims of mutual mistake as to injury at the time of release, there has been delineated a sharp distinction between injuries unknown to the parties and mistake as to the consequence of a known injury. A mistaken belief as to the nonexistence of presently existing injury is a prerequisite to avoidance of a release."

Plaintiffs submitted evidence establishing that, at the time plaintiff signed the release, he had been diagnosed only with sprains and strains and that, a few months later, he was diagnosed with a herniated disk and a rotator cuff tear, both of which required surgery. Defendants, on the other hand, submitted the affidavit of their insurance adjuster wherein she asserted that she was aware that plaintiff was suffering from something more serious than a sprain or strain at the time the release was signed by plaintiff. Court concludes that there is an issue of fact whether the release was the result of mutual mistake and that the court therefore indicated that the matter must be tried to a jury.
Editor’s Note:  Had there been corresponding proof that the adjuster and the claimant had discussed the possibility of additional injuries; the release would likely have been upheld.  Documentation of such a conversation, in a letter to plaintiff, would have been worthwhile here.

12/20/07          Bachrow  v. Turner Construction Corporation

Appellate Division, First Department

Subcontract Required Insurance for Contractor’s Negligence but Subcontractor’s Policy Only Provided for Insurance for Subcontractor’s Negligence.  Subcontractor Liable for Breach

The subcontract between owner and subcontractor required sub to secure insurance covering contractor for all liabilities arising out of sub’s work, including liabilities resulting from contractor’s own acts of negligence.  However, insurance that sub purchased limited GC’s coverage to liabilities caused by sub’s negligent acts or omissions.  Therefore, subcontractor breached the contract is liable if contractor has been damaged.

 

12/20/07          Green v. William Penn Life Insurance Company of New York

Appellate Division, First Department

In Life Insurance Case, Presumption Against Suicide Remain Intact and Insurer Required to Pay Benefits
In a 3-2 decision by a hotly divided court, the majority rules that the ancient presumption against suicide is still the law of the land.  Since there were other explanations that could explain the death of the decedent, other than a drug overdose (no autopsy performed), the court found that the presumption was not overcome and thus $500,000 (plus interest) payment under the policy was due.

Editor’s Note: This case is destined for Court of Appeals review, guaranteed by the 3-2 vote (unless the parties settle the matter beforehand)

 

12/20/07          Clarendon Insurance Company v. Le
Appellate Division, First Department

Discovery Allowed on Insurer’s Attempt to Secure Cooperation

The lower court found that the carrier established, as a matter of law that the insured failed to cooperate.  However, the Appellate Division found that there was a question of fact as to whether the attempt to find the driver of the car was focused on wrong person named Le. 


12/18/07          In the Matter of Allstate Ins. Co. v. Wang and New York Cent. Ins. Co

Appellate Division, Second Department

Findings After Hearing that Certain Driver Caused Accident will Not be Disturbed on Appeal of Stay Granted in Uninsured Motorists Proceeding
Allstate brought an application to stay an uninsured motorist proceeding claiming that injuries were caused by New York Central insured.  A framed issue hearing was held and the trial judge determined that the New York Central insured was responsible.  The Appellate Division refused to overturn that finding, holding that issues of witness credibility were within the domain of the judge who heard the case.

 

12/18/07          In the Matter of Hanover Insurance Company v. Etienne

Appellate Division, Second Department
Failure to Timely Notify of Uninsured Motorist Claim is Breach of Policy, No Fault Application Notwithstanding

The Supreme Court erred in denying the petition for a permanent stay of arbitration since the respondents failed to file a sworn statement within 90 days of the alleged hit-and-run accident, in accordance with the requirement of the uninsured motorist endorsement of the subject insurance policy. The fact that the carrier received some notice of the accident by way of an application for no-fault benefits did not negate the breach of the policy requirement.
Editor’s Note:  One would think that the carrier’ notice by way of the No Fault file would have generated a ruling that the carrier had to demonstrate prejudice, but perhaps the issues weren’t briefed.

 

12/18/07          In re Progressive Classic Ins. Co. v. Kitchen and NY Central Mutual

Appellate Division, First Department

Ineffective Evidence of Policy Cancellation Offered, so Motorist is Not Uninsured

Application made to stay UM arbitration on grounds that defendant’s carrier did not properly cancel policy.  While there was proof that NY Central Mutual t mailed the two underwriting information request letters required by the New York State Assigned Risk Plan as a condition to cancellation pursuant to Vehicle and Traffic Law § 313, that insurer failed to establish that, as required by Vehicle and Traffic Law § 313(2) (a), it filed a copy of the notice of cancellation with the Department of Motor Vehicles within 30 days of the effective date of the cancellation. The documentation NY Central provided to the court was not certified and office procedures demonstrating methods of transmitting notices of cancellation to the DMV website were not established by affidavit.  The failure to show that it had timely filed the notice of cancellation renders the cancellation ineffective.

 

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

12/21/07          Ashquabe v Mc Connell
Appellate Division, Fourth Department
SJ Denied: Defendants Failed to Show Plaintiff’s Injuries Were Preexisting
Here the Appellate Division held the Supreme Court properly denied defendant’s motion for summary judgment dismissing the complaint. Defendant failed to meet her initial burden of establishing that “plaintiff's alleged injuries sustained in the accident were preexisting.” In support of her motion, defendant submitted the report of its physician who examined plaintiff. According to that physician, plaintiff “denie[d] history of any similar preexistent pain conditions predating the accident,” but the physician failed to address the significance of the absence of any prior complaints. This physician’s analysis was conclusory and therefore “insufficient to establish that plaintiff’s pain might be chronic and unrelated to the accident.”

12/21/07          Barnes v Estes
Appellate Division, Fourth Department

No Acute Injury + No ROM Percentage = No Serious Injury

Order granting defendants’ summary judgment motion was upheld by the Appellate Division. The motion centered on the permanent consequential limitation of use category. Defendants met their initial burden by submitting the affirmation of a physician who examined plaintiff, and plaintiffs failed to raise a triable issue of fact. According to the affirmation of defendants’ examining physician, the CT scan and MRI studies did not indicate, inter alia, that plaintiff suffered any acute injury as a result of the accident. Although plaintiffs submitted the requisite objective evidence of plaintiff’s bulging discs, they also were required to provide the evaluation of an expert indicating “either a numeric percentage of [the] plaintiff’s loss of range of motion or a qualitative assessment of [the] plaintiff’s condition . . . , provided that the evaluation . . . compares the plaintiff’s limitations to the normal function, purpose and use of the affected body organ, member, function or system.”

 

12/18/07          Barroso v Kristensen

12/18/07          Grande v Fernandez

Appellate Division, Second Department

Quick and to the Point: SJ Granted as Plaintiffs Failed to Raise a Triable Issue of Fact

In very brief opinions, the Second Department affirmed orders which granted defendants’ summary judgment motions. The defendants met their prima facie burden by establishing that the plaintiffs did not sustain a serious injury. In opposition, the plaintiff failed to raise a triable issue of fact.

 

12/18/07          Gonzalez v San Fratello
Appellate Division, Second Department

Surgeon’s Review of Pre and Post Accident MRI Films Allows Plaintiff to Survive SJ

Plaintiff’s doctor’s review of MRI films allows lawsuit to continue.  In support of her motion for summary judgment dismissing the complaint, the defendant demonstrated that the plaintiff did not sustain a serious injury. However, in opposition, the plaintiff raised a triable issue of fact. The plaintiff’s treating orthopedic surgeon reviewed and compared MRI  films taken before and shortly after the accident which revealed that the accident caused “a posttraumatic lumbar L-5 disc herniation with resultant left S1 nerve root compression,” which required a “lumbar L5-S1 laminectomy and discectomy in order to remove the offending disc herniation.”

 

 

12/18/07          Morales v Theagene
Appellate Division, Second Department

Multiple Plaintiffs Result in Modified Summary Judgment Decision

In a lengthy opinion, the Appellate Division modified a lower court order by deleting the provision which granted defendants’ summary judgment motion and remitting a portion to the lower court, for a determination on the defendants’ summary judgment motion against plaintiffs Sandra Morales, in her individual capacity, and Jade Morales on the ground that the defendants are not negligent.

The defendants met their prima facie burden of establishing that the plaintiffs Jade Morales and Keith Morales did not sustain serious injuries but failed to meet that burden with respect to the plaintiff Sandra Morales in her individual capacity. The plaintiffs’ submissions in opposition failed to raise a triable issue of fact as to whether Keith sustained a serious injury. While the plaintiffs’ treating chiropractor concluded that he sustained a significant limitation of use to his lumbar spine, his conclusions were not based on a recent examination. The affidavit of the plaintiffs’ treating chiropractor raised a triable issue of fact as to whether Jade sustained a serious injury. In his affidavit, he set forth significant ROM limitations in her lumbar spine based on an examination that was performed contemporaneously with the accident, and found similar significant lumbar range of motion limitations roughly three years later during a recent examination.

12/18/07          Scarano v Wehrens
Appellate Division, Second Department

Reversed! Plaintiffs’ Prior Back Disability is No Summary Judgment Slam Dunk!

Plaintiffs successfully appealed a lower court order which had granted defendants’ motion for summary judgment dismissing the complaint. Husband and wife plaintiffs were rear-ended in a motor vehicle accident. Both plaintiffs had been involved in a number of accidents prior to the subject one, both had previously sustained spinal injuries, and both were currently receiving Social Security Disability benefits, based on disabling back injuries. Several weeks after the subject accident, husband underwent knee surgery, and, two months post accident, wife underwent spinal fusion and discectomy surgery in her cervical spine.

 

The Appellate Division held the defendants’ proof did not establish their entitlement to judgment as a matter of law. Specifically, the defendants failed to negate the existence of a triable issue of fact as to whether the plaintiffs’ injuries from prior accidents predating the subject accident were exacerbated by the subject accident and necessitating the surgeries which they underwent shortly after the accident.

 

12/18/07          Rodriguez v Huerfano
Appellate Division, Second Department

Bicyclist’s Complaint Bounced For Not Providing Objective & Recent Evidence of Injury

While riding his bicycle, the plaintiff was struck by defendants. Defendants successfully moved for summary judgment through the submission of the affirmed medical report of their expert orthopedist, who conducted an examination of the plaintiff, found a normal range of motion in his cervical and lumbar regions of the spine and no orthopedic disability. In opposition, the plaintiff failed to raise a triable issue of fact. The MRI report regarding the plaintiff’s lumbar region of the spine was without probative value, since it was not affirmed by the plaintiff’s physician, and was not actually relied upon by the defendants’ expert. Even if the underlying MRI report were admissible, the report of the plaintiff’s treating chiropractor still failed to provide objective and recent evidence of the extent or degree and duration of the claimed limitation of the plaintiff’s lumbar region of the spine.  

 

12/18/07          Paradizov v Doan
Appellate Division, Second Department

Court to Defendants: No Objective Evidentiary Basis for Doctor’s Opinion, then No SJ

In an action to recover damages for personal injuries, the plaintiffs successfully appealed an order which granted the defendants’ motion for summary judgment. The defendants failed to make a prima facie showing that the plaintiffs did not sustain a serious injury as a result of the subject accident. The defendants did not provide any objective evidentiary basis for their expert orthopedist’s opinion that each of the plaintiffs enjoyed a ‘full range of motion’ and that the plaintiff experienced only ‘slight restrictions of motion of the back’ which, in the expert’s view, were “entirely ascribable” to a subsequent accident.

12/11/07          Luciano v. Luchsinger
Appellate Division, Second Department
Failure to Address Plaintiffs’ Preexisting Injuries Leads to Summary Judgment
The Appellate Division affirmed a lower court order which granted the defendants’ motion for summary judgment dismissing the complaint on the ground that neither of the plaintiffs sustained a serious injury. The defendants met their prima facie burden. In opposition, the plaintiffs failed to raise a triable issue of fact. Plaintiffs’ doctors’ conclusions that the plaintiffs’ injuries were the result of the subject accident were based on speculation. Dr. Chopra failed to address the fact that both plaintiffs had pre-existing degenerative conditions in their spines. Moreover, he failed to acknowledge that the plaintiff had been involved in a prior car accident in which she injured her back and neck. Those omissions rendered speculative his conclusions that the plaintiffs’ cervical and lumbar spine injuries were the result of the subject accident. While Dr. BenEliyahu noted that he was treating one of the plaintiffs for injuries she sustained to her back and neck from a prior accident, his conclusions that the subject accidents aggravated dormant conditions in her neck and back were without any foundation.

 

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

 

12/26/07          In the Matter of the Arbitration Between Applicant and Respondent

Arbitrator Thomas J. McCorry (Erie County)

You MUST Fill Out the Denial Completely

On June 6, 2006, the Applicant, eligible injured person (“EIP”), was involved in an automobile accident purportedly sustaining injuries to his neck, back, left shoulder, and left knee.  The Applicant sought reimbursement for an MRI of the cervical spine performed at Pro Scan Imaging six days after the accident.  The Applicant also sought reimbursement for unspecified imaging performed by LMR Imaging and/or South Gate Physicians Imaging.

 

The MRI from Pro Scan Imaging was denied as the Applicant lacked standing to arbitrate this bill.  However, the Applicant, who paid the other imaging bill out of pocket, was awarded the full amount due to the insurer’s failure to issue a complete and timely denial.

 

The denial of claim form or NF-10 was determined to be undated and incomplete.  The box 27 “date bill received by insurer” was blank.  The arbitrator concluded that without that information the only conclusion is that the denial is untimely and the insurer is precluded from arguing lack of medical necessity.

 

What’s the Angle?     Well there are two here.  The first is that the insurer must, must, must ensure that the denial is completely filled out.  Keep in mind that this is now the first thing that arbitrator’s review in arbitrations.  The arbitrators always want to confirm that the insurer issued a timely denial.  It is in the insurer’s best interest to make sure that the denial alone provides the information to the arbitrator to confirm that the insurer issued a timely denial.

 

The second angle is a practice pointer for the adjuster or counsel submitting the arbitration evidence submission.  In this case, it is not known if the denial was timely issued.  However, in preparing your evidence submissions look at every denial to ensure that there is sufficient information to determine that the denial was timely.  If a box is blank, such as when the bill was received, take a look at the bill.  Usually the bills are date stamped the same day received.  If you can determine that the denial was timely issued then submits an affidavit from the adjuster who signed the denial and received that bill indicating the date received as well as office procedure on mail receipt.  I am not indicating that this will absolutely save the insurer but at least attempt to demonstrate that a timely denial was issued.

 

12/21/07          In the Matter of the Arbitration Between Applicant and Respondent

Arbitrator Mary Anne Theiss (Onondaga County)

Applicant Denied Lost Wages Due to Lack of Proof of Complete Disability

The Applicant, eligible injured person (“EIP”), was involved in an April 5, 2006, motor vehicle accident wherein he sustained a L4/5 fracture, left wrist fracture, and left ankle fracture.  The Applicant was working for an attorney, actually the attorney representing him in the arbitration, at the time of the accident lifting boxes up to 75 pounds.  The Applicant was also attempting to go back to school and at the time of the arbitration was a full time student at Jamestown Community College.

 

The Applicant submitted a note from his treating physician dated October 9, 2007, indicating that he had a 40 pound lifting restriction.  Interestingly, the Applicant’s evidence also contained physician and physical therapy notes dated August 22, 2006, indicating that the Applicant had excellent body mechanics from sitting to standing.  There was no evidence of impaired mobility and he had full range of motion in his left ankle.  The Applicant could return to work without any restrictions.  Also, it was not expected that the Applicant would have any permanent disabilities.

 

The Applicant underwent an independent medical examination on May 21, 2007, with Dr. R. Polavarapu, an orthopedic surgeon.  Dr. Polavarapu concluded that the Applicant had no orthopedic disability and was capable of full work activities without restriction.

 

The Applicant’s lost wage claim was denied as there was no indication in the records that the Applicant was not capable of at least working light duty.  

 

12/18/07          In the Matter of the Arbitration Between Applicant and Respondent

Arbitrator Thomas J. McCorry (Erie County)

You Must Submit Your Bills, Even if You Paid Them Out of Your Personal Injury Proceeds

The Applicant sought $21,000.00 in past medical expenses awarded to her in a jury trial for her personal injury action.  The Applicant had a social services lien that was resolved for $21,000.00.  Also, the Applicant’s health insurer had a lien for $10,300.00 which was purportedly for payments made over and above Medicare.  The Applicant in her post arbitration submission requested that the amount be amended to also include this lien amount.

 

The insurer, made a number of arguments as to why the Applicant’s entire claim must be denied.  The insurer argued that the Applicant lacked standing to arbitrate the liens but the Arbitrator noted that no party provided case law on this issue.  Further, the Arbitrator duly noted that since the Applicant paid for social services lien out of pocket that she had standing to proceed with this arbitration.

 

The insurer further argued that it not only never received any of the bills at issue in the arbitration, which if received now would violate the 45-day rule, but that the Applicant failed to submit a release of assignment from the providers and failed to include any bills in the AR-1.

 

The Applicant did submit partial denials for Dr. Gosy’s bills in the amount of $849.04.  The Applicant submitted one other partial denial for a bill in the amount of $2,085.00.  The denial’s basis was violation of the 45-day rule.

 

The Arbitrator held that upon review of the evidence no award could be made for those bills not submitted to the insurer.  The one denial for violation of the 45-day rule was upheld.  Further, the Arbitrator determined that the treatment provided by Dr. Gosy was medically necessary and awarded $849.04.

 

Litigation

 

12/19/07          CPT Med. Servs., P.C. v. New York Cent. Mut. Fire Ins. Co.,

Appellate Term, First Department

Unsworn Medical Report Attached to Attorney Affirmation Inadmissible Evidence of Medical Necessity

The insurer’s summary judgment motion was granted and the complaint was dismissed.  The insurer submitted a peer reviewer’s affidavit incorporating by reference the findings in his earlier report that the diagnostic testing was not medically necessary.  The plaintiff, in opposition, submitted an attorney affirmation attaching an unsworn and undated doctor’s report.  The Appellate Term concluded that this report should not have been considered.  The Court held that a physician’s affirmation may be based upon an unsworn medical report is admissible opposing evidence.  However, an attorney’s affirmation attaching an unsworn medical report is not admissible evidence.  The Court also noted that even if the report were admissible it failed to address the negative diagnostic study separately administered during the month before this test was conducted.

 

12/14/07          Todaro v. GEICO Gen. Ins. Co.,

Appellate Division, Third Department

Summary Judgment for Insurer Denied – Strategy of Throw Everything Against the Wall to See What Sticks not Effective

Plaintiff’s summary judgment motion in this no-fault case was granted and submitted a judgment.  The insurer did not object to the judgment but successfully vacated the judgment due to improper service and filing.  The plaintiff then sought an inquest on the damages issue. 

 

At the inquest, the insurer moved to dismiss the complaint which was denied and the court vacated the inquest as it was premature since the issues raised required further discovery.  Both parties appealed from this decision.

 

On appeal, the insurer argued that its motion should have been granted as the plaintiff lacked standing since she executed an assignment of benefits.  The Court held that the insurer failed to assert such a defense in a pre-answer motion or within its answer and as such the motion on this basis was untimely.  Then the insurer argued that the plaintiff failed to timely submit certain claims.  The Court held that this was a new basis for denial on which the insurer could not rely.  Next, the insurer argued that the plaintiff had not suffered out of pocket damages for which she is obligated to pay.  The Court rejected this argument on the basis that no-fault benefits are intended to reimburse individuals who have incurred medical expenses.  The Court construed the term incurred to mean expenses at the time that treatment was received.  Further, the fact that the plaintiff had the bills paid by other sources, i.e., her private health insurer, did not extinguish the insurer’s obligation.  Finally, the one valid defense the insurer had which was lack of coverage was also rejected on the basis that the insurer’s motion papers were insufficient to establish entitlement to dismissal.

 

 

PEIPER ON PROPERTY

Steven E. Peiper

[email protected]

 

After a thorough search, I admittedly struck out in my quest to find more opinions dealing with baseball (or property damage for that matter).  As a result, I have decided to temporarily suspend Peiper on Property to bring you Peiper’s Year-End Potpourri.  Please peruse the fine selections below which include a subrogation action, a dispute on interest in a coverage action, and the Third Department’s analysis of same-sex benefits under the Workers’ Compensation law.  Enjoy and Best Wishes for the New Year.

 

12/20/07          State Farm Mutual Auto. Ins. Co. v Croyle Enterprises, Inc.  

Appellate Division, Third Department

Breach of Warranty of Merchantability can be Satisfied by Purely Circumstantial Evidence

Insured purchased a used pick-up truck from defendant.  Nine days after the purchase, the vehicle caught fire during ordinary use and was rendered a total loss.  Thereafter, insurer of the vehicle commenced the above-captioned subrogation action seeking recovery from defendant/dealer.

 

In support of its position, carrier argued that defendant/dealer breached its warranty of merchantability by selling a vehicle with a defective oil leak.  Defendant opposed the insurer’s position by arguing that a breach of warranty claim cannot be supported by circumstantial evidence alone.  However, in finding for the insurer, the Third Department held that plaintiff’s expert’s testimony regarding the general location and cause of the fire was sufficient to sustain the trial court’s verdict.

 

12/27/07          Langan v State Farm Fire & Cas.

Appellate Division, Third Department

Civil Unions Are Recognized in Vermont, but New York Workers’ Compensation Law will Await Instruction from Legislature

Claimant and decedent were engaged in a committed relationship from 1986 until 2002.  During this time, they entered into a civil union in the State of Vermont.  Under Vermont law, civil unions are permissible for same-sex couples.

 

After decedent’s death in the course of his employment in 2002, claimant sought recovery of a death benefit from decedent’s workers’ compensation coverage.  The workers’ compensation carrier denied the claim on the basis that claimant did not satisfy the definition of a “surviving spouse”, and the denial was later affirmed by the Workers’ Compensation Board. The above-captioned action is claimant’s appeal from the Workers’ Compensation Board which sets forth three distinct arguments: (1) a partner to a civil union is a “surviving spouse” under Section 16 of the Workers’ Compensation law; (2) under the doctrine of comity, deference should be given to the Vermont law; and (3) the Board’s decision violates the Equal Protection Clause of the U.S. Constitution.

 

The Third Department first addressed claimant’s status under Section 16 of the Workers’ Compensation Law.  The court noted that Section 16 benefits are extinguished when or if the claimant remarries.  Accordingly, the Third Department reasoned that if remarriage would end benefits, a party must first be married for such benefits to accrue.  As claimant and decedent were admittedly not married, it was held that claimant could not satisfy the definition of a “surviving spouse.”

 

Next, the Third Department addressed claimant’s argument that the doctrine of comity required New York to afford “civil union” status to claimant and decedent.  As a civil union in Vermont, the couple would have been considered spouses under Vermont law.  Accordingly, claimant argued that if he was granted “spouse” status in Vermont, such status should be recognized under New York law. 

 

However, the Third Department noted that “[a]lthough we may recognize the civil union status of claimant and decedent as a matter of comity, we are not thereby bound to confer upon them all of the legal incidents of that status recognized in the foreign jurisdiction that created the relationship.”  Rather, the court stated that even under the doctrine of comity “New York is not required to extend to such parties all of the benefits extended to marital spouses.”  Notably, the decision also indicates that any extension of any benefits to civil unions is a decision best left to the Legislature taking into account all relevant “social and fiscal policy.”

 

Finally, the Third Department addressed claimant’s argument that his right to Equal Protection had been violated.  Under a “Rational Basis” analysis, a law is presumed valid as long as it is tied to a legitimate government interest.  The court indicated that the Workers’ Compensation Law’s purpose is to protect the “traditional family constellation” from falling into “destitution upon the death of the family breadwinner.”  Relying upon a Court of Appeal’s decision which has previously held that a law limiting marriage to opposite sex couples only was rationally related to a legitimate government interest, the Third Department held that, absent instruction from the Legislature, Section 16 of the Workers’ Compensation law does not run afoul of the 14th Amendment.

 

There is a strong dissent by Justice Rose who argues that as a matter of comity, New York law should recognize claimant’s status under Vermont law.  As Vermont law has defined participants in a civil union as spouses, Section 16 has accordingly been satisfied.  Justice Rose also notes that the remarriage argument relied upon by the Court would similarly apply to civil unions in that death benefits would cease upon the claimant entering into another civil union.

 

12/27/07          Raymond Corp. v Nat’l. Union Fire Ins. Co of Pittsburgh, Pa.

Appellate Division, Third Department

Stipulations Beware, CPLR can Institute Interest Regardless of the Parties’ Original Agreement

Parties to a coverage dispute stipulated that both would contribute to the settlement of an underlying personal injury action, and litigate the remaining coverage issues after the underlying matter was resolved. As part of the stipulation, the insured agreed to contribute $500,000 to the settlement of the underlying matter, with the carrier contributing remaining $2,500,000.  Pursuant to the Stipulation, the losing party would reimburse the prevailing party for their share of the underlying settlement.  Thus, if coverage where found, the carrier would pay $500,000 to its insured.  Likewise, if the disclaimer were upheld, the insured would remit $2,500,000 to its carrier.  Although the Stipulation addressed certain costs, there was no provision which permitted either party to recover accrued interest in addition to the agreed-to sums.

 

The trial court in this matter found that carrier’s disclaimer was enforceable, and therefore upheld the denial.  This decision was overturned by the Third Department.  However, the Third Department was later reversed by the Court of Appeals, and the Supreme Court’s original finding of that carrier’s disclaimer was valid was then reinstated.

 

Thereafter, the carrier submitted an Order which sought recovery of pre-decision and post-decision interest in addition to the $2,500,000 million already owed by the insured.  In the current action, the insured seeks to overturn the Order’s award of interest.

 

The Third Department initially noted that the original Stipulation entered into between the parties did not address the award of interest.  Accordingly, the court found that no award was permissible pursuant to the terms of the Stipulation.  However, because the Supreme Court granted judgment which permitted interest, and the Court of Appeals later affirmed that Order, the inclusion of interest was mandated by CPLR § 5002.  Thus, the Third Department held that the mandates of the CPLR superseded the stipulated agreement of the parties. 

 

Finally, the Third Department returned the insured’s final argument – that it was entitled to offset its $297,732 in defense costs from the 2.5 million it owed the carrier - to the trial court for a determination of the costs claimed by plaintiff are reasonable under the circumstances of the case.  In so holding, the Third Department indicated that the Stipulation provided that plaintiff would be entitled to an offset of costs if coverage where not confirmed.  This, according to the court, indicates the parties understanding that the duty to defend (being much broader than the duty to indemnify) had been triggered no matter the outcome of the coverage dispute.

 

EARL’S PEARLS

Earl K. Cantwell, II

[email protected]

 

Earl’s on hiatus this week but wanted to wish you all the best of holiday seasons.


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

 

12/26/07          Countrywide Home Loans, Inc. v. Allstate Insurance Company

Missouri Court of Appeals

Mortgagee May Not Collect Insurance Proceeds Arising from Pre-Foreclosure Loss
The court held that a union mortgage clause did not entitle the mortgagee/lender to insurance proceeds where the insured loss occurred prior to a foreclosure sale at which the mortgagee/lender purchased the property for the full amount of the secured indebtedness. The court held that the expanded benefits to a mortgagee to insurance proceeds arising from a union clause went only "up to the amount of the debt secured." To hold otherwise, the court opined, would result in a windfall for secured real estate creditors -- the creditor having already satisfied their debt by obtaining the real property for the amount of the remaining debt owed to them.

Submitted by: Curtis Woods (Sonnenschein Nath & Rosenthal LLP)

 

12/25/07          Hartford Acc. And Indem. Co. v. Ace American Reinsurance Co.

Connecticut Supreme Court
Common Cause Provision Ambiguous as to Whether Reinsured Incurred Loss from Any One Accident

The court reversed the trial court and held that a reinsurance treaty's common cause provision was ambiguous. The provision states that " ‘any one accident’ ... as respects liability arising out of products manufactured, made, handled, distributed or sold by an assured ... shall ... be deemed and construed to mean any one, or more than one, accident, happening or occurrence which the available evidence shows to be the probable common cause or causes of more than one claim under a policy, or policies, or renewals thereof, irrespective of the time of the presentation of such claims to the assured or the Hartford." The court held that the clause is ambiguous "as to whether, as the Hartford claims, it allows aggregation of losses that were 'meaningfully related' and 'arose out of the same pattern of events' or, as Ace claims, it 'incorporates spatial and temporal limitations' that preclude the aggregation of claims that were incurred at hundreds of different locations and over decades."

Submitted by: Curtis Woods (Sonnenschein Nath & Rosenthal LLP)

 

Reported Decisions

 

Ashquabe v. McConnell
 

Appeal from an order of the Supreme Court, Erie County (John M. Curran, J.), entered November 8, 2006 in a personal injury action. The order, among other things, denied defendant's motion for summary judgment dismissing the complaint.

Barth Sullivan Behr, Buffalo (Pierre A. Vincent of counsel), for defendant-appellant.
Law Office of Kenneth Bernas, Buffalo (Kenneth P. Bernas of counsel), for plaintiff-respondent.

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

Memorandum: Plaintiff commenced this action seeking damages for injuries he allegedly sustained when a motor vehicle driven by defendant rear-ended the vehicle driven by plaintiff. Supreme Court properly denied defendant's motion for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d). Defendant failed to meet her initial burden of establishing that "plaintiff's alleged injuries sustained in the accident were preexisting" (Clark v Perry, 21 AD3d 1373, 1374). In support of her motion, defendant submitted the report of a physician who examined plaintiff on behalf of defendant. According to that physician, plaintiff "incurred a cervical muscle strain as a result of the motor vehicle accident." The physician further stated that MRI scans of plaintiff's cervical spine "reveal[ed] degenerative disc disease/spondylosis at [C5-6] and [C6-7, as well as] associated mild disc bulging," and that MRI scans of plaintiff's thoracic spine "reveal[ed] degenerative disc disease at [T4-5] and [T5-6]." The physician failed to address the herniation at C6-7 observed by a radiologist, however, although he indicated that he had reviewed the radiologists' reports accompanying the MRI scans of plaintiff's cervical spine. In addition, the physician noted that plaintiff "denie[d] history of any similar preexistent pain conditions predating the motor vehicle accident," but he failed to address the significance of the absence of any prior complaints of similar pain. We thus conclude that the physician's report does not constitute "persuasive evidence that plaintiff's alleged pain and injuries were related to a preexisting condition" (Carrasco v Mendez, 4 NY3d 566, 580; see also Gentile v Snook, 20 AD3d 389; cf. Clark, 21 AD3d 1373). Indeed, we conclude that the physician's analysis was conclusory and therefore "insufficient to establish that plaintiff's pain might be chronic and unrelated to the accident" (Brown v Dunlap, 4 NY3d 566, 577).

Barnes v. Estes


Appeal from an order and judgment (one paper) of the Supreme Court, Erie County (Donna M. Siwek, J.), entered August 9, 2006 in a personal injury action. The order and judgment, among other things, granted defendants' motion for summary judgment dismissing the complaint.

FREID AND KLAWON, WILLIAMSVILLE (WAYNE I. FREID OF COUNSEL), FOR PLAINTIFFS-APPELLANTS.
THORN GERSHON TYMANN AND BONANNI, LLP, ALBANY (ERIN MEAD OF COUNSEL), FOR DEFENDANTS-RESPONDENTS.

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

 

Memorandum: Plaintiffs commenced this action seeking damages for injuries allegedly sustained by David R. Barnes (plaintiff) when the motor vehicle in which he was a passenger collided with a truck owned by defendant Ryder Truck Rental, Inc. Defendant Victor L. Estes was driving the truck in the course of his employment with defendant Sherwood Food Distributors Partnership of Orleans International & Regal Packing, Inc. Supreme Court properly granted defendants' motion for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d). We reject plaintiffs' contention that the court erred in granting the motion under the permanent consequential limitation of use category. Defendants met their initial burden with respect to that category by submitting the affirmation of a physician who examined plaintiff on defendants' behalf, and plaintiffs failed to raise a triable issue of fact. According to the affirmation of defendants' examining physician, the CT scan and MRI studies did not indicate that plaintiff suffered any acute injury as a result of the accident, and the bulging discs at L3-4, L4-5 and L5-S1 were due to "congenital abnormalities" (see Moore v Gawel, 37 AD3d 1158, 1159; Giraldo v Mandanici, 24 AD3d 419; Fountain v Sullivan, 261 AD2d 795, 795-796). Although plaintiffs submitted the requisite objective evidence of plaintiff's bulging discs, they also were required to provide the evaluation of an expert indicating "either a numeric percentage of [the] plaintiff's loss of range of motion' or a qualitative assessment of [the] plaintiff's condition . . . , provided that the evaluation . . . compares the plaintiff's limitations to the normal function, purpose and use of the affected body organ, member, function or system' " (Parkhill v Cleary, 305 AD2d 1088, 1089, quoting Toure v Avis Rent A Car Sys., 98 NY2d 345, 350; see also Patterson v NY Alarm Response Corp., ___ AD3d ___ [Nov. 13, 2007]; Guzman v Michael Mgt., 266 AD2d 508). Here, the affirmation of plaintiff's treating physician does not provide a numeric percentage representing plaintiff's loss of range of motion, nor does it provide a qualitative comparison of plaintiff's limitations to the normal function of plaintiff's spine.

 

Barroso v. Kristensen


Heriberto A. Cabrera, Brooklyn, N.Y. (Joseph M. Dash of counsel), for appellant.
Epstein, Rayhill & Frankini, Woodbury, N.Y. (Mona C. Haas 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, Queens County (Hart, J.), dated September 7, 2006, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

 

ORDERED that the order is affirmed, with costs.

 

The defendants met their prima facie burden 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. Accordingly, the Supreme Court correctly granted the defendants' motion for summary judgment dismissing the complaint.
SPOLZINO, J.P., SKELOS, LIFSON and McCARTHY, JJ., concur.

 

Gonzalez v. San Fratello


Desena & Sweeney, LLP (Rivkin Radler, LLP, Uniondale, N.Y.
[Evan H. Krinick, Cheryl F. Korman, and Melissa M. Murphy] of counsel), for appellant.
Scott J. Zlotolow, Sayville, N.Y., for respondent.

DECISION & ORDER

 

In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Nassau County (Phelan, J.), dated May 8, 2007, which denied her 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.

 

In support of her motion for summary judgment dismissing the complaint, the defendant demonstrated, prima facie, 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 Elyer, 79 NY2d 955, 956-957). However, in opposition, the plaintiff raised a triable issue of fact. The plaintiff presented, inter alia, an affidavit from his treating orthopedic surgeon stating that his personal review and comparison of Magnetic Resonance Imaging films taken before and shortly after the subject accident revealed that the accident caused "a posttraumatic lumbar L-5 disc herniation with resultant left S1 nerve root compression," which required a "lumbar L5-S1 laminectomy and discectomy in order to remove the offending disc herniation," and which resulted in specified limitations in the plaintiff's ranges of motion that were significant and permanent in nature (see Paz v Wydrzynski, 41 AD3d 453; compare McNeil v Dixon, 9 AD3d 481). Thus, summary judgment was properly denied. 

 

Grande v. Fernandez


Pena & Kahn, PLLC, Bronx, N.Y. (Claire M. Garcia of counsel), for appellants.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.                                                            (Stacy R. Seldin of counsel), for respondent.

DECISION & ORDER

In an action to recover damages for personal injuries, etc., the plaintiffs appeal from an order of the Supreme Court, Queens County (Nelson, J.), entered September 29, 2006, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff Sarahi Grande did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendants met their prima facie burden of showing that the plaintiff Sarahi Grande did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). In opposition, the plaintiffs failed to raise a triable issue of fact.

Morales v. Theagene


Cannon & Acosta, LLP, Huntington Station, N.Y. (June Redecker and Roger Acosta of counsel), for appellants.
Faust Goetz Schenker & Blee LLP, New York, N.Y. (Lisa L. Gokhulsingh of counsel),                         for respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiffs appeal, as limited by their brief, from so much of an order of the Supreme Court, Suffolk County (Doyle, J.), dated September 18, 2006, as granted those branches of the defendants' motion which were for summary judgment dismissing the complaint as to each of the plaintiffs on the ground that none of them sustained a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is modified, on the law, by deleting the provision thereof granting those branches of the motion which were for summary judgment dismissing the complaint insofar as asserted by the plaintiffs Sandra Morales, in her individual capacity, and Jade Morales on the ground that they did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and substituting therefor a provision denying those branches of the defendants' motion; as so modified, the order is affirmed insofar as appealed from, with one bill of costs payable to the plaintiffs Sandra Morales, in her individual capacity, and Jade Morales, and the matter is remitted to the Supreme Court, Suffolk County, for a determination on the merits of that branch of the defendants' motion which was for summary judgment dismissing the complaint insofar as asserted by the plaintiffs Sandra Morales, in her individual capacity, and Jade Morales on the ground that the defendants are not negligent.

The defendants met their prima facie burden of establishing that the plaintiffs Jade Morales (hereinafter Jade) and Keith Morales (hereinafter Keith) did not sustain serious injuries within the meaning of Insurance Law § 5102(d) as a result of the subject accident, but failed to meet that burden with respect to the plaintiff Sandra Morales in her individual capacity (hereinafter Sandra) (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The defendants' examining neurologist noted in his report significant range of motion limitations in both the cervical and lumbar regions of Sandra's spine (see Jenkins v Hacking Corp., 43 AD3d 393; Bentivegna v Stein, 42 AD3d 555; Zamaniyan v Vrabeck, 41 AD3d 472). Since the defendants failed to establish their prima facie burden with respect to Sandra, it was unnecessary for the Supreme Court to consider whether her papers submitted in opposition to the defendants' motion were sufficient to raise a triable issue of fact (see Ayotte v Gervasio, 81 NY2d 1062; Coscia v 938 Trading Corp., 283 AD2d 538).

The Supreme Court properly determined that the plaintiffs' submissions in opposition failed to raise a triable issue of fact as to whether Keith sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. While the plaintiffs' treating chiropractor concluded that Keith sustained a significant limitation of use to his lumbar spine as a result of the subject accident, his conclusions were not based on a recent examination (see Ali v Mirshah, 41 AD3d 748; Mejia v DeRose, 35 AD3d 407).

The affidavit of the plaintiffs' treating chiropractor raised a triable issue of fact as to whether Jade sustained a serious injury within the meaning of Insurance Law § 5102(d). He concluded that Jade sustained a significant limitation of use of her lumbar spine as a result of the subject accident. In his affidavit, he set forth significant range of motion limitations in Jade's lumbar spine based on an examination that was performed contemporaneously with the subject accident, and found similar significant lumbar range of motion limitations roughly three years later during a recent examination (see Green v Nara Car & Limo, Inc., 42 AD3d 430; Acosta v Rubin, 2 AD3d 657; Rosado v Martinez, 289 AD2d 386; Vitale v Lev Express Cab Corp., 273 AD2d 225). Contrary to the contentions of the defendants, there was no lengthy gap in Jade's treatment. The plaintiffs' treating chiropractor stated in his affidavit that Jade was treated by him on a regular and continuous basis from his initial treatment date with her on May 12, 2003.

To the extent that the defendants raise an issue with respect to that branch of their motion which was for summary judgment dismissing the complaint insofar as asserted by the plaintiffs Sandra Morales, in her individual capacity, and Jade Morales on the ground that the defendants were not negligent, we note that the subject branch of the motion was never decided by the Supreme Court on the merits. Therefore, we remit the matter to the Supreme Court for a determination on the merits of that branch of the defendants' motion.

Scarano v. Wehrens


Manheimer & Charnas LLP, New York, N.Y. (Jeffrey A. Manheimer of counsel), for appellants.
DeSena & Sweeney, LLP, Hauppauge, N.Y. (Robert P. Sweeney and Anne Marie Caradonna           of counsel), for respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiffs appeal, as limited by their brief, from so much of an order of the Supreme Court, Suffolk County (Doyle, J.), dated August 23, 2006, as granted the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiffs 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 the defendants' motion for summary judgment dismissing the complaint is denied.

On March 5, 2004, the plaintiff Shiela Scarano was riding as a front seat passenger, in a vehicle operated by her husband, the plaintiff Eugene Scarano. While stopped at a traffic light, the plaintiffs' car was rear-ended by a motor vehicle owned by the defendant Gary Wehrens, and being operated by the defendant Suzanne Wehrens. The impact propelled the plaintiffs' car into a vehicle which was directly in front of it. Both of the plaintiffs had been involved in a number of motor vehicle accidents prior to the subject one, both had previously sustained spinal injuries, and both were currently receiving Social Security Disability benefits, based on disabling back injuries. Several weeks after the subject accident, Eugene Scarano underwent knee surgery, and, in May 2004, Shiela Scarano underwent spinal fusion and discectomy surgery in her cervical spine.

In April 2004 the plaintiffs commenced the present action, alleging that they both sustained serious injuries as a result of the accident on March 5, 2004. The defendants then moved for summary judgment dismissing the complaint on the ground that any serious injuries exhibited by the plaintiffs were pre-existing in nature. The Supreme Court granted the defendants' motion. We reverse.

The defendants' proof did not establish their entitlement to judgment as a matter of law on the theory that neither of the plaintiffs sustained a serious injury as defined by Insurance Law § 5102(d) (see Miller v Afshin, 28 AD3d 437; Ribarudo v Amir, 27 AD3d 544). Specifically, the defendants failed to negate the existence of a triable issue of fact as to whether the plaintiffs' injuries from prior accidents or conditions predating the subject automobile accident were exacerbated by the subject accident, necessitating the surgeries which they respectively underwent within a relatively short time after the accident (see Cebularz v Diorio, 32 AD3d 975, 976). Accordingly, the Supreme Court should have denied the defendants' motion for summary judgment (see Alvarez v Prospect Hosp., 68 NY2d 320).

Rodriguez v. Huerfano


Cannon & Acosta, LLP, Huntington Station, N.Y. (June Redeker of counsel), for appellant.
Brian J. McGovern, LLC, New York, N.Y. (Timothy J. Valdez  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, Suffolk County (Doyle, J.), dated August 24, 2006, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

While riding his bicycle near the intersection of Hilltop Drive and Second Avenue in the Town of Islip, on the evening of March 19, 2003, the plaintiff was struck and knocked to the ground by a motor vehicle owned by the defendant David Garcia and operated by the defendant Virginia Huerfano. Following the plaintiff's commencement of this action to recover damages for the personal injuries sustained, the defendants successfully moved 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). We affirm.

The defendants established that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) through the submission of the affirmed medical report of their expert orthopedist, who conducted a physical examination of the plaintiff, finding a normal range of motion in his cervical and lumbar regions of the spine and the absence of any orthopedic disability (see Gaddy v Eyler, 79 NY2d 955, 956-957; Shamsoodeen v Kibong, 41 AD3d 577).

In opposition, the plaintiff failed to raise a triable issue of fact. The magnetic resonance imaging (hereinafter MRI) report regarding the plaintiff's lumbar region of the spine, upon which the plaintiff's treating chiropractor relied in opposing the motion, was without probative value, since it was not affirmed by the plaintiff's physician (see Grasso v Angerami, 79 NY2d 813, 814), and was not actually relied upon by the defendants' expert (see Zarate v McDonald, 31 AD3d 632, 633; Ayzen v Melendez, 299 AD2d 381). Even if the underlying MRI report were admissible (see Pommells v Perez, 4 NY3d 566, 577 n 5), the report of the plaintiff's treating chiropractor still failed to provide objective and recent evidence of the extent or degree and duration of the claimed limitation of the plaintiff's lumbar region of the spine (see Mejia v DeRose, 35 AD3d 407, 408; Young v Russell, 19 AD3d 688, 689). Therefore, no serious injury was sufficiently established with competent medical evidence to raise a triable issue of fact (see Iusmen v Konopka, 38 AD3d 608, 609; Felix v New York City Tr. Auth., 32 AD3d 527, 528).

The plaintiff's remaining contentions are without merit.


SCHMIDT, J.P., RIVERA, SANTUCCI and BALKIN, JJ., concur.

 

Paradizov v. Doan


Gershbaum & Weisz, P.C., New York, N.Y. (Charles Gershbaum of counsel), for appellants.
Cheven, Keely & Hatzis, New York, N.Y. (Mayu Miyashita of counsel), for respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiffs appeal from an order of the Supreme Court, Kings County (Kramer, J.), dated August 16, 2006, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that none of the plaintiffs sustained 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 for summary judgment dismissing the complaint is denied.

The defendants failed to make a prima facie showing that the plaintiffs 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 defendants did not provide any objective evidentiary basis for their expert orthopedist's opinion that each of the plaintiffs enjoyed a "full range of motion" and that the plaintiff Nikolai Paradizov experienced only "slight restrictions of motion of the back" which, in the expert's view, were "entirely ascribable" to a subsequent accident (Coburn v Samuel, 44 AD3d 698; see Cedillo v Rivera, 39 AD3d 453). Therefore, the defendants' motion for summary judgment dismissing the complaint should have been denied (see Ayotte v Gervasio, 81 NY2d 1062), regardless of the sufficiency of the plaintiffs' opposition (see Weingard v New York Univ. Med. Ctr., 64 NY2d 851, 853). CRANE, J.P., RITTER, FISHER, COVELLO and DICKERSON, JJ., concur.

 

 

Luciano v. Luchsinger



Tierney & Tierney, Port Jefferson Station, N.Y. (Stephen A. Ruland of counsel), for appellants.
Neil L. Kanzer, Garden City, N.Y. (Lorraine M. Korth and David R. Feen of counsel),                      for respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiffs appeal from an order of the Supreme Court, Suffolk County (Doyle, J.), dated September 18, 2006, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The Supreme Court correctly concluded that the defendants met their prima facie burden by establishing that neither of the plaintiffs sustained 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 Meyers v Bobower Yeshiva Bnei Zion, 20 AD3d 456).

In opposition, the plaintiffs failed to raise a triable issue of fact. The plaintiffs principally relied upon the affidavit of Dr. David BenEliyahu and the affirmations of Dr. Arvind Chopra. Initially, the affirmations of Dr. Chopra, along with his reports, failed to raise a triable issue of fact. Dr. Chopra's conclusions that the plaintiffs' injuries were the result of the subject accident were based on speculation. Dr. Chopra failed to address in either his affirmations or reports the fact that both plaintiffs had pre-existing degenerative conditions in their cervical and/or lumbar spines. Moreover, he failed to acknowledge that the plaintiff Angelina M. Luciano (hereinafter Angelina) had been involved in a prior car accident in which she injured her back and neck. Those omissions rendered speculative his conclusions that the plaintiffs' cervical and lumbar spine injuries were the result of the subject accident (see Moore v Sarwar, 29 AD3d 752; Giraldo v Mandanici, 24 AD3d 419).

Dr. BenEliyahu also failed to adequately address in his affidavit the findings of pre-existing degenerative disc disease in Angelina's cervical and lumbar spine, and the degeneration in the lumbar spine of the plaintiff Vincent Luciano (hereinafter Vincent). This rendered speculative his findings that the injuries and limitations in Vincent's lumbar spine, and the injuries and limitations in Angelina's cervical and lumbar spine, were the result of the subject accident (see Giraldo v Mandanici, 24 AD3d 419). While Dr. BenEliyahu did note that he was treating Angelina for injuries she sustained to her back and neck from a prior accident at the time the subject accident occurred, his conclusions that the subject accident aggravated dormant conditions in her neck and back were without any foundation. This is so because Dr. BenEliyahu failed to provide any medical evidence of her condition when he treated her prior to the subject accident so as to compare what her limitations were before and after the subject accident. Thus, there is no foundation for Dr. BenEliyahu's conclusions that the subject accident aggravated the prior conditions in Angelina's spine to the extent that her range of motion was significantly diminished thereafter (see Franchini v Palmieri, 1 NY3d 536).

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

In re Progressive Classic Insurance Company v. Kitchen and NY Central Mutual


Buratti, Kaplan, McCarthy & McCarthy, Yonkers (Michael A.
Zarkower of counsel), for appellant.
Mitchell S. Lustig, Plainview, for respondent-respondent.

Order, Supreme Court, Bronx County (John A. Barone, J.), entered on or about September 20, 2006, which, after a framed-issue hearing, denied petitioner insurer's application to stay an uninsured motorist arbitration upon a finding that additional respondent insurer (Central Mutual) had effectively cancelled its policy on the offending vehicle, unanimously reversed, on the law, without costs, and the petition to stay arbitration granted. While Central Mutual established that it mailed the two underwriting information request letters required by the New York State Assigned Risk Plan as a condition to cancellation pursuant to Vehicle and Traffic Law § 313 (Manual of the New York Automobile Insurance Plan, § 18.2[9][b] [April 1, 2004 Distribution]), it failed to establish that, as required by Vehicle and Traffic Law § 313(2)(a), it filed a copy of the notice of cancellation with the Department of Motor Vehicles within 30 days of the effective date of the cancellation. In the latter regard, Central Mutual relied on a copy of an "insurance activity expansion" it had downloaded from the Department of Motor Vehicles' Web site. The copy was not certified pursuant 4518(c), and Central Mutual did not attempt to prove at the hearing its office procedures, if any, for transmitting notices of cancellation to the Department of Motor Vehicles. Thus, there is no proof of an office practice and procedure followed by Central Mutual in the regular course of its business such as might raise a presumption that its notice of cancellation relating to the offending vehicle was received by the Department of Motor Vehicles within 30 days of the cancellation (cf. Matter of Liberty Mut. Ins. Co. v Morrissey, 203 AD2d 93 [1994]). Nor does the face of the expansion plainly indicate when the notice of cancellation was received by the Department of Motor Vehicles [FN1]. Accordingly, the expansion should not have been received as evidence of a section 313 cancellation unless so patently trustworthy in that respect as to be self-authenticating, which it is not (cf. Elkaim v Elkaim, 176 AD2d 116 [1991], appeal dismissed 78 NY2d 1072 [1991]). Central Mutual's failure to show that it had timely filed the notice of cancellation renders the cancellation ineffective as against persons other than the named insured and members of the latter's household (Vehicle and Traffic Law § 313[3]; see Matter of Progressive Northeastern Ins. Co. v Barnes, 30 AD3d 523 [2006]).

The Decision and Order of this Court entered herein on June 28, 2007 is hereby recalled and vacated (see M-3743 & 4371, decided simultaneously herewith).

 

Bachrow  v. Turner Construction Corporation


Havkins Rosenfeld Ritzert & Varriale, LLP, Mineola (Gail L.
Ritzert of counsel), for appellant.
London Fischer LLP, New York (John E. Sparling of counsel),
for Turner Construction Company, Montefiore Medical Center
and The Children's Hospital at Montefiore, respondents.
Carroll, McNulty & Kull LLC, New York (Ann M. Odelson of
counsel), Amicus Curiae.

Order, Supreme Court, Bronx County (Yvonne Gonzalez, J.), entered August 2, 2006, which in a third-party action by a construction site's owner and general contractor (collectively Turner) against plaintiff injured construction worker's employer (Lowy), insofar as appealed from as limited by the briefs, granted Turner's motion for summary judgment on its second cause of action for breach of contract to procure insurance, and denied Lowy's cross motion to sever such cause of action and consolidate it with an action commenced by Turner against Lowy's general liability insurer (U.S. Fire) for a declaration that U.S. Fire is obligated to defend and indemnify Turner in this action, unanimously reversed, on the law and the facts, without costs, Turner's motion for summary judgment on the second cause of action denied, and such cause of action severed and consolidated with the declaratory judgment action.

The motion court correctly held that the subcontract between Turner and Lowy required Lowy to procure insurance covering Turner for all liabilities arising out of Lowy's work, including liabilities resulting from Turner's own acts of negligence; that the insurance Lowy procured limited Turner's coverage to liabilities caused by Lowy's negligent acts or omissions; and that Lowy therefore breached the subcontract (see Kinney v Lisk Co., 76 NY2d 215, 218-219 [1990], citing, inter alia, Roblee v Corning Community Coll., 134 AD2d 803 [1987], lv denied 72 NY2d 803 [1988]). Nor is there any evidence that Turner ratified the insurance Lowy procured. Accordingly, Turner is entitled to recover any losses caused by this breach of contract, including its liability to plaintiff and costs of defending this action (see Kinney, id. at 219; Roblee, id. at 805). Nevertheless, the motion court's grant of summary judgment was premature, as it has yet to be determined that Lowy's failure to procure the agreed-upon insurance caused Turner any losses. Such causal relationship would be lacking in the event the declaratory judgment action determines that U.S. Fire was not given timely notice of the claim (see U.S. Pack Network Corp. v Travelers Prop. Cas., 42 AD3d 330 [2007]).

Clarendon National Insurance Company v. Le


Steven Wildstein, P.C., Great Neck, for appellant.
Schindel, Farman, Lipsius, Gardner & Rabinovich LLP, New
York (Ira S. Lipsius of counsel), for respondent.

Order, Supreme Court, New York County (Jane S. Solomon, J.), entered October 13, 2006, which, upon granting defendant Briano's motion to vacate a default judgment, granted summary judgment to plaintiff insurer and declared the policy it had issued to defendant Le void, relieving it of any obligation to defend or indemnify Le in the underlying action brought by Briano against Le and others, unanimously reversed, on the law, with costs, judgment vacated, and the matter remanded for further proceedings consistent herewith.

The refusal to afford Briano an opportunity to discover whether plaintiff's efforts to locate Le, the driver in the truck allegedly causing the accident, had been directed at the wrong person, was improper (see Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168-169 (1967).

Green v. William Penn Life Insurance Company of New York

Plaintiff appeals from a judgment of the Supreme Court, New York County (Harold Beeler, J.), entered June 29, 2006, dismissing the complaint after a nonjury trial.

Thomas Torto, New York and S. Edmund Resciniti,
Roslyn Heights for appellant.
Bleakley Platt & Schmidt, LLP, White Plains (Robert
D. Meade of counsel), for
respondent.

SAXE, J.

On this appeal, we are provided the opportunity to revisit the ancient common-law evidentiary presumption against death by suicide, as it is applied in New York, particularly as it relates to appellate review of a trial court's finding of suicide.

The facts are as follows. On February 20, 2002, at approximately 6:30 p.m., plaintiff Lisa Green found her husband, Alan Green, who was then 54 years old, lying in their bed when she arrived home from work. The bed was made and he was on top of the covers with a copy of the New York Times, his Palm Pilot and his portfolio lying next to him. Finding him unresponsive, plaintiff called 911, and Emergency Medical Services technicians then arrived and determined that Mr. Green was already dead. Members of the police department and the Office of the Chief Medical Examiner conducted an initial investigation for about six hours. Plaintiff's mother, her sister and Mr. Green's cousin and attorney, Richard Wolff, also came to the apartment.

An empty glass and two bottles of water were found on the nightstand next to the bed; in the top drawer of the nightstand were an empty bottle of hydrocodone pills and an empty bottle of Ambien pills. The hydrocodone bottle had contained 40 pills on January 23, 2002, when Mr. Green filled a prescription following hernia surgery, and the Ambien bottle had contained 30 pills when his prescription was refilled on February 6, 2002. In addition, 61 Vicodin pills out of 100 prescribed to Mr. Green on June 7, 2000 were found in the drawer. An empty vial of Percocet was also found, from a 1997 prescription for plaintiff.

Plaintiff would not permit an autopsy to be performed on Mr. Green, following her mother's upset reaction and Mr. Wolff's agreement, explaining that she and her husband were Jewish and "we don't do that." Plaintiff also objected to a toxicological examination for religious reasons, seeing no difference between it and an autopsy.

After a funeral service, Mr. Green's body was cremated, notwithstanding Jewish law against the procedure. Plaintiff explained that it was Mr. Green's desire to have his ashes spread over Yankee Stadium, and that her "husband's wishes were more important than anything."

After Mr. Green's death, plaintiff requested that defendant insurance company pay her the death benefit arising out of a life insurance policy it had issued to Mr. Green on December 3, 2001, in the amount of $500,000, designating plaintiff as beneficiary. Defendant refused to pay, on the ground that Mr. Green's death resulted from a suicide and the policy contained a clause limiting its obligation to repayment of the paid premiums in the event the insured committed suicide within two years of issuance of the policy. Plaintiff therefore commenced this action seeking to recover under the policy. In its answer, defendant asserted as an affirmative defense that the death of the insured was the result of suicide.

After a nonjury trial, the court concluded that there was "no reasonable explanation in this case other than suicide," and dismissed the complaint. This appeal ensued.

We hold, contrary to the trial court, that the evidence failed to overcome the powerful presumption embedded in our common law against suicide.

In this state, the nature and application of the presumption against suicide have evolved over time. Because the presumption is based on the premise that "[s]uicide is contrary to the general conduct of mankind'" and "an improbability [in that] most men cling to life" (Wellisch v John Hancock Mut. Life Ins. Co., 293 NY 178, 184 [1944], quoting Mallory v Travelers' Ins. Co., 47 NY 52, 54-55 [1871]), treatises have observed that it is not a true presumption, which involves assuming one fact based upon proof of another fact (Black's Law Dictionary 1203 [7th ed 1999]), but "rather, it is a metaphorical way of stating that the burden of proof is on the party alleging suicide" (2 Fishman, Jones on Evidence § 10:5, at 215 [7th ed]). In fact, the Wellisch Court characterized it as a different sort of presumption, one that "is really a rule or guide for the jury in coming to a conclusion on the evidence (id.).

There is no unanimity among common law jurisdictions as to the degree of the burden placed on the party seeking to establish that a death was by suicide; some jurisdictions have imposed a preponderance of the evidence standard, others require more (see 2 Fishman, Jones on Evidence § 10:5, at 215-216 [7th ed]). But the standard now applied in this state, as established in Wellisch, creates an exceedingly high burden. As was clearly explained in the case of Schelberger v Eastern Savings Bank (93 AD2d 188, 192 [1983], affd 60 NY2d 506 [1983]), "[a]pplication of the presumption shifts the burden of going forward to the insurer to establish suicide as a defense by clearly establishing such facts as will exclude any reasonable hypothesis of accidental death'" (quoting Vance, Insurance, at 571 [emphasis added]). In other words, due to the presumption, a finding of suicide is warranted only if "no conclusion other than suicide may reasonably be drawn" (Schelberger v Eastern Sav. Bank, 60 NY2d at 510).

On the record before us, the trial court was wrong in concluding that there was no reasonable explanation in this case other than suicide. Based upon the evidence before the court, it was also possible to reasonably infer other causes for his death, including the possibility that Mr. Green accidentally overdosed on the pain or sleep medication he had been prescribed following his hernia surgery. But our difference of opinion regarding which inference is the more likely one is not determinative. The analysis we must employ on appeal does not turn on the relative merits of the competing inferences as to whether Mr. Green's death was caused by suicide, accident or other means. Reasonable people may differ as to whether the evidence better supports one hypothesis or the other. Our obligation here is to review the evidence and determine whether the trial court properly concluded that suicide was the only conclusion that could reasonably be drawn from the evidence. As a matter of law, it was not. Therefore, application of the law regarding the presumption against suicide necessitated a directed verdict in this case, and we cannot uphold the determination of the trial court as factfinder that Mr. Green committed suicide.

We do not disagree that there was sufficient evidence to logically support the inference of suicide. However, there was much evidence that supports other conclusions as to what caused his death. We are not making findings contrary to those of the trial court as to what occurred; rather, we are simply observing that there are other reasonable conclusions that may be drawn from the evidence, aside from suicide, and that therefore, as a matter of law, the presumption against suicide was not overcome.

Plaintiff testified that February 20, 2002 began as an ordinary day for the couple. Mr. Green, who exhibited no signs of depression or other unusual behavior, told his wife that he would be going to the gym that morning to relieve abdominal pain from his hernia surgery, and that he had to make telephone calls, including a work-related conference call, that afternoon. Indeed, he was dressed in gym clothes — jeans, t-shirt and sweatshirt, with his sneakers on the floor next to the bed - when he was found that evening.

In addition, Mr. Green's cousin, Richard Wolff, who represented Mr. Green in litigation with his former attorney, testified that he spoke with Mr. Green on the morning of February 20, 2002, and they scheduled a meeting for the following week. According to Mr. Wolff, Mr. Green was upbeat, positive and excited about the consulting business he had begun.

Mr. Green had visited his internist the day before his death, and according to the physician's testimony, expressed feelings of depression and anxiety and described problems with insomnia. However, importantly, when the physician asked him directly if he felt depressed enough to take his own life, Mr. Green protested that "he would never do such a thing, he was not suicidal, he was just down." Furthermore, Mr. Green went to the trouble of following his internist's suggestion and telephoning the psychiatrist he recommended, leaving a message on his voicemail.

Moreover, his actions shortly before his death and the circumstances at the time of his death support the inference that his death was accidental. His lying on top of the covers of his bed with a copy of the New York Times, his Palm Pilot and his portfolio surrounding him, like the conversations he had that day and the appointments he made, point to a man engaged in life, not one determined to depart it.

The trial court heavily emphasized the hearsay statements contained in the police report and medical examiner's report, in both of which it was reported that plaintiff remarked that Mr. Green was feeling depressed and had overdosed on pain medication. The court similarly pointed to the testimony of Mr. Green's sister, reporting that on the day after his death plaintiff said that Mr. Green had been depressed and that his death might be attributable to an overdose. Based upon these reports, the trial court held plaintiff's testimony to be incredible to the extent she denied that Mr. Green was really depressed or under substantial pressure and asserted that she did not know what had caused his death, that it might have been a heart attack, or an aneurysm, or an adverse reaction to medication.

The dissent highlights the finding regarding plaintiff's credibility, treating it as highly supportive of the verdict. However, we view that determination as having limited importance. Whatever plaintiff feared or believed on the day she found her deceased husband regarding the cause of his death, that fear or belief is not evidence of how he died. In any event, it would be appropriate to question plaintiff's credibility even in the absence of contradictory statements, given her pecuniary interest in the matter.

The trial court asserted that the amount of medication taken by Mr. Green on the day he died was "inconsistent with an accident and only consistent with the fact that it was a deliberate suicidal act." This assertion is based upon conjecture, and not sufficiently supported by the record. We simply do not know how many pills remained in the Ambien vial by that date. Mr. Green's average usage during the previous prescription may be relevant, but it cannot be relied upon by itself to establish as a fact his usage during the weeks preceding his death. Notably, plaintiff said that Mr. Green took the Ambien regularly and that if he woke in the middle of the night, he took another pill or half a pill. She also admitted to having used approximately five of the Ambien pills herself. The described usage could have left the vial empty or nearly empty on the date in question, without enough Ambien to cause death. As to the painkiller hydrocodone, [*5]there is no basis at all for a conclusion that any of it remained in its vial on that date, given that it was prescribed 27 days earlier and was to be taken at the rate of two every four hours.

The court's remarks regarding the psychology of acute reactive depression and the possibility of it leading abruptly to suicide, although interesting and perhaps apt, like its conclusions regarding the number of pills available to Mr. Green on that date, do not negate the availability of other reasonable conclusions besides suicide to be drawn from the evidence here.

The evidence that Mr. Green was experiencing physical, emotional and financial difficulties, following his recent career change and very recent surgery, could certainly support an inference that he committed suicide, but fails to compel it. That the trial court found it "quite clear" that Mr. Green was depressed does not suffice.

Nor does plaintiff's refusal to permit a toxicology exam or an autopsy on religious grounds, notwithstanding her compliance with the insured's wish to be cremated, compel the conclusion that the death was a suicide.

The open questions posed by the dissent, such as why plaintiff would have remarked on the lack of pills and suggested the possibility of suicide immediately after her husband's death, and what else could have caused his death, need not be answered to properly rule on this appeal. In the face of the applicable presumption against suicide, we need only determine whether the court correctly concluded that suicide was the only reasonable conclusion to be drawn. However, we observe that a woman whose husband just died might, in a panic, draw conclusions that she may later be dissuaded from by calmer thinking, and that middle-aged men may also die of accidental overdoses as well as from other sudden fatal break-downs of bodily functions. While an autopsy would have helped answer those questions, the family's wishes against the procedure do not serve to eliminate those other possibilities.

In many other cases, equally strong bases were presented for an inference of intentional suicide, yet the presumption could not be overcome. In Schelberger (93 AD2d at 197-198), the insured had ingested 30 to 40 Tuinal pills (a barbiturate), the death occurred on Christmas Day, the insured had recently had an argument with his wife, the telephone cord had been allegedly ripped from the wall, and the decedent was a known drug user who had previously been hospitalized for an overdose of Tuinal upon ingesting somewhere between 4 and 40 pills. This Court observed that "other than proof as to the ingestion of a large quantity of drugs, there is no evidence here that the insured intended to take his own life" (id. at 199). This Court therefore concluded that the presumption against suicide required upholding a jury verdict in favor of the insurance beneficiary (id.), and the Court of Appeals observed that there was "no basis in law for disturbing [the] verdict" (60 NY2d at 512).

In Wellisch, the insured was found comatose in his car which had crashed into a tree despite dry and clear weather conditions, and his death a few days later was determined to be the result of barbiturate poisoning from the drug Seconal, which he had picked up from a pharmacy for his aunt on the day of the crash, and which he was known to have taken in the past for headaches (293 NY at 181). The evidence in Wellisch also established that earlier that day the insured had complained of a headache, was in a nervous and irritable mood, had slapped one of his children, causing the child to fall, break a glass and cut himself, and had experienced some discord between himself and his wife, prompting his aunt to call the police. In fact, when the police arrived, the insured had remarked, " [w]ell, . . . she won't be bothered with me any more'" (id. at 182). He then went out with his fishing gear, and crashed on the way to his favorite fishing place. In addition, a scrap of paper was found in the car upon which the insured had written, " [a]ll life is only one dark hour . . . The best thing in this hapless strife is the end of life,'" which the insurance company viewed as a suicide note, while the wife viewed it as poetry (id. at 183). The court observed that while "[i]t was conclusively shown that Morris Wellisch died from an overdose of seconal[,] . . . a question was presented as to whether he took the extra capsules by mistake or with the intention of killing himself," finding the proof circumstantial and equivocal (id. at 184). It particularly noted that "[t]here was an innocent reason for the possession and use of the drug, in some quantity" (id.). Accordingly, in reliance on the application of the presumption, the Court upheld a finding against the insurance company (id.).

We recognize that in the foregoing cases, the appellate courts were upholding findings rather than reversing them. However, it is important to recognize that this was because they were applying the presumption, not simply deferring to the factfinders' conclusions. Here, even giving appropriate deference to the trial court's findings, and recognizing its advantage of having seen the witnesses — a limited advantage when related to plaintiff, since, as indicated, we would in any case question her credibility based upon her pecuniary interest in the outcome — we must come to an opposite conclusion. This Court has not only the authority but the responsibility to review the evidence to determine whether the judgment is warranted by the established facts (see Northern Westchester Professional Park Assoc. v Town of Bedford, 60 NY2d 492, 499 [1983]). Because the evidence supplies a logical basis for alternative reasonable conclusions, such as the possibility that Mr. Green took an overdose of his medications by mistake, not with the intention of killing himself, the evidence failed as a matter of law to overcome the presumption against suicide.

If the standard of review was merely whether a fair interpretation of the evidence in the record supported the inference drawn by the trial court, our analysis would change. However, the strong presumption against a finding of suicide unless that is the only conclusion that may reasonably be drawn changes the applicable analysis, and requires a reversal here. The record fails to support the court's ultimate finding that the only available reasonable inference is that Mr. Green committed suicide. Therefore, the presumption against suicide required, as a matter of law, a result in favor of plaintiff.

Accordingly, the judgment of the Supreme Court, New York County (Harold Beeler, J.), entered June 29, 2006, dismissing the complaint after a nonjury trial, should be reversed, on the law,  without costs, and plaintiff awarded the principal amount of $500,000, plus statutory interest from the date of the insured's death. The Clerk is directed to enter judgment accordingly.

All concur except Andrias, J.P. and Nardelli, J. who dissent in an Opinion by Andrias, J.P.

 

In the Matter of Allstate Insurance Company v. Wang


Baxter, Smith, Tassan & Shapiro, P.C., Hicksville, N.Y. (Anne
Marie Ladia-Garcia of counsel), for respondents-appellants.
Robert P. Tusa (Shapiro, Beilly, Rosenberg & Aronowitz,
LLP, New York, N.Y. [Roy J.
Karlin] of counsel), for petitioner-
respondent.


DECISION & ORDER

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, New York Central Mutual Fire Ins. Co. and Michael Prunella appeal from a judgment of the Supreme Court, Queens County (Rios, J.), entered October 27, 2006, which, after a hearing, granted the petition, permanently stayed arbitration, and directed New York Central Mutual Fire Ins. Co. to provide insurance coverage for the subject accident.

ORDERED that the judgment is affirmed, with costs.

The determination that the automobile owned by Michael Prunella struck the vehicle operated by Hang Li Wang from the rear was dependent, in substantial measure, upon an assessment of the credibility of the witnesses, whom the Supreme Court saw and heard and therefore was in a better position to evaluate (see Matter of Aetna Life & Cas. v Gramazio, 242 AD2d 530, 530). We see no reason to disturb that determination (id.; see also Matter of Travelers Prop. Cas. Co. v Landau, 27 AD3d 477, 478; Matter of Metropolitan Prop. & Cas. Co. v Sands, 5 AD3d 601).

The appellants' remaining contentions are without merit.

In the Matter of Hanover Insurance Company v. Etienne


Goldman & Grossman, New York, N.Y. (Jay S. Grossman and
Eleanor R. Goldman of counsel), for appellant.
Jeffrey H. Schwartz, New York, N.Y., for respondents.

DECISION & ORDER

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a claim for uninsured motorist benefits, the petitioner appeals from an order of the Supreme Court, Kings County (Held, J.), dated June 26, 2007, which denied the petition.

ORDERED that the order is reversed, on the law, with costs, and the petition to permanently stay the arbitration is granted.

The Supreme Court erred in denying the petition for a permanent stay of arbitration since the respondents failed to file a sworn statement with the petitioner insurance company within 90 days of the alleged hit-and-run accident, in accordance with the requirement of the uninsured motorist endorsement of the subject insurance policy. The respondents thus failed to satisfy a condition precedent of coverage under the policy, and are not entitled to arbitrate their claim seeking coverage (see Matter of Eveready Ins. Co. v Mesic, 37 AD3d 602; Matter of Empire Ins. Co. v Dorsainvil, 5 AD3d 480, 481; Matter of Legion Ins. Co. v Estevez, 281 AD2d 420; Matter of Aetna Life & Cas. v Ocasio, 232 AD2d 409; Matter of State Farm Ins. Co. v Velasquez, 211 AD2d 636, 637). "Moreover, the fact that the petitioner received some notice of the accident by way of an application for no-fault benefits did not negate the breach of the policy requirement" (Matter of Eveready Ins. Co. v Mesic, 37 AD3d at 603; see Matter of Allstate Ins. Co. v Estate of Aziz, 17 AD3d 460, 461; Matter of America Home Assur. Co. v Joseph, 213 AD2d 633).

The petitioner's remaining contention need not be addressed in light of our determination.

Allstate Insurance Company v. Swanson


Appeal from a judgment of the Supreme Court, Allegany County (Thomas P. Brown, A.J.), rendered August 8, 2006 in a declaratory judgment action. The judgment denied the motion of defendants Wendy Wilcox, individually and as parent and natural guardian of Zakary S.C., an infant, and Jackey C., individually and as parent and natural guardian of Zakary S.C., an infant, for summary judgment, granted plaintiff's cross motion for summary judgment and granted judgment declaring that plaintiff has no obligation to defend or indemnify defendant Christopher Swanson in the underlying personal injury action.

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

Memorandum: Plaintiff commenced this action seeking judgment declaring that it has no duty to defend or indemnify Christopher Swanson (defendant) in the underlying personal injury action brought against him by defendants Wendy Wilcox and Jackey C. (defendant parents). Defendant shot an arrow from a compound bow at defendant parents' son, striking him in the eye. As a result of the incident, defendant pleaded guilty to assault in the first degree (Penal Law § 120.10 [3]), and plaintiff, which had issued a homeowners' policy to defendant's parents, denied coverage based, inter alia, on a policy exclusion for bodily injury "intended by, or which may reasonably be expected to result from the intentional or criminal acts or omissions[] of an insured person." Supreme Court properly granted plaintiff's cross motion for summary judgment and granted judgment declaring that plaintiff has no obligation to defend or indemnify defendant in the underlying personal injury action. Plaintiff submitted evidence establishing as a matter of law that the injury in question falls within the policy exclusion for injury resulting from defendant's criminal act, for which defendant was convicted, and that the injury could reasonably be expected to result from that act (see Allstate Ins. Co. v Schimmel, 22 AD3d 616; Kehoe v Nationwide Mut. Fire Ins. Co., 299 AD2d 318, 319-320; Allstate Ins. Co. v Ruggiero, 239 AD2d 369; cf. Allstate Ins. Co. v Zuk, 78 NY2d 41, 45-47).

Schoreder v. Connelly


Appeal from an order of the Supreme Court, Onondaga County (Edward D. Carni, J.), entered September 25, 2006. The order, insofar as appealed from, denied defendants' cross motion for summary judgment dismissing the complaint.

LAW OFFICES OF EPSTEIN & DONNELLY, NORTH SYRACUSE (MICHAEL G. DONNELLY OF COUNSEL), FOR DEFENDANTS-APPELLANTS.
PARKER & WAICHMAN, LLP, GREAT NECK (BRETT A. ZEKOWSKI OF COUNSEL), FOR PLAINTIFFS-RESPONDENTS.


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

Memorandum: Plaintiffs commenced this action seeking damages for injuries sustained by Thomas Schroeder (plaintiff) when the vehicle in which he was a passenger was rear-ended by a vehicle operated by defendant Susan Connelly and owned by defendant William Connelly. Plaintiffs moved to strike defendants' third affirmative defense, in which defendants asserted that the action is barred by a release signed by plaintiff, and defendants cross-moved for summary judgment dismissing the complaint based, inter alia, on that release. Supreme Court denied the motion and cross motion, and defendants contend on appeal that the court should have granted their cross motion. We affirm.

In support of their motion, plaintiffs contended that the release signed by plaintiff was the result of mutual mistake and therefore should be set aside. It is well established, however, that "[a] release should not be set aside unless plaintiff demonstrates duress, illegality, fraud, or mutual mistake" (Budnack v Crymes, 288 AD2d 827; see Rocanova v Equitable Life Assur. Socy. of U.S., 83 NY2d 603, 616; Gibli v Kadosh, 279 AD2d 35, 38) and that, "in the instance of mutual mistake, the burden of persuasion is on the one who would set the release aside" (Mangini v McClurg, 24 NY2d 556, 563). "[I]n resolving claims of mutual mistake as to injury at the time of release, there has been delineated a sharp distinction between injuries unknown to the parties and mistake as to the consequence of a known injury. A mistaken belief as to the nonexistence of presently existing injury is a prerequisite to avoidance of a release" (id. at 564). " Even where a releasor has knowledge of the causative trauma, it has been held that there must be actual knowledge of the injury' " (O'Neal v Life Science Labs., Inc., 23 AD3d 1024, 1024-1025).

Here, plaintiffs submitted evidence establishing that, at the time plaintiff signed the release, he had been diagnosed only with sprains and strains and that, a few months later, he was diagnosed with a herniated disk and a rotator cuff tear, both of which required surgery. Defendants, on the other hand, submitted the affidavit of their insurance adjuster wherein she asserted that she was aware that plaintiff was suffering from something more serious than a sprain or strain at the time the release was signed by plaintiff. We thus conclude that there is an issue of fact whether the release was the result of mutual mistake and that the court therefore properly denied defendants' cross motion (cf. id. at 1025; see generally Zuckerman v City of New York, 49 NY2d 557, 562).

In the Matter of the Arbitration between New York Central Fire Ins. Co. and Gordon


Calendar Date: October 16, 2007
Before: Mercure, J.P., Spain, Carpinello, Mugglin and Kane, JJ.


Finkelstein & Partners, Newburgh (George A. Kohl II
of counsel), for appellant.
Eisenberg & Kirsch, Saratoga Springs (Jeffrey D.
Wait of counsel), for respondent.

MEMORANDUM AND ORDER

Kane, J.

Appeal from an order of the Supreme Court (Lynch, J.), entered December 6, 2006 in Ulster County, which granted petitioner's application pursuant to CPLR 7503 to stay arbitration between the parties.

On April 12, 2005, respondent was injured in a motor vehicle accident while driving his 1996 Pontiac insured by petitioner. At the time, respondent lived with his father, whose separate automobile insurance policy issued by petitioner contained supplemental uninsured/underinsured motorist (hereinafter SUM) coverage. The father's policy did not list the 1996 Pontiac as an insured vehicle or respondent as a named insured [FN1]. In a letter received by petitioner on April 21, 2005, respondent provided petitioner with his notice of intention to make a claim for SUM coverage. The cover letter of respondent's counsel which accompanied this claim identified only respondent as the insured, not his father. The claim form itself identified respondent as the claimant and listed his own policy as having been implicated in the accident. A question on the claim form asks whether other members of the injured person's household also own an automobile; respondent answered by inserting his father's name and his father's policy number. Nowhere in this correspondence, however, did respondent notify petitioner of his intention to make a claim for SUM coverage under the father's policy. Petitioner promptly responded to this communication by letter dated April 25, 2005, in which it clearly identified respondent as the insured and listed only respondent's policy number. The letter further went on to disclaim coverage under respondent's policy because the tortfeasor's coverage exceeded that of respondent. No mention was made of the father's policy. Taking all of this correspondence together, by the end of April 2005 the only reasonable conclusion is that respondent was making a SUM claim under only his own policy.

Notably, nothing further transpired until December of that year. In response to an inquiry, on December 27, 2005, petitioner reminded respondent's counsel that it had previously disclaimed under respondent's policy. By letter dated January 10, 2006, respondent's counsel again wrote to petitioner and now for the first time in the heading of their letter made reference to respondent's father as the "Insured." The text of this letter made clear that respondent's counsel themselves believed that this was the first time that they were making claim under the father's policy because they state, "Please open a[n] under insurance claim and call so we may discuss." It is also undisputed that promptly after receipt of this letter, by letter dated January 25, 2006, petitioner disclaimed coverage under the father's policy based upon an exclusion in that policy.

In August 2006, respondent served petitioner with a request for SUM arbitration. Petitioner commenced this CPLR article 78 proceeding seeking to permanently stay arbitration, alleging that the father's policy excluded coverage for respondent's injuries. Respondent sought dismissal based upon untimely commencement of this proceeding, as well as an untimely disclaimer by petitioner. Supreme Court held that the timeliness issue was irrelevant, petitioner's January 2006 disclaimer was timely and, in any event, coverage did not exist under the father's policy. In light of these determinations, the court granted the petition and permanently stayed arbitration between the parties, prompting this appeal by respondent.

We reject respondent's argument alleging untimely commencement of this proceeding. Respondent contends that the proceeding must be dismissed because petitioner failed to file a signed order to show cause within 20 days after respondent served his demand for arbitration (see CPLR 7503 [c]). Yet, following the 2001 amendment to CPLR 304, "[a] special proceeding is commenced by filing a petition," not by filing an executed order to show cause (CPLR 304; compare Matter of Fry v Village of Tarrytown, 89 NY2d 714, 717 [1997] [holding that, under CPLR former 304, filing a proposed but unexecuted order to show cause had no legal effect and did not satisfy the commencement requirements]). The status of the order to show cause thus being irrelevant, and respondent not having proven or even asserted that the petition was not filed within the required 20-day period, the proceeding is deemed timely commenced.

Respondent concedes that the policy exclusion relied upon by petitioner applies under the factual situation here. Petitioner can only rely upon that exclusion to deny respondent coverage, however, if petitioner timely issued its disclaimer based upon that exclusion (see Insurance Law § 3420 [d]; Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 189-190 [2000]). A disclaimer must be issued promptly, with the timeliness for an insurer's disclaimer measured from the time when "the basis for denying coverage was or should have been readily apparent" (First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 69 [2003]). The mere inclusion of insurance information regarding respondent's father's policy on the claim form did not make it readily apparent in April 2005 that respondent was making a claim under his father's policy. Because petitioner timely disclaimed coverage under the father's policy in response to respondent's first notice of a claim under that policy on January 10, 2006, we affirm the determination granting the petition to stay arbitration (see R.C. Dolner, Inc. v My-Way Contr. Corp., 41 AD3d 185, 186-187 [2007]).

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

ORDERED that the order is affirmed, without costs.

Footnotes

 

Footnote 1:
The policy excluded coverage for members of the father's household while driving a vehicle they owned but which was not named in the father's policy.
 

City of Kingston v. Harco National Insurance


Before: Cardona, P.J., Mercure, Crew III, Carpinello and Lahtinen, JJ.

White, Fleischner & Fino, L.L.P., New York City
(Janet P. Ford of counsel), for appellant.
Cook, Netter, Cloonan, Kurtz & Murphy, P.C.,
Kingston (Michael Cook of counsel), for City of Kingston, respondent.
Basch & Keegan, L.L.P., Kingston (Derek J. Spada of
counsel), for Jacki Blanc and another, respondents.

MEMORANDUM AND ORDER

Crew III, J.

Appeal from an order of the Supreme Court (Work, J.), entered September 26, 2006 in Ulster County, which, among other things, denied the motion of defendant Harco National Insurance Company for summary judgment declaring that it had no duty to defend or indemnify plaintiff in certain actions commenced against it.

In January 2004, a sewer main ruptured in the City of Kingston, Ulster County, discharging a flood of water and sewage into multiple homes and forcing evacuations. The affected residents (hereinafter collectively referred to as defendants) filed notices of claim and, ultimately, suit against plaintiff seeking recovery for, among other things, property damage, personal injury and emotional distress. Plaintiff, in turn, demanded that defendant Harco National Insurance Company defend and indemnify pursuant to the terms of the underlying commercial lines policy in effect at the time. By letter dated April 28, 2004, Harco disclaimed coverage upon the basis of the total pollution exclusion contained within the policy, which denied coverage for bodily injury, personal injury or property damage that "would not have occurred in whole or in part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants at any time." Pursuant to the terms of the policy, the term "pollutants" was defined as "any solid, liquid, gaseous, or thermal irritant or contaminant including but not limited to, smoke, vapor, soot, fumes, acid, alkalis, chemicals and waste," the latter of which included materials to be "recycled, reconditioned or reclaimed."

Plaintiff thereafter commenced this declaratory judgment action seeking, among other things, a declaration that Harco was required to defend and indemnify it for any resulting liability to defendants. Following joinder of issue and discovery, Harco moved for summary judgment and plaintiff cross-moved for similar relief. Supreme Court denied Harco's motion in its entirety and partially granted plaintiff's motion, declaring that Harco was required to provide plaintiff with a defense in the underlying actions. This appeal by Harco ensued.

We affirm. Preliminarily, we reject Harco's assertion that the fungi or bacterial exclusion contained in the policy provides an alternate basis for denying coverage. The case law makes abundantly clear that "an insurer's disclaimer is strictly limited to those grounds stated in the notice of disclaimer, which disclaimer must clearly apprise the insured of the grounds on which the disclaimer is based" (Maroney v New York Cent. Mut. Fire Ins. Co., 10 AD3d 778, 780-781 [2004], affd 5 NY3d 467 [2005] [internal quotation marks and citation omitted]; see Kokonis v Hanover Ins. Co., 279 AD2d 868, 870 [2001]). Having failed to invoke the fungi or bacterial exclusion in the April 2004 disclaimer letter, Harco cannot now be heard to complain.

Turning to the issue of Harco's duty to defend, it is well settled that "an insurer's duty to defend its insured arises whenever the allegations in a complaint state a cause of action that gives rise to the reasonable possibility of recovery under the policy" (Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 65 [1991]). Stated another way, "[i]f any of the claims against [an] insured arguably arise from covered events, the insurer is required to defend the entire action" (Town of Massena v Healthcare Underwriters Mut. Ins. Co., 98 NY2d 435, 443 [2002] [internal quotation marks and citation omitted]). Where, as here, the insurer seeks "[t]o be relieved of its duty to defend on the basis of a policy exclusion, [it] bears the heavy burden of demonstrating that the allegations of the complaint cast the pleadings wholly within that exclusion, that the exclusion is subject to no other reasonable interpretation, and that there is no possible factual or legal basis upon which the insurer may eventually be held obligated to indemnify the insured under any policy provision" (Frontier Insulation Contrs., Inc. v Merchants Mut. Ins. Co., 91 NY2d 169, 175 [1997]).

Assuming, without deciding, that raw sewage unambiguously constitutes a "contaminant" and, hence, falls within the scope of the policy exclusion invoked here, Harco nonetheless failed to demonstrate that the underlying complaints cast those pleadings wholly within that exclusion and, further, that there is no possible factual or legal basis upon which it ultimately could be obligated to indemnify plaintiff. A review of the relevant complaints, as well as the examination before trial testimony of certain defendants (see Durant v North Country Adirondack Coop. Ins. Co., 24 AD3d 1165, 1166 [2005] ["extrinsic evidence may be used to expand the insurer's duty to defend"]), makes clear that at least some of the damages incurred by defendants arguably is attributable to the force of the rushing of water, variously described as a "flood" or "river" flowing like "Niagara Falls," that passed through and over defendants' respective properties. Contrary to Harco's assertion, it cannot be said that the erosion and structural damage alleged in the form of shifted foundations and cracked interior walls would not have occurred "but for" the presence of raw sewage. Accordingly, we agree with Supreme Court that Harco plainly has a duty to defend plaintiff in the underlying actions and, further, that the issue of its duty to indemnify must await the proof at trial.

Cardona, P.J., Mercure, Carpinello and Lahtinen, JJ., concur.

ORDERED that the order is affirmed, without costs.

Granite State Insurance Co. v. ACE American Reinsurance Co.


Lovells LLP, New York (Sean Thomas Keely of counsel), for
appellant.
Grais & Ellsworth LLP, New York (David J. Grais of counsel),
for respondents.

Order, Supreme Court, New York County (Richard B. Lowe III, J.), entered March 2, 2007, which, to the extent appealed from, denied defendant's renewed cross motion for summary judgment dismissing the fourth cause of action, unanimously affirmed, without costs. Appeals from order, same court and Justice, entered December 20, 2006, granting plaintiffs summary judgment on their first, second, third, and fifth causes of action, and judgment entered thereon on December 21, 2006, unanimously withdrawn pursuant to the parties' stipulation dated November 8, 2007.

As pertinent to this appeal, it is undisputed that plaintiffs, subsidiaries of American International Group (collectively known as AIG), issued excess umbrella liability policies to Castle & Cooke, Inc. (later known as Dole Foods Company), and then purchased facultative contracts of reinsurance from defendant, ACE American Reinsurance Company. Pursuant to these policies, ACE agreed to indemnify and promptly reimburse AIG, following receipt of proof of loss, an agreed part of any amounts that AIG paid under the insurance policies for which it purchased reinsurance.

In the early 1990's, Castle & Cooke was sued by thousands of its field workers in Central America and the Philippines for injuries allegedly suffered by them as a result of their exposure to the pesticide dibromochloropropane (commonly referred to as DBCP). Castle & Cooke then tendered claims to its insurers. Of the seven policies issued by AIG, ACE reinsured only one, a policy that had been issued by Granite State in 1979. In 1993, AIG, after consulting with counsel, disclaimed coverage based on its belief that the Granite State policy issued to Castle & Cooke did not provide coverage for Castle & Cooke's claim. According to ACE, Castle & Cooke accepted such disclaimer. Castle & Cooke then entered into a future cost agreement (FCA) with certain AIG companies, effective June 1, 1996, setting forth which policies would provide defense and indemnity on the Castle & Cooke claims on an ongoing basis.

AIG thereafter realized that it had paid more than the available limits with respect to defense expense and indemnity on one of its National Union policies issued to Castle & Cooke, a policy that ACE had not reinsured. Counsel on coverage matters advised AIG by letter dated May 19, 1997 to move its National Union overpayments to the Insurance Company of the State of Pennsylvania, which ACE also did not reinsure. In September 1997, AIG asked coverage counsel to see if it could correct its error by instead charging the overpayments to the Granite State policy that was reinsured by ACE. Then, after AIG asked Castle & Cooke if it would accept payments under the Granite State policy, AIG and Castle & Cooke added an addendum to the FCA, dated April 13, 1998, which provided that AIG had exhausted the applicable limits of its National Union policy and, "to the extent any sums remain unpaid, they shall become the responsibility of Granite State."

On February 21, 1998, AIG sent ACE a notice of loss based on the payments to Castle & Cooke that it had reallocated to the Granite State policy. ACE responded by letter dated March 4, 1998, stating that the first reinsurance notice of loss was dated February 21, 1998 and that "[t]here was no useful narrative on the Notice. Please appreciate the claim having an exposure of $500,000 should be accompanied by something on which we can use [sic]. Unfortunately we cannot consider the First Notice as being sufficient to avoid prejudice under the Cert. Could you please pass these advises along with our request for narrative." In its response dated May 8, 1998, AIG asserted that Castle & Cooke was facing 26,000 lawsuits in many states and foreign countries resulting from alleged exposure to pesticides and that once AIG determined that the National Union policy was exhausted, the FCA was amended by endorsement to replace the National Union policy with the Granite State policy. The letter did not explain how AIG moved around its losses in order to charge them to the Granite State policy.

By letter dated May 21, 1998, ACE maintained that it could not understand the basis for the claims, based on AIG's failure to detail its billings, and requested further information with respect to AIG's claims, including Castle & Cooke's damages, AIG's determination and resolution of any coverage issues, the basis for any settlement by AIG, and the rationale for AIG's decision to cede the claims to the Granite State policy. ACE maintains that, despite repeated requests, AIG never provided most of the requested information.

The purpose of the "follow the fortunes" or "follow the settlements" doctrine in reinsurance law is to prevent the reinsurer from "second-guessing" the settlement decisions of the ceding company (Aetna Cas. and Sur. Co. v Home Ins. Co., F Supp 1328, 1346 [SD NY 1995]), in this case, AIG. Thus, where there is concurrency of coverage between the ceding company's policy and the policy of reinsurance, the doctrine imposes a contractual obligation upon the reinsurer to indemnify the ceding company for payments it makes pursuant to a loss settlement under its own policy, provided that such settlement is not fraudulent, collusive or otherwise made in bad faith, and provided further that the settlement is not an ex gratia payment, i.e., one made by a party that recognizes no legal obligation to pay, but makes payment to avoid greater expense, as in the case of a settlement by an insurance company to avoid the cost of a suit (id.). The "follow the fortunes" doctrine requires payment where the cedent's good faith payment is at least arguably within the scope of the insurance coverage that was reinsured, and a reinsurer cannot second-guess the good faith liability decisions made by its reinsured or the reinsured's good faith decision to waive defenses to which it may be entitled (id. at 1347).

ACE now contends that the Commercial Division erred in denying its cross motion for summary judgment on the Castle & Cooke claim since, after discovery was completed with respect to such claim, there was no question that AIG made an ex gratia payment that was not covered by the reinsurance contract. It maintains that the court misunderstood the "follow the fortunes" doctrine in conflating two exceptions to the rule, bad faith and ex gratia payment, and erroneously required it to prove bad faith by AIG in ceding the Castle & Cooke claim to the Granite State policy.

However, rather than conflating the two exceptions, it appears that the motion court merely decided that there were questions of fact with regard to the bad faith issue and did not reach the ex gratia payment issue. Nevertheless, it properly denied ACE's cross motion on the Castle & Cooke claim.

AIG initially disclaimed coverage on the Granite State policy based on the DBCP exclusion, and ACE maintains that Castle & Cooke then settled with AIG and agreed that the Granite State policy did not provide coverage. Moreover, the FCA, while listing the parties as "AIG Member Companies, including National Union Fire Insurance Company and The Insurance Company of the State of Pennsylvania," and specifically noting that AIU Insurance Company was not included as an AIG member company for purposes of the agreement, makes no mention of Granite State. It also appears that AIG made a mistake in calculating how its payments to Castle & Cooke had exhausted a different AIG policy; that AIG's coverage counsel initially determined that the mistake should be corrected by allocating payments to the Insurance Company of the State of Pennsylvania policy, not the Granite State policy; and that years after its initial disclaimer of coverage and the settlement agreement, AIG reversed its coverage position and asked Castle & Cooke to accept payments under the Granite State policy. Thus, given the foregoing, as well as the question whether the FCA affirmatively excluded the Granite State policy and therefore rendered any future payment under that policy ex gratia, as ACE contends, or whether the FCA, which designated certain policies that were expected to make the initial payments toward Castle & Cooke's defense costs, could be amended to include other policies upon the exhaustion of the initial policies, as AIG contends, issues of fact exist with respect to the applicability of both the bad faith and the ex gratia payment exceptions to the "follow the fortunes" doctrine, requiring resolution by the trier of fact.

Judlau Contracting, Inc. v. Westchester Fire Ins. Co.


Biedermann, Hoenig & Ruff, P.C., New York (Peter H. Cooper
of counsel), for appellant.
Lustig & Brown, LLP, New York (James M. Haddad of
counsel), for Westchester Fire Insurance Company, respondent.
Wilson, Elser, Moskowitz, Edelman & Dicker LLP, New York
(Patrick J. Lawless of counsel), for North American Specialty,
f/k/a Commercial Underwrites Insurance Company, respondent.

Order, Supreme Court, New York County (Robert D. Lippmann, J.), entered January 5, 2007, which effectively granted reargument but adhered to an earlier order dismissing the complaint against both defendants, unanimously modified, on the law, the complaint reinstated as against defendant Westchester Fire, and otherwise affirmed, without costs. Appeal from order, same court and Justice, entered August 11, 2006, which granted the initial motion to dismiss, unanimously dismissed, without costs, as superseded by the appeal from the January 5, 2007 order.

In April 2004, plaintiff was impleaded in an underlying action in which Bloomingdales alleged it had incurred property damage in February 2002 as a result of work performed by the New York City Transit Authority. In August 2004, plaintiff tendered its defense as an additional insured in that action to Westchester Fire, which had issued an insurance policy to plaintiff's subcontractor, Janus Industries, for the period August 13, 2001 to August 13, 2002.

In November 2004, plaintiff impleaded Janus in the underlying action, alleging that Janus had entered into a contract dated October 1, 1998, which was in effect in 1999, and performed work on the Transit Authority project. In August 2005, plaintiff tendered its defense in the underlying action to defendant Commercial Underwriters, which had issued a policy to Janus that was in effect for the period June 18, 1999 through June 18, 2000, and also named plaintiff as an additional insured.

After Westchester Fire refused to accept the tender and Commercial Underwriters disclaimed coverage, plaintiff commenced the instant action, seeking a declaration of entitlement to a defense and indemnification from each insurer. Defendant insurers each moved to dismiss on the ground that its policy did not provide coverage with respect to the occurrence alleged in the underlying action. Westchester Fire contended that although Bloomingdales alleged the damage occurred in February 2002, under the terms of the insurance policy, any damage had actually occurred in September 1999, which was prior to the effective date of its policy. Commercial Underwriters contended that its coverage was not implicated by the pleadings in the underlying action, and in any event, plaintiff failed to provide timely notice of the lawsuit. Meanwhile, in the underlying action, the Transit Authority and third-party defendants, including plaintiff herein, moved to dismiss Bloomingdales' complaint as time-barred.

The motion court granted the motions to dismiss the underlying action, and simultaneously granted the motions to dismiss the instant action on the ground that the coverage dispute was rendered "academic" by dismissal of the underlying action. Plaintiff moved to reargue, contending that the instant dispute remained justiciable because it still sought to recover the costs of its defense in the underlying action, and that the motions by defendants herein to dismiss should be denied on the merits. Although purportedly denying reargument, the court stated that the notice given by plaintiff to Commercial Underwriters was untimely. In effect, the court granted reargument and then adhered to its original decision with respect to Commercial Underwriters' dismissal motion on the alternate ground of late notice, thus rendering the later order appealable (Buccella v Hofstra Univ., 288 AD2d 118 [2001]).

Plaintiff's delay of nine months from the time it impleaded Janus in the underlying action until notice of the suit was given to Commercial Underwriters was unreasonable as a matter of law, entitling that insurer to dismissal (see Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332 [2005]; National Union Fire Ins. Co. v State Ins. Fund, 1 AD3d 136 [2003], lv denied 1 NY3d 508 [2004]). The court erred, however, in granting Westchester Fire's motion to dismiss on this record. The order dismissing the underlying Bloomingdales action did not render the dispute between plaintiff herein and the insurers "academic," since plaintiff continued to have a claim for litigation expenses incurred in defense of the underlying action (see Brody Truck Rental v Country Wide Ins. Co., 226 AD2d 205 [1996]; Lewis v Nationwide Mut. Ins. Co., 202 AD2d 816, 817 [1994]). Nor did Westchester Fire present documentary evidence sufficient to establish that its policy was not implicated by the allegations in the underlying action. "If the complaint contains any facts or allegations which bring the claim even potentially within the protection purchased, the insurer is obligated to defend" (Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66, 73 [1989]). An insurer may escape its duty to defend under the policy "only if it could be concluded as a matter of law that there is no possible factual or legal basis on which [the insurer] might eventually be held to be obligated to indemnify [the insured] under any provision of the insurance policy" (Spoor-Lasher Co. v Aetna Cas. & Sur. Co., 39 NY2d 875, 876 [1976]). Since Westchester Fire failed to present documentary evidence in admissible form sufficient to refute the allegations in the underlying action that property damage had occurred in February 2002, or to establish that any property damage attributable to plaintiff or Janus had occurred in 1999, outside the effective dates of its policy's coverage, it was not entitled to dismissal.

 

State Farm Mutual Automobile Insurance Company

v

Croyle Enterprises, Inc. d/b/a Damian’s Automotive


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

Cohen & Cohen, L.L.P., Utica (Daniel S. Cohen of
counsel), for appellant.
Handelman, Witkowicz & Levitsky, Rochester (Eric
D. Handelman of counsel), for respondent.

MEMORANDUM AND ORDER


Carpinello, J.

Appeal from a judgment and order of the Supreme Court (McDermott, J.), entered on December 28, 2006 in Madison County, upon a decision of the court in favor of plaintiff.

In October 2003, plaintiff's insured purchased a used pick-up truck from defendant. Nine days later, the vehicle caught fire while being driven and was totally destroyed. In the interim, no work of any kind had been performed on it. After a nonjury trial in this ensuing subrogation action, Supreme Court ruled in favor of plaintiff finding a breach of the implied warranty of merchantability. Defendant appeals.

Defendant argues that plaintiff could not recover on a breach of warranty claim because it only presented circumstantial evidence of a defect. To support this position, defendant relies exclusively on Winckel v Atlantic Rentals & Sales (159 AD2d 124 [1990]), a personal injury case decided largely on a theory of strict products liability. Notably, however, in Bradley v Earl B. Feiden, Inc. (8 NY3d 265 [2007]), the Court of Appeals expressly held that a breach of warranty of merchantability claim "may be sustainable solely on circumstantial evidence" (id. at 273). Here, testimony at trial established that defendant changed the oil in the truck prior to its delivery to plaintiff's insured. Indeed, an expert for each side agreed that the fire was caused by or "most likely occurred" because of oil leakage in the vicinity of the filter. Although neither expert identified with specificity the particular defect which caused the oil leak, the testimony as to the general origin of the fire was nonetheless sufficient "to support the claim that the [truck] was not fit for its ordinary purpose" (id. at 274) as it caught fire while being used in the customary manner (see Denny v Ford Motor Co., 87 NY2d 248, 258-259 [1995]).

Crew III, J.P., Peters, Spain and Mugglin, JJ., concur.

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

Langan v. State Farm Fire & Casualty

 

Before: Crew III, J.P., Mugglin, Rose, Lahtinen and Kane, JJ.

Gibson, Dunn & Crutcher, L.L.P., New York City
(Jennifer H. Rearden of counsel), for appellant.
Stewart, Greenblatt, Manning & Baez, Syosset (David
J. Goldsmith of counsel), for State Farm Fire & Casualty,
respondent.
David S. Buckel, Lambda Legal Defense &
Education Fund, Inc., New York City, for Lambda Legal Defense &
Education Fund, Inc., amicus curiae.

Kane, J.

Appeal from a decision of the Workers' Compensation Board, filed September 7, 2006, which ruled that claimant is not the surviving spouse of decedent and denied his claim for workers' compensation death benefits.

Claimant and Neal Conrad Spicehandler (hereinafter decedent) were committed domestic partners from 1986 until decedent's death in 2002. In November 2000, claimant and decedent entered into a civil union in Vermont (see Vt Stat Ann, tit 15, § 1201). In February 2002, decedent was struck by a car while he was working for claimant's insurance business, resulting in a serious leg injury. After undergoing surgery on his leg, decedent died. Claimant filed workers' compensation claims for decedent's leg injury, and for death benefits as decedent's surviving spouse pursuant to Workers' Compensation Law § 16 (1-a)[FN1]. The workers' compensation carrier accepted the claims as work-related injuries, but questioned whether claimant was decedent's spouse for death benefits purposes. A Workers' Compensation Law Judge found that claimant did not have standing to assert the death benefits claim and the Workers' Compensation Board affirmed.

On claimant's appeal, he makes three arguments: Workers' Compensation Law § 16 (1-a) includes a partner to a civil union as a surviving spouse, the doctrine of comity requires New York to recognize claimant as decedent's surviving spouse for death benefits purposes and, if those arguments are not successful, the deprivation of death benefits to same-sex partners of a civil union violates the Equal Protection Clause of the US Constitution. We address each argument in turn.

For purposes of the workers' compensation death benefits provision, which gives first priority to surviving spouses, "the term surviving spouse shall be deemed to mean the legal spouse" of the deceased employee (Workers' Compensation Law § 16 [1-a]). Workers' Compensation Law § 16 does not further define the term "legal spouse" (see Matter of Valentine v American Airlines, 17 AD3d 38, 40 [2005]). In previously reviewing Workers' Compensation Law § 16 (1-a) in the context of a claim for death benefits by a registered domestic partner, we examined the statute's plain language and legislative history and determined that a "'legal spouse' is a husband or wife of a lawful marriage" (id.). This interpretation is further supported by language in other subdivisions of the same statute, which provide a certain percentage of the deceased employee's average wages to the surviving spouse during widowhood or widowerhood, with a lump sum payment "upon remarriage" (Workers' Compensation Law § 16 [1-b], [1-c], [2], [2-a]). Clearly, the term "remarriage" assumes that the surviving spouse was previously a party to a marriage. Claimant acknowledges that a civil union is not a marriage (compare Vt Stat Ann, tit 15, § 1201 [2], with § 1201 [4]), and he was not married to decedent. If a party to a Vermont civil union was considered a legal spouse for workers' compensation purposes, the statute would have the anomalous result of allowing a surviving civil union partner to continue collecting surviving spouse benefits even after entering into another civil union, because that new civil union is not considered a "remarriage" that would terminate death benefits. As parties to civil unions are not legal spouses under Workers' Compensation Law § 16, claimant was not statutorily entitled to assert the death benefits claim.

The doctrine of comity does not require New York to recognize claimant as decedent's surviving spouse for death benefits purposes. This doctrine is not a mandate to adhere to another state's laws, but an expression of one state's voluntary choice to defer to another state's policy (see Ehrlich-Bober & Co. v University of Houston, 49 NY2d 574, 580 [1980]). Although we may recognize the civil union status of claimant and decedent as a matter of comity, we are not thereby bound to confer upon them all of the legal incidents of that status recognized in the foreign jurisdiction that created the relationship (see Langan v St. Vincent's Hosp. of N.Y., 25 AD3d 90, 102 [Fisher, J., dissenting] [2005], appeal dismissed 6 NY3d 890 [2006]). Vermont considers parties to a civil union to be "spouses" under that state's law and provides them with all of the benefits, responsibilities and protections of spouses to a marriage, including workers' compensation benefits (see Vt Stat Ann, tit 15, § 1204 [a], [b], [e] [9]). But even under Vermont law, such parties are not part of a marriage (see Vt Stat Ann, tit 15, § 1201 [2], [4]). While parties to a civil union may be spouses, and even legal spouses, in Vermont, New York is not required to extend to such parties all of the benefits extended to marital spouses. The extension of benefits entails a consideration of social and fiscal policy more appropriately left to the Legislature (see Langan v St. Vincent's Hosp. of N.Y., 25 AD3d at 95). We therefore decline to recognize, as a matter of comity, all of the legal incidents of a civil union that Vermont law provides to such parties in that state.

Having reached the conclusions that Workers' Compensation Law § 16 does not include parties to civil unions as spouses and that we should not extend death benefits to such parties as a matter of comity, we now determine that the deprivation of death benefits to the surviving party of a civil union does not violate the Equal Protection Clause of the US Constitution (see US Const, 14th Amend, § 1). Using the rational basis test to review this allegation of sexual orientation discrimination, the "legislation is presumed to be valid and will be sustained if the classification drawn by the statute is rationally related to a legitimate state interest" (City of Cleburne, Texas v Cleburne Living Ctr., 473 US 432, 440 [1985]; see Romer v Evans, 517 US 620, 631-633 [1996]; Matter of Valentine v American Airlines, 17 AD3d at 42). Claimant bears the burden of rebutting this presumption of constitutionality by demonstrating that the denial of death benefits to parties to a civil union serves no legitimate governmental purpose (see Matter of Langan v St. Vincent's Hosp. of N.Y., 25 AD3d at 92-93; Matter of Valentine v American Airlines, 17 AD3d at 41). Prior case law "established that confining marriage and all laws pertaining either directly or indirectly to the marital relationship to different sex couples is not offensive to the Equal Protection Clause" (Matter of Langan v St. Vincent's Hosp. of N.Y., 25 AD3d at 93; see Baker v Nelson, 291 Minn 310, 313-314 [1971], appeal dismissed 409 US 810 [1972]; Matter of Cooper, 187 AD2d 128, 133-134 [1993], appeal dismissed 82 NY2d 801 [1993]; see also Hernandez v Robles, 7 NY3d 338, 363-365 [2006]).

Claimant has not set forth any basis for us to depart from precedent. We previously held that Workers' Compensation Law § 16 does not differentiate on the basis of sexual orientation, but on the basis of legal status, and that this classification was rationally related to the state's interest in "swift and orderly processing of death benefits claims" (Matter of Valentine v American Airlines, 17 AD3d at 42). While that rationale of administrative efficiency was persuasive in the context of domestic partners, a relationship that could be difficult to define in terms of rights and responsibilities and thus delay the payment of benefits (see id.), existence of a Vermont civil union is easily evidenced by a Vermont Department of Health license and certificate of civil union, similar to proof of a marriage in New York, and the rights of such partners are extensively defined under Vermont law. Even so, there may be other legitimate state interests served by limiting death benefits to marital spouses.

Workers' compensation provides a safety net to a surviving spouse (see Matter of Landon v Motorola, Inc., 38 AD2d 18, 20 [1971], citing Matter of Post v Burger & Gohlke, 216 NY 544, 553 [1916]). It would not be unreasonable to conclude that the Worker's Compensation Law was enacted, in part, to encourage and protect the traditional family constellation of husband, wife and children. Survivor benefits to the homemaker/child-rearing spouse, who was traditionally not employed or was employed part time, protects that spouse from destitution upon the death of the family breadwinner. It also compensates that spouse for sacrificing his or her own career by remaining at home to raise children. Although some may argue that same-sex couples are as capable of creating a family unit and raising children as opposite-sex couples, the Court of Appeals has already determined that the Legislature's decision to limit marriage to opposite-sex couples is rationally related to this legitimate interest and withstands rational basis scrutiny (see Hernandez v Robles, 7 NY3d at 365). The decision to extend workers' compensation death benefits to a whole new class of beneficiaries, i.e., survivors of same-sex unions, is a decision to be made by the Legislature after appropriate inquiry into the societal obligation to provide such benefits and the financial impact of such a decision. As the statute is rationally related to a legitimate state interest, claimant has not met his burden.

Crew III, J.P., Mugglin and Lahtinen, JJ., concur.

Rose, J. (dissenting).

I respectfully dissent as to the majority's conclusion that the doctrine of comity does not require New York to recognize claimant as decedent's surviving spouse for purposes of the death benefits afforded by Workers' Compensation Law § 16 (1-a).

While I certainly agree that the valid Vermont civil union entered into by claimant and decedent does not bind us to confer upon them "all of the incidents which the other jurisdiction attaches to such status" (Matter of Chase, 127 AD2d 415, 417 [1987]), claimant is not seeking such an incident here. He does not ask us to confer workers' compensation death benefits simply because Vermont would confer them. Rather, claimant asks us only to recognize the legal status of spouse afforded to him by Vermont, as a matter of comity. Once that status is recognized, New York law provides the legal incidents to which claimant would be entitled, including workers' compensation death benefits.

There appears to be no real disagreement that Vermont has defined its civil union as a spousal relationship and conferred upon claimant the legal status of spouse (see Vt Stat Ann, tit 15, § 1204 [b]), or that the doctrine of comity requires our recognition of a legal status acquired under the laws of another state (see Matter of Chase, 127 AD2d at 417). Nor is there any disagreement that Workers' Compensation Law § 16 affords a death benefit to a spouse. Where we diverge appears to be over the question of whether claimant can be a qualifying "legal spouse" in New York in view of our prior holding in Matter of Valentine v American Airlines (17 AD3d 38, 40 [2005]), and the use of the term "remarriage" in Workers' Compensation Law § 16 (1-b).

In Matter of Valentine v American Airlines (17 AD3d at 40), we dealt only with domestic partnerships, holding that a domestic partner does not fall within the definition of "legal spouse" for purposes of Workers' Compensation Law § 16 (1-a). There, unlike here, we were required to determine the legal status of domestic partners because no authority in New York had considered it. Due to the absence of a statutory definition of "legal spouse," we turned to dictionary definitions to find its meaning and concluded that it excluded domestic partners (id. at 40). We did not consider the legal status of Vermont civil union spouses. While Vermont civil unions are not marriages, they are formal spousal relationships between same-sex couples which are sanctioned and recognized by that state (see Vt Stat Ann, tit 15, § 1201), require a court proceeding to dissolve (see Vt Stat Ann, tit 15, § 1206) and obligate each party to provide for the support of the other (see Vt Stat Ann, tit 15, § 1204 [c]). Thus, here, we need not construe the term "legal spouse" because a state legislature clearly has conferred that status on claimant, and we need only apply our doctrine of comity to give it effect.

As for the implications of the term "remarriage," it is significant that marriage was the only legally recognized spousal relationship in the United States when Worker's Compensation Law § 16 was first drafted (see L 1913, ch 816) and, thus, the term "remarriage" covered the only conceivable event that could replace the support obligation lost upon a first spouse's death. Since a civil union is now an alternate way to become a legal spouse and replace that obligation, an anomalous result could occur under the majority's strict reading of the statute even if civil union spouses were excluded from workers' compensation death benefits. Under the majority's construction, the term "remarriage" would mean that, upon later entry into a civil union, the surviving spouse of a marriage would not face termination of death benefits because it would not be a remarriage. That result can be avoided by reading the term "remarriage" to mean entry into a subsequent marriage or civil union, thereby treating all spouses the same. The term "remarriage" would then no longer imply that a surviving spouse could only have been previously married rather than having entered a civil union. Such an interpretation of "remarriage," while expansive, would avoid the anomaly, not be unreasonable and, in my view, be preferable "[s]ince the Workers' Compensation Law must be liberally construed in favor of employees in order to achieve its humanitarian purpose" (Matter of Lashlee v Pepsi-Cola Newburgh Bottling, 301 AD2d 879, 881 [2003]).

For these reasons, I would recognize claimant's status as a surviving spouse and, if the constitutional issue were not thereby rendered moot, find a violation of the Equal Protection Clause of the US Constitution, requiring annulment and remittal of the Workers' Compensation Board's decision.

ORDERED that the decision is affirmed, without costs.

Footnotes



Footnote 1:Claimant also commenced a wrongful death action against the hospital where decedent's surgery was performed. The Second Department dismissed that action, finding that claimant did not have standing because he does not qualify as a surviving spouse under the EPTL (Langan v St. Vincent's Hosp. of N.Y., 25 AD3d 90 [2005], appeal dismissed 6 NY3d 890 [2006]).

 

Raymond Corp. v. National Union Fire Insurance Company of Pittsburgh, Pa


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

Powers & Santola, L.L.P., Albany (Michael J. Hutter
of counsel), for appellants.
Mitchell, Goris & Stokes, L.L.C., Cazenovia (Joshua
Wall of Cozen O'Connor, Philadelphia, Pennsylvania, pro hac
vice), for respondent.

MEMORANDUM AND ORDER

Mugglin, J.

Appeals (1) from a judgment of the Supreme Court (Dowd, J.), entered June 30, 2006 in Chenango County, upon a decision of the court in favor of defendant, and (2) from an order of said court, entered April 9, 2007, in Chenango County, which, among other things, denied plaintiffs' motion to vacate the judgment.

Plaintiff Raymond Corporation contributed $500,000 and defendant contributed $2.5 million toward a $6 million settlement [FN1] of a personal injury accident, stipulating to resolve an insurance coverage issue in subsequent litigation or arbitration. When that subsequent litigation was previously before us, we reversed Supreme Court's November 5, 2002 order granting summary judgment to defendant and declared that the policy at issue covered Raymond's vendor, as an additional insured, only for injury arising out of defects in Raymond's products (6 AD3d 788 [2004]). Our interpretation that the policy language covered personal injury claims caused by the vendor's independent acts of negligence was reversed by the Court of Appeals (5 NY3d 157 [2005]) and Supreme Court's order was reinstated.

Thereafter, in October 2005, defendant submitted a notice of settlement of judgment and notice of taxation of costs, including predecision interest. Supreme Court rejected plaintiffs' opposition to the proposed judgment, issuing a "memorandum decision" on June 22, 2006. On June 30, 2006, final judgment was entered awarding defendant $2.5 million with predecision interest of $895,625 and postdecision interest of $1,118,858.44. Thereafter, plaintiffs moved to vacate the final judgment claiming that the judgment was obtained as a result of defendant's misconduct during discovery and requesting additional discovery based on newly discovered evidence. Supreme Court denied plaintiffs' motion to vacate the final judgment. Plaintiffs now appeal from Supreme Court's "memorandum decision" entered June 22, 2006, the final judgment entered June 30, 2006 and the denial of the motion to vacate the final judgment. The appeals were consolidated by order of this Court.

We first address defendant's assertions that neither the "memorandum decision" nor the final judgment entered herein constitute appealable paper and, thus, these appeals should be summarily dismissed (see CPLR 5512 [a]; Matter of Palmer v Palmer, 284 AD2d 612, 613 [2001]). An appealable paper is an order or judgment of the court of original instance (see CPLR 5512 [a]; Thorne v Grubman, 14 AD3d 433, 434 [2005]). First, although the document entered June 22, 2006 is styled "memorandum decision," the foot of the decision refers to the papers considered and states "the signing of this decision and order shall not constitute entry or filing under CPLR 2220." Although the paper has aspects of an order, since it is not based on a notice of motion seeking specific relief, we conclude that the document does not constitute an appealable order. Second, the final judgment entered in response to the "memorandum decision" is an appealable paper since it addresses the issue of entitlement to predecision and postdecision interest, a heretofore unlitigated issue.

We next address plaintiffs' appellate arguments that the judgment must be vacated due to newly discovered evidence (see CPLR 5015 [a] [2]) and because of alleged misconduct on the part of defendant (see CPLR 5015 [a] [3]). Although we reject defendant's position that plaintiffs should be sanctioned for frivolous conduct as a result of these arguments, we nevertheless find them unpersuasive. Plaintiffs' arguments are premised on their assertion that the Court of Appeals engaged in an economic justification that a vendor's endorsement is a "cheap add-on" in denying coverage and, therefore, defendant's destruction of its files containing the cost of this vendor add-on and plaintiffs' "newly discovered" evidence of the cost of this add-on support vacating the judgment. In our view, a fair and balanced reading of the Court of Appeals decision reveals that it is based on an analysis of the language of the policy, not economic principles. Therefore, earlier discovery of the cost of the vendor endorsement to Raymond would have had no impact on the final determination of this issue. Although this determination renders plaintiffs' additional arguments largely irrelevant, we do observe that we find no abuse of Supreme Court's discretion in denying plaintiffs' motion to vacate the final judgment because of defendant's misconduct or because of newly discovered evidence (see Woodson v Mendon Leasing Corp., 100 NY2d 62, 68 [2003]). In any event, as the relevant invoices were at all times in Raymond's own files, there is no merit to the argument that defendant committed misconduct i.e., spoliation of evidence by destroying its copies of the invoices or that the evidence constitutes newly discovered evidence (see Tibbits v Verizon N.Y., Inc., 40 AD3d 1300, 1302 [2007]; People v Tucker, 40 AD3d 1213, 1214 [2007], lv denied 9 NY3d 882 [2007]; Evergreen Bank v Dashnaw, 262 AD2d 737, 738 [1999]).

We next address plaintiffs' argument that the inclusion of over $2 million in prejudgment interest is unsupportable in law and contrary to the parties' stipulation, and defendant's argument that this issue is unpreserved for appellate review because plaintiffs served no reply to its answer, which sought $2.5 million plus interest, costs and counsel fees. We reject defendant's contention that the issue is unpreserved. Notably, only the wherefore clause of the answer demands interest. There is no separate cause of action pleaded as a counterclaim for interest and, therefore, there is no need for a separate reply pleading. Moreover, the pleadings adequately frame the issues between the parties.

Turning to the merits, we first observe that the stipulation placed on the record is a contract, subject to the principles of contract interpretation. Where the terms are clear and unambiguous, the intent of the parties is to be gleaned solely from the language of the agreement (see Dudick v Gulyas, 4 AD3d 604, 606 [2004]; Mayefsky v Mayefsky, 184 AD2d 954, 955 [1992, lv dismissed 80 NY2d 924 [1992]). As relevant to this appeal, the stipulation recites:

"An agreement that each of the insurance carriers and the insureds release any and all claims, including subrogation claims, bad faith claims, punitive damage claims amongst themselves with the exception of . . .: Number one, the issue between Raymond Corporation and AIG National Union as to whether Arbor Handling [Services, Inc.] is entitled to coverage under the policy at issue. If so, five hundred thousand dollars and the costs today (sic) (probably means to date) will be refunded to the Raymond Corporation. If not, the Raymond Corporation will pay 2.5 million, less costs, back to AIG National Union."

This stipulation is clear and unambiguous in that it contains no provision for the payment of interest and if the parties had intended that predecision interest be addressed, they should have so stated (see Mann v Gulf Ins. Co., 300 AD2d 452 [2002]). Therefore, we examine the relevant provisions of the CPLR. Under the circumstances here, we conclude that the provisions of CPLR 5001 (a), providing for predecision interest in specific situations, are inapplicable. This is not an action based on a breach of performance of a contract (i.e., the stipulation) nor can it be said that prior to the resolution of the coverage issue, Raymond interfered with title to, possession or enjoyment of any property belonging to defendant. Nevertheless, since the Court of Appeals reinstated the order of Supreme Court, we conclude that CPLR 5002 mandates inclusion of interest from the date of Supreme Court's order (November 5, 2002) to the entry of final judgment.

Lastly, we address plaintiffs' argument that Supreme Court erred by not reducing the $2.5 million basic judgment by the amount of the costs they incurred in defending the underlying action up to the time of the stipulation. First, we again reject defendant's argument, for the reasons hereinbefore expressed, that plaintiffs' failure to serve a reply to its answer constitutes a waiver of this issue. Because of the stipulation, we also reject defendant's argument that the entry of judgment was merely a ministerial act. The stipulation which allows Raymond to recover its costs and its $500,000 if there is coverage, and allows Raymond to deduct its costs if it must pay $2.5 million if there is no coverage, can only be interpreted as a recognition by the parties that the duty to defend is broader than the duty to indemnify (see Automobile Ins. Co. of Hartford v. Cook, 7 NY3d 131, 137 [2006]). Plaintffs now argue that the $3 million self-insured retention contained in the policy with defendant was satisfied when Raymond's vendor (Arbor) contributed its $3 million toward the $6 million settlement making defendant responsible for all costs of defense, including the $297,732 that Raymond had expended. Whether that argument has merit and whether the $297,732 represents the reasonable costs of defense cannot be determined from this record and must be remitted to Supreme Court for determination.

Cardona, P.J., Crew III, Rose and Kane, JJ., concur.

ORDERED that the judgment and order are modified, on the law, without costs, by reversing so much thereof as awarded predecision interest of $895,625; matter remitted to the Supreme Court for further proceedings not inconsistent with this Court's decision; and, as so modified, affirmed.

Footnotes

 


Footnote 1:The remaining $3 million was contributed by the insurance carrier for plaintiff TBS Group, Inc., formerly Arbor Handling Services, Inc., plaintiffs' vendor.

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