Coverage Pointers - Volume IX, No. 16

New Page 1

Dear Coverage Pointers Subscribers:

Thanks to the fine folks at Encompass and MetLife for so warmly welcoming us into their warm homes on our trip to the North Country over the last couple of days.  We do so enjoy scheduling and providing training programs for claims professionals and as Audrey mentions down below, our visits included two No Fault related presentations.  To the subscribers and friends we ran into at the Hampton Inn, awaiting the arrival of their CEO, we will forgive you for keeping us away!

I promised the folks at Encompass that I would relate the history of Valentine's Day, and I do, below.  But first, I offer you a taste of things in the issue.

You will find lots of lessons in this week's issue.  Two attempts at summary judgment were denied because of failure to place the policy before the court in evidentiary form.  I can't tell you how often I see that - coverage lawsuits that require the court to read the policy (now there's a surprise) and counsel has inexcusably failed to have someone from the company, rather than the lawyer, identify the policy and present it to the court.

You will find yet another miserable late notice case, where an insurer lost its right to deny coverage because of a 37-day delay in disclaiming.  There are two decisions where a losing party tried to bring a different proceeding, unsuccessfully, to have a court revising a losing position.  There are all kinds of great stuff, an issue chock full of practical pointers.  They are insurance pointers.  Nah, they are Coverage Pointers.  Perhaps I can use that name in the future.

How do you celebrate Valentine's Day?  Do you do it the modern way and send cards, candy, flowers and gifts?  I would hope not. I thought a little history of the holiday would help you recreate a more traditional approach, steeped in history.

During the third century in Rome, Emperor Claudius II who was only emperor for two short years, by the way (August 268 to January 270) was preparing to fight the Goths.  [Editor's note:  who wouldn't fight the Goths, given the opportunity?]  Anyway, he decided that single men would be better soldiers than married ones so he outlawed marriage for young men.  However, one young priest, Valentine, believing that the Emperor's decree was unjust, continued to perform weddings.  Rumor had it that he had a financial interest in a chapel and later moved to Vegas.   Claudius learned of Valentine's defiance, and had him imprisoned.  While in jail, he fell in love with the jailer's daughter and it is said that before his death, he wrote her a love letter, which he signed "From your Valentine." 

Valentine's feast day was set to commemorate his death in February 270, and that was also used to make it into a Christian holiday, the pagan Lupercalia Festival, which also celebrated the beginning of spring.  That Festival involved the sacrifice of a goat for fertility and a dog for purification.  The goat hide would be sliced into strips, dipped in sacrificial blood, and taken to the streets by young men who would slap women with the strips, apparently making the women more fertile.  Pope Gelasius, seeking to end the pagan holiday but continue the tradition, declared February 14 as St. Valentine's Day around 496 A.D.  So there you go.  Forget the card, forget the candy, and forget the flowers.  Chase your sweetheart around the room and slap him or her with dried goat strips dipped in blood, and you'll be celebrating the holiday the right way.

Just don't tell the PETA people.

Earl Cantwell's column reviews the somewhat new rule that permits judges to compel carrier representatives to conferences, and gives you some hints on how you might deal with those directives.

From Audrey Seeley, the acclaimed Queen of No Fault, I provide you were sage words.  I do note, that she drove the entire way and there was evidence that at some point, perhaps on this trip and perhaps another, her vehicle's speed approached 90 mpg.  I know who insures her.

Dan and I had a great break from winter and traveled to Albany.  We had a great time with our friends at MetLife, Encompass, Farm Family, and even said hello to some of our friends at Progressive.  We provided some training to some on the no-fault regulations because knowledge is power.  We also provided some training to some on obtaining a good IME/Peer Review/Medical Records Review in liability and no-fault claims.  Please let us know if you are interested in these topics as we would be happy to come to you to provide training.

 

Well,  I also got a preview of Dan's cover note to you.  All I can say is that all queens prefer gems any day of the week to demonstrate affection as opposed to being hit by some disgusting dried up piece of hide soaked in blood.

 

This is a light issue this time around.  There is an interesting arbitration decision that I handled where the carrier prevailed on the intoxication defense.  There is another decision where the insurer's denial for a policy violation for failure to attend an IME was upheld.  Yet, it was not as the carrier was instructed to perform another IME to see if further low back treatment was warranted and to pay the bills if the IME was positive.

 

Enjoy and Happy St. Valentine's Day!  I hope that my husband chooses not to be a traditionalist for his sake this year.

 

Audrey Seeley
[email protected]

 

Editor's Note:  No more previews for you, Audrey.

 

In this week's issue, attached, you find a gallimaufry of decisions and these headlines should whet your appetite.  Since I know you are curious, I will mention that the word "gallimaufry" has been used but twice in reported court decisions since the 1800's.  It was last used in 1976 in a Court of Appeals decision that struck down the Sunday Sales Laws (the "Blue Laws").  For the non-believers, or those with too much time on their hands, see:  People v. Abrahams, 40 N.Y.2d 277 (NY 1976):
 

  • Carrier has 20 days to Move to Stay Uninsured Arbitration, but that Time Period Does Not Apply if there were Not an Agreement to Arbitrate.  However, Here, that Was Not an Sustainable Position
  • The Incredible Shrinking Time to Disclaim - 37 Days too Long
  • Failure to Provide Timely Notice of SUM Claim and You are Out of the Box
  • Sorry Court. We Disagree with Your Understanding of Trigger of Coverage for Underinsured (SUM) Coverage
  • Since the Driver was Not an Insured and the Vehicle Was Not a Covered Auto, Coverage Does Not Exist, No Matter How One Tries to Stretch the Language
  • Coverage May be "Drained" from Policy Where Water Damaged Building as a Result of Failure of Drain, not Overflow
  • You Can Still Win Late Notice Cases
  • First of Two One Bite Cases - Determination at Workers Compensation Board, After Full Hearing of Exclusion's Validity Cannot be Relitigated in Court
  • In Claim for Car Rental Insurance, Court Cannot Decide Order of Coverage without Car Rental Agreement and Policy
  • Insured Fails to Prove New York Not a Convenient Forum for Coverage Lawsuit
  • Constitutionality of "Graves Amendment" Ending Vicarious Liability of Rental and Leasing Companies Heading to Court of Appeals
  • Late Notice Excuse Denied:  Where a Reasonable Person Could Envision Liability, there is a Duty to Make Inquiry
  • Unless Carrier Establishes Coverage Defenses in Evidentiary Form, It Cannot Win Motion for Summary Judgment
  • Like Adam, Abraham Gets But One Bite of the Apple
  • Liar, Liar.  Pants on Fire.  When Insured Misrepresent Knowledge of Accident, and Insurer Promptly Disclaims When it Learns of the Truth -- Even Years Later - Disclaimer is Timely
  • Carrier has Chance to Refute Claim of Hit-and-Run Vehicle First Raised in Opposition to Motion to Stay UM Arbitration 

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

 

[Note that Mark is on the road, staying in a hotel where the Internet connection went down.  He'll include seven additional serious injury decisions in the next issue and will no longer stay in that hotel.]

 

  • Submitting Evidence Pointing out Plaintiff's Injuries Dooms Defendant's SJ Hopes
  • Surprise, Surprise: Plaintiff Survives SJ as Defendants' Doctors Fail to Address Claims
  • Quick and to the Point: SJ Denied as Defendants Failed to Make a Prima Facie Showing Claim Properly Denied Based Upon Failure to Attend IME BUT Carrier Must Schedule Another IME to Assess Back Injury 

AUDREY'S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]

 

PEIPER ON PROPERTY

Steven E. Peiper

[email protected]

 

  • Coverage May be "Drained" from Policy Where Water Damaged Building as a Result of Failure of Drain, not Overflow
  • Identify of Proper Carrier Not a Mystery, but Cause of Property Collapse Unclear
  • Contract between Defendant and Insured/Home Owner only Required Water Removal, and not Mold/Mildew Prevention; Carrier's Subrogation Claim Dismissed.
  • Same Sex Unions Upheld as Recognizable Marriage in New York

Dan

New Page 2

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

Newsletter Editor

Dan D. Kohane
[email protected]

 

Insurance Coverage Team

Dan D. Kohane, Team Leader
[email protected]

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

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

Jody E. Briandi
Steven E. Peiper

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

APPELLATE TEAM
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

 

2/5/08              In the Matter of Dairyland Insurance Company v. Figueroa

Appellate Division, Second Department
Carrier has 20 days to Move to Stay Uninsured Arbitration, but that Time Period Does Not Apply if there Was Not an Agreement to Arbitrate.  However, Here, that was Not a Sustainable Position
While it is true that the 20-day period to move to stay uninsured arbitration does not apply if there was no agreement in place, here, the carrier failed to demonstrate that there was no agreement in place.  Ergo, the 20-day period applied and the carrier failed to start the proceeding on time.

 

2/5/08              Sirius America Insurance Company v. Vigo Construction Corp.

Appellate Division, Second Department
The Incredible Shrinking Time to Disclaim – 37 Days too Long

Unexcused failure to disclaim for 37 days after carrier had enough information to deny coverage leads to loss of right to disclaim.

Editor’s Note:  These decisions make me scream in insurance agony.  The Legislature is considering adding a prejudice requirement before an insurer can deny coverage for a failure of an insured to give timely notice yet refuses to consider a similar requirement before an insured can take advantage of a late disclaimer under Insurance Law Section 3420(d).  It’s just wrong.  Wrong I say.  Wrong.

 

2/5/08              In the Matter of New York Central Mutual v. Lekocevic

Appellate Division, Second Department
Failure to Provide Timely Notice of SUM Claim and You are Out of the Box

Short and sweet.  A failure to provide timely notice of a SUM claim, without excuse, violates the policy and vitiates the coverage.  That’s what happened here.

 

2/5/08              In the Matter of Clarendon National Insurance Company v. Nunez
Appellate Division, Second Department
Sorry Court. We Disagree with Your Understanding of Trigger of Coverage for Underinsured (SUM) Coverage

On June 21, 2001, Nunez and others involved in an auto accident with a car insured by tortfeasor’s carrier, Progressive.  The Nunez family had coverage through Clarendon.

 

Progressive had a $25K/$50K liability policy.  It paid $5K to Stephanie Nunez, $15K to Francicso Nunez, $15K to Junior, totaling $50K, the limits of its policy for the tortfeasor.  Now, the Nunez’ made a claim for underinsured coverage (SUM coverage) with Clarendon.  Clarendon’s policy was also $25K/$50K.

Since the liability limits of the two policies were the same, the court holds that the SUM coverage does not trigger. The question was whether payment of the claims reduced the available coverage to as to cause the SUM policy to trigger.  Court finds that the reduction in the available liability coverage by payment to the insureds was not a reduction in the policy because the payments weren’t to other persons.

The court goes on to say that Clarendon is entitled to offset the $50,000 received by the respondents from the tortfeasor's insurer against the SUM limits of its policy, thereby precluding any recovery under the SUM endorsement.

Editor’s Note:  Frankly, we think this case is just wrongly decided.  The court lumps the plaintiffs’ together and should have considered each claim separately.  We just don’t follow the “other persons” argument.  For example, once the payments are made, Francisco does not have access to $25K in coverage, only $15K, so the tortfeasor was underinsured by $10K.

The mandatory language prescribed in the regulation provides:

(c) Uninsured Motor Vehicle. The term "uninsured motor vehicle" means a motor vehicle that, through its ownership, maintenance or use, results in bodily injury to an insured, and for which:


* * *

(3) there is a bodily injury liability insurance coverage or bond applicable to such motor vehicle at the time of the accident, but;

* * *



(ii) the amount of such insurance coverage or bond has been reduced, by payments to other persons injured in the accident, to an amount less than the third-party bodily injury liability limit of this policy …

I will stand corrected if I receive a valid argument telling me that I’ve lost my mind.

2/5/08              Empire Fire and Marine Insurance Co. v. Eveready Insurance Co.
Appellate Division, Second Department
Since the Driver was Not an Insured and the Vehicle Was Not a Covered Auto, Coverage Does Not Exist, No Matter How One Tries to Stretch the Language
T
he plain meaning of the policy's language may not be disregarded in order to find an ambiguity where none exists. This policy covered damages that an “insured” becomes legally obligated to pay because of an auto accident.  A “person using your covered auto” is an insured but here, the car being used did not belong to the policyholder.  It was not identified on the policy and it was not a “temporary substitute.”  Since it was not a covered auto and since its driver was not the policy holder or a family member, and since the policy holder was not a party in the law suit, coverage does not exist.

2/5/08              Junius Development, Inc. v. New York Marine and General Insurance Co.
Appellate Division, Second Department
Coverage May be “Drained” from Policy Where Water Damaged Building as a Result of Failure of Drain, not Overflow
Junius Development Co., Inc. claimed to have sustained water damage to its insured building after a subcontractor emptied the contents of a rooftop water tank into a drainpipe. The trap inside the pipe was clogged with construction debris. Thus, when the rooftop tank was emptied, the pressure created by the column of water above the obstruction caused the drainpipe to fail inside the premises, flooding parts of the building.

Junius’ carrier, the defendant New York Marine and General Insurance Co. (NYMAGIC) denied coverage.  Junious sued NYMAGIC. In support of its denial of first party coverage the insurer relied primarily on a policy provision specifically excluding any "loss or damage caused directly or indirectly by . . . [w]ater that backs up or overflows from a . . . drain."

However, here, the loss was not caused by back up or overflow of a drain, but by the separation of the drain pipe so the exclusion did not apply

2/5/08              J.C. Contracting of Woodside Corp. v. Insurance Corporation of New York

Appellate Division, Second Department

You Can Still Win Late Notice Cases
Insurance Corporation of New York established that it did not receive timely notice of the accident and promptly disclaimed coverage on that ground.  First notice of claim was made five months after the insured was sued and while an application for a default was pending.  No excuse was offered that impressed the court.

 

2/5/08              D’Angelo v. State Insurance Fund

Appellate Division, Second Department
First of Two One Bite Cases – Determination at Workers Compensation Board, After Full Hearing of Exclusion’s Validity Cannot be Relitigated in Court
At the Workers Compensation Board, determination was made, after full hearing, that exclusion of plaintiff from Comp Policy was valid.  Plaintiff then commenced a lawsuit and sought to have a court rule on the name issue again.  Under the doctrine of collateral estoppel, the decision at the Workers Compensation Board which found the exclusion applicable could not be revisited in the courthouse.

 

2/5/08              Cendant Car Rental Group v. Liberty Mutual Insurance Company

Appellate Division, Second Department
In Claim for Car Rental Insurance, Court Cannot Decide Order of Coverage without Car Rental Agreement and Policy

Padilla, an employee of Graebel Movers, Inc. was driving a truck rented from Budget, when the truck was involved in an accident with another car.  A passenger in the other car sued Trade Zone Truck Rental, Budget’s dispatching dealer.  Cendant is the parent company of both Budget and Trade Zone.

 

All three companies, Budget, Trade Zone and Cendant sued Liberty, Graebel’s insurer, seeking defense and indemnity.   The three companies claimed that under the rental agreement, Graebel’s insurer, Liberty Mutual, was the primary insurer above the statutorily-mandated coverage (see ELRAC, Inc. v Ward, 96 NY2d 58). However, they failed to submit a signed copy of the rental agreement or a copy of the policy of insurance issued by Liberty.

Editor’s Note:  Surely, without evidence of the rental agreement and the policy before the court, the court surely was on the money.  Under the Elrac decision, as the court noted, the obligation to defend rests with the carrier that provided the statutorily mandated coverage, the carrier for Budget.  What this Editor can’t figure out is why (or how) Cendant expected defense out of Liberty where the defense obligation rested with the primary carrier.

 

 

2/5/08              Travelers Casualty and Surety Company v. Honeywell International Inc.

Appellate Division, First Department
Insured Fails to Prove New York Not a Convenient Forum for Coverage Lawsuit

A declaratory judgment action was commenced in New York by the carrier.  A similar action was pending in New Jersey.  The insured moved to dismiss the New York action because another action was already pending or, stay it, until the NJ lawsuit was completed.

The forum non conveniens – refusing to litigate in an inconvenient forum, permits a court to dismiss an action when, in the interest of substantial justice, it should be heard in another forum. However, the burden of proof is on the defendant to demonstrate hardship, public policy grounds or some other acceptable reason to compel the dismissal.  Here, the insured, Honeywell, did not meet its burden of proving that the interests of substantial justice would be served by moving the lawsuit.  There is a solid New York nexus as the policies were negotiated and issued in New York and the underlying circumstances primarily occurred in New York. 

2/1/08              Rawlings v. National Car Rental System, Inc.

Appellate Division, Second Department

Constitutionality of “Graves Amendment” Ending Vicarious Liability of Rental and Leasing Companies Heading to Court of Appeals

Effective August 2007, Congress, in the so-called “Graves Amendment” barred vicarious liability claims against long term lease and rental car companies.  The Second Department has certified the granted applications for leave to appeal to the Court of Appeals to permit high court review of the constitutionality of this statute.  The two cases going up are Jones v. Bill and this one, Rawlings

Editors Note:  For a thoughtful and comprehensive discussion of the constitutional questions raised, see Graham v. Dunkley, decided the same day by the Second Department

  

1/31/08            York Speciality Food, Inc. v. Tower Insurance Company of New York

Appellate Division, First Department

Late Notice Excuse Denied:  Where a Reasonable Person Could Envision Liability, there is a Duty to Make Inquiry
Insured knew of accident three days after it occurred but waited eight months to notify insurer.  Insured did nothing to investigate knowledge of employees, some of whom saw injured party removed from premises in ambulance.  Late notice excuse therefore fails.
Editor’s Note:  Once again, Attaboy Max.

 

1/29/08            Guideone Ins. Co. v. Evangelical Lutheran Bethlehem Church
Appellate Division, Second Department

Unless Carrier Establishes Coverage Defenses in Evidentiary Form, It Cannot Win Motion for Summary Judgment
Insurer failed to demonstrate its coverage defenses, in a motion for summary judgment by submitting evidentiary proof.  Without that proof, summary judgment cannot be granted.

Editor’s Note:  An attorney’s affidavit cannot establish the existence of a policy or of policy defenses, as a general rule.  Proof must come from a company representative.

 

1/29/08            Abraham v. Hermitage Insurance Company , et al

Appellate Division, Second Department

Like Adam, Abraham Gets but One Bite of the Apple

In a previous declaratory judgment action, where the subject was Eagle Insurance Company’s coverage for the loss, Eagle was found not to have coverage.  The injured party then took a judgment against the insured and sued Eagle in a direct action.  Court finds that the action could not be relitigated.  Once it is established that no coverage exists, the question should not be revisited, assuming a party with a similar interest made or could have made, similar arguments.
 

1/29/08            Wausau Business Ins. Co. v. 3280 Broadway Realty Company LLC

Appellate Division, First Department

Liar, Liar.  Pants on Fire.  When Insured Misrepresent Knowledge of Accident and Insurer Promptly Disclaims When it Learns of the Truth -- Even Years Later – Disclaimer is Timely

Insured misrepresented to the carrier that he was unaware of an accident that in fact he knew about.  Carrier defended.  It then learned, two years later, that insured misrepresented the fact and the insurer promptly denied coverage 24 days later.  Denial was timely.        

 

1/29/08            In the Matter of Nationwide Mutual Fire Insurance Company v. Thomas

Appellate Division, Second Department
Carrier has Chance to Refute Claim of Hit-and-Run Vehicle First Raised in Opposition to Motion to Stay UM Arbitration

In response to demand for arbitration for uninsured motorist benefits, Nationwide made an application to permanently stay arbitration on grounds that offending vehicle was not uninsured.  In response to that application, claimant argued, for the first time, that he was struck by hit-and-run auto.  Nationwide responded that this position was inconsistent with police report filed by claimant.  Lower court found that Nationwide could not take that position, for the first time, in reply papers.  Appellate Division held, thankfully, that carrier was surely entitled to respond to new arguments made for first time in response to application to stay and that lower court should have held a framed-issue hearing on issue of whether there was a contact accident with a hit-and-run car.

  

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

 

1/29/08            Cabrera v Momperousse
Appellate Division, Second Department

Submitting Evidence Pointing out Plaintiff’s Injuries Dooms Defendant’s SJ Hopes

Helping the other side’s case led to the Appellate Division affirming a lower court order which denied the defendants’ motion for summary judgment. The Appellate Division held the lower court properly denied the defendants’ motion for summary judgment dismissing the complaint. In support of their motion, the defendants submitted evidence that the plaintiff had significant restrictions in motion of the lumbar and cervical regions of his spine. Accordingly, the defendants failed to establish, prima facie, that the injured plaintiff did not sustain a serious injury.

 

1/29/08            Edwards v. Sultan Transp., Inc.
Appellate Division, Second Department

Surprise, Surprise: Plaintiff Survives SJ as Defendants’ Doctors Fail to Address Claims

Plaintiffs successfully appealed a lower court order which had granted defendants’ summary judgment motion. On appeal, the Appellate Division held the defendants failed to establish, prima facie, that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The affirmed medical report of the neurologist, who examined the plaintiffs on behalf of the defendants, set forth range of motion findings concerning the plaintiffs’ respective cervical and lumbar spines but failed to compare those findings to what is normal. Furthermore, the defendants did not adequately address the plaintiffs' claims, clearly set forth in their bill of particulars, that they sustained a serious injury under the 90/180 day category.

 

1/29/08            Malik v. Rahman

Appellate Division, Second Department

Quick and to the Point: SJ Denied as Defendants Failed to Make a Prima Facie Showing

Here, the defendants appeal a lower court order that denied its motion for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury. The order was affirmed as defendants failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. Since the defendants failed to satisfy their prima facie burden, it was unnecessary to consider whether the plaintiffs’ opposition papers were sufficient to raise a triable issue of fact.

 

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. 

2/4/08              In the Matter of the Arbitration Between Applicant and Respondent
Arbitrator Mary Anne Theiss (Onondaga County)
Claim Properly Denied Based Upon Failure to Attend IME BUT Carrier Must Schedule Another IME to Assess Back Injury
The Applicant, eligible injured person, sustained injuries when struck as a pedestrian by a truck.  On May 18, 2006, the Applicant saw an individual, who had exited a truck, urinating in the parking lot of his apartment complex and called the police.  The Applicant sat on the curb while waiting for the police to arrive.  The individual proceeded to get into his truck and begin backing up.  The Applicant was in the path of the truck and froze.  The Applicant rolled over the truck and sustained unspecified injuries.

The Applicant was a veteran of the Gulf War and deemed totally disabled because of post traumatic stress disorder. 

On July 25, 2007, the Applicant and his attorney received notice of a scheduled IME with Dr. Kim on August 2, 2007.  The Applicant’s attorney’s office cancelled the appointment on July 30, 2007, because the Applicant had a fear of foreigners.  The Applicant requested to be examined by an American physician.  The insurer rescheduled with a different physician for September 20, 2007.  The Applicant and his counsel were notified of this date by correspondence dated August 13, 2007.  A reminder letter was sent on September 12, 2007, and also advised that failure to comply was a policy condition violation that could result in a denial.

The Applicant admittedly did not read his mail for over a month and then only read mail pertaining to bills and correspondence from his counsel.  The Applicant missed the scheduled IME. 

The arbitrator held that the Applicant failed to comply with the policy conditions to submit to an IME and did not award payment of massage therapy bills.  Yet, she held equity requires that the Applicant be examined by a physician of the insurer’s choosing to determine if further treatment is needed for an alleged back injury.

2/4/08              In the Matter of the Arbitration Between Applicant and Respondent
Arbitrator Thomas J. McCorry (Erie County)
Standing and Gratuitous Payment from Settlement Proceeds Argument by Insurer Rejected
This was a lengthy decision involving whether multiple providers’ treatment was medically necessary.  The two interesting points that we wish to point out are the insurer’s defenses that the arbitrator outright rejected.

The first defense was that the Applicant, eligible injured person, could not seek payment of the bills until she demonstrated that she had actually paid the bills out of her own pocket.  The arbitrator rejected this argument reasoning that this position goes against the no-fault regulatory scheme.  An eligible injured person, who may be indigent and completely disabled from an accident, should not be expected to pay the bills before commencing a no-fault arbitration.  Rather, this issued could be validly raised if an assignment was taken by the medical provider, no release of assignment presented, and no payment by the Applicant of the bill.  In that situation, the Applicant would lack standing.

The second defense was that the Applicant’s payment of the denied bills from her personal injury proceeds to satisfy a physician’s lien is a gratuity payment and not reimbursement.   The arbitrator likewise rejected that argument.  He reasoned that if no-fault benefits have been denied the physician does not have to continue treating the patient.  In the event that the physician continues to treat the patient through acceptance of lien on a possible third-party settlement does not bar the eligible injured person from recovering that money paid to the physician for the services rendered.

1/28/08  In the Matter of the Arbitration Between Applicant and Respondent
Arbitrator Thomas J. McCorry (Erie County)
Applicant’s Claim Barred Due to Applicant of Intoxication Exclusion
This was an arbitration that I handled.  To provide some background much of the decision is based upon the parties’ evidence and post arbitration written closing statements.  The Applicant in this case chose not to testify. 

The Applicant, eligible injured person, sought no-fault benefits arising out of a two car October 27, 2006, motor vehicle accident.  The insurer denied benefits based upon the intoxication exclusion.

The Applicant rear ended a stopped vehicle at an intersection with such forth that the vehicle crossed two lanes of traffic.  Then the vehicle went up and onto a ditch turning on its side with such force to cause the vehicle to cross two lanes of traffic into and up

Thereafter, the Applicant left the accident scene and began “running away.”  One account was that she was going to her home that was nearby.  The Applicant’s neighbor, who was a firefighter responding to the accident scene, found her and attempted to physically restrain her from going home.  It is noted that the Applicant submitted testimony from the Grand Jury which was relied upon on the arbitration.  The Applicant threw approximately two punches at her neighbor when he attempted to stop from returning to her house. 

 

A responding police officer testified to the Grand Jury that he observed Applicant’s vehicle containing a half full bottle of Smirnoff malt liquor beverage.  A second responding officer who approached the Applicant testified that the Applicant had slurred speech and had the smell of alcohol on her breath.  The Applicant took a field screening test with a .22% BAC.  She refused a Breathalyzer and a blood test.  The second responding officer testified that based upon his training and experience he determined that the Applicant was intoxicated.  Thereafter, the Applicant was arrested and charged with felony driving while intoxicated.

 

Ultimately, the Applicant was convicted of driving while impaired and leaving an accident scene.  The Applicant argued that this conviction was insufficient for the insurer to deny benefits as she was not found to be intoxicated.  The insurer argued under Fafinski v. Reliance Ins. Co., that a lack of a DWI conviction is not dispositive on the issue of whether at the time of the accident the Applicant was intoxicated for purposes of invoking the intoxication exclusion under the no-fault regulations.

 

The Arbitrator determined that the evidence submitted was overwhelming that at the time of this accident the Applicant was intoxicated.  The Arbitrator cited to Judge Franczyk’s statement to he Applicant when she was sentenced for a period of incarceration:

 

I cannot ignore the fact that you have one , two three---four drinking and driving convictions spanning a period of 11 years and here you are again daring to go on the roadways after consuming alcohol

 

****

 

How does anybody get a message to somebody who persists in drinking and driving that they are not supposed to do it, because they endanger themselves and everyone who comes anywhere near them.

11/21/07  Office of General Counsel for the New York State Insurance Department Opinion
Insurers are Entitled to Require a Social Security Number
An insurer may require a social security number from an Applicant before paying or denying a claim.  The Insurance Department pointed to 11 NYCRR 65-3.4(c) which references multiple requisite claims forms of which the NF-2 (no-fault application) requires the Applicant to provide a social security number.  The insurer may require that this information be filled in through the proper delay of the claim by an additional verification request.  Further, if additional verification for this information is outstanding the insurer cannot pay or deny the claim.

 

PEIPER ON PROPERTY

Steven E. Peiper

[email protected]

 

2/5/08              Junius Development, Inc. v. New York Marine and General Insurance Co.
Appellate Division, Second Department
Coverage May be “Drained” from Policy Where Water Damaged Building as a Result of Failure of Drain, not Overflow
Junius Development Co., Inc. claimed to have sustained water damage to its insured building after a subcontractor emptied the contents of a rooftop water tank into a drainpipe. The trap inside the pipe was clogged with construction debris. Thus, when the rooftop tank was emptied, the pressure created by the column of water above the obstruction caused the drainpipe to fail inside the premises, flooding parts of the building,

Junius’ carrier, the defendant New York Marine and General Insurance Co. (NYMAGIC) denied coverage.  Junious sued NYMAGIC. In support of its denial of first party coverage the insurer relied primarily on a policy provision specifically excluding any "loss or damage caused directly or indirectly by . . . [w]ater that backs up or overflows from a . . . drain."

However, here, the loss was not caused by back up or overflow of a drain, but by the separation of the drain pipe so the exclusion did not apply

2/5/08              Fontanelli v. Hanover Insurance Company
Appellate Division, Second Department
Identify of Proper Carrier Not a Mystery, but Cause of Property Collapse Unclear
Hanover Insurance Company and not Massachusetts Bay Insurance Company (hereinafter Massachusetts Bay or Allmerica Financial Alliance Insurance Company issues the policy so only Hanover remains in the lawsuit.

Hanover established, in the first instance, that the plaintiff's loss was not covered by the insurance policy. Hanover provided evidence establishing that the loss resulted from a condition caused by the poor design and construction of the house, and not a "collapse." However, the insured then presented proof that there had been a collapse caused by a “hidden condition.”  Since there was a question of  fact, summary judgment should not be granted and the jury will have to decide the cause.

1/29/08            State Farm Fire & Casualty Co. v Whistle Clean By Warren Services, Inc.

                        Martinez v. County of Monroe  

Appellate Division, Second Department

Contract between Defendant and Insured/Home Owner only Required Water Removal, and not Mold/Mildew Prevention; Carrier’s Subrogation claim Dismissed.

 

In this case, the carrier’s insured hired defendant to remove water and debris after a covered event occurred at the insured’s residence.   Upon a home inspection carried out by carrier, it was revealed that mold and mildew had begun to form in the residence.  In turn, insureds were caused to expend additional monies to remediate the mold condition.

 

Although carrier reimbursed its insureds for the water and debris cleanup, as well as the mold/mildew remediation, it sought to recover from the defendant in subrogation.  Defendant moved for summary judgment on the theory that its contract with the insured limited its duties to water and debris cleanup.  As such, defendant contended it could not be held liable for the subsequent mold and mildew formation.

 

Carrier opposed defendant’s applications on the basis that industry standards required that defendant undertake methods to prevent mold formation.  The Second Department found for the defendant, and held that because the mold/mildew prevention was not part of the agreement between defendant and insured/homeowner.  Thus, there was no cause of action for defendant’s alleged failure to perform these services.

 

2/01/08            Martinez v. County of Monroe  

Appellate Division, Fourth Department

Same Sex Unions Upheld as Recognizable Marriage in New York

And now for a little potpourri. 

 

Plaintiff legally married her domestic, same-sex, partner in Ontario, Canada on July 5, 2004.  Thereafter, plaintiff, and employee at Monroe Community College (“MCC”), immediately requested health care benefits for her, now, spouse.  Plaintiff’s application was subsequently denied by the MCC Director of Human Resources.  As a result, plaintiff commenced the current action alleging a violation of New York Executive Law § 296 which prohibits certain types of discrimination (including discrimination based upon sexual orientation).

 

Initially, the Fourth Department noted that marriages entered into in a foreign jurisdiction are traditionally recognized in New York; the noted exceptions being when the relationship is (a) incestuous or polygamous or (b) violates a “positive law” in New York.  As the relationship between plaintiff and her spouse was not incestuous or polygamous, the Court next looked at whether it violated existing law in New York.  The Fourth Department held that the New York Legislature had not passed legislation which outright bans same-sex marriage, and accordingly, the current situation does not then violate positive law. 

 

As the Fourth Department ruled that the marriage was recognizable under current New York law, the Fourth Department also held that the denial was in violation of Section 296 of the Executive Law’s prohibition of discrimination based upon an individual’s sexual orientation.

 

In so holding, the Fourth Department rejected the defendants’ final argument that it was entitled to government immunity.  In support of this decision, the Court noted the denial was not a discretionary act taken by defendants’ employee, but rather an erroneous legal determination and thus beyond the protection of governmental immunity.

 

Please also review the Third Department’s December 27, 2007 decision in Langan v State Farm Fire & Cas. a decision that came up with quite a different conclusion.  As noted in our December 28, 2007 Edition of Coverage Pointers:

 

                         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


EARL’S PEARLS

Earl K. Cantwell, II

[email protected]

 

New Court Rule Allows New York Courts to “Shanghai” Insurance Adjusters

 

            Many of us have participated in charity fundraisers where someone is spirited off to a fake jail, and friends and family then pay a “bail” or “fine” to the charity to “release” them back into society.  In my experience, this has included being “volunteered” for such incarceration only to have family, friends and co-workers remain quietly on the sidelines, not donating but secretly praying for my non-return. 

 

            The insurance industry should be aware of a new court rule in the New York State Trial Courts which purports to give judges the authority to haul “representatives of insurance carriers,” i.e., adjuster, into court, presumably in an effort to get more money thrown into a settlement pot or explain why not.  Rule 202.26 of the Uniform Rules for the New York Trial Courts deals with the “Pre-Trial Conference,” particularly when the Note of Issue has been filed and the case is near trial or ready for a trial date.  The exact text of the rule at 202.26(e) states that, “Where appropriate, the court may order parties, representatives of parties, representatives of insurance carriers or persons having an interest in any settlement, including those holding liens on any settlement or verdict, to also attend in person or telephonically at the settlement conference.”  The rub, of course, is that the rule gives the court authority to require the insurance adjuster to attend the settlement conference in person “where appropriate,” which is notably vague and subject to the interpretation of the person wearing the robes.

 

            There has been much informal jesting and chortling by judges and law clerks waiting to exercise this new-found power to require insurance adjusters, particularly those of companies in disfavor with the courts, or who have not been cooperative in settling a case, to appear in the Star Chamber and face the Inquisition.  There are at least a few local judges in Western New York who are using this rule regularly, but not routinely, as part of the settlement process.  Requiring the adjuster to appear in court may obviously be detrimental to the operation of the insurance company and particularly disadvantageous if the carrier is out of town or has out-of-town claims offices working the file.

 

            The following are some suggestions for avoiding the necessity for such an appearance, and preventing a judge from exercising this authority or determining that “where appropriate” means your case:

                        1.         Retain local counsel who are familiar with the judge and the trial part, and generally have a good political relationship with the judge, his or her law clerk, and other court staff;

                        2.         Make sure counsel has a history of appearing promptly for pre-trial conferences and motions in the case and being able to clearly explain the carrier’s position and the extent or non-extent of settlement authority;


                        3.         If the insurance carrier is taking a “no pay” or “low pay” position, have counsel be able to explain clearly the reasons for that position so it is clear to the court that the position is not being taken through neglect or indecision;


                        4.         Be consistent in settlement positions and discussions.  If over time your settlement position moves up or down, be able to explain why, such as receiving a good outcome on a motion decision or a less than favorable IME report;


                        5.         At the pre-trial conference and any related discussions, have the adjuster or claims manager with authority available by telephone at the appointed time for purposes of discussion and settlement authority;


                        6.         If the court requires some direct communication by the insurance company, have the adjuster or claims manager participate telephonically at the settlement conference as permitted by the rule;


                        7.         If you are an out-of-town carrier or adjuster, retain or contract with a local independent adjuster to appear at the settlement conference if required, making sure that adjuster is formally retained and has some defined settlement authority and knows who to contact during any settlement dialogue;


                        8.         If “appropriate” or required, have the adjuster or claims manager appear in person, which at times has a beneficial effect, since the court can hear directly from the decision-makers what facts they consider important in the case and their analysis with respect to liability, damages, or both. Many times, if an adjuster appears with counsel and confirms or explains the position, the court may become more mellow, understand that positions are not being taken simply for posturing, and realize that the insurance company is not being obdurate without good reason;


            If the above options are not successful and you are required to send a representative but fail to appear, we do know some good local criminal lawyers to whom we make referrals.  Just make sure that you look good in an orange jumpsuit and have a spare toothbrush on hand.

 

 

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

 

2/5/08              Universal Underwriters Ins. Co. v. Paridis

Supreme Court of Connecticut
Employee Not An Insured Under Employer's Umbrella Policy
This matter arose from an October 2002 single vehicle accident involving three employees of Crowley Chrysler-Plymouth, Inc. The accident occurred within the scope of the individuals' employment with Crowley. The passengers brought a civil action against Crowley as well as the driver. The Plaintiff insurer defended both Crowley and the driver under a policy of insurance issued to Crowley. After Crowley was dismissed via summary judgment, Plaintiff asserted that it was only obligated to indemnify and defend the driver pursuant to its "garage coverage," which had a limit of $500,000. The passengers disagreed and argued that Plaintiff had an obligation to provide coverage under its umbrella policy issued to Crowley as well, which had a limit of $10 million. Plaintiff filed a Declaratory Judgment Action seeking a determination that it had no duty to provide coverage under its umbrella policy. In agreeing with Plaintiff, the appellate court held that, since the driver was not listed as a designated person under the umbrella policy, "[t]he definition of an insured for such coverage has a definite and precise meaning concerning which there is no reasonable basis for a difference of opinion. As a consequence, efforts by the defendants to assert that Paradis [the driver] had umbrella coverage must fail." The appellate court further held that the Connecticut statute mandating minimum insurance coverage likewise did not provide coverage under the umbrella policy. "The statutory purpose of the minimum insurance statute is satisfied by Crowley's automotive coverage and, therefore, the financial responsibility law does not create coverage under the umbrella coverage." The court concluded that the Plaintiff's $500,000 garage policy "more than satisfied" Connecticut's statutory financial responsibility provisions.

Submitted by: Anthony J. Zarillo, Jr. and Jason P. Gratt (Bevan, Mosca, Giuditta & Zarillo, P.C

 

1/31/08            Arreguin v. Farmers Insurance Company of Idaho

Idaho Supreme Court

Outbuildings Exclusion Ambiguous
Here an insurance company contended that an "Outbuilding" exclusion precluded coverage for a detached garage damaged by a fire. Outbuilding was not defined by the policy. After a coverage suit was filed by the policyholder, the trial court granted the carrier's motion for summary judgment. The Supreme Court held that the Outbuilding exclusion was ambiguous and construed it in favor of the policyholder and against the insurance company. As a result, the court reversed the district court's grant of summary judgment to Farmers.

Submitted by: Anthony J. Zarillo, Jr. (Bevan, Mosca, Giuditta & Zarillo, P.C.)

 

REPORTED DECISIONS

 

Wausau Business Insurance Company v. 3280 Broadway Realty Company LLC


Jaffe & Asher, LLP, New York (Marshall T. Potashner of
counsel), for appellant.
Johnson & Liebman, LLP, New York (Charles D. Liebman of
counsel), for respondents.

Order, Supreme Court, New York County (Karen S. Smith, J.), entered December 27, 2006, which denied plaintiff's motion for summary judgment dismissing the counterclaims of defendants 3280 Broadway Realty Company LLC (3280 Broadway) and Jarvis Doctorow, unanimously reversed, on the law, with costs, the motion granted and the counterclaims dismissed. The Clerk is directed to enter judgment accordingly.

The denial of plaintiff's motion on the ground that it failed to support its motion with evidence in admissible form was improper, where the affidavit of plaintiff's claims handler was based upon documentary evidence and sufficiently complied with the requirement that a motion for summary judgment be supported
by an affidavit from a person having personal knowledge (see CPLR 3212[b]; First Interstate Credit Alliance v Sokol, 179 AD2d 583, 584 [1992]).

The court also improperly determined that plaintiff's disclaimer of coverage was untimely as a matter of law. Because the grounds for which plaintiff denied coverage were not readily apparent to it until June 5, 2006 (see Matter of Allcity Ins. Co. (Jimenez), 78 NY2d 1054, 1056 [1991]), when it discovered a letter indicating that Doctorow, 3280 Broadway's property manager, knew of the underlying accident in 2003, but failed to disclose such knowledge until more than two years later, and plaintiff disclaimed coverage 24 days later after consulting with both in-house and outside counsel, it demonstrated that its disclaimer was timely (see Insurance Law § 3420[d]; see also Sirius Am. Ins. Co. v TGC Constr. Corp., 37 AD3d 818, 819 [2007]). The record evidence also establishes that Doctorow misrepresented when he had first learned of the accident, and that plaintiff reasonably relied on this misrepresentation when it initially agreed to defend and indemnify 3280 Broadway in the underlying action (id.).

Abraham v. Hermitage Insurance Company , et al


Hankin, Handwerker & Mazel, PLLC, New York, N.Y. (Mark
Hankin and Mitchell Flachner of counsel), for appellant.


DECISION & ORDER

In an action to enforce a judgment pursuant to Insurance Law § 3420, the plaintiff appeals, as limited by his brief, from so much of a judgment of the Supreme Court, Queens County (Kelly, J.), entered April 6, 2006, as, upon an order of the same court entered January 23, 2006, granting that branch of the motion of the defendant Eagle Insurance Company which was for summary judgment dismissing the complaint insofar as asserted against it, and denying that branch of his motion which was for summary judgment on the complaint insofar as asserted against that defendant, is in favor of the defendant Eagle Insurance Company and against him dismissing the complaint insofar as asserted against that defendant.

ORDERED that the judgment is affirmed insofar as appealed from, without costs or disbursements.

Under the doctrine of res judicata, a disposition on the merits bars litigation between the same parties, or those in privity with them, of a cause of action arising out of the same transaction or series of transactions as a cause of action that either was raised or could have been raised in the prior proceeding (see Matter of Hunter, 4 NY3d 260, 269; Barbieri v Bridge Funding, 5 AD3d 414, 415; Winkler v Weiss, 294 AD2d 428, 429). The fact that causes of action may be stated separately or invoke different legal theories, will not permit relitigation of claims (see Matter of Hodes v Axelrod, 70 NY2d 364, 372).

Here, the Supreme Court properly granted that branch of the motion of the defendant Eagle Insurance Company (hereinafter Eagle) which was for summary judgment dismissing the complaint insofar as asserted against it on the ground of res judicata, as the plaintiff's claims regarding whether there is coverage under the Eagle policy could have been raised in a prior action which was disposed of on the merits (see Sabatino v Capco Trading, Inc., 27 AD3d 1019; Barbieri v Bridge Funding, 5 AD3d at 415; CRK Contr. of Suffolk v Brown & Assoc., 260 AD2d 530).

In light of the foregoing determination, the plaintiff's remaining contentions have been rendered academic.

Guideone Insurance Company v. Evangelical Lutheran Bethlehem Congregational Church


Lawrence N. Rogak, LLC, Oceanside, N.Y. (Renee A. Breitner of
counsel), for appellant.
Joseph N. DiGrazia, Brooklyn, N.Y. (Louis R. Lombardi of
counsel), for respondent Guy Coleman.


DECISION & ORDER

In an action for a judgment declaring, inter alia, that the plaintiff is not obligated to defend and indemnify the defendants Evangelical Lutheran Bethlehem Congregational Church, Bethlehem Evangelical Lutheran Church, and Bay Ridge Center for Older Adults in an underlying personal injury action commenced by the defendant Guy Coleman entitled Coleman v Evangelical Lutheran Bethlehem Congregational Church, et al., pending in the Supreme Court, Kings County, under Index No. 11239/06, the plaintiff appeals from an order of the Supreme Court, Kings County (Held, J.), dated May 15, 2007, which, among other things, denied its motion for summary judgment.

ORDERED that the order is affirmed, with costs to the respondent Guy Coleman.

The plaintiff failed to meet its burden of establishing entitlement to judgment as a matter of law. The plaintiff failed to support its motion for summary judgment with any competent evidence in admissible form establishing the validity of its disclaimer of coverage (see Zuckerman v City of New York, 49 NY2d 557, 562; Batista v Santiago, 25 AD3d 326). Accordingly, the plaintiff's motion for summary judgment was properly denied, regardless of the sufficiency of the opposition papers (see Ayotte v Gervasio, 81 NY2d 1062).

In the Matter of Nationwide Mutual Fire Insurance Company v. Thomas


Mallilo & Grossman, Flushing, N.Y. (Francesco Pomara, Jr., of
counsel), for respondent.

DECISION & ORDER

In a proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of an uninsured motorist claim, the petitioner, Nationwide Mutual Fire Insurance Company, appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Ruchelsman, J.), dated September 7, 2006, as denied that branch of its petition which was for a permanent stay of arbitration.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and the matter is remitted to the Supreme Court, Kings County, for a hearing on the issue of whether there was physical contact between the respondent's vehicle and an alleged "hit-and-run" vehicle.

The respondent, Rahman Thomas, allegedly was injured while driving a vehicle insured by the petitioner, Nationwide Mutual Fire Insurance Company (hereinafter Nationwide), when he lost control of the vehicle and struck several parked vehicles. Thomas made a demand on Nationwide for uninsured motorist benefits arising from the accident. Nationwide commenced this proceeding, inter alia, for a permanent stay of arbitration of that claim. Nationwide contended, among other things, that the accident did not involve an uninsured vehicle. In opposition to the petition, Thomas averred for the first time that his vehicle was struck by a "hit-and-run" vehicle that entered from a side street after running a red light. In reply, Nationwide argued that Thomas's allegations concerning a "hit-and-run" vehicle were inconsistent with the police report of the accident and his prior testimony at an examination under oath, neither of which mentioned any physical contact between the insured vehicle and any vehicle other than the parked vehicles, all of which were insured. The Supreme Court, finding the issue of physical contact with the alleged "hit and run" vehicle impermissibly raised for the first time in Nationwide's reply papers, denied that branch of the petition which was for a stay of arbitration. We disagree.

In relevant part, the Nationwide policy requires physical contact between the insured vehicle and a "hit-and-run" vehicle to maintain a claim for uninsured motorist benefits. Such physical contact is a condition precedent to arbitration of a claim for uninsured motorist benefits (see Matter of Merchants Mut. Ins. Group v Idore, 10 AD3d 612). Here, Nationwide did not impermissibly attempt to raise a new factual issue as to such physical contact in its reply papers (see Matter of Harleysville Ins. Co. v Rosario, 17 AD3d 677). Rather, Nationwide merely was responding to allegations, made for the first time by Thomas in his opposition to the petition, that a "hit-and-run" vehicle had been involved in the accident (id.). Consequently, there should have been a framed issue hearing on the issue of whether there was physical contact between the insured vehicle and the alleged "hit-and-run" vehicle (see Matter of Allstate Ins. Co. v Hayes, 17 AD3d 669; Matter of Merchants Mut. Ins. Group v Idore, 10 AD3d at 612; Matter of Utica Mut. Ins. Co v Leconte, 3 AD3d 534; Matter of New York Cent. Mut. Fire Ins. Co. v Paredes, 289 AD2d 495).

Finally, Nationwide argues that the Supreme Court erred in failing to address the issue of whether Thomas overstated the limits of the uninsured motorist benefits of the subject policy. However, this does not present a threshold issue as to arbitrability (see Matter of County of Rockland [Primiano Constr., Co.], 51 NY2d 1). Thus, the Supreme Court did not err in failing to address the issue.

York Speciality Food, Inc. v. Tower Insurance Company of New York


Law Office of Max W. Gershweir, New York (Joseph S. Wiener
of counsel), for appellant.
Composto & Composto, Brooklyn (Frank A. Composto of
counsel), for respondent.

Order, Supreme Court, New York County (Judith J. Gische, J.), entered November 16, 2006, which, to the extent appealed from, denied the motion of defendant Tower Insurance Company (Tower) for summary judgment dismissing the complaint against it, unanimously reversed, on the law, with costs, and the motion granted. The Clerk is directed to enter judgment in favor of Tower dismissing the complaint as against it.

Where a liability insurance policy requires notice of an occurrence to the carrier as soon as practicable, such notice must be given within a reasonable period of time (Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742 [2005]). The insured's noncompliance with this requirement constitutes failure of a condition precedent, thus vitiating the contract as a matter of law, even without a showing of prejudice (Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332, 339 [2005]).

Plaintiff became aware of the claimant's accident within three days, but did not notify Tower of the possibility of a claim until eight months later. Where a reasonable person could envision liability, that person has a duty to make some inquiry as to potential liability (White v City of New York, 81 NY2d 955, 958 [1993]). Although a good-faith belief in non-liability may excuse the failure to give timely notice (see Great Canal Realty Corp., 5 NY3d at 743), there is no indication that plaintiff ever took any action to ascertain the possibility of its liability for the claimant's accident. Had plaintiff's president questioned his employees, some of whom had witnessed the accident, he would have learned that the claimant, after falling in front of the premises, had been taken away in an ambulance. Since he made no investigation at all, there is no basis for a good-faith belief in plaintiff's non-liability.

Rawlings v. National Car Rental System, Inc.


Lipsig Shapey Manus & Moverman, PC (Pollack, Pollack, Isaac &
De Cicco, New York, N.Y. [Brian J. Isaac] of counsel), for
appellant.
Smith Mazure Director Wilkins Young & Yagerman, P.C., New
York, N.Y. (Joel M. Simon of
counsel), for nonparty-respondents and for
defendants National Car Rental
System, Inc., and Alamo Rent-A-Car, LLC.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Dabiri, J.), dated June 27, 2006, which denied her cross motion pursuant to CPLR 3025 for leave to amend the complaint to name Alamo Financing, L.P., and ANC Rental Corporation as additional defendants. Application by the plaintiff for leave to appeal to the Court of Appeals, in the event that the order is affirmed.

ORDERED that the order is affirmed, with costs; and it is further,

ORDERED that the plaintiff's application for leave to appeal to the Court of Appeals is granted, and the following question is certified to the Court of Appeals: Was the decision and order of this Court properly made?

Under Jones v Bill (34 AD3d 741, lv granted 9 NY3d 954), the plaintiff's proposed cause of action against Alamo Financing, L.P., and ANC Rental Corporation is barred by the Graves Amendment (49 USC § 30106), and thus the Supreme Court properly denied the plaintiff's cross motion for leave to amend the complaint to name those two parties as additional defendants.

 

Graham v. Dunkley

 

APPEAL by the defendant NILT, Inc., in an action to recover damages for personal injuries, as limited by its brief, from so much of an order of the Supreme Court (Thomas V. Polizzi, J.), dated September 11, 2006, and entered in Queens County, as denied that branch of its motion which was to dismiss the complaint insofar as asserted against it for failure to state a cause of action.
OPINION & ORDER


CARNI, J.The plaintiff allegedly was injured in a two-car collision in Queens. The driver of the other car, the defendant Rayon S. Dunkley, leased his vehicle from County Line Buick Nissan, Inc., in Middlebury, Connecticut, which subsequently assigned the lease to the defendant NILT, Inc. (hereinafter NILT). On or about March 8, 2006, the plaintiff commenced this action against Dunkley and NILT. The complaint did not allege any affirmative negligence on the part of NILT, but sought damages from it based on vicarious liability. NILT moved, inter alia, to dismiss the complaint insofar as asserted against it for failure to state a cause of action, based on 49 USC § 30106 (hereinafter the Graves Amendment), a Federal statute which bars vicarious liability actions against professional lessors and renters of vehicles. The Supreme Court, Queens County, held that the Graves Amendment was an unconstitutional enactment in excess of Congressional power pursuant to the Commerce Clause of the United States Constitution and therefore denied that branch of NILT's motion. We reverse the order insofar as appealed from.

Generally, at common law, absent an agency relationship, the owner of a vehicle was not vicariously liable for injuries caused by a driver using the vehicle with the owner's permission (see Morris v Snappy Car Rental, 84 NY2d 21, 27). In 1924, the New York State Legislature enacted a statute which imposed such liability (see former Highway Law § 282-e). The substance of that statute has been continued and is now codified in Vehicle and Traffic Law § 388, which provides, in relevant part:

"Every owner of a vehicle used or operated in this state shall be liable and responsible for death or injuries to person or property resulting from negligence in the use or operation of such vehicle, in the business of such owner or otherwise, by any person using or operating the same with the permission, express or implied, of such owner."

 

The statute "expresses the policy that one injured by the negligent operation of a motor vehicle should have recourse to a financially responsible defendant" (Continental Auto Lease Corp. v Campbell, 19 NY2d 350, 352; see Tikhonova v Ford Motor Co., 4 NY3d 621, 624; Morris v Snappy Car Rental, 84 NY2d at 27).

New York, Maine, and Rhode Island are now the only states that have statutes purporting to impose vicarious liability for an unlimited amount of damages on car owners, including lessors (see Martin, Commerce Clause Jurisprudence and the Graves Amendment: Implications for the Vicarious Liability of Car Leasing Companies, 18 U Fla J Law & Pub Policy 153, 157-162).

On August 10, 2005, President George W. Bush signed into law the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), a comprehensive transportation bill which included the Graves Amendment, now codified at 49 USC § 30106. The section, entitled "Rented or leased motor vehicle safety and responsibility," states, in relevant part:

"(a) In general. An owner of a motor vehicle that rents or leases the vehicle to a person (or an affiliate of the owner) shall not be liable under the law of any State or political subdivision thereof, by reason of being the owner of the vehicle (or an affiliate of the owner), for harm to persons or property that results or arises out of the use, operation, or possession of the vehicle during the period of the rental or lease, if—

(1) the owner (or an affiliate of the owner) is engaged in the trade or business of renting or leasing motor vehicles; and (2) there is no negligence or criminal wrongdoing on the part of the owner (or an affiliate of the owner)."

The section applies to all actions commenced on or after August 10, 2005 (see 49 USC § 30106[c]), and has been enforced as preempting the vicarious liability imposed on commercial lessors by Vehicle and Traffic Law § 388 (see Hernandez v Sanchez, 40 AD3d 446, 447; Kuryla v Halabi, 39 AD3d 485, 486; Jones v Bill, 34 AD3d 741, 742; Murphy v Pontillo, 12 Misc 3d 1146, 1147). Challenges based on the Commerce Clause of the United States Constitution have been frequently rejected (see Merchants Ins. Group v Mitsubishi Motor Credit Assn., F Supp 2d, 2007 WL 2815744; Dupuis v Vanguard Car Rental USA, 510 F Supp 2d 980; Seymour v Penske Truck Leasing Co., Slip Copy, 2007 WL 2212609; Garcia v Vanguard Car Rental USA, Inc., 510 F Supp 2d 821; Iljazi v Dugre, 2007 WL 1247246). We agree with the weight of precedent that the Graves Amendment was a constitutional exercise of Congressional power pursuant to the Commerce Clause of the United States Constitution.

The federal government is one of enumerated powers, and those powers not delegated to the federal government are reserved to the states (see US Const, 10th Amend). Article I, section 8 of the United States Constitution grants Congress broad power to enact legislation in several enumerated areas of national concern. Those laws enacted pursuant to a delegated power preempt conflicting state laws via the Supremacy Clause (US Const, art VI, cl 2).

The Commerce Clause delegates to Congress the authority "[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes" (US Const, art I, § 8, cl 3). In United States v Lopez (514 US 549), the United States Supreme Court identified three categories of activity subject to Congressional regulation under the Commerce Clause. First, Congress may regulate "the use of the channels of interstate commerce." Second, it may regulate "the instrumentalities of interstate commerce, or persons or things in interstate commerce." Finally, Congress may regulate "those activities that substantially affect interstate commerce" (United States v Lopez, 514 US 549, 558-559).

In Pierce County, Wash. v Guillen (537 US 129), the United States Supreme Court addressed the first two of these categories - the channels and instrumentalities of, and persons or things in, commerce. In that case, the Supreme Court upheld a federal statute which protected information gathered in connection with certain federal highway safety programs from discovery in state actions. States had been reluctant to compile federally-required information pertaining to highway safety believing that such information might increase their liability in state actions by injured persons. To assuage that concern, Congress provided that information collected pursuant to the program would be protected from disclosure in state suits. Despite the challengers' argument that the statute infringed on the states' authority to establish discovery and admissibility rules in state actions, the United States Supreme Court upheld the statute. It reasoned that the statute could be viewed as legislation aimed at improving safety in the channels of commerce and increasing protection for the instrumentalities of commerce, since it could induce the states to be more diligent in collecting the relevant information (see Pierce County, Wash. v Guillen, 537 US 129, 147).

Pierce is instructive in that the statute at issue there could have been seen as regulating state discovery rules, an area of state concern. However, the Supreme Court indicated that this was too narrow a description of the activity being regulated. Since the challenged statute aided in, and was related to, the implementation of a federal regulatory program concerning safe highways, it was a constitutional exercise of Congress' power to legislate under the Commerce Clause.

Likewise, here, the plaintiff argues that the Graves Amendment regulates "state-imposed liability for harm"—which is not in itself an instrumentality of, or thing or person in commerce. However, the statute aids in the regulation of the national market for leased and rented automobiles. Motor vehicles are "the quintessential instrumentalities of modern interstate commerce" (United States v Bishop, 66 F3d 569, 588; see United States v Ballinger, 395 F3d 1218, 1226; United States v Cobb, 144 F3d 319, 322; United States v McHenry, 97 F3d 125, 126; United States v Oliver, 60 F3d 547, 550). Moreover, leased and rented vehicles are "things in" interstate commerce. "The leasing market for vehicles . . . is a national one" (United States v Fenton, 367 F3d 14, 23; see United States v Geiger, 263 F3d 1034, 1037). The Graves Amendment, therefore, regulates both instrumentalities of, and things in, interstate commerce. "While the Graves Amendment may affect a state's ability to impose liability, it regulates the conditions under which motor vehicle lessors operate" (Dupuis v Vanguard Car Rental USA, 510 F Supp 2d 980). Furthermore, Congress may properly regulate instrumentalities of commerce "even though the threat [to interstate commerce] may come only from intrastate activities" (United States v Lopez, 514 US 549, 558). Accordingly, contrary to the plaintiff's contention, jurisdictionally limiting language was unnecessary (see Pierce County, Wash. v Guillen, 537 US 129, 146-147; United States v Bishop, 66 F3d 569, 589; see also Southern R. Co. v United States, 222 US 20).

Moreover, the statute was also constitutional as a regulation of an economic "class of activities" which, taken in the aggregate, substantially affect interstate commerce (see Gonzales v Raich, 545 US 1, 18-22; Perez v United States, 402 US 146, 154; Heart of Atlanta Motel v United States, 379 US 241, 258; Wickard v Filburn, 317 US 111).

Contrary to the plaintiff's contentions, the Graves Amendment does regulate an economic activity - the rental and lease of vehicles. That the statute does so by preempting rules of state tort law does not make it unconstitutional. The Tenth Amendment of the United States Constitution is "but a truism that all is retained which has not been surrendered" (United States v Darby, 312 US 100, 124), and "does not operate as a limitation upon the powers, express or implied, delegated to the national government" (Case v Bowles, 327 US 92, 102, quoting Fernandez v Wiener, 326 US 340, 362). While value judgments concerning the apportionment of the costs of tort injuries are traditionally left to the states, Congress has preempted numerous state liability schemes in aid of economic regulations (see Geier v American Honda Motor Co., 529 US 861 [state no-airbag tort actions preempted]; Cipollone v Liggett Group, 505 US 504 [some state tort causes against cigarette manufacturers preempted]; Mondou v New York, N.H. & H.R. Co., 223 US 1 [1912][preemption of state liability of common carriers for employees' injuries]; Militrano v Lederle Labs., 26 AD3d 475,477 [National Vaccine Injury Compensation Program]; Schafer v American Cyanamid Co., 20 F3d 1 [same]; City of New York v Beretta USA Corp., 401 F Supp 2d 244, 278-279 [ED NY] [the Protection of Lawful Arms in Commerce Act of 2005]; see also the General Aviation Revitalization Act of 1994 [products liability for airlines], the Air Transportation Safety and System Stabilization Act of 2001 [suits against airlines arising out of 9/11]).

Congress may choose to preempt state liability schemes in order to effectuate regulation of economic activities which affect interstate commerce. It is the primary activity—here, the rental and lease of vehicles—which is to be evaluated for its economic nature and its impact on interstate commerce. There can be no real dispute that the rental and lease of vehicles, and the conditions under which such transactions occur, are economic activities which impact the national market. While the plaintiff argues that the link between state vicarious liability rules and interstate commerce is too attenuated to support the legislation, the link here is direct. As detailed in the amicus briefs, vicarious liability laws caused lessors to either cease leasing cars in states having them, opting for more expensive balloon note structures, or spread the cost of higher insurance premiums to lease customers nationwide.

Courts "must defer to a congressional finding that a regulated activity affects interstate commerce, if there is any rational basis for such a finding" (Hodel v Virginia Surface Mining & Reclamation Assn., Inc., 452 US 264, 276; see Gonzales v Raich, 545 US 1, 22; Katzenbach v McClung, 379 US 294, 303-304; Heart of Atlanta Motel v United States, 379 US 241, 262). Congress had a rational basis to conclude that rentals and leases of vehicles, even in purely intrastate instances, have a substantial effect on interstate commerce. Accordingly, the statute is constitutional under the third Lopez category as well (see Gonzales v Raich, 545 US 1, 18-22).

The finding that Congress had the authority, pursuant to the Commerce Clause, to enact the Graves Amendment, thereby preempting conflicting New York law, ends the analysis (see US Const, art VI, cl 2). Should New York wish to provide protection to innocent victims of accidents with leased and rented vehicles, it may require companies to lease or rent vehicles only to drivers with insurance, set up a fund, or take some other legislative action not barred by the federal statute. However, actions against rental and leasing companies based solely on vicarious liability may no longer be maintained.

Accordingly, the plaintiff's cause of action against NILT based solely on vicarious liability failed to state a cause of action, and the Supreme Court should have granted that branch of NILT's motion which was to dismiss the complaint insofar as asserted against it. The order is reversed insofar as appealed from, on the law, and that branch of NILT's motion which was to dismiss the complaint insofar as asserted against it is granted.
CRANE, J.P., FISHER and McCARTHY, JJ., concur.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and that branch of the motion of the defendant NILT, Inc., which was to dismiss the complaint insofar as asserted against it is granted.

Cabrera v. Momperousse


Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Stacy R. Seldin of counsel), for appellants.
Louis C. Fiabane, New York, N.Y., for respondents.


DECISION & ORDER

In an action to recover damages for personal injuries, etc., the defendants appeal from an order of the Supreme Court, Kings County (Ambrosio, J.), dated May 7, 2007, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff Tomas Cabrera did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The Supreme Court properly denied the defendants' motion for summary judgment dismissing the complaint. In support of their motion, the defendants submitted evidence that the plaintiff Tomas Cabrera (hereinafter the injured plaintiff) had significant restrictions in motion of the lumbar and cervical regions of his spine (see Bentivegna v Stein, 42 AD3d 555, 556; see also McDowall v Abreu, 11 AD3d 590, 591; Meyer v Gallardo, 260 AD2d 556, 556-557). Accordingly, the defendants failed to establish, prima facie, that the injured 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). Under these circumstances, it is unnecessary to consider whether the papers submitted by the plaintiffs in opposition to the defendants' motion were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538).
PRUDENTI, P.J., SKELOS, MILLER, COVELLO and McCARTHY, JJ., concur.

Edwards v. Sultan Transp., Inc.,




Miller & Miller, Brooklyn, N.Y. (Andrew R. Miller of counsel), for appellants.
Galvano & Xanthakis, P.C., New York, N.Y. (Kyle S. Edmonds 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 (Hinds-Radix, J.), dated September 29, 2006, which granted the motion of the defendants Grecco Bros Towing and Auto, Inc., and Edillo Rodriguez, Jr., for summary judgment dismissing the complaint insofar as asserted against them 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 reversed, on the law, with costs, and the motion of the defendants Grecco Bros Towing and Auto, Inc., and Edillo Rodriguez, Jr., for summary judgment dismissing the complaint insofar as asserted against them is denied.

Contrary to the Supreme Court's determination, the defendants Grecco Bros Towing and Auto, Inc., and Edillo Rodriguez, Jr. (hereinafter the defendants), failed to establish, prima facie, 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). The affirmed medical report of Dr. Edward Weiland, the neurologist who examined the plaintiffs on behalf of the defendants, set forth range of motion findings concerning the plaintiffs' respective cervical and lumbar spines but failed to compare those findings to what is normal (see Page v Belmonte, 45 AD3d 825; Malave v Basikov, 45 AD3d 539; Fleury v Benitez, 44 AD3d 996; Nociforo v Penna, 42 AD3d 514). These omissions, on their own, prevented the defendants from meeting their prima facie burden.

Furthermore, the defendants did not adequately address the plaintiffs' claims, clearly set forth in their bill of particulars, that they sustained medically-determined injuries or impairments of a nonpermanent nature which prevented them from performing substantially all of the material acts which constituted their usual and customary daily activities for not less than 90 days during the 180 days immediately following the accident (see Alexandre v Dweck, 44 AD3d 597; Torres v Performance Auto. Group, Inc., 36 AD3d 894; Sayers v Hot, 23 AD3d 453). The plaintiff Bashia Edwards testified at her deposition that she was confined to her home for more than three months post-accident and during that time could not care for her grandfather. As to the plaintiff Kelvin Spooner, he testified that he was out of work for seven months post-accident. Dr. Weiland did not address this category of serious injury in his reports. Furthermore, the subject accident occurred on November 12, 1998, and the plaintiffs were not examined by Dr. Weiland until May and June of 2004.

Thus, since the defendants failed to meet their prima facie burden, it is unnecessary to consider whether the papers submitted by the plaintiffs in opposition were sufficient to raise a triable issue of fact (see Page v Belmonte, 45 AD3d 825; Alexandre v Dweck, 44 AD3d 597; Coscia v 938 Trading Corp., 283 AD2d 538).
MASTRO, J.P., SANTUCCI, DILLON and ANGIOLILLO, JJ., concur.

Malik v. Rahman



Baker, McEvoy, Morrissey & Moskovits, P.C. (Michael I. Josephs of counsel), for appellants.


DECISION & ORDER

In an action to recover damages for personal injuries, etc., the defendants appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Held, J.), dated June 19, 2007, as denied that branch of their motion which was for summary judgment dismissing the complaint insofar as asserted by the plaintiff Sajid Malik 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 insofar as appealed from, without costs or disbursements.

The defendants failed to make a prima facie showing that the plaintiff Sajid Malik 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).

Since the defendants failed to satisfy their prima facie burden, it is unnecessary to consider whether the plaintiffs' opposition papers were sufficient to raise a triable issue of fact (see Pomaquiza v Sibri,AD3d [2d Dept, Dec. 4, 2007]; Sayers v Hot, 23 AD3d 453; Coscia v 938 Trading Corp., 283 AD2d 538). RIVERA, J.P., RITTER, LIFSON and CARNI, JJ., concur.

Travelers Casualty and Surety Company v. Honeywell International Inc.



Kirkpatrick & Lockhart Preston Gates Ellis LLP, New York
(Michael J. Lynch of the Pennsylvania Bar, admitted pro hac
vice, of counsel), for appellant.
Simpson Thacher & Bartlett LLP, New York (Andrew T.
Frankel of counsel), for Travelers Casualty and Surety
Company, respondent.
Seward & Kissel LLP, New York (Dale C. Christensen, Jr. of
counsel), for Employers Insurance Company of Wausau and
National Casualty Company, respondents.
White and Williams LLP, New York (Gregory T. LoCasale of
counsel), for Republic Insurance Company, respondent.
Traub Lieberman Straus & Shrewsberry LLP, Hawthorne
(Copernicus T. Gaza of counsel), for Evanston Insurance
Company, respondent.
Wilson, Elser, Moskowitz, Edelman & Dicker LLP, New York
(Brett D. Goodman of counsel), for MidStates ReInsurance
Corporation, respondent.
Hogan & Hartson LLP, New York (Victoria Zaydman of
counsel), for Hartford Accident and Indemnity Company, First State
Insurance Company, New England Reinsurance Corporation and
Twin City Fire Insurance Company, respondents.

Order, Supreme Court, New York County (Walter B. Tolub, J.), entered September 12, 2006, which denied defendant Honeywell's motion to dismiss the action on grounds of forum non conveniens or to stay the action until resolution of an action pending in New Jersey, unanimously affirmed, with costs. Order, same court and Justice, entered December 11, 2006, which, to the extent appealed from, denied Honeywell's motion to dismiss or stay the cross claims of defendants Employers of Wausau, Evanston, First State, Hartford Accident & Indemnity, MidStates Reinsurance, National Casualty, New England Reinsurance, Republic and Twin City Fire (the insurer defendants) on similar grounds, unanimously affirmed, with costs.

The common-law doctrine of forum non conveniens, now codified in CPLR 327, permits a court to dismiss an action when, in the interest of substantial justice, it should be heard in another forum. "The burden rests upon the defendant challenging the forum to demonstrate relevant private or public interest factors which militate against accepting the litigation," among which are "the burden on the New York courts, the potential hardship to the defendant, and the unavailability of an alternative forum in which plaintiff may bring suit. . . . The court may also consider that both parties to the action are nonresidents [citation omitted] and that the transaction out of which the cause of action arose occurred primarily in a foreign jurisdiction," (Islamic Republic of Iran v Pahlavi, 62 NY2d 474, 479 [1984], cert denied 469 US 1108 [1985]), although a defendant's "heavy burden" remains despite the plaintiff's status as a nonresident (Bank Hapoalim [Switzerland] Ltd. v Banca Intesa S.p.A., 26 AD3d 286, 287 [2006]).

Honeywell failed to demonstrate, in support of its motion to dismiss for forum non conveniens, that the interests of substantial justice would be served by moving the action to New Jersey. To the contrary, the record indicates that there is a substantial nexus between this action and New York, as most of the insurance policies at issue were issued, negotiated and brokered here (see Continental Ins. Co. v Garlock Sealing Tech., LLC, 23 AD3d 287 [2005]), and the circumstances giving rise to the underlying actions largely occurred here (see Seneca Ins. Co. v Lincolnshire Mgt., 269 AD2d 274, 275 [2000]). Moreover, while the choice-of-law issues presented by this litigation have not yet been adjudicated, New York courts are capable of applying New Jersey law should that necessity arise (see Yoshida Print. Co. v Aiba, 213 AD2d 275 [1995]).

In view of this action's connection to New York, that branch of Honeywell's motion for dismissal on the ground that a similar action is pending in New Jersey was properly denied (see CPLR 3211[a][4]; San Ysidro Corp. v Robinow, 1 AD3d 185, 187 [2003]).

In re Pease


Appeal from an order of the Surrogate's Court, Ontario County (Frederick G. Reed, S.), entered October 3, 2006. The order denied the objections of Edward Pease and James Pease to petitioner's final accounting of decedent's estate.

CROUCHER, JONES AND JOHNS, CANANDAIGUA (WALTER W. JONES, JR., OF COUNSEL), FOR OBJECTANTS-APPELLANTS.
GAGE, GAGE & BLEAKLEY, GENEVA (S. SCOTT PORTER OF COUNSEL), FOR PETITIONER-RESPONDENT.

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

Opinion by Martoche, J.: Edward Pease and James Pease (collectively, objectants) appeal from an order of Surrogate's Court that settled petitioner's final accounting of decedent's estate. On March 31, 2000, decedent applied for a Group Variable Annuity Certificate from Hartford Life. On the annuity contract application, decedent designated "James Pease (as executor in the will of John Pease) 100%" as the only beneficiary. James is decedent's great-nephew and was the named executor of decedent's estate under the will that was in effect at the time decedent applied for the annuity. Subsequent to executing the annuity contract, decedent executed a new will, dated February 21, 2002
, which named petitioner, one of decedent's nephews, as executor of decedent's estate. Decedent's bequests in the February 2002 will included, inter alia, a specific bequest to Edward Pease, another nephew, of "[a]ll farm machinery that I own at the time of my death" and a specific bequest to petitioner of "[a]ll the contents of my home and all the contents of my shop."

Decedent died on October 2, 2004. On November 4, 2004, objectants, petitioner and a mutually agreed-upon appraiser, George Coryn, went to decedent's properties to appraise the farm machinery bequeathed to Edward. Coryn appraised only the items he was asked to appraise, and neither petitioner nor objectants raised any objections to the items that were appraised or alleged that other items should have been included in the appraisal. Edward filed a notice of claim against decedent's estate in May 2005, however, alleging that he did not receive all of the farm machinery to which he was entitled under decedent's February 2002 will. 

After probate of decedent's will, petitioner disputed that James, in his individual capacity, was the beneficiary of decedent's annuity. In April 2005, James's attorney sent a letter to Hartford Life asserting that James should be paid as the named beneficiary of the annuity and that the parenthetical designation following his name on the application was no more than mere clarification of identity. Hartford Life responded that, although James was the named beneficiary, he was designated only in his capacity as executor of decedent's estate and, "[t]herefore, when the Executor . . . was changed, the beneficiary designation changed as well." Upon receipt of the proceeds of the annuity, petitioner placed the funds in an interest-bearing account pending final determination of whether James or decedent's estate is the rightful owner of the funds.

Petitioner sought approval of the final accounting of decedent's estate in 2006, and objectants filed objections seeking, inter alia, a determination that James is the rightful owner of the annuity funds and that Edward did not receive his entire bequest under the February 2002 will. After a hearing, the Surrogate denied the objections. With respect to the annuity, the Surrogate determined that, pursuant to the language of the annuity contract, James was to receive the funds only in his role as executor of decedent's estate and, thus, the Surrogate held that the funds were intended to be part of decedent's estate. The Surrogate distinguished the decision of the Court of Appeals in McCarthy v Aetna Life Ins. Co. (92 NY2d 436) that a decedent may not change the designation of a beneficiary in a life insurance policy by means of a testamentary disposition when the policy sets forth another procedure for changing the beneficiary, because here the designated beneficiary of the annuity, decedent's estate, was never actually changed. With respect to the decedent's bequest of farm machinery to Edward, the Surrogate determined that Edward had received all of the items designated and appraised by the parties' mutually agreed-upon appraiser, and that the disputed items that were not appraised were not contemplated by the parties to be included in decedent's bequest to Edward. We conclude that the order should be affirmed.

The particular facts of this case appear to present a novel issue in New York. It is well settled that "the method prescribed by the insurance contract must be followed in order to effect a change of beneficiary" (id. at 440), and a relationship description included with a named beneficiary is generally regarded as merely descriptive (see Jacobelli v Regan, 131 AD2d 166, 169). The facts in this case, however, are distinguishable from McCarthy and its progeny. Here, the description of the relationship between James and decedent in the annuity contract was not merely that James was decedent's great-nephew. Rather, the annuity contract described James "as executor in the will of John Pease." We agree with the Surrogate that the designation of James "as executor" conferred upon him a fiduciary duty with respect to the annuity proceeds, rather than a personal interest in the annuity proceeds.

There are several federal and state cases supporting the Surrogate's conclusion (see generally Duggins v Fluor Daniel, Inc., 217 F3d 317, 319 [5th Cir]; Faircloth v Northwestern Natl. Life Ins. Co., 799 F Supp 815, 817 [SD Ohio]; Murino v Reynolds, 1987 WL 859627 [RI Super, Mar. 20, 1987, Pederzani, J.], affd 550 A2d 1058). Those cases appear to be in line with the relevant principles set forth in legal treatises (see e.g. 31 Am Jur 2d, Executors and Administrators § 482 ["[W]here a [life insurance] policy is payable to the insured or to his executors, administrators, assigns, or legal representatives,' without designation of other beneficiaries, it is deemed payable to the estate, and the proceeds constitute general assets of the estate."]; 46A CJS, Insurance § 1949 ["Ordinarily, the proceeds of a life insurance policy are payable to the executor or administrator of the insured as assets of the estate where by the terms of the policy the proceeds are payable to the insured or to the insured's estate, legal representatives, executors or administrators, or executors, administrators, or assigns."]; 4 Couch on Insurance 3d § 59:21 ["A policy which designates the executors and administrators' of the insured as beneficiary is payable to the executors under the will or the administrators of the estate of the insured. Such payment is made to the beneficiary in his or her fiduciary capacity so that a policy payable to a named person described as the [executor] of the will of the insured is received and held by the [executor] in that capacity, and [he or] she is not permitted to retain the proceeds for [his or] her individual benefit."]).

In Duggins, the decedent replaced his daughter as the beneficiary of his ERISA plan by crossing out her name and writing in " David D. Duggins' " (217 F3d at 319). Two lines below the line for the beneficiary's name was a line for the designation of the decedent's relationship to the beneficiary, and the decedent wrote "Attorney and Executor," although Duggins was not, in fact, the executor of decedent's estate at the time (id. at 319). The Fifth Circuit reversed the United States District Court for the Eastern District of Louisiana and concluded that Duggins was named as a beneficiary individually, rather than in his fiduciary capacity, and that the relationship designation was merely a truthful answer to the relationship query (see id.; see also Murino, 1987 WL 859627 [holding that the sole named beneficiary of an insurance policy took the proceeds in her individual capacity, although she was later designated administratrix of the decedent's estate]).

In Faircloth, the decedent designated his brother as the beneficiary of his life insurance policy, writing " Faircloth James H., Administrator' " on the group enrollment card (799 F Supp at 817). Decedent was not married at that time. He later married, and his wife was named the administratrix of his estate (see id.). The defendant's insurance company paid the proceeds of the policy to James Faircloth, although he was never named administrator of the decedent's estate (see id.). The United States District Court for the Southern District of Ohio determined that the administrator of the decedent's estate was the intended beneficiary, rather than James Faircloth (see id.). The court found particularly relevant the fact that James Faircloth was not designated solely by name, or as " my brother,' " and concluded that " Faircloth James H., Administrator' is more than a description [because] it indicates the legal status in which James H. Faircloth was to be the administrator" (id.).

We conclude that the result reached in Faircloth is the proper result in this case and that the decision of the Court of Appeals in McCarthy does not apply here because the beneficiary was not changed by decedent's February 2002 will. The plain language in the annuity contract establishes that the beneficiary was always the estate, by its executor, and not James individually. We further note that James was not identified as decedent's great-nephew on the annuity contract but, rather, he was identified as the executor of decedent's estate. We thus conclude that the Surrogate properly determined that the proceeds of the annuity contract belong to decedent's estate.

We also reject the contention of objectants that the Surrogate erred in denying their objection with respect to decedent's bequest of farm machinery to Edward. The Surrogate credited the testimony of the appraiser concerning the nature of each disputed item and accepted the appraiser's interpretation of whether the disputed items were farm machinery. Inasmuch as the Surrogate's determination is based upon a fair interpretation of the evidence, it should not be disturbed (see Matter of Alpert, 37 AD3d 187, 188, lv denied 9 NY3d 812, lv dismissed 9 NY3d 952). Further, with respect to any of the farm machinery that allegedly disappeared or was sold without Edward's knowledge, the evidence presented at the hearing establishes that petitioner acted diligently in his duty as executor in attempting to turn those items over to Edward (see generally Morris v Canadian Four State Holdings, 254 AD2d 705, 706).

Accordingly, we conclude that the order should be affirmed.

Martinez v. County of Monroe  

 

Appeal from a judgment of the Supreme Court, Monroe County (Harold L. Galloway, J.), dated July 27, 2006 in an action for, inter alia, a declaratory judgment. The judgment granted defendants' motion for summary judgment to the extent of granting judgment in favor of defendants declaring, inter alia, that plaintiff's marriage to Lisa Ann Golden in the Province of Ontario, Canada, is not entitled to recognition in New York State and denied plaintiff's cross motion for partial summary judgment.

JEFFREY WICKS, PLLC, ROCHESTER (JEFFREY WICKS OF COUNSEL), FOR PLAINTIFF-APPELLANT.
DANIEL M. DE LAUS, COUNTY ATTORNEY, ROCHESTER (MICHAEL E. DAVIS OF COUNSEL), FOR DEFENDANTS-RESPONDENTS.
ANDREW M. CUOMO, ATTORNEY GENERAL, ALBANY (SASHA SAMBERG-CHAMPION OF COUNSEL), AMICUS CURIAE IN SUPPORT OF PLAINTIFF-APPELLANT. It is hereby ORDERED that the judgment so appealed from is unanimously reversed on the law without costs, the motion is denied in its entirety, the cross motion is granted in part, and judgment is granted in favor of plaintiff as follows:

It is ADJUDGED and DECLARED that plaintiff's marriage to Lisa Ann Golden in the Province of Ontario, Canada is entitled to recognition in New York State.

Opinion by Peradotto, J.:

On July 5, 2004, plaintiff, an employee of defendant Monroe Community College (MCC), married her same-sex partner, Lisa Ann Golden, in the Province of Ontario, Canada. Defendants do not dispute that the marriage is valid under the laws of Canada and the Province of Ontario. On the basis of that marriage, plaintiff applied to MCC on July 7, 2004 for spousal health care benefits for Golden. MCC admittedly provided health care benefits for the opposite-sex spouses of its employees. On November 24, 2004, defendant MCC Director of Human Resources Sherry Ralston denied plaintiff's application for spousal health care benefits.

Plaintiff commenced this action seeking, inter alia, a declaration that defendants' failure to recognize her marriage for purposes of her spousal health care benefits application violated her rights under the Equal Protection Clause of the New York State Constitution and Executive Law § 296 and damages incurred as a result of those violations. Defendants moved for summary judgment dismissing the first amended complaint, and plaintiff cross-moved for partial summary judgment on the first amended complaint. Supreme Court granted defendants' motion to the extent of granting judgment in favor of defendants declaring that plaintiff's marriage is not entitled to recognition in New York and that defendants did not violate the Equal Protection Clause or Executive Law § 296 in refusing to recognize plaintiff's marriage for the purposes of plaintiff's application for spousal health care benefits. On appeal, plaintiff contends that her valid Canadian marriage is entitled to recognition in New York. We agree.

II

For well over a century, New York has recognized marriages solemnized outside of New York unless they fall into two categories of exception: (1) marriage, the recognition of which is prohibited by the "positive law" of New York and (2) marriages involving incest or polygamy, both of which fall within the prohibitions of "natural law" (Matter of May, 305 NY 486, 491; see Moore v Hegeman, 92 NY 521, 524; Thorp v Thorp, 90 NY 602, 605; see generally Van Voorhis v Brintnall, 86 NY 18, 24-26). Thus, if a marriage is valid in the place where it was entered, "it is to be recognized as such in the courts of this State, unless contrary to the prohibitions of natural law or the express prohibitions of a statute" (Moore, 92 NY at 524; see also Thorp, 90 NY at 606; Van Voorhis, 86 NY at 25-26). Under that "marriage-recognition" rule, New York has recognized a marriage between an uncle and his niece "by the half blood" (May, 305 NY at 488), common-law marriages valid under the laws of other states (see Matter of Mott v Duncan Petroleum Trans., 51 NY2d 289, 292-293), a marriage valid under the law of the Province of Ontario, Canada of a man and a woman both under the age of 18 (see Donohue v Donohue, 63 Misc 111, 112-113), and a "proxy marriage" valid in the District of Columbia (Fernandes v Fernandes, 275 App Div 777), all of which would have been invalid if solemnized in New York.

We conclude that plaintiff's marriage does not fall within either of the two exceptions to the marriage-recognition rule. "[A]bsent any New York statute expressing clearly the Legislature's intent to regulate within this State marriages of its domiciliaries solemnized abroad, there is no positive law in this jurisdiction" to prohibit recognition of a marriage that would have been invalid if solemnized in New York (May, 305 NY at 493 [internal quotation marks omitted]; see also Van Voorhis, 86 NY at 37). The Legislature has not enacted legislation to prohibit the recognition of same-sex marriages validly entered into outside of New York, and we thus conclude that the positive law exception to the general rule of foreign marriage recognition is not applicable in this case.

The natural law exception also is not applicable. That exception has generally been limited to marriages involving polygamy or incest or marriages "offensive to the public sense of morality to a degree regarded generally with abhorrence" (May, 305 NY at 493), and that cannot be said here.

Defendants nevertheless contend that recognition of plaintiff's same-sex marriage is contrary to the public policy of New York, as articulated by the Court of Appeals in Hernandez v Robles (7 NY3d 338), and thus falls within an exception to the rule requiring recognition of valid foreign marriages. We reject that contention. Hernandez does not articulate the public policy for which it is cited by defendants, but instead holds merely that the New York State Constitution does not compel recognition of same-sex marriages solemnized in New York (see id. at 356). The Court of Appeals noted that the Legislature may enact legislation recognizing same-sex marriages (see id. at 358-359) and, in our view, the Court of Appeals thereby indicated that the recognition of plaintiff's marriage is not against the public policy of New York. It is also worth noting that, unlike the overwhelming majority of states, New York has not chosen, pursuant to the federal Defense of Marriage Act (28 USC § 1738C), to enact legislation denying full faith and credit to same-sex marriages validly solemnized in another state.

Thus, we conclude that plaintiff's marriage to Golden, valid in the Province of Ontario, Canada, is entitled to recognition in New York in the absence of express legislation to the contrary. As the Court of Appeals indicated in Hernandez, the place for the expression of the public policy of New York is in the Legislature, not the courts (see 7 NY3d at 361, 366). The Legislature may decide to prohibit the recognition of same-sex marriages solemnized abroad. Until it does so, however, such marriages are entitled to recognition in New York.

III

Having concluded that plaintiff's marriage to Golden is entitled to recognition in New York, we further conclude that, by refusing to recognize plaintiff's valid Canadian marriage, defendants violated Executive Law § 296 (1) (a), which forbids an employer from discriminating against an employee "in compensation or in terms, conditions or privileges of employment" because of the employee's sexual orientation. Defendants' contention that the discrimination to which plaintiff was subject is based not on her sexual orientation but on her marital status is circular in its reasoning. The sole reason for defendants' rejection of the marital status of plaintiff is her sexual orientation, and defendants thus violated Executive Law § 296 (1) (a). In light of our decision, we need not, and do not, consider plaintiff's contention that defendants also violated the Equal Protection Clause of the New York State Constitution (see generally People v Harris, 98 NY2d 452, 496-497; People v Felix, 58 NY2d 156, 161, appeal dismissed 464 US 802).

IV

We reject defendants' further contention that plaintiff's appeal is moot. In our view, there is an issue of fact with respect to the monetary damages that plaintiff allegedly sustained during the years 2004 and 2005 as a result of defendants' denial of her spousal health care benefits application. Those damages are not diminished by the fact that, on January 1, 2006, Golden began receiving health care benefits pursuant to a new provision providing therefor in the contract under which plaintiff is employed by MCC. Plaintiff may be entitled to money damages for the period during which her application for spousal health care benefits was wrongfully denied, and the appeal is not moot inasmuch as "the rights of the parties will be directly affected by the determination of the appeal" (Matter of Hearst Corp. v Clyne, 50 NY2d 707, 714).

V

Finally, we reject the contention of defendants that their decision to deny plaintiff's application for spousal health care benefits is protected by governmental immunity. Even assuming, arguendo, that the doctrine applies to the facts of this case, we conclude that the denial of plaintiff's application was not a discretionary act but instead was an erroneous legal determination with respect to the ministerial action that was required. Defendants therefore are not protected by governmental immunity (see generally Haddock v City of New York, 75 NY2d 478, 484; Tango v Tulevech, 61 NY2d 34, 40-41).

VI

Accordingly, we conclude that the judgment should be reversed, defendants' motion for summary judgment denied in its entirety, plaintiff's cross motion for partial summary judgment granted in part, and judgment granted in favor of plaintiff declaring that plaintiff's marriage to Lisa Ann Golden in the Province of Ontario, Canada is entitled to recognition

State Farm Fire & Casualty Co. v Whistle Clean By Warren Services, Inc.



Callahan & Malone, Mineola, N.Y. (Anne V. Malone of counsel),
for appellant.
Feldman, Rudy, Kirby, & Farquharson, P.C., Westbury, N.Y.
(Brian R. Rudy of counsel), for
respondent.

DECISION & ORDER

In a subrogation action to recover damages for injury to property, the defendant appeals from an order of the Supreme Court, Nassau County (Parga, J.), dated April 3, 2007, which denied its motion for summary judgment dismissing the complaint.

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

The home of Eric Lerner and Linda Lerner was damaged by a basement flood. The Lerners contacted their property insurer, the plaintiff, State Farm Fire & Casualty Company (hereinafter State Farm), which offered to send one of its approved vendors to the Lerners' home to remove the water and debris. The Lerners opted instead to employ the defendant to remove standing water and ceiling tile debris from their basement. The defendant responded to the Lerner residence and removed all standing water and ceiling tile debris using a wet vacuum and mop. When the Lerners' home was inspected by a State Farm representative approximately one week later, it was determined that the basement was contaminated by mold and mildew growth, which caused the Lerners to expend additional sums for remediation. The Lerners filed an insurance claim with State Farm, which paid the claim and then sought to recover the amount of the claim from the defendant, alleging, inter alia, that the defendant failed to take certain measures, such as the use of dehumidification equipment and other drying materials, to prevent the growth of mold and mildew in the Lerners' basement.

The defendant established its entitlement to summary judgment by adducing sworn desposition testimony from its owner and an affidavit from Linda Lerner establishing that the Lerners hired the defendant for the sole purpose of removing the standing water and ceiling tile debris from their basement, and never contracted with the defendant for the performance of additional services required to prevent mold and mildew formation (see generally GTF Mktg. v Colonial Aluminum Sales, 66 NY2d 965, 967; Zuckerman v City of New York, 49 NY2d 557, 562).

In opposition to the defendant's prima facie showing, State Farm failed to raise a triable issue of fact. The sole evidence proffered by State Farm consisted of an affidavit from an expert industrial hygienist, who stated, among other things, that the defendant failed to utilize the proper equipment and materials, consistent with the industry standards for emergency flood services, to prevent the formation of mold in the Lerners' basement. However, the expert affidavit failed to raise a triable issue of fact because it did not demonstrate that the defendant was retained by the Lerners to prevent the development of mold in their home, or for any action other than the removal of standing water and tile debris. Moreover, the agreement between the Lerners and the defendant did not create a relationship for which the defendant owed a duty to the Lerners separate from its contractual obligation (see New York Univ. v Continental Ins. Co., 87 NY2d 308, 316-318; Logan v Empire Blue Cross & Blue Shield, 275 AD2d 187, 193). Accordingly, the defendant's motion for summary judgment should have been granted.
SANTUCCI, J.P., LIFSON, COVELLO and McCARTHY, JJ., concur.

Cendant Car Rental Group v. Liberty Mutual Insurance Company


Ahmuty, Demers & McManus, Albertson, N.Y. (Brendan T.
Fitzpatrick and William J. Mitchell of counsel), for appellants.
Carfora, Klar, Gallo, Vitucci, Pinter & Cogan LLP, New
York, N.Y. (Yolanda L. Ayala and
Matthew J. Vitucci of counsel), for
respondents.

DECISION & ORDER

In an action for a judgment declaring that the defendant Liberty Mutual Insurance Company is obligated to defend and indemnify the plaintiffs in an underlying action entitled Minguzzi v Trade Zone Truck Rental, pending in the Supreme Court, Queens County, under Index No. 13799/04, the defendants Liberty Mutual Insurance Company and Graebel Companies, Inc., d/b/a Graebel Movers, Inc., appeal from an order of the Supreme Court, Westchester County (Donovan, J.), entered September 11, 2006, which granted the plaintiffs' motion for summary judgment declaring that the defendant Graebel Companies, Inc., d/b/a Graebel Movers, Inc., through its insurer, the defendant Liberty Mutual Insurance Company, is obligated to defend and indemnify them in the underlying action.

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

The defendant David Padilla, an employee of the plaintiff Graebel Companies, Inc., d/b/a Graebel Movers, Inc. (hereinafter Graebel), was driving a truck rented from the plaintiff Budget Rent A Car Systems, Inc. (hereinafter Budget), when it was involved in an accident with another vehicle. A passenger in the other vehicle commenced a personal injury action against, among others, the plaintiff Trade Zone Truck Rental (hereinafter Trade Zone), Budget's dispatching dealer. The plaintiff Cendant Car Rental Group (hereinafter Cendant) is the parent company of both Budget and Trade Zone.

Cendant, Budget, and Trade Zone commenced this action for a judgment declaring that the defendant Liberty Mutual Insurance Company (hereinafter Liberty Mutual), Graebel's insurer, is obligated to defend and indemnify them in the underlying action. The Supreme Court granted the plaintiffs' motion for summary judgment. We reverse.

The plaintiffs failed to establish their prima facie entitlement to summary judgment declaring that Liberty Mutual is required to defend and indemnify them in the underlying personal injury action (see generally Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853; Zuckerman v City of New York, 49 NY2d 557, 562). Although the plaintiffs claimed that pursuant to the rental agreement, Liberty Mutual, as Graebel's insurer, was the primary insurer above the statutorily-mandated coverage (see ELRAC, Inc. v Ward, 96 NY2d 58), in support of their motion, they failed to submit a signed copy of the rental agreement or a copy of the policy of insurance issued by Liberty Mutual to Graebel (hereinafter the Liberty Mutual policy) (see Zurich Am. Ins. Co. v Argonaut Ins. Co., 204 AD2d 314, 315). Moreover, the certificate of insurance proffered in support of their motion, which expressly stated that "it is issued as a matter of information only and confers no rights upon the certificate holder," was insufficient to support their contention that they were additional insureds under the Liberty Mutual policy (see Trapani v 10 Arial Way Assoc., 301 AD2d 644, 647; Penske Truck Leasing Co. v Home Ins. Co., 251 AD2d 478, 479; American Ref-Fuel Co. of Hempstead v Resource Recycling, 248 AD2d 420, 423). Since the plaintiffs failed to meet their burden, the sufficiency of the opposing papers need not be considered (see generally Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853). Consequently, the Supreme Court should have denied the plaintiffs' motion for summary judgment.

In light of the foregoing, the appellants' remaining contention need not be reached.


D’Angelo v. State Insurance Fund

 

Pellegrini & Associates, LLC, New York, N.Y. (Frank L. Pellegrini
and Juan C. Restrepo-Rodriguez of counsel), for respondents.


DECISION & ORDER

In an action, inter alia, for a judgment declaring that the plaintiff Santo D'Angelo is entitled to benefits under a policy of workers' compensation insurance issued to the plaintiff S & V Foods, Inc., the defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Queens County (Dorsa, J.), entered March 20, 2007, as denied that branch of its motion which was to dismiss the complaint pursuant to CPLR 3211(a), and granted the plaintiffs' cross motion for leave to amend the complaint pursuant to CPLR 3025(b) to add a cause of action to recover damages for breach of contract.

ORDERED that the order is reversed insofar as appealed from, on the law, without costs or disbursements, that branch of the motion which was to dismiss the complaint is granted, and the cross motion for leave to amend the complaint is denied.

In this action, the plaintiffs seek to relitigate an issue already determined against the plaintiff Santo D'Angelo in proceedings before the Workers' Compensation Board (hereinafter the Board). Specifically, they seek to relitigate the validity of the exclusion of D'Angelo, the president of the plaintiff S & V Foods, Inc. (hereinafter S & V), from the coverage provided by a policy of workers' compensation insurance (hereinafter the policy) issued to S & V by the defendant. As the defendant correctly contends, this action is barred by the doctrine of collateral estoppel.

In order to invoke the doctrine of collateral estoppel, a party must establish that the issue on which preclusion is sought is identical to a material issue necessarily decided in the prior proceeding, and that the party against whom the doctrine is asserted had a full and fair opportunity to contest this issue in the prior proceeding (see Jeffreys v Griffin, 1 NY3d 34, 39; Parker v Blauvelt Volunteer Fire Co., 93 NY2d 343, 349; Altegra Credit Co. v Tin Chu, 29 AD3d 718, 719). The burden of proving that the issue sought to be litigated in the second proceeding was identical to a material issue necessarily decided in the prior proceeding is on the party asserting the doctrine, here, the defendant. The burden of establishing the absence of a full and fair opportunity to contest the issue is on the party seeking to avoid preclusion, here, the plaintiffs (see Jeffreys v Griffin, 1 NY3d at 39; Parker v Blauvelt Volunteer Fire Co., 93 NY2d at 349; see generally Siegel, NY Prac, § 462, at 777 [4th ed]). While the defendant met its burden, the plaintiffs failed to meet theirs.

The essence of this action is D'Angelo's contention that the defendant's exclusion of him from coverage under the policy was not valid, and thus erroneous. However, in deciding whether or not D'Angelo was entitled to benefits under the policy for an accident that occurred on August 26, 2003, the Board was specifically presented with that argument, i.e., that his exclusion from the policy was invalid and erroneous. The Board's determination that D'Angelo was not entitled to benefits under the policy because he was excluded from coverage necessarily determined the essential issue of this action—the validity of his exclusion—against him. Since the plaintiffs failed to meet their burden of establishing that they did not have a full and fair opportunity to contest that issue (see Allied Chem. v Niagara Mohawk Power Corp., 72 NY2d 271, 276, cert denied 488 US 1005; Schwartz v Public Adm'r of County of Bronx, 24 NY2d 65, 72; Altegra Credit Co. v Tin Chu, 29 AD3d at 719; McRae v Sears, Roebuck & Co., 2 AD3d 419, 419-420; Rigopolous v American Museum of Natural History, 297 AD2d 728, 729), the Supreme Court erred in denying that branch of the defendant's motion which was to dismiss the complaint pursuant to CPLR 3211(a)(5).

The Supreme Court further erred in granting the plaintiffs' cross motion for leave to amend the complaint to add a cause of action to recover damages for breach of contract. Leave to amend a pleading " should be freely granted unless the amendment sought is palpably improper or insufficient as a matter of law, or unless prejudice and surprise directly result from the delay in seeking the amendment'" (Yemini v Goldberg,AD3d, 2007 NY Slip Op 10144 at * 1 [2d Dept, Dec. 18, 2007], quoting Maloney Carpentry, Inc. v Budnik, 37 AD3d 558, 558; see Alatorre v Hee Ju Chun, 44 AD3d 596). Here, however, the amendment sought was "palpably improper" because the Supreme Court lacks subject matter jurisdiction over a cause of action to recover damages for breach of contract against the defendant. A claim for money damages against the State must be litigated in the Court of Claims (see Court of Claims Act § 9[2]). The State Insurance Fund is a state agency, and, consequently, claims against it for money damages must be litigated in the Court of Claims, rather than in the Supreme Court (see Sukup v State of New York, 19 NY2d 519, 520; Commissioners of State Ins. Fund v Photocircuits Corp., 20 AD3d 173, 176; Commissioners of State Ins. Fund v Trio Asbestos Removal Corp., 9 AD3d 343, 345; Commissioners of State Ins. Fund v J.D.G.S. Corp., 253 AD2d 368, 369; Commissioners of State Ins. Fund v Mathews & Sons Co., 131 AD2d 301, 301-302). Although the defendant did not raise this issue in the Supreme Court, a court's lack of subject matter jurisdiction may not be waived and may, in fact, be raised at any time (see Matter of Fry v Village of Tarrytown, 89 NY2d 714, 718; Morrison v Budget Rent A Car Sys., 230 AD2d 253, 257-260; see generally Siegel, NY Prac, § 8, at 11; § 260, at 441 [4th ed]). Consequently, the cross motion for leave to amend the complaint should have been denied.

Empire Fire and Marine Insurance Company v. Eveready Insurance Company


Shapiro, Beilly, Rosenberg, Aronowitz, Levy & Fox, LLP
(Sweetbaum & Sweetbaum, Lake Success, N.Y. [Marshall D. Sweetbaum]
of counsel), for appellant.
Faust Goetz Schenker & Blee, LLP, New York, N.Y. (Lisa L.
Gokhulsingh of counsel), for
respondent.

DECISION & ORDER

In an action for a judgment declaring the priority of insurance coverage in certain underlying personal injury actions, the defendant appeals from an order of the Supreme Court, Kings County (Knipel, J.), dated June 18, 2007, which denied its motion for summary judgment.

ORDERED that the order is reversed, on the law, with costs, the defendant's motion for summary judgment is granted, and the matter is remitted to the Supreme Court, Kings County, for the entry of judgment declaring that the defendant is not obligated to provide any coverage in the subject underlying personal injury actions.

" [C]ourts bear the responsibility of determining the rights or obligations of parties under insurance contracts based on the specific language of the policies'" (Sanabria v American Home Assur. Co., 68 NY2d 866, 868, quoting State of New York v Home Indem. Co., 66 NY2d 669, 671). Unambiguous policy provisions must be given "their plain and ordinary meaning" (Government Empls. Ins. Co. v Kligler, 42 NY2d 863, 864; see Maroney v New York Cent. Mut. Fire Ins. Co., 5 NY3d 467, 471-472; United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229, 232). While any ambiguity must be construed against the insurer as the drafter of the policy (see Guardian Life Ins. Co. of Am. v Schaefer, 70 NY2d 888, 890; Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390, 398; Matter of Eveready Ins. Co. v Farrell, 304 AD2d 830, 831; Matter of Eveready Ins. [*2]Co. v Ruiz, 208 AD2d 923), the plain meaning of the policy's language may not be disregarded in order to find an ambiguity where none exists (see Bassuk Bros. v Utica First Ins. Co., 1 AD3d 470, 471; Garson Mgt. Co. v Travelers Indem. Co. of Ill., 300 AD2d 538, 539; Sampson v Johnston, 272 AD2d 956).

Here, the Supreme Court erred in denying the defendant's motion for summary judgment. The policy issued by the defendant covers damages for which an "insured" becomes liable as a result of an automobile accident. Although "any person using your covered auto'" is an "insured" within the meaning of the policy, the automobile at issue here was not "[the policyholder's] covered auto" since it was not owned by the policy holder and was not a "temporary substitute" auto within the meaning of the policy. Coverage for an automobile that does not qualify as a "covered auto" is provided only for the acts and omissions of the policy holder or a family member. It is undisputed that the driver of the subject vehicle was neither, and since the defendant's covered insured, who was the policy holder, was not a defendant in the underlying personal injury actions, there is no basis for the plaintiff to contend that the liability arises from any act or omission on the policy holder's part.

Thus, the defendant met its initial burden of establishing its entitlement to judgment as a matter of law by demonstrating that the plain meaning of the exclusion relieved the defendant of liability in a case such as this, where a noninsured motorist was driving a vehicle that was not a "covered auto" within the terms of the policy. In opposition, the plaintiff failed to raise a triable issue of fact (see Zuckerman v City of New York, 49 NY2d 557, 562). Accordingly, the defendant's motion for summary judgment should have been granted.

Since this is a declaratory judgment action, the matter must be remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that the defendant is not obligated to provide any coverage in the subject underlying personal injury actions (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

Fontanelli v. Hanover Insurance Company


Vincent P. Crisci, New York, N.Y. (Eleanor R. Goldman of
counsel), for appellants-respondents.
Andrew S. Targum, P.C., New York, N.Y. (Louis A. Badolato
and Brian J. Isaac of counsel), for
respondent-appellant.


DECISION & ORDER

In an action, inter alia, to recover damages for breach of an insurance contract, the defendants appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Bunyan, J.), dated September 27, 2006, as denied that branch of their cross motion which was for summary judgment dismissing the complaint, and the plaintiff cross-appeals from so much of the same order as denied her motion for summary judgment on the issue of liability.

ORDERED that the order is modified, on the law, by deleting the provision thereof denying that branch of the defendants' cross motion which was for summary judgment dismissing the complaint insofar as asserted against the defendants Massachusetts Bay Insurance Company and Allmerica Financial Alliance Insurance Company, and substituting therefor a provision granting that branch of the cross motion; as so modified, the order is affirmed insofar as appealed and cross-appealed from, without costs or disbursements.

The record shows that the defendant Hanover Insurance Company (hereinafter Hanover), and not the defendants Massachusetts Bay Insurance Company (hereinafter Massachusetts Bay) and Allmerica Financial Alliance Insurance Company (hereinafter Allmerica Financial Alliance), issued the subject homeowner's insurance policy. Thus, the Supreme Court should have awarded Massachusetts Bay and Allmerica Financial Alliance summary judgment dismissing the complaint insofar as asserted against them (cf. Binyan Shel Chessed, Inc. v Goldberger Ins. Brokerage, Inc., 18 AD3d 590, 592).

The Supreme Court correctly declined to award Hanover summary judgment dismissing the complaint insofar as asserted against it. On the cross motion, Hanover demonstrated its entitlement to judgment as a matter of law (see Alvarez v Prospect Hosp., 68 NY2d 320, 324), by establishing, prima facie, that the plaintiff's loss was not covered by the insurance policy. In this regard, Hanover provided evidence establishing that the loss resulted from a condition caused by the poor design and construction of the house, and not a "collapse" (cf. Catucci v Greenwich Ins. Co., 37 AD3d 513, 515). In opposition, however, the plaintiff raised a triable issue of fact as to whether the loss was covered under the policy (see Alvarez v Prospect Hosp., 68 NY2d at 324), by providing evidence establishing that there had indeed been a "collapse," and that the collapse had been caused by a "hidden" condition.

The Supreme Court also correctly declined to award the plaintiff summary judgment against Hanover on the issue of liability. In opposition to the plaintiff's prima facie showing that the loss was covered under the insurance policy, Hanover raised a triable issue of fact (id.).

J.C. Contracting of Woodside Corp. v. Insurance Corporation of New York



Marshall Conway Wright & Bradley, P.C., New York, N.Y.
(Norman J. Golub and Stacey H. Snyder of counsel), for respondent.


DECISION & ORDER

In an action, inter alia, for a judgment declaring that the defendant, Insurance Corporation of New York, is obligated to defend and indemnify the plaintiff in an underlying personal injury action entitled Roche v J.C. Contracting of Woodside Corp., pending in the Supreme Court, Kings County, under Index No. 42787/03, the plaintiff appeals from an order of the Supreme Court, Kings County (Schneier, J.), dated October 20, 2006, which denied its motion for summary judgment on the complaint and granted the defendant's cross motion for summary judgment.

ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that the defendant, Insurance Corporation of New York, is not obligated to defend and indemnify the plaintiff in the underlying personal injury action entitled Roche v J.C. Contracting of Woodside Corp., pending in the Supreme Court, Kings County, under Index No. 42787/03.

The defendant, Insurance Corporation of New York, established its prima facie entitlement to judgment as a matter of law by showing that it did not receive timely notice of the subject occurrence and promptly disclaimed coverage on that ground (see Natural Stone Indus., Inc. v Utica Natl. Assur. Co., 38 AD3d 862). In opposition, the plaintiff failed to raise a triable issue of fact. Contrary to the plaintiff's contention, its notice of claim—which was made approximately five months after the plaintiff was served with the summons and complaint in the underlying action and while a motion for entry of a default judgment in the underlying action was pending—was untimely as a matter of law (see Modern Cont. Constr. Co. Inc. v Giarola, 27 AD3d 431; Pile Found. Constr. Co. v Investors Ins. Co. of Am., 2 AD3d 611). Moreover, the plaintiff failed to offer any reasonable excuse for the delay (see Great Canal Realty Corp. v Seneca Ins. Co. Inc., 5 NY3d 742; Travelers Ins. Co. v Volmar Constr. Co., 300 AD2d 40).

Accordingly, the Supreme Court properly granted the defendant's cross motion and denied the plaintiff's motion. Since this is a declaratory judgment action, we remit the matter to the Supreme Court, Kings County, for the entry of a judgment declaring that the defendant is not obligated to defend and indemnify the plaintiff in the underlying personal injury action (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

Junius Development, Inc. v. New York Marine and General Insurance Co.


Daniel S. Perlman, New York, N.Y., for plaintiff-appellant and
third-party defendant-appellant.
McMahon, Martine & Gallagher, LLP, New York, N.Y. (Patrick
W. Brophy and Timothy Gallagher of
counsel), for defendant third-party
plaintiff-respondent.

DECISION & ORDER

In an action to recover damages for breach of an insurance contract and a third-party subrogation action, the plaintiff and the third-party defendant appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (F. Rivera, J.), dated July 17, 2007, as granted the motion of the defendant third-party plaintiff for summary judgment dismissing the complaint and denied that branch of their cross motion which was for summary judgment on the issue of liability.

ORDERED that the appeal by the third-party defendant from so much of the order as granted the motion of the defendant third-party plaintiff for summary judgment dismissing the complaint is dismissed, as it is not aggrieved by that portion of the order; and it is further,

ORDERED that the order is modified, on the law, by deleting the provision thereof granting the motion of the defendant third-party plaintiff for summary judgment dismissing the complaint and substituting therefor a provision denying that motion; as so modified, the order is affirmed insofar as appealed from; and it is further,

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

The plaintiff, Junius Development Co., Inc. (hereinafter Junius), allegedly sustained water damage to its insured building after a subcontractor emptied the contents of a rooftop water tank into a drainpipe. It is undisputed that a trap inside the pipe was clogged with construction debris. Thus, when the rooftop tank was emptied, the pressure created by the column of water above the obstruction caused the drainpipe to fail inside the premises, releasing quantities of water into the mezzanine, basement, and/or sub-basement areas of the building.

Junius submitted the claim to its carrier, the defendant New York Marine and General Insurance Co. (hereinafter NYMAGIC). After NYMAGIC denied coverage, Junius commenced this action, and NYMAGIC commenced a third-party subrogation action, against Junius' plumbing subcontractor, the third-party defendant M. Rondon Construction Corp., a/k/a M. Rondon Plumbing and Heating (hereinafter Rondon). NYMAGIC moved for summary judgment dismissing the complaint, and Junius and Rondon cross-moved, inter alia, for summary judgment on the issue of liability. Regarding NYMAGIC's motion for summary judgment dismissing the complaint, we note that the insurer relies primarily on a policy provision specifically excluding any "loss or damage caused directly or indirectly by . . . [w]ater that backs up or overflows from a . . . drain."

In order for a policy exclusion to be enforced, the language must be clear and unmistakable, and the carrier must establish that the exclusion applies in the particular case and is subject to no other reasonable interpretation (see Seabord Sur. Co. v Gillette Co., 64 NY2d 304, 311; Essex Ins. Inc. v Pingley, 41 AD3d 774, 776). On this record, NYMAGIC has failed, prima facie, to satisfy that burden (see Ayotte v Gervasio, 81 NY2d 1062). Indeed, to the ordinary business person, the loss in this case was most immediately and visibly occasioned by the separation of the drain pipe (cf. Album Realty Corp. v American Home Assurance Co., 80 NY2d 1008, 1010-1011), which resulted in water from the rooftop tank flowing directly into the basement area of the building. Under these circumstances, the above exclusion has no application (see World Fire & Marine Ins. Co. v Carolina Mills Dist. Co., 169 F2d 826 [8th Cir]; Thompson v Genis Building Corp., 182 Ind App 200). Therefore, the Supreme Court erred in granting NYMAGIC's motion for summary judgment dismissing the complaint.

Nevertheless, Junius was not entitled to summary judgment on the issue of liability, as the record presents unresolved triable issues of fact regarding the applicability of another policy exclusion relied upon by NYMAGIC.

In the Matter of Clarendon National Insurance Company v. Nunez


Hiscock & Barclay, LLP, Rochester, N.Y. (Joseph A. Wilson and
Mark T. Whitford of counsel), for appellant.
Allen D. Springer, PLLC, Brooklyn, N.Y., for respondents.


DECISION & ORDER

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a claim for underinsured motorist benefits, the petitioner appeals from an order of the Supreme Court, Kings County (Harkavy, J.), dated March 16, 2007, which denied the petition.

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

On or about June 21, 2001, the respondents were involved in an automobile accident with a motor vehicle insured by nonparty Progressive Northwestern Insurance Company (hereinafter the tortfeasor's insurer). The respondents' vehicle was insured under a policy of insurance issued by the petitioner, Clarendon National Insurance Company, to the respondent Francisco Nunez, Sr. (hereinafter the petitioner's policy). The other respondents, Francisco's wife and infant children, also were insureds under the petitioner's policy.

The tortfeasor's insurer paid out the sums of $5,000 to the respondent Stephanie Nunez, $15,000 to the respondent Francisco Nunez, Jr., $15,000 to the respondent Rafael Nunez, and $15,000 to the respondent Francisco Nunez, Sr., totaling the sum of $50,000, representing the limit for bodily injury liability coverage under the tortfeasor's policy. Subsequently, the respondents made a demand for arbitration of their claims under the endorsement for supplementary uninsured/underinsured motorist benefits (hereinafter the SUM benefits or the SUM endorsement) of the petitioner's policy in the total sum of $100,000, with $25,000 for each respondent. The petitioner's policy, however, was underwritten with SUM benefits equal to $25,000 per person and $50,000 per accident. The petitioner's policy limits for bodily injury liability were in those same amounts.

Since the tortfeasor's policy limits for bodily injury liability were identical to the petitioner's policy limits for bodily injury liability, the tortfeasor's vehicle was not underinsured (see Insurance Law § 3420[f][2][A]; Matter of Prudential Prop. & Cas. Co. v Szeli, 83 NY2d 681, 685; Matter of Allstate Ins. Co. v DeMorato, 262 AD2d 557; Matter of Automobile Ins. Co. of Hartford Conn. v Stillway, 165 AD2d 572, 575). Contrary to the respondents' contention, 11 NYCRR 60-2.3(f)(c)(3)(ii) does not render the tortfeasor's vehicle "underinsured" for purposes of triggering the SUM endorsement because of the payments the tortfeasor's insurer already made to them (see Matter of Government Empls. Ins. Co. v Young, 39 AD3d 751, 753).

11 NYCRR 60-2.3(f)(c) defines an "uninsured motor vehicle" as one that "through its ownership, maintenance or use, results in bodily injury to an insured, and for which . . . (3) there is a bodily injury liability insurance coverage or bond applicable to such motor vehicle at the time of the accident, but . . . (ii) the amount of such insurance coverage or bond has been reduced, by payments to other persons injured in the accident, to an amount less than the third-party bodily injury liability limit of this policy [emphasis added]." When determining whether a tortfeasor's vehicle is underinsured for purposes of triggering SUM coverage, 11 NYCRR 60-2.3(f)(c)(3)(ii) does not require an insurer, in comparing the third-party bodily injury liability limits of the policy it issued to its insureds (hereinafter the claimants) with those of the tortfeasor's policy, to reduce the tortfeasor's policy limits by payments the tortfeasor made to the claimants. 11 NYCRR 60-2.3(f)(c)(3)(ii) requires such reduction for payments made "to other persons" (see State Farm Mut. Auto. Ins. Co. v Sparacio, 297 AD2d 284, 285; Matter of New York Cent. Mut. Fire Ins. Co. v White, 262 AD2d 415, 417).

Moreover, the petitioner is entitled to offset the $50,000 received by the respondents from the tortfeasor's insurer against the SUM limits of its policy, thereby precluding any recovery under the SUM endorsement (see 11 NYCRR 60-2.1[c]).

In the Matter of Dairyland Insurance Company v. Figueroa


Hammill, O'Brien, Croutier, Dempsey & Pender, P.C., Syosset,
N.Y. (Anton Piotroski of counsel), for appellant.
Bader Yakaitis & Nonnenmacher, LLP, New York, N.Y.
(Darlene S. Miloski of counsel), for
respondent.


DECISION & ORDER

In a proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of an uninsured motorist claim, the petitioner Dairyland Insurance Company appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Jacobson, J.), dated September 13, 2006, as denied that branch of its petition which was for a permanent stay of arbitration.

ORDERED that the order is affirmed insofar as appealed from, with costs.

The appellant Dairyland Insurance Company (hereinafter Dairyland) commenced this proceeding, inter alia, to permanently stay arbitration of a claim for uninsured motorist benefits by its insured, the respondent Luis Figueroa. The Supreme Court denied such relief pursuant to CPLR 7503(c). We affirm, albeit for different reasons than those stated by the Supreme Court.

Dairyland did not apply for a permanent stay of arbitration within the 20-day time limitation of CPLR 7503(c) (see Matter of Steck [State Farm Ins. Co.], 89 NY2d 1082; Matter of Matarasso [Continental Cas. Co.], 56 NY2d 264; Matter of Lejbik v Allstate Indem. Co., 40 AD3d 644). However, since the basis for the permanent stay was that the parties had never agreed to arbitrate, an exception to this time limitation, the Supreme Court erred in concluding that the petition was untimely pursuant to CPLR 7503(c) (see Matter of Steck [State Farm Ins. Co.], 89 NY2d 1082; Matter of Matarasso [Continental Cas. Co.], 56 NY2d 264; Matter of Lejbik v Allstate Indem. Co., 240 AD3d 644). However, a permanent stay of arbitration was nonetheless properly denied. Under New York law, Dairyland is obligated to provide Figueroa with uninsured motorist benefits (see Insurance Law § 5107; Matter of Allstate Ins. Co v Lopez, 266 AD2d 209; Matter of Midwest Mut. Ins. Co. v Pisani, 250 AD2d 512).

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

Antin, Ehrlich & Epstein, P.C., New York, N.Y. (Jeffrey S. Antin
and Joseph Ehrlich of counsel), for appellant.
Hiscock & Barclay, LLP, Albany, N.Y. (William C. Foster of
counsel), for respondent.

DECISION & ORDER

In a proceeding pursuant to CPLR article 75 to stay arbitration of an underinsured motorist claim, the appeal is from an order of the Supreme Court, Dutchess County (Sproat, J.), dated November 22, 2006, which granted the petition.

ORDERED that the order is affirmed, with costs.

The appellant violated the terms of his insurance policy by failing to provide his notice of claim for underinsurance benefits "as soon as practicable" (Rekemeyer v State Farm Mut. Auto. Ins. Co., 4 NY3d 468, 474; see Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d 487, 495; Matter of Continental Ins. Co. v Marshall, 12 AD3d 508; Interboro Mut. Indem. Ins. Co. v Brown, 300 AD2d 660; Nationwide Mut. Ins. Co. v DiGregorio, 294 AD2d 579).

Accordingly, the Supreme Court properly granted the petition and permanently stayed arbitration.

Sirius America Insurance Company v. Vigo Construction Corp.


Sullivan Papain Block McGrath & Cannavo, P.C., New York, N.Y.
(Brian J. Shoot of counsel), for appellant-respondent.
Brody, O'Connor & O'Connor, Northport, N.Y. (Scott A. Brody
and Patricia A. O'Connor of counsel),
for plaintiffs-respondents-appellants.
Dollinger, Gonski & Grossman, Carle Place, N.Y. (Matthew
Dollinger, Leslie A. Foodim, and
Michael J. Spithogiannis of counsel),
for defendant-respondent-appellant.

DECISION & ORDER

In an action for a judgment declaring that the plaintiff Sirius America Insurance Company is not obligated to defend and indemnify the defendant Vigo Construction Corp. in an underlying action entitled Gonzalez v Vigo Construction Corp., pending in the Supreme Court, Queens County, under Index No. 04/10349, the defendant Martin C. Gonzalez appeals, as limited by his brief, from so much of an order of the Supreme Court, Queens County (Dorsa, J.), dated June 27, 2006, as denied his cross motion for summary judgment, the plaintiffs cross-appeal from so much of the same order as denied their motion for summary judgment declaring that the plaintiff Sirius America Insurance Company is not obligated to defend and indemnify the defendant Vigo Construction Corp. in the underlying action, and the defendant Vigo Construction Corp. cross-appeals from the same order.

ORDERED that the cross appeal of the defendant Vigo Construction Corp., is dismissed, as that defendant is not aggrieved by the order (see CPLR 5511); and it is further,

ORDERED that the order is reversed insofar as appealed from, on the law, and the cross motion of the defendant Martin C. Gonzalez for summary judgment is granted; and it is further,

ORDERED that the order is affirmed insofar as cross-appealed from by the plaintiffs; and it is further,

ORDERED that one bill of costs is awarded to the defendant Martin C. Gonzalez payable by the respondents-appellants appearing separately and filing separate briefs; and it is further,

ORDERED that the matter is remitted to the Supreme Court, Queens County for the entry of a judgment declaring that the plaintiff Sirius America Insurance Company is obligated to defend and indemnify the defendant Vigo Construction Corp., in an underlying action entitled Gonzalez v Vigo Construction Corp., pending in the Supreme Court, Queens County, under Index No. 04/10349.

Preliminarily, we note that the cross appeal of the defendant Vigo Construction Corp. (hereinafter Vigo), must be dismissed, because only an "aggrieved party" has standing to appeal (CPLR 5511). Vigo did not seek any relief in the Supreme Court, and the plaintiffs' motion for summary judgment, which Vigo opposed, was denied (see Anspach v Miller Bluff's Constr. Corp., 280 AD2d 564). Additionally, merely because the order appealed from contains language or reasoning that a party deems adverse to its interests does not furnish "a basis for standing to take an appeal" (Castaldi v 39 Windfield Assoc., LLC, 22 AD3d 780; quoting Pennsylvania Gen. Ins. Co. v Austin Powder Co., 68 NY2d 465, 472-473).

Insurance Law § 3420(d) requires an insurer to provide a written disclaimer "as soon as is reasonably possible." The reasonableness of any delay in providing such written disclaimer is measured from the time when the insurer "has sufficient knowledge of facts entitling it to disclaim, or knows that it will disclaim coverage" (First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 66). The insurer bears the burden of justifying any delay (id. at 69). In the instant case, Sirius relied upon a disclaimer dated November 3, 2004, and sent 34 days after it knew or should have known of the basis for denying coverage. Since there was no explanation for that delay, the 34-day delay in disclaiming coverage was unreasonable as a matter of law and thus ineffective (see Matter of Allstate Ins. Co. v Swinton, 27 AD3d 462; Pawley Interior Contr., Inc. v Harleysville Ins. Cos., 11 AD3d 595; Moore v Ewing, 9 AD3d 484; cf. Farmbrew Realty Corp. v Tower Ins. Co. of N.Y., 289 AD2d 284; Brooklyn Hosp. Ctr v Centennial Ins. Co., 258 AD2d 491). Under these circumstances, the defendant Martin C. Gonzalez was entitled to judgment as a matter of law on the issue of whether Sirius was required to defend and indemnify Vigo in an underlying action entitled Gonzalez v Vigo Construction Corp., pending in the Supreme Court, Queens County, under Index No. 04/10349. Since this is a declaratory judgment action, the matter must be remitted to the Supreme Court, Queens County for the entry of a judgment declaring that Sirius is obligated to defend and indemnify Vigo Construction Corp. in that action (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied, 371 US 901).

Newsletter Sign-up

Fill in the form to register to receive any of our free electronic newsletters: