Coverage Pointers - Volume IX, No. 23

Dear Coverage Pointers Subscribers:

 

Our latest issue of Coverage Pointers is attached.

 

PROGRAM REMINDER:

 

FDCC Litigation Management College and Graduate Program
June 15-19, 2008
Emory University, Atlanta, GA

The Federation of Defense & Corporate Counsel Litigation Management College and Graduate Program will be held at Emory University from June 15-19, 2008.  The College and the Graduate Program have sold out each year.  For more information about this stellar program, visit the FDCC website:  www.thefederation.org.

NEWS OF THE DAY

 

I feel like the newsboy hollering about Dewey beating Truman.

 

Extra! Extra! Read all about it!

 

Bi-Economy serves precedent for bad faith claims!  Governor circulates new Late Notice - Prejudice Bill!

 

So much going out in Coverage Land, I'm not sure where to start. 

 

 

BI-ECONOMY STRIKES FIRST BLOW ON BAD FAITH

 

Bi-Economy Score:  Bad Faith 1, Consequential Damages ?.

 

The first post-Bi-Economy volley has been fired by an appellate court and a lower court decision has also referenced the Court of Appeals case.  You'll find the Second Department's decision in Hoffman v. Union Mutual reviewed in this week's edition.  Not good news for insurers.

 

The Appellate Division case is a first party case; a claim under a disability policy.  The carrier moved to dismiss the lawsuit on statute of limitations grounds, but there was a question of fact that precluded a ruling on that issue.  However, the Appellate Division agreed that the plaintiff should have been permitted to amend its complaint to allow allegations of bad faith to be incorporated in the pleading citing to the February 19^th Court of Appeals' decisions in Bi-Economy and Panasia Estates.  Was there even a NOMINAL discussion about the right to recover consequential damages?  Nah.  The Second Department suggested that Bi-Economy allowed bad faith claims to be asserted:

 

Contrary to the appellant's assertion, the Supreme Court was correct in allowing the allegations of bad faith to be incorporated in an amended complaint and in denying that branch of the appellant's motion which to strike those portions of the amended complaint.

 

When the Court of Appeals expanded the scope of the recovery of consequential damages in a first party, business interruption case in Bi-Economy, the judges carrying the majority went out of their way to underscore the fact that consequential damages do not equal punitive damages:

 

Therefore, in light of the nature and purpose of the insurance contract at issue, as well as Bi-Economy's allegations that Harleysville breached its duty to act in good faith, we hold that Bi-Economy's claim for consequential damages including the demise of its business, were reasonably foreseeable and contemplated by the parties, and thus cannot be dismissed on summary judgment.

 

In fact, in Panasia, the high court went out of it way to explain Bi-Economy:

 

As we explained in Bi-Economy Market v Harleysville Ins. Co. [decided today], consequential damages resulting from a breach of the covenant of good faith and fair dealing may be asserted in an insurance contract context, so long as the damages were "'within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting'" . Here, the courts below failed to consider whether the specific damages sought by Panasia were foreseeable damages as the result of Hudson's breach. Because the record before us is not fully developed on that issue, such claim must be considered by Supreme Court.

 

The dissenting judges penned the same dissent to both opinions and suggested that the majority was dressing up a wolf in lamb's clothing and, in fact, were opening the door to punitive damages, not merely consequential damages:

 

The "consequential" damages authorized by the majority, though remedial in form, are obviously punitive in fact. They are not triggered, as true consequential damages are, simply by a breach of contract, but only by a breach committed in bad faith. The majority never explains why this should be true, but the explanation is self-evident: the purpose of the damages the majority authorizes can only be to punish wrongdoers and deter future wrongdoing. They have nothing to do with consequential damages, or with the covenant of good faith and fair dealing, as those terms are ordinarily understood.

 

The other decision is a lower court (Supreme Court) case: Prince Seating Corp. v QBE Insurance Company and it involved a claim against an insurance broker, QBE for failing to carry out its alleged duty to notify the insurer, Century, of an accident.  It speaks of a claim against the broker involving consequential damages and sustains the claim:

 

Plaintiff seeks damages, which it alleges, were a direct and foreseeable result of Century's breach of the agreement, namely, that if QBE is found not to have a duty to defend and indemnify it for the judgment in the Virginia action under the QBE policy, Century is liable to it and obligated to indemnify it for all damages arising out of the Virginia action.

 

While Century asserts that it did not contemplate the default judgment rendered, this judgment was the natural consequence of the lack of a defense from QBE, which was allegedly caused by Century's failure to notify QBE of the claim, resulting in QBE's disclaimer (see generally Bi-Economy Mkt., Inc., 10 NY3d at 192; Ashland Mgt., 82 NY2d at 403; Kenford Co., 73 NY2d at 319).

 

At least with the first volley at the appellate level, it looks like the dissenters had a far more accurate crystal ball.

 

LATE NOTICE LEGISLATION

 

Let's then move to the late notice legislation proposed by the Governor's Office.  There's a new draft out there carrying a May 7, 2008, date stamp.  It has not yet been introduced in either house of the Legislature.  Here are the chief components of the bill, which are similar, but not identical, to the drafts circulated in October of 2007 and before:

 

• The current drafts amend CPLR 3001 to reference the direct action statute which is contained in Insurance Law Section 3420(a).  It gives the injured party the right to commence a declaratory judgment action as referenced in the Direct Action statute.  As in previous drafts, it's really unnecessary and confusing because the Direct Action under the Insurance Law is not a declaratory judgment action, and has never been.  Calling it a declaratory judgment action adds nothing of substance to the direct action.
   
• Under current law, both the insured and injured party may give notice to the insurer of the accident, occurrence or lawsuit.  That right is maintained in the latest draft. Ins. Law Section 3420(a)(3).
   
• Under current law, the failure to give any notice required by such policy shall not invalidate any claim made by the insured, injured party or any other claimant if it shall be shown not to have been reasonably possible to give such notice and that notice was given as soon as was reasonably possible thereafter.  That provision is maintained in the new draft.  Ins. Law Section 3420(a)(4).
   
• Prejudice Required For Disclaimers Based on Late Notice
  A new subdivision, Section 3420(a) (5) is added, similar in style and language to previous drafts.  It provides that: failure to give any notice required to be given by such policy within the time prescribe therein shall not invalidate any claim made by the insured, the injured party or any other claimant unless the failure to provide timely notice has prejudiced the insurer with carve-outs for claims made policies). Ins. Law Section 3420(a)(5).
   
• Defining Prejudice
  As part of a new Section 3420(c)(2), this draft provides the most limited definition of prejudice we've seen yet, limiting proof of prejudice to material impairment of the ability to investigate or timely defend the claim:

The insurer's rights shall not be deemed prejudiced unless the failure to timely provide notice materially impairs the ability of the insurer to investigate or timely defend the claim.

There have been several prior incantations of the prejudice definition in previous drafts, including:

 

The insurer's rights shall not be deemed prejudiced unless the failure to timely provide notice materially impaired a significant interest of the insurer, including its ability to investigate the claim, negotiate a settlement, defend the claim or maintain adequate reserves; and

 

The insurer's rights shall not be deemed prejudiced unless the failure to timely provide notice impairs a significant interest of the insurer, including but not limited to, its ability to:  investigate the claim; negotiate a settlement; or defend a claim.

 

Differences:

 

With the current draft, the term "material" rather than "substantial" is used, and the ways of establishing prejudice are limited to only two (investigate and timely defend).  The "included but not limited to language" has been removed as has reference to impairment of ability to negotiate a settlement and maintain reserves.

 
 

• Direct Actions
  This draft allows, only in wrongful death and personal injury claims (likely, the term should better read "bodily injury,") if the insurer disclaims liability or denies coverage upon the failure to provide timely notice, then the injured person or other claimant may maintain an action directly against such insurer, in which the sole question is the insurer's disclaimer or denial based on the failure to provide timely notice.  This limits direct actions to late notice cases only, unless there is a judgment already against the purported insured.
  
  That pre-judgment direct action could not be commenced, however, if within 60 days following the disclaimer or denial of coverage, the insured or the insured commenced a declaratory judgment action, naming the injured person or any other claimant.
  
  In summary, the only direct action that may be commenced, prior to the injured party taking judgment against the insured, is one based on late notice.  It can only be brought by a person who seeks recovery for injury or wrongful death.  It can only be brought if the insurer or the insured has not commenced a declaratory judgment action within 60 days after the denial, naming them as parties.
   
• Burden of Proof in Establishing Prejudice
  In any action where the insurer alleges it was prejudiced as a result of a failure to provide timely notice, the burden of proof is on the insurer to demonstrate prejudice if notice was provided within two years of the time required by the policy and on the insured or injured person if the notice was provided more than two years after the time required by the policy.
  
  There is an irrebutable presumption of prejudice if, prior to notice, the insured's liability has already been determined by a court or arbitrator or if the insured has settled the case on his or her or its own.
   
• Written Request to Confirm Coverage
  With respect to liability policies that provide coverage with respect to claims for bodily injury or wrongful death, where the policy is a personal lines policy (subject to Section 3425 of the Insurance Law) other than an excess or umbrella policy, an insurer shall, within 60 days of receipt of a written request by an injured party who has filed a claim or by another claimant, (a) confirm to the injured person or other claimant in writing whether the insured had a liability insurance policy in effect with the insurer and the limits of coverage provided under that policy.
  
  If the insurer does not have sufficient information to identify such a policy, the insurer has 45 days from the initial request to ask for more information and then another 45 days after it is provided to provide the information requested.
  
  As in previous drafts, failure to comply can result in Departmental sanctions.
   
• What is Not in the Draft
  Sadly missing from the draft is any sense of balance with respect to prejudice and late notice, an utter lack of quid pro quo. What is good for the goose is not good for the gander.  While an insurer will have to demonstrate prejudice before denying coverage on late notice, there is no change proposed to 3420(d) so that an insurer's late disclaimer can and will still be invalidated - even without ANY prejudice to the insured or injured party - if the reasons to deny coverage are policy exclusions and breaches of policy conditions. 

Expect some final tinkering and quick legislative action.  Of course, I've predicted that before.

 

BASEBALL ANNIVERSARY

According to Major League Baseball sources, today marks the centennial of only one major league play.  Edward Francis (Jeff) Sweeney was the only player to debut in the big leagues 100 years ago today, on May 16, 1908. Sweeney, who caught for the Yankees from 1908 - 1915, broke into the minors at 17 years old, joined the majors when he was only 19, and was one of the five youngest players at the time. He finished his career with a .232 batting average, three home runs and 151 RBI. He had 427 career hits in 1,841 total at bats. Sweeney had 63 stolen bases all-time. He participated in 644 games, all but 17 of those with the Yankees.  Jeff Sweeney still holds the single-season record for a New York Yankee catcher for base stealing with 19 base steals in 1914.   This week, you can buy his baseball card, a T205 Gold Border Edward "Jeff" Sweeney, with a Piedmont back, for $29.95 on e-Bay.

Speaking of the Yankees, five-time Yankee Manager Billy Martin was born 80 years ago today, May 16, 1928, as Alfred Manuel Pesano.

Any real baseball fan knows that the oldest player ever to play Major League Baseball was the great Leroy Robert "Satchel" Paige who pitched at the age of 59 years old.  We know you're curious about the youngest. The youngest baseball player every to appear in a major league ball game was Fred Chapman.  He was 14 years old when he broke into the big leagues on July 22, 1887, with the Philadelphia Athletics.  He pitched five innings that game, gave up eight hits and four earned runs, walked two and struck out four.  He never played in a major league game again.  Joe Nuxhall, at age 15, was the youngest NL player, having thrown nine pitches for the Reds in his first game, in 1944.  He did get two guys out but gave up five earned runs.  He didn't get another Major League appearance for another eight years, returning to the Reds in 1944 and retiring from the same team 18 years later. 

MAY 16^th is WEAR PURPLE FOR PEACE DAY

Why, you might ask? According to Holiday Insights, some folks believe that aliens from outer space consider earthlings to be too hostile. As a result, aliens have yet to make contact with us. So we should wear purple for peace in order to make the world a more peaceful place and encourage aliens to visit.

NOTES FROM THE NO FAULT LAND OF AUDREY SEELEY:

Dear friends:

 

While the reported decisions are sparse this edition they are full of reminders to insurers. 

 

The first is to ensure that you timely submit your evidence.  If you are close to the deadline and question if it will make it to AAA by the date due, request a two week extension.  I note that it is getting difficult to get the extensions but at least make the call and send the email requesting one while continuing to draft your submission.

 

The second reminder is to ensure that any denial for lack of medical necessity or treatment unrelated to the accident is supported by a medical opinion.  An adjuster should not be making this determination.  I hear many times that the treating records coming in do not indicate that the treatment was related to an injury from my claim.  In most cases in order to support a denial for lack of causal relationship of the injury to the accident it must be based upon a peer review.  I know that many adjusters and attorneys - applicant and respondent alike, read gobs of medical records but remember that does not make you a licensed physician.

 

The final reminder is to ensure that Box 33 is sufficiently worded.  Do not be afraid to provide a lengthy explanation and attach an additional sheet instead of using the 2 centimeters of space provided for the explanation.  Further, as we saw in the reported award, if you have multiple IME's conducted make sure that Box 33 sets forth the type of treatment being denied; what IME report you are relying upon, including the doctor's name and the date conducted; and attach a copy of it or attach a copy of the general denial that should contain the medical reasoning from the report for the denial.

 

Overall, when in doubt on the wording of a denial or whether you need a peer review or IME on particular file, contact counsel for advice.

 

Audrey

 

Audrey A. Seeley
[email protected]

 

HIGHLIGHTS OF THIS WEEK'S ISSUE:

 

• First Bi-Economy Citation by Appellate Court Gets it Wrong.  Consequential Damages?  Nah. 
• Errors and Omissions Claim Against Insurance Agent Dismissed; Policyholders Presumed to Read and Understand Coverage
• Late and Inadequate Disclaimers by Carrier Preclude Insurer from Raising Late Notice Defense but do Not Preclude Insurer from Claiming that Party was Not Additional Insured
• An Motor Vehicle Must Actually be Uninsured to be Considered Uninsured; Makes No Difference that SIR Precludes Access to Policy when Insured Files for Bankruptcy Protection
• Direct Action Fails for Lots of Good Reasons:  (a) Default Judgment Established Insured Not Owner, (b) Driver Not Additional Insured and (c) Untimely Disclaimer Cannot Create Coverage Where None Exists.  Statutory Obligation to Deny Claims Timely Does not Apply to Out-of-State Accidents
• Sophisticated Insured that Enters into Policy Release Agreement Cannot Rescind it Based on Mistaken Belief in Quantity of Coverage being Sacrificed
• Direct Action Fails.  Injured Parties, have Statutory Right and Therefore, Statutory Duty to Notify Defendant's Insurer of Accident and Lawsuit.  Moreover, Without Proof of Existence of Policy, Recovery Under the Policy is Not Warranted
• Condo Association Board of Managers Satisfy Fiduciary Duty to Members by Hiring Insurance Broker
• Oral Notice of Disclaimer to Liability Carrier for Additional Insured Constitutes Notice to Additional Insured
• Contract Requiring Provision of Coverage for "Mutual Benefit" is not Requirement of Additional Insured Status. 

STAROSIELEC'S SERIOUS (INJURY) SIDE OF NEW YORK NO FAULT

Mark Starosielec
[email protected]

 

• How to Make a Prima Facie Showing. . . Let's Count the Ways
• Following Jury Trial, A.D. Defers to Jury on SI Issues But Not on Damages
• No Assessment of Plaintiff's Injuries = No Triable Issue of Fact
• Plaintiff's Chiropractor's ROM Tests Creates Triable Issues of Fact, Leads to SJ Survival
• Medial Meniscus Tear = Triable Issue of Fact
• SJ Affirmed as Plaintiff Relied on Unaffirmed & Uncertified Medical Records
• Plaintiff's Prior MVA Not Enough to Grant Summary Judgment for Defendant
• Short and Sweet: Summary Judgment Denied
• SJ Reversed: On Second Opinion, Defendants Did Not Meet Their Prima Facie Burden
• Plaintiff Wins Battle of The Experts and Survives Summary Judgment 

AUDREY'S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]

 

Arbitration

• Untimely Submissions; Improper Releases; and Adjusters Rendering Medical Opinions - Oh My!
• The Insurer Must Clearly Advise What Examination It is Relying Upon for the Denial 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

• Ex-Wife and Children not Liable for Independent Acts of Insured Homeowner
• Exclusion Relied Upon by Carrier Inapplicable = Coverage for Insured  

EARL'S PEARLS

Earl K. Cantwell, II

[email protected]

 

Limitation of Liability Clauses - Limitless Litigation

 

We hope you enjoy the attached issue.  See you in a couple of weeks.

 

Dan 

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

 

Newsletter Editor

Dan D. Kohane
[email protected]

 

Insurance Coverage Team

Dan D. Kohane, Team Leader
[email protected]

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

Fire, First-Party and Subrogation Team
Andrea Schillaci, Team Leader
[email protected]
Jody E. Briandi
Steven E. Peiper

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

APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]
Dan D. Kohane
Scott M. Duquin

Index to Special Columns

 

Starosielec’s Serious Side of “Serious Injury”

 Audrey’s Angles on No Fault

Peiper on Property
Earl’s Pearls

Across Borders

 

5/8/08              Hoffman v. Unionmutual Stock Life Insurance Company of New York
Appellate Division, Second Department
First Bi-Economy Citation by Appellate Court Gets it Wrong.  Consequential Damages?  Nah. 

This was a claim for disability benefits.  The disability carrier moved to dismiss the plaintiff’s complaint as time-barred, claiming that it denied the claim more than six years before it was sued and as such, the statute of limitations had expired. The Court was not convinced that the denial was more than six years prior so it denied the motion.

 

In addition, the Second Department affirmed a lower court order that permitted the  allegations of bad faith to be incorporated in an amended complaint and denied the carrier’s motion to strike those portions of the pleading, citing to Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of New York, 10 NY3d 187; Panasia Estates v Hudson Ins. Co., 10 NY3d 200).

 

Editor’s Note:  This is the first appellate decision citing Bi-Economy and Panasia Estates and demonstrates what a clear crystal ball the dissenting judges had in that case.  Remember, if you read the majority opinions carefully in those recent Court of Appeals cases, the majority insisted that they had nothing to do with bad faith, but only concerned themselves with consequential damages.  It too only one decision for a court to equate Bi-Economy with bad faith.

 

5/8/08              Catskill Mountain Mechanical, LLC v. Marshall and Sterling Upstate, Inc.

Appellate Division, Third Department
Errors and Omissions Claim Against Insurance Agent Dismissed; Policyholders Presumed to Read and Understand Coverage
Catskill used Marshall, an insurance agency, to obtain coverage for its fabrication business since 1994.  In 1998, plaintiff was asked by another customer to do a different kind of work, vacuuming ships using a piece of heavy equipment known as a Kovako. Catskill claims it contact Marshall to make certain that there was proper coverage for that operation and claims that Marshall confirmed coverage. Marshall disputes the substance of the calls.

Catskill received a new endorsement from Marshall containing only a longshoreman's clause for workers' compensation coverage involving operations near water.  require any increase in the premium. Plaintiff's owner acknowledged that he received that endorsement and failed to read it. When the Kovako was damaged and plaintiff made an insurance claim, which was denied on the basis of lack of coverage.

Case against agent dismissed.  Policyholders are presumed to review the policies provided, absent fraud.  The statement by the agent, that the risks were covered, was made before the endorsement was received.  If there had been proof of affirmative misrepresentations regarding coverage in response to questioning by the client after reviewing the policy the results might be different.

5/8/08              OneBeacon Insurance v. Travelers Property Casualty Company of New York
Appellate Division, Third Department

Late and Inadequate Disclaimers by Carrier Preclude Insurer from Raising Late Notice Defense but do Not Preclude Insurer from Claiming that Party was Not Additional Insured
A golfer slipped and fell on a newly constructed deck at the club house owned by Saratoga National Golf Club, Inc. (owner). He sued the owner and contractors.  OneBeacon, the owner’s carrier, brought a declaratory judgment action seeking a determination that Great American, the carrier for the deck subcontractor, D&B Building, Inc. also insured the owner as an additional insured. The CGL policy provided coverage for the owner and defendant The Pike Company and the general contractor, as additional insureds, so long as D & B's operations were ongoing at the time of the occurrence. Great American also had issued an owners and contractors protective (hereinafter OCP) policy to Pike. Travelers, as Pike's primary insurer, cross-claimed for defense and indemnification of Pike under Great American’s CGL and OCP policies.

When Great American moved for summary judgment, the parties agreed that coverage for the owner and Pike as additional insureds under the CGL policy depended upon whether D & B was still engaged in work on the owner's project at the time of the accident.  There was also an issue of late notices of claim served on Great American by both the owner and Pike. The lower court held that there was issues of fact about the ongoing nature of the work BUT that Great American could not raise late notice as a defense because its own disclaimer was late and the disclaimers failed to cite late notices as a coverage defense. In addition, as for the owner, lower court found that Great American had issued no disclaimer at all it and thus could not maintain a coverage defense.

Great American argued on appeal that because there is no evidence in the record showing that D & B was actually working on the owner's project when the accident occurred, the lower court should have found that neither the owner nor general contractor were additional insureds under its CGL policy.  However, the Appellate Division disagreed.  There was evidence that there were still “punch list items” being resolved at the time of the accident and thus a question of fact existed as to ongoing work.

With respect to late notice defense, as to the owner, Great American issued no disclaimer. That would preclude Great American from raising late notice as defense but would NOT preclude Great American from maintaining its position that the owner was not an insured.

With respect to late notice as to the general contractor, without excuse, Great American did not disclaim until approximately six months after receiving notice of its claim under the CGL policy and seven months after notice of its claim under the OCP policy.  Accordingly, Great American loses its right to claim that the notices from the general contractor were late under the policies.  In any event, by not raising late notice in its disclaimer, it has waived late notice as a defense.
Editor’s Note:  Looks like the right decision for the right reason.  Insurance coverage cannot be created, simply by the passage of time.  Carrier will not lose its right to claim that party is not an additional insured because of a late notice of disclaimer. If party does not fall within the grant of coverage, it should make no difference that insurer does not raise that quickly. Perkins case decided two days earlier by Second Department and summarized in this issue stands for same proposition.

On the other hand, a failure to timely and properly disclaim on late notice is the death knell to that defense.

5/8/08              In re Lancer Insurance Company v. Lackraj
Appellate Division, First Department
An Motor Vehicle Must Actually be Uninsured to be Considered Uninsured; Makes No Difference that SIR Precludes Access to Policy when Insured Files for Bankruptcy Protection

The Court permanently stayed an application for uninsured motorists’ benefits.  While the insured has a large self-insured retention and while the insured filed for bankruptcy, that does not change the fact that there was a policy of insurance in place and therefore the vehicle was not uninsured. 

Editor’s Note:  This is a short but interesting decision.  Claimant is without source of recovery for pain and suffering which, of course, is purpose of the statutory obligation to provide uninsured motorists benefits.  While there is a policy in place for the defendant, so he is not technically uninsured, the bankruptcy of the defendant makes the recovery under the SIR problematic and thus, for this claim he is de facto uninsured.  Perhaps the Legislature needs to step in here.

5/8/08              Fleischman v. Peacock Water Company, Inc.
Appellate Division, Third Department
Injuries to Plaintiff’s Leg Did Not Constitute “Grave Injuries” Under Workers Compensation Law Justifying Third Party Claim for Against Employer; No Evidence of Written Indemnity Agreement Either
The Plaintiff, was employee of Catskirondacks, Inc., when h fell from a ladder while involved in construction work and  fractured his right femur.  He sued the defendants under the Labor Law and the defendants brought a third party action against Catskirondacks, Inc. seeking (1) common-law indemnification, (2) contractual indemnification and (3) breach of agreement to obtain liability insurance. That action was dismissed following motion by Catskirondacks.

The question before the Appellate Division was whether there was any proof of a “grave injury.”  Under Section 11 of the Workers Compensation Law, third party actions against employers cannot be maintained by a defendant unless there is proof of a written contract or indemnity or a “grave injury” which includes the category of "permanent and total loss of use [of a] leg," There was no proof submitted here demonstrating that dramatic an injury to the plaintiff’s leg.  In fact, no sworn medical records were submitted and the Bill of Particulars demonstrated less that a total loss of use of the leg, in any event, only  “severe swelling," a "loss of ability to ambulate properly," a "significant limp," a "loss of range of motion" and a loss of "stability" and "flexibility."

The lower court properly dismissed the remaining claims against Catskirondacks because the employer established that no such agreements were in place.  There was nothing established that would demonstrate that further discovery would lead to the parties finding any writer agreements.

5/6/08              Perkins v. Allstate Insurance Company

Appellate Division, Second Department

Direct Action Fails for Lots of Good Reasons:  (a) Default Judgment Established Insured Not Owner, (b) Driver Not Additional Insured and (c) Untimely Disclaimer Cannot Create Coverage Where None Exists.  Statutory Obligation to Deny Claims Timely Does not Apply to Out-of-State Accidents.

A direct action brought against Allstate, claiming carrier insured a driver, one Robert Shoffner and the owner, Riggin Master.  That car was insured under a policy issued by Allstate, in the State of Virginia, to Lucy Carr (who neither owned nor the operator of the vehicle at the time of the accident.

A judgment was entered against Shoffner and Riggin Master in the underlying action, because they did not appear in the lawsuit and after 30 days went by, the plaintiff, now judgment creditor, brought an action against Allstate to satisfy the judgment.

In the default judgment, which is conclusive as to fact litigated, no judgment was entered against Lucy Carr (who was not named in the pleadings).  The lawsuit claimed, and the judgment thereby conclusively determined, that the owner of the car was Riggin Master.

While the policy provided coverage for "non-owned automobiles," the only individuals covered thereunder were the named insureds, relatives who reside in the same household as the named insureds, Shoffner and Riggin Master did not fit within the definition.

The contention that a failure to disclaim timely precluded the insurer from claiming a lack of coverage was rejected.  A failure to timely disclaim cannot create coverage where none exists (and in any event, the duty to disclaim timely, imposed by statute, does not apply to out-of-state accidents).
Editor’s Note:  Attalawyer, Beth.

5/6/08              The Scotts Company, LLC v. Ace Indemnity Insurance Company

Appellate Division, First Department

Sophisticated Insured that Enters into Policy Release Agreement Cannot Rescind it Based on Mistaken Belief in Quantity of Coverage being Sacrificed

Pursuant to a settlement agreement  entered into in late 2000, plaintiff, in exchange for $325,000, released defendants from any and all past, present and future claims under insurance policies, whether known or unknown, issued by defendants. Four and a half years after executing the agreement and accepting the $325,000, plaintiff commenced this action to rescind the agreement.

 

Plaintiff claims that the policy chart prepared by its own agent, on which plaintiff relied in the negotiations leading to the agreement, contained a visual error that gave the impression that the total amount in primary coverage under the policies issued by defendant PEIC was $16 million when it was much higher, $80 million.

 

The settlement agreement and release was entered into by two sophisticated commercial entities, each who had counsel and took place over a period of 21 months. The plaintiff's contended in part that does the disparity in exchanged value i.e., the release of $80 million in insurance coverage for $325,000 was unconscionable.

The stated purpose of the agreement was to fully and finally terminate the parties' relationship as insurer and insured under the policies. The nature of the agreement thus remains intact irrespective of the policy limits. In any event, it does not avail plaintiff to invoke even a material mistake to avoid the consequences of its own negligence.

 

5/6/08              Lopez v. State Farm Fire & Casualty Company

Appellate Division, Second Department
Direct Action Fails.  Injured Parties, have Statutory Right and Therefore, Statutory Duty to Notify Defendant’s Insurer of Accident and Lawsuit.  Moreover, Without Proof of Existence of Policy, Recovery Under the Policy is Not Warranted
New York law permits an injured party to give notice of an accident to an insurer and if the injured party gives timely notice, that notice substitutes for and satisfies the requirement under a liability policy for an insured to give timely notice.  Courts have held, as this one has, that the right by an injured party to give notice is also an obligation to do so.  Here, the injured party did not give notice in a timely manner.  Instead, it took a default judgment against the insured and then commenced a direct action against its purported insurer seeking to enforce it.

 

The court held that the injured party’s failure to give notice in this case was problematic and led to an inability of the injured party to enforce the terms of an insurance policy due to a breach of the notice provisions. There was no evidence that the injured party notified the insurer of the underlying action they commenced against the defendant's purported insured and in which a default judgment was entered, until the a direction action was commenced seeking to enforce the judgment.

 

In addition, injured party failed to establish that carrier it sued actually insured the underlying defendant.  The plaintiffs' only submission, on their motion for summary judgment on the complaint, to establish that there was in full force and effect an agreement of insurance covering them for the liability, was a letter from the defendant to them requesting information regarding a claim.  The letter, without more, failed to establish, prima facie, the existence of a valid policy of insurance covering the accident.  Without proof of a policy, there can be no recovery of policy proceeds.

5/6/06              Acevedo v. Town N Country Condominium, Section I, Board of Managers

Appellate Division, Second Department

Condo Association Board of Managers Satisfy Fiduciary Duty to Members by Hiring Insurance Broker
In a little different twist, unit owners of a condominium sued the Board of Managers of the Condominium for breach of fiduciary duty in failing to obtain sufficient fire insurance. Following the “business judgment rule,” which prevents judicial inquiry into board acts so long as they are in good faith, the court dismissed the lawsuit against the Board. It proved its good faith by demonstrating that it hired an insurance broker for the purpose of securing proper coverage and the unit owners failed to demonstrate that such conduct was insufficient to demonstrate good faith.

 

5/6/08              American Bridge Company v. Acceptance Insurance Company

Appellate Division, Second Department
Oral Stipulation for Reciprocal Reimbursement Trumps Pleadings in Declaratory Judgment Action
When the settlement of the underlying lawsuit was placed in on the record in court, there was a stipulation announced where it was agreed that the funding would be divided equally amount four carriers and that the settlement would not impact this declaratory judgment action which sought to establish that Acceptance Insurance was obligation to indemnify two of the parties to the underlying suit.  It was also agreed that there would be “no interest” against any of the carriers once the coverage action was decided.

Acceptance won the coverage action and then sought to recover, under the stipulation, have of its funding of the underlying lawsuit from Zurich.  Zurich argued that the stipulation did not call for Zurich to reimburse Acceptance if Acceptance won, only for Acceptance to reimburse Zurich if Zurich one. The court found that the stipulation was enforceable but that the true intent of the stipulation was for reciprocal reimbursement. While Acceptance never formally pleaded a claim against Zurich for reciprocal reimbursement, nothing prevented the insurers from entering into a stipulation on the record extending to matters beyond the pleadings, as they apparently did in the proceedings resulting in the settlement of the underlying personal injury action.

5/2/08              The Cincinnati Insurance Companies v. Sirius America Insurance Company

Appellate Division, Fourth Department

Notice of Disclaimer to Liability Carrier for Additional Insured Constitutes Notice to Additional Insured

The rule of reason has prevailed in the Fourth Department on an interesting issue of statutory compliance with the disclaimer requirements.

 

Section 3420(d) requires a liability carrier in a matter involving bodily injury or wrongful death to send out notices of disclaimer to the injured party and any other claimant to be effective.  The term “any other claimant” is generally recognized as including co-defendants in lawsuits.  In this case, the carrier did not send out the notice of disclaimer to the injured party and instead of sending it out to the co-defendants, sent it out to the liability carrier for the co-defendants.  In this case, the co-defendants were also insureds under the policy, entitling them to notice.

 

The Fourth Department held that (a) the co-defendants had no standing to complain about a failure on the party of the carrier. Sirius, to send the letter out to the injured party (underlying plaintiff) and (b) that by sending the notice to the co-defendants liability carrier, Sirius complied with the statute.  The court cited to a 1999 First Department case, Excelsior Ins. Co. v Antretter Contr. Corp., 262 AD2d 124, 127-128), which held: .

 

While defendant is correct that an insurer is not always equivalent to an attorney as an agent for receipt of notice, because the latter is an agent for all purposes while the former may have conflicts of interest with the insured, this is not such a case. Failure to serve a formal notice on the nominal party in interest does not render ineffective the denial of coverage where, under the circumstances, the party who received the notice was expected to forward it to the nominal party and had undertaken to protect the nominal party's rights

 

5/2/08              Kassis v. The Ohio Casualty Insurance Company

Appellate Division, Fourth Department
Contract Requiring Provision of Coverage for “Mutual Benefit” is not Requirement of Additional Insured Status.

Did Ohio Casualty have an obligation to defend Kassis and his sign company on the ground that either he was an additional insured under the policy or an “intended third party beneficiary of the policy?  “No,” says a divided Fourth Department.

The blanket additional insured endorsement provides in relevant part that the term defining "who is an insured" included  “any person or organization who you are required to name as an additional insured on this policy under a written contract or agreement."  The contract between the parties did not quite require that Kassis be an additional insured.  Instead, it required that Superior Sign would procure CGL coverage for "the mutual benefit of" Kassis and Superior Sign.” The court held that “for the mutual benefit” is not the same as requiring additional insured status.

As to “third-party beneficiary” status, the court held that that such status was not conferred.  It was not demonstrated that the parties to the insurance policy intended to insure the interest for which the third-party beneficiary seeks coverage . . . Where the insurance contract does not name, describe, or otherwise refer to the entity or individual seeking the benefit thereof as an insured, there is no obligation to defend or indemnify."

The two dissenting justices argued that Kassis was an additional insured based on the placement and juxtaposition of the insurance procurement provisions in the policy.
Editors Note:  We agree with the majority on this one.

STAROSIELEC’S SERIOUS (INJURY) SIDE OF NEW YORK NO FAULT

Mark Starosielec
[email protected]

 

5/8/08              Chong Sim Kim v Amaya

Appellate Division, First Department

How to Make A Prima Facie Showing. . . Let’s Count the Ways

A lower court order granting defendant’s motion for summary judgment was unanimously affirmed by the Appellate Division. Here, defendant established a prima facie showing by submitting affirmed reports of a neurologist and an orthopedist, who reviewed plaintiff's prior medical records. They examined her and performed objective tests before concluding that plaintiff was neurologically intact, had no meaningful limitation of use of her cervical or lumbar spine, and that the findings on the MRI films and x-rays were degenerative in nature. Plaintiff's opposition failed to raise a triable issue of fact. The affirmed report from the physician who examined plaintiff more than three years post MVA, fails to provide a causal connection between the alleged injuries and the accident. Plaintiff also failed to provide a reasonable explanation as to why she terminated treatment in 2002.

 

5/8/08              Kithcart v Mason

Appellate Division, Third Department

Following Jury Trial, A.D. Defers to Jury on SI Issues But Not on Damages

In a lengthy opinion, the Appellate Division affirmed a jury verdict finding that plaintiff did suffer a serious injury but reduced her award for future pain and suffering. After trial, the jury found that plaintiff suffered a serious injury under both the permanent consequential limitation and significant limitation of use categories. It awarded her $60,000 for past pain and suffering and $400,000 for future pain and suffering. Defendant moved to set aside the verdict pursuant to CPLR 4404 (a). The lower court denied the motion.

The Appellate Division held the lower court did not err in denying defendant's motion. To establish entitlement to a judgment based upon insufficient evidence, there must be "no valid line of reasoning and permissible inferences which could possibly lead rational [people] to the conclusion reached by the jury on the basis of the evidence presented at trial" (Cohen v Hallmark Cards, 45 NY2d 493, 499 [1978]; see O'Connor v Sleasman, 37 AD3d 954, 956 [2007], lv denied 9 NY3d 806 [2007]). Serious injury can only be established through medical proof containing objective quantitative evidence. Here, an MRI taken a year and a half after the accident indicated a large disc bulge and an arthritic degenerative condition of the plaintiff’s cervical spine. An EMG taken revealed active nerve impingement. Based upon this objective evidence, the plaintiff’s neurologist opined that plaintiff's cervical strain, disc problems and radiculopathy were caused by the accident and limited the range of motion of her cervical spine. He quantified the limitations to her range of motion too. The neurologist also opined that plaintiff's condition was permanent.

The verdict was not against the weight of the evidence. The standard is whether the evidence preponderated so in favor of defendant that the jury could not have reached its verdict on any fair interpretation of the evidence (see Black v City of Schenectady, 21 AD3d 661, 662 [2005]). we defer to the jury's evaluation of these conflicting medical opinions and its resolution of the associated credibility determination (see Apuzzo v Ferguson, 20 AD3d 647, 648 [2005]; Jones v Davis, 307 AD2d 494, 496 [2003], lv dismissed 1 NY3d 566 [2003]). However, the jury's award of damages for future pain and suffering should be reduced. While a jury's assessment of damages is accorded deference, courts will disturb an award which deviates materially from what would be reasonable compensation for the injuries sustained, as determined by examining comparable cases (see Hensley v Lawrence, 40 AD3d 1375, 1376 [2007]; see also CPLR 5501 [c]). Plaintiff returned to work full time only three days after the accident. An award of $300,000 is more reasonable.

5/6/08              Curtis v. Brent

Appellate Division, First Department

No Assessment of Plaintiff’s Injuries = No Triable Issue of Fact

In a brief opinion, the Appellate Division affirmed a lower court order which had granted defendants’ motion for summary judgment dismissing the complaint. Here, plaintiff's VBOP, medical records and defendant's expert's affirmed report established prima facie that plaintiff did not sustain a serious injury, but rather cervical, lumbar and left shoulder strains, which had resolved 16 months post MVA. Plaintiff's experts’ reports provide neither quantitative nor qualitative assessments of the seriousness of plaintiff’s injuries, and contain no competent medical evidence that he sustained a medically determined injury of a nonpermanent nature.

 

5/6/08              Qurashi v. Hittin

Appellate Division, Second Department

Plaintiff’s Chiropractor’s ROM Tests Creates Triable Issues of Fact, Leads to SJ Survival

In a brief opinion, the Appellate Division agreed with the lower court’s assessment that the plaintiff raised a triable issue of fact in opposition to defendant’s summary judgment motion. As such, the lower court order which denied the defendant's motion for summary judgment was affirmed. The defendant met his prima facie showing. In opposition, the plaintiff raised triable issues of fact regarding whether his range of motion limitations, as quantified and compared to normal by his chiropractor and whether his bulging discs and his herniated discs were causally related to or exacerbated by the accident.

 

5/6/08              Rodriguez v. Reyes

Appellate Division, Second Department

Medial Meniscus Tear = Triable Issue of Fact

Report of plaintiff’s orthopedist, who treated plaintiff multiple times and performed surgery on her, was enough to create a triable issue of fact and allow plaintiff to survive summary judgment.  Here, plaintiff concedes that the defendants met their prima facie showing. However, in opposition, plaintiff raised a triable issue of fact. She submitted the affirmed report of her treating orthopedist. His opinion was based on his examination of the plaintiff shortly after the accident, on his examination performed after the MSJ was made, and upon an arthroscopic procedure he performed upon the plaintiff, which showed a tear in the medial meniscus. He opined that the plaintiff's injuries and ROM limitations were permanent, and were causally related to MVA.

 

5/6/08              Seebaran v. Mendonca

Appellate Division, Second Department

SJ Affirmed as Plaintiff Relied on Unaffirmed & Uncertified Medical Records

Here, plaintiff unsuccessfully appealed a lower court order which granted the defendant's motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury. The defendant met his prima facie burden of showing that the plaintiff did not sustain a serious injury. In opposition, the plaintiff failed to raise a triable issue of fact. Liberty Advanced Medical records were without any probative value since they were unaffirmed. The same holds true for the MRI report of the plaintiff's left shoulder. Finally, neither the plaintiff nor his treating orthopedic surgeon adequately explained the lengthy gap in plaintiff's treatment.

 

5/6/08              Sforza v. Big Guy Leasing Corp.

Appellate Division, Second Department

Plaintiff’s Prior MVA Not Enough to Grant Summary Judgment for Defendant

An older plaintiff with some age-related ailments and a prior MVA to boot was nevertheless able to survive summary judgment. As such, the defendants’ appeal of an order denied their motion for summary judgment was unsuccessful.

The defendants met their prima facie burden of showing that the plaintiff, who was 64 years old at the time of the subject accident, did not sustain a serious injury. Defendants submitted an affirmation of a neurologist who quantified restrictions in range of motion in the plaintiff's cervical and lumbar spine, but attributed those restrictions to age-related crepitus and arthritis.  In response, the plaintiff raised a triable issue of fact. An affirmed MRI report indicated that the plaintiff suffered herniated discs in the cervical region of the spine and herniated and bulging discs in the lumbar region of the spine. However, the plaintiff's treating orthopedist, concluded that “the MRI findings of Multi-level bulging and herniated discs to both her neck and back are a direct result of the impact she sustained as a result” of the accident.

The defendants seek to attribute the plaintiff's injury to an accident in or about 1992 in which the plaintiff's lower back was injured. The plaintiff testified at her deposition that she never injured her neck, and the injury to her lower back healed. Accordingly, there is no evidence in this record of a pre-existing injury to the plaintiff's neck.

 

 

5/6/08              Thomas v. Singh

Appellate Division, Second Department

Short and Sweet: Summary Judgment Denied

Without giving an explanation for its decision, the Appellate Division affirmed a lower court order which denied defendant’s motion for summary judgment dismissing the complaint. In the briefest of opinions, the Appellate Division stated the defendant met his prima facie burden but plaintiffs raised a triable issue of fact in opposition. That’s all folks.

 

5/6/08              Yung v. Eager

Appellate Division, Second Department

SJ Reversed: On Second Opinion, Defendants Did Not Meet Their Prima Facie Burden

By emphasizing their SI claim under the 90/180 day category, plaintiffs successfully appealed a lower court order which had granted the defendants’ motion for summary judgment. On appeal, the defendants failed to meet their prima facie burden by not adequately addressing the plaintiffs' claims, clearly set forth in their bill of particulars, that they each sustained a serious injury under the 90/180 day category. The plaintiffs were each confined to their home for three to four months after the accident. The defendants’ examining orthopedic surgeon did not relate his medical findings to this category of serious injury for the period of time immediately following the subject accident. Since the defendants failed to satisfy their prima facie burdens, it was unnecessary to consider whether the plaintiffs' opposition papers were sufficient to raise a triable issue of fact.

 

5/2/08              Sconiers v. Barber

Appellate Division, Fourth Department

Plaintiff Wins Battle of The Experts and Survives Summary Judgment

Defendant’s doctor was good, but plaintiff’s doctor was better seemed to be the message as the Appellate Division affirmed a lower court order which denied defendants’ motion for summary judgment. Here, plaintiffs claim serious injury under the categories of permanent consequential limitation of use and significant limitation of use.

 

Defendants submitted the report of the physician who examined plaintiff on their behalf. That physician concluded that plaintiff's "cervical spine range of motion is limited in flexion/extension, and right and left rotation" but that plaintiff had no disability. In opposition, plaintiffs submitted the affirmation of plaintiff's treating physician, who indicated that, inter alia, plaintiff had severe L4-5 and L5-S1 disc herniations with marked disc desiccation, that his lumbar range was 45% to 50% of normal and his cervical range of motion was 50% of normal. Even if defendants met their initial burden, plaintiffs raised triable issues of fact precluding summary judgment.

 

 

AUDREY’S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]

 

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

 

Arbitration

 

5/13/08            In the Matter of the Arbitration Between Applicant and Respondent

Arbitrator Thomas J. McCorry (Erie County)

Untimely Submissions; Improper Releases; and Adjusters Rendering Medical Opinions – Oh My!

The Applicant, eligible injured person (“Applicant”) sought $62,312.94 in lost wages and medical health expenses.  This award had almost every issue in it that you could think of.  The first issue was whether the insurer’s arbitration evidence would be considered as it was untimely submitted.  The assigned arbitrator has the discretion to consider the late evidence and this arbitrator noted that he prefers to have a case before him that is decided on the full and complete discussion of the substantive issues.  The insurer’s late evidence was accepted and interestingly, the arbitrator noted that the Applicant had a late post arbitration written submission.  That submission was also considered despite being untimely after the timeframe was agreed upon by all parties and the arbitrator.

 

In regard to the lost wage claim, the insurer contended that the Applicant was not entitled to lost wages for a portion of the claimed time because the applicant returned to work on November 29, 2006, therefore there was no viable claim.  The insurer’s position regarding the claim for lost wages from January 31, 2007 through April 4, 2007, was that the Applicant failed to submit proof of claim within 90 days from the date the loss was incurred.  More specifically the insurer argued that a new proof of claim was warranted because the Applicant’s lost wage claim changed.  The Applicant was then working but purportedly lost wages from the inability to tutor during the summer.  Of interest is the fact that at the time the claim was made it was not summer and the insurer contended that there was no proof that the Applicant sought a claim for that loss of earnings.

 

The Applicant argued the insurer’s position was “disingenuous” as the Applicant contacted the insurer on an almost daily basis and was purportedly told to stop calling.  This resulted in the Applicant filing a complaint with the Insurance Department.  Applicant was partially awarded lost wages in this decision upon the records from her treating physician rendering her disabled during the claimed period.

 

However, the Applicant’s claim for loss of earning from summer tutoring was denied for failure to include it in her AR-1 and provide timely notice to the insurer of the claim.

 

Turning to the medical expenses portion of the claim, the insurer properly denied some claims based upon violation of the 45 day rule and was not responsible for other bills that were paid by the Applicant’s private health insurer.

 

There were also a number of denials issued that were not upheld because the claims adjuster denied them based upon his or her own opinion that the treatment was not related to the motor vehicle accident.

 

Finally, the issue of the Applicant’s failure to obtain an appropriate release of assignment of benefits was raised.  The Applicant submitted releases that were not signed by the Applicant.  The arbitrator while recognizing that while this signature was requested and “perhaps required” determined that the Applicant’s action of filing for arbitration was tantamount to consent to the release thereby obviating the need for the Applicant’s signature.

 

5/2/08  In the Matter of the Arbitration Between Applicant and Respondent

Arbitrator Thomas J. McCorry (Erie County)

The Insurer Must Clearly Advise What Examination It is Relying Upon for the Denial.

The Applicant, eligible injured person (“Applicant”) sought reimbursement for physical therapy treatments rendered from November 22, 2005 through July 19, 2006, by Dr. Calabrese, purportedly related to a September 11, 2002, motor vehicle accident.

 

The insurer denied the treatment based upon multiple medical examinations by Dr. Brothman.  The first examination was performed in March 2003 where Dr. Brothman opined that the Applicant sustained an aggravation of a pre-existing cervical spine degenerative disc disease.  Dr. Brothman stated that in his opinion the Applicant had reverted back to his pre-accident status.  Yet, he stated that the Applicant should receive further treatment of his cervical spine in the form of physical therapy for another two months, two times per week.

 

The second examination with Dr. Brothman occurred in May 2006, wherein the Applicant complained of knee and low back pain which was determined to be pre-existing and aggravated by the motor vehicle accident.  Dr. Brothman opined that the Applicant had returned to pre-accident status and that the treatment to date was reasonable and necessary.

 

The parties disputed whether Dr. Brothman’s May 2006, examination report sufficiently demonstrated the lack of medical necessity for further medical treatment as a result of the motor vehicle accident.  The arbitrator determined that there was no controlling case law that required the insurer to submit a report from a physician using the phrase lack of medical necessity.  The arbitrator instead looked at the totality of the report to see if the import of lack of medical necessity was expressed.  The arbitrator determined that the May 2006 examination report was sufficient to support a defense of lack of medical necessity.

 

Next the arbitrator turned to the sufficiency of the subsequent denials which were based upon one of the examinations conducted but it was determined that the denials were not clearly worded to advise the Applicant as to which examination the insurer was relying upon.  The arbitrator found this problematic and failed to uphold any denial that was based upon the March 2003 examination.

 

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

I apologize for the brevity of my column this week.  Great thanks go out to my co-contributors for providing ample sustenance to get you through.  Here’s hoping I have more to say in the upcoming issues.  For now, here it is:

 

05/08/08          New Hampshire Ins. Co. v Bartha

Appellate Division, First Department

Ex-Wife and Children not Liable for Independent Acts of Insured Homeowner

In this subrogation action, plaintiff sought recovery of damages it paid as a result of an intentional explosion which was caused by, and resulted in the death of, a distressed homeowner.  In addition to naming the decedent, the decedent’s estate and Consolidated Edison, the plaintiff also named the decedent’s ex-wife and adult children as defendants as well. 

 

In reversing the holding of the trial court, the First Department noted that the ex-wife, who had been estranged from decedent for several years, as well as his adult children, had no authority to control the intentionally destructive actions of the decedent.  Furthermore, the Court held that neither the wife, nor the children, had any relationship with the plaintiff’s insured which would have created liability. 

 

Accordingly, plaintiff’s causes of action against the ex-wife and children were dismissed.

 

05/06/08          Pioneer Tower Owners Assoc. v State Farm Fire & Cas. Co.

Appellate Division, Second Department

Exclusion Relied Upon by Carrier Inapplicable = Coverage for Insured

Carrier had erroneously relied upon an exclusion in the policy (don’t blame me, the Second Department didn’t tell us which one), which resulted in plaintiff’s commencement of the current declaratory judgment action to recover for damages to insured property.  In finding coverage for the insured, the Second Department stated without explanation that the exclusion relied upon by carrier did not apply to plaintiff’s claim.   

 

 

EARL’S PEARLS

Earl K. Cantwell, II

[email protected]

 

Limitation of Liability Clauses – Limitless Litigation

 

It is becoming more commonplace in many industries to encounter “form” documents, especially in professional service contracts, containing a “limitation of liability” clause. Such a clause generally sets a maximum liability or dollar exposure for a claim arising out of service provided. Examples of such industries include inspection contracts, alarm systems, lawn spray contracts, photofinishing services, entertainment and sports venues, etc. However, they are not enforceable in all states.

 

?                     In every case, such a clause will be strictly scrutinized and reviewed. The old phrase “equity abhors forfeiture” does apply here.

?                     States that enforce and allow such clauses tend to regard them as acceptable portions of business contracts between parties. However, either as a matter of statute or equity, many states and decisions require such a clause to be:

§         clear and unambiguous;

§         conspicuous; and

§         use bold or larger type face.

?                     States that do not allow or enforce “limitation of liability” clauses usually do so because they violate public policy and/or state anti-indemnity statutes.

?                     You have to examine each state’s panoply of statutory and case law to determine if such a clause is valid to see why it may be enforceable in Florida but not in New Jersey. Such a clause may be enforceable in New York. See, e.g., Long Island Lighting Company v. Stone & Webster Engineering Corporation, 668 F.Supp. 237 (S.D.N.Y. 1987)

 

So, if a claim is asserted against your client or insured, check the contracts to see if (a) there is a limitation of liability clause, in (b) proper or at least clear (if not highlighted) form, which (c) is enforceable in the relevant state or jurisdiction.

 

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
 

5/12/2008        Utica Mutual Insurance Company v. Voyles

United States Court of Appeals for the Tenth Circuit
Extremely Broad Duty To Defend Fraud Claims Where "Possibility Of Recovery"
Under Oklahoma law, an insurer's duty to defend is substantially broad. The insurer must defend all claims that "may give rise to a possibility of a recovery under the policy." To assess the low "possibility" threshold, the court readily looks beyond the four corners of the Complaint. As such, the court considers all sources of information available to the insurer when the defense is demanded. Based upon the external information, a duty to defend likely exists. The Oklahoma District Court held, and the United States Court of Appeals for the Tenth Circuit affirmed, that Utica Mutual Insurance Company had a contractual duty to defend Great States and President Paul Voyles for fraud claims arising out of the failure to establish adequate health insurance and workers compensation benefits as promised. Voyles established an undercapitalized self-funded health insurance plan and purchased an excess liability policy that resulted in insufficient or nonexistent health care coverage. Utica argued that the policy excluded claims arising out of the failure of the self-insurance program and, therefore, Utica no duty to defend the related fraud claims. The appellate court found that the duty to defend persisted because, even though Utica may not be required to defend the creation of the related self-insurance program, the related fraud claims may give rise to the possibility of recovery under the policy.

Submitted by: Robert T. Franklin and Kerry C. Raymond (Franklin & Prokopik)

 

5/09/2008        Finchum v. Patterson

Tennessee Court of Appeals
Equitable Estoppel Held not Applicable against Insurance Agent Where Insurance Company Denied Coverage
Plaintiffs bought commercial fire insurance policy from defendant insurance agency that excluded coverage for theft. Insurance company denied coverage after equipment and merchandise were stolen from plaintiffs’ store. Plaintiffs filed suit claiming that defendant agency had represented to them that policy covered loss caused by theft, that they relied on this representation to their detriment, and that the defendant agency should therefore be estopped from relying on exclusion of theft in policy. Plaintiff appealed to circuit court after judgment for defendant, and circuit court held for plaintiffs based on estoppel. Court of Appeals reversed, holding that equitable estoppel was not applicable against insurance agent because insurance company, not agent, denied coverage. Court further held that plaintiffs are charged with knowledge of terms of insurance contract they signed, including provision that only insurance company could amend terms of policy, which clearly excluded losses from theft.

Submitted by: Gregory L. Cochran (McKenna Storer)

 

5/06/2008        Evelyn I. Rechtzigel Trust v. Fidelity National Title Ins. Co. of New York
Minnesota Court of Appeals

Title Insurance Does Not Cover Monetary Losses Arising Out of Bankruptcy Trustee’s Preference Action Against Insured Where Claims Do Not Implicate Marketability of Title to Real Property or Other Specified Risks
Plaintiff Evelyn I Rechtzigel Trust ("Rechtzigel") agreed to transfer property in Apple Valley, Minnesota to Pulte Homes Minnesota Corporation ("Pulte Homes") in a "like-kind" land exchange for farmland in another county owned by other persons. Rechtzigel contracted with Like Kind Exchange Services ("Like-Kind"), a qualified intermediary for like-kind exchanges under 26 U.S.C § 1031, to handle the transaction. Rechtzigel deeded the Apple Valley property to Pulte Homes and Pulte Homes paid over $600,000 to Like-Kind. Like-Kind transferred that money to a title agency to be paid to the owners of the farmland. At closing, the owners of the farmland delivered a deed transferring it directly to Rechtzigel, and the title agency distributed the funds to the sellers. Rechtzigel purchased title insurance for the farmland from Fidelity National Title Insurance Company of New York ("Fidelity"). Shortly after closing, Like-Kind filed for bankruptcy, and although all matters related to the farmland transaction had been completed, the bankruptcy trustee demanded that Rechtzigel restore $602,474.76 to the bankrupt estate and initiated a preference action seeking judgment in this amount. Rechtzigel filed several claims with Fidelity seeking a defense against the bankruptcy trustee’s action. Fidelity declined, contending that the title insurance did not cover these monetary demands. After settlement with the trustee, Rechtzigel sued Fidelity alleging, among other claims, breach of its duty to defend and cover losses under the title insurance contract. The trial court granted summary judgment to Fidelity and Rechtzigel appealed. The Court of Appeals affirmed, explaining that the title insurance only afforded coverage for title risks that were defects, liens, encumbrances or other conditions that render title unmarketable. Since the bankruptcy trustee’s focus was on the money, not the farmland, and did not take any action that would create a lien, encumbrance, or otherwise affect the farmland’s marketability, there was no coverage for losses arising out of the preference action. Moreover, because the preference action did not fall within the scope of coverage, Fidelity owed no duty to defend Rechtzigel against the preference complaint.

Submitted by: Bruce D. Celebrezze and Andrew J. King (Sedgwick, Detert, Moran & Arnold LLP)

 

REPORTED DECISIONS

 

The Cincinnati Insurance Companies v. Sirius America Insurance Company

Appeal from a judgment (denominated order) of the Supreme Court, Erie County (Diane Y. Devlin, J.), entered March 21, 2007 in a declaratory judgment action. The judgment, among other things, granted plaintiffs' motion for summary judgment and declared that defendant Sirius America Insurance Company is obligated to defend and indemnify plaintiffs C.O. Falter Construction Corp., Buffalo Sewer Authority and City of Buffalo Water Division in the underlying personal injury action.

CULLEY, MARKS, TANENBAUM & PEZZULO LLP, ROCHESTER (AMY L. DI FRANCO OF COUNSEL), FOR DEFENDANT-APPELLANT.
CHELUS, HERDZIK, SPEYER & MONTE, P.C., BUFFALO (THOMAS P. KAWALEC OF COUNSEL), FOR PLAINTIFFS-RESPONDENTS.
SLIWA & LANE, BUFFALO (MICHAEL J. PASTRICK OF COUNSEL), FOR DEFENDANT-RESPONDENT.

It is hereby ORDERED that the judgment so appealed from is unanimously modified on the law by vacating the second decretal paragraph and as modified the judgment is affirmed without costs.

Memorandum: We conclude that the judgment must be modified for the sole reason that Supreme Court erred in determining therein that the failure of defendant Sirius America Insurance Company (Sirius) to send its notice of disclaimer to the plaintiff in the underlying action as well as to three of the plaintiffs in this action, i.e., C.O. Falter Construction Corp. (Falter) and the Buffalo Sewer Authority and the City of Buffalo Water Division (collectively, City), renders the disclaimer invalid under Insurance Law § 3420 (d). Falter and the City have no standing to assert the alleged statutory violation by Sirius with respect to the plaintiff in the underlying action because they did not suffer an injury as a result thereof, and "they are not within the zone of interest which the statutory requirement of notice to the injured part[y] seeks to protect" (Batchie v Travelers Ins. Co., 130 AD2d 536, 537). With respect to Falter and the City, although they are entitled to notice of disclaimer pursuant to Insurance Law § 3420 (d) based upon their status as insureds, the notice of disclaimer was not rendered invalid under [*2]Insurance Law § 3420 (d) based on the failure of Sirius to send it to them inasmuch as Sirius complied with the statute by sending the notice of disclaimer to plaintiff Cincinnati Insurance Companies, the insurance carrier for Falter and the City (see Excelsior Ins. Co. v Antretter Contr. Corp., 262 AD2d 124, 127-128). We therefore modify the judgment accordingly, and we otherwise affirm the judgment for reasons stated in the decision at Supreme Court.

Kassis v. The Ohio Casualty Insurance Company

 

Appeal from a judgment (denominated order) of the Supreme Court, Onondaga County (Donald A. Greenwood, J.), entered February 16, 2007 in a declaratory judgment action. The judgment, inter alia, granted plaintiffs' motion for summary judgment and denied defendant's cross motion for summary judgment.


DAMON & MOREY LLP, BUFFALO (VINCENT G. SACCOMANDO OF COUNSEL), FOR DEFENDANT-APPELLANT.
GREEN & SEIFTER, ATTORNEYS, P.L.L.C., SYRACUSE (LAWRENCE M. ORDWAY, JR., OF COUNSEL), FOR PLAINTIFFS-RESPONDENTS.

 

It is hereby ORDERED that the judgment so appealed from is reversed on the law without costs, the motion is denied in its entirety, the declaration is vacated, the cross motion is granted in part and judgment is granted in favor of defendant as follows:


It is ADJUDGED and DECLARED that defendant is not obligated to defend or indemnify plaintiff Joseph Kassis in the underlying action pursuant to its commercial general liability policy.

Memorandum: Plaintiffs, Joseph Kassis and Kassis Superior Sign Co., Inc. (Superior Sign), commenced this action seeking, inter alia, a declaration that defendant has a duty to defend and indemnify Kassis in the underlying action. According to plaintiffs, defendant is obligated to defend and indemnify Kassis under a commercial general liability (CGL) policy issued by defendant to Superior Sign on the grounds that he was an additional insured under the policy's blanket additional insured endorsement and that he was an intended third-party beneficiary under the policy. We reject plaintiffs' contention on both grounds. The blanket additional insured endorsement provides in relevant part that the term defining "who is an insured" "is amended to include as an insured any person or organization who you are required to name as an additional insured on this policy under a written contract or agreement." Pursuant to the property lease executed by Kassis and Superior Sign, Superior Sign would procure CGL coverage for "the mutual benefit of" Kassis and Superior Sign, but it does not require that Superior Sign name Kassis as an additional insured on Superior Sign's CGL policy issued by defendant. That policy expressly and unambiguously provides that the written contract or agreement between Superior Sign and Kassis must require that Kassis be named as an additional insured, and the lease in question does not do so (see generally Maurice Goldman & Sons v Hanover Ins. Co., 80 NY2d 986, 987). If Kassis and Superior Sign had intended the term "mutual benefit" in the lease to mean that Kassis would be named as an additional insured, the lease could have so provided. Indeed, we note that it is in fact of "mutual benefit" to Kassis and Superior Sign that Superior Sign has coverage for the risk of loss created by Superior Sign's use and occupancy of the leased property, particularly in light of the lease provision requiring Superior Sign to indemnify Kassis for loss or damage to third parties.

We further conclude that Kassis is not an intended third-party beneficiary under the policy between defendant and Superior Sign. "While it [is] well settled that the identity of a third-party beneficiary need not specifically be set forth in the contract . . ., it must be demonstrated that the parties to the insurance policy intended to insure the interest for which the third-party beneficiary seeks coverage . . . Put another way, where the insurance contract does not name, describe, or otherwise refer to the entity or individual seeking the benefit thereof as an insured, there is no obligation to defend or indemnify" (State of New York v American Mfrs. Mut. Ins. Co., 188 AD2d 152, 155). Here, plaintiffs rely on policy language setting forth that the exclusion for contractual liability, pursuant to which the insured is obligated to pay damages based on the assumption of such liability in a contract, does not apply to liability for damages "[a]ssumed in a contract . . . that is an insured contract.' " Although it is undisputed that the lease between Kassis and Superior Sign is an insured contract within the meaning of the policy, the provision upon which plaintiffs rely simply affords coverage to Superior Sign with respect to its duty to provide contractual indemnification. There is no suggestion of an intent thereby to extend direct coverage to Kassis (see generally Jefferson v Sinclair Ref. Co., 10 NY2d 422, 426-427). Thus, Kassis is at best "merely an incidental beneficiary," not an intended third-party beneficiary (Cole v Metropolitan Life Ins. Co., 273 AD2d 832, 833; see American Mfrs. Mut. Ins. Co., 188 AD2d at 155-156).

Finally, we note that no declaratory relief has been granted with respect to Superior Sign inasmuch as it is not a party to the underlying action.

All concur except Smith and Centra, JJ., who dissent and vote to affirm in the following Memorandum: We respectfully dissent, and would affirm the judgment. We disagree with the majority that plaintiff Kassis Superior Sign Co., Inc. (Superior Sign) was not required to name plaintiff Joseph Kassis as an additional insured under the commercial general liability (CGL) policy at issue. Pursuant to the terms of defendant's CGL policy, "any person or organization who [Superior Sign is] required to name as an additional insured on this policy under a written contract or agreement" will be covered as an additional insured. The clause at issue in the lease executed by Kassis and Superior Sign requires that Superior Sign procure CGL coverage "at its sole cost and expense and for the mutual benefit of" Superior Sign and Kassis, with a combined single limit of $1 million per occurrence and an annual aggregate of $2 million, plus an excess liability policy with additional coverage in the amount of $1 million. The paragraph in the lease preceding that clause requires that Kassis maintain fire insurance for the benefit of both parties, which "may be written either under separate policies in Landlord's name or combined with other coverages acquired by Tenant," and the clause following the one at issue states that Superior Sign may maintain additional coverage for its own benefit on any improvements that it has placed on the premises and for any business losses that it may sustain. Based upon the placement of the clause at issue, along with the inclusion of the specific amounts of the coverage that was required, and based on our interpretation of the three clauses as a whole to give effect to the intent of the parties as expressed therein (see Insurance Corp. of N.Y. v Central Mut. Ins. Co., 47 AD3d 469, 471; Hook Superx, Inc. v Ciampa N. Co., 2 AD3d 587, 589; see generally Empire Props. Corp. v Manufacturers Trust Co., 288 NY 242, 248), we conclude that the clause at issue requires that Kassis be named as an additional insured on Superior's CGL policy, bringing him within defendant's policy.

Finally, we note that it is mere speculation for the majority to state that "it is in fact of mutual benefit' to Kassis and Superior Sign that Superior Sign has coverage for the risk of loss created by Superior Sign's use and occupancy of the leased property, particularly in light of the lease provision requiring Superior Sign to indemnify Kassis for loss or damage to third parties." While it may eventually inure to the benefit of Kassis for Superior Sign to have such coverage, the coverage presently does not directly benefit Kassis unless Kassis is required to be named as an additional insured under the CGL policy.

Chong Sim Kim v. Amaya

 

Yoon & Kim LLP, New York (Jay H. Kim of counsel), for appellants.
Abrams, Gorelick, Friedman & Jacobson, P.C., New York
(Dennis J. Monaco of counsel), for respondent.

Order, Supreme Court, New York County (Milton A. Tingling, J.), entered January 29, 2007, which, insofar as appealed from as limited by the briefs, granted the motion of defendant Chrysler Financial for summary judgment dismissing the complaint on the ground that plaintiff Chong Sim Kim did not sustain a serious injury as defined by Insurance Law § 5102(d), unanimously affirmed, without costs.

Defendant established a prima facie entitlement to summary judgment by submitting affirmed reports of a neurologist and an orthopedist, who reviewed plaintiff's prior medical records, examined her and performed objective tests before concluding that plaintiff was neurologically intact, had no meaningful limitation of use of her cervical or lumbar spine, and that the findings on the MRI films and x-rays were degenerative in nature and not the result of the subject car accident (see Gaddy v Eyler, 79 NY2d 955 [1992]).

Plaintiff's opposition failed to raise a triable issue of fact as to whether a serious injury was sustained within the meaning of the Insurance Law. The affirmed report from the physician who examined plaintiff more than three years after the accident, fails to provide a causal connection between the alleged injuries and the accident (see Montgomery v Pena, 19 AD3d 288, 289-290 [2005]), and does not account for the degenerative changes that the MRI films revealed (see Mullings v Huntwork, 26 AD3d 214, 216 [2006]). Plaintiff also failed to provide a reasonable explanation as to why she terminated treatment at the end of 2002 (see Pommells v Perez, 4 NY3d 566, 574 [2005]). Furthermore, plaintiff did not raise a triable issue of fact in the form of competent objective evidence substantiating her 90/180-day claim (see Johnson v Marriott Mgt. Servs. Corp., 44 AD3d 450 [2007]).

The cause of action for intentional infliction of emotional distress was properly dismissed because the allegations upon which the claim is based are not "sufficiently outrageous" to support the cause of action (see Howell v New York Post Co., 81 NY2d 115, 122 [1993]).

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

Kithcart v.  Mason
 

Calendar Date: March 28, 2008
Before: Peters, J.P., Carpinello, Kane, Malone Jr. and Stein, JJ.


Lewis, Johs, Avallone & Aviles, Melville (Michael G. Kruzynski of counsel), for appellant.
Rusk, Wadlin, Heppner & Martuscello, L.L.P., Kingston                                                                      (Daniel G. Heppner of counsel), for respondents.

MEMORANDUM AND ORDER


Kane, J.

Appeal from a judgment of the Supreme Court (Zwack, J.), entered March 6, 2007 in Ulster County, upon a verdict rendered in favor of plaintiffs.

Plaintiff Eleanor Kithcart (hereinafter plaintiff) was driving her car when it was struck by a vehicle driven by decedent, Robert I. Mason. To recover for injuries that she sustained in the accident, plaintiff and her husband, derivatively, commenced this personal injury action. Defendant conceded decedent's responsibility, leading to a trial solely on the issues of whether plaintiff suffered a serious injury under Insurance Law § 5102 (d), causation and damages. The jury found that plaintiff suffered a serious injury under both the permanent consequential limitation and significant limitation of use categories. It awarded her $60,000 for past pain and suffering and $400,000 for future pain and suffering ^[FN1]. Defendant moved to set aside the verdict pursuant to CPLR 4404 (a). Supreme Court (Kavanagh, J.) denied the motion, prompting this appeal from the judgment entered on the jury's verdict.

Supreme Court did not err in denying defendant's motion for judgment as a matter of law at the close of plaintiffs' case and his motion to set aside the verdict. To establish entitlement to a judgment based upon insufficient evidence, there must be "no valid line of reasoning and permissible inferences which could possibly lead rational [people] to the conclusion reached by the jury on the basis of the evidence presented at trial" (Cohen v Hallmark Cards, 45 NY2d 493, 499 [1978]; see O'Connor v Sleasman, 37 AD3d 954, 956 [2007], lv denied 9 NY3d 806 [2007]). Serious injury under the categories at issue here can only be established through medical proof containing "objective, quantitative evidence with respect to diminished range of motion or a qualitative assessment comparing plaintiff's present limitations to the normal function, purpose and use of the affected body organ, member, function or system" (John v Engel, 2 AD3d 1027, 1029 [2003]; see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350 [2002]). Any demonstrated limitation must be significant, not minor, mild or slight (see Pugh v De Santis, 37 AD3d 1026, 1029 [2007]; King v Johnston, 211 AD2d 907, 907 [1995]).

The quantitative standard here required objective proof of plaintiff's bulging cervical discs and a medical expert's quantifications of the limitations caused by that condition (see Pianka v Pereira, 24 AD3d 1084, 1086 [2005]). Plaintiff's neurologist, who treated her for the four years between her accident and the trial, testified that an X ray taken on the day of the accident depicted a cervical strain and narrowing of the disc spaces for two discs. A subsequent X ray indicated further degeneration and a large disc bulge. An MRI taken a year and a half after the accident indicated the same large disc bulge and an arthritic degenerative condition of the cervical spine. An EMG taken around the same time revealed active nerve impingement, which could lead to radiculopathy. Based upon this objective evidence, the neurologist opined that plaintiff's cervical strain, disc problems and radiculopathy were caused by the accident and limited the range of motion of her cervical spine (compare Pianka v Pereira, 24 AD3d at 1086). He quantified the limitations to her range of motion through his examinations, which included observations of plaintiff's degrees of rotation, flexion and extension, then compared those findings to normal degrees of movement of the cervical spine (see Silva v Vizcarrondo, 31 AD3d 292, 292 [2006]; compare Felton v Kelly, 44 AD3d 1217, 1219 [2007]; Mikl v Shufelt, 285 AD2d 949, 950 [2001]). Considering his treatment with only slight changes over four years, the neurologist also opined that plaintiff's condition was permanent. Pairing this medical proof with testimony from plaintiff and her husband concerning her inability to perform certain activities of daily living, plaintiffs submitted sufficient proof that plaintiff suffered from a serious injury, not a minor one (see Gehrer v Eisner, 19 AD3d 851, 852-853 [2005]).

The verdict was not against the weight of the evidence. The standard is whether the evidence preponderated so in favor of defendant that the jury could not have reached its verdict on any fair interpretation of the evidence (see Black v City of Schenectady, 21 AD3d 661, 662 [2005]). Both plaintiffs' and defendant's experts agreed that the accident caused plaintiff's cervical condition. While the defense expert opined that plaintiff's injury was not permanent and was due mainly to degenerative changes related to the aging process, we defer to the jury's evaluation of these conflicting medical opinions and its resolution of the associated credibility determination (see Apuzzo v Ferguson, 20 AD3d 647, 648 [2005]; Jones v Davis, 307 AD2d 494, 496 [2003], lv dismissed 1 NY3d 566 [2003]).

The jury's award of damages for future pain and suffering should be reduced. While a jury's assessment of damages is accorded deference, courts will disturb an award which deviates materially from what would be reasonable compensation for the injuries sustained, as determined by examining comparable cases (see Hensley v Lawrence, 40 AD3d 1375, 1376 [2007]; see also CPLR 5501 [c]). It was established that plaintiff suffers from a permanent disability to her cervical spine, with bulging discs and radiculopathy that impair her range of motion. On the other hand, testimony concerning her future need for cortisone injections and surgery was speculative, and plaintiff had previously rebuffed recommendations for similar treatment (see Brown v Elliston, 42 AD3d 417, 419 [2007]; Donatiello v City of New York, 301 AD2d 436, 437 [2003]). Plaintiff returned to work full time only three days after the accident and lost no further time from her employment as a secretary. At the time of trial she was 63 years old and the jury awarded damages for her life expectancy of 20 years. Comparing plaintiff's circumstances to similar cases, we find that an award of $300,000 for future pain and suffering is more in line with reasonable compensation (see Acton v Nalley, 38 AD3d 973, 976-977 [2007] [fractured vertebra with permanent compression and unrefuted testimony concerning life-long problems for young man; future pain and suffering award reduced to $450,000]; Obdulio v Fabian, 33 AD3d 418, 419-420 [2006] [herniated disc resulting in cervical radiculopathy and bulging disc resulting in lumbar radiculopathy with occasional pain controlled by over-the-counter medication; future pain and suffering award reduced to $25,000]; Gehrer v Eisner, 19 AD3d at 853 [cervical nerve root injury resulting in loss of mobility and affecting the ability to work, sleep and perform daily routine; future pain and suffering award reduced to $125,000]; Schmidt v Bartolotta, 17 AD3d 1162, 1163 [2005] [injuries to back and neck which required modification of job duties and caused inability to perform household duties; future pain and suffering award of $275,000 reasonable]; Rountree v Manhattan & Bronx Surface Tr. Operating Auth., 261 AD2d 324, 328 [1999], lv denied 94 NY2d 754 [1999] [herniated disc with cervical pain and radiculopathy, necessitating surgery and loss of ability to perform former job in 49-year-old man; $300,000 future pain and suffering award did not deviate from reasonable compensation]).

Peters, J.P., Carpinello, Malone Jr. and Stein, JJ., concur.

ORDERED that the judgment is modified, on the facts, without costs, by reversing so much thereof as awarded plaintiff Eleanor Kithcart $400,000 for future pain and suffering; new trial ordered on the issue of said damages unless, within 20 days after service of a copy of the order herein, plaintiffs stipulate to reduce the award for future pain and suffering to $300,000, in which event said judgment, as so modified, is affirmed.

Footnotes

Footnote 1:The jury also found that plaintiff's husband did not establish his derivative claim.

 

Curtis v. Brent

Jonathan Silver, Kew Gardens, for appellant.
Law Offices of Vincent P. Crisci, New York (Caroline Papadatos of counsel), for respondent.

Order, Supreme Court, Bronx County (Stanley Green, J.), entered June 7, 2007, which granted defendant's motion for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), unanimously affirmed, without costs.

Plaintiff's verified bill of particulars, medical records, and deposition testimony and defendant's expert's affirmed report established prima facie that plaintiff did not sustain a serious injury, but rather cervical, lumbar and left shoulder strains, which had resolved as of 16 months after the accident, and that he was not prevented, for 90 of the 180 days following the accident, from performing his usual and customary activities (see Lopez v Simpson, 39 AD3d 420 [2007]; Norona v Manhattan & Bronx Surface Tr. Operating Auth., 40 AD3d 480 [2007]; Style v Joseph, 32 AD3d 212, 214 n * [2006]). Plaintiff's experts' reports provide neither quantitative nor qualitative assessments of the seriousness of plaintiff's injuries (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350-351 [2002]), and contain no competent medical evidence that he sustained a medically determined injury of a nonpermanent nature (see id. at 357; Lopez, 39 AD3d at 421; Norona, 40 AD3d at 480-481).

Sconiers v. Barber

Appeal from an order of the Supreme Court, Niagara County (Richard C. Kloch, Sr., A.J.), entered January 16, 2007 in a personal injury action. The order denied the motion of defendants Michelle Ragusa and Michael Ragusa for summary judgment dismissing the complaint against them.

Bouvier Partnership, LLP, Buffalo (Norman E.S. Greene of counsel), for defendants-appellants.
Cellino & Barnes, PC, Buffalo (John A. Sheehan of counsel), for plaintiff-respondent.

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

Memorandum: Plaintiffs commenced this action seeking damages for injuries sustained by Ronald J. Sconiers (plaintiff) in a motor vehicle accident, alleging that he sustained a serious injury under the categories of permanent consequential limitation of use and significant limitation of use (see Insurance Law § 5102 [d]). Michelle Ragusa and Michael Ragusa (defendants) moved for summary judgment dismissing the complaint against them on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d). We conclude that Supreme Court properly denied the motion. In support thereof, defendants submitted the report of the physician who examined plaintiff on their behalf. That physician concluded that plaintiff's "cervical spine range of motion is limited in flexion/extension, and right and left rotation" but that plaintiff had no disability relating to the motor vehicle accident. In opposition to the motion, plaintiffs submitted the affirmation of plaintiff's treating physician, who indicated that, based on a lumbar MRI, plaintiff had severe L4-5 and L5-S1 disc herniations with marked disc desiccation, that his lumbar range was 45% to 50% of normal and his cervical range of motion was 50% of normal, that his condition was permanent, and that the accident caused the soft tissue component of the disc herniations and activated the degenerative conditions in his spine. Even assuming, arguendo, that defendants met their initial burden on the motion, we conclude that plaintiffs raised triable issues of fact whether plaintiff sustained a serious injury under the permanent consequential limitation of use or significant limitation of use categories (see Brown v Dunlap, 4 NY3d 566, 577).

Thomas v. Singh

Robert P. Tusa (Sweetbaum & Sweetbaum, Lake Success, N.Y.
[Marshall D. Sweetbaum], of counsel), for appellant.
Rubenstein & Rynecki, Brooklyn, N.Y. (Kliopatra Vrontos of counsel), for respondents.


DECISION & ORDER

In an action, inter alia, to recover damages for personal injuries, etc., the defendant appeals, as limited by his brief, from so much of an order of the Supreme Court, Kings County (Vaughan, J.), dated October 24, 2007, as denied his motion for summary judgment dismissing the complaint on the ground that the plaintiff Gary N. Thomas did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

The defendant met his prima facie burden of showing that the plaintiff Gary N. Thomas (hereinafter 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). In opposition, the plaintiffs raised a triable issue of fact (see generally Alvarez v Prospect Hosp., 68 NY2d 320, 324). Accordingly, the Supreme Court correctly denied the defendant's motion for summary judgment dismissing the complaint.
RIVERA, J.P., LIFSON, MILLER, CARNI and ENG, JJ., concur.

 

Qurashi v. Hittin

Robert P. Tusa (Sweetbaum & Sweetbaum, Lake Success, N.Y.
[Marshall D. Sweetbaum] of counsel), for appellant.
Schoen & Strassman, LLP, Huntington, N.Y. (Joseph B. Strassman of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Kings County (Ambrosio, J.), dated October 15, 2007, which denied the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendant met his prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957; see also Meyers v Bobower Yeshiva Bnei Zion, 20 AD3d 456). In opposition, however, the plaintiff raised triable issues of fact regarding whether his range of motion limitations, as quantified and compared to normal by his chiropractor (see Toure v Avis Rent A Car Sys., 98 NY2d 345), his bulging discs at C3-4, C4-5, C6-7, L1-2, L2-3, and L3-4, and his herniated discs at C5-6 and L4-5, were causally related to or exacerbated by the subject accident (cf. McKenzie v Redl, 47 AD3d 775, 776).

The defendant's remaining contention is without merit.
SKELOS, J.P., SANTUCCI, COVELLO, McCARTHY and CHAMBERS, JJ., concur.

Rodriguez v. Reyes

Baker, McEvoy, Morrissey & Moskovits, P.C. (Feinman & Grossbard, P.C., White Plains, N.Y. [Steven N. Feinman], of counsel), for appellants.
Friedman, Friedman, Chiaravalloti & Giannini, New York, N.Y.
(Daniel J. Friedman of counsel), for respondent.
Edward J. Garfinkel (Fiedelman & McGaw, Jericho, N.Y.
[Dawn C. DeSimone], of counsel), for defendant Trans-Millennium Enterprises Corp.


DECISION & ORDER

In an action to recover damages for personal injuries, the defendants Domingo Reyes and Juan A. Jungbluth appeal from an order of the Supreme Court, Kings County (Schmidt, J.), dated October 23, 2007, which denied their motion for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

In her brief on appeal, the plaintiff concedes that the defendants Domingo Reyes and Juan A. Jungbluth (hereinafter the appellants) met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). We agree with the plaintiff that in opposition, she raised a triable issue of fact as to whether, as a result of the subject accident, she sustained a serious injury to her left knee, under the permanent consequential and/or significant limitation of use categories of Insurance Law § 5102(d). Among other things, she submitted the affirmed report of her treating orthopedist, Dr. Frank Carr. His opinion was based on his examination of the plaintiff shortly after the accident, on his examination performed after the motion for summary judgment was made, and upon an arthroscopic procedure he performed upon the plaintiff approximately one month post-accident, which showed, among other things, a tear in the medial meniscus. He opined that the plaintiff's injuries and the range of motion limitations that he observed were permanent, and were causally related to the subject accident (see Altreche v Gilmar Masonry Corp.,AD3d, 2008 NY Slip Op 01902 [2008]; Rosado v Martinez, 289 AD2d 386; Vitale v Lev Express Cab Corp., 273 AD2d 225). Contrary to the appellants' contention, the plaintiff adequately explained the gap in her treatment (see Gibson v Tordoya, 44 AD3d 1000, 1001; Black v Robinson, 305 AD2d 438, 439-440).
RIVERA, J.P., LIFSON, MILLER, CARNI and ENG, JJ., concur.

Seebaran v. Mendonca

Susan R. Nudelman, Richmond Hill, N.Y. (Ken Yilmaz of counsel), for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Holly E. Peck of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Dollard, J.), dated March 30, 2007, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendant met his prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957).

In opposition, the plaintiff failed to raise a triable issue of fact. The reports from Liberty Advanced Medical were without any probative value since they were unaffirmed (see Patterson v NY Alarm Response Corp., 45 AD3d 656; Verette v Zia, 44 AD3d 747; Nociforo v Penna, 42 AD3d 514; see also Grasso v Angerami, 79 NY2d 813; Pagano v Kingsbury, 182 AD2d 268). The same holds true for the magnetic resonance imaging report of the plaintiff's left shoulder by Dr. Mark Freilich. In addition, the plaintiff's records from Jamaica Hospital were without any probative value since they were uncertified (see Mejia v DeRose, 35 AD3d 407).

The affirmed medical report of the plaintiff's treating orthopedic surgeon was also without probative value, and thus failed to raise a triable issue of fact, since he clearly relied on the unsworn report of Dr. Freilich in arriving at his conclusions (see Malave v Basikov, 45 AD3d 539; Verette v Zia, 44 AD3d 747; Furrs v Griffith, 43 AD3d 389; see also Friedman v U-Haul Truck Rental, 216 AD2d 266, 267). Further, neither the plaintiff nor his treating orthopedic surgeon adequately explained the lengthy gap in the plaintiff's treatment evident in the record (see Pommells v Perez, 4 NY3d 566; Wei-San Hsu v Briscoe Protective Sys., Inc., 43 AD3d 916; Bestman v Seymour, 41 AD3d 629; Albano v Onolfo, 36 AD3d 728).

Finally, the plaintiff's affidavit was insufficient, on its own, to raise a triable issue of fact (see Rashid v Estevez, 47 AD3d 786; Roman v Fast Lane Car Serv., Inc., 46 AD3d 535; Verette v Zia, 44 AD3d 747; Duke v Saurelis, 41 AD3d 770).
SKELOS, J.P., SANTUCCI, COVELLO, McCARTHY and CHAMBERS, JJ., concur.

Sforza v. Big Guy Leasing Corp.

Sacco & Fillas, LLP, Whitestone, N.Y. (Andrew Wiese of counsel), for respondent.


DECISION & ORDER

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

ORDERED that the order is affirmed, with costs.

The defendants met their prima facie burden of showing that the plaintiff, who was 64 years old at the time of the subject accident, did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. In support of their motion, the defendants submitted an affirmation of a neurologist who quantified restrictions in range of motion in the plaintiff's cervical and lumbar spine, but, based upon a physical examination, attributed those restrictions to age-related crepitus and arthritis (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Elyer, 79 NY2d 955, 956-957). The neurologist stated that magnetic resonance imaging (hereinafter MRI) examinations of the plaintiff's cervical and lumbar spine were "reported to show significant DJD changes" but it is unclear as to whether the neurologist examined the MRI films, or who reported degenerative changes.

In response to this prima facie showing, the plaintiff raised a triable issue of fact. An affirmed MRI report indicated that the plaintiff suffered herniated discs in the cervical region of the spine and herniated and bulging discs in the lumbar region of the spine. An initial X-ray of the cervical spine revealed "some degenerative change." However, Dr. Baum, the plaintiff's treating orthopedist, concluded that "while this patient may have had some underlying development of degenerative joint disease due to her age, the MRI findings of Multi-level bulging and herniated discs to both her neck and back are a direct result of the impact she sustained as a result" of the accident. Dr. Baum noted that the plaintiff suffered quantified restrictions of range of motion of the cervical and lumbar spine based upon examinations shortly after the accident, and based upon a recent examination.

The defendants seek to attribute the plaintiff's injury to an accident in or about 1992 in which the plaintiff's lower back was injured. The plaintiff testified at her deposition that she never injured her neck, and the injury to her lower back healed. Accordingly, there is no evidence in this record of a pre-existing injury to the plaintiff's neck. Further, considering the length of time between the two accidents, and the plaintiff's testimony that her lumbar region of the spine completely healed, Dr. Baum's failure to consider the 1992 accident did not render his conclusions speculative.

Accordingly, there are triable issues of fact which preclude the granting of summary judgment. SKELOS, J.P., SANTUCCI, COVELLO, McCARTHY and CHAMBERS, JJ., concur.

Yung v. Eager

 

Alan M. Greenberg, P.C., New York, N.Y. (Jeremy A. Hellman of counsel), for appellants.
O'Connor, McGuinness, Conte, Doyle & Oleson, White Plains, N.Y.                                           (Montgomery L. Effinger 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, Westchester County (Giacomo, J.), entered June 7, 2007, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that neither plaintiff 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 defendants' motion for summary judgment dismissing the complaint is denied.

The defendants failed to met their prima facie burden of showing that neither the plaintiff Ken Fea Yung nor the plaintiff Wai Hing Yung 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 defendants' motion papers did not adequately address the plaintiffs' claims, clearly set forth in their bill of particulars, that they each 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 subject accident. The plaintiffs' bill of particulars alleged that as a result of the subject accident, they were each confined to their home for three to four months after the accident. The defendants' examining orthopedic surgeon conducted examinations of the plaintiffs more than four months after the subject accident occurred. He did not relate his medical findings to this category of serious injury for the period of time immediately following the subject accident (see Joseph v Hampton, 48 AD3d 638; Deville v Barry, 41 AD3d 763, 764; Torres v Performance Auto. Group, Inc., 36 AD3d 894, 895; Sayers v Hot, 23 AD3d 453).

Since the defendants failed to satisfy their prima facie burdens, it is unnecessary for this Court to consider whether the plaintiffs' opposition papers were sufficient to raise a triable issue of fact (see Joseph v Hampton, 48 AD3d at 638; Sayers v Hot, 23 AD3d 453). SPOLZINO, J.P., RITTER, DILLON, BALKIN and LEVENTHAL, JJ., concur.

The Scotts Company, LLC v. Ace Indemnity Insurance Company

Quinn Emanuel Urquhart Oliver & Hedges, LLP, New York
(Kevin S. Reed of counsel), for appellant.
Siegal & Park, Mount Laurel, NJ, (Brian G. Fox of counsel),
for respondent.

Order and amended order, Supreme Court, New York County (Bernard J. Fried, J.), entered March 1, 2007 and March 26, 2007, respectively, which granted the motion of defendant Pacific Employers Insurance Company (PEIC) for summary judgment dismissing the complaint as against it and declared that the Settlement Agreement and Release executed by the parties in December 2000 is valid and enforceable, unanimously affirmed, with costs.

Pursuant to a settlement agreement and release entered into in December 2000, plaintiff, in exchange for $325,000, released defendants from any and all past, present and future claims under insurance policies, whether known or unknown, issued by defendants. Four and a half years after executing the agreement and accepting the $325,000, plaintiff commenced this action to rescind the agreement. Plaintiff claims that the policy chart prepared by its agent, on which plaintiff relied in the negotiations leading to the agreement, contained a visual error that gave the impression that the total amount in primary coverage under the policies issued by defendant PEIC was $16 million. It is undisputed that the actual limits of each of the PEIC primary policies were $2 million per occurrence with an aggregate limit of $10 million per year. Thus, the difference between the primary coverage depicted on the policy chart and the amount of primary coverage actually provided by the PEIC policies was $64 million. It is also undisputed that the correct limits were written on the policy chart in eight different places, i.e., where the policies were depicted. However, the bars of the graph representing the policies were a smaller size than was commensurate with the dollar amounts.

There is no legitimate dispute that the settlement agreement and release was entered into by two sophisticated commercial entities, that there were no deceptive or high pressure tactics, that there was no fine print in the unambiguous agreement, and that there was no disparity between plaintiff and defendants in experience or bargaining power. The negotiations took place over
a period of 21 months; plaintiff was advised by legal counsel and had retained a consulting firm that assists policyholders in resolving complex insurance claims. Plaintiff was free to walk away from the negotiations at any time and litigate its differences with defendants in the United States District Court for the Southern District of New York, where a declaratory judgment action by defendants was pending. Thus, plaintiff's claim of procedural unconscionability fails as a matter of law (see Gillman v Chase Manhattan Bank, 73 NY2d 1, 10-11 [1988]; 186-90 Joralemon Assoc. v Dianzon, 161 AD2d 329, 330 [1990]; Chrysler Credit Corp. v Kosal, 132 AD2d 686 [1987]). Nor, contrary to plaintiff's contention, does the disparity in exchanged value i.e., the release of $80 million in insurance coverage for $325,000 demonstrate substantive unconscionability (see Gillman, 73 NY2d at 12), since the disparity between the amount of insurance coverage plaintiff believed it was releasing, i.e., $16 million, and the $325,000 it received in exchange was itself substantial, and yet, after 21 months of negotiations, plaintiff agreed to that exchange.

Plaintiff's claim of mutual mistake also fails as a matter of law. Plaintiff admits that its agent prepared the policy chart based on its review of the insurance policies, rather than on any information provided by PEIC. Moreover, while the bar graph may have been inaccurate, the text that accompanied it set forth the correct policy limits. Since plaintiff's agent obviously was aware of those limits, there was no mistake. However, even assuming there was a mistake, the mistake was not so material as to go to the foundation of the agreement (see DaSilva v Musso, 53 NY2d 543, 552 [1981]). The stated purpose of the agreement was to fully and finally terminate the parties' relationship as insurer and insured under the policies. The nature of the agreement thus remains intact irrespective of the policy limits. In fact, although in the agreement the policies were identified by number, policy period and issuing company, the policy limits were not even mentioned. Moreover, under the agreement, plaintiff released an unknown number of policies with unknown limits. In any event, it does not avail plaintiff to invoke even a material mistake to avoid the consequences of its own negligence (see P.K. Dev. v Elvem Dev. Corp., 226 AD2d 200, 201 [1996]). Plaintiff could have easily ascertained the limits of the policies by reading the policies. Instead, it assumed the risk of proceeding based upon second-hand information presented to it by its own agent.

Further discovery will not aid plaintiff in overcoming the hurdles to its claims.

We have considered plaintiff's remaining contentions and find them without merit.

Catskill Mountain Mechanical, LLC v. Marshall and Sterling Upstate, Inc.

Calendar Date: March 24, 2008
Before: Cardona, P.J., Carpinello, Rose, Malone Jr. and Stein, JJ.


Lustig & Brown, L.L.P., Stamford, Connecticut
(Christopher B. Weldon of counsel), for appellant-respondent.
Freeman Howard, P.C., Hudson (Paul M. Freeman of
counsel), for respondent-appellant.

MEMORANDUM AND ORDER

Stein, J.

Appeals (1) from an order of the Supreme Court (Benza, J.), entered September 21, 2004 in Albany County, which, among other things, denied defendant's motion for summary judgment dismissing the complaint, and (2) from an order of said court (McNamara, J.), entered March 1, 2007, which denied plaintiff's motion to vacate a conditional order of preclusion and to reinstate the action to the trial calendar.

Plaintiff first obtained insurance from defendant, an insurance agency, in connection with plaintiff's business of sheet metal fabrication in 1994. From 1994 to 2001, plaintiff obtained and renewed various insurance policies through defendant, including liability and workers' compensation insurance. In 1998, plaintiff was approached by another company about providing a service of "cleaning out" ships, a process in which cement is vacuumed out by stevedores, using a piece of heavy equipment called a Kovako, which is located on a floating barge. Plaintiff began performing this operation on a regular basis in the spring of 1999. Plaintiff's owner alleges that he contacted defendant by telephone to request insurance coverage for the new operation and that defendant's agent almost immediately called him back and advised him that the necessary coverage had been obtained. Plaintiff's owner also alleges that he had several subsequent conversations with defendant's agents, in which the specific nature of plaintiff's new business was discussed in detail, although there are no allegations that those conversations concerned insurance coverage. Defendant's representatives dispute the alleged telephone conversations and assert that they were unaware of the nature of the business.

In any event, after the alleged telephone calls, plaintiff received an endorsement to its insurance policy which contained only a longshoreman's clause for workers' compensation coverage involving operations near water. The addition of the longshoreman's clause did not require any increase in the premium. Plaintiff's owner acknowledged that he received that endorsement and failed to read it. He also acknowledged that he had received other policy renewals, endorsements, certificates of insurance and insurance summaries which did not contain any reference to cement unloading. In October 2000, the Kovako was damaged and plaintiff made an insurance claim, which was denied on the basis of lack of coverage.

Plaintiff commenced this action against defendant for failure to provide sufficient liability coverage. In May 2004, after the completion of discovery, including motions related thereto, defendant moved for summary judgment, and plaintiff cross-moved for summary judgment. In September 2004, Supreme Court (Benza, J.) denied both motions on the basis that there were questions of fact regarding whether plaintiff had the right to rely on defendant's "presumed obedience to his instructions," which would rebut the presumption that plaintiff knew the contents of the insurance policy in effect at the time of the damage to the Kovako.

In March 2005, three days prior to trial, defendant made a motion in limine seeking to preclude plaintiff from offering evidence at trial concerning alleged conversations between the parties, based on a prior conditional order of preclusion. Plaintiff opposed the motion and cross-moved to vacate the conditional order of preclusion. Supreme Court (McNamara, J.) denied plaintiff's cross motion and, sua sponte, converted defendant's motion to one for summary judgment, orally granted the motion and dismissed the complaint on the basis that plaintiff could not make a prima facie case on liability or damages without the precluded evidence.

In March 2006, plaintiff moved for an order reinstating the action to the trial calendar and vacating the conditional order of preclusion. By order entered March 1, 2007, Supreme Court denied the motion. Plaintiff now appeals from that order, and defendant appeals from the September 2004 order denying its summary judgment motion.

We find that Supreme Court (Benza, J.) erred in denying defendant's motion for summary judgment. "While insurance agents have a common-law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so, absent fraud or other wrongful conduct on the part of the insurance agent, an insured is conclusively presumed to know the contents of an insurance policy concededly received, even though the insured did not read or review it" (Laconte v Bashwinger Ins. Agency, 305 AD2d 845, 846 [2003] [internal quotation marks and citations omitted]). We have recognized exceptions to this presumption only in limited circumstances, such as where the agent failed to correct a clear misimpression created by the binder or policy (see Arthur Glick Truck Sales v Spadaccia-Ryan-Haas, Inc., 290 AD2d 780 [2002]) or where the agent made an affirmative misrepresentation regarding coverage in response to questioning by the client after reviewing the policy (see Kyes v Northbrook Prop. & Cas. Ins. Co., 278 AD2d 736 [2000]).

Here, the alleged misrepresentation was made before plaintiff received the endorsement, plaintiff received but did not read the endorsement, the absence of the desired coverage was readily apparent, and the circumstances (i.e., no increase in premium) were such that a reasonable person would have questioned the agent further. We decline to create a further exception to the general rule under these circumstances. Therefore, as there are no triable issues of fact, defendant is entitled to judgment as a matter of law. In light of this determination, plaintiff's appeal is rendered academic.

Cardona, P.J., Carpinello, Rose and Malone Jr., JJ., concur.

ORDERED that the order entered September 21, 2004 is modified, on the law, without costs, by reversing so much thereof as denied defendant's motion; motion granted, summary judgment awarded to defendant and complaint dismissed; and, as so modified, affirmed.

Hoffman v. Unionmutual Stock Life Insurance Company of New York

Begos Horgan & Brown, LLP, Bronxville, N.Y. (Patrick W. Begos
of counsel), for appellant.
Eric H. Green & Associates, New York, N.Y. (Marc Gertler and
Elliot B. Pasik of counsel), for
respondent.

DECISION & ORDER

In an action to recover damages for breach of contract, the defendant First Unum Life Insurance Company appeals from (1) so much of an order of the Supreme Court, Kings County (Schmidt, J.), entered February 16, 2007, as denied that branch of its motion which was for summary judgment dismissing the complaint insofar as asserted against it as time-barred, and, upon granting that branch of its motion which was to dismiss the second and third causes of action insofar as asserted against it premised on its alleged bad faith handling of the plaintiff's claim for benefits under a policy of disability insurance, granted the plaintiff leave to serve an amended complaint incorporating the allegations of bad faith into the first cause of action, premised on breach of contract and (2) so much of an order of the same court dated July 9, 2007, as denied that branch of its motion which was to strike portions of the amended complaint.

ORDERED that the orders are affirmed insofar as appealed from, with costs.

In support of that branch of its motion which was for summary judgment dismissing the complaint as time-barred, the appellant failed to make a prima facie showing that it denied the plaintiff's claim for disability benefits under the insurance policy more than six years prior to the commencement of the action (see Alvarez v Prospect Hosp., 68 NY2d 320, 324; Annunziato v City of New York, 33 AD3d 950; American Bldg. Contrs. Assoc., Inc. v Mica & Wood Creations, LLC, 23 AD3d 322).

Contrary to the appellant's assertion, the Supreme Court was correct in allowing the allegations of bad faith to be incorporated in an amended complaint and in denying that branch of the appellant's motion which to strike those portions of the amended complaint (see Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of New York, 10 NY3d 187; Panasia Estates v Hudson Ins. Co., 10 NY3d 200).
RITTER, J.P., COVELLO, ANGIOLILLO and McCARTHY, JJ., concur.

Acevedo v. Town N Country Condominium, Section I, Board of Managers

Braverman & Associates, P.C., New York, N.Y. (Jon Kolbrener of
counsel), for appellant.
Kevin T. Mulhearn, P.C., Orangeburg, N.Y., for respondents.


DECISION & ORDER

In an action, inter alia, to recover damages for breach of fiduciary duty, the defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Rockland County (Nelson, J.), dated December 5, 2007, as denied its motion for summary judgment dismissing the complaint.

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

The plaintiffs, unit owners of a condominium, alleged, inter alia, that the defendant, the board of managers of the Town N Country Condominium, Section I, breached its fiduciary duty in failing to obtain sufficient fire insurance. The defendant moved for summary judgment dismissing the complaint arguing that, among other things, its actions were protected from judicial review pursuant to the business judgment rule.

The business judgment rule, which applies to condominium boards, prohibits judicial inquiry into the actions of the board as long as the board acts for the purpose of the condominium, within its authority and in good faith (see Matter of Levandusky v One Fifth Ave. Apt. Corp., 75 NY2d 530, 538; Schoninger v Yardarm Beach Homeowners Assn., 134 AD2d 1, 2). The defendant met its prima facie burden by establishing that it acted in good faith, within its authority, and for the benefit of the condominium, when it retained an insurance broker to procure insurance sufficient to cover full replacement of the buildings to the extent obtainable. In opposition, the plaintiffs failed to raise a triable issue of fact. Accordingly, the court should have granted the defendant's motion for summary judgment dismissing the complaint (see Zuckerman v City of New York, 49 NY2d 557, 562-563; Gershman v Habib, 37 AD3d 530).

American Bridge Company v. Acceptance Insurance Company

Melito & Adolfsen, P.C., New York, N.Y. (Ignatius John Melito,
S. Dwight Stephens, and Paul F. McAloon of counsel), for
appellants.
Montfort, Healey, McGuire & Salley, Garden City, N.Y.
(Donald S. Neumann, Jr., of counsel), for
respondent.


DECISION & ORDER

In an action, inter alia, for a judgment declaring that Acceptance Insurance Company is obligated to indemnify American Bridge Company and Perini Corporation in connection with the settlement of an underlying action entitled Prokop v Perini Corp., commenced in the Supreme Court, Westchester County, under Index No. 2457/99, the plaintiffs and the third-party defendant appeal, as limited by their brief, from so much of an order of the Supreme Court, Westchester County (Nicolai, J.), entered May 31, 2006, as granted the motion of the defendant third-party plaintiff for summary judgment enforcing a stipulation of settlement entered in open court on February 14, 2001, which provided for reimbursement of its half of the funding of the settlement proceeds in the underlying action.

ORDERED that the appeal by the plaintiffs is dismissed, as they are not aggrieved by the portion of the order appealed from (see CPLR 5511); and it is further,

ORDERED that the order is affirmed insofar as appealed from by the third-party defendant Zurich American Insurance Group; and it is further,

ORDERED that the respondent is awarded one bill of costs.

During settlement proceedings held on February 14, 2001, in connection with an underlying personal injury action, it was agreed, on the record, that the funding of the settlement proceeds would be divided equally between the third-party defendant, Zurich American Insurance Group (hereafter Zurich), the insurance carrier for the plaintiffs American Bridge Company (hereafter American Bridge) and Perini Corporation (hereafter Perini), and the defendant third-party plaintiff, Acceptance Insurance Company (hereafter Acceptance), the insurance carrier for the defendant Hannibal Construction Co., Inc. It was also agreed, at that time, that the settlement would not affect this action, then pending, for a judgment declaring that Acceptance is obligated to indemnify American Bridge and Perini in connection with the settlement of the underlying action. Further, it was additionally stated on the record during the settlement proceedings that "there will be no interest against either [of] the insurance companies [i.e., Acceptance and Zurich] at the time that the coverage issues are decided," and that "the agreement is that at the time the declaratory judgment [sic] is resolved, when one carrier is obligated to reimburse the other carrier, the reimbursement will be just for the amount paid to the plaintiff without interest."

On a prior appeal in this declaratory judgment action, this Court affirmed a judgment of the Supreme Court declaring that Acceptance was not obligated to indemnify American Bridge and Perini in the underlying personal injury action (see American Bridge Co. v Acceptance Ins. Co., 40 AD3d 666). Acceptance thereafter moved for summary judgment enforcing the stipulation of settlement, which provided for reimbursement of its half of the funding of the settlement proceeds in the underlying action. The Supreme Court granted the motion, and we affirm.

A stipulation of settlement entered into in open court is judicially favored and will not be set aside absent a showing of cause sufficient to invalidate a contract, such as fraud or collusion (see Hallock v State of New York, 64 NY2d 224, 230). Zurich does not seek to have the stipulation of settlement set aside. Instead, it contends that the Supreme Court improperly interpreted the stipulation of settlement as providing reciprocal reimbursement to the prevailing party in this action for a declaratory judgment as to insurance coverage. We disagree.

An oral stipulation of settlement that is made in "open court" and stenographically recorded becomes enforceable (see CPLR 2104) as a contract binding on all the parties thereto, and is governed by general contract principles for its interpretation and effect (see Fukilman v 31st Ave. Realty Corp., 39 AD3d 812, 813). Thus, as in a matter where parties seek enforcement of a contract, the court has the responsibility of effectuating the true intent of the parties, and where the terms are unambiguous, this intent must be gleaned from the plain meaning of the words used by the parties (see W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 163; Teitelbaum Holdings v Gold, 48 NY2d 51, 56; Fukilman v 31st Ave. Realty Corp., 39 AD3d 812).

Here, the oral stipulation between the parties clearly and unambiguously expressed the parties' reciprocal intent that the insurance carrier prevailing in this action would be entitled to reimbursement from the non-prevailing party. The reciprocal nature of the agreement between Acceptance and Zurich is underscored by the portion of the agreement which recites that the prevailing party in the coverage action waived the receipt of interest. While Acceptance never formally pleaded a claim against Zurich for reciprocal reimbursement, nothing prevented the insurers from entering into a stipulation on the record extending to matters beyond the pleadings, as they apparently did in the proceedings resulting in the settlement of the underlying personal injury action. Accordingly, the Supreme Court properly granted Acceptance's motion for summary judgment enforcing the oral stipulation between the insurance carriers.
FISHER, J.P., RITTER, DILLON and McCARTHY, JJ., concur.

Fleischman v. Peacock Water Company, Inc.

Calendar Date: March 27, 2008
Before: Cardona, P.J., Mercure, Spain and Lahtinen, JJ.

Petrone & Petrone, Syracuse (William Savage of
counsel), for defendants and third-party plaintiffs-appellants.
Shantz & Belkin, Latham (M. Randolph Belkin of
counsel), for third-party defendants-respondents.

MEMORANDUM AND ORDER


Cardona, P.J.

Appeal from an order of the Supreme Court (Williams, J.), entered July 9, 2007 in Saratoga County, which granted the motion of third-party defendants Catskirondacks, Inc. and Kevin Misevis for summary judgment dismissing the third-party complaint against them.

Plaintiff, an employee of third-party defendant Catskirondacks, Inc., sustained injuries which included a fractured right femur when he fell from a ladder on defendants' property while working to remove a water tower. In August 2005, plaintiff commenced the underlying personal injury action against defendants, alleging negligence and various Labor Law causes of action. In November 2006, defendants brought a third-party action against, among others, Catskirondacks, Inc., and its president, third-party defendant Kevin Misevis (hereinafter collectively referred to as Catskirondacks). The third-party complaint stated three causes of action, namely: (1) common-law indemnification, (2) contractual indemnification and (3) breach of agreement to obtain liability insurance. Following joinder of issue, Catskirondacks moved for summary judgment dismissing the third-party complaint and that motion was granted, prompting this appeal by defendants.

Initially, we are unpersuaded by defendants' argument that Supreme Court improperly dismissed their cause of action premised upon common-law indemnity ^[FN1]. Notably, "Workers' Compensation Law § 11 prohibits third-party indemnification or contribution claims against employers, except in the case of a 'grave injury' or where based upon a written contract entered into prior to the accident" (Giblin v Pine Ridge Log Homes, Inc., 42 AD3d 705, 706 [2007]). The Court of Appeals has clearly indicated that the grave injury categories listed in the statute are extremely limited and should be narrowly construed (see Fleming v Graham, 10 NY3d 296, ___, 2008 NY Slip Op 02502, *3 [2008]; Castro v United Container Mach. Group, 96 NY2d 398, 401-402 [2001]). As relevant herein, the definition of a grave injury includes the "permanent and total loss of use [of a] leg," therefore, to avoid summary judgment, defendants were required to establish a triable issue of fact regarding their claim that plaintiff's injury met that strict definition (Workers' Compensation Law § 11).^[FN2] 

In seeking summary judgment dismissing the third-party complaint, Catskirondacks submitted, among other things, plaintiff's verified bill of particulars and his unsworn medical records. While defendants argue that the unsworn medical records should not be considered and the motion should have been denied due to the lack of admissible medical proof, significantly, in a case such as this involving one "of the more clear-cut categories of grave injury [a prima facie case can be established] without presenting medical evidence" (Way v Grantling, 289 AD2d 790, 794 [2001]). In that regard, we conclude that the submission of plaintiff's verified bill of particulars was, standing alone, sufficient to establish, prima facie, that plaintiff did not suffer a permanent and total loss of use of his leg within the meaning of Workers' Compensation Law § 11 (see Marshall v Arias, 12 AD3d 423, 423-424 [2004]). Specifically, while the verified bill of particulars notes that plaintiff's injuries to his right leg and knee include "severe swelling," a "loss of ability to ambulate properly," a "significant limp," a "loss of range of motion" and a loss of "stability" and "flexibility," there is nothing set forth therein alleging that plaintiff was claiming a total loss of use of his leg or that he retained only "passive movement" in that limb (Millard v Alliance Laundry Sys., 28 AD3d 1145, 1147 [2006]). Accordingly, since defendants failed to present any admissible proof in opposition to the motion that would raise a triable issue of fact as to grave injury, the first cause of action based on common-law indemnity was properly dismissed.

Turning to Supreme Court's dismissal of the remaining causes of action based on contractual indemnification and breach of agreement to obtain insurance, we conclude that summary judgment was properly granted due to defendants' failure to contradict Catskirondacks' denials regarding the existence of such agreements with appropriate proof in admissible form (see Murray v North Country Ins. Co., 277 AD2d 847, 849-850 [2000]). We note that in addressing the failure to produce appropriate documentation, defendants argue that further discovery is necessary "to ascertain the existence of contracts between the parties . . . and [obtain] information with respect to the agreement to procure insurance." However, while summary judgment may be denied when discovery has not been completed (see CPLR 3212 [f]), the nonmoving party must produce some evidence indicating that further discovery "will yield material and relevant evidence" (Zinter Handling, Inc. v Britton, 46 AD3d 998, 1001 [2007]). Here, we find no basis to disagree with Supreme Court's conclusion that defendants had sufficient time to locate documents that would presumably be in their own possession and, therefore, the third-party complaint should be dismissed against Catskirondacks (see Meath v Mishrick, 68 NY2d 992, 994-995 [1986]).

The remaining issues raised by the parties and not specifically addressed herein have been considered and found to be either unpersuasive or unnecessary to reach given the above conclusions

ORDERED that the order is affirmed, with costs.

Footnotes

Footnote 1: We note that, contrary to defendants' assertions, Catskirondacks referred to issues relating to common-law indemnity in its motion papers and, therefore, it was an issue properly before Supreme Court for resolution.

Footnote 2: Although defendants appear to contend that the appropriate test for the subject grave injury allegation is one of "permanent total disability" involving a determination of whether the injured person is employable "in any capacity" (Rubeis v Aqua Club, Inc., 3 NY3d 408, 417 [2004] [emphasis omitted]), we note this language only applies to a grave injury to the brain under Workers' Compensation Law § 11, not to the leg (cf. Trimble v Hawker Dayton Corp., 307 AD2d 452, 453 [2003]).

Lopez v. State Farm Fire & Casualty Company

Jose R. Mendez, P.C., Rego Park, N.Y., for appellants.
Nicolini, Paradise, Ferretti & Sabella, PLLC, Mineola, N.Y.
(Barbara L. Hall of counsel), for
respondent.


DECISION & ORDER

In an action pursuant to Insurance Law § 3420(a)(2) to recover an unsatisfied judgment against the defendant's purported insured, the plaintiffs appeal from so much of an order of the Supreme Court, Queens County (Kelly, J.), dated November 8, 2007, as denied their motion for summary judgment on the complaint.

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

Where, as here, the plaintiffs, the injured parties, have commenced a personal injury action against the purported insured, they were required to notify the defendant, the insurer, of the underlying action (see Serravillo v Sterling Ins. Co., 261 AD2d 384, 385; Government Empls. Ins. Co. v Blecker, 150 AD2d 428, 429; see generally Rodriguez v Liberty Mut. Ins. Co., 214 AD2d 366; cf. Eveready Ins. Co. v Chavis, 150 AD2d 332, 333-334).

Here, the plaintiffs proffered no evidence that they notified the defendant of the underlying action they commenced against the defendant's purported insured and in which a default judgment was entered, until the defendant was served in the instant action (see Fisher v Hanover Ins. Co., 288 AD2d 806, 806-807; Serravillo v Sterling Ins. Co., 261 AD2d 384, 385; Government Empls. Ins. Co. v Blecker, 150 AD2d 428, 429; see generally Rodriguez v Liberty Mut. Ins. Co., 214 AD2d 366; cf. Eveready Ins. Co. v Chavis, 150 AD2d 332, 333). In addition, the plaintiffs' only submission, on their motion for summary judgment on the complaint, to establish that there was in full force and effect an agreement of insurance covering them for the liability, was a letter from the defendant to them requesting information regarding a claim (see Kleynshvag v GAN Ins. Co., 21 AD3d 999). That letter indicated that the defendant was making a second request to the plaintiffs to provide certain documentation regarding the plaintiffs' claim referenced therein "[i]n order to properly analyze and evaluate" the claim. Such letter, without more, failed to establish, prima facie, the existence of a valid policy of insurance covering the accident (id.).

Accordingly, the plaintiffs failed to establish their prima facie entitlement to summary judgment on the complaint pursuant to Insurance Law § 3420(a)(2) to recover the unsatisfied judgment against the defendant's purported insured. The plaintiffs' failure to meet their initial burden on the motion necessitated its denial regardless of the sufficiency of the opposing papers (see generally Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).

The parties' remaining contentions need not be reached in light of our determination.

In re Lancer Insurance Company v. Lackraj

Samuel Katz, New York, for appellant.
Theodore A. Stamas, Carle Place, for Lancer Insurance
Company, respondent.
Schindel, Farman, Lipsius, Gardner & Rabinovich LLP, New
York (David BenHaim of counsel), for Security Insurance
Company of Hartford, respondent.

Judgment, Supreme Court, Bronx County (Kenneth L. Thompson, Jr., J.), entered on or about February 27, 2007, granting the petition to stay arbitration, unanimously affirmed, with costs.

Arbitration of respondent Lackraj's uninsured motorist claim against petitioner was properly stayed. The offending vehicle, a bus, did not meet the definition of an "uninsured motor vehicle" within the meaning of Insurance Law § 3420(f)(1), notwithstanding the fact that the policy insuring the vehicle had a large deductible and the owner became insolvent (see Matter of Fireman's Fund Ins. Co. v Wisham, 2005 NY Misc LEXIS 160, 2005 WL 263957).

OneBeacon Insurance v. Travelers Property Casualty Company of New York

Calendar Date: March 24, 2008
Before: Cardona, P.J., Carpinello, Rose, Malone Jr. and Stein, JJ.


Friedman, Hirschen & Miller, L.L.P., Albany
(Carolyn B. George of counsel), for appellants.
Lustig & Brown, L.L.P., Buffalo (David J. Sleight of
counsel), for One Beacon Insurance, respondent.
Kenney, Shelton, Liptak & Nowak, Buffalo (Timothy
E. Delahunt of counsel), for Travelers Property Casualty
Company of America and another, respondents.

MEMORANDUM AND ORDER


Rose, J.

Appeal from an order of the Supreme Court (Teresi, J.), entered March 22, 2007 in Albany County, which, among other things, denied a motion by defendants Great American Insurance Company of New York and D & B Building, Inc. for summary judgment dismissing the complaint and all cross claims against them.

A golfer slipped and fell on a newly constructed deck at the club house owned by Saratoga National Golf Club, Inc. (hereinafter the owner). When the litigation he commenced to recover for his injuries extended to the contractors involved in the owner's construction project, issues arose as to insurance coverage. Plaintiff, which insures the owner, then commenced this action seeking a declaration that, to the extent relevant here, the owner was an additional insured under a commercial general liability (hereinafter CGL) policy issued by defendant Great American Insurance Company of New York to defendant D & B Building, Inc., the subcontractor who built the deck. The CGL policy provided coverage for the owner and defendant The Pike Company, the general contractor, as additional insureds so long as D & B's operations were ongoing at the time of the occurrence. Great American also had issued an owners and contractors protective (hereinafter OCP) policy to Pike. Defendant Travelers Property Casualty Company of America, as Pike's primary insurer, cross-claimed for a defense and indemnification of Pike under both of Great American's policies.

When Great American moved for summary judgment dismissing the complaint and cross claims, plaintiff and Travelers opposed the motion. While the parties agreed that coverage for the owner and Pike as additional insureds under the CGL policy depended upon whether D & B was still engaged in work on the owner's project at the time of the accident, they disputed whether D & B's operations were completed at that time and whether the late notices of claim served on Great American by both the owner and Pike vitiated coverage. Plaintiff also cross-moved for summary judgment dismissing Great American's defense which alleged untimely notice of the owner's claim. Supreme Court denied Great American's motion, finding a triable issue of fact as to whether D & B's operations were completed. The court also found that Great American did not otherwise have a viable defense against Pike's late notices of claim because its own disclaimers were late and failed to cite late notice as their basis. As for the owner, Supreme Court found that Great American had issued no disclaimer at all and, therefore, granted plaintiff's cross motion.

Great American appeals, arguing initially that because there is no evidence in the record showing that D & B was actually working on the owner's project when the accident occurred, Supreme Court should have found that neither the owner nor Pike was an additional insured under its CGL policy and granted its motion ^[FN1]. We disagree. The CGL policy expressly limits coverage of additional insureds to "liability arising out of [D & B's] ongoing operations" and, thus, the existence of CGL coverage for the owner and Pike as to the underlying accident depends upon whether D & B's work on the owner's project had been completed at the relevant time. While the record contains evidence that the deck had been constructed and was in use before the accident, there is also the deposition testimony of D & B's president in the underlying negligence action and a punch list prepared by the project architect showing that there was work remaining to be done on the deck by D & B at the time of the accident. This evidence is sufficient to support Supreme Court's finding of a material question of fact as to coverage (see Pepper v Allstate Ins. Co., 20 AD3d 633, 636 [2005]; Catalanotto v Commercial Mut. Ins. Co., 256 AD2d 883, 884 [1998]; New York Cent. Mut. Fire Ins. Co. v Kowalski, 195 AD2d 940, 942 [1993]).

Nor is there merit in Great American's contention that it is obligated neither to the owner under its CGL policy nor to Pike under either of its policies because it received late notice of their claims. Pursuant to Insurance Law § 3420 (d), if an insurer does not disclaim coverage in writing to the insured as soon as is reasonably possible, it is precluded from disclaiming coverage based upon late notice (see Hermitage Ins. Co. v Arm-ing, Inc., 46 AD3d 620, 621 [2007]; Tully Constr. Co., Inc. v TIG Ins. Co., 43 AD3d 1150, 1152 [2007]).

As to the owner, Great American issued no disclaimer. Although the failure to disclaim would not preclude Great American from asserting a lack of coverage on the basis of the completion of D & B's operations (see Zappone v Home Ins. Co., 55 NY2d 131, 134 [1982]; Elashker v Medical Liab. Mut. Ins. Co., 46 AD3d 966, 967 [2007]), its failure forfeits its affirmative defense of late notice (see Hermitage Ins. Co. v Arm-ing, Inc., 46 AD3d at 621; Mohawk Minden Ins. Co. v Ferry, 251 AD2d 846, 848 [1998]). Accordingly, Supreme Court properly denied Great American's motion on this ground and granted plaintiff's cross motion to dismiss Great American's defense of late notice.

As to Pike, Great American did not disclaim until approximately six months after receiving notice of its claim under the CGL policy and seven months after notice of its claim under the OCP policy. Nor has Great American sought to explain its delay. Even though Pike's notices of claim were late, we agree with Supreme Court that the disclaimers are untimely as a matter of law and Great American cannot deny coverage based upon late notice (see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 70 [2003]; Matter of Nationwide Mut. Ins. Co. v Steiner, 199 AD2d 507, 508 [1993]; Matter of State Farm Mut. Auto. Ins. Co. [Merrill], 192 AD2d 824, 825 [1993]). In any event, Great American's failure to specifically disclaim upon the basis of Pike's late notice further precludes it from raising lateness as a defense to Pike's claim under its policies (see General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864 [1979]; Haslauer v North Country Adironack Coop. Ins. Co., 237 AD2d 673, 674 [1997]).

Great American's remaining arguments have been reviewed and found to be unavailing.

Cardona, P.J., Carpinello, Malone Jr. and Stein, JJ., concur.

ORDERED that the order is affirmed, with one bill of costs.

Footnotes

Footnote 1: While Great American also argues that there was no CGL coverage because construction of the deck was pursuant to a change order which did not provide for additional insureds, this argument was not preserved (see #1 Funding Ctr., Inc. v H & G Operating Corp., 48 AD3d 908, 910 n [2008]; Goodspeed v Adirondack Med. Ctr., 43 AD3d 597, 598 [2007]; Prince v 209 Sand & Gravel, LLC, 37 AD3d 1024, 1026 [2007]).

Perkins v. Allstate Insurance Company

Lewis Johs Avallone Aviles & Kaufman, LLP, Melville, N.Y.
(Elizabeth A. Fitzpatrick of counsel), for appellant.
Laurence Tarowsky, New York, N.Y. (Dara L. Warren of
counsel), for respondent.


DECISION & ORDER

In an action, in effect, pursuant to Insurance Law § 3420(a)(2) to recover an unsatisfied judgment against the defendant's purported insureds in an underlying action entitled Perkins v Riggin Master, commenced in the Supreme Court, Kings County, under Index No. 4819/01, the defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Saitta, J.), dated March 22, 2007, as denied its motion for summary judgment on its counterclaim declaring that it is not obligated to satisfy the judgment against the defendants in the underlying action on the ground of lack of coverage.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, the defendant's motion for summary judgment on its counterclaim is granted, and the matter is remitted to the Supreme Court, Kings County, for the entry of a judgment, inter alia, declaring that the defendant is not obligated to satisfy the judgment against the defendants in the underlying action entitled Perkins v Riggin Master, commenced in the Supreme Court, Kings County, under Index No. 4819/01, on the ground of lack of coverage.

The plaintiff, a New York resident, allegedly was injured in an automobile accident in Maryland. In the underlying personal injury action, the plaintiff brought suit against Robert Shoffner, the operator of the subject vehicle, also allegedly a New York resident, and, among others, the New York corporation which owned the vehicle (hereinafter collectively Riggin Master). The subject vehicle was insured under a policy of insurance issued by the defendant in Virginia, to nonparty Lucy Carr, a Virginia resident. Carr neither owned the vehicle nor was she operating it at the time of the accident. She also was not named as a defendant in the underlying action.

A judgment was entered against Shoffner and Riggin Master in the underlying action, upon their default in appearing or answering. When that judgment remained unsatisfied for more than 30 days, the plaintiff commenced this action, in effect, pursuant to Insurance Law § 3420(a)(2) to recover the unsatisfied judgment. The defendant moved for summary judgment on its counterclaim declaring that it was not obligated to satisfy the judgment in the underlying action on the ground of lack of coverage. The Supreme Court erroneously denied the motion.

The judgment entered on default in the underlying action is conclusive for res judicata purposes as to any matters actually litigated or that might have been litigated therein (see 83-17 Broadway Corp. v Debcon Fin. Servs., Inc. 39 AD3d 583; Rizzo v Ippolito, 137 AD2d 511). In the first instance, no judgment was entered in that action against Carr, the defendant's named insured who, as aforesaid, was not operating the vehicle on the day of the accident. In addition, the underlying action was conclusive as to the identity of the vehicle's owner (Riggin Master) and the vehicle's operator (Robert Shoffner), neither of whom were named insureds under the policy issued by the defendant to Carr.

Moreover, although the policy provided coverage for "non-owned automobiles," the only individuals covered thereunder were the named insureds, relatives who reside in the same household as the named insureds (hereinafter a residing relative), and "any other person or organization not owning or hiring the automobile, but only with respect to his or its liability because of acts or omissions of" a named insured or residing relative. The defendants against whom the judgment was entered in the underlying action do not fit any of the criteria for "Persons Insured" under the policy.

Furthermore, the plaintiff's contention that the defense of lack of coverage was invalid because the defendant failed to issue a timely disclaimer is without merit. Where an insurer is entitled to deny a claim based on an absence of coverage, its failure to timely disclaim coverage does not preclude it from denying liability on that ground (see Insurance Law § 3420[d]; Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 188; State Farm Fire & Cas. Co. v Horton, 37 AD3d 820). Moreover, Insurance Law § 3420(d) does not apply to out-of-state accidents (see Matter of Transportation Ins. Co. v Cafaro, 295 AD2d 618).

Based on the foregoing, the defendant established its entitlement to judgment as a matter of law by demonstrating, prima facie, that the unsatisfied judgment was not entered against its insured and there was no coverage for the accident under its policy. In opposition, the plaintiff failed to raise a triable issue of fact.

In light of our determination, we need not reach the defendant's remaining contention.

Since this is, in part, a declaratory judgment action, the matter must be remitted to the Supreme Court, Kings County, for the entry of a judgment, inter alia, declaring that the defendant is not obligated to satisfy the judgment against the defendants in the underlying action entitled Perkins v Riggin Master, commenced in the Supreme Court, Kings County, under Index No. 4819/01, on the ground of lack of coverage (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

 

New Hampshire Insurance Company v Bartha

Brief Carmen & Kleiman, LLP, New York (Adria De Landri of
counsel), for appellants.
Clausen Miller, P.C., New York (Robert A. Stern of counsel),
for respondent.

Order, Supreme Court, New York County (Doris Ling-Cohan, J.), entered September 19, 2007, which, to the extent appealed from, denied the individual defendants' motion to dismiss the complaint as against them for failure to state a cause of action, imposed costs upon their counsel, and granted plaintiff's cross motion for leave to amend the complaint to add certain allegations against the individual defendants, unanimously reversed, on the law, with costs, defendants' motion granted, the imposition of costs vacated, and plaintiff's cross motion denied.

In the matrimonial action brought by defendant Cordula Bartha against her then-husband, the decedent herein, this Court held, inter alia, that a certain townhouse constituted marital property and that therefore Cordula was entitled to share in its value (see Bartha v Bartha, 15 AD3d 111, 115-117 [2005]). On or about July 10, 2006, the decedent, unwilling to accept that the townhouse was marital property, set off an explosion on the premises that destroyed the building and caused fatal injuries to himself. There followed numerous lawsuits against the decedent's estate by individuals and entities seeking damages for injury to persons or property due to the decedent's wrongful conduct in blowing up the house. Plaintiff New Hampshire Insurance Company commenced the instant action on behalf of its insured, the Links Club, not only as against the estate but also as against Cordula Bartha and the couple's two daughters, one of whom had been appointed administrator of the estate, in their individual capacities.

Irrespective of any viable claims that plaintiff might have against either the decedent's estate or defendant Consolidated Edison arising out of the decedent's conduct in destroying his property, it has none as against any of the individual defendants. Cordula Bartha had been divorced from the decedent for several years, and neither she nor the couple's two daughters had resided with him since October 2001. None of them had either authority to control the decedent's actions (see Purdy v Public Adm'r of County of Westchester, 72 NY2d 1, 8 [1988]) or a relationship with the Links Club that required them to protect it from the conduct of others (see Hamilton v Beretta U.S.A. Corp., 96 NY2d 222, 233 [2001]). Contrary to plaintiff's contention, the decision in the matrimonial action, while it had the effect of making Cordula an owner of the townhouse, did not render her liable for the decedent's conduct. Indeed, her position was akin to that of an out-of-possession judgment creditor who neither maintained nor controlled the premises where an injury-causing event occurred (see Moran v Regency Sav. Bank, F.S.B., 20 AD3d 305, 306 [2005]).

In the absence of a viable cause of action against the individual defendants, plaintiff should not have been afforded leave to amend its complaint (see Wieder v Skala, 168 AD2d 355 [1990]).

In the circumstances presented, particularly as the record discloses no noncompliance with any judicial directive, the imposition of costs upon defendants' counsel was improper.

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

ENTERED: MAY 8, 2008

 

Pioneer Tower Owners Association v State Farm Fire & Casualty Company

Rivkin Radler LLP, Uniondale, N.Y. (Evan H. Krinick, Cheryl F.
Korman, Michael A. Troisi, and Stuart M. Bodoff of counsel), for
appellants.
Kushnick & Associates, P.C., Melville, N.Y. (Vincent T.
Pallaci, Lawrence A. Kushnick, and Craig H.
Handler of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for breach of contract and for a judgment declaring that the loss to the plaintiff's property is covered under the insurance policy issued by the defendants, the defendants appeal from (1) an order of the Supreme Court, Nassau County (Feinman, J.), dated March 29, 2007, which granted the plaintiff's motion for summary judgment on the issue of liability and denied their cross motion for summary judgment dismissing the complaint, and (2) a judgment of the same court entered November 28, 2007, which, upon the order and upon a stipulation on the issue damages, is in favor of the plaintiff and against the defendants in the principal sum of $122,500.

ORDERED that the appeal from the order is dismissed; and it is further,

ORDERED that the judgment is modified, on the law, by adding a provision thereto declaring that the loss to the plaintiff's property is covered under the insurance policy issued by the defendants; as so modified, the judgment is affirmed, with costs.

The appeal from the order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241). The issues raised on the appeal from the order are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501[a][1]).

The Supreme Court properly granted the plaintiff's motion for summary judgment on the issue of liability, and denied the defendants' cross motion for summary judgment dismissing the complaint. The plaintiff met its initial burden of establishing its entitlement to judgment as a matter of law by demonstrating that the insurance policy exclusions did not clearly and unambiguously apply to the loss in this case (see Lee v State Farm Fire & Cas. Co., 32 AD3d 902; 242-44 E. 77th St., LLC v Greater N.Y. Mut. Ins. Co., 31 AD3d 100, 103-104; Burack v Tower Ins. Co. of N.Y., 12 AD3d 167). In opposition, the defendants failed to raise a triable issue of fact (see Zuckerman v City of New York, 49 NY2d 557, 562).

Since this is, in part, a declaratory judgment action, the Supreme Court's judgment should have included an appropriate declaration in favor of the plaintiff (see 200 Genesee St. Corp. v City of Utica, 6 NY3d 761, 762; Lanza v Wagner, 11 NY3d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
SPOLZINO, J.P., BALKIN, DICKERSON and BELEN, JJ., concur.

ENTER: