Coverage Pointers - Volume IX, No. 26

Dear Coverage Pointers Subscribers:

 

Welcome to Volume IX, Issue 26 of Coverage Pointers. It is the last issue in this Volume and our next issue, on July 11, will commence our 10^th year of publication.  Pretty neat.  We have over 1500 direct subscribers and many hundreds more who are receiving this publication forwarded by another.  Thanks for tuning in.

 

There is so much material in this cover note - and in the attached issue - that I feel compelled to list the topics in this missive first so you know what is in store:
 

·       Sad Times

·       Chatter on Coverage

·       What do we do about Elacqua II ?

·       Long Term Solution to Independent Counsel Requirements

·       Partial Disclaimers v. Reservation of Rights Letters

·       Audrey's Angles

·       Final Legislative Action on Jury Selection

·       Anniversary Time

·       Mark's Mark

·       Earl's Pearls

·       This Week's Issue

 

SAD TIMES

 

            We shed a tear for the family of Tim Russert, as he was one of Buffalo's very best.  I never met the man but felt like he was one of us. George Carlin passed away as well; I enjoyed his bristling brand of humor and, more particularly, appreciated a professional who was willing to "push the envelope" no matter what the consequences.

 

Chatter on Coverage

 

Over the last two weeks, the phone hasn't stopped ringing and the e-mails are coming in hot and heavy.  Everyone's talking coverage.

 

Topic I - What do we do about Elacqua II, the Third Department's recent decision finding an insurer subject to General Business Law Unfair Trade Practices sanctions for failing to advise an insured about its right to select counsel when there is a partial disclaimer or reservation of rights? 

 

Topic II - What's the status of the proposed changes to the Insurance Law with respect to late notice and direct action, and when do we need to worry about it?

 

Topic III - Is New York going to become a "Bad Faith" state and if so, how do we prepare for it?

 

I can spend about 10 pages on each topic.  But I have run through various incantations, options, and projections.  I have read tea leaves and examined certain palms. I have gazed into my ever-polished crystal ball and I have dealt out the Tarot cards time and time again. 

 

Let me spend some time on Elacqua in this issue.  I'll spend time on the other very hot questions in upcoming issues because they are not as time-critical. 

 

What do we do about Elacqua II

 

For those who missed our review of this decision or don't remember it by name or (heavens' forbid, do not read every issue of Coverage Pointers from cover-to-cover, I remind you of this June 5^th Third Department decision and urge you to review our June 13^th edition which can be reached by clicking on the case name Elacqua v. Physician's Reciprocal Insurers  (Elacqua II).  The court restated the long-established rule that where an insurer has issued a partial disclaimer or reservation of rights and there is a "chance" of "divided loyalties," an insurer has an obligation to affirmatively advise its insured of the right to select its own counsel whose reasonable defense costs are to be paid by the carrier. It then went on to hold that a failure to notify the insured of its right to select counsel was - as a matter of law - a Deceptive Trade Practice under General Business Law § 349 even without a demonstration of actual damages.

 

Please see Steve Peiper's column in this week's issue where he begins a discussion on the implications of and penalties associated with a finding of a GBL violation.

 

In the meantime ...

 

We are recommending to our clients, Departments, that as a general rule they consider advising their insureds of this right throughout the state, rather than risk adverse consequences.

 

We're suggesting this kind of wording:

 

"We have made arrangements to have the law firm of ABC defend you in this matter. With this firm, your case will be entrusted to a team of seasoned litigators, knowledgeable in this area of practice. Should you wish to discuss your right to designate counsel of your own choosing at our expense, please don't hesitate to contact us."

 

long term solution to independent counsel requirements

 

How do we resolve the problem in the long term?  What do we do with courts that impose absurd penalties without any real proof of damages?  How do we find consistency in approach so that a carrier knows what do say, how to respond, when to offer, how much to pay in fees, etc?  How do we make certain that matrimonial lawyers aren't selected to defend serious bodily injury cases when they have no experience in doing so?

 

The answer is relatively simple.  New York can follow the lead of other states and enact a statute that sets out the rules of engagement.  As a public service, I've taken a crack at the first draft of such a statute.  It is based on California and Florida statutes presently in place, in particular Section 627.426, Florida Statutes and California Civil Code CIV Section 2860:

 

Proposed New York Independent Counsel Statute

 

DDK Draft III

 

§ 1. The insurance law is amended by adding a new section 3421 to read as follows:

 

Designation of Independent Counsel

 

(a) If the provisions of a policy of insurance impose a duty to defend upon an insurer and a conflict of interest arises which creates a duty on the part of the insurer to provide independent counsel to the insured, the insurer shall provide independent counsel to represent the insured unless, at the time the insured is informed that a possible conflict may arise or does exist, the insured expressly waives, in writing, the right to independent counsel.  An insurance contract may contain a provision which sets forth the method of selecting that counsel consistent with this section. 

 

(b) For purposes of this section, a conflict of interest does not exist as to allegations or facts in the litigation for which the insurer denies coverage; however, when an insurer reserves its rights on a given issue and the outcome of that coverage issue can be controlled by counsel first retained by the insurer for the defense of the claim, a conflict of interest may exist.  No conflict of interest shall be deemed to exist as to allegations of punitive damages or be deemed to exist solely because an insured is sued for an amount in excess of the insurance policy limits.

 

c) When the insured has selected independent counsel to represent him or her, (a) the counsel shall be mutually agreed upon and (b) the insurer may exercise its right to require that the counsel selected by the insured possess certain minimum qualifications which may include that the selected counsel have (1) at least five years of civil litigation practice which includes substantial defense experience in the subject at issue in the litigation, and (2) errors and omissions coverage.  The insurer's obligation to pay fees to the independent counsel selected by the insured is limited to the rates which are actually paid by the insurer to attorneys retained by it in the ordinary course of business in the defense of similar actions in the community where the claim arose or is being defended.  This subdivision does not invalidate other different or additional policy provisions pertaining to attorney's fees or providing for methods of settlement of disputes concerning those fees.  Any dispute concerning attorney's fees not resolved by these methods shall be resolved by final and binding arbitration by a single neutral arbitrator selected by the parties to the dispute.

 

(d) When independent counsel has been selected by the insured, it shall be the duty of that counsel and the insured to disclose to the insurer all information concerning the action except privileged materials relevant to coverage disputes, and timely to inform and consult with the insurer on all matters relating to the action.  Any claim of privilege asserted is subject to in camera review in a court of competent jurisdiction.  Any information disclosed by the insured or by independent counsel is not a waiver of the privilege as to any other party.

 

(e) The insured may waive its right to select independent counsel by signing the following statement:

 

"I have been advised and informed of my right to select independent counsel to represent me in this lawsuit.  I have considered this matter fully and freely waive my right to select independent counsel at this time.  I authorize my insurer to select a defense attorney to represent me in this lawsuit."

 

(f) Where the insured selects independent counsel pursuant to the provisions of this section, both the counsel provided by the insurer and independent counsel selected by the insured shall be allowed to participate in all aspects of the litigation.  Counsel shall cooperate fully in the exchange of information that is consistent with each counsel's ethical and legal obligation to the insured. Nothing in this section shall relieve the insured of his or her duty to cooperate with the insurer under the terms of the insurance contract.

 

§ 2.  This act shall take effect ninety days after it shall have become a law

 

You like the concept?  We can tinker with the language.  All we need is a sponsor in the Assembly and the Senate and we're on our way for the 2009 legislative session.

 

Partial Disclaimer Letters v. Reservation of Rights Letters

 

Let me segue into this topic from Elacqua II.  Remember, the court held:

 

Here, the partial disclaimer letters sent by defendant to its insureds including plaintiffs failed to inform them that they had the right to select independent counsel at defendant's expense, instead misadvising that plaintiffs could retain counsel to protect their uninsured interests "at [their] own expense." Equally disturbing is the fact that defendant continued to send similar letters to its insureds, failing to inform them of their rights, even after this Court's pronouncement in Elacqua I This practice was certainly "likely to mislead a reasonable consumer acting reasonably under the circumstances"

 

Accordingly the letter must inform the insured of its (a) right to select independent counsel and (b) the carrier's obligation to pay for that counsel. 

 

One good client asked me this very important question:

 

What is the difference between a Reservation of Rights Letter and a Partial Disclaimer Letter? 

 

I can't answer that without a discussion of my view on ROR letters ...  In short, partial disclaimer letter is a more effective and statutorily recognized replacement for what we traditionally called a ROR letter. It may be a longer answer to a short question.

 

Carriers in NY should avoid ROR letters because as a rule, they do not comply with 3420(d) obligations to disclaim or deny coverage.  In almost every instance, I recommend partial disclaimer letters rather than ROR letters.

 

An example of the difference:

 

Let's say the policy contains an intentional results exclusion but there are allegations of negligence that require a defense.  What kind of language might be contained in the coverage letter to the insured?

 

A ROR letter might say, after reciting the terms of the exclusion:

 

We advise you that we are fully reserving our rights to disclaim coverage based on Exclusion A, if it is determined that the injuries to Mr. Smith were intentionally caused by you.  We have assigned the defense of this lawsuit to ...

 

That tells the insured that you may disclaim or deny coverage LATER and that you are not doing it now.

 

Remember that 3420(d) provides: 

 

(d)  If  under  a liability policy delivered or issued for delivery in this state, an insurer shall disclaim liability or deny coverage  for death or bodily  injury arising out of a motor vehicle accident or any other type of accident  occurring  within  this  state,  it  shall  give written  notice  as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant.

 

Notice, there is no language suggesting that a Reservation of Rights should be sent.

 

If you then wait until the trial is over or further investigation is complete to actually tell the insured that you are actually denying coverage, the courts have suggested that your disclaimer would be untimely as it wasn't made as soon as reasonably possible.  In 1979, the New York State Court of Appeals stated the proposition clearly (and it has been repeated many times thereafter:

A reservation of rights letter has no relevance to the question whether the insurer has timely sent a notice of disclaimer of liability or denial of coverage ....
Hartford Ins. Co. v. County of Nassau, 46 N.Y.2d 1028, 1029 (NY 1979)

 

So, if we cannot send out ROR letters, what are the options?  One option is a bilateral non-waiver agreement, and we can assist you in crafting those.  Another is a partial disclaimer letter.  By tweaking a few words in what you may originally craft as a reservation of rights letter, you can "partially disclaim" and thereby comply with the statute.  Here's the kind of language you can craft:

 

We advise you there is no coverage available under your policy for intentional injuries under the terms Exclusion A.  However, since there are allegations of negligence asserted in the complaint, we recognize our obligation to defend you in this lawsuit and have assigned the defense of the action to ...

 

Now you have disclaimed as the statute requires.  OK, repeat after me:

 

Reservations of rights:  BAD

Partial disclaimer: GOOD

 

AUDREY'S ANGLES

 

I have a light column this edition but two important issues to discuss.  The first is an Appellate Term, Second Department case applying LMK.  The court held that an attorney's fee is awarded per claim but the fee is calculated at 20% of the claim with a maximum of $850.00.  Unfortunately, the insurer's argument, which has merit, that the attorney's fee is 20% of the total amount of the first-party benefits awarded not per claim with a maximum of $850.00, was rejected.  The regulation certainly does not provide that the fee is on a per claim basis.  A plain reading of the regulation supports the position that the fee is awarded based on the total amount of the first party benefits awarded to the plaintiff/applicant.  I truly hope that New York Central will take that decision up to the Second Department to see what it has to say on the issue of attorney's fees.  I will keep my eye on this case and report back if there is any further appellate practice.

 

The second issue is an insurance department circular letter advising insurers that neither they nor their counsel can suggest or require waiver of interest even if the claim is in arbitration or litigation.  I am not surprised by this position but note that the letter indicates the purpose of prohibiting an insurer from engaging in this behavior is to ensure that the insurer does not exercise undue influence on an applicant.  In the case where the arbitration claimant or litigation plaintiff had counsel, the chances are slim of an insurer exercising undue influence.  Instead, the effect of this position would not surprisingly lead to fewer settlements and more trials.  Looking at this from a litigator's perspective, why would any attorney advise their client to pay full value for a case in settlement?  There is no incentive to resolve the case and I am not buying the argument that the insurer has to incur extensive trial costs.  These trials do not proceed for weeks at a time with multiple experts from the insurer's perspective.  Ultimately, the message from this letter is to ensure that you have advised your defense counsel accordingly of this new circular letter.   

           

            Audrey A. Seeley

            [email protected]

 

FINAL LEGISLATIVE ACTION ON CIVIL JURY SELECTION

 

Little discussed on the streets yet is NYS Assembly Bill 11715, introduced in the Assembly on June 20, adopted by the Assembly on June 23, delivered to and adopted by the Senate on June 24 and now heading to the Governor for final consideration.  It's a bill guaranteed to extend the time to select a civil jury trial and tinker with jury alternates, with no particular advantage.

 

What does it do?

 

With respect to alternate jurors, the statute currently calls for alternatives to be discharged from service once the case is submitted to the jury for consideration.  The new statute would allow the court, with the consent of all parties, to discharge the alternate jurors.  What happens if they are not discharged?  We guess they hang around the courtroom to see if one of the regular jurors cannot complete deliberation.  Odd.

 

With respect to selection jurors, there are some changes as well.  The Chief Administrator is empowered to adopt rules of jury selection.  No problem there. The big change would be the addition of a new subdivision (q) to section 212 of the Judiciary Law directing the Chief Administrator of Courts to designate one or more Supervising Judges for Voir Dire for each judicial district.  That supervising judge would have the power to review and to vacate or modify an order or determination by a justice, judge or judicial hearing officer in relation to the conduct of jury selection in a civil action originating in the supreme court or county court where such order or determination constitutes a failure to follow the rules of Jury Selection adopted by the Chief Administrator

 

Most significantly, the proposed statute gives this new Supervising Judge for Voir Dire, the power to conduct an immediate review of any order or determination of the trial court pertaining to the conduct of jury selection, A record, including a recording of any telephone conference, of such review shall be made at the request of any party and any written order shall be issued.

 

If  the for review pertains to an order or determination as to the questioning of an individual juror, the voir dire shall be suspended and the Supervising Judge for Voir Dire shall rule on  the order  or  determination  before  further questioning resumes as to that particular juror.

 

I can see it now.  Every objectionable question in jury selection is ruled on first by the trial judge or JHO monitoring jury selection and then an appeal is taken to the Supervising Judge for Voir Dire.  Sheesh.  Jury selection will never end.

 

Anniversary Time

 

It's the century anniversary of the last big bang.

 

One hundred years ago this week:  The Tunguska Event in Siberia, from Wikipedia, the source of all modern knowledge:

 

At around 7:17 a.m. local time, Tungus natives in the hills northwest of Lake Baikal observed a column of bluish light, moving across the sky. About 10 minutes later, there was a flash and a sound similar to artillery fire. Eyewitnesses closer to the explosion reported the sound source moving east to north. The sounds were accompanied by a shock wave that knocked people off their feet and broke windows hundreds of miles away. The majority of eyewitnesses reported only the sounds and the tremors, and not the sighting of the explosion. Eyewitness accounts differ as to the sequence of events and their overall duration.  By all accounts, the explosion was most likely caused by the burst of a meteoroid or comet a few miles above the Earth's surface and nothing like that has impacted in the Earth in the last century.

Although though the Richter Scale had not yet been developed, some suggest it the shocks would be equivalent to an earthquake of 5.0 on the Richter scale.  Over the next few weeks, night skies were aglow such that one could read in their light, from dust suspended in the stratosphere by the explosion.

Rumor has it that claims are still being adjusted .

 

MARK'S MARK

Here's Mark's Mark, from one of the few lawyers in the world who has read every appellate serious injury threshold decision in the last two years: 

 

Bulges and Tendons and Tears - Oh My! 

This is no fairy tale but today's cases do teach an important lesson. There are plenty of decisions which state that mere existence of disc bulges is not evidence of a serious injury in the absence of objective evidence of the extent of the alleged physical limitations resulting from the injury and its duration. See the summary of  Browne v. M & P Distribs Corp. in today's edition which cites the following cases in support of same: Piperis v Wan, 49 AD3d 840; Mejia v DeRose, 35 AD3d 407; Yakubov v CG Trans. Corp., 30 AD3d 509; Cerisier v Thibiu, 29 AD3d 507; Bravo v Rehman, 28 AD3d 694; Kearse v New York City Tr. Auth., 16 AD3d 45; Diaz v Turner, 306 AD2d 241.

 

However, it bears repeating that the same notion applies to tears in the tendon as well. See the summary of Silla v. Mohammad in today's edition:

"The MRI report of Dr. Thomas Kolb merely evinced that the plaintiff suffered from tears in the rotator cuff and anterior glenoid labrum as of September 6, 2005. Dr. Kolb did not offer any opinion on the cause of those tears (see Collins v Stone, 8 AD3d 321, 322), and: the mere existence of a tear in a tendon is not evidence of a serious injury in the absence of objective evidence of the extent of the alleged physical limitations resulting from the injury and its duration (see Cornelius v Cintas Corp., 50 AD3d 1085; Piperis v Wan, 49 AD3d 840; Casas v Montero, 48 AD3d 728, 730; Shvartsman v Vildman, 47 AD3d 700, 701)."

Mark A. Starosielec
[email protected]

 

EARL'S PEARLS

This week's column: N.Y Rules for Conducting Depositions: A "Code" of Civility, thanks to Earl Cantwell.

 

We do appreciate civility

 

THIS WEEK'S ISSUE

 

In the attached issue, you will find an eclectic group of interesting coverage cases from NY appellate courts released over the past two weeks.

 

Court of Appeals

·       Regulation "90" Reports Subject to FOIL Disclosure; Siding in favor of the Brooklyn Borough President, the Court of Appeals Denies Leave to Appeal, Leaving in place Kohane's Mantra:  A Reservation of Rights Letter is Not a Substitute for a Disclaimer

·       If the Construction Contract Doesn't Require Party to be Named as Additional Insured, the Status Does Not Exist (even if Certificate Says So)

·       While Carrier Established it Did Not List Property on Which Accident Occurred on Date of Accident, Broker Established that Carrier May Have Retrospectively Charged a Premium For the Property so Question of Fact as to Whether Property was Insured Location

·       Anti-Subrogation Prohibition Does Not Preclude Subrogation Action Under Separate Policy; Even though Landlord and Tenant are Co-Insureds Under CGL Policy, Carrier that Made Payment Under Separate Property Policy May Pursue Subrogation Claim Against Landlord

·       Court Does Not Reach Question of Availability of SUM Coverage When Paid Claims Reduced Available Liability Coverage

·       Appellate Court Exercises Power to Rewrite Blanket Additional Insured Endorsement.  In a Simple Inexcusable Decision, Second Department finds that Blanket Additional Insured Endorsement Extends Coverage to Party where there was Only an Oral Agreement to Do So

·       Carrier has No Obligation to Defend, if Claims Fall Totally Outside of Coverage

·       Late Disclaimer Invalidates Denial Based on Exclusionary Language

·       MVAIC Spanked for Dilatory Conduct

 

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

Mark Starosielec
[email protected]

 

·       Triable Issue of Fact Created When Plaintiff's Doc Conducted Inter Alia Sensory Exams

·       Failure to Explain Prior Line-of-Duty Injuries Sinks Plaintiff's SJ Survival Hopes

·       Court to Doctors: Don't Affirm Based On Unsworn Reports of Other Doctors

·       D's Failure to Compare Findings to What is Considered Normal Allows P to

·       Low Five: Plaintiff's Failure to Explain Five-Year Treatment Gap Leads to SJ

·       Reversed: SJ Granted as Plaintiff Relies on Uncertified Records in Opposition

·       Court: Mora Needed More to Vacate Order Granting Defendants' Unopposed MSJ

·       Complicated MSJ Denied as Defendants Failed to Make Its Prima Facie Burden

·       SJ Granted as Silly Silla Submissions Fail To Raise a Triable Issue of Fact

·       Failure to Pass Go Dooms Defendant's Summary Judgment Hopes

·       Checkmate: D Met Prima Facie Burden, But P Blocked SJ by Raising Triable Issue of Fact

·       Jury Finding of Serious Injury But No Award for Future Pain and Suffering = Retrial

 

AUDREY'S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]

 

Arbitration

·       Ignorance of the Law is No Excuse for Timely Submission of Prescription Expenses

·       Physiatrists Comments on Further Chiropractic Care in IME Insufficient to Support Denial of Chiropractic Treatment

 

Litigation

·       Plaintiff's Stipulation to Evidence Preclusion on Medical Necessity if Failure to Appear for Deposition Assisted Insurer in Prevailing on Summary Judgment

·       Petition Papers Insufficient to Support Motion to Vacate Arbitration Award

·       Plaintiff Failed to Submit Proper Corporate Officer Affidavit to Establish Prima Facie Case

·       Summary Judgment Motions Denied for Insufficient Affidavits and an Insufficient IME Report

·       Attorney's Fee Calculated at 20% of Max $850.00 Per Claim

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

·       Should Have Known Better: Plaintiff's Fraud Claims Against Broker are Time Barred

·       Absent a Special Relationship, a Broker has No Fiduciary Duty to its Customer

·       Insurance Law § 3420(d) is Inapplicable to Claims for Failure to Procure Insurance 

 

EARL'S PEARLS

Earl K. Cantwell, II

[email protected] 

 

New N.Y Rules for Conducting Depositions: A "Code" of Civility

 

Well, that's it.  Enjoy the issue and we continue to appreciate the kind comments we receive from so many of you during the 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

Mark Starosielec

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

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

Index to Special Columns

 

Starosielec’s Serious Side of “Serious Injury”

 Audrey’s Angles on No Fault

Peiper on Property
Earl’s Pearls

Across Borders

 

Court of Appeals

 

6/26/08            In the Matter of Markowitz v. Serio
New York State Court of Appeals
Regulation “90” Reports Subject to FOIL Disclosure
Siding in favor of the Brooklyn Borough President, the Court of Appeals rejects at attempt by the insurance industry to protect competitive marketing date from disclosure.  The high court holds that the industry failed to prove that narrow exemptions in the Freedom of Information Law would put insurers at a competitive disadvantage and the strong public policy in favor of public disclosure outweighs any concerns proffered by the industry.

6/25/08            NYAT Operating Corp., etc.,  v. GAN National Insurance Company
New York State Court of Appeals
Court of Appeals Denies Leave to Appeal, Leaving in Place Kohane’s Mantra:  A Reservation of Rights Letter is Not a Substitute for a Disclaimer
Once again, the Court of Appeals leaves in place a decision, this time from the First Department, where the appellate courts have rejected a “reservation of rights letter,” where a disclaimer letter should have been sent instead.  We reported on the First Department’s December 6, 2007 decision in  our December 14, 2007 edition (Volume IX, No. 12).  The Court of Appeals was asked to review the decision and, on Wednesday, declined to do.  We reported then:

You’ve heard this from me before, and some of you just don’t accept it.

The claim against NYAT was that it negligently hired and retained an employee who eventually sexually assaulted the victim, Cabrera. Cabrera obtained a $1 million judgment against NYAT and the carrier, GAN, refused to pay it, just as it refused to defend NYAT in the lawsuit.

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

Appellate Division

 

6/26/08            ALIB, Inc. v. Atlantic Casualty Insurance Company

Appellate Division, First Department
If the Construction Contract Doesn’t Require Party to be Named as Additional Insured, the Status Does Not Exist (even if Certificate Says So)

The question was whether or not ALIB was afforded additional insured status under a policy issued by Atlantic to AFA where the written contract between the two did not require AFA to name ALIB as an additional insured.  The short answer was “no” and a Certificate of Insurance to the contrary did not amend the policy. In any event, coverage would have been excluded by an employee’s exclusion in the policy.

 

6/24/08            Moncrief v. DiChiaro
Appellate Division, Second Department
While Carrier Established it Did Not List Property on Which Accident Occurred on Date of Accident, Broker Established that Carrier May Have Retrospectively Charged a Premium For the Property so Question of Fact as to Whether Property was Insured Location
Sirius Insurance Company established, prima facie, that it was not obligated to defend and indemnify PLDC, which arose from injuries the infant plaintiff allegedly sustained on November 5, 2002, in an unfinished home owned by PLDC. An endorsement in the commercial general liability insurance policy Sirius issued to PLDC listed coverage only for another premises, not the one where the accident occurred. PLDC contended that before the accident its insurance broker was instructed to have Sirius add the subject premises to the policy.   However, that request was not made until after the accident.  In response, however, PLDC provided proof from the broker that after the policy expired, Sirius audited the policy, and PLDC "a premium for all the work associated with [the subject premises]" during the entirety of the policy period, March 28, 2002, to March 28, 2003. .

 

6/24/08            Utica Mutual Ins. Company v. Brooklyn Navy Yard Development Corp. Appellate Division, Second Department
Anti-Subrogation Prohibition Does Not Preclude Subrogation Action Under Separate Policy; Even though Landlord and Tenant are Co-Insureds Under CGL Policy, Carrier that Made Payment Under Separate Property Policy May Pursue Subrogation Claim Against Landlord

Ares (a tenant) leased property on the fifth floor of a building at the Brooklyn Navy Yard (BNY), which was managed by the defendant Brooklyn Navy Yard Development Corp. (BNYDC) and owned by the City of New York.  Ares sustained damage when a water pipe suspended from the ceiling of the leased premises burst. Under the lease, Ares was required and did name BNYDC and the City as additional insureds under a CGL policy issued by Utica Mutual Insurance Company. They were named as additional insureds "only with respect to liability arising out of the ownership, maintenance or use of that premises leased to [Ares]." They were not named as additional insureds under Ares' separate commercial property policy (hereinafter the property damage policy), also obtained from Utica. Ares submitted a claim to Utica under its property damage policy for property damage and business losses, and Utica allegedly paid to Ares a sum in excess of $2,500,000 for those losses.

Utica, as the first-party property insurer and subrogee of Ares, then commenced this action against the BNYDC and the City for subrogation blaming those defendants for the loss Utica had to pay out to Ares.  After discovery, the BNYDC and City moved for summary judgment dismissing the complaint insofar as asserted against them, arguing, inter alia, that the antisubrogation doctrine barred the action since they were additional insureds under the liability policy.

The antisubrogation doctrine prohibits an insurer from commencing a subrogation action against its own insured for a claim arising from the very risk for which the insured was covered. Utica did not pay the claim under its liability policy but under a separate property policy.  Accordingly the antisubrogation doctrine does not bar this action.

6/24/08            In the Matter of Allstate Insurance Company v. Dawkins

Appellate Division, Second Department
Court Does Not Reach Question of Availability of SUM Coverage When Paid Claims Reduced Available Liability Coverage
Ian Dawkins claims to have been injured in an accident involving three motor vehicles. After the tortfeasor's insurer, AIG , offered to settle with three victims of the accident (including Dawkins) for the full amount of the tortfeasor's policy, Dawkins demanded arbitration of a claim for underinsured motorist benefits from his own insurer, Allstate. Allstate commenced this proceeding, for a permanent stay of such arbitration, asserting that the tortfeasor's vehicle was not "underinsured" because the limits for bodily injury under the AIG policy were the same as those in the Allstate policy.

 

Dawkins argued that he was entitled to benefits pursuant to 11 NYCRR 62-1.8(f)(c)(3)(ii) because the coverage available under the AIG policy had been reduced by payments made to other persons injured in the accident to an amount less than the bodily injury liability limit of his policy with Allstate. 

The appellate court did reach the argument because the carrier did not argue the position in a timely way, in the lower court.

 

6/17/08            Superior Ice Rink, Inc., v. Nescon Contracting Corp.

Appellate Division, Second Department
Appellate Court Exercises Power to Rewrite Blanket Additional Insured Endorsement.  In a Simple Inexcusable Decision, Second Department finds that Blanket Additional Insured Endorsement Extends Coverage to Party where there was Only an Oral Agreement to Do So

Nescon contracted with the plaintiff Superior Ice Rink, (Superior), to paint the roof of Superior's facility. Superior's manager and Nescon's principal orally agreed that in order for Nescon to perform any work, Nescon had to name Superior as an additional insured under an insurance policy issued to Nescon by the defendant Merchants Mutual (Merchants).

Nescon then asked its broker to add Superior as an additional insured under Nescon's insurance policy. A "certificate of liability insurance," indicating that Superior was an additional insured under that policy, was then issued to Superior.

Two of Nescon's workers, were injured while painting Superior's roof and sued Superior. Superior sought to have Merchants defend Superior but Merchants disclaimed coverage.

Superior sued the broker and Merchants, seeking (against Merchants) an order declaring that  Merchants was obligated to defend and indemnify Superior. Superior alleged that it was an additional insured under Nescon's policy, that Merchants owed it an obligation to defend and indemnify it in the underlying actions and breached that obligation, and that it "sustained substantial damages" in that it "was forced to . . . defend the lawsuits" and "incur the financial liability that resulted" therefrom.

The Merchants policy had a blanket additional insured endorsement that provided additional insured status for any organization Nescon was required by "a written contract, agreement or permit" to name as an insured would be included as an insured with respect to liability arising out of Nescon's work performed for that organization at the location designated in "the contract, agreement or permit."

Merchants contends that it is clear that the word "written" in the phrase "written contract, agreement or permit" modifies the words "contract," "agreement" and "permit," and hence, that Superior was not an additional insured because Nescon was not required by a written contract, written agreement or written permit to name Superior as an insured under Nescon's policy. However, since the word "written" could also be reasonably interpreted to only modify the word "contract," the court finds that the phrase is ambiguous (see Travelers Indem. Co. of Am. v Royal Ins. Co. of Am., 22 AD3d 252, 253).

Applying these principles, the court concludes that since Nescon was required by an oral agreement to name Superior as an insured under the policy,  Merchants had an obligated to defend and indemnify Superior in the underlying personal injury actions.

Editor’s Note: What an AWFUL decision.  Why in heaven’s name would a blanket additional injured provision speak to written contracts if was extending AI status to oral agreements? 

This interpretation invites and encourages fraud.  It is so easy to imagine a contractor who might suddenly (and miraculously) remember an oral agreement to provide an owner with additional insured status even though the written contract between the owner and contractor only required that the owner be a “certificate holder.”

6/17/08            Global Construction Company, LLC, v. Essex Insurance Company

Appellate Division, Second Department

Carrier has No Obligation to Defend, if Claims Fall Totally Outside of Coverage

Well, that’s no surprise.  Unfortunately there is nothing in the appellate decision to flush out the facts of this case, and the lower court decision was not reported.  Accordingly, all we can tell you is that the court was surely right:  here, the carrier was able to establish that the allegations in the complaint fell out side of coverage or within exclusions.  Accordingly, Essex had no duty to defend since it would never have a duty to indemnify.

 

6/17/08            Rael Automatic Sprinkler Co., Inc. v Schaefer Agency
Appellate Division, Second Department
Late Disclaimer Invalidates Denial Based on Exclusionary Language

On December 11, 2001, Matthews, an employee of Rael Sprinkler, was installing fire sprinklers at the Metropolitan Museum of Art (MOMA) when he fell off a plank and was injured.  Rael was insured by Frontier (thereafter assumed by Clarendon).  Rael had used the Schaefer Agency which in turn used a wholesale broker, Gremesco.

 

Rael had asked for blanket contractual coverage but in fact that coverage was specifically excluded, unless the agreement constituted an “insured contract;”  the policy also excluded bodily injuries to employees (the contractual liability and employers liability exclusions).

In May 2002, Matthews sues MOMA and MOMA’s carrier tenders to Rael and Clarendon. In August, Clarendon disclaims indicating that MOMA was not an insured and citing the contractual liability and employer’s liability exclusions.

The personal injury case was settled with Rael and Schaefer each contributing the sum of $250,000 to the settlement. Rael commenced the instant action against Schaefer alleging, inter alia, breach of contract for failure to procure insurance. Schaefer then sued Gremesco and Clarendon seeking coverage and argued that Clarendon seeking, was obligated to defend and indemnify Rael, on the ground that its disclaimer was untimely.

Since Clarendon's disclaimer was based on policy exclusions, Clarendon was required to provide Rael with timely notice of its disclaimer under Insurance Law § 3420(d).  Clarendon indicated that it began investigating the grounds for disclaiming coverage as early as March 5, 2002. There was on good excuse offered for a delay in its final decision until August.

6/17/08            In the Matter of Jennifia Rowtham v. MVAIC
Appellate Division, Second Department
MVAIC Spanked for Dilatory Conduct
In an uninsured motorists proceeding against MVAIC, the Court Attorney Referee was directed "to conduct a hearing on the issue of coverage on a date certain with no adjournments." Instead, the referee directed the addition of new parties and adjourned the hearing.  The Appellate Division found that direction was against the authority granted to the Referee, vacated the order then, blaming MVAIC for what had occurred granted the petitioner's application for leave to commence an action against MVAIC.

 

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

Mark Starosielec
[email protected]

 

6/26/08            Hildenbrand v. Chin

Appellate Division, Third Department

Triable Issue of Fact Created When Plaintiff’s Doc Conducted Inter Alia Sensory Exams

In a lengthy opinion, the Appellate Division affirmed a lower court order which denied defendant's motion for summary judgment dismissing the complaint. Here, plaintiff alleged he sustained serious injury, inter alia  in the permanent consequential limitation of use and significant limitation of use. Initially, defendant met her burden of establishing that plaintiff did not suffer a causally-related serious injury. In support of her motion, defendant submitted, among other things, a medical report by Rene Elkin, a neurologist, who, upon examination of plaintiff, opined that, despite plaintiff's complaints of headaches and pain in his neck and left arm which were consistent with cervical muscle sprain, there were no objective findings of a permanent or disabling injury resulting from the accident.

In opposition, plaintiffs were required to submit 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"  Towards that end, plaintiffs submitted the results of an EMG test establishing "[m]ild acute denervation in [plaintiff's] C5/C6/C7/C8 muscles is suggestive of multilevel dysfunction," as well as the MRI report which, in addition to the degenerative condition, also noted a "severe degree of cord impingement at C6-7." Plaintiffs also relied upon the medical report of neurologist Lydia Shajenko who examined plaintiff and reviewed his various medical records, including the MRI results. Upon physical examination, Shajenko observed a "significant decreased range of motion in extension, flexion and horizontal movement" and a "significant paraspinal muscle spasm was noted in [plaintiff's] cervical spine with point tenderness especially at C6-7 on the left." She also conducted neurological motor, reflex and sensory examinations. Based upon plaintiff's asymptomatic condition prior to the accident, the established decreased range of motion of plaintiff's neck and arm and the cervical MRI revealing disc bulges and nerve impingement, plaintiff's primary care physician, Ravi Ramaswami, opined that plaintiff was permanently disabled as a result of the accident. Viewing this evidence in a light most favorable to plaintiffs, the Appellate Division found sufficient objective evidence in the record to raise a question of fact.

6/26/08            Ronda v Friendly Baptist Church

Appellate Division, First Department

Failure to Explain Prior Line-of-Duty Injuries Sinks Plaintiff’s SJ Survival Hopes

Here, the plaintiff unsuccessfully appealed a lower court order which granted defendants' motion for summary judgment dismissing the complaint. The Appellate Division held the defendants met their initial burden of showing that plaintiff's shoulder tendon tear and other injuries were not proximately caused by the subject accident by submitting reports of plaintiff's previous line-of-duty injuries and the opinion of their examining orthopedist, describing arthritic changes in the shoulder joint as degenerative, Plaintiff failed to meet his burden to adduce evidence rebutting the asserted lack of causation.  

 

6/24/08            Benavides v Peralta

Appellate Division, Second Department

Court to Doctors: Don’t Affirm Based On Unsworn Reports of Other Doctors

In a pitfall seen time and time again, plaintiff’s doctors’ reliance on unsworn reports of other doctors failed to raise a triable issue of fact. As such, the lower court order which granted the defendants' motion for summary judgment dismissing the complaint was affirmed.  The defendants met their prima facie burden. In opposition, the plaintiff failed to raise a triable issue of fact. The affirmation of the plaintiff's treating physician was without any probative value since it is clear that in concluding that the plaintiff sustained a herniated disc at L5-S1, he relied on the unsworn MRI reports of another physician.

 

6/24/08            Spahn v. Wohlmacher

Appellate Division, Second Department

D’s Failure to Compare Findings to What is Considered Normal Allows P to Survive SJ

In an action to recover damages for personal injuries, the defendant appealed from a lower court order which denied her motion for summary judgment. The defendant failed to meet her prima facie burden. In support of her motion, the defendant relied upon, inter alia, the report of her examining neurologist. During testing of the plaintiff's lumbar spine, the defendant's examining neurologist noted that the plaintiff was able to bend forward and bring her hands down to the midthigh level. In the supine position, the plaintiff's leg elevation was to 30 degrees bilaterally. Despite making these findings, the defendant's examining neurologist never compared those findings to what is normal. As to the cervical spine, the defendant's examining neurologist merely stated that movements of the neck were "normal" without setting forth the objective tests used to arrive at those conclusions that the plaintiff had full range of motion in the cervical spine.

 

6/19/08            Brown v Singh

Appellate Division, First Department

Low Five: Plaintiff’s Failure to Explain Five-Year Treatment Gap Leads to SJ

A lower court order, which had denied defendants’ motion for summary judgment dismissing the complaint, was unanimously reversed by the Appellate Division. Here, the plaintiff offered no explanation for the absence of any evidence that he underwent any medical treatment in the five years since he was examined at the hospital emergency room immediately after the subject automobile accident. In addition, the report of a physician who examined plaintiff more than five years after the accident was too remote in time to show any contemporaneous ROM limitations in his cervical and lumbar spine.

 

6/17/08            Brown v. M&P Distribs. Corp
Appellate Division, Second Department

Reversed: SJ Granted as Plaintiff Relies on Uncertified Records in Opposition

Here, defendant successfully appealed a lower court order which had denied their motion for summary judgment dismissing the complaint. The Appellate Division held the defendants met their prima facie burden. In opposition, the plaintiff failed to raise a triable issue of fact. The submissions of the plaintiff's treating physician were without any probative value since these submissions consisted of either uncertified records or unaffirmed medical reports.

 

6/17/08            Mora v Scarpitta
Appellate Division, Second Department

Court: Mora Needed More to Vacate Order Granting Defendants’ Unopposed MSJ

Plaintiff Mora unsuccessfully appealed a lower court order, which denied her motion to vacate an order of the same court granting the defendants' unopposed motion for summary judgment. To prevail on such a motion to vacate a default in opposing a motion, a moving party is required to demonstrate both a reasonable excuse for its default and a meritorious claim (see Eugene Di Lorenzo, Inc. v. A.C. Dutton Lbr. Co., 67 NY2d 138, 141; Montague v Rivera, 50 AD3d 656; Perez v Han Ki Man, 39 AD3d 521; Itskovich v Lichenstadter, 2 AD3d 406, 407; Beale v Yepes, 309 AD2d 886, 887). Here, the plaintiff failed to do either. The conclusory reasons for the default offered by the plaintiff's counsel were not substantiated. Further, the plaintiff failed to submit competent medical evidence demonstrating that she sustained a serious injury.

 

6/17/08            Perez v Fugon

Appellate Division, Second Department

Complicated MSJ Denied as Defendants Failed to Make Its Prima Facie Burden

While complicated with renewal and reargument issues, the plaintiffs ultimately successfully appealed a lower court order which had granted the motion of the defendant for summary judgment dismissing the complaint. The Appellate Division held the lower court improperly adhered to its original determinations granting the motion. The defendants failed to show their prima facie entitlement to judgment. The only evidence relied upon in support of their motion was the affirmed medical report of Dr. Hendler, an orthopedist who examined the injured plaintiff at the request of the defendant Gardner. While Dr. Hendler opined that the injured plaintiff had "full" ranges of motion in her left shoulder and cervical and lumbar spine on the date of the examination, he failed, among other things, to set forth the objective test or tests he performed to arrive at those conclusions. In addition, while he did set forth range of motion findings with respect to the injured plaintiff's knees, he failed to compare those findings to the normal ranges of motion.

 

6/17/08            Silla v Mohammad
Appellate Division, Second Department

SJ Granted as Silly Silla Submissions Fail To Raise a Triable Issue of Fact

Here, the defendants successfully appealed a lower court order which had denied their motion for summary judgment dismissing the complaint. The Appellate Division held the defendants met their 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. The affirmation of Dr. Anglade, the plaintiff's treating physician, and his report, failed to acknowledge the fact that the plaintiff had been in an accident a few years prior to the subject one, in which she injured her neck and back. Further, the MRI report of Dr. Kolb merely evinced that the plaintiff suffered from tears in the rotator cuff and anterior glenoid labrum. Dr. Kolb did not offer any opinion on the cause of those tears. The mere existence of a tear in a tendon is not evidence of a serious injury in the absence of objective evidence.

 

6/17/08            Swaby v Maldonado

Appellate Division, Second Department
Failure to Pass Go Dooms Defendant’s Summary Judgment Hopes

The defendant’s failure to make a prima facie showing that the plaintiff did not sustain a serious injury led the Appellate Division to conclude that the lower court properly denied the defendant's motion for summary judgment regardless of the sufficiency of the opposition papers.

 

6/17/08            Zavala v Shevlin
Appellate Division, Second Department
Checkmate: D Met Prima Facie Burden, But P Blocked SJ by Raising Triable Issue of Fact

While defendant passed go, he failed to collect the proverbial $200.  Defendant met her prima facie burden by showing that the plaintiff did not sustain a serious injury but the plaintiff raised a triable issue of fact in opposition. As such the lower court order that denied defendant’s motion for summary judgment was affirmed.  

 

6/17/08            Lamanna v Jankowski

Appellate Division, First Department

Jury Finding of Serious Injury But No Award for Future Pain and Suffering = Retrial

An inconsistent verdict led the Appellate Division to order a retrial on all issues. As such, the lower court order, which had granted defendants' motion to set aside the jury verdict rendered in plaintiff's favor, and directed judgment in defendants' favor, was unanimously reversed. At the trial court level, the jury found that plaintiff sustained "a permanent consequential limitation of use of a body organ or member" yet failed to award any damages for future pain and suffering. Since the failure to award such damages cannot be reconciled, retrial is mandated as there is a strong likelihood that the verdict results from a trade-off on a finding of liability in return for a compromise on damages.

 

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.

 

The insurance department recently issued a circular letter dated June 14, 2008, regarding no-fault regulation provision 11 NYCRR §65-3.9, pertaining to an insurer not suggesting or requiring waiver of interest to resolve a claim.  This letter is meant to advise insurers that the Insurance Department is applying 11 NYCRR §65-3.9 to counsel for the insurer in arbitration or litigation.  Simply put, counsel is not to suggest or require as a condition of settlement in an arbitrated or litigated case that the plaintiff waive interest.  Further, the Insurance Department will enforce compliance through market conduct examinations of insurers including targeted investigation of insurers if warranted.

 

Arbitration

 

6/24/08            In the Matter of the Arbitration Between Applicant and Respondent

Arbitrator Thomas J. McCorry (Erie County)

Ignorance of the Law is No Excuse for Timely Submission of Prescription Expenses.

The Applicant, eligible injured person (“Applicant”), was involved in a November 24, 2004, motor vehicle accident.  The Applicant was prescribed various medications by his treating physicians.  The Applicant submitted the prescriptions to the insurer for reimbursement and most of the prescriptions were denied as the Applicant failed to submit them within the requisite 45 day period.

 

The Applicant argued that he was not aware of the subtleties of the no-fault regulation and did not know there was a timeframe in which the prescription expenses must be submitted to the insurer.

 

The arbitrator held that ignorance of the law is not an excuse to untimely submission of the prescription expenses.  The was particularly so when the insurer through a submitted affidavit pointed out that the Applicant was indisputably  provided with a separate notice advising of the important time frames for claim submission.

 

6/19/08            In the Matter of the Arbitration Between Applicant and Respondent

Arbitrator Veronica K. O’Connor (Erie County)

Physiatrists Comments on Further Chiropractic Care in IME Insufficient to Support Denial of Chiropractic Treatment. 

The Applicant, eligible injured person (“Applicant”), began a course of chiropractic care after a December 31, 2005, motor vehicle accident.  On March 22, 2006, the Applicant underwent an independent medical examination (“IME”) with a physiatrist who opined that no further treatment was warranted regarding his specialty of Physical Medicine and Rehabilitation.  He further opined that physical therapy, chiropractic care, massage therapy, acupuncture treatment, and diagnostic testing were not necessary.  Based upon this report, the insurer denied the Applicant’s chiropractic treatment.

 

In response to the IME, the treating chiropractor submitted a report taking issue with a physiatrist providing an opinion on the need for chiropractic treatment.  In addition, to taking issue with the IME reports lack of explanation of positive objective findings, the treating chiropractor argued that the chiropractic and physical medicine specialties are different and the physiatrist should have deferred the opinion on chiropractic care to a chiropractor.

 

Surprisingly the assigned arbitrator agreed and held that the IME report did not support the termination of chiropractic care and this issue should have been referred to the proper specialty.

 

Litigation

 

6/12/08            Vista Surgical Supplies, Inc. v. American Protection Ins. Co.,

Appellate Term, Second Department

Plaintiff’s Stipulation to Evidence Preclusion on Medical Necessity if Failure to Appear for Deposition Assisted Insurer in Prevailing on Summary Judgment

The lower court properly granted the insurer’s cross motion for summary judgment and denied the plaintiff’s motion for summary judgment.  The plaintiff sought reimbursement for medical supplies purportedly furnished to the eligible injured person.  The insurer denied the claim based upon a peer review.  Interestingly, the parties entered into a stipulation that the plaintiff would be precluded at trial from offering evidence on medical necessity if the plaintiff failed to appear for a deposition.

 

The plaintiff failed to appear for a deposition and promptly moved for summary judgment.  The insurer cross moved for summary judgment and its motion was granted on the basis that its peer review report established that the supplies plaintiff furnished were not medically necessary.  In light of the plaintiff’s preclusion from offering evidence of medical necessity there was no rebuttal evidence.

 

On appeal, the plaintiff argued that it was entitled to summary judgment but the insurer properly pointed out that the plaintiff’s corporate officer affidavit was insufficient to establish that the documents were business records.  Accordingly, the plaintiff failed to establish its prima facie case in the first instance.  

 

6/12/08            SP Medical, P.C. a/a/o Dong Sheng Zheng v. Country-Wide Ins. Co.,

Appellate Term Second Department

Petition Papers Insufficient to Support Motion to Vacate Arbitration Award

The Court declined to vacate a Master Arbitrator’s decision as the petition papers purportedly signed by an attorney were insufficient to grant the requested relief.  The petition papers contained a document entitled Affirmation in Support but there was no requisite affirmation language as required under CPLR 2106.  Further, the purported affirmation was signed by an individual purportedly an attorney from the petitioner’s law firm but it was unclear which of the three attorneys as the firm signed the affirmation.  Accordingly, the petition papers were insufficient and the relief requested was denied.

 

6/12/08            Infinity Health Products a/a/o Cecelia Morgan v. Amex Assurance Co., Appellate Term, Second Department

Plaintiff Failed to Submit Proper Corporate Officer Affidavit to Establish Prima Facie Case

The Plaintiff’s summary judgment motion should have been denied as it failed to submit the proper affidavit from a corporate officer to establish its prima facie case.  Specifically, the affidavit failed to set forth sufficient information that the affiant had personal knowledge of the plaintiff’s practice and procedures to lay the foundation for admission of the billing as a business record.

 

6/12/08            Alur Med. Supply, Inc. a/a/o Douglas Gomez v. Country-Wide Ins. Co.

Appellate Term, Second Department

Summary Judgment Motions Denied for Insufficient Affidavits and an Insufficient IME Report

The plaintiff’s and insurer’s summary judgment motions were denied.  The plaintiff’s motion for summary judgment was denied as it failed to submit the proper employee affidavit to have its records admitted as business records.  The insurer’s cross-motion for summary judgment was denied on the basis that the submitted independent medical examination report did not address the lack of medical necessity of the medical supply at issue in the litigation.

 

6/12/08            Fortune Med., P.C. a/a/o Eka Lowen v. New York Central Mut. Fire Ins. Co.

Appellate Term, Second Department

Attorney’s Fee Calculated at 20% of Max $850.00 Per Claim

The parties were disputing the calculation of attorney’s fees particularly after the LMK decision from the Third Department.  The insurer argued that the plaintiff could only recover 20% of the total of the amount of first-party benefits awarded subject to a maximum of $850.00.  Focusing on the language – total amount of first-party benefits awarded, the insurer argued that the most the plaintiff could recover in the action was $850.00 and not 20% of each claim with a maximum award per claim of $850.00. 

 

The Court disagreed and citing LMK held that attorney’s fees are calculated on a per claim basis of 20% with a maximum of $850.00.

 

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

Stop me if you have heard this before, but apparently the Third Department recently issued a decision that has changed existence as we know it.  Okay, well maybe it has not changed the time-space continuum, but the decision rendered by the Third Department in Elaqua v Physician’s Reciprocal Insurers is, as our esteemed editor aptly noted, “life altering.”  Make no mistake, the Third Department has warned all that a carrier must affirmatively notify its insureds of their right to select independent counsel where there are covered and uncovered claims at issue.  More importantly, the Third Department has stated that failure to do so may result in a claim under Section 349(h) of the General Business Law.  What that means, however, is what we are still trying to figure out.

 

Initially, we note that what constitutes a violation of GBL § 349 is still somewhat murky.  Traditionally, a claim could not ripen without the injured party asserting that (a) there was a deceptive practice and (b) that the deceptive practice resulted in “actual damage” (see Gaidon v Guardian Life Ins. Co. of Am., 94 NY2d 330, 704 NYS2d 177 [1999]).  We know from the opinion that not apprising the insured of its right to independent counsel will be considered a “deceptive practice,” but what about the need to establish actual damages?   In Elaqua, the Third Department notes that the insured was damaged because the assigned attorney put the carrier’s interest in removing covered claims ahead of those of his client.

 

But what if counsel did oppose the motion to dismiss, and it was granted anyway?  Is there actual damage without a showing that the insured did not receive the benefit of effective counsel? Clearly, if counsel takes a position on behalf of his client which is not complementary of the carrier, it cannot be reasonably argued that the carrier’s right to counsel was impacted . . . can it?

 

Assuming you have a claim under GBL § 349, the next question is what are the damages?  Under Section 349(h), the Legislature provides that the injured party is entitled to “his actual damages or fifty dollars” whichever is greater.  In addition, the statute provides authority for injunctive relief to stop the deceptive act.  There is also a provision in the statute which provides that damages can be tripled if the deception was done willfully or knowingly.  However, under no circumstances will the award exceed $1,000.  Finally, the statute provides that the injured party may be awarded attorney’s fees if a violation of the GBL is proven. 

 

In Elaqua, the matter was sent back to trial for a determination on damages.  But what are the damages for counsel failing to assert the best interests of his or her client (Third Department’s assessment --- not mine)?  If it is loss of coverage, are the damages the $2,000,000 award rendered against the partnership in the underlying action?  If so, a maximum of a $1,000 penalty seems like a good trade off for Physician’s Reciprocal.  Can the trial court increase damages beyond that which is permitted under the GBL?  How expansive is the injunctive remedy, and more importantly, how broadly can it be applied? 

 

Rest assured, your bleary-eyed author is intrepidly seeking answers to these questions, and will have a full analysis of these issues (plus a few more) in our next issue.  However, if you wish to discuss this matter or would like to weigh in on the issue before then, I would be most grateful for your time and thoughts.   For the time being, however, on with the Potpourri…

 

06/26/08          Aldrich v Marsh & McLennan Companies, Inc.

Appellate Division, First Department

Should Have Known Better: Plaintiff’s Fraud Claims Against Broker are Time Barred

Plaintiff sought to commence an action alleging that defendant fraudulently concealed facts related to an applicant’s risk exposure.  However, because the plaintiff knew, or should have known, about the fraudulent activities for more than two full years prior the action, the matter was barred by the applicable statute of limitations.

 

06/19/08          State v. Liberty Mutual Ins. Co.

Appellate Division, First Department

Absent a Special Relationship, a Broker has No Fiduciary Duty to its Customer

The First Department overturned the trial court’s denial of defendant’s motion to dismiss a cause of action sounding in a breach of fiduciary duty.   In granting the motion to dismiss, the Court noted that, absent a special relationship, a “broker owes no common-law duty to its customer other than to obtain the policy requested within a reasonable amount of time, or to inform the customer that it could not do so.” 

 

As part of the opinion, the Court also affirmed that part of the trial court’s Order which held that plaintiff’s other claims under the Donnelly Act were not time barred, and thus could proceed accordingly.

 

06/12/08          Preserver Insurance Company v Ryba (revisited)

Court of Appeals

Insurance Law § 3420(d) is Inapplicable to Claims for Failure to Procure Insurance

As you will recall, we commented upon this case in our last issue.  However, given all of the angles discussed by the Court, we thought it was worth another look.  As you will recall, the defendant was an employee for a New Jersey Corporation, East Coast Stucco, at a jobsite in Orangeburg, New York.  While on the jobsite, defendant sustained a grave injury.  Thereafter, he commenced a declaratory judgment action against the General Contractor at the jobsite, Almedia.  Because of defendant’s injury, Almedia commenced a third-party action against East Coast for common law indemnification, contractual indemnification, and a breach of contract for failing to procure insurance coverage. 

 

Upon receipt of the claim, plaintiff commenced the current declaratory judgment action seeking confirmation that it had no duty to defend the breach of contract claims, and also that it had no common law indemnification obligations because the employee’s injury was not “incidental” to East Coast’s New Jersey operations.  Finally, the carrier sought a declaration that coverage was limited under the policy to $100,000. 

 

The Court of Appeals advised us that the law of New Jersey would govern the applicable limits of this case, and also reiterated that New York Insurance Law § 3420(d) only applied where the policy was issued in New York.

 

In addition, we also wanted to highlight that the Court of Appeals noted that the policy in question did not contemplate coverage for the claims premised upon the East Coast’s breach of contract for failing to procure insurance coverage for Almedia.  Further, because a claim for failure to procure insurance was not a claim for “bodily injury or death,” the Court of Appeals ruled that Insurance Law § 3420(d) was not applicable.

 

 

EARL’S PEARLS

Earl K. Cantwell, II

[email protected]

 

N.Y Rules for Conducting Depositions: A “Code” of Civility

 

            Effective October 1, 2006, the Chief Administrative Judge in New York State adopted new Part 221 to the Uniform Rules for the Trial Courts, attempting to govern and bring order and “civility” to the conduct of depositions.  The new rule adopts many practices commonly adopted by various state and federal courts under individual judges’

guidelines and practices. 

 

            New Rule 221.1 provides that, “No objection shall be made at a deposition” unless it would be waived if not interposed at the EBT.  The intent is to limit objections to those absolutely necessarily made at the moment.  As with most prior practice, when an objection is made, although it is noted by the reporter, “The answer shall be given and the deposition shall proceed subject to the objections and to the right of a person to apply for appropriate relief.”  In short, objections, as a general matter, will not prevent a question or forestall an answer.

 

            In an effort to cut down on the infamous “speaking objection” and attorney diatribes, the rule provides that when objection is made it must be stated “succinctly and framed so as not to suggest an answer to the deponent, and, at the request of the questioning attorney, shall include a clear statement as to any defect in the form or other basis of error or irregularity.” Except as permitted by CPLR 3115, no “person in attendance” is allowed to make statements or comments which interfere with the questioning.

 

            Rule 221.2 concerns the infamous “direction not to answer.”  It provides that a deponent must answer all questions at a deposition, except to preserve a privilege or right of confidentiality, enforce or obey a limitation in any court order, or when the question is “plainly improper,” and would if answered cause significant prejudice to any person.   Other than these exceptions, although “plainly improper” leaves some latitude, an attorney may not direct a deponent not to answer a question.  In addition, any refusal to answer must be explained by a statement of the underlying rationale.

 

            In an effort to diminish “timely” breaks and discussions with witnesses, Rule 221.3 provides that an attorney shall not interrupt a deposition for the purpose of communicating with the deponent unless all parties consent, or the communication is made for the purpose of determining whether the question should not be answered on one of the grounds set forth in section 221.2 of the rules.  The reason for the communication must also be stated on the record.  At a minimum, the rule provides that an attorney may not interrupt a deposition while a question is pending, and, overall, is an attempt to cut down on “in the hallway” discussions with witnesses about matters under questioning.

 

            While these and similar issues were all previously grist for the mill of discovery motions and ad hoc telephone calls to the presiding judge, the new Rule 221 will provide a more orderly and specific framework for the conduct of attorneys and resolving discovery disputes as they arise.

 

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

 

6/23/08            Golden v. GMAC Insurance Co,

New Jersey, Appellate Division
Statute of Limitations Begins When Tortfeasor's Liability Insurance Company was Declared Insolvent
The six year statute of limitations required by New Jersey law applies to uninsured motorist insurance claims. Therefore, the plaintiff's cause of action accrued against her uninsured motorist carrier when the tortfeasor's liability insurance company was declared insolvent and not as of the date of accident.

Submitted by: Sarah Sutusky, Sowell Gray Stepp & Laffitte

 

6/19/08            Yates Carpet, Inc. v. The Travelers Lloyds Insurance Company

Court of Appeals of Texas, Seventh District

Liability Coverage Precluded by Exclusion for Advertising Injury Arising Out of Breach of Contract
CCA Global Partners, Inc., FA Cooperative, Inc., and FA Management Enterprises, Inc. (collectively referred to as “CCA”) sued Yates Carpet, Inc. (“Yates”) for trademark infringement, unfair competition, deceptive and unfair trade practices, fraud, breach of contract and unjust enrichment, arising from an agreement Yates had entered into with CCA. Through the agreement, Yates received a license to use CCA’s registered marks, proprietary marks, and proprietary business information, as long as it purchased 80% of its floor covering products through arrangements established by CCA. The agreement also prohibited Yates from purchasing like items through any other cooperative or under a similar buying arrangement with others. Despite these restrictions and requirements, Yates executed a similar purchasing agreement with Mohawk Industries and Floorz without informing CCA. So too did it continue to use CCA’s registered marks, proprietary marks, and proprietary business information. CCA discovered this, and filed suit against Yates. Yates tendered its defense to The Travelers Lloyds Insurance Company (“Travelers”), which had issued it a liability insurance policy. Travelers denied the tender, contending that the matter fell outside the scope of coverage. Yates filed a declaratory judgment action, and the court granted summary judgment in favor of Travelers. The appellate court affirmed. It reasoned that while the policy at issue provided coverage for claims involving advertising injury, it excluded from coverage advertising injury “arising out of . . . [b]reach of contract, other than misappropriation of advertising ideas under an implied contract.” Noting that the phrase “arising out of” requires only an incidental relationship between the claim and the conduct excluded, the court found that the purported breach of contract by Yates had at least an incidental relationship to all the other acts of which CCA complained. As such, the claims against Yates were excluded from coverage.

Submitted by: Bruce D. Celebrezze & Nicholas J. Boos (Sedgwick, Detert, Moran & Arnold LLP)
 

 

REPORTED DECISIONS

 

Silla v. Mohammad

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

DECISION & ORDER

In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Bunyan, J.), dated December 5, 2007, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

The defendants met their prima facie burden 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 magnetic resonance imaging (hereinafter MRI) report of Dr. Mark Freilich, concerning the plaintiff's cervical spine, was without any probative value since it was unaffirmed (see Patterson v NY Alarm Response Corp., 45 AD3d 656; Verette v Zia, 44 AD3d 747, 748; Nociforo v Penna, 42 AD3d 514, 515; see also Grasso v Angerami, 79 NY2d 813, 814; Pagano v Kingsbury, 182 AD2d 268, 270). The affirmation of Dr. Albert Anglade, the plaintiff's treating physician, and his report dated June 28, 2007, failed to acknowledge the fact that the plaintiff had been in an accident a few years prior to the subject one, in which she injured her neck and back. The failure to acknowledge the prior accident and injuries rendered speculative his conclusions that the injuries and limitations he noted during his examinations, concerning the plaintiff's cervical and lumbar spine, were the result of the subject accident (see Cornelius v Cintas Corp., 50 AD3d 1085; Laurent v McIntosh, 49 AD3d 820, 821; Wright v Rodriguez, 49 AD3d 532, 533; Penaloza v Chavez, 48 AD3d 654, 655; Cervino v Gladysz-Steliga, 36 AD3d 744, 745; Moore v Sarwar, 29 AD3d 752).

While the plaintiff did not injure her left shoulder in the prior accident, the submissions of Dr. Anglade did not raise a triable issue of fact in that regard, either. Although Dr. Anglade noted significant range of motion limitations in the plaintiff's left shoulder based on a recent examination, neither the plaintiff nor Dr. Anglade proffered competent objective medical evidence that showed range of motion limitations in her left shoulder that were roughly contemporaneous with the subject accident (see Perdomo v Scott, 50 AD3d 1113; Scotto v Ah Ram Suh, 50 AD3d 1012; Ferraro v Ridge Car Serv., 49 AD3d 498; D'Onofrio v Floton, Inc., 45 AD3d 525; Morales v Daves, 43 AD3d 1118; Rodriguez v Cesar, 40 AD3d 731, 733; Borgella v D & L Taxi Corp., 38 AD3d 701, 702). Furthermore, it is clear that Dr. Anglade relied on the unaffirmed MRI report of Dr. Freilich in reaching his conclusions that the plaintiff suffered from bulging discs in her cervical spine (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).

The MRI report of Dr. Thomas Kolb merely evinced that the plaintiff suffered from tears in the rotator cuff and anterior glenoid labrum as of September 6, 2005. Dr. Kolb did not offer any opinion on the cause of those tears (see Collins v Stone, 8 AD3d 321, 322), and the mere existence of a tear in a tendon is not evidence of a serious injury in the absence of objective evidence of the extent of the alleged physical limitations resulting from the injury and its duration (see Cornelius v Cintas Corp., 50 AD3d 1085; Piperis v Wan, 49 AD3d 840; Casas v Montero, 48 AD3d 728, 730; Shvartsman v Vildman, 47 AD3d 700, 701). The plaintiff's affidavit, and her deposition testimony, were insufficient to raise a triable issue of fact (see Casas v Montero, 48 AD3d at 730; Shvartsman v Vildman, 47 AD3d at 701).

The plaintiff's admissible medical submissions were insufficient to establish that she sustained a medically-determined injury of a nonpermanent nature which prevented her from performing her usual and customary activities for 90 of the 180 days following the subject accident (see Casas v Montero, 48 AD3d at 730; Roman v Fast Lane Car Serv., Inc., 46 AD3d 535; Sainte-Aime v Ho, 274 AD2d 569). Accordingly, the Supreme Court should have granted the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
SPOLZINO, J.P., RITTER, DILLON, BALKIN and LEVENTHAL, JJ., concur.

Swaby v. Maldonado

Wollerstein & Futoran (Sweetbaum & Sweetbaum, Lake Success,
N.Y. [Marshall D. Sweetbaum], of counsel), for appellant.
Mallilo & Grossman, Flushing, N.Y. (Brian Butler 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 (Saitta, J.), dated August 2, 2007, which denied her motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendant failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). Accordingly, the Supreme Court properly denied the defendant's motion for summary judgment dismissing the complaint regardless of the sufficiency of the opposition papers (see Hussain v Wang, 18 AD3d 816). RIVERA, J.P., LIFSON, MILLER, CARNI and ENG, JJ., concur.

Lamanna v. Jankowski

Pollack, Pollack, Isaac & De Cicco, New York (Brian J. Isaac
of counsel), for appellant.
Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, New York
(Jamie C. Kulovitz of counsel), for Joseph Jankowski, respondent.
Camacho Mauro & Mulholland LLP, New York (Kathleen M.
Mulholland of counsel), for Diakaite Ousseine and France Croissant, Ltd., respondents.

Order, Supreme Court, Bronx County (Nelson S. Roman, J.), entered January 26, 2007, which, in an action for personal injuries sustained in a motor vehicle accident, inter alia, granted defendants' motion to set aside the jury verdict rendered in plaintiff's favor, and directed judgment in defendants' favor as a matter of law, unanimously reversed, on the law and the facts, without costs, and the matter remanded for a new trial.

The jury found that as a result of the motor vehicle accident, plaintiff sustained "a permanent consequential limitation of use of a body organ or member" (Insurance Law § 5102[d]), yet failed to award any damages for future pain and suffering. Since the failure to award such damages cannot be reconciled with a finding of permanent injury, retrial is mandated on all issues as there is a strong likelihood that the verdict results from a trade-off on a finding of liability in return for a compromise on damages (see McKenna v Lehrer McGovern Bovis, 302 AD2d 329, 330 [2003]; Patrick v New York Bus Serv., 189 AD2d 611, 612 [1993]).

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

Zavala v. Shevlin

Shapiro, Beilly, Rosenberg & Aronowitz, LLP, New York, N.Y.
(Roy J. Karlin of counsel), for appellant.
Marie F. McCormack, P.C., Garden City, N.Y., for respondent.

DECISION & ORDER

In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Nassau County (Woodard, J.), entered November 19, 2007, which denied her motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendant met her prima facie burden by showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). However, in opposition, the plaintiff raised a triable issue of fact.
FISHER, J.P., FLORIO, ANGIOLILLO, DICKERSON and BELEN, JJ., concur.

Ronda v. Friendly Baptist Church

Popick, Rutman & Jaw, New York (Rick J. Rutman of
counsel), for appellant.
Molod Spitz & DeSantis, P.C., New York (Marcy Sonneborn
of counsel), for respondents.

Order, Supreme Court, Bronx County (Betty Owen Stinson, J.), entered August 27, 2007, which, inter alia, granted defendants' motion for summary judgment dismissing the complaint, unanimously affirmed, without costs.

Defendants carried their initial burden of showing that plaintiff's shoulder tendon tear and other injuries were not proximately caused by the subject accident (see Pommells v Perez, 4 NY3d 566, 574-575 [2005]), by submitting reports of plaintiff's previous line-of-duty injuries and the opinion of their examining orthopedist, based in part on the MRI report describing arthritic changes in the shoulder joint as degenerative, that the shoulder injury was among plaintiff's preexisting conditions. Plaintiff failed to meet his burden to adduce evidence rebutting the asserted lack of causation (see Knoll v Seafood Express, 5 NY3d 817 [2005]; Becerril v Sol Cab Corp., 50 AD3d 261 [2008]).

We note that neither the minor curtailment of his activities nor his need to be placed on light duty upon his return to work raised an inference that plaintiff was unable to perform his usual and customary daily activities for 90 of the first 180 days following the accident (see Insurance Law § 5102[d]; Cartha v Quin, 50 AD3d 530 [2008]).

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

THIS CONSTITUTES THE DECISION AND ORDER

Benavides v. Peralta

Cannon & Acosta, LLP, Huntington Station, N.Y. (June Redeker of counsel), for appellant.
Richard T. Lau, Jericho, N.Y. (Gene W. Wiggins of counsel), for respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Suffolk County (R. Doyle, J.), dated January 29, 2007, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendants 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). In opposition, the plaintiff failed to raise a triable issue of fact. The affirmation of the plaintiff's treating physician was without any probative value since it is clear that in concluding that the plaintiff sustained a herniated disc at L5-S1, he relied on the unsworn magnetic resonance imaging (hereinafter MRI) reports of another physician (see Seebaran v Mendonca,AD3d, 2008 NY Slip Op 04342 [2d Dept 2008]; 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). Similarly, the unsworn MRI reports themselves were without probative value (see Laurent v McIntosh, 49 AD3d 820; 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). RIVERA, J.P., LIFSON, MILLER, CARNI and ENG, JJ., concur.

Spahn v Wohlmacher

Jerrold N. Cohen, Mineola, N.Y., for appellant.
Sanders, Sanders, Block, Woycik, Viener & Grossman, P.C.,
Mineola, N.Y. (Mark R. Bernstein 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, Suffolk County (Costello, J.), dated November 9, 2007, which denied her motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendant failed to meet her 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 support of her motion, the defendant relied upon, inter alia, the report of her examining neurologist, who examined the plaintiff on December 6, 2006, over one year after the subject accident. During that examination, the plaintiff's lumbar spine and cervical spine were tested. During testing of the plaintiff's lumbar spine, the defendant's examining neurologist noted that the plaintiff was able to bend forward and bring her hands down to the midthigh level. In the supine position, the plaintiff's leg elevation was to 30 degrees bilaterally. Despite making these findings, the defendant's examining neurologist never compared those findings to what is normal (see Page v Belmonte, 45 AD3d 825; Malave v Basikov, 45 AD3d 539; Fleury v Benitez, 44 AD3d 996; Nociforo v Penna, 42 AD3d 514). As to the cervical spine, the defendant's examining neurologist merely stated that movements of the neck were "normal" without setting forth [*2]the objective tests used to arrive at those conclusions that the plaintiff had full range of motion in the cervical spine (see Giammanco v Valerio, 47 AD3d 674; Palladino v Antonelli, 40 AD3d 944, 945; Cedillo v Rivera, 39 AD3d 453; McLaughlin v Rizzo, 38 AD3d 856; Geba v Obermeyer, 38 AD3d 597; Larrieut v Gutterman, 37 AD3d 424).

Since the defendant failed to meet her prima facie burden, it is unnecessary to consider whether the papers submitted by the plaintiff in opposition to the defendant's motion for summary judgment were sufficient to raise a triable issue of fact (see Page v Belmonte, 45 AD3d at 826; Giammanco v Valerio, 47 AD3d at 675; Coscia v 938 Trading Corp., 283 AD2d 538).
RIVERA, J.P., LIFSON, MILLER, CARNI and ENG, JJ., concur.

Hildenbrand v. Chin

 

Calendar Date: May 2, 2008
Before: Cardona, P.J., Spain, Carpinello, Malone Jr. and Kavanagh, JJ.

Boeggeman, George & Corde, P.C., White Plains
(Cynthia Dolan of counsel), for appellant.
Majer H. Gold, New Paltz, for respondent.

MEMORANDUM AND ORDER
Cardona, P.J.

Appeal from an order of the Supreme Court (O'Connor, J.), entered May 17, 2007 in Ulster County, which denied defendant's motion for summary judgment dismissing the complaint.

In March 2005, plaintiff Robert Hildenbrand (hereinafter plaintiff) was involved in a motor vehicle accident when his car was struck by a vehicle driven by defendant. Thereafter, plaintiff began experiencing headaches, neck pain and left shoulder pain with numbness and tingling down his left arm. Plaintiff and his wife, derivatively, commenced this personal injury action alleging that, as a result of the accident, plaintiff had sustained serious physical injury within the meaning of Insurance Law § 5102 (d). Specifically, the pleadings alleged serious injury in the permanent consequential limitation of use, significant limitation of use, and 90/180-day categories of Insurance Law § 5102 (d). Defendant moved for summary judgment dismissing the complaint on the ground that plaintiff did not suffer a serious injury. Finding questions of fact, Supreme Court denied the motion and this appeal ensued.

Initially, we find that defendant, as the proponent for summary judgment, met her burden of establishing that plaintiff did not suffer a causally-related serious injury (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 352 [2002]; Felton v Kelly, 44 AD3d 1217, 1218 [2007]). In support of her motion, defendant submitted, among other things, a medical report by Rene Elkin, a neurologist, who, upon examination of plaintiff, opined that, despite plaintiff's complaints of headaches and pain in his neck and left arm which were consistent with cervical muscle sprain, there were no objective findings of a permanent or disabling injury resulting from the accident. Rather, consistent with plaintiff's cervical MRI results revealing a degenerative disc disease, Elkin opined that plaintiff's chronic neck pain was related to degenerative spondylosis of the cervical spine, which condition predated the accident and was not a result of any traumatic etiology. Given the submission of such evidence, the burden then shifted to plaintiffs to raise a triable issue of fact that plaintiff suffered a serious injury.

Turning first to the permanent consequential limitation and significant limitation categories, plaintiffs were required to submit 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 Felton v Kelly, 44 AD3d at 1218). Towards that end, plaintiffs submitted the results of an EMG test establishing "[m]ild acute denervation in [plaintiff's] C5/C6/C7/C8 muscles is suggestive of multilevel dysfunction," as well as the MRI report which, in addition to the degenerative condition, also noted a "severe degree of cord impingement at C6-7." Plaintiffs also relied upon the medical report of neurologist Lydia Shajenko who examined plaintiff and reviewed his various medical records, including the MRI results. Upon physical examination, Shajenko observed a "significant decreased range of motion in extension, flexion and horizontal movement" and a "significant paraspinal muscle spasm was noted in [plaintiff's] cervical spine with point tenderness especially at C6-7 on the left." In conducting neurological motor, reflex and sensory examinations, Shajenko also observed an increased motor tone, decreased deep tendon reflex in the left upper extremities and decreased light touch in plaintiff's left fingers. Although not set forth in Shajenko's report, plaintiff's loss of range of motion was quantified in Elkin's medical report, comparing such restrictions to normal degrees of movement. Furthermore, Shajenko noted plaintiff's limitation of physical activities attributable to plaintiff's loss of range of motion and limited use of his left upper extremity, which included restrictions on lifting no more than 10 pounds, his inability to sit or stand more than two hours and limited ability to drive. Based upon plaintiff's asymptomatic condition prior to the accident, the established decreased range of motion of plaintiff's neck and arm and the cervical MRI revealing disc bulges and nerve impingement, plaintiff's primary care physician, Ravi Ramaswami, opined that plaintiff was permanently disabled as a result of the accident. Viewing this evidence in a light most favorable to plaintiffs (see Toure v Avis Rent A Car Sys., 98 NY2d at 353), we find sufficient objective evidence in the record to raise a question of fact with respect to the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102 (d) to defeat defendant's motion for summary judgment (see Secore v Allen, 27 AD3d 825, 827-828 [2006]; Dooley v Davey, 21 AD3d 1242, 1244 [2005]).

We reach a similar conclusion with respect to the 90/180-day category of serious injury, where plaintiffs were required to submit objective evidence of "a medically determined injury or impairment of a non-permanent nature which prevent[ed] [plaintiff] from performing substantially all of the material acts which constitute [his] usual and customary daily activities" for at least 90 out of the 180 days immediately following the accident (Insurance Law § 5102 [d]). In that regard, plaintiff averred that his symptoms arose for the first time following the accident and he has been unable to return to work as a school bus driver and home health care aide. He further affirms in his pretrial testimony that he is unable to drive long distances, hold a coffee cup in his left hand, shovel snow, do household chores and take out the trash, and he has difficulty bathing himself. Furthermore, as previously indicated, the results of the EMG and MRI, respectively, establish "mild acute denervation . . . suggestive of multilevel dysfunction" as well as both a mild and severe cord impingement. Moreover, in addition to the various medical reports submitted by plaintiffs regarding plaintiff's causally-related impairments, defendant's own expert, physician Adam Soyer, assessed plaintiff with "probable left brachial plexopathy, status post motor vehicle accident." We further note that Elkin acknowledged that "the accident may have resulted in symptoms consistent with cervical muscle sprain and nonspecific headaches." Under these circumstances, we find this evidence sufficient to raise a triable issue of fact with regard to the 90/180-day category of the No-Fault Law (see Insurance Law § 5102 [d]).

Spain, Carpinello, Malone Jr. and Kavanagh, JJ., concur.

Brown v. Singh

Marjorie E. Bornes, New York, for appellants.
Monaco & Monaco, LLP, Brooklyn (Frank A. Delle Donne of counsel), for respondent.

Order, Supreme Court, Bronx County (Howard R. Silver, J.), entered September 21, 2007, which denied defendants' motion for summary judgment dismissing the complaint on the ground that plaintiff did not suffer a "serious injury" within the meaning of Insurance Law § 5102(d), unanimously reversed, on the law, without costs, the motion granted and the complaint dismissed. The Clerk is directed to enter judgment accordingly.

Plaintiff offered no explanation for the absence of any evidence that he underwent any medical treatment or physical therapy in the five years since he was examined, X-rayed and released by the hospital emergency room immediately after the automobile accident in which he claims to have sustained "serious injury." In addition, the report of a physician who examined plaintiff more than five years after the accident was too remote in time to show any contemporaneous range of motion limitations in his cervical and lumbar spine resulting from the accident, and therefore fails to raise an issue of fact as to whether his injuries were permanent or significant (see Thompson v Ramnarine, 40 AD3d 360 [2007]).

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

Browne v. M & P Distribs Corp.

Cheven, Keely & Hatzis, New York, N.Y. (William B. Stock of counsel), for appellants.
Manoussos & Associates, P.C., Garden City, N.Y. (Elias Khalife of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Partnow, J.), entered March 27, 2007, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

The defendants met their prima facie burden of establishing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In opposition, the plaintiff failed to raise a triable issue of fact. The submissions of the plaintiff's treating physician were without any probative value since these submissions consisted of either uncertified records or unaffirmed medical reports (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). Although the plaintiff properly relied on the magnetic resonance imaging reports of the cervical and lumbar regions of her spine since the results of those reports were set forth in the affirmed medical report of the defendants' examining orthopedist (see Casas v Montero, 48 AD3d 728; Zarate v McDonald, 31 AD3d 632; Ayzen v Melendez, 299 AD2d 381), those reports merely found that as of November 6, 2003, the plaintiff had disc bulges at C2-3 through C6-7 and at L3-4 through L5-S1. The mere existence of a bulging disc is not evidence of a serious injury in the absence of objective evidence of the extent of the alleged physical limitations resulting from the disc injury and its duration (see Piperis v Wan, 49 AD3d 840; Mejia v DeRose, 35 AD3d 407; Yakubov v CG Trans. Corp., 30 AD3d 509; Cerisier v Thibiu, 29 AD3d 507; Bravo v Rehman, 28 AD3d 694; Kearse v New York City Tr. Auth., 16 AD3d 45; Diaz v Turner, 306 AD2d 241). No other objective medical evidence was relied upon by the plaintiff.
FISHER, J.P., FLORIO, ANGIOLILLO, DICKERSON and BELEN, JJ., concur.

Mora v. Scarpitta

Dominick W. Lavelle, Mineola, N.Y. (Mitchell Dranow of counsel), for appellant.
Morenus, Conway, Goren & Brandman, Melville, N.Y. (Keith J. Conway of counsel),                             for respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Dorsa, J.), entered March 20, 2007, which denied her motion to vacate an order of the same court dated September 21, 2006, granting the defendants' unopposed motion for summary judgment dismissing the complaint on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

In order to prevail on a motion to vacate a default in opposing a motion, a moving party is required to demonstrate both a reasonable excuse for its default and a meritorious claim (see Eugene Di Lorenzo, Inc. v. A.C. Dutton Lbr. Co., 67 NY2d 138, 141; Montague v Rivera, 50 AD3d 656; Perez v Han Ki Man, 39 AD3d 521; Itskovich v Lichenstadter, 2 AD3d 406, 407; Beale v Yepes, 309 AD2d 886, 887). Here, the plaintiff failed to do either. The conclusory reasons for the default offered by the plaintiff's counsel were not substantiated by detailed facts and thus were insufficient to constitute a reasonable excuse (see Montague v Rivera, 50 AD3d 656; Juarbe v City of New York, 303 AD2d 462). Further, the plaintiff failed to submit competent medical evidence demonstrating that she sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject automobile accident (see Montague v Rivera, 50 AD3d 656; Itskovich v Lichenstadter, 2 AD3d at 407; Beale v Yepes, 309 AD2d 886; Waaland v Weiss, 228 AD2d 435, 436). SKELOS, J.P., SANTUCCI, COVELLO, McCARTHY and CHAMBERS, JJ., concur.

Perez v. Fugon

Tarshis, Catania, Liberth, Mahon & Milligram, PLLC, Newburgh, N.Y.                                                (Ralph L. Puglielle, Jr., of counsel), for appellants.
Craig P. Curcio, Middletown, N.Y. (Timothy P. Blum of counsel),                                                            for respondents Damaris Fugon and Karen M. Penamontoya.
Grogan & Souto, P. C., Goshen, N.Y. (Edward P. Souto of counsel),

for respondent Mary R. Gardner.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiffs appeal (1) from an order of the Supreme Court, Orange County (McGuirk, J.), dated February 28, 2007, which granted the motion of the defendant Mary R. Gardner for summary judgment dismissing the complaint insofar as asserted against her on the ground that the plaintiff Mariana Perez did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and (2), as limited by their brief, from so much of an order of the same court dated November 2, 2007, as denied that branch of their motion which was for leave to renew their opposition to the motion of the defendant Mary R. Gardner and to the separate motion of the defendants Damaris Fugon and Karen M. Penamontoya for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff Mariana Perez did not sustain a serious injury within the meaning of Insurance Law § 5102(d), which had been granted in an order of the same court also dated February 28, 2007, and, upon reargument, adhered to the original determinations in the prior orders.

ORDERED that the appeal from the order dated February 28, 2007, granting the motion of the defendant Mary R. Gardner for summary judgment dismissing the complaint insofar as asserted against her on the ground that the plaintiff Mariana Perez did not sustain a serious injury within the meaning of Insurance Law § 5102(d), is dismissed, as that order was superseded by the order dated November 2, 2007, made upon reargument; and it is further,

ORDERED that the appeal from so much of the order dated November 2, 2007, as denied that branch of the plaintiffs' motion which was for leave to renew their opposition to the motion of the defendant Mary R. Gardner and to the separate motion of the defendants Damaris Fugon and Karen M. Penamontoya for summary judgment dismissing the complaint insofar as asserted against each of them is dismissed, as academic in light of our determination; and it is further,

ORDERED that the order dated November 2, 2007, is reversed insofar as reviewed, on the law, upon reargument, the orders dated February 28, 2007, are vacated and the motion of the defendant Mary R. Gardner and the separate motion of the defendants Damaris Fugon and Karen M. Penamontoya for summary judgment dismissing the complaint insofar as asserted against each of them on the ground that the plaintiff Mariana Perez did not sustain a serious injury within the meaning of Insurance Law § 5102(d) are denied; and it is further,

ORDERED that one bill of costs is awarded to the appellants payable by the respondents appearing separately and filing separate briefs.

The Supreme Court, upon reargument, improperly adhered to its original determinations granting the motion of the defendant Mary R. Gardner and the separate motion of the defendants Damaris Fugon and Karen M. Penamontoya for summary judgment dismissing the complaint insofar as asserted against each of them on the ground that the plaintiff Mariana Perez (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. The defendants failed to show their prima facie entitlement to judgment as a matter of law. The only evidence relied upon in support of their respective motions was the affirmed medical report of Dr. Robert C. Hendler, an orthopedist who examined the injured plaintiff at the request of the defendant Mary R. Gardner. While Dr. Hendler opined, inter alia, that the injured plaintiff had "full" ranges of motion in her left shoulder and cervical and lumbar spine on the date of the examination, he failed, among other things, to set forth the objective test or tests he performed to arrive at those conclusions (see Giammanco v Valerio, 47 AD3d 674, 675; Palladino v Antonelli, 40 AD3d 944, 945; Cedillo v Rivera, 39 AD3d 453, 453-54; McLaughlin v Rizzo, 38 AD3d 856, 857; Geba v Obermeyer, 38 AD3d 597; Larrieut v Gutterman, 37 AD3d 424, 425; Schacker v County of Orange, 33 AD3d 903, 904; Ilardo v New York City Tr. Auth., 28 AD3d 610, 611; Kelly v Rehfeld, 26 AD3d 469, 470; Nembhard v Delatorre, 16 AD3d 390, 391). In addition, while he did set forth range of motion findings with respect to the injured plaintiff's knees, he failed to compare those findings to the normal ranges of motion (see Page v Belmonte, 45 AD3d 825, 825-26; Fleury v Benitez, 44 AD3d 996, 997).
SKELOS, J.P., SANTUCCI, COVELLO, McCARTHY and CHAMBERS, JJ., concur.

Global Construction Company, LLC, v. Essex Insurance Company

Jaffe & Asher, LLP, New York, N.Y. (Marshall T. Potashner of
counsel), for appellants.
Donohue, Sabo, Varley & Huttner, LLP, Albany, N.Y. (Bruce
S. Huttner of counsel), for respondent.

DECISION & ORDER

In an action, inter alia, for a judgment declaring that the defendant is obligated to defend and indemnify the plaintiffs in an underlying action entitled Genovese v Global Constr. Co., LLC, commenced in the Supreme Court, Putnam County, under Index No. 1542/05, the plaintiffs appeal from an order of the Supreme Court, Putnam County (O'Rourke, J.), dated June 13, 2007, which denied their motion for summary judgment declaring that the defendant is so obligated and granted the defendant's cross motion for summary judgment declaring that it is not so obligated.

ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Putnam County, for the entry of a judgment declaring that the defendant is not obligated to defend and indemnify Global Construction Company, LLC, and Brian Hill in the personal injury action entitled Genovese v Global Constr. Co., LLC, pending in the Supreme Court, Putnam County, under Index No. 1542/05.

An insurer's duty to defend is broader than its duty to indemnify, such that an insurer may be obligated to defend its insured even if, at the conclusion of an underlying action, it is found to have no obligation to indemnify its insured (see Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137; City of New York v Evanston Ins. Co., 39 AD3d 153, 157). An insurer must defend its insured whenever the allegations of a complaint in an underlying action " suggest . . . a reasonable possibility of coverage'" (BP A.C. Corp. v One Beacon Ins. Group, 8 NY3d 708, 714, quoting Automobile Ins. Co. of Hartford v Cook, 7 NY3d at 137; see Bruckner Realty, LLC v County Oil Co., Inc., 40 AD3d 898, 900; Shapiro v OneBeacon Ins. Co., 34 AD3d 259). The duty to defend is not triggered, however, when, "as a matter of law . . . there is no possible factual or legal basis upon which the insurer might eventually be held to be obligated to indemnify the claimant under any provision of the insurance policy" (Bruckner Realty, LLC v County Oil Co., Inc., 40 AD3d at 900; City of New York v Evanston Ins. Co., 39 AD3d at 157-158) or when the only interpretation of the allegations against the insured is that the factual predicate for the claim falls wholly within a policy exclusion (see Automobile Ins. Co. of Hartford v Cook, 7 NY3d at 137; Bruckner Realty, LLC v County Oil Co., Inc., 40 AD3d at 900).

Here, the defendant established, as a matter of law, that there was no factual or legal basis upon which it might eventually be obligated to indemnify its insureds, the plaintiffs in the underlying action, and that the only interpretation of the allegations in the complaint are that they fell wholly within specific policy exclusions (see Poulos v United States Fid. & Guar. Co., 227 AD2d 539; George A. Fuller Co. v United States Fid. & Guar. Co., 200 AD2d 255; Zandri Constr. Co. v Firemen's Ins. Co. of Newark, 81 AD2d 106, 109). In opposition, the plaintiffs failed to raise a triable issue of fact.

The plaintiffs' remaining contentions are without merit.

In the Matter of Jennifia Rowtham v. MVAIC

Frank Cruz & Ann Gangi, New York, N.Y. (Connors & Connors,
P.C. [Robert J. Pfuhler] of counsel), for appellant.
Michael M. Goldberg, P.C., New York, N.Y., for
petitioner-respondent.
Stanford Kaplan, Mineola, N.Y., for respondent-respondent
Cambridge Integrated Services Group.


DECISION & ORDER

In a proceeding pursuant to Insurance Law § 5218 for leave to commence an action against the Motor Vehicle Accident Indemnification Corporation, the appeal is from an order of the Supreme Court, Kings County (Bayne, J.), dated July 12, 2007, which granted the motion of Cambridge Intergrated Services Group to vacate an order of the same court (Archer, Ct. Atty. Ref.) dated May 29, 2007, and to reinstate and confirm a prior order of the same court (Archer, Ct. Atty. Ref.) dated October 16, 2006, granting the application.

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

After a framed-issue hearing, at which the only evidence presented was the testimony of the petitioner to the effect that, while a pedestrian, she was struck by an unidentified vehicle which left the scene of the accident, the Court Attorney Referee to whom the matter had been referred granted the petitioner leave to commence an action against the Motor Vehicle Accident Indemnification Corporation (hereinafter the MVAIC) by order dated October 16, 2006 . The motion by MVAIC to vacate that order was granted by the Supreme Court, which directed a new "framed issue hearing regarding the issue of coverage on a date certain with no adjournments." 

Despite that order, on May 29, 2007, the day that the new hearing was scheduled to be held, the Court Attorney Referee to whom the matter was referred directed that new parties be added to the proceeding, and adjourned the hearing. Thereafter, the Supreme Court granted the motion of one of those new parties, Cambridge Integrated Services Group, to vacate the order of the Court Attorney Referee dated May 29, 2007, and the order dated October 16, 2006, granting the petitioner leave to commence an action against MVAIC was reinstated and confirmed.

We affirm. The order of reference expressly limited the Court Attorney Referee "to conduct a hearing on the issue of coverage on a date certain with no adjournments," and the order dated May 29, 2007, purporting to direct the addition of new parties and adjourn the hearing was in excess of the authority granted (see CPLR 4311; Matter of Allcity Ins. Co. v Rhymes, 29 AD3d 787; Carrero v Dime Contr., 29 AD3d 506). Moreover, in light of MVAIC's dilatory conduct, the Supreme Court properly reinstated and confirmed the order dated October 16, 2006, which, after a hearing, granted the petitioner's application for leave to commence an action against MVAIC.

Rael Automatic Sprinkler Company, Inc., v. Schaefer Agency

Morris Duffy Alonso & Faley, LLP, New York, N.Y. (Anna J.
Ervolina of counsel), for second third-party
defendant-appellant-respondent.
Ryan, Brennan & Donnelly, LLP, Floral Park, N.Y. (John M.
Donnelly of counsel), for defendant
third-party plaintiff/second third-party
plaintiff-respondent-appellant.
Ahmuty, Demers & McManus, Albertson, N.Y. (Brendan T.
Fitzpatrick and William J. Mitchell of
counsel), for third-party
defendant-respondent-appellant.

DECISION & ORDER

In an action, inter alia, to recover damages for breach of a contract to procure insurance, the second third-party defendant Clarendon National Insurance Company appeals, as limited by its brief, from so much an order of the Supreme Court, Nassau County (Bucaria, J.), entered November 16, 2006, as denied its motion for summary judgment dismissing the second third-party complaint and, in effect, declaring that it is not obligated to defend and indemnify the plaintiff Rael Automatic Sprinkler Company, Inc., in an underlying action entitled Matthews v City of New York, pending in the Supreme Court, New York County, under Index No. 111455/02, and granted the cross motion of the defendant third-party plaintiff/second third-party plaintiff Schaefer Agency for summary judgment declaring that Clarendon National Insurance Company is so obligated, and the plaintiff Rael Automatic Sprinkler Company, Inc., the defendant third-party plaintiff /second third-party plaintiff Schaefer Agency, and the third-party defendant Gremesco of New Jersey, LLC, cross-appeal from the order.

ORDERED that the cross appeal of the plaintiff Rael Automatic Sprinkler Company, Inc., is dismissed as abandoned (see 22 NYCRR 670.8[e]); and it is further,

ORDERED that the cross appeals of the defendant third-party plaintiff/second third-party plaintiff Schaefer Agency and the third-party defendant Gremesco of New Jersey, LLC, are dismissed, as they are not aggrieved by the order cross-appealed from (see CPLR 5511); and it is further,

ORDERED that the order is affirmed insofar as appealed from, and the matter is remitted to the Supreme Court, Nassau County, for the entry of a judgment declaring that Clarendon National Insurance Company is obligated to defend and indemnify Rael Automatic Sprinkler Company, Inc., in the underlying action; and it is further,

ORDERED that one bill of costs is awarded to Schaefer Agency, payable by Clarendon National Insurance Company.

On December 11, 2001, Charles Matthews, an employee of the plaintiff Rael Automatic Sprinkler Company, Inc. (hereinafter Rael), was installing fire sprinklers at the Metropolitan Museum of Art (hereinafter MMA), when he fell off an unsecured wood plank, and sustained personal injuries. At the time, Rael had in effect an insurance policy (hereinafter the policy) issued by Frontier Insurance Company (hereinafter Frontier), which was then assumed by Clarendon National Insurance Company (hereinafter Clarendon). To procure the policy, Rael used the services of its retail broker, the Schaefer Agency (hereinafter Schaefer), which, in turn, utilized the services of a wholesale broker, Gremesco of New Jersey, LLC (hereinafter Gremesco).

Although Rael had requested blanket contractual liability coverage, the policy contained an exclusion from coverage where the obligation to pay damages arose by the "assumption of liability in a contract or agreement," unless the agreement constituted an "insured contract" (hereinafter the contractual liability exclusion). The policy also excluded coverage for Rael's employees if bodily injury sustained by those employees arose "out of and in the course of employment by the insured" (hereinafter the employer's liability exclusion).

In May 2002 Matthews and his wife commenced an action, inter alia, to recover damages for personal injuries (hereinafter the underlying action). On May 16, 2002, MMA's insurance carrier requested that Rael and its insurance carrier defend and indemnify MMA. On May 22, 2002, Schaefer forwarded MMA's request to North American Risk Services (hereinafter North American), the third-party administrator for Clarendon.

On August 8, 2002, North American, on behalf of Clarendon, informed Rael, the insurers for MMA, and the general contractor for the sprinkler installation project, that it was disclaiming coverage for the defendants named in the underlying action on the ground that those defendants were never added as additional insureds under the policy. On August 16, 2002, North American, on behalf of Clarendon, formally disclaimed coverage, based upon the contractual liability exclusion and the employer's liability exclusion.

The underlying action was settled, with both Rael and Schaefer each contributing the sum of $250,000 to the settlement. Rael commenced the instant action against Schaefer alleging, inter alia, breach of contract for failure to procure insurance. Schaefer commenced a third-party action against Gremesco, among others, and a second third-party action against Clarendon seeking, inter alia, a judgment declaring that Clarendon is obligated to defend and indemnify Rael, on the ground that its disclaimer was untimely.

Clarendon moved for summary judgment dismissing the second third-party complaint and, in effect, declaring that it is not obligated to defend or indemnify Rael in the underlying action. Schaefer cross-moved for summary judgment in its favor on the issue of liability on the second third-party complaint and declaring that Clarendon is so obligated. The Supreme Court granted Schaefer's cross motion and denied Clarendon's motion, finding that Clarendon is obligated to defend and indemnify Rael in the underlying action. The Supreme Court also awarded summary judgment to Gremesco dismissing the third-party complaint insofar as asserted against it, a provision which does not aggrieve Gremesco. Moreover, since the court failed to rule on that branch of Gremesco's motion which was for summary judgment dismissing Clarendon's cross claims insofar as asserted against it, that branch of the motion remains pending and undecided and is not properly before this Court (see Katz v Katz, 68 AD2d 536). Accordingly, Gremesco's cross appeal must be dismissed.

Although the cross appeal by Schaefer must be dismissed on the ground that it is not aggrieved by the order cross-appealed from, the contentions raised by Schaefer in support of its argument that Clarendon's disclaimer was invalid can be considered as alternative grounds for affirmance (see Parochial Bus Sys. v Board of Educ. of City of N.Y., 60 NY2d 539, 545; Schramm v Cold Spring Harbor Lab., 17 AD3d 661, 663).

In support of its motion for summary judgment, Clarendon failed to challenge Schaefer's standing to contest the validity of its disclaimer, and therefore the issue is raised for the first time on appeal. Although we thus need not address the issue, the contention that Schaefer lacks standing to contest the validity of Clarendon's disclaimer is nonetheless without merit (see Colonial Coop. Ins. Co. v Desert Storm Constr. Corp., 305 AD2d 363; Macon v Arnlie Realty Co., 207 AD2d 268, 270).

Since Clarendon's disclaimer was based on policy exclusions, Clarendon was required to provide Rael with timely notice of its disclaimer under Insurance Law § 3420(d) (see Markevics v Liberty Mut. Ins. Co., 97 NY2d 646, 648-649; City of New York v St. Paul Fire & Mar. Ins. Co., 21 AD3d 978, 980-981; 474431 Assoc. v AXA Global Risk US Ins. Co., 18 AD3d 604, 605). In response to a request for interrogatories, Clarendon indicated that it began investigating the grounds for disclaiming coverage as early as March 5, 2002. On May 22, 2002, Clarendon's insurance administrator received a letter from Gulf Insurance Group, requesting that it defend and indemnify MMA. In view of the foregoing, Clarendon's disclaimer in August 2002 was untimely as a matter of law (see Banuchis v Government Empls. Ins. Co., 14 AD3d 581; Moore v Ewing, 9 AD3d 484, 488; Campos v Sarro, 309 AD2d 888), and it is obligated to defend and indemnify Rael.

The parties' remaining contentions are without merit or need not be addressed in light of our determination.

Since this is, in part, a declaratory judgment action, we remit the matter to the Supreme Court, Nassau County, for the entry of a judgment declaring that Clarendon National Insurance Company is obligated to defend and indemnify Rael Automatic Sprinkler Company, Inc., in the underlying action (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
MILLER, J.P., DILLON, McCARTHY and CHAMBERS, JJ., concur.

Superior Ice Rink, Inc., v. Nescon Contracting Corp.

Edwards Angell Palmer & Dodge, LLP, New York, N.Y. (Goldberg Segalla
LLP [Robert D. Laurie and Thomas Segalla] of counsel), for
plaintiff-appellant.
Lustig & Brown, LLP, New York, N.Y. (William C. Kelly of
counsel), for defendant-appellant.
Hiscock & Barclay, LLP, Rochester, N.Y. (Joseph A. Wilson of
counsel), for respondent Merchants Mutual
Insurance Company.

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract and, in effect, for a judgment declaring that the defendant Merchants Mutual Marine Insurance Company is obligated to defend and indemnify the plaintiff in underlying personal injury actions entitled Dominguez v Superior Ice Rink, Inc., and Reyes v Superior Ice Rink, Inc., commenced in the Supreme Court, Kings County, under Index Nos. 30609/03 and 1187/04, respectively, the defendant Seigerman-Mulvey Company, Inc., appeals from an order of the Supreme Court, Nassau County (Mahon, J.), entered January 25, 2007, and the plaintiff cross-appeals from so much of the same order as granted the motion of the defendant Merchants Mutual Insurance Company, in effect, for summary judgment dismissing the complaint insofar as asserted against it and declaring that it is not so obligated, denied the plaintiff's cross motion for summary judgment on the complaint insofar as asserted against the defendant Merchants Mutual Insurance Company and declaring that the defendant Merchants Mutual Insurance Company is obligated to defend and indemnify it in the underlying personal injury actions, and denied that branch of the plaintiff's separate cross motion which was for leave to amend the complaint to assert new causes of action against the defendant Merchants Mutual Insurance Company. 

ORDERED that the appeal by the defendant Seigerman-Mulvey Company, Inc., is dismissed as academic, in light of the subsequent dismissal of the complaint insofar as asserted against that defendant (see Superior Ice Rink, Inc. v Nescon Contr. Corp., 40 AD3d 963); and it is further,

ORDERED that the order is modified, on the law, (1) by deleting the provision thereof granting the motion of the defendant Merchants Mutual Insurance Company, in effect, for summary judgment dismissing the complaint insofar as asserted against it and declaring that it is not obligated to defend and indemnify the plaintiff in the underlying personal injury actions, and substituting therefor a provision denying the motion, and (2) by deleting the provision thereof denying the cross motion of the plaintiff for summary judgment on the complaint insofar as asserted against the defendant Merchants Mutual Insurance Company and declaring that the defendant Merchants Mutual Insurance Company is obligated to defend and indemnify it in the underlying personal injury actions, and substituting therefor a provision granting that cross motion; as so modified, the order is affirmed insofar as cross-appealed from, with costs to the plaintiff payable by the defendant Merchants Mutual Insurance Company, and the matter is remitted to the Supreme Court, Nassau County, for the entry of a judgment, inter alia, declaring that the defendant Merchants Mutual Insurance Company is obligated to defend and indemnify the plaintiff in the underlying personal injury actions.

In 2003 the defendant Nescon Contracting Corp., d/b/a A1 Discount Painting (hereinafter Nescon), contracted with the plaintiff Superior Ice Rink, Inc. (hereinafter Superior), to paint the roof of Superior's facility. Superior's manager and Nescon's principal orally agreed that in order for Nescon to perform any work, Nescon had to name Superior as an additional insured under an insurance policy issued to Nescon by the defendant Merchants Mutual Insurance Company (hereinafter Merchants).

Nescon then requested that its insurance broker, the defendant Seigerman-Mulvey Company, Inc. (hereinafter Seigerman-Mulvey), add Superior as an additional insured under Nescon's insurance policy. A "certificate of liability insurance," indicating that Superior was an additional insured under that policy, was then issued to Superior.

Subsequently, two of Nescon's workers, who were injured while painting Superior's roof, commenced personal injury actions against Superior. Superior sought to have Merchants defend and indemnify it in those actions. However, Merchants disclaimed coverage.

Superior then commenced the instant action against the defendants. The only cause of action Superior set forth against Merchants was one to recover damages for breach of contract, which, in effect, also sought a judgment declaring that Merchants is obligated to defend and indemnify Superior in the underlying actions. In support of that cause of action, Superior alleged that it was an additional insured under Nescon's policy, that Merchants owed it an obligation to defend and indemnify it in the underlying actions and breached that obligation, and that it "sustained substantial damages" in that it "was forced to . . . defend the lawsuits" and "incur the financial liability that resulted" therefrom.

Merchants then moved for summary judgment dismissing the complaint insofar as asserted against it, and for summary judgment declaring that it was not obligated to defend and indemnify Superior in the underlying actions. In response, Superior, inter alia, cross-moved for summary judgment on its cause of action against Merchants to recover damages for breach of contract, and for summary judgment declaring that Merchants was obligated to defend and indemnify it in the underlying actions.

When determining whether a third party is an additional insured under an insurance policy, a court must ascertain the intention of the parties to the policy, as determined from within the four corners of the policy itself (see Binasco v Break-Away Demolition Corp., 256 AD2d 291, 292; I.S.A. In N.J. v Effective Sec. Sys., 138 AD2d 681, 682). Here, an endorsement to Nescon's policy provides, in a section entitled "additional insureds-by contract, agreement or permit," inter alia, that any organization Nescon was required by "a written contract, agreement or permit" to name as an insured would be included as an insured with respect to liability arising out of Nescon's work performed for that organization at the location designated in "the contract, agreement or permit."

When the terms and conditions of an insurance policy are clear and unambiguous, the construction of the policy presents questions of law to be determined by the court (see Gelb v Elroy Enters., Inc., 170 AD2d 481). Merchants contends that it is clear that the word "written" in the phrase "written contract, agreement or permit" modifies the words "contract," "agreement" and "permit," and hence, that Superior was not an additional insured because Nescon was not required by a written contract, written agreement or written permit to name Superior as an insured under Nescon's policy. However, since the word "written" could also be reasonably interpreted to only modify the word "contract," we find that the phrase is ambiguous (see Travelers Indem. Co. of Am. v Royal Ins. Co. of Am., 22 AD3d 252, 253).

If there is an ambiguity in an insurance policy, the parties to the policy may, as an aid in construction, submit extrinsic evidence of their intent at the time of contracting (see State of New York v Home Indem. Co., 66 NY2d 669, 671; Newin Corp. v Hartford Acc. & Indem. Co., 62 NY2d 916, 919; City of New York v Evanston Ins. Co., 39 AD3d 153, 156). If the determination of the parties' intent depends on the credibility of that extrinsic evidence, or a choice among reasonable inferences to be drawn therefrom, then a determination of the parties' intent is to be made by a jury (see Hartford Acc. & Indem. Co. v Wesolowski, 33 NY2d 169, 172; Gelb v Elroy Enters., Inc., 170 AD2d at 481).

Here, however, Merchants failed to offer any extrinsic evidence of its or Nescon's intent at the time of contracting. If an ambiguity can be resolved wholly without reference to extrinsic evidence, the issue of the intent of the parties to the insurance policy is to be determined as a question of law for the court (see Hartford Acc. & Indem. Co. v Wesolowski, 33 NY2d at 172; City of New York v Evanston Ins. Co., 39 AD3d at 156; Gelb v Elroy Enters., Inc., 170 AD2d at 481). Under those circumstances, the ambiguity must be resolved against the insurer, which drafted the policy (see Tri Town Antlers Found., Inc. v Fireman's Fund Ins. Co., 76 NY2d 841, 842; State of New York v Home Indem. Co., 66 NY2d at 671-672; City of New York v Evanston Ins. Co., 39 AD3d at 156-57).

Applying these principles, we conclude that Nescon's policy must be interpreted as providing that any organization Nescon was required by an oral or written agreement to name as an insured under the policy would be an additional insured under the policy. Since the record demonstrates that Nescon was required by an oral agreement to name Superior as an insured under the policy, the Supreme Court should have granted Superior's cross motion for summary judgment on the complaint insofar as asserted against Merchants and declaring that Merchants is obligated to defend and indemnify Superior in the underlying personal injury actions, and denied Merchants' motion, in effect, for summary judgment dismissing the complaint insofar as asserted against Merchants and declaring that it is not so obligated.

Superior's remaining contentions are without merit.

Since this is, in part, in effect, a declaratory judgment action, we remit the matter to the Supreme Court, Nassau County, for the entry of a judgment declaring that Merchants is obligated to defend and indemnify Superior in the underlying personal injury actions (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

In the Matter of Markowitz v. Serio

Drake Colley, for appellant.
Benjamin Gutman, for respondent.
Richard G. Liskov, for intervenors-respondents.
American Insurance Association et al., amici curiae.

PIGOTT, J.:

"Redlining," as the term is used in the insurance industry, is an insurer's refusal to issue or renew, or its cancellation of, a policy premised exclusively on the geographic location of the risk. Concerned that auto insurers were engaging in that practice, Marty Markowitz, Brooklyn Borough President and petitioner in this proceeding, filed two Freedom of Information Law (FOIL) requests with the State Insurance Department seeking information "for each Kings County zip code, including by carrier, the number of voluntary [automobile] policies issued, renewed, cancelled (other than for non-payment of premium), or nonrenewed" from 2000 through 2003. Markowitz claimed that such zip code reports (commonly referred to as "Regulation No. 90 reports") were available pursuant to 11 NYCRR 218.7(d), an insurance regulation which states that such reports "shall be public record."

The Department provided Markowitz with data relative to the total number of auto policies in force in New York in each county from 1999 through 2002, but refused to release any data generated after 1997 demarcating the number of policies in force broken down, by carrier, for each Kings County zip code. This refusal was based on the Department's contention that Regulation No. 90 reports are exempt from disclosure or release under FOIL because their contents constitute either trade secrets or records that, if disclosed, "would cause substantial injury to the competitive position" of insurers (Public Officers Law § 87[2][d]). The Department advised Markowitz that the reports would be disclosed, but only after six years.

On December 3, 2004, after exhausting his administrative remedies relative to the denials of both FOIL requests, Markowitz commenced this CPLR article 78 proceeding against respondent Gregory V. Serio, Superintendent of the Insurance Department. The petition seeks an order and judgment annulling, as arbitrary and capricious, the Superintendent's determinations that the Regulation No. 90 reports are subject to a FOIL exemption, and ordering the Superintendent to produce the reports broken down by zip code. The Department answered asserting that its refusal to release the reports was neither arbitrary nor capricious and that its decision was reasonable and consistent with lawful procedure.

Markowitz and the Superintendent entered into a stipulation permitting several interested insurers to intervene in the proceeding ^[FN1]. Those insurers submitted affidavits in support of their claims that the reports sought by Markowitz constituted confidential information, the release of which would result in substantial competitive harm.

Supreme Court granted the petition, holding that Regulation No. 90 expressly mandated public disclosure of the reports and that the Department failed to meet its burden of demonstrating that the Regulation No. 90 filings qualified under a FOIL exemption. The Appellate Division reversed and reinstated the Department's administrative determinations, noting that although the Department had decided in 1994 that the Regulation No. 90 reports were public records as the regulation clearly stated, they were nevertheless subject to FOIL disclosure and its reversal of position in 2000 was neither arbitrary nor capricious because the Department had relied on additional evidence from insurers that the disclosure of such information would result in competitive harm to them (39 AD3d 247, 248 [1st Dept 2007]). The Appellate Division further held that the Department's decision to exempt the reports on the ground that their release would result in substantial competitive injury was reasonable (id. at 248-249). This Court granted leave to appeal and we now reverse.

The Legislature enacted Insurance Law § 3429 to proscribe insurers from declining to issue or renew, or from canceling, certain types of auto insurance "based solely on the geographical location of the risk" (Insurance Law § 3429[a][2]). That law directs the Superintendent to promulgate regulations establishing "procedures with respect to notification to insureds of the insurer's specific reason or reasons for refusal to issue or renew or for cancellation" of auto insurance policies (Insurance Law § 3429[b]).

To that end, the Superintendent promulgated 11 NYCRR 218.7(d), which provides that Regulation No. 90 reports must be filed annually "in a format prescribed by the superintendent" and that "every such report shall be public record" (emphasis supplied). Contrary to Markowitz's contention, however, the "public record" language does not negate an insurer's right to assert that some information required to be included in the reports are exempt from disclosure under FOIL. Rather, as the Department has reasonably concluded, such language suggests that, although Regulation No. 90 reports are submitted by a private entity at the behest of the Department, they are subject to public disclosure unless the insurer asserts that a FOIL exemption applies and is able to sustain its burden of establishing non-disclosure. This interpretation is consistent with this Court's construction of the "public records" language in the context of FOIL exemptions (see e.g. Matter of Xerox Corp. v Town of Webster, 65 NY2d 131, 132 [1985]; Matter of New York Tel. Co. v Pub. Serv. Commn., 56 NY2d 213, 219-220 [1982]). Indeed, this Court has held that "the FOIL exemptions must be read as having engrafted, as a matter of public policy, certain limitations on the disclosure of otherwise accessible records" (Matter of Xerox Corp., 65 NY2d at 132). Accordingly, the Department's interpretation that 11 NYCRR 218.7(d) does not deprive insurers of their right to contest the disclosure of Regulation No. 90 reports is neither irrational nor unreasonable and is "entitled to deference" (Gaines v New York State Div. of Hous. & Community Renewal, 90 NY2d 545, 549 [1997]).

Further evidence of the reasonableness of the Department's interpretation of 11 NYCRR 218.7(d) is found at 11 NYCRR Part 241 (Regulation No. 71), which provides a regulatory framework concerning requests for, and the release of, Department records. For instance, 11 NYCRR 241.3(a) states that "[e]xcept as otherwise provided by the Insurance Law, section 87(2) of the Public Officers Law, or other provisions of law, all records produced [by the Department] shall be available for inspection and copying," thereby evidencing that FOIL exemptions are potentially applicable to all Department records, even those filed pursuant to Regulation No. 90. Moreover, 11 NYCRR § 241.6(a) explicitly permits one "who submits any information to the [D]epartment" to "request that the [D]epartment except such information from disclosure under" Public Officers Law § 87(2)(d). Indeed, several of the insurers here have done so in the past when filing their annual Regulation No. 90 reports. Therefore, it is apparent that the Department's interpretation of 11 NYCRR 218.7(d) reconciles, and gives effect to, the key disclosure components of Regulation Nos. 90 and 71. As such, while the "public record" language indicates that the Regulation No. 90 reports are subject to disclosure, an insurer retains the right to assert and attempt to prove that they fall within an applicable FOIL exemption.

The Department and insurers argue that the applicable FOIL exemption here is Public Officers Law § 87(2)(d), which states that the Department "may deny access to records or portions thereof that . . . are trade secrets or are submitted . . . by a commercial enterprise and which if disclosed would cause substantial injury to the competitive position of the subject enterprise." As the parties seeking the exemption, the Department and insurers are charged with the burden of proving their entitlement to it (see Public Officers Law § 89[4][b]; [5][e]), meaning that they must demonstrate that the reports "'fall[] squarely within a FOIL exemption and by articulating a particularized and specific justification for denying access'" (Matter of Data Tree, LLC v Romaine, 9 NY3d 454, 463 [2007] quoting Matter of Capital Newspapers Div. of Hearst Corp. v Burns, 67 NY2d 562, 566 [1986]). Because the overall purpose of FOIL is to ensure that the public is afforded greater access to governmental records, FOIL exemptions are interpreted narrowly (see Matter of Washington Post Co. v New York State Ins. Dept., 61 NY2d 557, 564 [1984]). To meet its burden, the party seeking exemption must present specific, persuasive evidence that disclosure will cause it to suffer a competitive injury; it cannot merely rest on a speculative conclusion that disclosure might potentially cause harm.

Here, the Department and insurers have failed to meet this burden. The evidence suggesting they will suffer a competitive disadvantage is theoretical at best. The insurers' key argument is that if they are forced to reveal zip codes of areas where relatively few policies are issued, competitors could use this information to exploit an insurer's geographic weakspot. It has not been shown that zip code data, without more, would necessarily put the insurer at a competitive disadvantage. Because neither the Department nor insurers have met their burden of justifying the exemption of the reports under Public Officers Law § 87(2)(d) (see Matter of Washington Post Co., 61 NY2d at 567), the order of the Appellate Division should be reversed, with costs, and the order and judgment of Supreme Court reinstated.

SMITH, J. (concurring):

The majority concludes that Regulation No. 90 reports are available to the public only if the Freedom of Information Law (FOIL) makes them so. It also concludes that the insurers have failed to show that the reports are exempt from FOIL.

I disagree with both conclusions. I think that Regulation No. 90, by its own force, makes the reports "public record." But if I were to consider the FOIL issue, I would find that the insurers had made an ample showing that disclosure of the records "would cause substantial injury to [their] competitive position" within the meaning of Public Officers Law § 87 (2) (d). Ironically, I end up agreeing with the majority's result — but only because the majority's two errors, as they affect this case, cancel each other out.

I

Regulation No. 90 requires insurers to submit certain reports and says: "every such report shall be public record." The majority holds that this means only that the records are public unless a FOIL exemption applies. If that is all it means, the authors of the regulation were wasting their time writing the words, because all records of state agencies are public unless a FOIL exemption applies. But "public record" and "subject to FOIL" do not mean the same thing.

A public record, in ordinary speech, refers to a record that any member of the public can look at and copy. Deeds on file at the county clerk's office are public records; so are the pleadings filed in most litigations. A clerk who is the custodian of public records will show them to anyone who walks into his or her office — or, if the office is technologically advanced, the documents may be available online to anyone with a computer. This is very different from documents subject to FOIL — as to which members of the public may only submit a FOIL request, which will be dealt with, often in cumbersome and time-consuming fashion, by the official assigned by the agency to deal with such things.

The majority cites Matter of Xerox Corp. v Town of Webster (65 NY2d 131 [1985]) and Matter of New York Tel. Co. v Public Serv. Commn. (56 NY2d 213 [1982]) for the proposition that "public records" and "subject to FOIL" have the same meaning. That is not what these cases hold. Xerox interpreted General Municipal Law § 51, a statute enacted before FOIL, which declared a broad category of documents to be "public records." We held that, since the Legislature was "presumably aware of General Municipal Law § 51 at the time it enacted FOIL," the later statute "must be read as having engrafted . . . certain limitations" on the earlier one (65 NY2d at 132). New York Tel. Co. involved a statute saying that all proceedings, documents and records of the Public Service Commission "shall be public records." We held that, while the proceedings of the Commission are generally public, the statute does not prohibit the Commission from making exceptions for evidence "which falls within the category of trade secrets" — just as a court, whose proceedings are generally public, might put some sensitive information under seal (56 NY2d at 219). New York Tel. Co. says nothing about FOIL.

Xerox and New York Tel. Co. stand for the proposition that, where a broad category of material is declared to be "public record," exceptions may be made, based on FOIL exemptions or simply on public policy. That proposition has no relevance to this case, for Regulation No. 90 establishes as "public record" not a broad category to which the insurers ask for an exception but the precise documents that they want to keep confidential for six years: reports showing insurers' agents, brokers, policies and applications broken down by zip code. The insurers are seeking not an exception to the "public record" requirement but the virtual nullification of it.

I would hold that reports under Regulation No. 90 are public, as the regulation says they are, and would not reach any question under FOIL.

II

If I did reach the FOIL issue, however, I would hold that the documents in issue here are exempt from disclosure under Public Officers Law § 87 (2) (d), because they "are submitted to an agency by a commercial enterprise . . . and . . . if disclosed would cause substantial injury to the competitive position of the subject enterprise."

The insurers' submissions make a specific and persuasive showing of competitive injury. The affidavit of Eric Webster, an official of intervenor State Farm Mutual Automobile Insurance Company, explains in detail how a State Farm competitor could gain an advantage from State Farm's Regulation No. 90 reports. Such a competitor, Webster says, would compare and merge its zip code data with State Farm's, would use that data to estimate its and State Farm's market share in each zip code, would determine from that which areas to target, would do a targeted marketing campaign, and would use the results to create a statistical model to guide future marketing. Webster adds that Regulation No. 90 reports would help competitors assess the weaknesses and strengths of particular State Farm agents' performance, using techniques that Webster describes at length. He also explains how, by tracking changes disclosed by the reports in "risk placement" between State Farm and an affiliated company, a competitor could detect a new State Farm marketing strategy, for example "a shift toward youthful, higher risk customers in specific zip codes." Affidavits submitted by officials of the other insurer-intervenors also contain explanations of the harm they will suffer.

The insurers' factual submissions total 19 pages. The majority brushes them aside in three sentences. It says their showing "is theoretical at best" (majority op at 7), but that is true only in the sense that any attempt to predict the consequences of disclosure must be theoretical. The statute requires such a prediction. The exemption created by section 87 (2) (d) is available only on a showing that the information "if disclosed would cause substantial injury."

The majority mentions only one of the insurers' points, which it chooses to call their "key argument" (majority op at 7). The majority then responds with the unsupported assertion that "it has not been shown that zip code data, without more, would necessarily put the insurer at a competitive disadvantage" (id.). But that is exactly what the insurers have shown, in extensive detail — and even without that showing, it would be self-evident that a business can get a substantial advantage from information about its competitor's success or lack of it in particular locations.

I have little doubt that insurers will suffer some significant competitive injury from the public disclosure of Regulation No. 90 reports. I would order those reports disclosed anyway, because I read the regulation as a policy determination by the Insurance Department, acting under the authority given it by the anti-redlining statute (Insurance Law § 3429), that the reasons for making this information public outweigh the insurers' legitimate reasons for keeping it confidential. But the majority's attempt to pretend that no policy choice need be made, because no competitive injury has been shown, simply ignores the record.
* * * * * * * * * * * * * * * * *
Order reversed, with costs, and order and judgment of Supreme Court, New York County, reinstated. Opinion by Judge Pigott.
Chief Judge Kaye and Judges Ciparick, Graffeo, Read and Jones concur. Judge Smith concurs in result in an opinion.
Decided June 26, 2008

Footnotes

Footnote 1: The intervenor-insurers are Farmers New Century Insurance Company, State Farm Mutual Automobile Insurance Company, State Farm Fire and Casualty Insurance Company, and Chubb & Son.

 

ALIB, Inc. v. Atlantic Casualty Insurance Company

Bertram Herman, P.C., Mount Kisco (Bertram Herman of
counsel), for appellants.
Nixon Peabody LLP, New York (Aidan M. McCormack of
counsel), for Atlantic Casualty Insurance Company, respondent.
Fiedelman & McGaw, Jericho (Andrew Zajac of counsel), for
Roger Metzger Associates, Inc., respondent.

Order, Supreme Court, Bronx County (Patricia Anne Williams, J.), entered July 20, 2007, which, in a declaratory judgment action seeking a declaration and damages with respect to obligations under an insurance policy, granted the motion of defendant Roger Metzger Associates, Inc. (RMA) pursuant to CPLR 3211(a)(7) to dismiss the complaint as against it, granted the cross motion of defendant Atlantic Casualty Insurance Company (Atlantic) for summary judgment dismissing the complaint as against it, and denied plaintiffs' cross motion for summary judgment, unanimously affirmed, without costs.

Plaintiff ALIB, Inc. was not afforded additional insured status under the insurance policy issued by Atlantic to AFA Construction Co., where the written contract entered into between AFA and ALIB did not require AFA to name ALIB as an additional insured, as required by the subject policy (see Nicotra Group, LLC v American Safety Indem. Co., 48 AD3d 253, 254 [2008]). Nor did the certificate of insurance, which contained the disclaimer that it was "issued as a matter of information only and confers no rights upon the certificate holder" and that it did not "amend, extend or alter the coverage afforded" by the subject policy, confer additional insured status (id.; see Moleon v Kreisler Borg Florman Gen. Constr. Co., 304 AD2d 337, 339 [2003]), even if assurances were provided that ALIB was an additional insured (see American Ref-Fuel Co. of Hempstead v Resource Recycling, Inc., 248 AD2d 420, 423-424 [1998]).

Furthermore, even if there was coverage, the claim is barred
by the policy's employee exclusionary clause (see Moleon, 304 AD2d at 339-340 [2003]), and contrary to plaintiffs' contention, the record shows that Atlantic's disclaimer, issued 20 days after receiving notice of the claim, was timely (see Travelers Ins. Co. v Volmar Constr. Co., 300 AD2d 40, 44-45 [2002]).

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

Rael Automatic Sprinkler Company, Inc., v. Schaefer Agency

Morris Duffy Alonso & Faley, LLP, New York, N.Y. (Anna J.
Ervolina of counsel), for second third-party
defendant-appellant-respondent.
Ryan, Brennan & Donnelly, LLP, Floral Park, N.Y. (John M.
Donnelly of counsel), for defendant
third-party plaintiff/second third-party
plaintiff-respondent-appellant.
Ahmuty, Demers & McManus, Albertson, N.Y. (Brendan T.
Fitzpatrick and William J. Mitchell of
counsel), for third-party
defendant-respondent-appellant.


DECISION & ORDER

In an action, inter alia, to recover damages for breach of a contract to procure insurance, the second third-party defendant Clarendon National Insurance Company appeals, as limited by its brief, from so much an order of the Supreme Court, Nassau County (Bucaria, J.), entered November 16, 2006, as denied its motion for summary judgment dismissing the second third-party complaint and, in effect, declaring that it is not obligated to defend and indemnify the plaintiff Rael Automatic Sprinkler Company, Inc., in an underlying action entitled Matthews v City of New York, pending in the Supreme Court, New York County, under Index No. 111455/02, and granted the cross motion of the defendant third-party plaintiff/second third-party plaintiff Schaefer Agency for summary judgment declaring that Clarendon National Insurance Company is so obligated, and the plaintiff Rael Automatic Sprinkler Company, Inc., the defendant third-party plaintiff /second third-party plaintiff Schaefer Agency, and the third-party defendant Gremesco of New Jersey, LLC, cross-appeal from the order.

ORDERED that the cross appeal of the plaintiff Rael Automatic Sprinkler Company, Inc., is dismissed as abandoned (see 22 NYCRR 670.8[e]); and it is further,

ORDERED that the cross appeals of the defendant third-party plaintiff/second third-party plaintiff Schaefer Agency and the third-party defendant Gremesco of New Jersey, LLC, are dismissed, as they are not aggrieved by the order cross-appealed from (see CPLR 5511); and it is further,

ORDERED that the order is affirmed insofar as appealed from, and the matter is remitted to the Supreme Court, Nassau County, for the entry of a judgment declaring that Clarendon National Insurance Company is obligated to defend and indemnify Rael Automatic Sprinkler Company, Inc., in the underlying action; and it is further,

ORDERED that one bill of costs is awarded to Schaefer Agency, payable by Clarendon National Insurance Company.

On December 11, 2001, Charles Matthews, an employee of the plaintiff Rael Automatic Sprinkler Company, Inc. (hereinafter Rael), was installing fire sprinklers at the Metropolitan Museum of Art (hereinafter MMA), when he fell off an unsecured wood plank, and sustained personal injuries. At the time, Rael had in effect an insurance policy (hereinafter the policy) issued by Frontier Insurance Company (hereinafter Frontier), which was then assumed by Clarendon National Insurance Company (hereinafter Clarendon). To procure the policy, Rael used the services of its retail broker, the Schaefer Agency (hereinafter Schaefer), which, in turn, utilized the services of a wholesale broker, Gremesco of New Jersey, LLC (hereinafter Gremesco).

Although Rael had requested blanket contractual liability coverage, the policy contained an exclusion from coverage where the obligation to pay damages arose by the "assumption of liability in a contract or agreement," unless the agreement constituted an "insured contract" (hereinafter the contractual liability exclusion). The policy also excluded coverage for Rael's employees if bodily injury sustained by those employees arose "out of and in the course of employment by the insured" (hereinafter the employer's liability exclusion).

In May 2002 Matthews and his wife commenced an action, inter alia, to recover damages for personal injuries (hereinafter the underlying action). On May 16, 2002, MMA's insurance carrier requested that Rael and its insurance carrier defend and indemnify MMA. On May 22, 2002, Schaefer forwarded MMA's request to North American Risk Services (hereinafter North American), the third-party administrator for Clarendon.

On August 8, 2002, North American, on behalf of Clarendon, informed Rael, the insurers for MMA, and the general contractor for the sprinkler installation project, that it was disclaiming coverage for the defendants named in the underlying action on the ground that those defendants were never added as additional insureds under the policy. On August 16, 2002, North American, on behalf of Clarendon, formally disclaimed coverage, based upon the contractual liability exclusion and the employer's liability exclusion.

The underlying action was settled, with both Rael and Schaefer each contributing the sum of $250,000 to the settlement. Rael commenced the instant action against Schaefer alleging, inter alia, breach of contract for failure to procure insurance. Schaefer commenced a third-party action against Gremesco, among others, and a second third-party action against Clarendon seeking, inter alia, a judgment declaring that Clarendon is obligated to defend and indemnify Rael, on the ground that its disclaimer was untimely.

Clarendon moved for summary judgment dismissing the second third-party complaint and, in effect, declaring that it is not obligated to defend or indemnify Rael in the underlying action. Schaefer cross-moved for summary judgment in its favor on the issue of liability on the second third-party complaint and declaring that Clarendon is so obligated. The Supreme Court granted Schaefer's cross motion and denied Clarendon's motion, finding that Clarendon is obligated to defend and indemnify Rael in the underlying action. The Supreme Court also awarded summary judgment to Gremesco dismissing the third-party complaint insofar as asserted against it, a provision which does not aggrieve Gremesco. Moreover, since the court failed to rule on that branch of Gremesco's motion which was for summary judgment dismissing Clarendon's cross claims insofar as asserted against it, that branch of the motion remains pending and undecided and is not properly before this Court (see Katz v Katz, 68 AD2d 536). Accordingly, Gremesco's cross appeal must be dismissed.

Although the cross appeal by Schaefer must be dismissed on the ground that it is not aggrieved by the order cross-appealed from, the contentions raised by Schaefer in support of its argument that Clarendon's disclaimer was invalid can be considered as alternative grounds for affirmance (see Parochial Bus Sys. v Board of Educ. of City of N.Y., 60 NY2d 539, 545; Schramm v Cold Spring Harbor Lab., 17 AD3d 661, 663).

In support of its motion for summary judgment, Clarendon failed to challenge Schaefer's standing to contest the validity of its disclaimer, and therefore the issue is raised for the first time on appeal. Although we thus need not address the issue, the contention that Schaefer lacks standing to contest the validity of Clarendon's disclaimer is nonetheless without merit (see Colonial Coop. Ins. Co. v Desert Storm Constr. Corp., 305 AD2d 363; Macon v Arnlie Realty Co., 207 AD2d 268, 270).

Since Clarendon's disclaimer was based on policy exclusions, Clarendon was required to provide Rael with timely notice of its disclaimer under Insurance Law § 3420(d) (see Markevics v Liberty Mut. Ins. Co., 97 NY2d 646, 648-649; City of New York v St. Paul Fire & Mar. Ins. Co., 21 AD3d 978, 980-981; 474431 Assoc. v AXA Global Risk US Ins. Co., 18 AD3d 604, 605). In response to a request for interrogatories, Clarendon indicated that it began investigating the grounds for disclaiming coverage as early as March 5, 2002. On May 22, 2002, Clarendon's insurance administrator received a letter from Gulf Insurance Group, requesting that it defend and indemnify MMA. In view of the foregoing, Clarendon's disclaimer in August 2002 was untimely as a matter of law (see Banuchis v Government Empls. Ins. Co., 14 AD3d 581; Moore v Ewing, 9 AD3d 484, 488; Campos v Sarro, 309 AD2d 888), and it is obligated to defend and indemnify Rael.

The parties' remaining contentions are without merit or need not be addressed in light of our determination.

Since this is, in part, a declaratory judgment action, we remit the matter to the Supreme Court, Nassau County, for the entry of a judgment declaring that Clarendon National Insurance Company is obligated to defend and indemnify Rael Automatic Sprinkler Company, Inc., in the underlying action (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

In the Matter of Allstate Insurance Company v. Dawkins

Robert P. Tusa (Sweetbaum & Sweetbaum, Lake Success, N.Y.
[Marshall D. Sweetbaum], of counsel), for appellant.


DECISION & ORDER

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a claim for underinsured motorist benefits, the petitioner appeals from an order of the Supreme Court, Queens County (Rios, J.), entered November 5, 2007, which denied the petition and dismissed the proceeding.

ORDERED that the order is affirmed, without costs or disbursements.

The respondent, Ian Dawkins, allegedly was injured in an accident involving three motor vehicles. After the tortfeasor's insurer, AIG Indemnity Company (hereinafter AIG), offered to settle with three victims of the accident (including Dawkins) for the full amount of the tortfeasor's policy, Dawkins demanded arbitration of a claim for underinsured motorist benefits from his own insurer, the petitioner Allstate Insurance Company (hereinafter Allstate). Allstate commenced this proceeding, for a permanent stay of such arbitration, asserting that the tortfeasor's vehicle was not "underinsured" because the limits for bodily injury under the AIG policy were the same as those in the Allstate policy. In opposition, Dawkins argued that he was entitled to benefits pursuant to 11 NYCRR 62-1.8(f)(c)(3)(ii) because the coverage available under the AIG policy had been reduced by payments made to other persons injured in the accident to an amount less than the bodily injury liability limit of his policy with Allstate. The Supreme Court denied Allstate's petition for a permanent stay of arbitration. We affirm.

Contrary to Allstate's contention on appeal, the Supreme Court properly declined to address its argument, made for the first time in its reply papers, that there was an issue of fact as to whether AIG made any payments on its policy. The function of reply papers is to address arguments made in opposition to the position taken by the movant, not to permit the movant to introduce new [*2]arguments or new grounds for the requested relief (see Matter of Harleysville Ins. Co. v Rosario, 17 AD3d 677; Matter of TIG Ins. Co. v Pellegrini, 258 AD2d 658). Further, Dawkins was not afforded an opportunity to address the new argument (see Matter of Harleysville Ins. Co. v Rosario, 17 AD3d 677; Matter of TIG Ins. Co. v Pellegrini, 258 AD2d 658). Finally, we decline Allstate's invitation, made for the first time on appeal, to reconsider our case law in this area and hold that the Superintendent of Insurance exceeded his authority in promulgating 11 NYCRR 62-1.8(f)(c)(3)(ii) (cf. Raffellini v State Farm Mut. Auto. Ins. Co., 9 NY3d 196).

Moncrief v. DiChiaro.

White, Quinlan & Staley, LLP, Garden City, N.Y. (Christopher M.
Otton of counsel), for second third-party defendant-appellant.
Necsci Keane Piekarski Keogh & Corrigan, PLLC, Hawthorne,
N.Y. (Jason M. Bernheimer of
counsel), for defendant and defendant
third-party plaintiff/second third-party
plaintiff-respondent.
Schulz & Associates, P.C., Melville, N.Y. (Laura Alto of
counsel), for third-party
defendant-respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, etc., and related third-party actions, inter alia, for a judgment declaring that Sirius America Insurance Company is obligated to defend and indemnify the defendants in the main action, the second third-party defendant Sirius America Insurance Company appeals from an order of the Supreme Court, Westchester County (Jamieson, J.), entered July 3, 2007, which granted the motion of the defendant third-party plaintiff/second third-party plaintiff, Purchase Land Development Corp., for leave to renew its opposition to the prior motion of Sirius America Insurance Company, among other things, for summary judgment dismissing the second third-party complaint insofar as asserted against it, which had been granted in an order of the same court entered June 7, 2006, and, upon renewal, denied the motion for summary judgment. ]

ORDERED that the order is affirmed, with costs.

The Supreme Court properly granted the motion of the defendant third-party plaintiff/second third-party plaintiff, Purchase Land Development Corp. (hereinafter PLDC), for leave to renew its opposition to the prior motion of the second third-party defendant Sirius America Insurance Company (hereinafter Sirius) for summary judgment dismissing the second third-party complaint insofar as asserted against it (see CPLR 2221[e]; Chunqi Liu v Wong, 46 AD3d 735, 736; Kreusi v City of New York, 40 AD3d 820, 822; cf. Matter of Orange & Rockland Util. v Assessor of Town of Haverstraw, 304 AD2d 668, 669). Even if some of the evidence relied upon by PLDC in moving for renewal may have been known to it at the time it had originally opposed Sirius's prior motion, the court did not improvidently exercise its discretion in granting renewal (see Wilder v May Dept. Stores Co., 23 AD3d 646, 648; Granato v Waldbaum's, Inc., 289 AD2d 289).

Upon renewal, the court properly denied Sirius's motion for summary judgment dismissing the second third-party complaint insofar as asserted against it. Sirius established, prima facie, that it was not obligated to defend and indemnify PLDC in the main action, which arose from injuries the infant plaintiff allegedly sustained on November 5, 2002, in an unfinished home owned by PLDC. An endorsement in the commercial general liability insurance policy Sirius issued to PLDC listed coverage only for another premises, but not the subject premises. Further, although PLDC contends that in May and/or July 2002, the defendant Michael DiChiaro, an officer of PLDC, instructed PLDC's insurance broker, USI Holdings Corporation (hereinafter USI Holdings) to have Sirius add the subject premises to the policy, USI Holdings did not make that request to Sirius until March 26, 2003, two days before the policy expired and well after the alleged accident date. In opposition, upon renewal, PLDC raised a question of fact by submitting deposition testimony of Dominick Sansotta, a vice president of PLDC's insurance broker, that after the policy expired, Sirius audited the policy, and thereafter charged PLDC "a premium for all the work associated with [the subject premises]" during the entirety of the policy period, March 28, 2002, to March 28, 2003. Although Sansotta conceded that the audit may not have specifically listed the subject premises as the property covered under the policy during the policy period, he explained that the coverage was related to PLDC's construction of a home, and during the policy period, the only home owned by and being built by PLDC was located at the subject premises. As such, Sansotta's deposition testimony also raised a question of fact as to whether Sirius may be estopped from denying coverage after it accepted premium payments from PLDC following the audit (see Scalia v Equitable Life Assur. Socy. of U.S., 251 AD2d 315; cf. Belesi v Connecticut Mut. Life Ins. Co., 272 AD2d 353, 354).

We do not reach Sirius's contention concerning that branch of its motion which was for summary judgment dismissing the second third-party complaint on the ground of a late notice of claim, as that branch of the motion was not addressed by the Supreme Court in the order appealed from. Thus, it remains pending and undecided (see Katz v Katz, 68 AD2d 536, 543).

Utica Mutual Insurance Company v. Brooklyn Navy Yard Development Corp.

Faust Goetz Schenker & Blee LLP, New York, N.Y. (Lisa L.
Gokhulsingh of counsel), for appellant.
Ryan & Conlon, LLP, New York, N.Y. (William F. Ryan of
counsel), for respondents.


DECISION & ORDER

In a subrogation action to recover damages for injury to property and breach of contract, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Schack, J.), dated October 13, 2006, as granted the motion of the defendants Brooklyn Navy Yard Development Corp. and City of New York for summary judgment dismissing the complaint insofar as asserted against them.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and the motion of the defendants Brooklyn Navy Yard Development Corp. and City of New York for summary judgment dismissing the complaint insofar as asserted against them is denied.

On August 14, 2003, premises leased by the tenant Ares Printing & Packaging Corporation (hereinafter Ares) on the fifth floor of a building at the Brooklyn Navy Yard (hereinafter BNY), which is managed by the defendant Brooklyn Navy Yard Development Corp. (hereinafter BNYDC) and owned by the defendant City of New York, allegedly sustained damage when a water pipe suspended from the ceiling of the leased premises burst. Pursuant to the terms of its lease, Ares named BNYDC and the City (hereinafter together the defendants) as additional insureds under a commercial general liability insurance policy (hereinafter the liability policy) that it obtained from the plaintiff Utica Mutual Insurance Company (hereinafter Utica). Specifically, the defendants were named as additional insureds under the liability policy "only with respect to liability arising out of the ownership, maintenance or use of that premises leased to [Ares]." The defendants were not named as additional insureds under Ares' separate commercial property policy (hereinafter the property damage policy), also obtained from Utica. After the incident of August 14, 2003, Ares submitted a claim to Utica under its property damage policy for property damage and business losses, and Utica allegedly paid to Ares a sum in excess of $2,500,000 for those losses.

Thereafter, Utica, as the first-party property insurer and subrogee of Ares, commenced this action against the defendants, among others, for subrogation, asserting that the defendants were responsible for Ares' loss and the resulting damages that Utica itself sustained. After joinder of issue and completion of discovery, the defendants moved for summary judgment dismissing the complaint insofar as asserted against them, arguing, inter alia, that the antisubrogation doctrine barred the action since they were additional insureds under the liability policy. The Supreme Court granted the motion on the ground that the antisubrogation doctrine barred the action. We reverse.

Subrogation is an equitable doctrine that allows an insurer to " stand in the shoes' of its insured to seek indemnification from third parties whose wrongdoing has caused a loss for which the insurer is bound to reimburse" (North Star Reins. Corp. v Continental Ins. Co., 82 NY2d 281, 294; see Dillion v Parade Mgt. Corp., 268 AD2d 554, 555). The antisubrogation doctrine prohibits an insurer from commencing a subrogation action against its own insured for a claim arising from the very risk for which the insured was covered (see North Star Reins. Corp. v Continental Ins. Co., 82 NY2d at 294; American Ref-Fuel Co. of Hempstead v Resource Recycling, 307 AD2d 939, 942).

In support of their motion, the defendants failed to establish, prima facie, that Utica paid Ares' claim solely pursuant to the liability policy, under which the defendants are named as additional insureds. Accordingly, because the defendants did not tender proof foreclosing the possibility that Utica properly covered Ares pursuant to the property damage policy, under which the defendants are not named as additional insureds, they failed to establish as a matter of law that the antisubrogation doctrine barred this action (see North Star Reins. Corp. v Continental Ins. Co., 82 NY2d at 294; Insurance Corp. of N.Y. v Cohoes Realty Assocs., L.P., 50 AD3d 1228; see also Alvarez v Prospect Hosp., 68 NY2d 320, 324). The defendants' failure to make such a prima facie showing requires a denial of their motion, regardless of the sufficiency of the opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).

In light of our determination, we need not reach the parties' remaining contentions.

Aldrich v Marsh & McLennan Companies, Inc.

Law Offices of David L. Trueman, P.C., Mineola (David L.
Trueman of counsel), for appellants.
Willkie Farr & Gallagher LLP, New York (Christopher J. St.
Jeanos of counsel), for respondents.

Order, Supreme Court, New York County (Herman Cahn, J.), entered June 7, 2007, which, in an action by former investors in Lloyd's of London against defendants brokers arising out of the brokers' alleged failure to disclose, in procuring insurance for a nonparty manufacturer of asbestos products, facts relating to the magnitude of the manufacturer's exposure to asbestos claims, inter alia, granted defendants' motion to confirm a Special Referee's report recommending dismissal of plaintiffs' causes of action for fraud as barred by the statute of limitations, unanimously affirmed, with costs.

Plaintiffs do not have a right to a jury trial on the issue of whether their fraud claims are barred by the two-year imputed discovery time limitation in CPLR 213(g) (cf. Nussbaum v Steinberg, 269 AD2d 192 [2000] [plaintiff not entitled to a jury trial on whether plaintiff was under disability of insanity so as to toll statute of limitations, and for what period of time]). On the merits, a finding that plaintiffs were on inquiry notice of the alleged fraud, and could have, with reasonable diligence, discovered the alleged fraud well before the beginning of the controlling two-year period (see Lucas-Plaza Hous. Dev. Corp. v Corey, 23 AD3d 217, 218 [2005], citing Watts v Exxon Corp., 188 AD2d 74, 76 [1993]), is supported by the extensive information that was available to plaintiffs in the public domain. Such information included the lawsuits commenced in the early 1980s by the manufacturer, first against certain Lloyd's syndicates and then against defendant broker Marsh & McLennan itself, both raising issues involving nondisclosure of material information in connection with the procurement of insurance for the manufacturer covering the risk of exposure to asbestos claims. We have considered plaintiffs' other contentions and find them unavailing.

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

 

State v Liberty Mutual Insurance Company

Kornstein Veisz Wexler & Pollard, LLP, New York (Kevin J.
Fee of counsel), for appellants.
Andrew M. Cuomo, Attorney General, New York (Richard P.
Dearing of counsel), for respondent.

Order, Supreme Court, New York County (Bernard J. Fried, J.), entered March 28, 2007, which denied defendants' motion to dismiss the complaint, unanimously modified, on the law, the motion granted to the extent of dismissing the fifth cause of action and all claims within the first, third and fourth causes of action based upon contingent commission agreements, and otherwise affirmed, without costs.

"Contingent commission agreements between brokers and insurers are not illegal, and, in the absence of a special relationship between the parties, defendant[s] had no duty to
disclose the existence of the contingent commission agreement" (Hersch v DeWitt Stern Group, Inc., 43 AD3d 644, 645 [2007], citation omitted; see also New York State Ins. Dept. Gen. Counsel Opinion Ltr., "Disclosure of Broker Commission, Aug. 30, 2005, http://www.ins.state.ny.us/ogco2005/rg050818.htm ["neither the Insurance Law nor the regulations promulgated thereunder require an insurance broker to disclose to its clients the commission it earns on the policies it places"]). Here, since no special relationship was alleged, claims of common-law fraud, including a breach of fiduciary duty to disclose, as well as unjust enrichment based on defendants' use of contingent commissions or such nondisclosure (as included in the first, third, fourth and fifth causes of action), must fail.

The Attorney General stated valid claims against defendants for their participation in a bid-rigging scheme in violation of the Donnelly Act (General Business Law § 340[2]). The State has inherent authority to act in a parens patriae capacity when it suffers an injury to a quasi-sovereign interest (Alfred L. Snapp & Son, Inc. v Puerto Rico, 458 US 592, 601 [1982]) "apart from the interests of particular private parties" (id. at 607). Here, the Attorney General sued to redress injury to its "quasi-sovereign interest in securing an honest marketplace for all consumers" (State of New York v General Motors Corp., 547 F Supp 703, 707 [SD NY 1982]), free of bid-rigging. Contrary to defendants' contention, this Court's decision in People v Grasso (42 AD3d 126 [2007]) does not support a holding that the Attorney General is not empowered to assert the Donnelly Act claims under the facts herein.

Nor are the bid-rigging claims time-barred, since the amended complaint alleges defendants' participation in the bid-rigging scheme within three years of the filing of the action (General Business Law § 342-a). Furthermore, "the Donnelly Act . . . should generally be construed in light of Federal [antitrust] precedent" (Anheuser-Busch, Inc. v Abrams, 71 NY2d 327, 335 [1988]), and because bid-rigging is an activity that is inherently one of fraudulent concealment, the statute of limitations should be tolled (see State of New York v Hendrickson Bros., Inc., 840 F2d 1065, 1083 [2d Cir 1988], cert denied 488 US 848 [1988]). Since the bid-rigging scheme was not discovered until October 2004, the claims filed in May 2006 are timely.

Nor did the Donnelly Act bid-rigging claims involve conduct that is regulated by Insurance Law § 2316, which law was not in force and effect between August 3, 2001 and June 25, 2003 (see Insurance Law § 2342), when a substantial portion of the bid-rigging activities occurred.

However, the court did err in failing to dismiss in its entirety the fifth cause of action, which alleges breach of fiduciary duty, since, absent a special relationship that does not exist here, an insurance agent or broker owes no common-law duty to its customer other than to obtain the policy requested within a reasonable period of time, or to inform the customer that it could not do so (see Murphy v Kuhn, 90 NY2d 266, 270 [1997]).

Therefore, except as stated herein, valid claims are stated by the Attorney General with respect to bid-rigging to sustain the first, second, third and fourth causes of action in the amended complaint.

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

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