Coverage Pointers - Volume IX, No. 7

Dear Coverage Pointers Subscribers:

 

 

Pod Cast Version of Coverage Pointers?

It's been suggested.  What do you think? 

 

Upcoming DRI Annual Meeting:

 

If you're going to be at the DRI Annual Meeting in Washington, DC this week, and want to attend the FDCC Cocktail Reception being held on Thursday night, I'd be delighted to have you join us. Contact me at the hotel, drop me an e-mail or call me on my cell, 716-445-2258.  I will surely see some of you at the DRI Insurance Law Committee meeting as well.

 

Our Man Mooney

 

A flash announcement: we just learned that our own Harry Mooney was selected by the Defense Trial Lawyers of Western New York as the Defense Trial Lawyer of the Year.  We're proud of you Harry!  Well deserved.  You can be sure that my mentor, our late founding partner and previous award recipient, Shelly Hurwitz, who passed away five years ago this week, is beaming with pride, from above.

 

Legislative Update

 

An Insurance Department version of the "Prejudice Bill" has been sent to the Governor for review, before submission to the Legislature. We have a pretty good idea what the proposed legislation looked like as it moved from the Department to the Governor but we don't know yet whether it may be altered by the time the Governor's office finishes its review.  We have and will keep you posted,

 

 

Meandering Thoughts ...

 

I'm not a sports nut but I am one of those end-of-the-year stalwarts who will watch the Super Bowl, Stanley Cup Finals and the NCAA Final Four.  Occasionally, I'll even catch a World Cup game or Women's Soccer and of course, the World Series.  As an aside, I do want to know what kind of silliness led to the creation of the Biathlon, the sport that couples skiing with rifle shooting and how that became an Olympic sport, but will save that for another day.  Anyway, I'm off to Cleveland to catch the second game of the Yankee-Cleveland series.  Speaking of baseball ...

 

Those who grew up in Brooklyn, home of the National League Brooklyn Dodgers (I grew up three blocks from Ebbets Field) naturally despise the Yankees and (virtually) all of us in Brooklyn became Mets fans in 1962. Yes, the Mets tanked this year.  Yes, as a former Mets fan, I am embarrassed about their skid at the end of the regular season.  Now don't blame me for the Mets failures; I've long since abandoned them and adopted the Buffalo Bisons as my favorite team.  The Bisons?  They are the AAA franchise of the Cleveland Indians so naturally I will be rooting against the (hated) Yankees in the Indian - Yankee series.   If you're ever in Buffalo during baseball season and the Bisons are in town, I have season's tickets right on top of the home (first base) dugout and we can surely catch a game.

 

Anyway, when I left Brooklyn back in 1971 for northern and western pastures, the official version  of the New York Mets theme song was still:

 

Meet The Mets
Meet The Mets
Step right up and greet the Mets
Bring your kiddies, bring the wife
Guaranteed to have the time of your life!
Because the Mets are really socking the ball
Knocking those home runs over the wall
East Side, West Side, everybody's coming down!
To meet the M-E-T-S Mets!
Of New York Town

 

In retrospect, I remember the verse as:  "bring your kiddies, bring your wives, guaranteed to have the time of your lives" and I now wonder whether Warren Jeffs was somehow involved in crafting the theme song . 

 

OK, today's trivia question, without looking it up:  when the Mets came into the National League in 1962, the NL expanded from eight teams to 10. Identify the other NL team.  And for a special bonus, see if you can remember the starting pitcher for the Mets in their 1962 opener.  By the way, Gil Hodges was on first and Don Zimmer was on third.  The Met went 40 - 120 that year, by the way.  Amazin'.

 

Oh, you want law?  Sorry.

 

A Primer on Removing a case from State Court to Federal Court

 

Let's start out with our new offering, an occasional column on practice tips, we've dubbed Earl's Pearls.  Our partner, Earl Cantwell handles a good deal of commercial litigation and has a vibrant Federal Court practice.  It is not unusual that we receive a request (or maybe a recommendation) to remove a case sued in state court to federal court.  We've found that occasionally and insurer or other client prefers to litigate a matter in federal court rather than state court.  Earl has prepared a brief but very helpful summary of the rules relating to transferring cases from state to federal court.  Feel free to call him if you have any questions.

 

From On High:

 

This month, the Court of Appeals hears the arguments is Raffellini v. State Farm Mutual. You'll remember that one from last year; it led to a Coverage Pointers Special Edition which is available online at:  http://www.hurwitzfine.com/shownews.php?type=coverage&id=298.  The Second Department held that the portion of Insurance Department regulation (35-D) and the mandatory policy language contained in that regulation that requires the SUM (underinsured) claimant prove a serious injury in order to recover those benefits has been found in violation of the Insurance Law.  In other words, the Court has held that a SUM claimant who has settled his or her case with the other car's insurer need not prove he or she has sustained a serious injury under the No Fault law when prosecuting the claim for SUM benefits.  On March 9, 2007, we reported that:  word has come down that the Second Department has granted leave to appeal of its order to the Court of Appeals, the only way that review can be obtained.  Thank goodness.  We simply cannot see the high Court, in good conscience, upholding this decision.  I stand by my view.

 

The high court is also hearing arguments on in White v. Continental Casualty Company, a case where the Fourth Department debated the "occupational disability" definition in a disability policy.  http://www.hurwitzfine.com/shownews.php?type=coverage&id=309

 

From Audrey Seeley, the Queen of No Fault: 

This edition provides some good advice for both applicants and insurers.  The advice for the applicant in arbitration is that you should check and check again to ensure that you have submitted sufficient evidence to demonstrate your prima facie case.  There is a recent arbitration decision from Arbitrator McCorry that is correctly decided where the insurer failed to timely submit its evidence and failed to submit an affidavit that it never received the bills at issue in the arbitration.  The applicant's claim was denied because the applicant failed to submit any proof of mailing of the bills to the insurer.

 

The advice for the insurer is to carefully read what your IME physician or chiropractor's conclusion is before you issue a denial.  Arbitrator O'Connor declined to uphold an insurer's denial of physical therapy benefits because the insurer did not carefully read the IME report.  Also, as reported in the decision it appeared that the insurer inserted some language that was not in the IME report about maximum medical improvement.  Aside from the issue with that phrase, the report, at least the one submitted to the arbitrator, did not state that conclusion.  It is imperative that the insurer carefully read the report's conclusions and recommendations before issuing the denial.

 

We hope you enjoy this edition!

 

Audrey A. Seeley

Issue Highlights 

 

This week's issue includes my summaries of the following appellate decisions:

 

·        Unexplained 37-Day Delay in Disclaimer Results in Loss of Coverage Defenses

·        Cancellation of Policy Annulled by Failure to Cite to Statute as Required by Law

·        Defending While Trying to Maintain a Late Notice Defense, Once Again Results in Waiver

·        Question of Fact on Timeliness of SUM Notice

·        Declaratory Judgment Action Venue Can be Based on Residence of Injured Party

·        Timely Notice was Given, So Late Notice Defense was Unsuccessful

·        Uninsured Motorists Claim Dismissed Where Carrier Fails to Establish that Offending Vehicle was Insured

·        Well Documented Investigation by Insurer Excuses Delay in Denying Coverage

 

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

Mark Starosielec
[email protected]

 

·    Plaintiff's Refusal to Obey Court Orders Leads to Summary Judgment for Defendants

·        Plaintiff Stopping Medical Treatment "Because he Felt Better" Sinks SJ Survival Chances

·        Defendant's Doctors Findings of ROM Limitations Leads to Summary Judgment Denial

·        Defendants' Failure to Address 90/180 Category Keeps Plaintiff's Complaint Alive

·        Déjà Vu All Over Again: Defendants Must Address Plaintiffs' Serious Injury Claims

·        Duh! SJ Affirmed as Plaintiff Fails to Submit Doctors' Affidavits or Medical Records

·        Findings of ROM Limitations Must Be Contemporaneous with Subject Auto Accident

·        No Reasonable Excuse? No Meritorious Opposition? No Vacation of Order Granting SJ

 

AUDREY'S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]

Arbitration

·        Insurer's Failure to Properly Interpret IME Physician's Conclusions Fatal to Denial of Medical Claim

·        Applicant Bears Burden of Demonstrating Claims Submitting to Insurer for Payment Irrespective of Insurer's Lack of Affidavit on Issue and Untimely Evidence Submission

Litigation

·        Allegation that Arbitrator was Impartial Based Upon Historically Unfavorable Awards Involving Petitioner's Counsel not Basis for Vacating Arbitration Award

·        Defense Medical Expert Affidavit Determined Conclusory and Speculative on Issue of Causal Relationship of Injuries

·        Plaintiff's Claim not Ripe for Determination as Insurer Timely Delayed Claim, Pending Receipt of Additional Verification

·        Permanent Stay of Arbitration Granted as Failure to Include SUM Insurer in Declaratory Judgment Action did not Estop SUM Insurer from Challenging Denial

PEIPER ON PROPERTY

Steven E. Peiper
[email protected]

 

·        "Wrongful Means" Alleged by Plaintiff, Precluded Defendant's Motion to Dismiss Cause of Action Based Upon Tortuous Interference with Prospective Business

·        Coverage is Affirmed where Carrier Failed to Disclaim at the Time of the Initial Claim

·        Questions of Fact Regarding whether Plaintiff's Claims were Made in Good Faith, and Whether Plaintiff's Dispute over Insurer's Investigation was "an Outright Refusal"

 

EARL'S PEARLS

Earl K. Cantwell, II

[email protected]

 

Removal to Federal Court - Relief May Be Only a Filing Away

 

Keep those cards and letters coming in.  We love hearing from you.

 

All the best.

 

Dan

 

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

Newsletter Editor

Dan D. Kohane
[email protected]

 

Insurance Coverage Team

Dan D. Kohane, Team Leader
[email protected]

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

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

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

APPELLATE TEAM
Dan D. Kohane
Scott M. Duquin

 

Index to Special Columns

 

Starosielec’s Serious Side of “Serious Injury”

 Audrey’s Angles on No Fault

Peiper on Property
Earl’s Pearls

Across Borders

 

10/2/07            Bovis Lend Lease LMB, Inc.,  v. Royal Surplus Lines Insurance Company
Appellate Division, First Department

An Unexplained 37-Day Delay in Disclaimer Results in Loss of Coverage Defenses

Insured failed to timely notify insurer of both occurrence and lawsuit but carrier waited 37 days before it denied coverage based on that late notice.  Court holds that the insurer had enough information when the claim arrived to disclaim then and its failure to do so results in a loss of that coverage defense.

Editor’s Note:  The Court cited an earlier “37-day” case in support of its position, dating back to January 2005.

 

9/28/07            Sweeney v. Preferred Mutual Ins. Co.

Appellate Division, Fourth Department

Cancellation of Policy Annulled by Failure to Cite to Statute as Required by Law

Notices of policy cancellation must be done right, and literal compliance with the statute is required.  The Insurance Law requires that a cancellation notice for, as an example, non-payment of premium, under Insurance Law § 3426 (c) (1) (A), shall contain a “reference to the pertinent paragraph or subparagraph of subsection (c) of this section."  Preferred Mutual’s did not, so the cancellation is invalidated.

 

9/28/07            National Grange Mutual Ins. Co. v. T.C. Concrete Const. Co.
Appellate Division, Fourth Department

Defending While Trying to Maintain a Late Notice Defense, Once Again Results in Waiver
National Grange commenced a declaratory judgment action seeking a determination that it had no obligation to defend T. C. Concrete because of a failure to provide timely notice of the accident. When the underlying personal injury action was resolved, T.C. Concrete’s counsel had stipulated that the declaratory judgment action would be dismissed.  However, T.C.’s counsel in that action did not have the legal capacity to negotiate dismissal of a declaratory judgment action in which he was not counsel for any of the parties.

However, the court finds that the carrier waived its right to disclaim coverage by its conduct in the underlying action, i.e., by participating in the binding arbitration, defending T.C. Concrete in the arbitration, and indemnifying T.C. Concrete in accordance with the determination in the arbitration. Based upon plaintiff's implied concession of coverage, defendants are entitled to recover on their counterclaim seeking reimbursement for their attorneys' fees and costs incurred in their defense of the declaratory judgment action
Editor’s Note:  We have said it before.  If a carrier believes that it has a right to deny coverage based on late notice, it cannot defend and participate in the underlying lawsuit (without a non-waiver agreement) or it will lose its right to deny.  There is a long line of cases, starting with Hartford v. County of Nassau, that so hold.

9/28/07            Progressive Insurance Companies v. DeWitt
Appellate Division, Fourth Department
Question of Fact on Timeliness of SUM Notice
DeWitt was injury in an accident in July 2004.  He received medical treatment over next 14 months.  In September 2005 he learned in had sustained permanent injuries and for the first time, notified Progressive of potential underinsured motorist (SUM) claim.  Progressive promptly denied coverage based on a failure to notify it of the claim "as soon as practicable" in accordance with respondent's SUM insurance policy. Respondent requested arbitration on the issue of coverage, and petitioner commenced this proceeding seeking a permanent stay of arbitration.

While the lower court found that there was no question by the notice was timely, the Appellate Division disagreed.  DeWitt alleged that he hoped his symptoms would improve during the time of his treatment.  The Appellate Division noted that in December 2004, DeWitt had been laid off from work because he was unable to carry out the necessary tasks of his job based on his injuries. Whether the delay in giving notice was a reasonable one is a question of fact and the matter was sent back to the trial court to hold a hearing on that question.

9/25/07            Vitti v. Hermitage Insurance Company
Appellate Division, First Department
Declaratory Judgment Action Venue Can be Based on Residence of Injured Party
Insured commenced declaratory judgment action in Bronx County, residence of injured plaintiff.  Carrier sought to change venue to Westchester.  Court held that while venue was based on residence of the injured plaintiff, his interest in the policy was sufficient to justify venue based on his residence. 

Editor’s Note:  Interesting ruling by the court, particularly when the Court of Appeals has previously held that the injured plaintiff does not have a sufficient enough interest in the policy, before judgment, to have standing to commence a declaratory judgment action.

 

9/25/07            Compass Const. of New York v. Empire Fire & Marine Company of Omaha
Appellate Division, Second Department
Timely Notice was Given, So Late Notice Defense was Unsuccessful
Policy required notice of lawsuit as soon as practicable and insured established that such notice was timely given. Action insured against carrier’s agent, for failing to procure proper policy of insurance, was dismissed

 

9/25/07            In the Matter of Progressive Northwestern Ins. Co. v. Gjonaj
Appellate Division, Second Department
Uninsured Motorists Claim Dismissed Where Carrier Fails to Establish that Offending Vehicle was Insured

A claim was made for uninsured motorist benefits and the carrier sought to stay arbitration.  However, it failed to establish that vehicle was in fact insured.  Accordingly, application to stay dismissed.

 

9/25/07            Tully Construction Co., Inc. v. TIG Insurance Co.
Appellate Division, Second Department
Well Documented Investigation by Insurer Excuses Delay in Denying Coverage
On November 27, 2000, Jones was operating Rubenstein’s car in which Rubenstein was a passenger.  The car struck a backhoe owned by Tully Construction.  Both Jones and Rubenstein were killed.  Zurich insured Tully for liability claims up to $1,000,000 with an excess liability policy issued by TIG Insurance Co.  Tully notified Zurich of the potential claims in December 2000. The two wrongful death cases, on behalf of Jones and Rubenstein, were commenced in the Spring of 2002.

 

In June 2004, Tully advised TIB that in February 2001, Tully had notified TIG of the November 2000 accident.  TIG did not respond.  Ten days later, on June 24, 2004, Tully advised TIG that in May 2001, Tully’s Broker had advised TIG of the incident.  TIG informed Tully that it had no record of the prior notice alleged by Tully and that the June 2004, letter constituted TIG's first notice of the claim. By letter to Tully dated August 5, 2004, TIG disclaimed coverage under Tully's policy with TIG based on late notice.

Pursuant to Insurance Law § 3420(d), an insurer must give written notice of a disclaimer "as soon as is reasonably possible" after the insurer learns of the grounds for the disclaimer of liability.  Here, even assuming Tully's June 14, 2004, letter was received by TIG, that letter cannot serve as the date of first notice to TIG since it contained insufficient information to provide grounds for a disclaimer of liability or denial of coverage and, in fact, professed that notice to TIG had been timely given. Thus, TIG's delay in disclaiming must be measured from Tully's June 24, 2004, letter until TIG's August 5, 2004, letter disclaiming coverage, a period of 42 days.

Contrary to Tully's contention, TIG's moving papers demonstrated that it conducted an investigation before disclaiming based on late notice. Among other things, TIG contacted Zurich and requested the summonses and complaints and any pretrial reports. TIG also requested a copy of the primary insurance policy issued to Tully by Zurich, which was not received by TIG until July 26, 2004. TIG then waited 10 additional days before issuing its disclaimer in order to ascertain whether Ryan had obtained documentation from Marsh of the alleged prior notice to TIG. Under the particular circumstances of this case, TIG met its burden of demonstrating that its investigation was reasonably related to its completion of a thorough and diligent investigation into whether it had grounds for a disclaimer based on late notice. Therefore, its delay in disclaiming coverage was not unreasonable for purposes of Insurance Law § 3420(d).

Editor’s Note: Remember those three little words:  document, document, document.  More cases with respect to late denials are lost because a carrier has failed to adequately document the depth of the investigation it was conduct prior to a denial of coverage.

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

 

10/04/07          Brewster v. FTM Servo, Corp.

Appellate Division, First Department

Plaintiff’s Refusal to Obey Court Orders Leads to Summary Judgment for Defendants

Plaintiff’s refusal to turn over medical records from another motor vehicle accident caused the Appellate Division to reverse a lower court order which had denied the summary judgment motion by defendant dismissing the complaint on the ground that plaintiff had not suffered a serious injury.  Based on plaintiff’s admission at deposition of his involvement in another automobile accident prior to this one, and the unavailability of the medical records for that case, defendant served a supplemental notice for discovery and inspection, requesting that plaintiff provide written authorization allowing defendants to obtain the relevant records. Plaintiff failed to comply with the demand.

CPLR 3126 authorizes sanctions against a party who “refuses to obey an order for disclosure or willfully fails to disclose information which the court finds ought to have been disclosed.” “If the credibility of court orders and the integrity of our judicial system are to be maintained, a litigant cannot ignore court orders with impunity” (Kihl v Pfeffer, 94 NY2d 118, 123 [1999]). Plaintiff’s unexplained noncompliance with a series of court-ordered disclosure mandates over a period of nearly two years sufficiently created an inference of willful and contumacious conduct (see Santoli v 475 Ninth Ave. Assoc., LLC, 38 AD3d 411, 415 [2007]; Jones v Green, 34 AD3d 260 [2006]). The persistent failure to submit medical records relating to his previous automobile accident warranted dismissal of his portion of the complaint, since such material was necessary to ascertain whether any of his purported injuries might have been caused by that earlier accident.

9/25/07            Abreu v. Bushwick Building Products & Supplies, LLC

Appellate Division, Second Department

Plaintiff Stopping Medical Treatment “Because he Felt Better” Sinks SJ Survival Chances

Here the plaintiff appealed from a lower court order which granted the defendants’ motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury. The defendants established their prima facie entitlement to judgment. In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff’s hospital records were without any probative value in opposing the defendants’ motion since those records were uncertified. Moreover, neither the plaintiff nor his treating physician adequately explained the gap in his treatment between the time he stopped treatment five months after the accident and his most recent examination. The plaintiff’s own deposition testimony was fatal since the plaintiff testified that he stopped treatment after five months because he felt better.

 

9/25/07            Andrade v. Hatzis
Appellate Division, Second Department

Defendant’s Doctors Findings of ROM Limitations Leads to Summary Judgment Denial

Plaintiff successfully appeals a lower court order which had granted the motion of the defendant for summary judgment. The Appellate Division held the defendant failed to establish that the plaintiff did not sustain a serious injury. In his report, defendant’s examining neurologist noted the existence of limitations in the range of motion of the plaintiff’s cervical spine upon testing. Since defendant failed to make a prima facie showing, it is unnecessary to consider whether the plaintiff’s opposition papers were sufficient to raise a triable issue of fact.

 

9/25/07            Bozza v. O'Neill
Appellate Division, Second Department

Defendants’ Failure to Address 90/180 Category Keeps Plaintiff’s Complaint Alive

While the Appellate Division held plaintiff was not entitled to summary judgment on the issue of liability, he was able to survive defendants’ motion for summary judgment seeking dismissal of his complaint. In support of his motion for summary judgment, the plaintiff submitted evidence establishing that the accident occurred after the defendant proceeded through a stop sign without first bringing his motor vehicle to a stop. In opposition, the defendants submitted a police report of the accident indicating that O'Neill failed to stop due to ice. The defendants attempted to invoke the emergency doctrine, by asserting that he skidded on ice and the accident was unavoidable.

The defendants’ proof never addressed the plaintiff’s claim that he sustained a medically-determined injury or impairment of a nonpermanent nature which prevented him from performing substantially all of the material acts which constituted his usual and customary activities for not less than 90 days during the 180 days immediately following the accident. At his deposition, the plaintiff testified that he did not return to his job following the accident and that his job was, in fact, terminated six months after the accident, when he was unable to provide his employer with a return date. The defendants’ medical expert did not relate his findings to this category of serious injury for the period of time immediately following the accident. The defendants were not able to offer sufficient evidence to establish that the plaintiff’s injuries either were solely attributable to a degenerative condition or were caused by a subsequent accident. Since the defendant does not meet this initial burden, the court “need not consider whether the plaintiff’s opposition papers were sufficient to raise a triable issue of fact.”

9/25/07            Greenidge v. Righton Limo, Inc.

Appellate Division, Second Department

Déjà Vu All Over Again: Defendants Must Address Plaintiffs’ Serious Injury Claims

In a remarkably similar case to Bozza, the Second Department once again ruled in favor of plaintiff as defendant failed to address the 90/180 category of serious injury as claimed by plaintiff in the Bill of Particulars. Here, the accident occurred on February 7, 2004. The plaintiff testified that as a result, she was out of work for 3½; months, which the defendant’s examining neurologist noted in his report. The defendant's examining neurologist did not examine the plaintiff until almost two years after the accident, and did not relate his medical findings to this category of serious injury for the period of time immediately following the accident. Since the defendant failed to establish its prima facie burden, it is unnecessary to consider whether the papers submitted by the plaintiff in opposition were sufficient to raise a triable issue of fact.

 

9/25/07            Kivelowitz v. Calia

Appellate Division, Second Department

Duh! SJ Affirmed as Plaintiff Fails to Submit Doctors’ Affidavits or Medical Records

The Appellate Division affirmed a lower court order granting defendant’s summary judgment motion on the grounds that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d). In support of their separate motions, defendants relied upon the affirmed reports of two orthopedists and the affirmed report of a radiologist. These reports established that the plaintiff did not sustain a serious injury. Thus, the defendants made a prima facie showing. In opposition, the plaintiff failed to raise a triable issue of fact. Notably, the plaintiff failed to submit any affirmations or affidavits of her treating physicians, or medical records in admissible form indicating what treatment, if any, she received for her alleged injuries.

 

9/25/07            Morales v. Daves

Appellate Division, Second Department

Findings of ROM Limitations Must Be Contemporaneous with Subject Auto Accident

The Appellate Division affirmed a lower court order, which granted defendants’ motion for summary judgment. The defendant established, prima facie, that the plaintiff did not sustain a serious injury. In opposition, the plaintiff failed to raise a triable issue of fact. The affidavit of the plaintiff’s treating chiropractor, while noting recent range of motion limitations in the cervical and lumbar regions of her spine, failed to proffer any evidence establishing that the plaintiff sustained any range of motion limitations in those regions of her spine roughly contemporaneous with the subject accident.

 

9/25/07            St. Rose v. McMorrow
Appellate Division, Second Department

No Reasonable Excuse? No Meritorious Opposition? No Vacation of Order Granting SJ

In a brief opinion, the plaintiff appealed a lower court order, which denied that branch of his motion which was to vacate an order of the same court, granting the defendant’s unopposed motion for summary judgment dismissing the complaint. The Appellate Division held that in order to vacate the order entered upon his default in opposing the motion, the plaintiff was required to demonstrate both a reasonable excuse for his default and a meritorious opposition to the motion for summary judgment. The plaintiff failed to demonstrate a reasonable excuse for his default and the lower court properly denied his motion.
 

AUDREY’S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]

 

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

 

Arbitration

9/28/07            In the Matter of the Arbitration Between Applicant and Respondent

                        Arbitrator Veronica K. O’Connor (Erie County)

Insurer’s Failure to Properly Interpret IME Physician’s Conclusions Fatal to Denial of Medical Claim

The Applicant, eligible injured person (“EIP”), sought medical health benefits in the amount of $28,231.87, purportedly arising out of a February 28, 2000, motor vehicle accident.  The insurer denied the benefits on the basis of multiple independent medical examinations (“IME”) and lack of causal relationship.

 

 The Applicant was already disabled and receiving Workers’ Compensation benefits due to multiple work related injuries.

 

The insurer had the Applicant undergo an orthopedic examination on October 18, 2000, by Dr. Melvin Brothman.  Dr. Brothman concluded that the Applicant had “probable” pre-existing degenerative cervical and lumbar spine disc disease and degenerative bilateral knee arthritis.

 

Dr. Brothman opined that her current treatment was appropriate but felt that there was aggravation of a pre-existing condition.  Dr. Brothman could not comment on whether the Applicant was returned to her pre-existing condition as the pre-accident records were not available for review.

 

Dr. Brothman did opine that physical therapy was no longer warranted, but wanted to see the pre-accident records.  The same opinion was provided for further diagnostic testing.  Then Dr. Brothman concluded that Applicant’s present disability was not related to the accident but was pre-existing.

 

Based upon this report, the insurer denied orthopedic treatment including physical therapy as well as diagnostic testing.  The denial stated that “according to the doctor performing the examination you have reached maximum medical improvement and therefore all further orthopedic benefits are denied.”

 

The Applicant presented a report from her treating orthopedic surgeon, Dr. Christopher Hamill, who opined that while Applicant had a pre-existing injury to her neck the post accident MRI of the cervical spine revealed evidence of a C5/6 bulge.  Thereafter a discography was performed revealing only a protrusion and no herniation.  Dr. Hamill attributes, with difficulty, 50% to this accident and 50% to the pre-existing injury.

 

Interestingly, a Workers’ Compensation decision issued on January 23, 2003, provided that by stipulation the apportionment of the injuries were 50% not causally related to any workers’ compensation injury.

 

Arbitrator O’Connor did not uphold the insurer’s denial on the basis that the denial failed to accurately reflect Dr. Brothman’s conclusions.  Likewise, Arbitrator O’Connor held that the insurer was not entitled to an offset of the paid Worker’s Compensation Benefits as it was not 100% attributable to a pre-existing work related injury.  Instead it appeared that the insurer would be provided with a 50% allocation of the cost.

 

Of interest, is that the bulk of Applicant’s claim was denied for failure of the medical providers to timely submit their claim to the insurer.

 

9/21/07            In the Matter of the Arbitration Between Applicant and Respondent

                        Arbitrator Thomas J. McCorry (Erie County)

Applicant Bears Burden of Demonstrating Claims Submitting to Insurer for Payment Irrespective of Insurer’s Lack of Affidavit on Issue and Untimely Evidence Submission

The Applicant, eligible injured person, sought chiropractic expenses purportedly arising out of a February 17, 2003, motor vehicle accident.  The Applicant paid for the outstanding expenses from his personal injury settlement proceeds and sought to recover them from the insurer.

 

The insurer argued that it had not received the chiropractic bills within 45 days from the date of service.  Arbitrator McCorry held that the insurer failed to submit an affidavit attesting to lack of receipt of the bills in a timely fashion.  To matters worse, the insurer’s submission was untimely.

 

While one may think the case was over, Arbitrator McCorry aptly proceeded to review the Applicant’s evidence submission as it was Applicant’s burden to demonstrate that the bills were submitted to the insurer for payment.  The Applicant in this case failed to demonstrate that the bills were submitted.  Accordingly, the claim was denied.

 

 

Litigation

 

9/18/07            Mays-Carr v. State Farm Ins. Co.,

2007 NYSlipOp 07257 (4^th Dept.)

Allegation that Arbitrator was Impartial Based Upon Historically Unfavorable Awards Involving Petitioner’s Counsel not Basis for Vacating Arbitration Award.

This was an Article 75 proceeding to vacate, what appeared to be a SUM arbitration award, on the grounds that the arbitrator exceeded his power or so imperfectly executed it that a final and definite award was not made as well as impartiality.  The lower court denied the petition to vacate the award and the Appellate Court affirmed.

 

The Appellate Court held that the petitioner’s argument lacked merit that the arbitrator exceeded his authority in finding that the petitioner was not entitled to an award for economic loss not in excess of basic economic loss.  The Court reasoned that an arbitrator is not bound by substantive law and rules of evidence absent an arbitration clause provided otherwise.  In addition, the arbitrator’s decision was supported by the evidence.

 

Finally, petitioner’s argument that the arbitrator was impartial was rejected.  The Court held that a speculative argument that the arbitrator was bias and had conflicts of interest together with multiple adverse decisions against petitioner’s counsel and other plaintiff’s attorneys was not a valid basis for finding impartiality.

 

9/18/07            New York and Presbyterian Hospital v. Selective Ins. Co.,

2007 NYSlipOp 06848 (2d Dept.)

Defense Medical Expert Affidavit Determined Conclusory and Speculative on Issue of Causal Relationship of Injuries

The Appellate Division upheld the award of summary judgment in favor of the plaintiff as the defendant failed to come forward with admissible evidence that the eligible injured person’s condition was unrelated to the motor vehicle accident.  The defendant’s medical expert’s affidavit was determined to be conclusory, speculative, and unsupported by the evidence.

 

9/18/07            Westchester Medical Center a/a/o Brenda Ryan v. Progressive Cas. Ins. Co., 2007 NYSlipOp 06865 (2d Dept.)

Plaintiff’s Claim not Ripe for Determination as Insurer Timely Delayed Claim Pending Receipt of Additional Verification

The plaintiff sought no-fault benefits in the form of medical services rendered to the injured person arising out of a one car accident.  The insurer delayed the plaintiff’s claim pending an investigation regarding intoxication based upon representations in the police accident report.

 

The Court held that the defendant was entitled to summary judgment as it timely delayed the claim pending receipt of additional verification regarding the intoxication issue.  The Court held that the plaintiff submitted the NF-5 and UB-92 to the insurer on March 14, 2006 by certified mail, return receipt requested.  The insurer received the forms on March 16, 2006.  The Court held that the insurer submitted evidence that it timely requested additional verification on the intoxication issue which was never received.  Under the regulation, the insurer could not issue a payment or denial until all verification was received.  Therefore, the plaintiff’s claim was premature.

 

 

 

 

9/18/07            In the Matter of New York Cent. Mut. Fire Ins. Co. v. Steiert,

2007 NYSlipOp 06886 (2d Dept.)

Permanent Stay of Arbitration Granted as Failure to Include SUM Insurer in Declaratory Judgment Action did not Estop SUM Insurer from Challenging Denial

The SUM insurer, New York Central, successfully argued that it was entitled to a permanent stay of a SUM arbitration as there was an issue as to whether there was additional insurance coverage available to the applicant under an insurance policy issued by Kemper Auto and Home.  Kemper issued a disclaimer of insurance coverage to applicant and applicant subsequently challenged the disclaimer, unsuccessfully in a declaratory judgment action.  Kemper and the applicant argued that New York Central was not entitled to a permanent stay of the arbitration as New York Central was estopped from challenging the disclaimer that was already litigated in the declaratory judgment action.  The Court reasoned that New York Central was not estopped from challenging the disclaimer as it was not a party to the declaratory judgment action.  Also, it was not argued or demonstrated that New York Central was in privity with a party to the declaratory judgment action.  Finally, the Court determined that New York Central was not afforded a full and fair opportunity to contest the disclaimer letter.

 

PEIPER ON PROPERTY

Steven E. Peiper

[email protected]

 

10/02/07          Schorr v Guardian Life Ins. Co. of Am.

Appellate Division, First Department

“Wrongful Means” Alleged by Plaintiff, Precluded Defendant’s Motion to Dismiss Cause of Action Based Upon Tortuous Interference with Prospective Business

Plaintiff commenced this action against insurer alleging that insurer’s refusal to issue a quote to him, and the insurer’s subsequent issuance of the same quote to a competitor, amounted to tortuous interference with prospective business.  Plaintiff requested a quote for a certain group insurance coverage he wished to place with an existing client.  Insurer declined citing that it could not issue a competitive quote due to a 25% surcharge on this particular line of coverage. 

 

Thereafter, plaintiff learned that the insurer issued a quote on the exact coverage to a competitor.  To do so, carrier agreed to waive its 25% surcharge to make the quote competitive.  As a result, plaintiff lost not only the business for this particular coverage, but also other coverages that he had customarily placed for the client. 

 

In finding that plaintiff had met his initial burden, the First Department ruled that plaintiff’s allegations that insurer interfered with his relationship with a long standing client were sufficient to overcome the insurer’s motion to dismiss. 

 

 

9/27/07            State Farm Fire and Cas. Co. v Browne
Appellate Division, Second Department

Coverage is Affirmed where Carrier Failed to Disclaim at the Time of the Initial Claim

In this case, defendant owned rental property which was insured under a policy of insurance procured through plaintiff.  Defendant’s policy provided coverage for property damage and

 

bodily injury claims, as well as coverage for lost rent when the property became uninhabitable.  In June of 2001, defendant’s tenants discovered that the residence contained high levels of lead paint.  Accordingly, the tenants vacated the premises shortly thereafter. 

 

Upon receiving notice of the existence of lead paint at the residence, plaintiff issued a disclaimer in July of 2001 denying any coverage obligations with respect to lead paint abatement or bodily injury resulting from lead paint ingestion.  Notably, however, the disclaimer did not deny coverage for any lost rental income. 

 

Thereafter, the tenants of the premises commenced legal action seeking damages related to the lead paint issues.  Defendant again requested coverage from plaintiff, and plaintiff again denied the request.  In addition, plaintiff commenced the instant declaratory judgment action against defendant seeking a judicial determination that no coverage existed.  In response, defendant commenced a counter-claim for lost rental income after the residence was deemed uninhabitable. 

 

In upholding a finding that the policy covered defendant’s lost rental income, the Second Department noted that the policy unquestionably provided coverage for lost rent.  As the disclaimers issued by plaintiff failed to address defendant’s entitlement to coverage for rental income, the Court affirmed the trial court’s award of coverage.  (***Note – the Court does not address why the carrier could not disclaim after counter-claim for lost rent was made***)

 

Also, in a separate opinion issued the same day, the Second Department remanded this matter to the trial court for a recalculation of interest awarded to defendants.  The Court agreed that defendant had lost a total of $66,000 in rental income.  However, interest on the loss should have been calculated as each month’s rent became due, and not as a whole from the date of the initial breach.

 

9/27/07            Influence Fashions, Inc., v Seneca Ins. Co.

Appellate Division, First Department

Questions of Fact Regarding whether Plaintiff’s Claims were Made in Good Faith, and Whether Plaintiff’s Dispute over Insurer’s Investigation was “an Outright Refusal”

In a declaratory judgment action, carrier sought dismissal of insured’s complaint on the grounds that the insured had misrepresented the nature of damages.  The First Department found that a question of fact existed as to whether the insured’s claim of total loss was made in good faith.  Moreover, the Court also found a question of fact existed regarding whether a dispute over materials sought by the carrier during its investigation was “an outright refusal.” 

  

EARL’S PEARLS

Earl K. Cantwell, II

[email protected]

 

Removal to Federal Court – Relief May Be Only a Filing Away

 

            Your insured has filed a first party claim against the company, and the case has been assigned to your nemesis, Judge Ann T. Carrier.  Another insured, or a plaintiff via assignment, has filed a declaratory judgment action seeking coverage and to overturn your disclaimer, which is pending in a court known to be unfriendly (to put it charitably) towards insurance companies, Hon. Ray D. Reserve.  Besides heavy sighs and aspirin, and nasty looks at the account underwriter in the company break room, you may have an option, if seized early, to improve your odds and find a friendlier or at least neutral forum by “removing” the case to local U.S. District Court.

 

            Under 28 U.S.C. 1441, an action filed in state court over which the federal court could have had original jurisdiction may be removed from state court to the local District Court.  The key issue is TIME and good early claims handling makes the difference: a Notice of Removal must be filed with copies of the state court pleadings at the federal court within 30 days of service of the pleading.  28 U.S.C. 1446(b).  This is an absolute fixed statutory time limit that cannot be extended by stipulation, or even a court order.

 

            Generally, some possible advantages of federal court over state court may be that:

 

1.                  The case is placed before a (perceived) more neutral, or more sophisticated, court, which may be important for complicated coverage and bodily injury claims.  If there are substantial legal issues, federal courts do rigorously attempt to find and apply the relevant law, state or federal.

2.                  Discovery rules may be broader in federal court, as, for example, the Federal Rules of Civil Procedure permit ample pre-trial discovery and routine depositions of experts as opposed to the New York State vestiges of minimal expert disclosure and trial by late ambush.

3.                  The federal courts have Magistrate Judges who can monitor discovery and resolve pre-trial issues quickly and fairly, often without resort to motions.

4.                  Federal courts are generally more willing to entertain and grant, in whole or in part, summary judgment motions if there are dispositive statutes, court decisions, or controlling insurance policy or contractual provisions.

5.                  A federal court jury pool may be drawn from a larger multi-county area than a typical state trial court.

6.                  Federal courts tightly control and limit attorney involvement in jury selection, which can prevent endless squabbles and challenges in the jury selection process.

 

            If the case involves a federal claim, or one which is a federal claim in all but name, i.e., employee benefits (ERISA), employment discrimination (EEOC), violation of some federal statute (OSHA), etc., the case may be removable due to “federal question” jurisdiction. 28 U.S.C. 1441(b).  The case may also be removed if there is “diversity of citizenship” jurisdiction, 28 U.S.C. 1441(a), where all the plaintiffs have different states of citizenship than all the defendants, and the case has enough juice – the amount in controversy must be at least $75,000.  A corporation, such as an insurance company, is deemed a “citizen” of the state where it is incorporated and the state where it has its principal place of business.  28 U.S.C. 1332(c).  Thus in a typical first party claim where an insured in New York sues an insurer which is incorporated in Delaware and has its main office in Illinois, the opportunity for removal exists.  As another example, a case in which an injured party in New York sues a product manufacturer incorporated and with headquarters in Ohio is a case in which the opportunity for removal exists.

 

            Removal is easily accomplished, as opposed to most legal things, by simply filing the Notice of Removal with attached state court pleadings in District Court, serving the adversary, and copying the state court, essentially to tell them they no longer have jurisdiction or control over the case.  28 U.S.C. 1446.

 

            Good, fast claims handling is the key, since you only have a 30-day window to remove a case.  Check the pleading for any federal claims, and look at the caption and description of the parties to see if plaintiff and all defendants reside in different states.  You also need to know where your company is incorporated and where its main office is located.  If there is “diversity” between plaintiff(s) and defendant(s), you should immediately contact and refer to counsel to file for removal.  You can then be in a position to say, “I’m out of here” to an unfriendly venue or judge, leaving a frustrated adversary in your wake.

 

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.

 

10/03/07          Kumarsingh v. PV Holding Corp.
Florida District Court of Appeals, Third District
Graves Amendment Florida’s Statute Governing Vicarious Liability Of Auto Lessors
The Court of Appeals affirmed the trial court’s decision that the Graves Amendment, which became effective August 10, 2005, supersedes and abolishes Florida’s statute governing vicarious liability of auto lessors. The Graves Amendment protects auto lessors from liability for a lessee’s use of the vehicle where the lessor is neither negligent nor involved in criminal wrongdoing.

Submitted by: Skip Wilson and Heather Hornsby (McDowell Knight Roedder & Sledge LLC)

Editor’s Note:  There have been similar challenges, in NY, to the Graves Amendment (that effectively overturns Vehicle & Traffic Law Section 388 for leased and rental vehicles in most cases).  The lower court cases go both ways; we are awaiting for a New York appellate decision on the challenge.

 

9/26/07            Jafari v. EMC Ins. Co.

California Court of Appeal

Self-Defense Acts Can Be Deemed an “Accident”

 

This matter involved a coverage action by an insured against his insurer stemming from a suit in which a customer sued the insured for assault and battery committed by the insurer’s business manager in a fight with the customer on the premises. The insurer moved for summary judgment claiming that the manager’s actions allegedly taken in self-defense were nevertheless intentional and deliberate and therefore outside the policy’s coverage for an “accident.” The trial court granted the insurer’s motion for summary judgment and dismissed the action. The appellate court reversed, on the grounds that existing case law indicates that acts committed by an insured in self-defense can be deemed an “accident” when the conduct is provoked by the unexpected and unintended acts of the third party. The court concluded that, in assault and battery cases, the insurer must take a broad view of any incident raising the question of self-defense when determining whether there has been an unexpected and unintended force in the causal chain of events creating the “accident.”

Submitted by: Bruce D. Celebrezze & Vanessa L. O'Brien

 

 

Reported Decisions

 

Vitti v. Hermitage Insurance Company

Gold, Stewart, Kravatz, Benes & Stone, LLP, Westbury
(Jeffrey B. Gold of counsel), for appellant.
The Vozza Law Firm, Mamaroneck (Joseph Vozza of counsel),
for respondents.

Order, Supreme Court, Bronx County (Yvonne Gonzalez, J.), entered August 7, 2006, which denied the motion of defendant Hermitage Insurance Company (Hermitage) to change venue from Bronx County to Westchester County, unanimously affirmed, with costs.

Defendant Richard Hauptner was allegedly injured as a result of construction work being performed near his home. Hauptner and his wife commenced an action in Bronx County against the parties performing the construction work and the owners of the premises under construction, and a third-party action was subsequently commenced against plaintiffs herein. When plaintiffs herein forwarded the third-party summons and complaint to their insurer, Hermitage, coverage was disclaimed. Plaintiffs then commenced this action in Bronx County seeking, inter alia, a declaration that Hermitage was obligated to defend and indemnify them in the underlying action.

The court properly denied Hermitage's motion to change venue pursuant to CPLR 510(1). The Hauptners are residents of Bronx County and were properly named as defendants inasmuch as they have an interest in the outcome of plaintiffs' action against Hermitage (see CPLR 503[a]).

Compass Construction of New York v. Empire Fire & Marine Company of Omaha

Hankin, Handwerker & Mazel, PLLC, New York, N.Y. (Mitchell
Flachner of counsel), for appellant in Action No. 1.
Herbert William Fischman, P.C., New York, N.Y. (Alexander
Wulwick of counsel), for appellants in
Action No. 2.
White Fleischner & Fino, LLP, New York, N.Y. (Nancy Davis
Lyness of counsel), for Empire Fire &
Marine Company of Omaha, Nebraska,
respondent in Action No. 1 and Empire
Fire & Marine Insurance Companies,
respondent in Action No. 2.
Lustig & Brown, LLP, New York, N.Y. (Stephen C.
Cunningham and James M. Haddad of
counsel), for NPA Associates, Ltd.,
respondent in Action No. 1.

 

DECISION & ORDER

In related actions, inter alia, for a judgment declaring that the defendant Empire Fire & Marine Company of Omaha, Nebraska, is required to indemnify Compass Construction of New York, the plaintiff in Action No. 1, in an underlying personal injury action entitled Kelly v Compass [*2]Constr. Co., Inc., prosecuted in the Supreme Court, Kings County, under Index No. 13092/00, in which a judgment was entered against Compass Construction Company, Inc., on February 25, 2003, and, pursuant to Insurance Law § 3420(a), to recover the amount of the judgment, Compass Construction of New York, the plaintiff in Action No. 1, appeals from so much of an order of the Supreme Court, Kings County (Douglass, J.), dated November 7, 2005, as granted that branch of the motion of the defendant Empire Fire & Marine Company of Omaha, Nebraska, which was for summary judgment in its favor in Action No. 1 and the separate motion of NPA Associates, Ltd., which was for summary judgment in its favor in Action No. 1 and denied Compass Construction of New York's cross motion for summary judgment in that action, and Kevin Kelly and Francis Kelly, the plaintiffs in Action No. 2, appeal from so much of the same order as granted that branch of the motion of the defendant, Empire Fire & Marine Insurance Companies, which as for summary judgment in its favor in Action No. 2 and denied that branch of the Kellys' cross motion which was for summary judgment in that action.

ORDERED that the order is modified, on the law, (1) by deleting the provision thereof granting the motion of the defendant Empire Fire & Marine Company of Omaha, Nebraska, in Action No. 1 and the defendant, Empire Fire and Marine Insurance Companies, in Action No. 2 for summary judgment in their favor in both actions, and substituting therefor a provision denying the motion, and (2) by deleting the provisions thereof denying the cross motion of the plaintiff, Compass Construction of New York, in Action No. 1, and that branch of the cross motion of the plaintiffs, Kevin Kelly and Frances Kelly, in Action No. 2, which were for summary judgment against the defendant Empire Fire & Marine Company of Omaha, Nebraska in Action No. 1 and the defendant, Empire Fire & Marine Insurance Companies, in Action No. 2, and substituting therefor provisions granting the respective cross motion and branch of the cross motion; as so modified, the order is affirmed, and the matter is remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that defendant Empire Fire & Marine Company of Omaha, Nebraska, is obligated to indemnify Compass Construction of New York in the underlying personal injury action entitled Kelly v Compass Constr. Co., Inc., prosecuted in the Supreme Court, Kings County, under Index No. 13092/00, in which a judgment was entered against Compass Construction Company, Inc., and that the defendant NPA Associates, Ltd., is not obligated to pay any damages to the plaintiff in Action No. 1; and it is further,

ORDERED that the plaintiffs in Action Nos. 1 and 2, appearing separately and filing separate briefs, are awarded one bill of costs payable by the defendants Empire Fire & Marine Company of Omaha, Nebraska, and Empire Fire & Marine Insurance Companies; and it is further,

ORDERED that NPA Associates, Ltd., is awarded one bill of costs payable by the plaintiff in Action No. 1, Compass Construction of New York.

Compass Construction of New York, the plaintiff in Action No. 1 (hereinafter Compass), and Kevin Kelly and Francis Kelly, the plaintiffs in Action No. 2 (hereinafter the Kellys), established their prima facie entitlement to judgment as a matter of law as against the defendants, Empire Fire & Marine Company of Omaha, Nebraska, and Empire Fire & Marine Insurance Companies (hereinafter collectively, Empire), by demonstrating on their respective cross motions that Compass provided notice of the underlying occurrence to Empire through Empire's agent, NPA Associates, Inc. (hereinafter NPA), a defendant in Action No 1. The record establishes that notice of the occurrence was provided "as soon as practicable" in accordance with Section IV(2)(a) of the policy, which defined Compass's notice of occurrence obligations, and that Empire's disclaimer of coverage was therefore improper (see D'Aloia v Travelers Ins. Co., 207 AD2d 820). In opposition, Empire failed to raise a triable issue of fact (see generally Zuckerman v City of New York, 49 NY2d 557, 562). Contrary to the Supreme Court's finding, oral notice was sufficient to satisfy the notice of occurrence provision in the instant policy since the provision unambiguously did not contain a written notice requirement (cf. Elkowitz v Farm Family Mut. Ins. Co., 180 AD2d 711, 712).

The Supreme Court in Action No. 1 properly granted the separate motion of the defendant NPA for summary judgment. As the agent of Empire, NPA owed no duty to Compass (see Neil Plumbing & Heating Constr. Corp. v Providence Washington Ins. Co., 125 AD2d 295, 297-298). We note, however, that contrary to NPA's brief on appeal, its separate motion did not seek summary judgment dismissing Empire's cross claim against it for indemnification arising out of, inter alia, NPA's alleged failure to procure a policy of insurance for Compass that comported with Empire's authorized guidelines.

Since this is a declaratory judgment action, we remit the matter to the Supreme Court, Kings County, for the entry of a judgment declaring that Empire is obligated to indemnify Compass in the underlying personal injury action, and that NPA is not obligated to pay any damages to Compass (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

 

In the Matter of Progressive Northwestern Ins. Co. v. Gjonaj

 

Antin, Ehrlich & Epstein, P.C., New York, N.Y. (Jeffrey S. Antin
of counsel), for appellants-respondents.
John C. Buratti, Yonkers, N.Y. (Michael A. Zarkower of
counsel), for respondent-appellant.

 

DECISION & ORDER

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a claim for uninsured motorist benefits, Prec Gjonaj and Lena Popovic appeal (1) from an order of the Supreme Court, Westchester County (Friedman, J.H.O.), dated January 11, 2006, which granted the petition, and (2), as limited by their brief, from so much of an order of the same court entered March 31, 2006, as, upon reargument, in effect, adhered to the prior determination, and the petitioner cross-appeals from so much of the order entered March 31, 2006, as, upon reargument, struck the word "permanently" from the order dated January 11, 2006.

ORDERED that the appeal from the order dated January 11, 2006, is dismissed, as that order was superseded by the order entered March 31, 2006, made upon reargument; and it is further,

ORDERED that the order entered March 31, 2006, is reversed insofar as appealed from, on the law and the facts, and upon reargument, the order dated January 11, 2006, is vacated, the petition is denied, and the proceeding is dismissed; and it is further,

ORDERED that the cross appeal is dismissed as academic in light of our determination on the appeal; and it is further,

ORDERED that one bill of costs is awarded to the appellants-respondents.

The petitioner's failure to meet its initial burden of showing that the offending vehicle was, in fact, insured on the date of the accident mandated denial of the petition and dismissal of the proceeding (see Matter of Allstate Ins. Co. v Holloway, 272 AD2d 539, 539-540; Matter of Eagle Ins. Co. v McPherson, 271 AD2d 689, 689; Matter of Prudential Prop. & Cas. Ins. Co. v Campbell, 227 AD2d 628; Matter of Eagle Ins. Co. v Battershield, 225 AD2d 545, 545; cf. Matter of State Farm Mut. Auto. Ins. Co. v Youngblood, 270 AD2d 493, 493-494).

Tully Construction Co., Inc. v. TIG Insurance Co.

Goodman & Jacobs LLP, New York, N.Y. (Judith F. Goodman and
Joseph S. Kavesh of counsel), for appellant.
Landman Corsi Ballaine & Ford P.C., New York, N.Y. (Jeremy
S. Simon, pro hac vice, of counsel), for
respondent.

 

DECISION & ORDER

In an action, inter alia, for a judgment declaring, among other things, that the defendant TIG Insurance Co. is obligated to indemnify the plaintiff in the underlying actions entitled Rubenstein v Tully Construction Co., Inc., in the Supreme Court, Kings County, under Index No. 15025/02, and Jones v Tully Construction Co., Inc., in the Supreme Court, Kings County, under Index No. 23132/02, in the combined sum of $952,000, the plaintiff appeals from an order and judgment (one paper) of the Supreme Court, Queens County (Satterfield, J.), entered August 7, 2006, which, upon a decision of the same court dated May 16, 2006, inter alia, denied the plaintiff's motion for summary judgment and granted the defendant TIG Insurance Co.'s motion for summary judgment, among other things, declaring that TIG Insurance Co. is not obligated to indemnify the plaintiff in the underlying actions.

ORDERED that on the court's own motion, the notice of appeal from the decision is deemed to be a premature notice of appeal from the order and judgment (see CPLR 5520[c]), and it is further,

ORDERED that the order and judgment is affirmed; and is it further,

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

On November 27, 2000, a vehicle operated by David Jones and owned by Debra Rubenstein hit a backhoe owned by the plaintiff, Tully Construction Co., Inc. (hereinafter Tully), which was parked on the shoulder of the Staten Island Expressway. As a result of the collision, both Jones and Rubenstein, who was a passenger in the vehicle, were killed. At the time of the accident, Tully was insured by Zurich Insurance Co. (hereinafter Zurich) for liability claims up to $1,000,000 and carried an excess liability policy issued by the defendant TIG Insurance Co. (hereinafter TIG). Tully notified Zurich of the potential claims in December 2000. The estates of Jones and Rubenstein commenced wrongful death actions on April 16, 2002, and June 11, 2002, respectively.

By letter dated June 14, 2004, Tully advised TIG's Claims Department, inter alia, that in February 2001 Tully had notified TIG of a claim arising out of an incident that occurred on November 27, 2000. Receiving no reply to its June 14, 2004, letter, Tully again wrote to TIG, by letter dated June 24, 2004, advising that, on November 27, 2000, Jones and Rubenstein crashed into Tully's parked backhoe and that Tully's broker had notified TIG about the accident on May 9, 2001. TIG informed Tully that it had no record of the prior notice alleged by Tully and that the June 24, 2004, letter constituted TIG's first notice of the claim. By letter to Tully dated August 5, 2004, TIG disclaimed coverage under Tully's policy with TIG based on late notice.

Pursuant to Insurance Law § 3420(d), an insurer must give written notice of a disclaimer "as soon as is reasonably possible" after the insurer learns of the grounds for the disclaimer of liability (see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 66; Reyes v Diamond State Ins. Co., 35 AD3d 830, 831; Lancer Ins. Co. v T.F.D. Bus Co. Inc., 18 AD3d 445, 446; Mann v Gulf Ins. Co., 3 AD3d 554, 556; McGinnis v Mandracchia, 291 AD2d 484, 485). An insurer's failure to do so precludes effective disclaimer or denial, even where the insured has failed to provide the insurer with timely notice of the claim (see Matter of Allstate Ins. Co. v Cruz, 30 AD3d 511, 512; Gregorio v J.M. Dennis Constr. Co. Corp., 21 AD3d 1056; Wasserheit v New York Cent. Mut. Fire Ins. Co., 271 AD2d 439, 440; see also Matter of New York Cent. Mut. Fire Ins. Co. v Aguirre, 7 NY3d 772, 774). "[T]imeliness of an insurer's disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage" (First Fin. Ins. Co. v Jetco Contr. Corp., at 68-69; see Halloway v State Farm Ins. Co., 23 AD3d 617, 618; Danna Constr. Corp. v Utica First Ins. Co., 17 AD3d 622, 623).

It is the insurer's responsibility to explain its delay in giving written notice of disclaimer, and an unsatisfactory explanation will render the delay unreasonable as a matter of law (see 1 NY3d at 68; Pennsylvania Lumbermans Mut. Ins. Co. v D & Sons Constr. Corp., 18 AD3d 843, 845; 17 AD3d at 623; 271 AD2d at 440). An insurer's explanation is insufficient as a matter of law where the basis for denying coverage was or should have been readily apparent before the onset of the delay (see First Fin. Ins. Co. v Jetco Contr. Corp., at 68; Danna Constr. Corp. v Utica First Ins. Co., at 623). However, an insurer's delay in notifying the insured of a disclaimer may be excused when the insurer conducts an "investigation into issues affecting [its] decision whether to disclaim coverage" (First Fin. Ins. Co. v Jetco Contr. Corp., at 69; see Schoenig v North Sea Ins. Co., 28 AD3d 462). In that case, the burden is on the insurer to demonstrate that its delay was reasonably related to its completion of a thorough and diligent investigation (see Schulman v Indian Harbor Ins. Co., 40 AD3d 957).

Here, even assuming Tully's June 14, 2004, letter was received by TIG, that letter cannot serve as the date of first notice to TIG since it contained insufficient information to provide grounds for a disclaimer of liability or denial of coverage and, in fact, professed that notice to TIG had been timely given. Thus, TIG's delay in disclaiming must be measured from Tully's June 24, 2004, letter until TIG's August 5, 2004, letter disclaiming coverage, a period of 42 days.

Tully contends that grounds for a disclaimer should have been readily apparent to TIG upon its receipt of the June 24, 2004, letter. However, the record reflects otherwise. A letter dated May 9, 2001, attached to Tully's June 24, 2004, letter to TIG indicated that Tully and Marsh USA, Inc. (hereinafter Marsh), Tully's broker, had agreed that Marsh would put TIG on notice of the claims. Moreover, according to an affidavit by a claims analyst from TIG, in a telephone conversation he had on June 30, 2004, with "William Ryan of Tully," Ryan was adamant that Marsh had given prior notice to TIG. Thus, TIG was presented with circumstances regarding Tully's late notice which warranted further investigation (cf. Uptown Whole Foods v Liberty Mut. Fire Ins. Co., 302 AD2d 592, 593).

Contrary to Tully's contention, TIG's moving papers demonstrated that it conducted an investigation before disclaiming based on late notice. Among other things, TIG contacted Zurich and requested the summonses and complaints and any pretrial reports. TIG also requested a copy of the primary insurance policy issued to Tully by Zurich, which was not received by TIG until July 26, 2004. TIG then waited 10 additional days before issuing its disclaimer in order to ascertain whether Ryan had obtained documentation from Marsh of the alleged prior notice to TIG. Under the particular circumstances of this case, TIG met its burden of demonstrating that its investigation was reasonably related to its completion of a thorough and diligent investigation into whether it had grounds for a disclaimer based on late notice. Therefore, its delay in disclaiming coverage was not unreasonable for purposes of Insurance Law § 3420(d) (see New York Cent. Mut. Fire Ins. Co. v Majid, 5 AD3d 447, 448; DeSantis Bros. v Allstate, Inc., Co., 244 AD2d 183, 184). Accordingly, the Supreme Court properly denied Tully's motion for summary judgment and granted TIG's summary judgment motion.

 

NATIONAL GRANGE MUTUAL v. T.C. CONCRETE CONSTRUCTION, INC.,

Appeal from a judgment (denominated order and judgment) of the Supreme Court, Onondaga County (John V. Centra, J.), entered October 3, 2006 in a declaratory judgment action. The judgment, among other things, declared that plaintiff does not have a duty to indemnify defendants T.C. Concrete Construction, Inc. and Timothy J. Cummings for attorneys' fees incurred in defending the underlying action.


ROACH, BROWN, MC CARTHY & GRUBER, P.C., BUFFALO (KEVIN VASQUEZ HUTCHESON OF COUNSEL), FOR DEFENDANTS-APPELLANTS.
COSTELLO, COONEY & FEARON, PLLC, SYRACUSE (NICOLE M. MARLOW OF COUNSEL), FOR PLAINTIFF-RESPONDENT.


It is hereby ORDERED that the judgment so appealed from be and the same hereby is unanimously modified on the law by vacating the second decretal paragraph and directing plaintiff to reimburse defendants T.C. Concrete Construction, Inc. and Timothy J. Cummings for their attorneys' fees and costs incurred in their defense of the declaratory judgment action and as modified the judgment is affirmed without costs, and the matter is remitted to Supreme Court, Onondaga County, for further proceedings in accordance with the following Memorandum: Plaintiff commenced this action seeking a declaration that it is not obligated to defend or indemnify defendants in the underlying personal injury action because they failed to provide timely notice of the accident, loss or claim as required by the insurance policy issued by plaintiff to defendant T.C. Concrete Construction, Inc. (T.C. Concrete). T.C. Concrete and defendant Timothy J. Cummings (collectively, defendants) appeal from a judgment that, inter alia, declared that plaintiff does not have a duty to indemnify them for attorneys' fees incurred in defending the underlying action. We conclude that Supreme Court erred in determining that this declaratory judgment action was dismissed pursuant to a stipulation entered into by T.C. Concrete's attorney in the underlying action. Pursuant to the terms of that stipulation, the parties in the underlying action entered into a binding arbitration agreement, and T.C. Concrete's attorney also stipulated that the declaratory judgment action would be dismissed. It is well settled that "a stipulation is generally binding on parties that have legal capacity to negotiate" (McCoy v Feinman, 99 NY2d 295, 302; see also CPLR 2104). T.C. Concrete's attorney in the underlying action erred in representing to the court in the underlying action that he had legal capacity to negotiate dismissal of the declaratory judgment action. He was not the attorney for any party in the declaratory judgment action, and thus his stipulation is not binding on the parties in the declaratory judgment action.

Nevertheless, we conclude that plaintiff waived its right to disclaim coverage with respect to the underlying action inasmuch as it implicitly conceded coverage by its conduct in the underlying action, i.e., by participating in the binding arbitration, defending T.C. Concrete in the arbitration, and indemnifying T.C. Concrete in accordance with the determination in the arbitration (see Government Empls. Ins. Co. v Cusi, 163 AD2d 918; see generally Meutsch v Travelers Ins. Co., 206 AD2d 953, 955). It is well settled that "an insurer's responsibility to defend reaches the defense of any actions arising out of the occurrence," and defense expenses are recoverable by the insured, including those incurred in defending against an insurer seeking to avoid coverage for a particular claim (Mighty Midgets v Centennial Ins. Co., 47 NY2d 12, 21; see U.S. Underwriters Ins. Co. v City Club Hotel, LLC, 3 NY3d 592, 597-598; United States Fid. & Guar. Co. v New York, Susquehanna & W. Ry. Corp., 277 AD2d 1026; U.S. Liab. Ins. Co. v Staten Is. Hosp., 162 AD2d 445, 447). An insurer's obligation to pay attorneys' fees and costs in connection with a declaratory judgment action is incidental to the insurer's contractual duty to defend (see U.S. Underwriters Ins. Co., 3 NY3d 592, 597-598; see also Mighty Midgets, 47 NY2d at 21; United States Fid. & Guar. Co., 277 AD2d 1026).We thus conclude that, based upon plaintiff's implied concession of coverage, defendants are entitled to recover on their counterclaim seeking reimbursement for their attorneys' fees and costs incurred in their defense of this action. We therefore modify the judgment accordingly, and we remit the matter to Supreme Court to determine the amount of reasonable attorneys' fees and costs incurred.

 

IN THE MATTER OF THE ARBITRATION BETWEEN PROGRESSIVE INSURANCE COMPANIES AND DE WITT

Appeal from an order of the Supreme Court, Onondaga County (James P. Murphy, J.), entered November 1, 2006 in a proceeding pursuant to CPLR article 75. The order denied the petition for a permanent stay of arbitration.


SUGARMAN LAW FIRM, LLP, SYRACUSE (SANDRA L. HOLIHAN OF COUNSEL), FOR PETITIONER-APPELLANT.
SETRIGHT, LONGSTREET & BERRY, LLP, SYRACUSE (MICHAEL J. LONGSTREET OF COUNSEL), FOR RESPONDENT-RESPONDENT.


It is hereby ORDERED that the order so appealed from be and the same hereby is unanimously reversed on the law without costs and the matter is remitted to Supreme Court, Onondaga County, for a hearing in accordance with the following Memorandum: Respondent was injured in July 2004 when he was struck by a motor vehicle while riding his motorcycle and, over the course of the next 14 months, he received treatment from various health care providers. Respondent learned in September 2005 that he had sustained permanent injuries, whereupon his attorney notified petitioner of a potential supplementary uninsured/underinsured motorist (SUM) claim by letter dated September 15, 2005. After conducting an investigation, petitioner denied coverage on the ground that respondent had failed to notify petitioner of the claim "as soon as practicable" in accordance with respondent's SUM insurance policy. Respondent requested arbitration on the issue of coverage, and petitioner commenced this proceeding seeking a permanent stay of arbitration.

Supreme Court erred in denying the petition upon determining as a matter of law that respondent had provided petitioner with timely notice of the SUM claim. We conclude that there is an issue of fact whether respondent "knew or should reasonably have known that the tortfeasor was underinsured" (Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d 487, 495). In response to the allegation in the petition that there was a delay of over one year in serving petitioner with written notice of the SUM claim (see generally Unwin v New York Cent. Mut. Fire Ins. Co., 268 AD2d 669, 670), respondent alleged that he had hoped that his symptoms would improve during that period and that he therefore had not intended to sue the tortfeasor. There is evidence in the record suggesting that respondent should have been aware that he had sustained a serious injury as early as December 2004, when he was laid off from work because he was unable to carry out the necessary tasks of his job based on his injuries. There is also medical evidence in the record, however, that amounts to "a credible basis to support [respondent's] reason for the delay," i.e., the hope of respondent that his symptoms would improve. Thus, "the issue of reasonableness becomes one of fact" (Matter of Travelers Ins. Co. [DeLosh], 249 AD2d 924, 925; see Metropolitan Prop. & Cas. Ins. Co., 93 NY2d at 494-495; Medina v State Farm Mut. Auto. Ins. Co., 303 AD2d 987, 988-989; Matan v Nationwide Mut. Ins. Co., 243 AD2d 978). We therefore reverse the order and remit the matter to Supreme Court for a hearing to determine whether notice was given as soon as practicable.

Sweeney v. Preferred Mutual Ins. Co.  

Appeal from an order of the Supreme Court, Steuben County (Peter C. Bradstreet, A.J.), entered July 6, 2006. The order, insofar as appealed from, granted in part plaintiff's motion for partial summary judgment.


WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER LLP, WHITE PLAINS (MICHAEL J. CASE OF COUNSEL), FOR DEFENDANT-APPELLANT.
WOODS OVIATT GILMAN LLP, ROCHESTER (WARREN B. ROSENBAUM OF COUNSEL), FOR PLAINTIFF-RESPONDENT.

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

Memorandum: We affirm for reasons stated in the decision at Supreme Court. We add only that, with respect to a notice of cancellation of an insurance policy, "[l]iteral compliance with the provisions of the . . . [applicable] statutes is the rule and any ambiguity in language is strictly construed against the insurer" (Government Empls. Ins. Co. v Mizell, 36 AD2d 452, 454). Here, defendant failed to refer to Insurance Law § 3426 (c) (1) (A) in its notice cancelling plaintiff's insurance policy for nonpayment of premiums despite the express requirement in Insurance Law § 3426 (h) that "[e]very notice of cancellation issued pursuant to [section 3426] shall . . . contain where applicable a reference to the pertinent paragraph or subparagraph of subsection (c) of this section."

Bovis Lend Lease LMB, Inc.,  v. Royal Surplus Lines Insurance Company,

 

 

Order, Supreme Court, New York County (Marilyn Shafer, J.), entered June 1, 2006, which, to the extent appealed from, granted the motion of third-party plaintiff Millennium Masonry, Inc. (Millennium) for summary judgment on its third cause of action against defendant/third party defendant Royal Surplus Lines Insurance Company (Royal) declaring that Royal is obligated to defend and indemnify Millennium in the underlying personal injury action and to reimburse Millennium for its defense costs, and order, same court and Justice, entered November 30, 2006, which denied Royal's motion for leave to renew, unanimously affirmed, with costs.

The court properly determined that the 37-day delay between Royal's receipt of the report from its investigator detailing the accident involving Millennium's employee and its letter disclaiming coverage was unreasonable as a matter of law (Insurance Law § 3420[d]). The reasons for Royal's disclaimer were readily apparent from the documents delivered to Royal, including the notice of claim and the investigation report (see 2833 Third Avenue Realty Assoc. v Marcus, 12 AD3d 329 [2004]; West 16th Street Tenants Corp. v Public Service Mutual Ins. Co., 290 AD2d 278 [2002], lv denied 98 NY2d 605 [2002]).

The court also properly denied Royal's motion for leave to renew. The report from Royal's investigator does not constitute new evidence that would change the prior determination (CPLR 2221[e][2])), and Royal's explanation that it did not initially submit the report because it believed it was not discoverable,  was not reasonable (CPLR 2221[e][3]; see Roman Catholic Church of the Good Shepherd v Tempco Sys., 202 AD2d 257 [1994]).

 

Brewster v. FTM Servo, Corp.

Richard T. Lau & Associates, Jericho (Kathleen E. Fioretti of counsel), for appellant.
Allen D. Springer, Brooklyn, for respondents.

Order, Supreme Court, Bronx County (Howard R. Silver, J.), entered April 26, 2007, which denied the motion by defendant Hernandez (and the cross motion by the remaining defendants) for summary judgment dismissing the complaint with respect to plaintiff Colin Brewster on the ground that said plaintiff had not suffered a serious injury, unanimously reversed, on the law, without costs, and the motion granted, and, upon a search of the record, the cross motion granted as well. The Clerk is directed to enter judgment in favor of defendants dismissing the complaint.

Based on Brewster's admission at deposition of his involvement in another automobile accident prior to this one, and the unavailability of the medical records for that case, defendant Hernandez served a supplemental notice for discovery and inspection, requesting that Brewster provide written authorization allowing defendants to obtain the relevant records. When Brewster failed to comply with that demand and ensuing court directives, including a so-ordered stipulation, Hernandez moved for summary dismissal of Brewster's portion of the complaint for refusal to supply the court-ordered discovery, as well as the failure to demonstrate serious injury as defined by Insurance Law § 5102(d).

CPLR 3126 authorizes sanctions against a party who "refuses to obey an order for disclosure or wilfully fails to disclose information which the court finds ought to have been disclosed." "If the credibility of court orders and the integrity of our judicial system are to be maintained, a litigant cannot ignore court orders with impunity" (Kihl v Pfeffer, 94 NY2d 118, 123 [1999]). Brewster's unexplained noncompliance with a series of court-ordered disclosure mandates over a period of nearly two years sufficiently created an inference of willful and contumacious conduct (see Santoli v 475 Ninth Ave. Assoc., LLC, 38 AD3d 411, 415 [2007]; Jones v Green, 34 AD3d 260 [2006]). The persistent failure to submit medical records relating to Brewster's previous automobile accident warranted dismissal of his portion of the complaint, since such material was necessary to ascertain whether any of his purported injuries might have been caused by that earlier accident.

Aside from his failure to abide with court-mandated disclosure, Brewster conceded at his deposition that he had sustained injuries to his neck, back and shoulder in a prior automobile accident. Once a defendant has presented evidence of a pre-existing injury, even in the form of an admission made at a deposition (see Alexander v Garcia, 40 AD3d 274 [2007]), it is incumbent upon the plaintiff to present proof to meet the defendant's asserted lack of causation (see Baez v Rahamatali, 6 NY3d 868 [2006]; Pommells v Perez, 4 NY3d 566, 574 [2005]). Brewster's submissions totally ignored the effect of his previous mishap on the purported symptoms caused by latest accident. The fact that Hernandez's expert discerned some minor loss of motion in Brewster's lumbar spine is irrelevant where the objective tests performed by this physician were negative, and Brewster had testified to a pre-existing injury in that part of his body (see Style v Joseph, 32 AD3d 212, 214 [2006]; Montgomery v Pena, 19 AD3d 288, 289-290 [2005]). Furthermore, not only did Brewster testify that he returned to work only a week after the accident, but there is no indication of any daily activity he could not perform as a result of this accident.

Upon search of the record, summary judgment is also granted to defendants FTM Servo Corp. and Hill against Brewster (see Seaton v Budget Rent A Car, 21 AD3d 792 [2005]) because the issue of serious injury is identical as it relates to all defendants,
notwithstanding their failure to pursue an appeal (see Friedman v City of New York, 307 AD2d 227 [2003]).

 

Abreu v. Bushwick Building Products & Supplies, LLC

Wittenstein & Associates, P.C., Brooklyn, N.Y. (Harlan Wittenstein of counsel), for appellant.
Vincent P. Crisci (Goldman & Grossman, New York, N.Y.
[Eleanor R. Goldman and Jay S. Grossman] of counsel), for respondents.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Harkavy, J.), dated September 27, 2006, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendants established their prima facie entitlement to judgment as a matter of law 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). In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff's hospital records were without any probative value in opposing the defendants' motion since those records were uncertified (see Mejia v DeRose, 35 AD3d 407). Moreover, neither the plaintiff nor his treating physician adequately explained the gap in his treatment between the time he stopped treatment five months after the accident and his most recent examination on February 13, 2006 (see Pommells v Perez, 4 NY3d 566, 574; see also Berktas v McMillian, 40 AD3d 563; Waring v Guirguis, 39 AD3d 741; Phillips v Zilinsky, 39 AD3d 728). The plaintiff's own deposition testimony was fatal to his cause of action in this respect since the plaintiff testified that he stopped treatment after five months because he felt better. Furthermore, the plaintiff's treating physician failed to address the finding of the defendants' expert radiologist attributing the condition of the plaintiff's cervical and lumbar spine to degenerative changes. This rendered speculative the plaintiff's treating physician's opinion that the plaintiff's lumbar and cervical conditions were caused by the subject motor vehicle accident (see Giraldo v Mandanici, 24 AD3d 419; Lorthe v Adeyeye, 306 AD2d 252; Pajda v Pedone, 303 AD2d 729; Ginty v MacNamara, 300 AD2d 624). In addition, the plaintiff failed to submit any competent medical evidence that he was unable to perform substantially all of his daily activities for not less than 90 of the first 180 days subsequent to the subject accident (see Nociforo v Penna, 42 AD3d 514; Felix v New York City Tr. Auth., 32 AD3d 527; Sainte-Aime v Ho, 274 AD2d 569).
SCHMIDT, J.P., SPOLZINO, SKELOS, LIFSON and McCARTHY, JJ., concur.

Andrade v. Hatzis

Cannon & Acosta, LLP, Huntington Station, N.Y. (June Redeker of counsel), for appellant.
Lewis Johs Avallone Aviles, LLP, Riverhead, N.Y. (Rebecca K. Vainder and Michael G. Kruzynski of counsel), for respondent.

 

DECISION & ORDER

In an action, inter alia, to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Pines, J.), entered August 10, 2006, which granted the motion of the defendant Denise Hatzis for summary judgment dismissing the complaint insofar as asserted against her on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is reversed, on the law, with costs, and the motion of the defendant Denise Hatzis for summary judgment dismissing the complaint insofar as asserted against her is denied.

Contrary to the Supreme Court's determination, the defendant Denise Hatzis (hereinafter Hatzis) failed, on her motion, to establish 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 his report, Hatzis's examining neurologist noted the existence of limitations in the range of motion of the plaintiff's cervical spine upon testing (see Quinones v E & L Transp., Inc., 35 AD3d 577; Smith v Delcore, 29 AD3d 890; Sano v Gorelik, 24 AD3d 747; Spuhler v Khan, 14 AD3d 693; Omar v Bello, 13 AD3d 430).

Since Hatzis failed to make a prima facie showing of entitlement to judgment as a matter of law, it is unnecessary to consider whether the plaintiff's opposition papers were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538).
RIVERA, J.P., KRAUSMAN, FLORIO, CARNI and BALKIN, JJ., concur.

Bozza v. O'Neill

Bamundo, Zwal & Schermerhorn, LLP (The Breakstone Law Firm, P.C., Bellmore, N.Y. [Michael C. Zwal] of counsel), for appellant.
Schondebare & Korcz (Aaronson Rappaport Feinstein & Deutsch, LLP, New York, N.Y. [Elliott J. Zucker] of counsel), for respondents.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals (1) from an order of the Supreme Court, Suffolk County (Weber, J.), dated March 8, 2006, which granted the motion of the defendants Donna O'Neill and Michael V. O'Neill, and the separate motion of the defendant HVT, Inc., for summary judgment dismissing the complaint insofar as asserted against them on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and denied, as academic, his motion for summary judgment on the issue of liability, and (2), as limited by his brief, from so much of an order of the same court dated April 17, 2006, as, upon reargument, adhered to the original determination.

ORDERED that the appeal from the order dated March 8, 2006, is dismissed, as that order was superseded by the order dated April 17, 2006, made upon reargument; and it is further,

ORDERED that the order dated April 17, 2006, is modified, on the law, by (1) deleting the provision thereof, upon reargument, adhering to so much of the original determination in the order dated March 8, 2006, as granted the motion of the defendants Donna O'Neill and Michael V. O'Neill and the separate motion of the defendant HVT, Inc., for summary judgment dismissing the complaint insofar as asserted against them, and substituting therefor a provision, upon reargument, vacating that portion of the order dated March 8, 2006, which granted the motions for summary judgment and thereupon, denying those motions, and (2) deleting the provision thereof, upon reargument, adhering to so much of the original determination in the order dated March 8, 2006, as denied, as academic, the plaintiff's motion for summary judgment on the issue of liability, and substituting therefor a provision, upon reargument, vacating that portion of the order dated March 8, 2006, which denied, as academic, the plaintiff's motion for summary judgment on the issue of liability and, thereupon, denying that motion; as so modified, the order dated April 17, 2006, is affirmed insofar as appealed from; and it is further,

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

In support of his motion for summary judgment, the plaintiff submitted evidence establishing that the accident occurred after the defendant Michael V. O'Neill (hereinafter O'Neill) proceeded through a stop sign without first bringing his motor vehicle to a stop, in violation of Vehicle and Traffic Law § 1172(a) (see Gonzalez v Schupak, 19 AD3d 367). In opposition, the defendants submitted a police report of the accident indicating that O'Neill failed to stop due to ice (see CPLR 3212[b]). The defendants attempted to invoke the emergency doctrine, by asserting that O'Neill skidded on ice and the accident was unavoidable.

In support of their respective motions for summary judgment, the defendants asserted that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). However, the defendants' proof in their respective motions never addressed the plaintiff's claim, clearly set forth in his bill of particulars, that he sustained a medically-determined injury or impairment of a nonpermanent nature which prevented him from performing substantially all of the material acts which constituted his usual and customary activities for not less than 90 days during the 180 days immediately following the accident. The subject accident occurred on January 30, 2003. At his deposition on June 8, 2004, the plaintiff testified that he did not return to his job as director of nutrition at Brunswick Hospital following the accident and that his job was, in fact, terminated six months after the accident, when he was unable to provide his employer with a return date. The defendants' medical expert did not relate his findings to this category of serious injury for the period of time immediately following the accident (see Sayers v Hot, 23 AD3d 453). The defendants were not able to offer sufficient evidence to establish that the plaintiff's injuries either were solely attributable to a degenerative condition or were caused by a subsequent accident. Where, as here, a defendant does not meet this initial burden, the court "need not consider whether the plaintiff's opposition papers were sufficient to raise a triable issue of fact" (Jones v Jacob, 1 AD3d 485, 486). Accordingly, the defendants were not entitled to summary judgment dismissing the complaint.

The plaintiff's proof was insufficient to establish as a matter of law that the accident was caused through the unexcused negligent actions of the defendants (see Canh Du v Hamell, 19 AD3d 1000). The plaintiff also failed to establish as a matter of law that his injuries were caused by the accident. Accordingly, the plaintiff was not entitled to summary judgment on the issue of liability.
SPOLZINO, J.P., RITTER, LIFSON and ANGIOLILLO, JJ., concur.

Greenidge v. Righton Limo, Inc.

Harold Solomon, Rockville Centre, N.Y. (Bernard G. Chambers of counsel), for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y. (Stacy R. Seldin of counsel),
for respondent.

 

DECISION & ORDER

In an action, inter alia, to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Patterson, J.), dated July 6, 2006, which granted the defendant's 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 reversed, on the law, with costs, and the defendant's motion for summary judgment dismissing the complaint is denied.

Contrary to the Supreme Court's determination, the defendant failed to meet its 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). The defendant failed to adequately address the plaintiff's claim, clearly set forth in her bill of particulars, that, as a result of the subject accident, she was unable to perform substantially all of the material acts which constituted her usual and customary daily activities for a period of 90 days during the 180 days immediately following the subject accident (see Kouros v Mendez, 41 AD3d 786; DeVille v Barry, 41 AD3d 763; Torres v Performance Auto. Group, Inc., 36 AD3d 894). The accident here occurred on February 7, 2004. The plaintiff testified that as a result of the subject accident she was out of work for 3½; months, which the defendant's examining neurologist noted in his report. The defendant's examining neurologist did not examine the plaintiff until almost two years after the accident, and did not relate his medical findings to this category of serious injury for the period of time immediately following the accident.

Since the defendant failed to establish its prima facie burden, it is unnecessary to consider whether the papers submitted by the plaintiff in opposition were sufficient to raise a triable issue of fact (see Kouros v Mendez, 41 AD3d 786; DeVille v Barry, 41 AD3d 763; Torres v Performance Auto. Group, Inc., 36 AD3d 894; Coscia v 938 Trading Corp., 283 AD2d 538).
SANTUCCI, J.P., GOLDSTEIN, DILLON and ANGIOLILLO, JJ., concur.

Kivelowitz v. Calia

Grey & Grey, LLP, Farmingdale, N.Y. (Joan S. O'Brien of counsel), for appellant.
Robert P. Tusa, Garden City, N.Y. (Shapiro, Beilly, Rosenberg, Aronowitz, Levy & Fox, LLP [Roy J. Karlin] of counsel), for respondent Gasper Hernandez.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals, as limited by her brief, from so much of an order of the Supreme Court, Queens County (Grays, J.), entered June 28, 2006, as granted that branch of the motion of the defendants Vito Calia and Cathryn Calia-Schrope, and that branch of the separate motion of Gaspar Hernandez, which were for summary judgment dismissing the complaint insofar as asserted against each of them 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 insofar as appealed from, with costs.

In support of their separate motions, inter alia, for summary judgment dismissing the complaint, the defendants Vito Calia and Cathryn Calia-Schrope, and the defendant Gaspar Hernandez, relied upon the affirmed reports of Dr. Robert Israel and Dr. Michael Katz, both of whom are orthopedists, and the affirmed report of Dr. Jessica Berkowitz, a radiologist (see Gaddy v Eyler, 79 NY2d 955, 956-957). These reports established that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). Thus, the defendants made a prima facie showing of entitlement to judgment as a matter of law.

In opposition, the plaintiff failed to raise a triable issue of fact as to whether she sustained a serious injury within the meaning of Insurance Law § 5102(d). Notably, the plaintiff failed to submit any affirmations or affidavits of her treating physicians, or medical records in admissible form indicating what treatment, if any, she received for her alleged injuries (see Smith v. Askew, 264 AD2d 834).

In light of the foregoing, we need not reach the plaintiff's remaining contention.
SCHMIDT, J.P., RIVERA, KRAUSMAN and FLORIO, JJ., concur.

Morales v. Daves

Cannon & Acosta, LLP, Huntington Station, N.Y. (June Redeker of counsel), for appellant.
DeSena & Sweeney, LLP, Hauppauge, N.Y. (Shawn P. O'Shaughnessy of counsel), for respondent.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Doyle, J.), dated August 3, 2006, which granted the defendant's 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 defendant established, prima facie, that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys. 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957; see also Kearse v New York City Tr. Auth., 16 AD3d 45). In opposition, the plaintiff failed to raise a triable issue of fact. The affidavit of the plaintiff's treating chiropractor, while noting recent range of motion limitations in the cervical and lumbar regions of her spine, failed to proffer any evidence establishing that the plaintiff sustained any range of motion limitations in those regions of her spine roughly contemporaneous with the subject accident (see Borgella v D & L Taxi Corp., 38 AD3d 701, 702; Iusmen v Konopka, 38 AD3d 608, 609; Earl v Chapple, 37 AD3d 520, 521; Zinger v Zylberberg, 35 AD3d 851, 852; Felix v New York City Tr. Auth., 32 AD3d 527, 528). The plaintiff's submission of magnetic resonance imaging reports showing disc bulges and/or herniations did not establish a serious injury in the absence of objective evidence of the extent of the alleged physical limitations resulting from the disc injury and its duration (see Mejia v DeRose, 35 AD3d 407, 407-408; Yakubov v CG Trans. Corp., 30 AD3d 509, 510; Cerisier v Thibiu, 29 AD3d 507, 508; Bravo v Rehman, 28 AD3d 694, 695; Kearse v New York City Tr. Auth., 16 AD3d 45; Diaz v Turner, 306 AD2d 241, 242).

The plaintiff also failed to submit any competent medical evidence that she was unable to perform substantially all of her daily activities for not less than 90 of the first 180 days subsequent to the subject accident (see Nociforo v Penna, 42 AD3d 514; Felix v New York City Tr. Auth., 32 AD3d at 528; Sainte-Aime v Ho, 274 AD2d 569, 570).
SANTUCCI, J.P., GOLDSTEIN, DILLON and ANGIOLILLO, JJ., concur.

St. Rose v. McMorrow

Harmon, Linder, & Rogowsky, New York, N.Y. (Mitchell Dranow of counsel), for appellant.
Susan B. Owens, White Plains, N.Y. (Joseph M. Zecca of counsel), for respondent.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Rockland County (Garvey, J.), dated September 8, 2006, which denied that branch of his motion which was to vacate an order of the same court dated January 25, 2006, granting the defendant's unopposed motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102 (d).

ORDERED that the order dated September 8, 2006, is affirmed, with costs.

In order to vacate the order entered upon his default in opposing the motion, the plaintiff was required to demonstrate both a reasonable excuse for his default and a meritorious opposition to the motion for summary judgment (see Oyebola v Makuch, 10 AD3d 600, 601; Itskovich v Lichenstadter, 2 AD3d 406, 407; Sicari v Hung Yuen Wong, 286 AD2d 489). The plaintiff failed to demonstrate a reasonable excuse for his default. Accordingly, the Supreme Court properly denied his motion.
CRANE, J.P., RITTER, FISHER, COVELLO and DICKERSON, JJ., concur.

State Farm Fire and Cas. Co. v Browne

Saretsky Katz Dranoff & Glass, LLP, New York, N.Y. (Howard
J. Newman, Justin Cilenti, and Howard R. Cohen of counsel),
for appellant.
Weiss & Hiller, P.C., New York, N.Y. (Michael Hiller and
Nikol A. Gruning of counsel), for
respondent.

 

DECISION & ORDER

In an action for a judgment declaring the rights and obligations of the parties under certain policies of insurance, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Westchester County (LaCava, J.), entered June 22, 2006, as, (a) granted the defendant's motion for leave to reargue that branch of her prior cross motion for summary judgment on her second counterclaim which was for an award of damages for breach of a rental dwelling insurance policy in the principal sum of $66,000, which cross motion had been determined in an order of the same court entered December 19, 2005, and upon, in effect, vacating so much of the order entered December 19, 2005, as directed an inquest on the issue of damages with respect to the second counterclaim, granted that branch of the defendant's prior cross motion and directed the entry of judgment in favor of the defendant and against the plaintiff on the second counterclaim in the principal sum of $66,000, together with prejudgment interest in the amount of $26,032, and with interest thereon from September 1, 2003, in the amount of $16,632, and (b) denied its cross motion, in effect, for leave to reargue stated portions of the defendant's prior cross motion for summary judgment.

ORDERED that the appeal from so much of the order as denied the plaintiff's cross motion, in effect, for leave to reargue stated portions of the defendant's prior cross motion for summary judgment is dismissed, as no appeal lies from an order denying reargument; and it is further, 

ORDERED that the order is modified, on the law and in the exercise of discretion, by deleting the provisions thereof, upon reargument, awarding prejudgment interest in the amount of $26,032, with interest thereon from September 1, 2003, in the amount of $16,632; as so modified, the order is affirmed insofar as reviewed, without costs or disbursements, and the matter is remitted to the Supreme Court, Westchester County, for a new determination of the amount of prejudgment interest and interest thereon from September 1, 2003, to which the defendant is entitled on her second counterclaim and for the entry of a judgment thereafter.

The Supreme Court properly granted the defendant's motion for leave to reargue that branch of her prior cross motion for summary judgment on her second counterclaim which was for an award of damages for breach of a rental dwelling insurance policy in the amount of $66,000. Upon reargument, the Supreme Court properly granted that branch of the defendant's prior cross motion and properly directed the entry of a judgment in favor of the defendant and against the plaintiff in that principal sum. The defendant sought coverage from the plaintiff for loss of rents due under an unexpired lease term. The principal balance of $66,000 due under the unexpired lease term was not a matter of dispute.

However, the court incorrectly calculated the amount of prejudgment interest, apparently accepting the defendant's method for calculating such interest, based on the entire principal balance measured from August 31, 2001, rather than upon the accumulating balance as remaining installments became due. Thus, the court incorrectly awarded the defendant both prejudgment interest in the sum of $26,032, relating to the period of August 31, 2001, to January 20, 2006, and interest thereon from September 1, 2003 (to the date of its order), in the sum of $16,632. We therefore modify the order appealed from and remit the matter to the Supreme Court, Westchester County, for a new determination of the amount of prejudgment interest and interest thereon from September 1, 2003, to which the defendant is entitled on her second counterclaim and for the entry of a judgment thereafter.
CRANE, J.P., GOLDSTEIN, FISHER and LIFSON, JJ., concur.

Schorr v  The Guardian Life Insurance Company of America

Kravet & Vogel, LLP, New York (Joseph A. Vogel of
counsel), for appellant.
Proskauer Rose LLP, Newark, NJ (Edward Cerasia II of
counsel), for respondent.

Order, Supreme Court, New York County (Rolando T. Acosta, J.), entered June 7, 2006, which granted defendant Guardian Life's motion to dismiss the complaint for failure to state a cause of action and sua sponte dismissed the claims against non-moving defendant Kadosh, modified, on the law, plaintiff's claim for tortious interference with prospective business relations reinstated against both defendants, and otherwise affirmed, without costs.

Plaintiff failed to plead properly a claim for breach of the implied covenant of good faith and fair dealing since he did not demonstrate the existence of a valid contract from which such a duty would arise (American-European Art Assoc. v Trend Galleries, 227 AD2d 170 [1996]).

He did, however, properly plead a cause of action for tortious interference with prospective business relations. The complaint alleged that defendant Guardian Life interfered with plaintiff's longstanding relationship with his client by utilizing "wrongful means" to provide a quote for group insurance coverage to another broker while declining to give a quote to plaintiff for the same coverage. The wrongful means alleged are violations of the Penal Code and the Insurance Law. This was sufficient to satisfy the pleading requirements (see Guard-Life Corp. v Parker Hardware Mfg. Corp., 50 NY2d 183, 194 [1980]; cf. NBT Bancorp v Fleet/Norstar Fin. Group, 87 NY2d 614, 624-625 [1996]).

The court failed even to consider the claim for tortious interference with prospective business relations against the non-moving defendant, who did not appear on the motion, and plaintiff was thus deprived of an opportunity to oppose any arguments that might have been raised. Nevertheless, the court inexplicably dismissed the complaint in its entirety.

All concur except Catterson, J. who dissents in a memorandum as follows:

CATTERSON, J. (dissenting)

Because I believe that both of plaintiff's claims should be reinstated, I write separately.

The plaintiff, Jerome Schorr, a licensed independent insurance broker, was appointed by the defendant Guardian as its agent for the purpose of selling its insurance products in 1973 pursuant to a brokerage agreement between Guardian and its general agent, Spaulder & Warshall, Ltd. (hereinafter referred to as "S & W Agency").

In 1981, the plaintiff was appointed as the broker of record for Israel Aircraft Industries International, Inc.'s (hereinafter referred to as "IAII") group life, medical and dental insurance coverage. In 1986, IAII appointed him as broker of record for the group life, medical and dental insurance coverage of its subsidiary, Commodore Aviation, Inc. (hereinafter referred to as "CAI"). In 2003, IAII appointed the plaintiff as broker of record for the group life, medical and dental insurance coverage of another subsidiary, Empire Aero Center, Inc. (hereinafter referred to as "EAC").

In the meantime, in 1990, 1996 and 1998, the plaintiff signed three separate Group Insurance Special Producer Compensation Agreements with Guardian. Pursuant to these agreements, the plaintiff was entitled to receive additional compensation for selling Guardian group insurance plans, provided that he had at least five Guardian group plans in effect at a certain qualifying date.

In late 2003, IAII contacted the plaintiff and advised that for the coverage period commencing January 1, 2004, it wished to have new bids for all of its group life, medical and dental insurance coverages for all of its employees, as well as the employees of its subsidiaries. The plaintiff submitted materials he received from IAII, such as a September census of all of its employees, including the employees of its subsidiaries, to competing insurers for quoting purposes.

Thereafter, he received a "no quote" from Guardian for a combined group medical and life insurance coverage for IAII and its subsidiaries. Guardian informed the plaintiff that it could not provide a competitive bid because it lacked a network of physicians and other healthcare providers in the location of EAC's facilities in upstate New York. Thereafter, the plaintiff requested a quote limited to the employees of IAII, exclusive of its subsidiaries. In response, he received another "no quote." Guardian's sales representative explained in writing that Guardian could not compete with the pricing quoted by other insurance companies due to a 25% surcharge that its underwriters needed to apply to IAII business. The plaintiff, was, however, able to obtain a quote from Guardian for group dental coverage.

The plaintiff subsequently learned that another broker, defendant Itzhak Kadosh had met with representatives from IAII in October or November 2003 and boasted that he could obtain better rates from Guardian than the plaintiff. IAII authorized Kadosh to obtain a quote from Guardian for its group coverage and provided him with the necessary materials, including a copy of the November census, a more recent version than the September census submitted by plaintiff.

Thereafter, Guardian, through John Feeney, one of its sales representatives in its Washington, D.C. office, provided a competitive quote to Kadosh for the group medical coverage. The plaintiff subsequently learned that the quote provided was, among other things, calculated without the 25% surcharge which Guardian had waived for Feeney and Kadosh.

The plaintiff alleges that Kadosh and/or Feeney falsified the census and that Guardian's underwriters knew or should have known that the census had been falsified since they were in possession of other renewal censuses from IAII that contradicted the census provided by Kadosh and/or Feeney. The plaintiff asserts that falsifying IAII's employee census was a violation of New York State Insurance Law § 4224.

He further asserts that pursuant to Insurance Law § 2402 and § 2403, a violation of section 4224 constitutes an unfair method of competition and/or a deceptive act or practice. In addition, the plaintiff asserts that waiving the surcharge improperly discounted Guardian's premium quotes in a discriminatory manner, in violation of Insurance Law § 4224.

As a result, IAII replaced its MetLife coverage previously procured by the plaintiff as broker with life insurance coverage from Guardian with Kadosh as broker. The plaintiff remained the broker for the medical insurance coverage of IAII and its subsidiaries for the 2004 coverage year since he had obtained quotes from other carriers that were still more competitive than the Guardian quote obtained by Kadosh. However, IAII revoked the plaintiff's authority to obtain future quotes from Guardian on its behalf and granted Kadosh the exclusive right to obtain such quotes.

The plaintiff subsequently lost IAII's medical and dental business for the 2005 coverage year after Kadosh was able to obtain extremely competitive quotes from Guardian. The plaintiff alleges that this was the direct result of the illegal activity engaged in by Kadosh and Feeney. He further alleges that IAII's 2006 renewal information confirmed that Guardian lost money on the IAII group medical and dental coverages for 2005 and 2006. He asserts that this "arrangement between Guardian and Kadosh" resulting in Guardian's loss of money "directly contravenes paragraph (g) of section 4235 of the New York Insurance Law." He further asserts that "[b]ut for the effects of the scheme between defendants Kadosh and Guardian, [he] would not have lost the business of IAII and its subsidiaries and the substantial commissions derived therefrom."

On or about November 22, 2005, the plaintiff commenced the instant action for breach of the covenant of good faith and fair dealing, and for tortious interference with a prospective business relationship. Defendant Kadosh served an answer on or about January 11, 2006. In lieu of an answer, Guardian served a motion to dismiss pursuant to CPLR 3211(a)(7) seeking an order dismissing the causes of action against it. In opposition to the motion, the plaintiff submitted an affidavit with exhibits, documenting his 33-year direct selling relationship with Guardian.

The court granted Guardian's motion, finding that there was no contract between the plaintiff and Guardian and thus, no implied duty of fair dealing between the two. The court further found that even if it could be found that the plaintiff and Guardian were parties to the 1973 agreement, there would still be no implied duty of fair dealing inasmuch as the agreement expressly stated that it could be terminated at any time by either party and thus was terminable at will.

With regard to the plaintiff's claim for tortious interference with prospective business relations, the court found that the plaintiff failed to state a cause of action. Specifically, the court stated "that Guardian would be a party to the prospective business relations and only a stranger to a contract, such as a third party, can be liable for tortious interference with a contract.'"

In my view, the motion court erred for the following reasons: The plaintiff properly pleaded a claim for breach of the implied covenant of good faith and fair dealing since he sufficiently alleged the existence of a series of valid contracts from which such duty would arise. Cf. American-European Art Assoc. v. Trend Galleries, 227 A.D.2d 170, 641 N.Y.S.2d 835 (1996). The plaintiff stated in his affidavit that since his appointment as an agent for Guardian in 1973, he has always communicated directly with Guardian's sales representatives. He submitted all requests for quotes exclusively to Guardian sales executives who issued all quotes, or refusals to quote, directly to him. All Guardian policies were issued to him for delivery to his clients and all matters having to do with those policies have been handled directly by the plaintiff and Guardian's sales representatives. All renewal quotes and all other renewal matters relating to Guardian policies issued to the plaintiff's clients have also been handled exclusively by the plaintiff and Guardian's sales representatives. Thus, the plaintiff maintained that he and Guardian had a direct selling relationship for more than 30 years.

The plaintiff also submitted a printout of his listing with the National Insurance Producer Registry which, he maintains, evidences his appointment by Guardian as its agent within New York State as well as copies of the Special Producer Compensation Agreements which he entered into with Guardian. Furthermore, the at-will character of the agreements is not relevant here since none of the agreements between Guardian and the plaintiff were ever terminated.

The plaintiff also properly pleaded a cause of action for tortious interference with prospective business relations, which required the plaintiff to show: (1) the existence of a business relationship between the plaintiff and a third party; (2) the defendants' interference with that business relationship; (3) that the defendants acted with the sole purpose of harming the plaintiff or used dishonest, unfair, improper or illegal means that amounted to a crime or an independent tort; and (4) that such acts resulted in the injury to the plaintiff's relationship with the third party. Carvel Corp. v. Noonan,  3 NY3d 182, 189, 785 N.Y.S.2d 359, 818 N.E.2d 1100 (2004); NBTBancorp Inc. v. Fleet/Norstar Fin. Group, Inc., 87 N.Y.2d 614, 641 N.Y.S.2d 581, 664 N.E.2d 492 (1996); Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 N.Y.2d 183, 428 N.Y.S.2d 628, 406 N.E.2d 445 (1980).

In this case, the complaint alleged that defendant Guardian interfered with the plaintiff's longstanding relationship with his client, IAII, by utilizing "wrongful means" to provide a quote for group insurance coverage to another broker while declining to give a quote to the plaintiff for the same coverage. The wrongful means alleged may constitute violations of the Penal Law and the Insurance Law. The motion court also erred in its finding that no tortious interference existed since Guardian was a party to the insurance policies interfered with and thus could not tortiously interfere with its own policies.

As the plaintiff properly asserts, here the business relationship interfered with by the defendants Guardian and Kadosh was the relationship that existed between himself (as broker of record) and IAII (as his client) - not the relationship between IAII (insured) and Guardian (one of several potential insurers). Thus, I believe this was sufficient to satisfy the pleading requirements.

Moreover, the record confirms that each time that the defendants' tortious interference caused IAII to shift its respective life, medical and dental policies from the plaintiff as broker of record to Kadosh as broker of record, Guardian was not the insurer for the group policy at issue. Specifically, at the time that IAII accepted the Guardian group life quote that Kadosh obtained from Guardian for upcoming coverage year 2004, Guardian was not the insurer on the 2003 group life policy. Rather, at the time in question, the 2003 group life insurance contract was between MetLife and IAII (and its subsidiaries), with the plaintiff as broker of record, thus, Guardian was not a party to the contract in which it interfered.

Finally, the court failed to even consider the claim for tortious interference with prospective business relations against the non-moving defendant, who did not appear on the motion. The plaintiff was thus deprived of an opportunity to oppose any arguments that might have been raised. Nevertheless, the court inexplicably dismissed the complaint in its entirety. For the foregoing reasons, I believe that the plaintiff's claims should be reinstated against both the defendants.

Positive Influence Fashions, Inc., v Seneca Ins. Co.

Shay & Maguire LLP, East Meadow (Kenneth R. Maguire of
counsel), for appellant.
Weg & Myers, P.C., New York (Joshua L. Mallin of counsel),
for respondent.

Order, Supreme Court, New York County (Michael D. Stallman, J.), entered March 13, 2007, which, to the extent appealed from as limited by the briefs, denied so much of defendant's motion as sought summary judgment dismissing the complaint or striking of the complaint on ground of spoliation of evidence, unanimously affirmed, with costs.

Defendant did not sustain its burden of showing that plaintiff insured's alleged misrepresentations were, in fact, willful and intentional (see Kyong Nam Chang v General Acc. Ins. Co. of Am., 193 AD2d 521 [1993]). There is a question of fact at least as to whether plaintiff made its claim of near-total loss of goods to smoke damage in good faith after persons in the garment industry, as well as the public adjuster, opined that smoke damage to any of the stock made all the goods in plaintiff's building unsaleable. Likewise, defendant did not show, beyond any doubt as to the existence of a material issue of fact (Rotuba Extruders v Ceppos, 46 NY2d 223, 231 [1978]), that disputes between plaintiff's president and defendant's accountant amounted to an outright "refusal to provide requested information material and relevant to defendant's investigation of the claimed loss" (Latha Rest. Corp. v Tower Ins. Co., 38 AD3d 321, 322 [2007], lv denied 9 NY3d 803 [2007]). Finally, regardless of whether some lesser sanction for spoliation of evidence might prove warranted in the future due to plaintiff's disposal of documents at a time when defendant's counsel was seeking documentation, the extreme sanction of dismissal of the complaint is not warranted (see Marro v St. Vincent's Hosp. & Med. Ctr. of N.Y., 294 AD2d 341 [2002]).