Back to Top

Coverage Pointers - Volume IX, No. 8

New Page 1

Dear Coverage Pointers Subscribers:

 

Go Tribe!  Enough said.

 

            I'm delighted to be back with you after a good trip to Chicago for the DRI Annual Meeting.  Queen Audrey attended and was dubbed Vice-Chair of the Young Lawyers Committee of the prestigious DRI's Insurance Law Committee.  Can a royalty be knighted?  Perhaps she was anointed.  In any event, we're proud of her.  Audrey's words for this week:

It's nice to see the courts and the arbitrators are in full swing on no-fault.  This edition brings an arbitration decision where the insurer is permitted to offset the claim amount from a premium due.  Also, there are a number of cases denying plaintiff's summary judgment motion for failure to submit a proper affidavit as well as denying plaintiff's petition to vacate a master arbitration award.  Please keep us in mind for training.  Just because winter is around the corner does not mean that we hibernate!

 

Audrey Seeley

Legislative Update: 

 

Later today, as part of the AIA team, I will participate in a meeting in NYC with the Insurance Department where the Governor's bill on prejudice and late notice will be released and discussed.  As of this writing, the bill draft has not yet been provided to the stakeholders.  A special session of the Legislature is scheduled to begin next week and it is possible that the Governor will try to move the legislation through that session.  You may hear from me over the weekend with further word and review.

 

Halloween and Insurance:    

 

            I do want to remind you to protect yourself and your insureds from those ghoulish trial lawyers who see Halloween as their next big ticket item.  The Center for Consumer Freedom offers you and your insureds a Halloween Liability and Indemnification Agreement. This agreement, to be signed by your October 31 visitors, promises not to haul treat-dispensers into court on the basis of:

 

·       Failure to provide nutritional information;

·       Failure to warn of potential for overeating because candy tastes too good and is provided at no cost;

·       Failure to offer healthier alternatives including, but not limited to, soy-based or sugar-free treats;

·       Failure to provide information about other venues serving alternative, healthier, Halloween treats; and

·       Failure to warn that eating may lead to obesity.

 

As we know you're curious, the words "Halloween" and "insurance" have only appeared together in six reported decisions in New York's published judicial decision dating back to the 1800's and only two of them had anything to do with insurance coverage. 

 

On Halloween, 2003, an insurer procured a release for both bodily injury and property damage claims from a potential plaintiff, who thereafter claimed he didn't know what he was signing. The court wondered whether eerie conduct was afoot:

 

The Court is faced with the issue of whether Mr. Turner's October 31, 2003 letter was a Halloween trick to fraudulently induce plaintiff to sign the enclosed general release to settle all his claims against defendant, or a Halloween treat to settle only plaintiff's property damage claim. Since a trial is necessary to resolve the trick or treat question, this Court cannot grant summary judgment to defendant.

 

In the other, actually worth reading, the Third Department indicated that there might be coverage a man who launched a steel pellet into a 12-year old girl's eye, while she was marching in a Halloween parade. Allstate relied upon an exclusion that precluded coverage for injuries which may reasonably be expected to result from the intentional or criminal acts of an insured person or which are in fact intended by an insured person. Allstate was treated to a coverage win, since the court found that the conduct (and his criminal conviction by plea) established that the injury was caused by a criminal act. Green v. Allstate Ins. Co., 172 A.D.2d 949 (3rd  Dept. 1991).  However, the court later reconsidered its decision, some seven months later, decided that it would be inappropriate for this court to decide, as a matter of law, the issue of whether Green's injury could "reasonably be expected to result" from the insured's actions.  Green v. Allstate Ins. Co., 177 A.D.2d 871.

 

Thought you wanted to know. 

 

And for our bizarre holiday celebrants, October 19th is Evaluate Your Life Day for our introspective readers and here's another hot flash: October 18th is World Menopause Day (as designated by W.H.O).  You can also focus on the 18th for a celebration of National Toy Camera Day.

 

Negligent Spoliation Not Recognized - as a Separate Tort:

 

            See the interesting summary by Earl Cantwell, in his Earl's Pearl's column, reviewing an October 16th decision of the New York State Court of Appeals finally resolving a long outstanding question as to whether the state recognizes the tort of negligent spoliation of evidence.  Earl also distinguishes between a separate claim against the spoliator and the imposition of sanctions against a party for disposing of important evidence,

 

Upcoming Presentations:      

 

Speaking of DRI, I'll be speaking on two topics at the DRI Insurance Coverage and Practice Symposium in New York City on December 13 and 14.  One presentation is entitled:  Can't We All Just Get Along? -The Insured's Duty to Cooperate under a Liability Policy and the other, along with Bob Peahl of AIG, explores the State of the Relationship - 2007, an interesting look at the ever-changing relationship of the insurance industry and defense counsel.  The second presentation is a review of a fascinating survey undertaken by the Federation of Defense & Corporate Counsel during my term as President, last year.  To register for this conference, you can visit the DRI website, www.dri.org

 

I'll also be speaking at two National Business Institute seminars on the topic Interpreting Coverage Under the Insurance Contract. I'll be presenting in Syracuse on January 17th and reprising the following day in Buffalo, on January 18th.  I just received the brochure for that conference and it suggests that I'll speak on several subjects, including Drafting a Reservation of Rights Letter.  Don't count on that - because I don't generally care for ROR letters, but you will learn about the difference between an ROR letter (which I generally avoid at all costs) and a partial disclaimer.

 

Also, Audrey Seeley will be speaking at the Westchester Community College Center for Insurance Education and Westchester CPCU Chapter's CPCU Seminar Day.  The seminar is scheduled for Friday, November 16, 2007, from 8:30 a.m. - 4:15 p.m. at Westchester Community College, Valhalla, NY (1/2 mile North of Exit 4 on I-287).  The morning session will focus on liability insurance issues, specifically additional insureds (this is Audrey's topic), late notice, complying with contractual insurance requirements, certificate of insurance conflicts, and hold harmless agreements.  The afternoon session will focus on workers' compensation issues and updates.  Specific topics include, return-to-work programs, cap on permanent partial disability, mandatory networks for pharmacy and testing, and an actuary's approach to self-insured programs.  Please note that the morning session is filed for four hours of NYS Ins. CE for Property/Casualty Agents, Brokers, General Consultant & Public Adjusters while the afternoon session is filed for three hours.  Also, the morning session is may be filed for four hours of CLE credit.  There is a discounted rated for CPCU, IIAWC, and WIP members.  If you are interested in attending you can contact Westchester Community College at (914) 606-6985 or Jerry Trupin at (914) 762-1842.  You can also email Jerry Trupin at [email protected].  If you do attend please be sure to stop by to say hello to Audrey during the lunch break.

 

In reviewing over 40 decisions in what might be our most robust issue in our eight years of publication, this week's issue brings you a whole raft of interesting decisions:

 

Court of Appeals

·       Disability Policy Provision on Monthly Benefit Complied with Statute

·       Court of Appeals Denies Leave to Appeal in a Case Involving the Perfect Meld of Additional Insured Provisions and Indemnity Agreements

·       When Dealing with a Permanent Partial Disability, Present Value Calculations for Future Benefits are Impermissibly Speculative

·       New York Liquidation Bureau Not Subject to Most Comptroller Review

·       Court Denies Leave to Appeal of Wacky First Department Decision

 

Appellate Division

·       Settlement of Tort Action Settles APIP Claims as Well, Especially Where No Fault Carrier Knows that Matter is Being Resolved

·       Lead Paint:  Allocation of Defense and Indemnity Costs Considered Where One Carrier Refuses to Defend and Insured has No Coverage for a Portion of the Time Involved.  Split Court Punishes a Non-Participating Insurer

·       New York Coverage Lawsuit Can Proceed Despite Other Similar Lawsuits in Different Jurisdictions

·       General Obligations Law Provisions Which Prohibit Indemnification of Contractor for its Own Negligence, Do Not Invalidate Insurance Coverage for Indemnity for Contractor's Negligence

·       Bad Faith Case Fails where Insured Failed to Give Timely Notice of Accident.  Injured Party's Strategy Backfires

·       For Want of a Nail, a Kingdom Can be Lost.  For Want of a Postage Stamp, so Can Coverage

·       Font Size Established; Cancellation Upheld


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

 

·       Defendant's Doctor's Findings of Significant Limitations Preclude Summary Judgment

·       Rely on Other Physicians' Reports at Your Own Risk

·       Late Appeal Heard, but Results are the Same: Lower Court Order is Affirmed

·       Plaintiff's Lack of Evidence and Medical Records Leads to Summary Judgment

·       Plaintiff's Failure to Explain Treatment Termination Leads to Complaint Dismissal

·       SJ Granted as Plaintiff's Injuries Were Not Causally Related to the MVA

·       Reversed! Reliance on Uncertified and Unaffirmed Medical Records Seals Plaintiff's Fate

·       Plaintiff, while Uncooperative during IME, Survives Summary Judgment

·       Brief and to the Point: Plaintiff Must Raise a Triable Issue of Fact to Survive SJ

·       Court to Parties: Read Your CPLR

·       Vagueness Sinks Plaintiff's Summary Judgment Survival Hopes

·       No Matter the Age, Plaintiffs Must Meet Serious Injury Threshold to Recover Damages

·       Primer to Defense Counsel: How NOT to Write a Motion for Summary Judgment

·       Defendants' Doctors Must Relate Their Findings to the Category of SI Alleged

·       Failure to Refute Plaintiff's Six-Month Absence from Work Proves Fatal to Defendant's Hopes for SJ

·       Defendants' Failure to Address Plaintiff's Scar and Disfigurement Leads to SJ Denial

 

AUDREY'S ANGLES ON NO-FAULT

Audrey Seeley

Arbitration

·       Insurer's Denial of Digital Motion X-Ray Upheld Based Upon Peer Review.

·       Insurer Can Offset a Premium Due from the Claim, Even With an Assignment.

·       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

·       Award Vacated and Remanded as Arbitrator Impermissibly Raised an Issue Sua Sponte

·       Some Claims Tolled Due to Pending Verification and Others not Due to Failure to Rebut Evidence that Verification Material Mailed to Insurer

·       Insurer Survives Summary Judgment on Timely Verification Request for Intoxication Defense but Loses Cross-Motion on Intoxication Defense for Lack of Admissible Evidence of Intoxication

·       Plaintiff's Retention of Answer Without Timely Objection Precludes Granting a Default Judgment

·       Failure to Submit Affidavit Demonstrating Knowledge of EIP's Failure to Appear for IME Lead to Summary Judgment in Plaintiff's Favor

·       Insurer's Demonstration That Question Whether Claim Fraudulent is Reasonable Excuse for a Default

·       Failure to Submit Affidavit Demonstrating Knowledge of EIP's Failure to Appear for IME Lead to Summary Judgment in Plaintiff's Favor

·       Plaintiff's Summary Judgment Motion Denied for Insufficient Affidavits to Demonstrate Prima Facie Case

·       Master Arbitrator's Decision in Insurer's Favor Not Vacated in Article 75 Proceeding 

 

PEIPER ON PROPERTY

Steven E. Peiper

 

·       Definition of "Non-Traditional" Family ONLY Applies in Rent Control Cases; Ex-Boyfriend would not Qualify Anyway

 

EARL'S PEARLS

Earl K. Cantwell, II

 

·       New York High Court Refuses to Recognize New Tort of Negligent Spoliation of Evidence (Although Sanctions Might Still be Imposed if Party Destroys Evidence)

 

We love your feedback.  Keep it coming

 

Dan

New Page 2

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

Newsletter Editor

Dan D. Kohane
[email protected]

 

Insurance Coverage Team

Dan D. Kohane, Team Leader
[email protected]

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

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

Jody E. Briandi
Steven E. Peiper

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

APPELLATE TEAM
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

10/18/07          Friedman v. Connecticut General Life Insurance Company
New York State Court of Appeals
Disability Policy Provision on Monthly Benefit Complied with Statute
The breach of contract claim was based upon the insurer's enforcement of its "Relation of Earnings to Insurance" (REI) clause, which was alleged to be unenforceable under the contract due to failure to comply with statutory requirements. Specifically, the policy allegedly failed to notify the insured that his monthly benefit would be less than the policy's stated monthly benefit, because the location in the policy of its REI clause did not accord with the statutory requirements.

Insurance Law § 3216(c) (7) mandates that an exception or reduction to benefits be stated either within the section containing the benefit provision to which it applies or in a section captioned, e.g., "exceptions" or "exceptions and reductions." If the exception or reduction specifically applies only to a particular benefit, a statement of the exception or reduction must be included with the benefit to which it applies. The record shows that the policy at issue complied with the Insurance Law § 3216(d) (2) requirements for the REI clause in all respects.

10/18/07           Harleysville Ins. Co. v. Travelers Ins. Co.
New York State Court of Appeals
Court of Appeals Denies Leave to Appeal in a Case Involving the Perfect Meld of Additional Insured Provisions and Indemnity Agreements
We reported on the Fourth Department’s decision in this case in our March 23, 2007 edition.  We represented Travelers in this matter and that court rendered a well-considered decision describing the interplay between insurance policy defense obligations and contractual indemnity provisions.  The Court of Appeals announced yesterday that it would not grant Harleysville’s application for leave to appeal and the matter is now final. 

Travelers insured Savarino, a GC, under a CGL policy.  Harleysville insured W.C. Roberson, a subcontractor, under a CGL policy.  The contract between Roberson and Savarino, the sub and the GC, required Roberson to do two things:  (a) provide a policy of insurance for Savarino listing Savarino as an additional insured and (b) contractually indemnify Savarino.  Roberson satisfied the first obligation by purchasing a policy of CGL insurance with Harleysville naming Savarino as an additional insured.  The lower court also found that the indemnity agreement was enforceable.

Harleysville then settled an underlying lawsuit commenced by a sub’s employee against Savarino and then sued Travelers, arguing that under Pecker Iron Works both Harleysville and Travelers had joint obligations to Savarino, the general contractor, and thus Travelers should contribute 50% of the defense and indemnity costs. 

The Fourth Department agreed with us that under the apt “other insurance” language of the policy, the Harleysville policy provided the sole primary coverage to the general contractor. The Travelers policy provided primary coverage to Savarino, unless there was other primary insurance available for which Savarino was added as additional insured.  Since the Harleysville policy did just that, it came before the Travelers policy. Accordingly, for the primary policies, Harleysville went first, Travelers second.

The Court determined that following the exhaustion of the Harleysville policy, the Travelers primary policy (which now became next in line to insure Savarino would come next. However that was not the end of the analysis.  Roberson did have an excess policy as well on which Savarino was not added as an additional insured.

Since Savarino, was able to get relief under the indemnity agreement against Roberson, Travelers was permitted to be fully reimbursed by Roberson, and, ergo, Harleysville’s for the amounts it paid on Savarino’s behalf.

As Savarino was granted summary judgment against Roberson on its cause of action for contractual indemnification. Travelers would therefore have a right of subrogation against Roberson in that third-party action and the court held, as a practical matter, would be entitled to reimbursement from Roberson for the amount that Travelers is obligated to pay plaintiff under its primary coverage for Savarino's liability to Roberson's employee.

10/11/07          Burns v. Varriale
New York State Court of Appeals
When Dealing with a Permanent Partial Disability, Present Value Calculations for Future Benefits are Impermissibly Speculative
As we initially reported in the September 8, 2006 edition of Coverage Pointers, Burns worked for the Colonie Police Department and was in his police car when struck by the defendant’s vehicle.  As a result of his injuries, the Workers’ Compensation Board classified him as having a permanent partial disability and awarded benefits at a weekly sum of $400.  

Plaintiff also pursued a personal injury action against the driver of the vehicle that struck him.  That action was ultimately settled for the tortfeasor’s full policy limit of $300,000.  Travelers, plaintiff’s workers’ compensation carrier, consented to the settlement while reserving its right to take a credit for payment of future compensation against plaintiff's net recovery.  Travelers also reserved its rights to seek satisfaction of its existing lien for benefits it had already paid, less its  pro rata share of counsel fees.

Under the Workers' Compensation Law § 29(1), an employee who is injured during the course of his or her employment by the negligence of a third-party tortfeasor may seek workers' compensation benefits and simultaneously bring an action against the third party. In order to prevent a double recovery in the event that the claimant prevails against the third party, the statute grants the workers' compensation carrier a lien on the proceeds of the recovery equal to the amount of past compensation paid, with interest, but less a deduction for costs and counsel fees.

Similarly, section 29(4) provides a credit or offset, which is a “holiday” that the workers' compensation carrier receives from payment of future benefits to a claimant until the proceeds recovered by the claimant in a personal injury action are exhausted. If such proceeds are exhausted, "the compensation carrier must award compensation for the deficiency 'between the amount of the recovery . . . actually collected, and the compensation provided or estimated'" under the statute, with the amount "actually collected" defined as "recovery proceeds remaining after deduction for litigation costs" (Matter of Kelly v State Ins. Fund, 60 NY2d 131, 138-139 [1983].

At the time of the settlement, Travelers had a total lien of $46,523.26.  Deducting counsel fees and expenses at a rate of 34.82%, Travelers sought $30,323.86 to satisfy the existing lien.  Plaintiffs, however, requested approximately $20,000 in "fresh money" for litigation expenses incurred in the personal injury action.  Plaintiffs based this figure, in part, by calculating the present value of future benefits that would be owed by Travelers.  In short, when extrapolated over the course of the term of the benefit, plaintiff’s calculations provided that Travelers would receive a windfall of $20,000.

 

Travelers opposed plaintiff’s demand for an addition $20,000 in benefits on the grounds that any calculation of the present value of future benefits was unduly speculative. The Appellate Division agreed, and reversed the trial court’s award of “fresh money” based upon the speculative present value calculations.

 

The Court of Appeals affirmed the ruling of the Appellate Division that any calculations of the present value of a future benefit were indeed speculative, and accordingly could not be used to support an award of “fresh money.”  In so holding, however, the Court of Appeals explained that a present value calculation was permissible in death cases, permanent total disability cases, and scheduled losses of use cases. 

 

Under its analysis, it is only in a permanent partial disability case that the present value calculation was too speculative to support an award.  The Court of Appeals supported this position by discussing the fact that the plaintiff’s benefits were based upon his “continued attachment to the workplace and how much [plaintiff] earns” during the period of the disability.  These variables, according to the Court, were too volatile to support a finding of future compensation benefits.

 

Importantly, the Court of Appeals specifically noted that “the carrier should be required to periodically pay its equitable share of attorney’s fees and costs incurred by claimant in securing continuous compensation benefits.”  Further, it charged the trial court with establishing a mechanism to ensure all payments of fees and costs are made to the plaintiff. 

10/11/07          Matter of Dinallo v DiNapoli
New York State Court of Appeals
New York Liquidation Bureau Not Subject to Most Comptroller Review
The central issue on this appeal is whether the New York State Comptroller has the constitutional and/or statutory authority to audit the New York State Insurance Department Liquidation Bureau. The high court holds that the Comptroller does not possess such authority. The liquidation of a distressed insurance company has no impact on the state’s finances and has nothing to do with state monies.  Accordingly, the lacks the authority to audit the Bureau.  In addition, the Bureau employees are handling the affairs of the insurer’s under a court order and not as state employees, so the Bureau is not a “state agency” when acting as a liquidator.

10/11/07          Cirone v. Tower Insurance
New York State Court of Appeals
Court Denies Leave to Appeal of Wacky First Department Decision
In April 2007, the Appellate Division decided this case.  When we reported on it, and the link above is to our April 26th edition which summarizes the holding, the headline read:

Court Accepts Injured Party’s Excuses for Giving Notice to Liability Carrier Late, Even Though Injured Party Never Gave Written Notice at All

While denying leave to appeal has no specific precedential impact, we would have preferred some clarification from the high court on this odd ruling.

10/18/07          Progressive Insurance Company, as subrogee of Weiner v. Sheri Torah, Inc.
Appellate Division, Second Department
Settlement of Tort Action Settles APIP Claims as Well, Especially Where No Fault Carrier Knows that Matter is Being Resolved
Infant settlement of plaintiff’s case was scheduled and No Fault carrier, that paid Additional Personal Injury Protection (APIP) benefits was aware of it.  After case settled, carrier sought to recover APIP benefits, as subrogee of its insured, the plaintiff, against the defendant and its liability carrier.  “Too late,” says the Second Department.  Next time become involved in the underlying settlement and let the parties know of your interest then.  Otherwise, your remedy is against your insured, for destroying your subrogation rights, if you have any remedy.

 

10/16/07          State of New York Ins. Dept. Liquidation Bureau v Generali Insurance Co.
Appellate Division, First Department
Lead Paint:  Allocation of Defense and Indemnity Costs Considered Where One Carrier Refuses to Defend and Insured has No Coverage for a Portion of the Time Involved.  Split Court Punishes a Non-Participating Insurer
This is a really interesting case and worth a close reading.

 

In 1993, mom and two kids commenced an action against Rosan, the owner of a premises where lead exposure allegedly occurred. Rosan was insured by Generali for 5.5 months and for Transtate for 10.2 months.  During much of the time when the exposure took place – 35 months -- Rosan was uninsured.  Request was made to both Generali and Transtate to defend and indemnify.  Transtate defended, Generali disclaimed.  Transtate became insolvent and the Liquidation Bureau took over its interests.  The case settled and now the Liquidation Bureau sought partial reimbursement for defense costs and a partial recovery of the settlement amount paid.

 

The lower court held that Generali should pay 50% of the defense costs rather than paying by time on the risk.  With respect to indemnity, the lower court held that although the insurers' respective indemnification obligations should be prorated according to the length of time each covered the risk, the insurers should, according to their respective rates of proration, together bear responsibility for that portion of the settlement covering the period when there was no insurance coverage.

 

Generali appeals, arguing that defense costs and the share of the settlement should have been allocated by “time on the risk” and that the insured should bear its own prorated defense costs for that period of time it was not insured.

 

What’s the formula to be used?  It’s not clear what will be used in the future, but here, the court found that since Generali’s failed to step up to the plate and defend and participate in the settlement it should be (how should I put this nicely) paddled.

 

The Appellate Division reject Generali’s proposed defense costs protocol.  Since it was now “undisputed” that Generali was, in fact, obligated to defend its insured, and since Generali wrongfully declined to defend, Generali may not now have its defense obligation finely tailored to its "time on the risk," particularly where the insured is defunct and there is no reasonable possibility that it will bear any share of the defense costs.  The court refused to disturb the 50-50 finding with respect to defense costs.

 

With regard to indemnification, the court recognized that the Court of Appeals has adopted a "time-on-the-risk" approach. See our review of the Consolidated Edison Co. of New York v Allstate Ins. Co., case, back from 2002.  However, the court noted that this case and those that follow did not involve settlements pertaining to risks extending over uninsured periods.  Because of “Generali's unjustified refusal to honor its obligations” the appellate court refused to disturb the formula adopted by the lower court.  

 

The Dissent

 

A two-judge, well-reasoned dissent agreed with the majority with respect to the allocation of defense costs, and for the same reasons announced by the three-judge majority.  The insured was defunct, so trying to foist defense costs on an fiscally unavailable insured after refusing to defend, is not countenanced.  50-50 wins the day.

 

However, the dissent takes issue with the majority’s holding on indemnity and would apply a strict, "time-on-the-risk" standard.  Citing federal court decisions, the court finds that the insured, as “risk bearer” should share in the allocation of indemnity costs and would include the insured in the proration of the settlement amounts.  No insurance is equated to self insurance.  The dissent argues that Transtate should have chased down its insured before it went belly-up

Editor’s Note:  This case is destined to be reviewed by the Court of Appeals and can get there, as  a matter of right, since there was a 3-2 split.  No doubt that the Liquidation Bureau, that settled the lead paint case of for $600,000 was delighted to get reimbursement from Generali for $210,191.08. Under Generali’s formula, it would only have paid $65,088.76.  With that kind of money involved, we doubt we’ve heard the last of this case.

 

10/11/07          ACE Fire Underwriters Insurance Company v. ITT Industries, Inc.
Appellate Division, First Department
New York Coverage Lawsuit Can Proceed Despite Other Similar Lawsuits in Different Jurisdictions
An action was commenced seeking a declaration as to rights and obligations with respect to insurance coverage for silica-related personal injury claims, and with respect to the excess and umbrella insurers' rights to contribution.  Actually three lawsuits were commenced, one in New York, one in Pennsylvania and one in West Virginia.  The motion before the court was to dismiss this action because the other pending lawsuits should take precedence.

The court found that since the other actions were started simultaneously, the rule which generally allows the first lawsuit filed to take precedence was inapplicable.  In any event, the other actions were not as comprehensive as this one and did cover all of the claims that were included in the New York action or all of the parties.

10/9/07            Wilson v. Sirius America Insurance Company
Appellate Division, Second Department
General Obligations Law Provisions Which Prohibit Indemnification of Contractor for its Own Negligence, Do Not Invalidate Insurance Coverage for Indemnity for Contractor’s Negligence
Wilson was injured at a construction site where he was employed as a foreman for a plumbing subcontractor. He sued the general contractor, KJ alleging violations of the Labor Law designed to protect construction workers. [Sections 200 and 241(6)]. KJ's insurer, the defendant Sirius,  disclaimed coverage based on an exclusion contained in endorsement Form SAIC 022 to the Commercial General Liability policy issued to KJ (SAIC 022). The endorsement excluded coverage for "bodily injury" arising out of work performed on behalf of KJ by a subcontractor "when there is no prior written and signed contract entered into between [KJ] and the . . . subcontractor . . . requiring the . . . subcontractor . . . to indemnify and hold harmless [KJ] in the event of a loss, including any loss suffered by an employee of the . . . subcontractor." The defendant maintains, and the plaintiffs do not dispute, that there was no written agreement between KJ and the injured plaintiff's employer.

KH defaulted in the action commenced by Wilson.  Wilson took judgment and then commenced this direct action to recover on the judgment. The lower court held that SAIC 022 violated General Obligations Law § 5-322.1 and, therefore, was void as against public policy.  The Appellate Division reverses.

That section of the General Obligations Law declares as void any construction contract where a contractor seeks indemnity for its own negligence.  The appellate court finds that the endorsement does not violated General Obligations Law § 5-322.1, because that section provides that it "shall not affect the validity of any insurance contract, workers' compensation agreement or other agreement issued by an admitted insurer." A broadly worded indemnity agreement, if it had existed, might have been void (there was not one here). However, the invalidity of the underlying indemnity agreement would not have relieved the carrier of its obligation to provide coverage to its insured under the terms of the policy.
Editor’s Note:  This case reminds us that tort and contractual relationships that may or may not exist between parties must be considered separately and distinctly from insurance relationships.  Of course, there was no contract here between the contractor and the subcontractor so there was no indemnification clause to enforce. However, the court noted that even if there had been one, and even if the indemnification provisions were unlawfully broad, that would only prevent the enforcement of the indemnity agreement and not the policy purchased to protect the contractor.  Accordingly, if the policy provided $1 million in coverage and the judgment against the contractor was for $1.5 million, the policy would cover the $1 million but the contractor would be unable to enforce the indemnity agreement for the remaining $500,000 if the indemnity agreement violated public policy,

10/2/07            Zeldin, as assignee of Mikhail Markman v. Interboro Mut. Ins. Co.
Appellate Division, Second Department
Bad Faith Case Fails where Insured Failed to Give Timely Notice of Accident.  Injured Party’s Strategy Backfires

Zeldin was a passenger in car owned and operated by Markman when injured in an auto accident on March 8, 1998.  He sued Markman, who was injured by Interboro with a $25,000 liability policy.  A default was taken against Markman in August of 1999, and an inquest led to a default verdict of over $2 million.  Markman assigned his rights against Interboro to Zeldin, and Zeldin commenced a bad faith case against Interboro, alleging that its refusal to defend Markman gave rise to extra-contractual liability.

Zeldin gave notice to Interboro on June 1, 1988, but Markman breached his obligation under the contract to provide prompt notice.  The court finds that as plaintiff seeks to stand in the insured’s shoes in this action, the plaintiff is bound by the insured’s policy breach.  The plaintiff, of course, had a separate right to give notice of the accident and, perhaps, his notice in June 1988 was timely.  However, the court notes that the plaintiff did not commence a declaratory judgment action against Interboro in her capacity as the injured party, seeking a declaration that Interboro was obligated to defend Markman.

Apparently, the policy required a showing of prejudice before a late notice disclaimer could be asserted, but the plaintiff did not raise that below so the appellate court wouldn’t consider it..

10/2/07            Geisco, LLC v. Greater New York Mutual Insurance Company

Appellate Division, Second Department

For Want of a Nail, a Kingdom Can be Lost.  For Want of a Postage Stamp, so Can Coverage
Greater New York Mutual (GNYl) insured Geisco.  Edwards sues Geisco and GNY denies coverage, claiming that Geisco failed to notify GNY of the claim as soon as practicable.  Geisco commenced a declaratory judgment action challenging the disclaimer. Geisco also sues its insurance broker, Lane, on the ground that Lane was notified of the accident and failed to notify GNY.  Lane then sues Farber, a producer on the GNY policy, claiming that Lane notified Farber and Farber failed to notify GNY. Geisco then amended its complaint to add Farber as a party defendant.

Farber claimed it never received notice from Lane of the incident and moved to dismiss the claims brought by Lane and Geisco. Lane demonstrated that it mailed the notice to Farber at 120 Pallisades Ave. Pallisades, NJ 07650, but the correct mailing address was "120 West Palisades Blvd. Palisades Park NJ 07650." In light of this discrepancy, the presumption of receipt did not apply.  Summary judgment denied and a hearing will be held to resolve the question of notice.

Editors Note:  Of course, none of this litigation would be pending if Geisco invested in one more postage stamp and sent a copy of the notice of occurrence directly to GNY.

10/2/07            In the Matter of Halycon Insurance Company v. Fox
Appellate Division, Second Department

Font Size Established; Cancellation Upheld
The Notice of Cancellation originally submitted to the court appeared to be of a smaller font size than that required by the Insurance Law.  In a framed issue hearing, an Assistant Vice President of Claims for the company that handled the cancellation, went through record keeping procedures and convinced the court that the font size was, in fact, of the correct denomination.  The appellate court refused to disturb the factual findings.

Editors Note:  To avoid this in the future, when offering proof to a court, bring in an actual sized facsimile. 

 

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

 

10/18/07          Czach v. O'Neill

Appellate Division, Second Department

Defendant’s Doctor’s Findings of Significant Limitations Preclude Summary Judgment

Here, the plaintiff successfully appealed a lower court order which had granted the defendants’ motion for summary judgment dismissing the complaint. The Appellate Division held the defendants failed to establish their prima facie entitlement to summary judgment. Upon his examination, which took place more than one year and two months after the accident, the defendants’ examining orthopedist found significant limitations in range of motion in the plaintiff's lumbar spine.

 

10/18/07          Govori v. Agate Corp.

Appellate Division, Second Department

Rely on Other Physicians’ Reports at Your Own Risk

Defendants’ successfully appealed a lower court order which had denied their summary judgment motion.  They established their prima facie entitlement to judgment as a matter of law by demonstrating, through the affirmations of their medical experts and the deposition testimony of the plaintiff, that the plaintiff did not sustain a serious injury. In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff’s hospital records and MRI reports were without probative value since they were neither affirmed nor certified, the affirmation of the plaintiff’s treating physician was without probative value since the conclusions were reached in reliance upon the unsworn reports of others and the plaintiff’s affidavit was insufficient to overcome these deficiencies. 

 

10/18/07          Tarhan v. Kabashi

Appellate Division, Second Department

Late Appeal Heard, but Results are the Same: Lower Court Order is Affirmed

A lower court order granting summary judgment was reviewed and affirmed, even though unsuccessful plaintiffs appealed late. The appeal from the intermediate order was dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from the order are brought up for review and were considered on the appeal from the judgment (see CPLR 5501[a][1]). In support of their motions for summary judgment, the defendants established prima facie their entitlement to judgment. The defendants demonstrated that the plaintiffs’ injuries were not serious through the submission of the plaintiffs’ deposition testimony and the affirmed reports of the several doctors who examined them and determined that there was no evidence of any injury sustained in the accident. In opposition to the motions, the plaintiffs failed to raise a triable issue of fact as to whether either of them sustained a serious injury. The plaintiffs’ medical expert improperly relied upon unsworn MRI reports by another physician in arriving at his diagnosis and conclusions.

 

10/18/07          Cameron  v. Engelhart

Appellate Division, Third Department

Plaintiff’s Lack of Evidence and Medical Records Leads to Summary Judgment

Despite driving a vehicle through the front window of a Blockbuster store, pinning plaintiff between two counters, defendant successfully appealed a lower court order, which had denied his motion for summary judgment dismissing the complaint. The Appellate Division held defendant met his burden that plaintiff did not suffer a significant limitation of use of a body function or system. Defendant’s evidence consists of plaintiff’s medical records and the affidavit of a doctor who performed an IME. Plaintiff's medical records demonstrate that on the date of the accident, she was diagnosed with a contusion on her left thigh and x-rays revealed a “normal left hip exam.” The evidence further demonstrates that she injured her back and left hip as a result of a fall down four stairs. The affidavit of the independent medical examiner who reviewed plaintiff’s pre-accident and post-accident medical records, indicates that he could find no objective evidence of a serious injury causally related to the accident.

 

In response, plaintiff submitted an affidavit and the affidavits of two physicians. Neither doctor included any medical records. Both lack either quantitative evidence or qualitative evidence which would support plaintiff’s claim and fail to describe the diagnostic tests employed or to compare plaintiff’s current limitations to normal function. Furthermore, plaintiff failed to explain the large gaps in periods of treatment or offer evidence clearly based upon recent medical examinations.

 

10/16/07          Yagi v Corbin

Appellate Division, First Department

Plaintiff’s Failure to Explain Treatment Termination Leads to Complaint Dismissal
Tests showing plaintiff had full range of motion helped to persuade the Appellate Division to affirm defendants’ motion and cross motion for summary judgment dismissing plaintiff’s complaint. Here, the affirmed medical report of defendants’ orthopedist, detailing the objective tests performed, finding that plaintiff had full range of motion in his cervical and lumbar spine, and concluding that he had recovered from the sprain- and strain-type injuries to his cervical, thoracic and lumbar spine suffered as a result of the accident, satisfied their prima facie burden. In response, plaintiff failed to meet that burden because his expert’s report, dated nearly three years after his last treatment of plaintiff, does not satisfactorily explain why plaintiff terminated treatment.

 

10/16/07          Johnson v Marriott Mgt. Servs. Corp.
 Appellate Division, First Department

SJ Granted as Plaintiff’s Injuries Were Not Causally Related to the MVA

Order granting defendants’ summary judgment  motion is upheld by the Appellate Division by first making a prima facie showing that plaintiff did not sustain a "significant limitation of use of a body function or system" (Insurance Law § 5102[d]). Defendants submitted an affidavit of a board-certified neurologist, who concluded that there was no neurological disorder consequent to the motor vehicle accident. The affidavit of plaintiff's chiropractor failed to demonstrate that the cervical disc herniations were causally related to the accident and were not, instead, related to a prior injury or degenerative condition. Plaintiff also failed to explain the two-to-three-year gap in her treatment.  Further, plaintiff failed to provide objective, admissible evidence of the persistence of her injury during the statutorily relevant period, and her subjective statements are insufficient to create a triable issue regarding whether she sustained a serious injury under the 90/180-day category

 

10/9/07            Verette v Zia

Appellate Division, Second Department
Reversed! Reliance on Uncertified and Unaffirmed Medical Records Seals Plaintiff’s Fate

The Appellate Division reversed a lower court order which had denied defendant’s motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). On appeal, it was determined that the defendants 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 plaintiff’s reliance on uncertified hospital records and unaffirmed magnetic resonance imaging reports failed to raise a triable issue of fact since those submissions were without probative value. The affirmed medical report of the plaintiff’s treating physician was also without probative value as she relied on the unsworn reports of others in reaching her conclusions about the plaintiff.

 

10/9/07            Washington v Delossantos

Appellate Division, Second Department
Plaintiff, while Uncooperative during IME, Survives Summary Judgment
Appellate Division denied summary judgment motion by defendant despite plaintiff’s obstructionist tactics during an independent medical examination. Here, defendants failed to establish their prima facie entitlement to judgment as a matter of law. Defendants' orthopedic expert failed to specify the objective tests he performed, or attempted to perform, to evaluate the plaintiff’s cervical range of motion, indicating only that “[c]ervical spine range of motion testing is met with voluntary resistance," and that, “[w]hen not being tested,” the plaintiff “is noted to be moving his head and neck without any apparent restriction.” Similarly, his report fails to list any range of motion test performed in an attempt to determine the abduction and forward flexion of the plaintiff's right shoulder, although the report does note that the internal rotation of the right shoulder was "complete." Notwithstanding the orthopedist’s claims of voluntary resistance, his report was insufficient to establish, prima facie, that the plaintiff’s documented prior complaints of cervical and right shoulder injury had resolved. Accordingly, because the defendants’ submissions failed to resolve all material issues of fact as to whether the plaintiff sustained serious injuries, summary judgment should have been denied.

 

Nevertheless, the Appellate Division stated the report raised serious questions regarding the plaintiff’s credibility, including the extent of his cooperation in the medical examination process. A defendant in a personal injury action has the unquestioned right to have the plaintiff medically examined by a designated physician (see CPLR 3212). Where there is evidence that the plaintiff refuses to cooperate in the examination process, the proper remedy is for the defendant to move, for sanctions such as preclusion of evidence, or dismissal of the complaint.

 

10/9/07            Ramirez v JIB II Express

Appellate Division, Second Department

Brief and to the Point: Plaintiff Must Raise a Triable Issue of Fact to Survive SJ

The Appellate Division reversed a lower court order when it found that plaintiff did not raise a triable issue of fact in response to defendants' prima facie showing that the plaintiff did not sustain a serious injury. As such, defendants’ motion for summary judgment dismissing the complaint was granted.


10/9/07            McDonald v Stroh

Appellate Division, Second Department

Court to Parties: Read Your CPLR

Here, defendant appeals a lower court order which denied his motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury. The Appellate Division ordered that the appeal is dismissed, without costs or disbursements, as the order was superseded by an order of the same court entered six months later, made upon reargument.

 

10/9/07            Murray v Stabile

Appellate Division, Second Department

Vagueness Sinks Plaintiff’s Summary Judgment Survival Hopes

Here, the defendants established, prima facie, that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). In opposition, the plaintiff failed to raise a triable issue of fact. Contrary to the plaintiff’s assertions, the submissions of his treating orthopedic surgeon failed to raise a triable issue of fact as to whether he sustained a fracture. The vague reference of the plaintiff’s orthopedic surgeon in his submissions that the plaintiff sustained an “osteochondral fracture” was insufficient to raise a triable issue of fact.

 

10/9/07            Munoz v Haider

Appellate Division, Second Department

No Matter the Age, Plaintiffs Must Meet Serious Injury Threshold to Recover Damages

Guardians for infant plaintiffs appeal a lower court order which granted the defendant’s motion for summary judgment dismissing the complaint insofar as asserted by them on the ground that neither of them sustained a serious injury. The order was affirmed as the defendant met her burden by establishing, prima facie, that neither of the appellants sustained a serious injury. Since the plaintiffs failed to submit any medical evidence in opposition to the defendant’s motion and thus did not raise any triable issues of fact, the lower court properly granted the defendant’s motion.

 

10/9/07            Coburn v Samuel

Appellate Division, Second Department

Primer to Defense Counsel: How NOT to Write a Motion for Summary Judgment

Here, there are many reasons for Appellate Division to affirm a lower court order denying  defendant’s motion for summary judgment dismissing the plaintiff’s cause of action. The defendant failed to make a prima facie showing. (1) The defendant did not address the plaintiff’s claim under the 90/180 category. None of the defendant’s experts related their findings to this category of serious injury for the period of time immediately following the accident. (2) The defendant relied upon a medical report which failed to specify ROM limitations in the plaintiff’s cervical and lumbar spine, and two medical reports which failed to quantify those limitations.  (3) Medical reports submitted by the defendant failed to set forth what objective testing was done to support a claim of full ROM  in the plaintiff's neck and lower torso and (4) other reports failed to compare those findings to what is normal. (5) The report of the chiropractor who examined the plaintiff at the request of her no-fault carrier did not provide any support for the defendant’s motion. (6) That report was not in affidavit form and therefore did not constitute competent evidence.

 

10/9/07            Daddio v. Shapiro
Appellate Division, Second Department

Defendants’ Doctors Must Relate Their Findings to the Category of SI Alleged

Plaintiff successfully appealed a lower court order, which had granted the defendant’s motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury. Here the Supreme Court erred in concluding that the defendant established her prima facie entitlement to judgment. The defendant’s submissions in support of her motion for failed to establish that the plaintiff did not sustain a serious injury. Defendant's papers failed to address the plaintiffs’ allegation, clearly set forth in their BOP, that the injured plaintiff suffered a serious injury under the 90/180 category. The injured plaintiff testified that as a result of the accident he missed 4 ½ to 5 months of work immediately following the accident. The defendant relied on, the affirmed medical report of an orthopedic surgeon who examined the injured plaintiff almost four years after the accident occurred. He did not relate any of his findings to this category of serious injury. As such, the defendant failed to meet her prima facie burden.

 

10/2/07            Alexandre v Dweck
Appellate Division, Second Department

Failure to Refute Plaintiff’s Six-Month Absence from Work Proves Fatal to Defendant’s Hopes for SJ

Here defendants’ motions for summary judgment failed to address plaintiff’s claim that he had sustained damage which qualified as a serious injury under the 90/180 category.  Evidence established that plaintiff was out of work from January 2, 2002 through July of 2002.  Moreover, defendants’ physicians did not examine plaintiff until 2 ½ years after the incident, and failed at that time to relate any of their findings to refute plaintiff’s 90/180 claim.  The Second Department affirmed the denial of summary judgment by noting that where the defendant’s failed to meet their initial burden of proof, plaintiff’s opposition was irrelevant.   

 

10/2/07            Monkhouse v Maven Limo, Inc.
Appellate Division, Second Department

Defendants’ Failure to Address Plaintiff’s Scar and Disfigurement Leads to SJ Denial
The Appellate Division affirmed a lower court order which had denied defendants’ summary judgment. Here, defendants failed to establish, prima facie, that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). They failed to even address, much less satisfy, their burden the plaintiff’s allegation that she suffered permanent facial scarring and disfigurement as a result of the accident. Further, defendants’ motion papers failed to adequately address the plaintiff’s claim, that she sustained a serious injury under the 90/180 category. The plaintiff’s bill of particulars alleged that as a result of the accident, she was confined to her home and bed for three months. Defendants’ examining neurologist conducted his examination of plaintiff more than 3½; years post-accident, and noted in his report that the plaintiff lost eight months of work as a result of the accident. He never related his medical findings to this category of serious injury for the period of time immediately following the accident. Since defendants failed to satisfy their prima facie burden, it is unnecessary to consider whether the plaintiff’s opposition papers were sufficient to raise a triable issue of fact

 

10/2/07            Monkhouse v Maven Limo, Inc.
Appellate Division, Second Department

Defendants’ Failure to Address Plaintiff’s Scar and Disfigurement Leads to SJ Denial
The Appellate Division affirmed a lower court order which had denied defendants’ summary judgment. Here, defendants failed to establish, prima facie, that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). They failed to even address, much less satisfy, their burden the plaintiff’s allegation that she suffered permanent facial scarring and disfigurement as a result of the accident. Further, defendants’ motion papers failed to adequately address the plaintiff’s claim, that she sustained a serious injury under the 90/180 category. The plaintiff’s bill of particulars alleged that as a result of the accident, she was confined to her home and bed for three months. Defendants’ examining neurologist conducted his examination of plaintiff more than 3½; years post-accident, and noted in his report that the plaintiff lost eight months of work as a result of the accident. He never related his medical findings to this category of serious injury for the period of time immediately following the accident. Since defendants failed to satisfy their prima facie burden, it is unnecessary to consider whether the plaintiff’s opposition papers were sufficient to raise a triable issue of fact

 

AUDREY’S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]

 

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

 

Arbitration

 

10/12/07          In the Matter of the Arbitration Between Applicant and Respondnet

Arbitrator Thomas J. McCorry (Erie County)

Insurer’s Denial of Digital Motion X-Ray Upheld Based Upon Peer Review.

The Applicant, eligible injured person (“EIP”), was involved in a February 16, 2001, motor vehicle accident and sought reimbursement for, among other things, a digital motion x-ray.  The insurer denied the digital motion x-ray based upon the peer review conducted by John Gaiser, D.C.  The insurer’s denial was upheld as Mr. Gaiser’s report opined that according to clinical practice guidelines “spinal imaging studies should be performed only when they will potentially improve the patients outcome to their effect on treatment.”

 

10/10/07          In the Matter of the Arbitration Between Applicant and Respondnet

Arbitrator Veronica K. O’Connor (Erie County)

Insurer Can Offset a Premium Due from the Claim, Even With an Assignment.

The issue in this arbitration was whether the insurer properly applied an owed premium by the Applicant’s assignor as an offset to the billing reimbursement.  Arbitrator O’Connor held that the insurer acted properly.

 

The insurer cancelled the eligible injured person’s insurance policy effective December 1, 2005, and had a premium balance due of $245.00.  When the Applicant, chiropractor, submitted medical bills in the amount of $283.00, $159.00, $106.00 the insurer issued partial denials on the ground that an insurer is entitled to offset a claim payment against the premium due on a policy issued to a named insured.  The insurer also indicated that the bill was not properly fee scheduled rated and proceeded to reduce the bill and apply the amount, which was $162.82, $81.33, and $54.22 respectively, against the $245.00 amount.

 

Arbitrator O’Connor upheld the denial based upon an Opinion Letter from the Office of General Counsel for the New York State Insurance Department which provided that the insurer had the ability take the offset and that the medical provider, by taking an assignment, has no greater rights than the named insured who provided the assignment.

 

10/9/07            In the Matter of the Arbitration Between Applicant and Respondnet

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 (“EIP”), was involved in an April 22, 2003, motor vehicle accident.  He returned to work for three days after the accident as a corrections officer but was taken out of work for almost one year thereafter.

 

The Applicant sought reimbursement of a cervical spine MRI which was denied based upon an independent medical examination (“IME”) performed by Dr. David Miller.  It is noted that Dr. Miller’s IME report was issued nearly one year before the MRI was conducted.

 

In that IME report, Dr. Miller reviewed a prior cervical spine MRI where he opined that there was diffuse degenerative disc changes with minor stenosis.  Dr. Miller after conducting an examination concluded that the EIP sustained a musculoligamentous sprain/strain of the cervical and lumbar spine as well as aggravated pre-existing cervical and lumbar degenerative disc disease as a result of the accident.  Dr. Miller did not feel that the EIP required any further physical medicine and rehabilitation and indicated that he could not comment on further orthopedic and neurologic care as it was outside of his specialty.

 

Arbitrator McCorry noted that the MRI was prescribed by an orthopedic surgeon.  Accordingly, the treating physician’s opinion was afforded more weight in light of the IME physician indicating that he could not comment on orthopedic issues.

 

Litigation

 

10/16/07          In the Matter of Health & Endurance Med., P.C. a/a/o Stanley Cummings v.

Deerbrook Ins. Co., Appellate Division, Second Department

Award Vacated and Remanded as Arbitrator Impermissibly Raised an Issue Sua Sponte.

The Appellate Division vacated an arbitration award and remanded it for further proceedings.  The medical providers’ claim was denied on the ground that it was not a provider of health care services within the no-fault regulation’s meaning.  Therefore, it was not entitled to direct payment.  The Court reversed on the basis that under the circumstances of this case the issue was impermissibly raised sua sponte by the arbitrator.  Moreover, since the arbitrator never ruled on the only issue the insurer raised the case was remanded to the arbitrator to be decided on that issue.

 

10/9/07            New York and Presbyterian Hosp. v. Countrywide Ins. Co.

Appellate Division, Second Department

Some Claims Tolled Due to Pending Verification and Others not Due to Failure to Rebut Evidence that Verification Material Mailed to Insurer

The Appellate Division affirmed summary judgment for one cause of action and reversed on another cause of action all over whether the insurer properly extended the time to pay or deny the claim due to pending verification requests.  As you are aware, the argument is that the action is premature if the insurer timely requests verification and no response is provided.  Here, a close review of the documentary evidence submitted on summary judgment revealed that the insurer requested verification of the claim tolling its time to either pay or deny the claim.  The Appellate Division stated that the insurer’s affidavit sufficiently demonstrated that the affiant had a basis for knowledge of the facts and laid the proper foundation for introducing the documents into evidence.  Unfortunately, the Court does not go into detail as how this was done or what the affiant’s position was with the insurer. 

 

Yet, the Appellate Division reversed on another cause of action pertaining to the same issue as the insurer failed to rebut the plaintiff’s evidence that the plaintiff responded to the verification request.  The Court noted that the presumption of the verification response was created by the certified mail receipt and signed return receipt card that bore the notation to the relevant medical record.

 

 

10/9/07            Westchester Med. Ctr. v. State Farm Mut. Auto. Ins. Co.,

Appellate Division, Second Department

Insurer Survives Summary Judgment on Timely Verification Request for Intoxication Defense but Loses Cross-Motion on Intoxication Defense for Lack of Admissible Evidence of Intoxication.

The insurer was not able to prevail on its cross-motion for summary judgment on the intoxication defense due to the failure to establish the eligible injured person was intoxicated at the time of the accident and that his intoxication was the cause of the accident.  In addition, the plaintiff was not able to prevail on its summary judgment motion as the insurer demonstrated that it properly tolled the claim through requesting verification on its intoxication defense.

 

In regard to the insurer’s intoxication defense, the Court held that the insurer failed to lay the proper foundation for the admission of the blood alcohol report by offering evidence as to the care in the collection of the individual’s blood sample and its analysis.  Fafinski v. Reliance Ins. Co., 106 AD88, aff’d, 65 NY2d 990.  Yet, the Court held that the insurer did properly submit the police accident report under the business record exception to hearsay rule.  The Court stated that the report was considered only to the extent that it was based upon the responding officer’s personal observations at the accident scene under a business duty to make the record.

 

The Court found an issue of fact precluding summary judgment in the plaintiff’s favor as the insurer demonstrated that it timely and properly requested verification seeking information regarding the eligible injured person’s alleged intoxication.

 

10/17/07          Star Med. Supply a/a/o Yamira Aroni v. State Farm Auto. Ins. Co.,

Appellate Term, Second Department

Plaintiff’s Retention of Answer Without Timely Objection Precludes Granting a Default Judgment.

The insurer successfully moved to vacate a default judgment as plaintiff’s retention of the answer without a timely objection waived the untimeliness objection.  Accordingly, the waiver precludes granting a default judgment.

 

10/17/07          Midisland Medical, PLLC a/a/o Jeff Cayot v. New York Cent. Mut. Ins. Co.,

Appellate Term, Second Department

Failure to Submit Affidavit Demonstrating Knowledge of EIP’s Failure to Appear for IME Lead to Summary Judgment in Plaintiff’s Favor.

Plaintiff’s summary judgment motion was granted as the insurer failed to submit an affidavit from someone with personal knowledge that the eligible injured person failed to appear for a scheduled independent medical examination.

 

10/17/07          Psychological Practice, P.C. a/a/o Espinal Kelvin v. Utica Mut. Ins. Co.,

Appellate Term, Second Department

Insurer’s Demonstration That Question Whether Claim Fraudulent is Reasonable Excuse for a Default.

Insurer was entitled to vacature of default judgment as it demonstrated that the claim, at the outset, had a question of fact as to whether it was fraudulent and involved a non-covered incident. 

 

10/17/07          Dan Medical, P.C. a/a/o Reginald Beaubrun v. New York Cent. Mut. Ins.

Appellate Term, Second Department

Failure to Submit Affidavit Demonstrating Knowledge of EIP’s Failure to Appear for IME Lead to Summary Judgment in Plaintiff’s Favor.

Plaintiff’s summary judgment motion was granted on five of the causes of action as the insurer’s proffered affidavit from a technical consultant/accident reconstructionist with an attached accident analysis report failed to comply with CPLR §2309(c) (proper oath or affirmation).  Accordingly, the insurer failed to establish by competent evidence that it possessed a founded belief that the alleged injuries did not arise out of an insured incident.

 

 

10/17/07          JSI Expert Services, Inc. a/a/o Romel Audige v. Travelers Ins. Co.,

Appellate Term, Second Department

                        Lexington Acupunture, P.C. a/a/o Iashawn Abrams v. MVAIC,

Appellate Term, Second Department

Great Wall Acupuncture, P.C. a/a/o Juan Carlos Marin v. Travelers Prop.

Cas., Appellate Term, Second Department

Astoria Quality Med. Supply a/a/o Aleksandr Chervyakpv v. Allstate Ins.

Co., Appellate Term, Second Department

Plaintiff’s Summary Judgment Motion Denied for Insufficient Affidavits to Demonstrate Prima Facie Case.

Here are four decisions all of which deny plaintiff’s summary judgment motion as the plaintiff’s employee’s affidavit submitted to establish its prima facie case failed to lay a proper foundation for the admission of the documents as business records.

 

10/17/07          RJ Professional Acupuncturist, P.C. a/a/o Hector Barrientos v. Allstate Ins.

Co., Appellate Term, Second Department

Superior Med. Equip. & Supply, Inc. a/a/o Vivian Mack v. Countrywide Ins.

Co., Appellate Term, Second Department

Better Health Med., PLLC a/a/o Mikhail Shabetayev v. Empire/Allcity

Ins. Co., Appellate Term, Second Department

Better Health Med., PLLC a/a/o Mikhail Shabetayev v. Empire/Allcity

Ins. Co., Appellate Term, Second Department

S.P. Med. Center a/a/o Carlos Torbino v. Allstate Ins. Co.,

Appellate Term, Second Department

Master Arbitrator’s Decision in Insurer’s Favor Not Vacated in Article 75 Proceeding.

In all five of these decisions the Court, citing Petrofsky v. Allstate Ins. Co., 54 NY2d 208, declined to vacate the Master Arbitrator’s award confirming the initial arbitration in the insurer’s favor. 

 

PEIPER ON PROPERTY

Steven E. Peiper

[email protected]

 

10/2/07            Preferred Mut. Ins. Co. v Pine

Appellate Division, Second Department

Definition of “Non-Traditional” Family ONLY Applies in Rent Control Cases; Ex-Boyfriend would not Qualify Anyway

Defendant was a co-tenant with her then boyfriend, Barrish, at a residence that was insured by plaintiff, Preferred Mutual Insurance Company (“Preferred”).  In November of 2002, defendant vacated the premises.  However, Barrish remained at the residence after defendant left.   On December 26, 2002, co-tenant Barrish set fire to the premises which resulted in significant damage.  

 

After paying for the repairs, Preferred commenced the present action seeking recovery through subrogation.  Preferred based its action upon three theories of liability.  One theory --that defendant failed to warn the homeowner of Barrish’s propensity to set fires -- was dismissed on motion.   At trial, Preferred’s second theory was dispelled when the jury found that defendant’s negligence did not contribute to the loss at the premise.

 

However, defendant was later found liable under Preferred’s remaining theory --contractual indemnification pursuant to the language of the lease -- and ordered to pay damages of $100,000.  Specifically, the lease contained a provision which held the tenant “responsible for all acts of Tenant’s family, employees, guests and invitees.” 

 

To satisfy this provision, Preferred successfully convinced the Court that under the terms of the lease the defendant could be held liable for acts committed by her family.  Preferred also successfully convinced the jury that defendant and Barrish were a “non-traditional” family as defined by the Court of Appeals’ decision in Braschi v. Stahl Assoc., Co. (74 NY2d 201).

 

In reversing this determination, the Second Department held that the definition of a “non-traditional family” as set forth in Braschi was limited to rent control cases.  Moreover, even if the Braschi standard were applied to the present case, Preferred had failed to establish that defendant and Barrish were “involved in a long term relationship characterized by both emotional and financial commitment and interdependence” which is essential to the expansive definition of “family” as set forth by the Court’s ruling in Braschi

 

EARL’S PEARLS

Earl K. Cantwell, II

[email protected]

 

10/16/07          Ortega v. City of New York

New York State Court of Appeals

New York High Court Refuses to Recognize New Tort of Negligent Spoliation of Evidence (Although Sanctions Might Still be Imposed if Party Destroys Evidence)
In October 2003, Ortega buys a Ford minivan from a private owner and then brings it to a service station for an inspection and tune-up.  The day after the service was performed, Ortega and Peralta were traveling in the car in Brooklyn.  Ortega smelled fumes, pulled the car to the side of the road and it burst into flames, severely injuring both Ortega and Peralta.

 

The investigating police officers contacted Ridge Transport System to remove the van from the roadway.  It was towed to Ridge’s facility and remained there until November 2003, then transported to the NYC Police Department’s auto pound.  Peralta’s attorney sought to inspect the van while Ridge possessed it, but was refused access since Peralta did not own the van.   Ridge threatened to destroy the van if it was not claimed by the owner

On October 31, 2003, Peralta commenced a special proceeding against Ridge and the New York City Police Department by order to show cause seeking to preclude destruction of the vehicle until it could be inspected by Peralta, and without opposition, an order was entered giving Peralta  some 60 days to conduct the inspection. For reasons unknown, and after letters to the owner, the van was placed into a salvage auction and crushed for scrap metal in December 2003.

Ortega and Peralta did not sue Ford Motor Company or the service station, but instead, sued the City of New York.  The plaintiffs claimed that the City should be held liable for all damages sustained because the City wrongfully destroyed the vehicle making it impossible to prove their case of product defect or negligence and, in addition, violated the preservation order and should be held in contempt. The City claimed that the plaintiff had other ways to prove its case, and argued that it was speculative that an inspection of the van would have helped prove anything.

The high court scolded the City for violating the order which compelled it to preserve the van for inspection.  The Court of Appeals discussed various sanctions that can be imposed against a party to a lawsuit that destroys evidence.  Of course here, the City would not have been a party to any lawsuit involving the vehicle. 

The plaintiffs wanted the court to recognize a new cause of action, negligent spoliation of evidence, and allow plaintiffs to recover for their conscious pain and suffering and other damages that they believed they would have recovered against the car manufacturer or the service station, if the van had not been destroyed. The Court refused, holding that in a third-party spoliation case, there is no way of ascertaining whether the proof no longer available would have benefited the plaintiff in an action against the defendants. Plaintiffs contended that examination of the vehicle would have revealed either a design or manufacturing defect, improper maintenance or faulty repair services. However,  the Court noted that an inspection might also have revealed that there were no manufacturing defects or faulty repair services.  Similarly, there was no proof that the defendants, even if liability had been established, would have been financial viable to pay any judgment.

Despite this decision, care should be taken with such pieces of evidence in the investigation and claims process since losing or destroying a key piece of evidence, such as an automobile, a piece of machinery or items from an arson investigation, could still be subject to sanctions against an insurance company and/or its insured.

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.


10/17/07          Webster v. Acadia Insurance Company

Supreme Court of New Hampshire
Faulty Workmanship Along With A Change In The Appearance Of Real Property Constitute Property Damage

Plaintiffs sought coverage under a general liability policy for allegations that they negligently installed a metal roof membrane on a local school building. Relying on several exclusions, as well as its belief that the underlying litigation did not include any allegations of "property damage," the defendant insurer denied coverage. The Supreme Court overturned the trial court's grant of summary judgment in favor of the insurer. In reaching this decision, the Court held that property is determined to be damaged when it is "altered in appearance, shape, color or in some other material dimension." Since the underlying litigation made specific allegations that various roof purlins had buckled, and otherwise changed their appearance after the plaintiff installed the new roof membrane, the Court found that there were, in fact, allegations of "property damage." As a result, the Court held that coverage was available to plaintiff. The Court also rejected the insurer's allegations that there was no "occurrence" as that term is defined by the applicable policy.

Submitted by: Anthony J. Zarillo, Jr. and Jason P. Gratt (Courter, Kobert & Cohen, P.C.)

 

10/16/07          Porter v. Shelter Mutual Insurance Company
Missouri Court of Appeals, Western District

Insurance Company Entitled To Deduct Depreciation In Calculating Loss Payments
Here the insurance company investigated the losses and determined the estimated cost to repair the damage and deducted an amount it calculated to be depreciation and paid the balance to the policyholders. Plaintiff policyholders filed suit against the insurance company seeking to have the carrier pay the full cost to repair regardless of whether the repairs were completed (i.e., without deduction for depreciation). In affirming judgment against the policyholders, the Appeals Court noted that the applicable statute (RS Mo. Section 379.150) clearly states that every policy requires payment for partial losses of "a sum of money equal to the damage done to the property, or repair," which has been interpreted to mean "actual cash value." The Court further noted that the foregoing interpretation of "damage" was not based on statutory interpretation but rather recognizes that casualty policies generally and historically cover losses at actual cash value.

Submitted by: Anthony J. Zarillo, Jr. and Marysol Rosado Thomas (Courter, Kobert & Cohen, P.C.)

 

Reported Decisions

 

Zeldin, as assignee of Mikhail Markman v. Interboro Mut. Ins. Co.



Miller & Goldman P.C., New York, N.Y. (Julie L. Miller and Linda
A. Goldman of counsel), for appellant.
Shayne, Dachs, Stanisci, Corker & Sauer, Mineola, N.Y.
(Norman H. Dachs of counsel), for
respondent.

 

DECISION & ORDER

In an action, inter alia, to recover damages for a bad faith breach of contract, the plaintiff appeals from an order of the Supreme Court, Kings County (Martin, J.), dated April 28, 2003, which denied her motion for summary judgment on the complaint and granted the defendant's cross motion for summary judgment dismissing the complaint.

ORDERED that the order is affirmed, with costs.

On March 8, 1998, the plaintiff sustained serious personal injuries when she was a passenger in a vehicle owned and operated by Mikhail Markman, a/k/a Mikhail Markham. The plaintiff commenced an action to recover damages for personal injuries against Markman, who was insured by a policy issued to him by the defendant, Interboro Mutual Indemnity Insurance Company (hereinafter Interboro). The applicable limit of the liability policy was $25,000. On August 5, 1999, after an inquest, the plaintiff obtained a default judgment against Markman in the sum of $2,024,657.53. Thereafter, Markman assigned all of his rights and claims against Interboro to the plaintiff. The plaintiff, as Markman's assignee, subsequently commenced this action against Interboro alleging, inter alia, that it committed a bad faith breach of contract by refusing to defend Markman in the underlying lawsuit.

"Where an insurance policy requires that notice of an occurrence be given promptly, notice must be given within a reasonable time in view of all of the facts and circumstances" (Eagle Ins. Co. v Zuckerman, 301 AD2d 493, 495; see Merchants Mut. Ins. Co. v Hoffman, 56 NY2d 799, 801-802; Travelers Indem. Co. v Worthy, 281 AD2d 411). "Providing an insurer with timely notice of a potential claim is a condition precedent, and thus [a]bsent a valid excuse, a failure to satisfy the notice requirement vitiates the policy'" (Sayed v Macari, 296 AD2d 396, 397, quoting Security Mut. Ins. Co. v Acker-Fitzsimons Corp., 31 NY2d 436, 440). Insurance Law § 3420(a)(3) provides that a notice of claim to an insurer may be made by the insured, the injured person, or any other claimant (see Hazen v Otsego Mut. Fire Ins. Co., 286 AD2d 708, 709; Eveready Ins. Co. v Chavis, 150 AD2d 332, 333).

Here, although the plaintiff provided written notice to Interboro by letter dated June 1, 1998, it is undisputed that Markman wholly and inexcusably failed to notify Interboro of the accident in violation of the express requirements of the policy. Inasmuch as Markman failed to comply with the notice provisions of the policy, he, and therefore the plaintiff, who stands in his shoes for purposes of this action, is estopped from contending that Interboro improperly disclaimed coverage on that basis (see Daus v Lumbermen's Mut. Cas. Co., 241 AD2d 665, 666; Pipoli v United States Fid. & Guar. Co., 38 AD2d 249). Significantly, the plaintiff did not commence a declaratory judgment action against Interboro in her capacity as the injured party, seeking a declaration that Interboro was obligated to defend Markman (see Lang v Hanover Ins. Co., 3 NY3d 350, 354-355). As a result, any defenses that Interboro might have had against Markman were good as against the plaintiff (see Long Is. Radiology v Allstate Ins. Co., 36 AD3d 763; Losner v Cashline, L.P., 303 AD2d 647, 648).

The plaintiff's contention that the language of the policy required Interboro to show prejudice stemming from the lack of notice is raised for the first time on appeal, and thus, is not properly before this court (see Bender v Peerless Ins. Co., 36 AD3d 1120, 1121).

In light of our determination, the plaintiff's remaining contentions have been rendered academic. Accordingly, the Supreme Court properly granted Interboro's cross motion for summary judgment dismissing the complaint and denied the plaintiff's motion for summary judgment on the complaint

Geisco, LLC v. Greater New York Mutual Insurance Company


Sullivan & Manarel, LLP, New York, N.Y. (Michael R. Manarel
and Frederick M. Klein of counsel), for defendant third-party
defendant-appellant.
Keogh Timko & Moses, LLP, White Plains, N.Y. (Anthony J.
Keogh of counsel), for plaintiff-
respondent.
L'Abbate, Balkan, Colavita & Contini, LLP, Garden City, N.Y.
(Maureen E. O'Connor of counsel), for
defendant third-party plaintiff-
respondent.

 

DECISION & ORDER

In an action, inter alia, for a judgment declaring that the defendant Greater New York Mutual Insurance Company is obligated to defend and indemnify the plaintiff in an underlying action entitled Edwards v Geisco, LLC, pending in the Supreme Court, Westchester County, under Index No. 137/04, or alternatively, to recover damages for negligence, the defendant and third-party defendant, J.J. Farber Lottman, appeals from an order of the Supreme Court, Westchester County (Colabella, J.), entered December 13, 2006, which denied its motion for summary judgment dismissing the amended complaint insofar as asserted against it and dismissing the third-party complaint.

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

The defendant Greater New York Mutual Insurance Company (hereinafter GNY), the insurance carrier for the plaintiff Geisco, LLC (hereinafter Geisco), disclaimed any obligation to defend or indemnify Geisco in an underlying personal injury action entitled Edwards v Geisco, LLC, pending in the Supreme Court, Westchester County, under Index No. 137/04, on the ground that Geisco failed to notify it of the claim as soon as practicable. Geisco commenced the instant action for a judgment declaring that GNY was obligated to defend and indemnify it in the underlying action or alternatively, to recover damages for negligence from its insurance broker Stanley Lane, Inc. (hereinafter Lane), on the ground that Lane first received notice of the claim from Geisco in March 2003 and failed to notify GNY. Lane commenced a third-party action against J.J. Farber Lottman (hereinafter Farber), a producer on the GNY policy of insurance, alleging that on March 26, 2003, Lane forwarded notice of the claim to Farber, and Farber failed to forward the claim to GNY at that juncture. Thereafter, Geisco amended its complaint to add Farber as a party defendant.

Farber moved for summary judgment dismissing the amended complaint insofar as it is asserted against it and the third-party complaint, claiming that it did not receive the notice of claim which Lane allegedly forwarded to it on March 26, 2003. The Supreme Court denied Farber's motion. We affirm.

The evidence in the record indicates that Lane mailed the notice of claim to Farber at "120 Pallisades Ave. Pallisades, NJ 07650," while its correct mailing address was "120 West Palisades Blvd. Palisades Park NJ 07650." In light of this discrepancy, the presumption of receipt did not apply (see New York & Presbyt. Hosp. v Allstate Ins. Co., 29 AD3d 547). However, the postal code was correct and there is no evidence in the record that the notice was returned to the sender. Under the circumstances of this case, summary judgment was properly denied.

In the Matter of Halycon Insurance Company v. Fox

 

Teresa Girolamo, White Plains, N.Y. (Nesci Keane Piekarski Keogh
& Corrigan [Jason M. Bernheimer] of counsel), for appellant.
Landman Corsi Ballaine & Ford, P.C., New York, N.Y. (Louis
G. Corsi and Christopher G. Fretel of
counsel), for respondent Indemnity
Insurance Co. of North America.

 

DECISION & ORDER

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, the petitioner appeals (1) from an order and judgment (one paper) of the Supreme Court, Queens County (Conway, Ct. Atty. Ref.), entered September 1, 2006, which, after a framed-issue hearing, denied the petition and, in effect, dismissed the proceeding, and (2), as limited by its brief, from so much an order of the same court (Rios, J.), dated February 21, 2007, as, upon reargument, adhered to the original determination.

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

ORDERED that the order is affirmed insofar as appealed from; and it is further,

ORDERED that one bill of costs is awarded to the respondent Indemnity Insurance Co. of North America.

The sole witness at the framed-issue hearing in this case was employed as the Assistant Vice President of Claims by a company which handled claims on behalf of the Indemnity Insurance Co. of North America (hereinafter Indemnity). The Assistant Vice President of Claims described the manner in which his company stored and printed its electronic records, and gave a detailed explanation as to why the print size on the version of the notice of cancellation initially submitted to the court differed from the version of the notice of cancellation which was actually sent to the insured. The court's decision to credit the testimony of this witness, and to rely upon it to conclude that the notice of cancellation sent to the insured complied with the applicable statutory print size requirements, is supported by the record and will not be disturbed on appeal (see Northern Westchester Professional Park Assoc. v Town of Bedford, 60 NY2d 492, 499). Furthermore, contrary to the petitioner's contention, the Assistant Vice President of Claims was competent to testify regarding how his company stored and retrieved electronic records, and the fact that he did not personally print the replica of the notice of cancellation which was sent to the insured went to the weight to be accorded to the replica, not its admissibility (see CPLR 4518[a]).
 

Burns v Varriale


Cornelius D. Murray, for appellants.
Michael D. Violando, for respondents Varriale and St.
Paul/Travelers Insurance Co.
Melissa A. Day, for respondent Special Funds
Conservation Committee.
Injured Workers' Bar Association, amicus curiae.

JONES, J.:

In this proceeding to extinguish a lien asserted pursuant to Workers' Compensation Law § 29, we conclude, as did the Appellate Division, that the value of future workers' compensation benefits for a claimant with a nonschedule permanent partial disability is speculative, that the present value of these benefits cannot be ascertained at the time claimant recovers damages in a third-party action, and that claimant is not entitled to an apportionment of attorney's fees based on such future benefits.

FACTS AND PROCEDURAL HISTORY

In January 2000, claimant Owen Burns, then an 18-year veteran of the Town of Colonie Police Department, was employed as a traffic safety investigator earning an average weekly wage of $1,330, or $69,160 annually. On January 13, 2000, claimant, while on duty driving to an accident scene, was involved in a motor vehicle accident with James Varriale. As a result, claimant sustained a number of permanent injuries. On September 2, 2001, after a number of attempts to resume his duties, claimant, then 45 years old, was forced to retire. Although claimant has worked since his retirement, his earnings have decreased significantly.

Subsequently, the Workers' Compensation Board classified claimant as permanently partially disabled and ordered St. Paul/Travelers Insurance Company (the Town of Colonie's workers' compensation carrier) to pay claimant an ongoing maximum benefit of $400 per week. This benefit was based on claimant's average weekly wage before the accident.

In June 2001, claimant (and his wife, derivatively) ("plaintiffs") commenced a personal injury action against Varriale. After the completion of discovery and the filing of plaintiffs' note of issue, a trial date was scheduled. Prior to trial, Varriale's insurance company offered the full amount of his policy ($300,000) to settle the lawsuit. Travelers, which had asserted a lien against any recovery plaintiffs received, was required, under Workers' Compensation Law § 29(5), to consent to the proposed settlement before it could be finalized.

In November 2004, plaintiffs petitioned Supreme Court for an order (1) compelling Travelers to consent to the third-party settlement, (2) extinguishing Travelers' lien because under Matter of Kelly v State Ins. Fund (60 NY2d 131 [1983]), Travelers' equitable share of the attorney's fees expended by plaintiffs in bringing the action and securing the settlement exceeded the amount of the lien by approximately $19,000 and (3) directing Travelers to pay plaintiffs this excess amount (referred to as "fresh money").

In its opposition and cross-motion to add the Special Funds Conservation Committee to the motion,[FN1] Travelers consented to the third-party settlement, but reserved its right, under Workers' Compensation Law § 29(4), to take a credit against plaintiffs' net recovery (i.e., the money received from settling the third-party action after deduction of the lien). Accordingly, Travelers would be relieved from paying future benefits until the credit is exhausted (i.e., during a "holiday" period). Travelers also asked Supreme Court to apply a portion of the settlement proceeds against its existing lien after the deduction of its pro rata share (34.82%), which represents the percentage of litigation costs and disbursements plaintiffs incurred in bringing the action compared to plaintiffs' total recovery. At the time of the settlement, Travelers' lien totaled $46,523.26 [FN2]. Further, Travelers sought an order (1) determining that the present value of estimated future compensation benefits cannot be reasonably ascertained because the value of any future benefits is necessarily speculative and (2) directing claimant to pay it $30,323.86, representing the value of its lien reduced by its equitable share of the costs plaintiffs incurred in legal fees and disbursements ($46,523.26 [value of lien] less $16,199.40 [34.82% of $46,523.26] = $30,323.86). In the alternative, Travelers argued that if the present value of estimated future compensation benefits could be ascertained, the Special Funds Conservation Committee should be directed to pay its pro rata share as it is responsible for the majority of litigation costs and disbursements.

Rejecting Travelers' arguments, Supreme Court granted the relief plaintiffs requested. Specifically, the court extinguished Travelers' lien and ordered Travelers to pay $18,960.92 in "fresh money" to plaintiffs, stating that

"[w]ith [claimant's] limited employment and currently assessed future benefits, it is not speculative to calculate future benefits. Once weekly benefits can be ascertained, the worker's compensation carrier . . . is assessed an equitable apportionment of legal fees (citation omitted). This is so because the carrier benefits in two ways: by recouping past compensation and by [being relieved of] its future obligations to pay the weekly benefits."

The Appellate Division modified Supreme Court's order by (1) reversing so much thereof as directed Travelers to pay plaintiffs $18,960.92 in "fresh money" and (2) directing plaintiffs to pay $30,323.86 to Travelers to represent the value of its lien reduced by its equitable share of the litigation costs, but otherwise affirmed the order. The court held that a claimant who receives a compensation award based on a permanent partial disability is not entitled to an immediate apportionment of attorney's fees based on both the carrier's recoupment of its lien and its relief from future compensation payments because, in this situation, the present value of future compensation benefits is speculative. In support of its holding, the court stated that

"[w]hen a claimant has a permanent partial disability . . . neither the duration nor the amount of an award is readily predictable because the award may or may not continue for the rest of the claimant's life and the weekly benefit of an award can change based upon the claimant's actual earnings."


The court further stated that a claimant is only entitled to an apportionment of attorney's fees based upon the present value of future compensation benefits where the benefits are readily ascertainable, such as in cases involving death, permanent total disability or a schedule loss of use.

Finally, the court noted that claimant may periodically apply to the Board for further compensation benefits and, if claimant is entitled to a benefits award, the Board may direct further reimbursement of attorney's fees; i.e., if the Board awards further compensation benefits to claimant during the carrier's holiday, "the carrier will be required at that point to pay its equitable share of the cost of obtaining those benefits, which can no longer be deemed hypothetical or speculative, as those benefits accrue." On plaintiffs' appeal, we now affirm [FN3].

DISCUSSION

It is well settled that "[Workers' Compensation Law § 29] governs the rights and obligations of employees, their dependents, and compensation carriers with respect to actions arising out of injuries caused by third-party tort-feasors" (Matter of Kelly, 60 NY2d at 136; see Becker v Huss Co., 43 NY2d 527, 537 [1978]). Section 29(1) provides, in part, that:

"If an employee entitled to compensation under this chapter be injured or killed by the negligence or wrong of another not in the same employ, such injured employee . . . may take such compensation and medical benefits and . . . pursue his remedy against such other [party]. In such case, the . . . insurance carrier liable for the payment of such compensation . . . shall [— in order to prevent the employee from enjoying a double recovery —] have a lien on the proceeds of any recovery from such other [party] after the deduction of the reasonable and necessary expenditures, including attorney's fees, incurred in effecting such recovery, to the extent of the total amount of compensation awarded under or provided or estimated by this chapter . . . . Should the employee . . . secure a recovery from such other [party] . . . such employee . . . may apply on notice to such lienor to the court in which the third party action was instituted . . . for an order apportioning the reasonable and necessary expenditures, including [attorney's] fees, incurred in effecting such recovery. Such expenditures shall be equitably apportioned by the court between the employee . . . and the lienor."


The purpose of this provision is to

 

"stem the inequity to the claimant[] arising when a carrier benefits from an employee's recovery while assuming none of the costs incurred in obtaining the recovery, and to ensure that the claimant receives a full measure of the recovery proceeds in excess of the amount of statutory benefits otherwise due the claimant"


(Matter of Kelly, 60 NY2d at 138).

 

Moreover, equitable apportionment by the court "was purposely adopted to avoid 'rigid statutory formulas' and to implement a 'practical and flexible' approach towards ensuring that a compensation carrier assumes its fair share of the costs of litigation" (id. [citations omitted]). Workers' Compensation Law § 29(4) provides that the carrier is responsible for any deficiency between a claimant's actual recovery, i.e., the amount actually collected, and the amount of the compensation provided or estimated under the Workers' Compensation Law.

 

"[Section 29(4)] has been construed to mean that in a deficiency case the amount 'actually collected' by the employee is the recovery proceeds remaining after deduction for litigation costs. . . . Therefore, the carrier assumes the entire cost of obtaining the recovery, as its responsibility to make payments is reduced only by the amount 'actually collected' by claimant"


(Matter of Kelly, 60 NY2d at 138-139 [citation omitted]). "The ultimate determination of the equitable apportionment of legal expenses . . . resides in the courts vested with the powers of fact finding and the exercise of a sound discretion" (Becker, 43 NY2d at 544). Whether, under the circumstances presented here, the value of future compensation benefits can be ascertained is a question of law subject to this Court's review (see id.).

In Matter of Kelly, petitioner was awarded death benefits under Workers' Compensation Law § 16 after her husband was killed in the course of his employment. After petitioner brought a wrongful death action and recovered $315,000, she applied to the Surrogate's Court for an equitable distribution of the recovery proceeds between her and the compensation carrier. We held that a carrier's equitable share of the litigation costs and disbursements incurred by a claimant must be apportioned based on the total benefit the carrier receives (see Matter of Kelly, 60 NY2d at 135, 140). Regarding the carrier's total benefit, we noted that when a claimant recovers damages in a third-party action, a carrier benefits in two ways — i.e., the carrier recoups its lien (past benefits paid out to the claimant) and is relieved of its future obligation to make benefit payments to the claimant (due to its section 29[4] credit) (id. at 135)[FN4]. In recognizing that the carrier's future benefit must be taken into account, we stated that it "is not so speculative that it would be improper to estimate and to assess litigation costs against this benefit to the carrier" (Matter of Kelly, 60 NY2d at 139). From this statement it follows that if the carrier's future benefit is speculative (i.e., it cannot be quantified or reliably predicted), it would not be appropriate for a court to apportion attorney's fees based on such benefit.

Following the lead of Matter of Kelly, a number of courts, apportioning attorney's fees based on a carrier's future benefit, have held that if the value of such benefit cannot be quantified by actuarial or other reliable means, apportionment of fees based on that benefit is impermissible (see Matter of Briggs v Kansas City Fire & Mar. Ins. Co., 121 AD2d 810, 812 [3d Dep't 1986]; Matter of McKee v Sithe Independence Power Partners, 281 AD2d 891 [4th Dep't 2001])[FN5]. Moreover, the Third and Fourth Departments have held that if a claimant does not receive benefits for death, total disability or schedule loss of use, the carrier's future benefit cannot be quantified by actuarial or other reliable means (id. [emphasis supplied]). We agree.

When an employee dies in the course of employment, the dependent spouse may be awarded weekly death benefits for life — payable at a rate that does not change — unless the spouse remarries (see Workers' Compensation Law § 16). Further, the Board can determine the present value of future death benefits by using actuarial tables that take into account the dependent spouse's life expectancy and the probability of remarriage. When an employee is classified as having a permanent total disability, there is no expectation that he or she will rejoin the work force. Accordingly, the compensation benefits awarded to such employee do not fluctuate and continue for the duration of the employee's life, which can be reliably predicted using life expectancy tables (see Workers' Compensation Law § 15[1]). Finally, compensation awards for schedule loss of use, which pay an employee for lost earnings associated with the loss of use of a specific body part, are easily ascertainable because such awards are paid out over a specific number of weeks at a set rate (or in a lump sum) (see Workers' Compensation Law § 15[3]). Although there is a measure of uncertainty in all forecasts, a forecast of the future course of, and compensation payments resulting from, a permanent partial disability is substantially more uncertain than a comparable forecast in the cases discussed above.

If the Board determines that a workers' compensation claimant has a permanent partial disability and that the claimant retired from his or her prior job due to that disability, an inference that his or her reduced future earnings resulted from the disability may be drawn. First, claimant must demonstrate that his or her reduced earning capacity is due to the disability, not "age, general economic conditions or other factors unrelated to the disability" (Matter of Meisner v United Parcel Serv., 243 AD2d 128, 130 [3d Dep't 1998]). The carrier can overcome the inference by offering proof that something other than the disability — e.g., voluntary withdrawal from the labor market — is the sole cause of claimant's reduced earning capacity (see Matter of Leeber v LILCO, 29 AD3d 1198, 1199 [3d Dep't 2006]; Matter of Tipping v National Surface Cleaning Mgt., Inc., 29 AD3d 1200, 1200-1201 [3d Dep't 2006]; Matter of Rothe v United Med. Assoc., 18 AD3d 1093, 1094 [3d Dep't 2005]). Thus, in a permanent partial disability case, whether a claimant has maintained a sufficient attachment to the labor market must be resolved by the Board in determining his or her reduced earning capacity and whether benefits should be awarded.

A claimant who demonstrates that his or her reduced earnings are related to the partial disability may receive a reduced earnings award (see Workers' Compensation Law § 15[3][w]). The weekly rate for such award equals 66 2/3% of the difference between claimant's average weekly wage prior to the disability and "his [or her] wage earning capacity thereafter" (id.). "The wage earning capacity of an injured employee in cases of partial disability shall be determined by his [or her] actual earnings" during the period of the disability (Workers' Compensation Law § 15[5-a]; see also Matter of Matise v Monroe Waterproofing Co., 293 NY 496, 500 [1944] ["where actual earnings during the period of the disability are established, wage earning capacity must be determined exclusively by the actual earnings of the injured employee without evidence of capacity to earn more or less during such disability period"]). Therefore, in addition to establishing a sufficient attachment to the labor market, a permanent partially disabled claimant who alleges that he or she works must provide the Board with proof of actual earnings after the work for a given period is performed.

Here, the Board's determination that claimant has a permanent partial disability did not entitle him to weekly compensation benefits at a specific rate over his life or over a set period. Claimant has an ongoing obligation to demonstrate his continued attachment to the labor market and how much he actually earns. However, as these variables cannot be reliably predicted, the rate and duration of benefits awarded by the Board may change from one period to the next.  Thus, at the time a permanently partially disabled claimant recovers damages in a third-party action, the value of future compensation benefits is speculative.

Even if the present value of the future benefits cannot be ascertained at the time of claimant's recovery in a third-party action, the carrier should be required to periodically pay its equitable share of attorney's fees and costs incurred by claimant in securing any continuous compensation benefits. We note that because the present value of future benefits in a permanent partial disability case is not ascertainable, the court cannot use these benefits for purposes of calculating the carrier's equitable share of the claimant's attorney's fees and costs. This does not mean that the claimant must wait indefinitely for the carrier to pay its equitable share of litigation costs. The trial court, in the exercise of its discretion, can fashion a means of apportioning litigation costs as they accrue and monitoring (e.g., by court order or stipulation of the parties) how the carrier's payments are made and, thereby, ensure that the payment of attorney's fees by the carrier is based on an actual, non-speculative benefit.

Accordingly, the order of the Appellate Division should be affirmed, with costs.
* * * * * * * * * * * * * * * * *
Order affirmed, with costs. Opinion by Judge Jones. Chief Judge Kaye and Judges Ciparick, Graffeo, Read, Smith and Pigott concur.
Decided October 11, 2007

Footnotes



Footnote 1: The Special Funds Conservation Committee maintains and defends the Special Disability Fund (see Workers' Compensation Law § 15[8]).

Footnote 2: This figure is derived from Travelers' total payments to claimant ($96,523.26 [$79,960 for indemnity benefits plus $19,563.26 for medical benefits]) less $50,000 it paid in lieu of first-party no-fault benefits.

Footnote 3: By decision filed April 5, 2007, an Administrative Law Judge determined that for the period of November 3, 2004 to March 15, 2007, claimant had no legally compensable lost time or entitlement to benefit awards. In support of this determination, the Board found that "claimant has failed to demonstrate a sufficient attachment to the labor market to [warrant] further benefits." An administrative appeal is pending.

Footnote 4: Under Matter of Kelly, the carrier's equitable share is calculated by (1) adding (a) the carrier's lien and (b) the future payments the carrier is relieved from making during the holiday period, and (2) multiplying the sum of those two figures by the percentage of litigation expenses claimant incurred compared to claimant's total recovery. If the carrier's equitable share is greater than its lien, it must pay the excess to claimant.

Footnote 5: Although Matter of Briggs and Matter of McKee are factually distinguishable from the case at bar, the distinction is insignificant because these cases focus on (1) the character of the particular classification (i.e., whether the rate and duration of an award based on that classification can be quantified or predicted), and (2) whether, in light of the classification, the present value of future benefits can be accurately ascertained. Accordingly, these cases are helpful in resolving the case at bar.

 

Monkhouse v. Maven Limo, Inc.


Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Stacy R. Seldin of counsel), for appellants.
Goidel & Siegel, LLP, New York, N.Y. (Daniel H. Levy of counsel), for respondent.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the defendants Maven Limo, Inc., and Cedano M. Ortiz appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Held, J.), dated December 11, 2006, as denied their motion for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

The defendants Maven Limo, Inc., and Cedano M. Ortiz (hereinafter collectively Maven Limo) failed to establish, 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). Maven Limo failed to even address, much less satisfy their burden with respect to, the plaintiff's allegation that she suffered permanent facial scarring and disfigurement as a result of the subject accident (see O'Neal v Bronopolsky, 41 AD3d 452; Hughes v Cai, 31 AD3d 385; Loadholt v New York City Tr. Auth., 12 AD3d 352). Moreover, Maven Limo's motion papers failed to adequately address the plaintiff's claim, clearly set forth in her bill of particulars, that she sustained a medically-determined injury or impairment of a nonpermanent nature which prevented her from performing substantially all of the material acts which constituted her usual and customary daily activities for not less than 90 days during the 180 days immediately following the accident. The subject accident occurred on January 16, 2003. The plaintiff's bill of particulars alleged that as a result of the subject accident, she was confined to her home and bed for three months post-accident. Maven Limo's examining neurologist conducted his examination of the plaintiff more than 3½; years post-accident, and noted in his report that the plaintiff lost eight months of work as a result of the subject accident. He never related his medical findings to this category of serious injury for the period of time immediately following the subject accident (see DeVille v Barry, 41 AD3d 763; Kouros v Mendez, 41 AD3d 786; Torres v Performance Auto. Group, Inc., 36 AD3d 894; see also Sayers v Hot, 23 AD3d 453, 454).

Since Maven Limo failed to satisfy their prima facie burden, it is unnecessary to consider whether the plaintiff's opposition papers were sufficient to raise a triable issue of fact (see DeVille v Barry, 41 AD3d 763; Sayers v Hot, 23 AD3d 453; Coscia v 938 Trading Corp., 283 AD2d 538).
 

ACE Fire Underwriters Insurance Company v. ITT Industries, Inc.,

Order, Supreme Court, New York County (Herman Cahn, J.), entered June 8, 2006, which, inter alia, denied defendant ITT's motion to dismiss or stay this action in light of a pending Pennsylvania federal court action, unanimously affirmed, without costs. Order, same court and Justice, entered July 20, 2006, which, inter alia, denied defendant U.S. Silica's motion to dismiss or stay this action in light of a pending West Virginia action and on the ground of forum non conveniens, and granted ITT's motion to dismiss to the extent of staying this action pending a California action with respect to the excess and umbrella insurers' claims for contribution relating to silica-related claims indemnity coverage under a certain 1985 agreement, unanimously affirmed, without costs.

This is an action seeking a declaration as to the obligations of the parties with respect to insurance coverage for a contractual indemnification of silica-related personal injury claims, and with respect to the excess and umbrella insurers' rights to contribution. This action, the Pennsylvania federal action and the West Virginia action were filed virtually simultaneously, so the rule giving precedence to the state in which an action is first commenced, which in any event should not be applied mechanically, is inapplicable (see L-3 Communications Corp. v Safenet, Inc., 2007 NY App Div LEXIS 9420, *10-11, 2007 WL 2445986, *4).

The Pennsylvania action is far less comprehensive than is this action. The West Virginia action is also less comprehensive, since it mentions neither the 1985 indemnification clause and its coverage, nor any coverage for U.S. Silica after 1985. Nor does it mention indemnitee ITT, which, while perhaps not technically a necessary party, is a crucial one. The coverage issues are contractual, so the location of the personal injury claimants in the underlying actions is of little moment with respect to the relief sought. While the motion court did not address the forum non conveniens branch of U.S. Silica's motion, we find, upon review of the record (see Phat Tan Nguyen v Banque Indosuez, 19 AD3d 292, 294 [2005], lv denied 6 NY3d 703 [2006]), that U.S. Silica has failed to carry its heavy burden of showing that retention of the action in New York would not be in the interest of substantial justice (see Van Deventer v CS SCF Mgt. Ltd., 37 AD3d 280 [2007]). The dispute would place no particular burden on the courts of New York: the location of the personal injury claimants is, as noted, irrelevant to the interpretation issues in the coverage dispute; the documents, much of which have been reduced to a single computer disc, may be easily transported; and it is not claimed that unnamed witnesses in West Virginia will be needed to shed light on the dispute.

The California complaint differs from this action in that it mentions "silica sand" only in passing, the initial California complaints involve environmental property damage, the dispute over coverage with respect to the indemnification did not arise until late 2005 (so none of the California discovery or court rulings could have directly addressed that issue), and the claimed conduct of Pacific Employers in possibly ratifying an extension of coverage is not mentioned. However, the excess and umbrella insurers' contribution claims depend not on the primary silica-related coverage in the 1985 agreement, but rather on language in policies that are already before the California court. Even assuming that the argument may properly be raised for the first time at this juncture (see DeRosa v Chase Manhattan Mtge. Corp., 10 AD3d 317, 319-320 [2004]), ITT is not judicially estopped from seeking to stay the contribution claim, since it differs from the primary coverage issues and its contention does not run contrary to a successfully advanced prior position (see Baje Realty Corp. v Cutler, 32 AD3d 307, 310 [2006]).

We decline to take judicial notice of any of the materials submitted that are dehors the record. We have considered the parties' other contentions for affirmative relief and find them unavailing.

In the Matter Dinallo, Superintendent v. DiNapoli, Comptroller

 

Guy Miller Struve, for appellants.
Evan A. Davis, for respondent.


PIGOTT, J.:

The central issue on this appeal is whether the New York State Comptroller has the constitutional and/or statutory authority to audit the New York State Insurance Department Liquidation Bureau. We hold that the Comptroller does not possess such authority.

I.

The Superintendent of Insurance serves in two distinct capacities: (1) as supervisor and regulator of New York State's insurance industry as a whole (see Insurance Law §§ 201, 301); and (2) as a court-appointed receiver on behalf of distressed insurers (see Insurance Law §§ 7402, 7404). As to the latter role, the Legislature, by statutory enactment, bestowed upon the Superintendent broad fiduciary powers to manage the affairs of distressed domestic insurers and to marshal and disburse their assets (see Corcoran v Andra Ins. Co., 77 NY2d 225, 232 [1990], cert. denied 500 US 953 [1991]; see also Insurance Law §§ 7401-7436). This statutory scheme was devised for the protection of creditors, policyholders and the general public by furnishing a comprehensive mechanism for collecting the assets of a distressed insurer and paying its creditors (see Matter of Transit Cas. Co., 79 NY2d 13, 19 [1992], cert. denied 506 US 869 [1992], citing Matter of Knickerbocker Agency [Holtz], 4 NY2d 245 [1958]).

As a court-appointed receiver, the Superintendent is authorized to either rehabilitate or liquidate a domestic insurer that meets the definition of "insolvency" as defined by Insurance Law § 1309 (see Insurance Law §§ 7402[a], 7404). An order of rehabilitation directs the Superintendent "to take possession of the property of such insurer and to conduct the business thereof, and to take such steps toward the removal of the causes and conditions which have made such proceeding necessary as the court shall direct" (Insurance Law § 7403[a]). Should the Superintendent determine that attempts to rehabilitate a distressed insurer would be "futile," he may apply to Supreme Court for an order of liquidation (Insurance Law § 7403[c]). Such order directs the Superintendent "to take possession of the property of such insurer," liquidate its business, "deal with such property and business of such insurer," and "give notice to all creditors to present their claims" (Insurance Law § 7405[a]). An order of liquidation terminates the distressed insurer's existence, and the Superintendent "'for all practical purposes takes the place of the insolvent insurer'" (see Matter of Knickerbocker Agency [Holtz], 4 NY2d at 251, quoting Bohlinger v Zanger, 306 NY 228, 234 [1954], rearg. denied 306 NY 851 [1954]).

Upon entry of an order of liquidation, the Superintendent is "vested by operation of law with the title to all property, contracts and rights of action of such insurer" (Insurance Law § 7405[b]). He has the discretionary authority to dispose of assets and compromise claims of a distressed insurer, pursuant to statutory claim priorities and subject to the approval of Supreme Court (see Insurance Law §§ 7428, 7434). Supreme Court, in turn, is charged with directing "the manner in which payments and dividends to creditors shall be made" (Matter of Knickerbocker Agency [Holtz], 4 NY2d at 252 [citation omitted]).

The Superintendent enforces orders of rehabilitation and liquidation through the New York Liquidation Bureau ("Bureau"), a separate office of the Insurance Department which conducts the day-to-day operations of the distressed insurer (see Gillis, Litigators Must Prepare for Risk that Insurers May Go Into Rehabilitation or Liquidation, 75 NY St BJ 20 [March/April 2003]). The Bureau routinely retains personnel from the distressed insurer to assist it in the liquidation process, a practice sanctioned by Insurance Law § 7422(a). Such individuals are compensated "out of the funds or assets of such insurer" (Insurance Law § 7422[b]) and are not employees of the State (see e.g. Matter of Kinney, 257 AD 496, 499 [3d Dept 1939], affd. without opinion 281 NY 840 [1939]; see also Helvering v Therrell, 303 US 218, 221, 225 [1938]).

II.

In January 2004, the Comptroller sought to audit the financial management and operating practices of the Bureau. The Bureau rejected the Comptroller's request, asserting that the Bureau was not a "state agency" subject to oversight by the Comptroller. After several months of unsuccessful negotiations concerning the scope of the audit, the Comptroller issued nine testimonial subpoenas seeking an examination of the Superintendent and eight Bureau officials. The purpose of the audit was to: (1) "determine whether the financial management and operating practices of the Liquidation Bureau are effective in carrying out its responsibility to liquidate and settle the affairs of insolvent insurance companies"; and (2) "establish the accuracy and completeness of the abandoned property reports the Liquidation Bureau has filed with the Comptroller under the Abandoned Property Law." The Comptroller's asserted authority to audit the Bureau was premised on article V, § 1 of the New York State Constitution, the State Finance Law, and the Abandoned Property Law. Specifically, the Comptroller contended that his audit authority originated from his constitutional and statutory powers to audit all official accounts, moneys under the control of State officials, and the books, records and documents of entities required to file abandoned property reports with the Comptroller.

The Comptroller also served a subpoena duces tecum seeking production of documents concerning, among other things, the financial records of distressed insurers in liquidation and records from the Bureau's abandoned property account involving open and closed rehabilitated and liquidated estates. The Comptroller's asserted authority and purpose for the production of the documents was premised on the same constitutional and statutory authority set forth in the testimonial subpoenas.

The Superintendent [FN1] and the eight subpoenaed Bureau employees commenced this special proceeding to quash all ten subpoenas, asserting that the Comptroller lacked the constitutional and statutory authority to audit the Bureau. They additionally asserted that the subpoenas issued relative to the proposed audits of abandoned property were overly broad and burdensome. In his verified answer, the Comptroller sought a declaration that he had the authority to pre-audit all Bureau expenditures and post-audit the financial management and operations of the Bureau, and that the Comptroller's power to audit encompassed all assets held by the Superintendent, including abandoned property reports of open and closed insurer estates.

Supreme Court quashed the subpoenas, holding that article V, § 1 of the New York State Constitution, State Finance Law § 111 and Abandoned Property Law § 1412-a did not permit the Comptroller to pre-audit Bureau expenditures, post-audit the financial management and operations of the Bureau, or empower him to audit the property of insolvent insurers (see Serio v Hevesi, 9 Misc 3d 835, 841-844 [Sup. Ct., New York County 2005]). In a 3-2 decision and order, the Appellate Division reversed the judgment of Supreme Court and reinstated the subpoenas, holding that the Bureau is a "state agency" and that the Superintendent, when acting as a liquidator, is a "state officer," and therefore the Comptroller had the constitutional and statutory authority to audit the Bureau (see Serio v Hevesi, 40 AD3d 72, 78-81 [1st Dept 2007]). The Appellate Division further concluded that the Comptroller's audit authority was "not limited to examining the . . . Bureau's handling of abandoned property" but also included the power to audit open and closed liquidation proceedings (id. at 82). We now reverse that order and reinstate the judgment of Supreme Court.

III.

The Comptroller asserts that his constitutional and statutory authority to pre-audit Bureau expenditures and post-audit the financial management and operational practices of the Bureau is derived from article V, § 1 and State Finance Law § 111, respectively. Both provisions relate to the Comptroller's express authority to pre-audit certain expenditures. The Comptroller's asserted authority to post-audit is derived from his "implicit constitutional authority to post-audit funds under state control and his express constitutional power to audit all official accounts."

The Comptroller's constitutional authority to pre-audit certain enumerated expenditures originates from article V, § 1, which provides, in pertinent part, that:


"The comptroller shall be required: (1) to audit all vouchers before payment and all official accounts; (2) to audit the accrual and collection of all revenues and receipts; and (3) to prescribe such methods of accounting as are necessary for the performance of the foregoing duties. The payment of any money of the state, or of any money under its control, or the refund of any money paid to the state, except upon audit by the comptroller, shall be void, and may be restrained upon the suit of any taxpayer with the consent of the supreme court in the appellate division on notice to the attorney general. In such respect, the legislature shall define the powers and duties and may also assign to him or her: (1) supervision of the accounts of any political subdivision of the state . . . The legislature shall assign to him or her no administrative duties, excepting such as may be incidental to the performance of these functions, any other provision of this constitution notwithstanding."

The aforementioned constitutional pronouncement designates the Comptroller as the "independent auditing official for the affairs of the State" (Patterson v Carey, 41 NY2d 714, 723 [1977]). As such, all of the duties delineated in article V, § 1, "whether required or discretionary, are in furtherance of the [Comptroller's] fundamental duty of the office, to 'superintend the fiscal concerns of the State'" (Blue Cross and Blue Shield v McCall, 89 NY2d 160, 166 [1996], quoting State Finance Law § 8; 4 Report of the 1938 New York State Constitutional Convention Committee on State and Local Government in New York, at 337).

In 1939, the Legislature passed State Finance Law § 111, the statutory counterpart to article V, § 1, to further delineate and designate the Comptroller's pre-audit authority. That provision states that:


"No moneys of the state, including moneys collected in its behalf, and no moneys in the possession, custody or control of any officer, agent, or agency of the state in his or her representative capacity, and no moneys in or belonging to any fund or depository, title to which is vested in the state, shall hereafter be paid, expended or refunded except upon audit by the comptroller" (emphasis supplied).

Since the passage of article V, § 1 and State Finance Law § 111, the Comptroller has, on certain occasions upon the consent of the Bureau, post-audited the Bureau's financial management and operating practices. The first of such post-audits was conducted in 1976; prior to that time, the Bureau operated without any pre-audits or post-audits by the Comptroller. Indeed, this is the first time the Comptroller has sought to pre-audit Bureau expenditures, who now contends that any moneys expended by the Bureau without a pre-audit are void. Our interpretation of the constitutional and statutory provisions before us does not support such an argument.

We now hold that because the liquidation of a distressed insurer has no impact on the State fisc, it does not implicate the Comptroller's constitutional and statutory authority to superintend the fiscal affairs of the State and therefore the Comptroller lacks the authority to audit the Bureau [FN2]. Specifically, neither article V, § 1 nor State Finance Law § 111 grant the Comptroller the power to audit the Bureau because assets of a distressed insurer constitute neither "money[s] of the state" nor "money[s] under [state] control." We recognize that the statutory framework of the Insurance Law grants the Superintendent legal title to the assets of the insolvent insurer (see Insurance Law § 7405[b]); however, equitable title remains with the distressed insurer for distribution to the creditors and policyholders (see Matter of Kinney, 257 AD at 499, supra). Any assets distributed by the Superintendent to creditors are derived from the estate of the distressed insurer, subject to direction of Supreme Court (see Insurance Law §§ 7428 & 7434). The State has no interest in those assets and thus they do not constitute "money[s] of the state." Nor do assets of a distressed insurer constitute "money[s] under [state] control" (see generally Smith v Levitt, 37 AD2d 418 [3d Dept 1971], affd. 30 NY2d 934 [1972]). Such assets are segregated from the State Treasury and are not commingled with State funds. Moreover, the assets remain under the control of the Superintendent in his capacity as liquidator of a private business, not in his public capacity as a regulator and supervisor of the insurance industry, and therefore the assets are not under State control.

The Comptroller, citing to State Finance Law § 111, argues that the assets of a liquidated insurer constitute "moneys in the possession, custody or control" of the Superintendent "in his representative capacity" as an officer of the State. We disagree. When acting as liquidator of a distressed insurer, the Superintendent operates as a statutory receiver who stands in the shoes of a private entity and "takes immediate possession and control of the assets and proceeds to a liquidation of its affairs" (Bohlinger, 306 NY at 234, supra). Indeed, the Superintendent as liquidator occupies a legal status that is "separate and distinct from the superintendent of insurance as the public official charged with regulating the insurance industry generally" (Matter of Ideal Mut. Ins. Co., 140 AD2d 62, 67-68 [1st Dept 1988]). Thus, while the Superintendent's role as liquidator is judicial and private, his role as regulator and supervisor is administrative and public. Consequently, the Superintendent as liquidator is not a state officer but rather one who acts on behalf of a private entity.

IV.

Nor do we agree that the Bureau is a "state agency" subject to audit by the Comptroller pursuant to State Finance Law § 8(2-b)(a). Section 8(2-b)(a), which is part of the State Governmental Accountability, Audit and Internal Control Act, permits the Comptroller to audit the "internal controls and operations of state agencies." A "state agency" is defined as "[a]ny . . . board, bureau, division, commission, committee, council, office or other governmental entity performing a governmental or proprietary function for the state" (State Finance Law § 2-a[3] [emphasis supplied]). The Bureau does not perform a governmental or proprietary function "for the state", but rather runs the day-to-day operations of private businesses in liquidation pursuant to Supreme Court order. The Bureau is not part of the Insurance Department's budget, operates without the benefit of state funds, maintains its own errors and omissions coverage, and is represented by its own private counsel, not the Attorney General, as is normally the case when a state agency is sued. Thus, the Bureau is not a "state agency" within the ambit of State Finance Law § 8(2-b)(a). To hold otherwise would be to contravene article V, § 1's prohibition against the Legislature assigning to the Comptroller administrative tasks that are not incidental to his duty to superintend the fiscal concerns of the State (see Blue Cross and Blue Shield, 89 NY2d at 167, supra).

Because the Superintendent as liquidator is neither a state officer, nor the Bureau a state agency, State Finance Law § 121(2) does not apply to either the Superintendent or the Bureau. Section 121 (2) permits the Comptroller to audit those funds governed by State Finance Law § 4(4), which applies to "money[s] which [have] not been given, granted, or bequeathed to the state . . . and the ownership and equitable title of which belongs to an individual or organization other than the state, but which is being held by an agency or officer of the state."

V.

Finally, the Comptroller lacks the authority under the Abandoned Property Law to conduct the broad audit functions he seeks to implement in this case. Therefore, Supreme Court properly determined that the subpoenas issued here were overly broad.

Based on the foregoing, the Appellate Division's order should be reversed, with costs, and the judgment of Supreme Court should be reinstated.
* * * * * * * * * * * * * * * * *
Order reversed, with costs, and judgment of Supreme Court, New York County, reinstated. Opinion by Judge Pigott. Chief Judge Kaye and Judges Ciparick, Graffeo, Read, Smith and Jones concur.
Decided October 11, 2007

Footnotes



Footnote 1: This proceeding was originally commenced by then-Superintendent of Insurance Gregory V. Serio against then-Comptroller Alan G. Hevesi. Since that time, Mr. Serio has been replaced by Eric R. Dinallo, and Mr. Hevesi has been replaced by Thomas P. DiNapoli.

Footnote 2: This holding is not meant to imply that the Superintendent may not be subject to an independent audit. Although the Legislature does not have the authority under our holding in Blue Cross and Blue Shield to assign to the Comptroller the task of auditing the Bureau, it does have the authority to require the Bureau to retain independent auditors.

 

Wilson v. Sirius America Insurance Company


White Quinlan & Staley, LLP, Garden City, N.Y. (Regis E. Staley,
Jr., of counsel), for appellant.
Sobo & Sobo, LLP, Middletown, N.Y. (Gregory M. Sobo of
counsel), for respondents.

 

DECISION & ORDER

In an action pursuant to Insurance Law § 3420(a)(2) to recover an unsatisfied judgment against the defendant's insured, the defendant appeals from an order of the Supreme Court, Orange County (Lubell, J.), entered July 5, 2006, which granted the plaintiffs' motion for summary judgment and denied its cross motion for summary judgment dismissing the complaint.

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

The plaintiff Stephen Wilson was injured at a construction site where he was employed as a foreman for a plumbing subcontractor. He and his wife commenced an action (hereinafter the underlying action) against the general contractor, K.J. Gold, LLC (hereinafter KJ), asserting, inter alia, causes of action predicated on violations of Labor Law §§ 200 and 241(6). KJ's insurer, the defendant Sirius America Insurance Company, disclaimed coverage based on an exclusion contained in endorsement Form SAIC 022 to the Commercial General Liability policy issued to KJ (hereinafter SAIC 022). In relevant part, the endorsement excluded coverage for "bodily injury" arising out of work performed on behalf of KJ by a subcontractor "when there is no prior written and signed contract entered into between [KJ] and the . . . subcontractor . . . requiring the . . . subcontractor . . . to indemnify and hold harmless [KJ] in the event of a loss, including any loss suffered by an employee of the . . . subcontractor." The defendant maintains, and the plaintiffs do not dispute, that there was no written agreement between KJ and the injured plaintiff's employer.

KJ ultimately defaulted in the underlying action and, after an inquest, judgment was entered in the plaintiffs' favor. Thereafter, the plaintiffs commenced this action to recover on the judgment. The Supreme Court granted the plaintiffs' motion for summary judgment on the ground that SAIC 022 violated General Obligations Law § 5-322.1 and, therefore, was void as against public policy, and denied the defendant's cross motion for summary judgment dismissing the complaint. We reverse.

Contrary to the plaintiffs' contention, SAIC 022 does not violate General Obligations Law § 5-322.1, which, by its own terms, "shall not affect the validity of any insurance contract, workers' compensation agreement or other agreement issued by an admitted insurer." Had the insured in this case actually obtained from the third-party subcontractor the broadly-worded indemnification agreement contemplated by SAIC 022, we recognize that the indemnification agreement itself, under certain circumstances, would have been void under General Obligations Law § 5-322.1 (see Itri Brick & Concrete Corp. v Aetna Cas. & Sur. Co., 89 NY2d 786; Brown v Two Exch. Plaza Partners, 76 NY2d 172; Alesius v Good Samaritan Hosp. Med. & Dialysis Ctr., 23 AD3d 508). Significantly, however, the invalidity of the underlying indemnity agreement would not have relieved the carrier of its obligation to provide coverage to its insured under the terms of the policy. Rather, it would only have affected the carrier's ability, as subrogee of its insured, subsequently to seek enforcement of the indemnification provision against the third-party subcontractor.

In this case, however, KJ never entered into a written indemnification agreement with the injured plaintiff's employer, as required under the contract of insurance as a condition of coverage. Under these circumstances, the defendant was entitled to summary judgment dismissing the complaint.
SCHMIDT, J.P., GOLDSTEIN, SKELOS and FISHER, JJ., concur.

State of New York Insurance Department, Liquidation Bureau v Generali Insurance Co..


Milton M. Witchel, P.C., New York (Bernard S. Epstein of
counsel), for appellant.
Armienti, DeBellis & Whiten, LLP, New York (Vanessa
Corchia of counsel), for respondent.

Order, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered on or about April 12, 2006, which, in this action seeking contribution for plaintiff's defense and settlement of the underlying personal injury claim, to the extent appealed from, granted plaintiff's cross motion for summary judgment as against defendant Generali Insurance Company and directed that judgment be entered against Generali in the amounts of $23,302.42 and $210,191.08, plus interest, affirmed, without costs.

In 1993, two children and their mother instituted an action to recover damages caused by their exposure to lead paint. Rosan Realty Corp., an owner of the premises where the alleged exposure occurred, was named as a defendant. During Rosan's ownership of the premises, it was insured for the risk at issue by Generali for 5.5 months, and by Transtate Insurance Company for 10.2 months. The coverage provided by the two insurers was discontinuous, and for much of the risk period at issue in the lawsuit there was no coverage. Following the lawsuit's commencement, Transtate notified Generali of the claim(s) against the insured, but Generali disclaimed any defense or indemnification obligation under its policy and, accordingly, did not participate in the litigation or its settlement. Inasmuch as Transtate had become insolvent, plaintiff Liquidation Bureau, acting through Transtate on behalf of the now-defunct Rosan, paid both the entire cost of the defense and Rosan's share of the settlement. It thereafter brought this action, seeking partial reimbursement of the defense and indemnification costs it had borne from Generali. The motion court determined that Generali should reimburse plaintiff for half of the defense costs and that, although the insurers' respective indemnification obligations should be prorated according to the length of time each covered the risk, the insurers should, according to their respective rates of proration, together bear responsibility for that portion of the settlement covering the period when there was no insurance coverage. Generali takes issue with these allocations, urging that both its defense and indemnification obligation should have been prorated according to its time on the risk, and that the insured should bear its own defense and indemnification costs, on a prorated basis, for the period during which the risk at issue went uninsured.

We reject Generali's proposed defense cost allocation as inequitable. It is now undisputed that Generali was in fact obligated to defend its insured. Having unjustifiably disclaimed that obligation and left plaintiff to absorb all of the defense costs, Generali may not now have its defense obligation finely tailored to its "time on the risk," particularly where the insured is defunct and there is no reasonable possibility that it will bear any share of the defense costs. Under the circumstances, we see no reason to disturb the motion court's determination to allocate the defense costs equally between plaintiff and Generali.

With respect to indemnification, although it is true that "time-on-the-risk" has been employed to prorate insurers' respective obligations (see Consolidated Edison Co. of New York v Allstate Ins. Co., 98 NY2d 208 [2002]; Serio v Public Serv. Mut. Ins. Co., 304 AD2d 167, 168 [2003]), the cited cases do not involve settlements pertaining to risks extending over uninsured periods, and, indeed, no authority is advanced supporting the utilization of the kind of strict proration advocated by Generali in a situation where there are lapses in insurance coverage and the insured is not a viable entity. Significantly, the Court of Appeals stated in Consolidated Edison, supra, that its reliance on "time-on-the-risk" proration in that case did "not foreclose pro rata allocation among insurers by other methods" and that "this is not the last word on proration" (98 NY2d at 225). Under the particular circumstances presented, in which plaintiff, in the face of Generali's unjustified refusal to honor its obligations, bore nearly the entire costs of defending and settling the underlying claim against the defunct insured, covering lengthy periods for which there was no applicable coverage, the proration formula employed by the motion court was manifestly fair and should stand.

Generali's remaining arguments are unavailing.

All concur except Catterson and Malone, JJ. who dissent in a memorandum by Catterson, J. as follows:


CATTERSON, J. (dissenting)

In 1993, the underlying personal injury action was instituted on behalf of two infants to recover damages caused by their exposure to lead paint. Rosan Realty Corp. (hereinafter referred to as "Rosan"), an owner of the premises where the alleged exposure occurred, was named as a defendant. Two insurers, Generali Insurance Company (hereinafter referred to as "Generali") and Transtate Insurance Company (hereinafter referred to as "Transtate") covered the premises during Rosan's ownership from March 1988 to July 1992, when Rosan's interest was extinguished by foreclosure. The corporation itself was dissolved in 1994.

Following the lawsuit's commencement, Transtate notified Generali of the claim against the insured but Generali disclaimed any defense or indemnification obligation under its policy and, accordingly, did not participate in the litigation or its settlement. Inasmuch as Transtate had become insolvent, plaintiff Liquidation Bureau, acting through Transtate on behalf of the now-defunct Rosan, paid both the entire cost of the defense and Rosan's share of the settlement of $600,000.

Subsequently, Transtate brought this action against Generali seeking partial reimbursement of the defense costs of $46,604.84, and the indemnification costs it had borne. The motion court established that of the 50.7 months of total period of risk that Rosan had owned the premises, the property had been insured for 15.7 months, of which Generali was the insurer for 5.5 months and Transtate for 10.2 months. The motion court also found that the property was uninsured for 35 months.

The motion court determined that Generali should reimburse plaintiff for half of the defense costs and that, although the insurers' respective indemnification obligations should be prorated according to the length of time each covered the risk, the insurers should, according to their respective rates of proration, together bear responsibility for that portion of the settlement covering the period when there was no insurance coverage. It thus determined that Generali's share of the defense costs was 50% or $23,302.42 on the grounds of the overarching duty to defend. It also calculated Generali's pro rata share of the settlement at $210,191.08.

In effect, the court used plaintiff's formula for the ratio of time on the risk (in Generali's case, 5.5 months) to the time the premises had been insured overall (15.7 months) and not as a ratio to the total time that Rosan had owned the property (50.7 months), which would have amounted to $65,088.76 as Generali's prorata share.

On appeal, Generali takes issue with these allocations, urging that both its defense and indemnification obligations should have been prorated according to its straight time on the risk, and that the insured should bear its own defense and indemnification costs, on a prorated basis, for the period during which the risk at issue went uninsured.

As to the defense cost allocation, we reject Generali's proposal as inequitable. It is now undisputed that Generali was in fact obligated to defend its insured. Having disclaimed that obligation and left plaintiff to absorb all of the defense costs, Generali may not now have its defense obligation finely tailored to its "time-on-the-risk," particularly where the insured is defunct and there is no reasonable possibility that it will bear any share of the defense costs. Under the circumstances, we see no reason to disturb the motion court's determination to allocate the defense costs equally between plaintiff and Generali.

With respect to indemnification, however, a strict "time-on-the-risk" standard has been employed to pro rate insurers' respective obligations. See Consolidated Edison Co. of New York v. Allstate Ins. Co., 98 N.Y.2d 208, 746 N.Y.S.2d 622, 774 N.E.2d 687 (2002); Serio v. Public Serv. Mut. Ins. Co., 304 A.D.2d 167, 168, 759 N.Y.S.2d 110, 111 (2003). While the cited cases do not involve settlements pertaining to risks extending over uninsured periods, and, while the motion court may be accurate in characterizing the instant case as one of first impression in the state courts, nevertheless, similar issues determined in the federal courts offer useful guidance. For example, in Stonewall Insurance Company v. Asbestos Claims Management, (73 F.3d 1178 (2nd Cir. 1995)), the Court, addressing the issue of allocation between an insured and its carriers with respect to periods of exposure where there was no insurance, held that:

"A fair method of allocation appears to be one that is related to both time on the risk and the degree of risk assumed. When periods of no insurance reflect a decision by an actor to assume or retain a risk, as opposed to periods when coverage for a risk is not available, to expect the risk-bearer to share in the allocation is reasonable." (Internal citation marks omitted).

In U.S. Fidelity & Guaranty Co. v Treadwell Corp., (58 F. Supp.2d 77 (S.D.N.Y. 1999)), the Court, citing Stonewall, applied the "proration to the insured" approach to the "time-on-the-risk" method of allocating liability for indemnity and defense costs between an asbestos installer and its liability insurance carriers. The Court held that liability for continuous asbestos-related injuries would be allocated between comprehensive general liability insurers and the insured, as a self-insurer, during the periods it had no insurance, on a pro rata basis, according to the years on the risk, reasoning as follows:

"Treadwell made a decision to go without insurance for the years prior to 1967, and this decision should have consequences. Otherwise, Treadwell would receive the same treatment as an identically situated company that chose to purchase insurance for the full period."

...

Accordingly, Treadwell is obligated to contribute towards payment of the Asbestos Claims based on the number of years it was uninsured." Id. at 104-105.

In the instant case, appellant contends that, since the record reveals that Rosan was uninsured during the bulk of the period of risk, the compelling inference is that its decision to carry no insurance was a conscious one. The argument is persuasive, especially as Transtate does not point to any evidence in the record suggesting otherwise or that Rosan was unable to obtain coverage. Likewise, plaintiff's assertion that the foregoing federal cases did not involve insureds who were no longer viable entities is a weak attempt to distinguish them. As appellant contends, Rosan was still a viable corporation at the time of the commencement of the action, and remained so for another fourteen months. Generali, thus, asserts that Transtate had ample opportunity to seek contribution from Rosan.

In any event, the viewpoint that to rule in Generali's favor would simply encourage insurers to disclaim coverage and sit on the sidelines is less compelling than the viewpoint that to pro- rate Generali's share of the settlement to cover the uninsured portion of the risk period will encourage entities like Rosan to be even less diligent about insurance coverage.

Yagi v. Corbin



Friedman, Khafif & Sanchez, LLP, Brooklyn (Albert Khafif of counsel), for appellant.
Fiedelman & McGaw, Jericho (Dawn C. DeSimone of counsel), for Thor Corbin and Rafael Vasquez, respondents.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York
(Stacy R. Seldin of counsel), for Muhammed Rashid and Harry Kleidermacher, respondents.

Order, Supreme Court, Bronx County (Kenneth L. Thompson, Jr., J.), entered May 17, 2006, which granted defendants' motion and cross motion for summary judgment dismissing the complaint, unanimously affirmed, without costs.

The affirmed medical report of defendants' orthopedist, detailing the objective tests performed, finding that plaintiff had full range of motion in his cervical and lumbar spine, and concluding that he had recovered from the sprain- and strain-type injuries to his cervical, thoracic and lumbar spine suffered as a result of the accident, satisfied their burden of establishing prima facie that plaintiff did not suffer a serious injury (see Gaddy v Eyler, 79 NY2d 955, 956 [1992]). The burden then shifted to plaintiff to raise a triable issue of fact that a serious injury was sustained within the meaning of the Insurance Law (see Thompson v Abbasi, 15 AD3d 95, 97 [2005]).

Plaintiff failed to meet that burden because his expert's report, dated nearly three years after his last treatment of plaintiff, does not satisfactorily explain why plaintiff terminated treatment. Therefore, notwithstanding the objective medical proof offered by plaintiff, "when additional contributory factors interrupt the chain of causation . . . — such as a gap in treatment . . . or a preexisting condition — summary dismissal of the complaint may be appropriate" (see Pommells v Perez, 4 NY3d 566, 572 [2005]). Not only was there an unexplained gap in treatment of nearly three years, but plaintiff also had a pre-existing shoulder injury, which was not sufficiently addressed.

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

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

Johnson v. Marriott Mgt. Servs. Corp.



Barry Siskin, New York, for appellant.
Wade, Clark Mulcahy, New York (Paul F. Clark of counsel), for respondents.

Order, Supreme Court, Bronx County (Stanley Green, J.), entered June 5, 2006, which, to the extent appealed from as limited by the briefs, granted defendants' motion for summary judgment dismissing the complaint on the ground that plaintiff did not suffer a serious injury under Insurance Law § 5102(d), unanimously affirmed, without costs.

Defendants met their initial burden by making a prima facie showing that plaintiff did not sustain a "significant limitation of use of a body function or system" (Insurance Law § 5102[d]). Defendants submitted, inter alia, an affidavit of a board-certified neurologist, who reviewed plaintiff's medical records, examined her and performed range of motion tests before concluding that there was no neurological disorder consequent to the instant motor vehicle accident. The affidavit of plaintiff's chiropractor failed to demonstrate that the cervical disc herniations or any other injury plaintiff suffered were causally related to the accident and were not, instead, related to a prior injury or degenerative condition (see Shinn v Catanzaro, 1 AD3d 195, 198 [2003]). Plaintiff also failed to explain the two-to-three-year gap in her treatment (Pommells v Perez, 4 NY3d 566, 574 [2005]).

Defendants similarly made a prima facie showing that plaintiff did not sustain a non-permanent injury which prevented her from performing substantially her usual and customary daily activities for not less than 90 days during the 180 days immediately following her accident (Insurance Law § 5102[d]). Defendants' submissions included the opinion of the neurologist, plaintiff's medical records and a copy of plaintiff's bill of particulars in which she stated that she was only confined to bed for two weeks following the accident (see Copeland v Kasalica, 6 AD3d 253 [2004]). In opposition, plaintiff failed to provide objective, admissible evidence of the persistence of her injury during the statutorily relevant period, and her subjective statements are insufficient to create a triable issue regarding whether she sustained a serious injury under the 90/180-day category (see Nelson v Distant, 308 AD2d 338, 339-340 [2003]).

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

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

Verette v. Zia

 

Marjorie E. Bornes, New York, N.Y., for appellants.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the defendants appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Partnow, J.), dated October 31, 2006, as denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

The defendants 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). In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff's reliance on uncertified hospital records and unaffirmed magnetic resonance imaging reports failed to raise a triable issue of fact since those submissions were without probative value (see Nociforo v Penna, 42 AD3d 514; Rodriguez v Cesar, 40 AD3d 731; Phillips v Zilinsky, 39 AD3d 728; Mejia v De Rose, 35 AD3d 407). The affirmed medical report of the plaintiff's treating physician was also without probative value as she relied on the unsworn reports of others in reaching her conclusions about the plaintiff (see Phillips v Zilinsky, 39 AD3d 728; Porto v Blum, 39 AD3d 614; Iusmen v Konopka, 38 AD3d 608). The self-serving affidavit of the plaintiff, on its own, failed to raise a triable issue of fact as to whether she sustained a serious injury (see Garcia v Solbes, 41 AD3d 426; Felix v New York City Tr. Auth., 32 AD3d 527; Fisher v Williams, 289 AD2d 288). Moreover, the plaintiff failed to adequately explain the essential cessation of her physical therapy treatment five to six months post-accident (see Pommells v Perez, 4 NY3d 566; Berktas v McMillian, 40 AD3d 563; Waring v Guirguis, 39 AD3d 741; Phillips v Zilinsky, 39 AD3d 728). Lastly, the plaintiff failed to submit any competent medical evidence that the injuries she sustained in the accident caused her to be 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 527; Sainte-Aime v Ho, 274 AD2d 569).
RIVERA, J.P., KRAUSMAN, FLORIO, CARNI and BALKIN, JJ., concur.

Washington v. Delossantos



Mark L. Lubelsky, New York, N.Y., for appellant.
Jacobson & Schwartz, Rockville Centre, N.Y. (Scott Wein and
Richard Geffen of counsel), for respondent.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals, as limited by his brief, from so much of an amended order of the Supreme Court, Nassau County (Robbins, J.), dated July 10, 2006, as, upon reargument, adhered to so much of a prior determination in an order of the same court dated April 12, 2006, as granted the motion of the defendant Pedro A. Delossantos and that branch of the cross motion of the defendants Andre S. Keller and B.D. Bethea-Keller which were for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the amended order is reversed insofar as appealed from, on the law, with costs, upon reargument, so much of the order dated April 12, 2006, as granted the motion of the defendant Pedro A. Delossantos and that branch of the cross motion of the defendants Andre S. Keller and B.D. Bethea-Keller which were for summary judgment dismissing the complaint insofar as asserted against them is vacated, and the motion and the subject branch of the cross motion are denied.

Although this court has the inherent jurisdiction to do so, we do not, as a general rule, consider an issue on a subsequent appeal that was raised or could have been raised in an earlier appeal that was dismissed for lack of prosecution (see Rubeo v National Grange Mut. Ins. Co., 93 NY2d 750; Bray v Cox, 38 NY2d 350). The plaintiff appealed from the order dated April 12, 2006, but, when the Supreme Court, upon reargument, issued the amended order, the plaintiff abandoned his appeal from the earlier order, resulting in a dismissal of that appeal for failure to prosecute. Nevertheless, we exercise our discretion to review the issues raised on the plaintiff's appeal from the amended order, made upon reargument (see Faricelli v TSS Seedman's, 94 NY2d 772, 774; Rubeo v National Grange Mut. Ins. Co., 93 NY2d at 750).

The Supreme Court, upon granting reargument, erred in adhering to its original determination. In support of their respective requests for summary judgment dismissing the complaint insofar as asserted against them, the defendant Pedro A. Delossantos, and the defendants Andre S. Keller and B.D. Bethea-Keller, failed to establish their prima facie entitlement to judgment as a matter of law (see Ayotte v Gervasio, 81 NY2d 1062). Among other things, the defendants' orthopedic expert, Dr. Leon Sultan, failed to specify the objective tests he performed, or attempted to perform, to evaluate the plaintiff's cervical range of motion, indicating only that "[c]ervical spine range of motion testing is met with voluntary resistance," and that, "[w]hen not being tested," the plaintiff "is noted to be moving his head and neck without any apparent restriction." Similarly, Dr. Sultan's report fails to list any range of motion test performed in an attempt to determine the abduction and forward flexion of the plaintiff's right shoulder, although the report does note that the internal rotation of the right shoulder was "complete." Again, Dr. Sultan's report opines that range of motion testing of the right shoulder was met with total voluntary resistance, with the plaintiff holding his right upper arm against his chest wall and claiming an inability to move his right shoulder. Dr. Sultan opined that "[t]here was obvious voluntary resistance with abduction and forward flexion."

Notwithstanding the orthopedist's claims of voluntary resistance, his report was insufficient to establish, prima facie, that the plaintiff's documented prior complaints of cervical and right shoulder injury had resolved. Accordingly, because the defendants' submissions failed to resolve all material issues of fact as to whether the plaintiff sustained serious injuries, summary judgment should have been denied (see Ayotte v Gervasio, 81 NY2d 1062).

Nevertheless, we are not unmindful that Dr. Sultan's report raised serious questions regarding the plaintiff's credibility, including the extent of his cooperation in the medical examination process. A defendant in a personal injury action has the unquestioned right to have the plaintiff medically examined by a designated physician (see CPLR 3212). Where there is evidence that the plaintiff refuses to cooperate in the examination process, the proper remedy is for the defendant to move, not for summary judgment pursuant to CPLR 3212, but rather for sanctions such as preclusion of evidence, or dismissal of the complaint (see CPLR 3126; cf. Allen v State of New York, 228 AD2d 1001, 1002).
SCHMIDT, J.P., GOLDSTEIN, SKELOS and FISHER, JJ., concur.

Ramirez v. JIB II Express



Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Holly E. Peck of counsel), for appellants.
Ferro, Kuba, Mangano, Skylar, Gacovino & Lake, P.C.,
(Kenneth E. Mangano and George J. Parisi of counsel), for respondent.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Schack, J.), entered January 26, 2007, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

The defendants established their prima facie entitlement to judgment as a matter of law by proffering evidence showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957; see also Giraldo v Mandanici, 24 AD3d 419; Kearse v New York City Tr. Auth., 16 AD3d 45, 49-50). The Supreme Court erred in finding that the plaintiff's submissions raised a triable issue of fact.
SANTUCCI, J.P., GOLDSTEIN, DILLON and ANGIOLILLO, JJ., concur.

McDonald v. Stroh



Irwen C. Abrams (Wilson, Elser, Moskowitz, Edelman & Dicker,
LLP, New York, N.Y. [Joseph A.H. McGovern and John D. Morio]
of counsel), for appellant.
Joseph N. Di Grazia, Brooklyn, N.Y. (Louis R. Lombardi of counsel), for respondent.

 

DECISION & ORDER

In an action, inter alia, to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Kings County (Balter, J.), entered July 12, 2006, which denied his motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the appeal is dismissed, without costs or disbursements, as the order was superseded by an order of the same court entered December 12, 2006, made upon reargument (see McDonald v Stroh,AD3d [Appellate Division Docket No. 2007-00526, decided herewith]).
CRANE, J.P., RITTER, FISHER, COVELLO and DICKERSON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Murray v. Stabile



Goldstein & McGowan, LLP, New York, N.Y. (Steven Goldstein
of counsel), for appellant.
Martyn, Toher & Martyn, Mineola, N.Y. (David C. Smith of
counsel), for respondent Robert Stabile.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Nassau County (Robbins, J.), entered October 4, 2006, which granted the defendants' separate motions 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).

ORDERED that the order is affirmed, with costs payable by the plaintiff to the defendant Robert Stabile.

The defendants 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). In opposition, the plaintiff failed to raise a triable issue of fact. Contrary to the plaintiff's assertions on appeal, the submissions of his treating orthopedic surgeon failed to raise a triable issue of fact as to whether he sustained a fracture of the type contemplated by Insurance Law § 5102(d). The vague reference of the plaintiff's orthopedic surgeon in his submissions that the plaintiff sustained an "osteochondral fracture" was insufficient to raise a triable issue of fact (see generally Catalan v Empire Stor. Warehouse, 213 AD2d 366, 367).
RIVERA, J.P., KRAUSMAN, FLORIO, CARNI and BALKIN, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Munoz v. Haider



Mallilo & Grossman, Flushing, N.Y. (Francesco Pomara, Jr., and
Christopher L. Bauer of counsel), for appellants.
White Fleischner & Fino, LLP, New York, N.Y. (Nancy Lyness of counsel), for respondent.

 

DECISION & ORDER

In an action, inter alia, to recover damages for personal injuries, the plaintiffs Sebastian Munoz, an infant under the age of 18 years old by his mother and natural guardian, Rosemary Munoz, and Pedro Munoz, Jr., an infant under the age of 18 years old by his mother and natural guardian, Rosemary Munoz, appeal from an order of the Supreme Court, Queens County (Kelly, J.), entered July 19, 2006, which granted the defendant's motion for summary judgment dismissing the complaint insofar as asserted by them on the ground that neither of them sustained a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

Contrary to the appellants' contention, the defendant met her burden on her motion for summary judgment by establishing, prima facie, that neither of the appellants sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). Since the appellants failed to submit any medical evidence in opposition to the defendant's motion and thus did not raise any triable issues of fact, the Supreme Court properly granted the defendant's motion.
SANTUCCI, J.P., GOLDSTEIN, DILLON and ANGIOLILLO, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Coburn v. Samuel




Hawkins, Feretic, Daly & Maroney, P.C. (Sweetbaum &
Sweetbaum [Marshall D. Sweetbaum] of counsel), for appellant.
Weitz, Kleinick & Weitz (Pollack, Pollack, Isaac & DeCicco
[Brian J. Isaac and Diane K. Toner] of counsel), for respondent.

 

DECISION & ORDER

In an action, inter alia, to recover damages for personal injuries, the defendant Roxene Samuel appeals, as limited by her brief, from so much of an order of the Supreme Court, Queens County (Durante, J.), entered January 7, 2003, as denied her motion for summary judgment dismissing the plaintiff's cause of action to recover damages for personal injuries insofar as asserted against her on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

While we affirm the Supreme Court's order, we do so on grounds other than those relied upon by the Supreme Court. The defendant Roxene Samuel (hereinafter the defendant) failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The defendant did not address the plaintiff's claim that she sustained a medically-determined injury or impairment of a non-permanent nature which prevented her from performing substantially all of the material acts which constituted her usual and customary daily activities for not less than 90 days during the 180 days immediately following the accident. None of the defendant's experts related their findings to this category of serious injury for the period of time immediately following the accident (see Torres v Performance Auto Group, Inc., 36 AD3d 894; Talabi v Diallo, 32 AD3d 1014; Sayers v Hot, 23 AD3d 453).

Additionally, the defendant relied upon a medical report which failed to specify range of motion limitations in the plaintiff's cervical and lumbar spine, and two medical reports which failed to quantify those limitations (see Dzaferovic v Polonia, 36 AD3d 652; Whittaker v Webster Trucking Corp., 33 AD3d 613; Kaminsky v Waldner, 19 AD3d 370). Medical reports submitted by the defendant failed to set forth what objective testing was done to support a claim of full range of motion in the plaintiff's neck and lower torso (see Cedillo v Rivera, 39 AD3d 453; McLaughlin v Rizzo, 38 AD3d 856) and other reports failed to compare those findings to what is normal (see McNulty v Buglino, 40 AD3d 591; Harman v Busch, 37 AD3d 537). The report of the chiropractor who examined the plaintiff at the request of her no-fault carrier did not provide any support for the defendant's motion. That report was not in affidavit form and therefore did not constitute competent evidence (see CPLR 2106; Kunz v Gleeson, 9 AD3d 480; Santoro v Daniel, 276 AD2d 478).

Under these circumstances, it is not necessary to consider whether the plaintiff's papers submitted in opposition were sufficient to raise a triable issue of fact (see Whittaker v Webster Trucking Corp., 33 AD3d 613; Coscia v 938 Trading Corp., 283 AD2d 538).
SCHMIDT, J.P., KRAUSMAN, GOLDSTEIN, COVELLO and ANGIOLILLO, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Daddio v. Shapiro



Gravante & Looby, LLP, Brooklyn, N.Y. (Mary Margaret Looby
of counsel), for appellants.
Robin Harris King Fodera & Richman (Mauro Goldberg & Lilling LLP, Great Neck, N.Y.
[Deborah F. Peters and Richard J. Montes] of counsel), for respondent.

 

DECISION & ORDER

In an action to recover damages for personal injuries, etc., the plaintiffs appeal from an order of the Supreme Court, Richmond County (Maltese, J.), dated March 28, 2006, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff William Daddio 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.

The Supreme Court erred in concluding that the defendant established her prima facie entitlement to judgment as a matter of law. The defendant's submissions in support of her motion for summary judgment failed to establish that the plaintiff William Daddio (hereinafter the injured plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The defendant's papers failed to address the plaintiffs' allegation, clearly set forth in their bill of particulars, that the injured plaintiff 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 daily activities for not less than 90 days during the 180 days immediately following the accident. The accident occurred on October 12, 2000. The injured plaintiff testified that as a result of the accident he missed 4 ½; to 5 months of work immediately following the accident. The defendant relied on, inter alia, the affirmed medical report of an orthopedic surgeon who examined the injured plaintiff on September 3, 2004. The orthopedic surgeon, who conducted his examination of the injured plaintiff almost four years after the accident occurred, did not relate any of his findings to this category of serious injury for the period of time immediately following the accident. As such, the defendant failed to meet her prima facie burden (see Kouros v Mendez, 41 AD3d 786; DeVille v Barry, 41 AD3d 763; Torres v Performance Auto. Group, Inc., 36 AD3d 894; see also Sayers v Hot, 23 AD3d 453, 454).

Since the defendant failed to meet her prima facie burden, it is unnecessary to address the question of whether the papers submitted by the plaintiffs 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; see also Sayers v Hot, 23 AD3d 453, 454; Coscia v 938 Trading Corp., 283 AD2d 538).
SCHMIDT, J.P., SPOLZINO, SKELOS, LIFSON and McCARTHY, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Alexandre v Dweck


Picciano & Scahill, P.C., Westbury, N.Y. (Robin Mary Heaney and
Francis J. Scahill of counsel), for appellants Freida Dweck and
Accutime Watch Corp.
McCabe, Collins, McGeough & Fowler, LLP, Carle Place, N.Y.
(James J. Collins of counsel), for
appellant Hann Auto Trust (joining in brief
of appellants Freida Dweck and
Accutime Watch Corp.).
Baron Associates, P.C., Brooklyn, N.Y. (Alan G. Karmazin of
counsel), for respondent.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the defendants Freida Dweck and Accutime Watch Corp. appeal, and the defendant Hann Auto Trust separately appeals, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Jackson, J.), dated January 5, 2006, as denied their respective cross motions for summary judgment dismissing the complaint insofar as asserted against them on the issue of liability and on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed insofar as appealed from, with one bill of costs payable by the appellants appearing separately.

The appellants failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). The appellants' motion papers did not adequately address 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 daily activities for not less than 90 days during the 180 days immediately following the accident (see Sayers v Hot, 23 AD3d 453, 454). The accident occurred on January 2, 2002, and the plaintiff was out of work until July 2002. The appellants' physicians conducted their examinations of the plaintiff more than 2½; years after the incident. Neither expert related his findings to this category of serious injury for the period of time immediately following the accident. Where a defendant does not meet this initial burden, the court need not consider whether the plaintiff's opposition was sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538).

Furthermore, while the deposition testimony of the defendant Freida Dweck established, prima facie, that the accident did not result from negligence on her part (see Alvarez v Prospect Hosp., 68 NY2d 320, 324), the conflicting testimony of the plaintiff as to which driver was proceeding with a green light raised a triable issue of fact on the question of liability (see CPLR 3212[b]).
CRANE, J.P., LIFSON, CARNI and BALKIN, JJ., concur.

Monkhouse v. Maven Limo, Inc.



Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Stacy R. Seldin of counsel), for appellants.
Goidel & Siegel, LLP, New York, N.Y. (Daniel H. Levy of counsel), for respondent.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the defendants Maven Limo, Inc., and Cedano M. Ortiz appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Held, J.), dated December 11, 2006, as denied their motion for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

The defendants Maven Limo, Inc., and Cedano M. Ortiz (hereinafter collectively Maven Limo) failed to establish, 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). Maven Limo failed to even address, much less satisfy their burden with respect to, the plaintiff's allegation that she suffered permanent facial scarring and disfigurement as a result of the subject accident (see O'Neal v Bronopolsky, 41 AD3d 452; Hughes v Cai, 31 AD3d 385; Loadholt v New York City Tr. Auth., 12 AD3d 352). Moreover, Maven Limo's motion papers failed to adequately address the plaintiff's claim, clearly set forth in her bill of particulars, that she sustained a medically-determined injury or impairment of a nonpermanent nature which prevented her from performing substantially all of the material acts which constituted her usual and customary daily activities for not less than 90 days during the 180 days immediately following the accident. The subject accident occurred on January 16, 2003. The plaintiff's bill of particulars alleged that as a result of the subject accident, she was confined to her home and bed for three months post-accident. Maven Limo's examining neurologist conducted his examination of the plaintiff more than 3½; years post-accident, and noted in his report that the plaintiff lost eight months of work as a result of the subject accident. He never related his medical findings to this category of serious injury for the period of time immediately following the subject accident (see DeVille v Barry, 41 AD3d 763; Kouros v Mendez, 41 AD3d 786; Torres v Performance Auto. Group, Inc., 36 AD3d 894; see also Sayers v Hot, 23 AD3d 453, 454).

Since Maven Limo failed to satisfy their prima facie burden, it is unnecessary to consider whether the plaintiff's opposition papers were sufficient to raise a triable issue of fact (see DeVille v Barry, 41 AD3d 763; Sayers v Hot, 23 AD3d 453; Coscia v 938 Trading Corp., 283 AD2d 538).

 

Friedman v. Connecticut General Life Insurance Company


Richard J. Quadrino, for appellant.
Cheryl F. Korman, for respondent.

READ, J.:

We are called upon to decide whether the placement of a "Relation of Earnings to Insurance" (REI) clause within the "General Provisions" of a disability insurance policy complies with Insurance Law § 3216. For the reasons that follow, we conclude that it does.

I.

Defendant Connecticut General Life Insurance Company issued a 10-page form disability income insurance policy to plaintiff Bruce Friedman, a citizen and resident of New York, on July 19, 1983. The first section of the policy, entitled "Policy Specifications," sets forth a "Monthly Indemnity for Total Disability" in a "Benefit Amount" of $2,500, and an "Annual Premium" of $952.50. Sections entitled "Definitions," "Benefit Provisions," "Exclusions and Limitations," "Premium and Reinstatement Provisions" and "General Provisions" immediately follow.

In its "Benefit Provisions," the policy declares plaintiff eligible for a "Monthly Indemnity for Total Disability" of $2,500 upon proof of his total disability while the policy is in force. The REI clause, included within the "General Provisions," specifies, however, that

"[i]f the total amount of loss of time benefits promised for the same disability under all valid loss of time coverage upon the insured exceeds the greater of (a) the insured's monthly earnings at the time disability commenced or (b) the insured's average monthly earnings for the 2-year period immediately preceding a disability for which claim is made, the Company will be liable only for a reduced amount of the benefits under the policy. Such reduced amount will be (a) such proportion of the benefits otherwise provided under the policy as the amount of such monthly earnings or average monthly earnings bear to the total amount of monthly benefits for the same disability under all valid loss of time coverage upon the insured at the time such disability commences, plus (b) pro rata refund of the premiums paid during such 2-year period for benefits not paid. This provision, however, will not operate to reduce the total monthly amount of benefits payable under all valid loss of time coverage upon the insured below the lesser of: (a) the sum of $300 or (b) the sum of the monthly benefits specified in such coverages. This provision will not be effective with respect to any renewal of the policy after Age 65. 'Valid loss of time coverage' means all loss of time coverage provided by any government, or agency thereof, or any insurance company, organization or fund."

In June 1998, plaintiff became totally disabled within the meaning of the policy [FN1]. He had paid all the premiums due since the policy's issuance and had otherwise complied with its terms and conditions. Initially, Connecticut General tendered plaintiff a monthly benefit check in the amount of $2,500. Later, however, the company applied the policy's REI clause and reduced his monthly benefits to $543.33 (plus a pro rata refund of premiums already paid, as provided by the REI clause).[FN2]

In a summons and complaint dated June 18, 2001, plaintiff sued Connecticut General in Supreme Court on behalf of himself and a putative class. He alleged eight causes of action arising out of the company's use of REI clauses in its insurance policies in New York and elsewhere.

Plaintiff's first and third causes of action asserted class claims under other states' statutes proscribing deceptive acts or practices in business or trade and other states' statutes and regulations governing insurance respectively. A second cause of action alleged that Connecticut General's "conduct in the marketing and sale of" the policies was "materially unfair, misleading, and constituted a deceptive act or practice in the conduct of [its] business or trade" under General Business Law § 349. As a fourth cause of action, plaintiff alleged that Connecticut General was "in violation of New York insurance statutes and regulations." Plaintiff's fifth cause of action alleged breach of contract; his sixth cause of action alleged that the policy was unconscionable because of its REI clause. As remedies for the above causes of action, plaintiff principally sought damages amounting to the difference between the amount paid and the benefit amount of $2,500, and a declaration that the REI clause was void or unenforceable.

A seventh cause of action sought the statutory penalty under Insurance Law § 4226 for alleged violation of insurance regulations: a refund of premiums paid. In his eighth and final cause of action, plaintiff alleged that even if the REI clause was enforceable, Connecticut General had still underpaid him. Plaintiff therefore sought to be awarded a sum equal to the difference between the amount he considered to be due and payable and the lesser amount that he had, in fact, received.

The thrust of the complaint was that the REI clause's location in the policy was "unfair, deceptive and misleading" to plaintiff and purported class members. Specifically, plaintiff contended that section 3216(c)(7) of the Insurance Law mandated putting the REI clause together with the total disability benefit to which it applied, whereas Connecticut General had instead buried the REI clause in the policy's "General Provisions."

On August 3, 2001, Connecticut General moved to dismiss the complaint on grounds that plaintiff's claims were either time-barred or failed to state a cause of action. Supreme Court denied the motion in its entirety, agreeing with plaintiff that section 3216(c)(7) mandated placing the REI clause with the benefit provision to which it applied,

"to wit, the Total Disability Benefit. Instead, [Connecticut General] placed it in the 'General Provisions' section of the policy along with 'general' terms such as claim forms, proof of loss, payment of claims, etc. . . . [T]he Specification Page, which is the first substantive page of the policy, describes the benefit provided by the policy as $2500 without making any mention of the prior earnings 'cap.'"

Supreme Court went on to address plaintiff's eighth cause of action, although he did not need to reach it. Relying on an out-of-state case where the REI language was written by an insurance company rather than a legislature, the court opined that "it would appear that even if the clause were enforceable, plaintiff would still be entitled to the full benefit amount of the policy, in the absence of a showing that he has another disability policy providing loss of time benefits."

On May 30, 2003, plaintiff moved by order to show cause to certify a class consisting of "[a]ll insureds, owners, and beneficiaries under disability policies of insurance underwritten and sold by [Connecticut General] that contain a Relation of Earnings to Insurance Provision." On July 29, 2003, Connecticut General moved for summary judgment to dismiss the complaint. In support of its motion, the company supplied documentation to establish that the form policy issued to plaintiff had been reviewed and approved by the New York State Insurance Department for use in New York. Further, Connecticut General emphasized that

"[t]he purpose of the REI provision is to reduce or restrict loss of time benefits if the insured is over-insured at the time of claim. Application does not deprive the insured of benefits to which he was entitled. To the extent premiums were paid for a greater benefit than actually received, such premiums are returned to the policyholder."


On behalf of himself and the putative class, plaintiff on October 6, 2003 cross-moved for partial summary judgment on certain of his causes of action.

As an initial matter, Supreme Court determined that Connecticut General's "motion for summary judgment [was], in essence, a motion to reargue the prior motion to dismiss" and treated the prior order as law of the case [FN3]. Ultimately, Supreme Court dismissed plaintiff's first and second causes of action on the company's motion; granted plaintiff summary judgment on his fifth cause of action for breach of contract; declared the REI clause void from the beginning, entitling plaintiff to full disability benefits going forward and reimbursement of any amounts deducted from past payments on account of the REI clause; entered judgment for plaintiff on the seventh cause of action for payment of a statutory penalty equal to the amount of premiums paid; dismissed plaintiff's third, fourth, sixth, and eighth causes of action as duplicative and/or moot; and denied class certification.

Connecticut General appealed; plaintiff cross-appealed the denial of class certification. In addition, plaintiff contended that in the event the Appellate Division reversed the order granting him summary judgment on his fifth and seventh causes of action, it should reinstate the other claims dismissed by Supreme Court.

First, the Appellate Division faulted Supreme Court for regarding Connecticut General's motion for summary judgment as a motion to reargue the motion to dismiss, and for "treating the [prior order] as law of the case . . . since the scope of review on the two motions differs" (30 AD3d 349 [1st Dept 2006]). The court then explained that

"[t]his error was compounded by the prior motion court's erroneous construction of the policy language. The breach of contract claim was based upon the insurer's enforcement of its [REI] clause, which was alleged to be unenforceable under the contract due to failure to comply with statutory requirements. Specifically, the policy allegedly failed to notify the insured that his monthly benefit would be less than the policy's stated monthly benefit, because the location in the policy of its REI clause did not accord with the statutory requirements" (30 AD3d at 350).

The Appellate Division rejected Supreme Court's interpretation of section 3216, holding that "the location of the REI clause in the policy did not violate the statute, as a matter of law." The court denied plaintiff's cross motion in its entirety and dismissed plaintiff's fifth and seventh causes of action, ultimately directing the clerk to enter judgment in favor of defendant and dismiss the complaint. The Appellate Division did not discuss the four causes of action dismissed by Supreme Court as duplicative and/or moot based on that court's contrary interpretation of section 3216, but instead simply affirmed this part of Supreme Court's order.

Plaintiff then moved for leave to appeal to us. We granted his motion except insofar as he sought to appeal from the portion of the Appellate Division's order denying class certification, which we dismissed on the ground of finality (see 8 NY2d 875 [2007])[FN4]. We begin our analysis by considering the causes of action dismissed for the first time by the Appellate Division — the fifth cause of action for breach of contract and the seventh cause of action for a statutory penalty under Insurance Law § 4226.

II.

Plaintiff's breach-of-contract claim is premised upon a clause in the policy entitled "Conformity with State Statutes." This clause, which comes directly after the REI clause in the section captioned "General Provisions," states that "[a]ny provision of the Policy . . . in conflict with the statutes of the state in which the Insured resides . . . is hereby amended to conform to the minimum requirements of such statutes" (see also Insurance Law § 3103[a] ["in all respects in which [an insurance policy's] provisions are in violation of the requirements or prohibitions of [the Insurance Law] it shall be enforceable as if it conformed with such requirements or prohibitions"]). Consequently, if Connecticut General's REI clause does not comply with the requirements of New York's Insurance Law, the reduction of plaintiff's benefits in accordance with the REI clause would constitute a breach of contract.

Insurance Law § 3216(c)(7) provides that

"[n]o policy of accident and health insurance shall be delivered or issued for delivery to any person in this state unless: . . . [t]he exceptions and reductions of indemnity are set forth in the policy and, except those which are set forth in subsection (d) of this section, are printed, at the insurer's option, either included with the benefit provision to which they apply, or under an appropriate caption such as 'EXCEPTIONS,' or 'EXCEPTIONS AND REDUCTIONS,' provided that if an exception or reduction specifically applies only to a particular benefit of the policy, a statement of such exception or reduction shall be included with the benefit provision to which it applies" (emphasis added).


Plaintiff argues that section 3216(c)(7)'s closing proviso — i.e., "provided that if an exception or reduction specifically applies only to a particular benefit of the policy, a statement of such exception or reduction shall be included with the benefit provision to which it applies" — should control the placement of the REI clause, which concededly applies solely to the "particular benefit" of "Total Disability Benefit." Governing principles of statutory construction, as applied to the language of subsections (c)(7), (d)(2), and (d)(4), however, counsel otherwise.

First, section 3216(c)(7) begins by explicitly "except[ing] those [exceptions and reductions of indemnity] which are set forth in subsection (d) of this section" from its further requirements as to location of exceptions and reductions of indemnity. Subsection (d)(2), in turn, states as follows:

"Other provisions. No such policy delivered or issued for delivery to any person in this state shall contain provisions respecting the matters set forth below unless such provisions are in the words (not including the designation by number or letter) in which the same appear in this paragraph except that the insurer may, at its option, use in lieu of any such provision a corresponding provision of different wording approved by the superintendent [of Insurance] which is not less favorable in any respect to the insured or the beneficiary. Any such provision contained in the policy shall be preceded individually by the appropriate caption appearing herein or, at the option of the insurer, by such appropriate individual or group captions or subcaptions as the superintendent may approve."


Paragraph F in subsection (d)(2), captioned "RELATION OF EARNINGS TO INSURANCE," recites the precise wording used by Connecticut General in the REI clause that is the subject of this litigation. Thus, Connecticut General's REI clause, as an exception or reduction in indemnity "set forth in subsection [d]" of section 3216, is explicitly excepted from the requirements of section 3216(c)(7) by the plain language of that statutory provision.

Plaintiff nonetheless argues that the "subsection (d)" exception within subsection (c)(7) modifies only the phrase "either included with the benefit provision to which they apply, or under an appropriate caption such as 'EXCEPTIONS', or 'EXCEPTIONS AND REDUCTIONS'." Thus, he contends that subsection (c)(7)'s further proviso (i.e., "provided that if an exception or reduction specifically applies only to a particular benefit of the policy, a statement of such exception or reduction shall be included with the benefit provision to which it applies") modifies subsection (d) exceptions or reductions in indemnity. In short, plaintiff maintains that subsection (c)(7)'s final proviso is unqualified by that subsection's earlier, explicit limitation relating to subsection (d) enumeration.

"The purpose of a proviso is to restrain the enacting clause, to except something which would otherwise have been within it, or in some measure to modify it" (McKinney's Cons Laws of NY, Book 1, Statutes § 212). "The operation of a proviso is usually and properly confined to the clause or distinct portion of the enactment which immediately precedes it and does not, in the absence of a manifestly shown intent, extend to or qualify other sections or portions of the statute" (id.) (emphasis added). Thus, under traditional principles of statutory construction, the proviso so heavily relied upon by plaintiff modifies only "the clause or distinct portion of the enactment which immediately precedes it." The end result is that subsection (c)(7) commands that, where no subsection (d) exception or reduction in indemnity applies, any other exception or reduction in indemnity that pertains only to a particular policy benefit must be included with the benefit provision to which it applies. Thus, the statutory proviso is wholly inapplicable to the REI clause.

Further, subsection (d) sets forth its own requirements for placement and captioning of the exceptions or reductions in indemnity that it enumerates. This lends additional support to our reading of section 3216(c)(7). Specifically, subsection 3216(d)(4) provides that
"[t]he provisions which are the subject of paragraphs one and two of this subsection, or any corresponding provisions which are used in lieu thereof in accordance with such paragraphs, shall be printed in the consecutive order of the provisions in such paragraphs or, at the option of the insurer, any such provision may appear as a unit in any part of the policy, with other provisions to which it may be logically related, provided the resulting policy shall not be in whole or in part unintelligible, uncertain, ambiguous, abstruse, or likely to mislead a person to whom the policy is offered, delivered or issued" (emphasis added).

Because of this explicit direction relating to placement of subsection (d) exceptions and reductions, interpreting subsection (c)(7)'s ending proviso to govern the REI clause would inevitably create superfluity if not a downright conflict within section 3216. A court must consider a statute as a whole, reading and construing all parts of an act together to determine legislative intent (see McKinney's Cons Laws of NY, Book 1, Statutes § 97), and, where possible, should "harmonize[] [all parts of a statute] with each other . . . and [give] effect and meaning . . . to the entire statute and every part and word thereof" (id. at § 98; see also People v Mobil Oil Corp., 48 NY2d 192, 199 [1979] ["It is a well-settled principle of statutory construction that a statute or ordinance must be construed as a whole and that its various sections must be considered together and with reference to each other"]). The existence of a specific placement scheme within subsection (d) reinforces our conclusion that the final proviso of subsection (c)(7) applies only to those exceptions and reductions in indemnity that are not enumerated in subsection (d), while subsection (d)(4) — the independent provision on placement contained within subsection (d) — applies to those exceptions and reductions in indemnity that are specifically enumerated in subsection (d). Only this interpretation permits subsections (c) and (d) to fit together in complete concinnity.

Because the REI clause's placement in the policy complies with section 3216, the Appellate Division correctly dismissed plaintiff's fifth cause of action for breach of contract, as that claim hinges upon the policy provision demanding conformity with State statutes. For the same reason, the Appellate Division also properly dismissed plaintiff's seventh cause of action, a claim for statutory penalties under Insurance Law § 4226(d). We next address plaintiff's eighth cause of action.

III.

Plaintiff alleges in his eighth cause of action that even if the REI clause is enforceable, Connecticut General has not calculated his benefits correctly. He contends that once this cause of action is no longer moot, it must be reinstated because it has never been considered on its merits by any court.

The record makes clear that between Supreme Court's initial order, which was addressed solely to the pleadings, and its subsequent order, which disposed of Connecticut General's and plaintiff's motions for summary judgment and partial summary judgment respectively, neither party submitted additional facts on the subject of the eighth cause of action. Connecticut General's motion for summary judgment and its supporting memoranda, exhibits, and affirmations merely reassert the argument made in its earlier motion to dismiss; that is, that plaintiff insufficiently alleged a mistake. For his part, plaintiff did not cross-move for summary judgment on this particular cause of action. Instead, he simply took the position that there were material issues of fact regarding Connecticut General's misapplication of the REI clause, assuming it to be enforceable. As a result, plaintiff's eighth cause of action requires further adjudication. Plaintiff's arguments to support revival of his other causes of action are without merit.

Accordingly, the order of the Appellate Division, insofar as appealed from, should be modified, without costs, by reinstating the eighth cause of action and remitting to Supreme Court for further proceedings on that cause of action, and, as so modified, should be affirmed.
* * * * * * * * * * * * * * * * *
Order, insofar as appealed from, modified, without costs, by reinstating the eighth cause of action and remitting to Supreme Court, New York County, for further proceedings on that cause of action and, as so modified, affirmed. Opinion by Judge Read.
Chief Judge Kaye and Judges Ciparick, Graffeo, Smith, Pigott and Jones concur.
Decided October 18, 2007

Footnotes

Footnote 1:Plaintiff's premiums for the policy were waived on June 8, 1998.

Footnote 2:According to plaintiff's counsel, at some point Connecticut General increased his monthly benefit from $543.33 to an amount over $1,900. According to Connecticut General's counsel, plaintiff paid about $14,000 over a 15-year period in premiums and, as of November 2003, had collected roughly $98,000 in benefits.

Footnote 3:The prior motion was decided by a different Justice, who had retired by the time Connecticut General moved for summary judgment.

Footnote 4:An order denying class certification is not reviewable on appeal from a final order because it does not necessarily affect the final determination (see Karger, The Powers of the New York Court of Appeals § 4:6, at 61 [rev 3d ed 2005]).

Cameron v. Engelhart


Fischer, Bessette, Muldowney & Hunter, L.L.P.,
Malone (Matthew H. McCarole of counsel), for appellant.
Livingston L. Hatch, Plattsburgh, for respondents.

MEMORANDUM AND ORDER


Mugglin, J.

Appeal from an order of the Supreme Court (Dawson, J.), entered July 24, 2006 in Clinton County, which denied defendant's motion for summary judgment dismissing the complaint.

Plaintiff Penny M. Cameron (hereinafter plaintiff) claims that she suffered a serious injury as defined in Insurance Law § 5102 (d) when defendant's vehicle, after crashing through the front window of a Blockbuster store, pinned plaintiff between two counters. Supreme Court denied defendant's motion for summary judgment dismissing the complaint, finding that plaintiffs' evidentiary submissions created a triable issue of fact. This appeal by defendant ensued.

We reverse. Defendant met his burden of establishing that plaintiff did not suffer a significant limitation of use of a body function or system within the meaning of Insurance Law § 5102 (d), the only category of serious injury claimed by plaintiff (see Haddadnia v Saville, 29 AD3d 1211, 1211 [2006]; John v Engel, 2 AD3d 1027, 1028 [2003]). Defendant's evidence in support of his motion for summary judgment consists of plaintiff's medical records and the affidavit of a doctor who performed an independent medical examination of plaintiff on September 19, 2005. Plaintiff's medical records demonstrate that on the date of the accident, she was diagnosed with a contusion on her left thigh and X rays revealed a "normal left hip exam." Subsequently, plaintiff treated with an orthopedist who diagnosed plaintiff as suffering from a contusion to the left thigh and low back strain. The evidence further demonstrates that plaintiff missed only 18 days of work initially and that in April 2002, she injured her back and left hip as a result of a fall down four stairs. The affidavit of the independent medical examiner based on a physical examination of plaintiff in September 2005 and review of plaintiff's pre-accident and post-accident medical records, including MRIs and X rays, indicates that he could find no objective evidence of a serious injury causally related to the motor vehicle accident. In view of this evidence, the burden shifted to plaintiffs to lay bare their evidence raising a genuine issue of fact concerning the existence of a serious injury (see Pommells v Perez, 4 NY3d 566, 574 [2005]).

In response, plaintiffs submitted plaintiff's own affidavit and the affidavits of two physicians. Neither doctor indicated the date of last examination and neither included any medical records. Both lack either quantitative evidence or qualitative evidence which would support plaintiff's claim of significant limitation of use of a body function or system (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350 [2002]), and fail to describe the diagnostic tests employed or to compare plaintiff's current limitations to normal function, purpose and use of the affected body member (see Toure v Avis Rent A Car Sys., 98 NY2d at 350-351). Furthermore, plaintiffs have failed to explain the large gaps in periods of treatment or offer evidence clearly based upon recent medical examinations (see Tuna v Babendererde, 32 AD3d 574, 577 [2006]).

Finally, it is noted that in large measure plaintiffs' evidence concerning serious injury begins several years after the accident in question and several years after repeated medical exams which consistently fail to reveal any significant injury to plaintiff causally related to the accident. Given the lack of probative medical evidence that plaintiff suffered a serious injury contemporaneous with the subject accident (see Borgella v D & L Taxi Corp., 38 AD3d 701, 702 [2007]; Ortega v Maldonado, 38 AD3d 388, 388 [2007]; Earl v Chapple, 37 AD3d 520, 521 [2007]), no genuine triable issue of fact exists and defendant's motion should have been granted by Supreme Court.

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

ORDERED that the order is reversed, with costs, motion granted and complaint dismissed.

Progressive Insurance Company, as subrogee of Weiner v. Sheri Torah, Inc.



Catalano Gallardo & Petropoulos, LLP, Jericho, N.Y. (Gary
Petropoulos and Domingo R. Gallardo of counsel), for appellants.
Carman, Callahan & Ingham, LLP, Farmingdale, N.Y. (James
M. Carman of counsel), for
respondent.

 

DECISION & ORDER

In a subrogation action to recover insurance benefits paid on behalf of the plaintiff's insured, the defendants appeal from an order of the Supreme Court, Orange County (Slobod, J.) dated August 30, 2006, which denied their motion to dismiss the complaint pursuant to CPLR 3211(a)(1), (3), and (7).

ORDERED that the order is reversed, on the law, with costs, and the motion to dismiss the complaint is granted.

In 2004 the plaintiff Progressive Insurance Company (hereinafter Progressive) was the underwriter of a motor vehicle insurance policy on behalf of its insured, Arye Weiner. On December 31, 2004, Arye Weiner's son, the infant Moshe Weiner (hereinafter Moshe), was severely injured after alighting from a school bus owned by the defendant Sheri Torah, Inc., and driven by the defendant Chaim Kohn (hereinafter together the defendants), when Kohn drove the bus over Moshe's torso and legs. As a result of the motor vehicle accident, Progressive paid, on behalf of its insured, the sum of approximately $85,000 to medical and health care providers pursuant to an [*2]endorsement to its policy for additional personal injury protection (hereinafter APIP) benefits. Progressive orally notified the defendants' insurance carrier of its right of subrogation for that payment.

In 2005 Arye Weiner tentatively settled his and Moshe's underlying personal injury claims against the defendants. On or about September 13, 2005, Progressive was notified that Ayre Weiner had submitted an infant compromise application to the Supreme Court. On or about November 30, 2005, Progressive was notified that the Supreme Court scheduled a hearing on the proposed infant compromise order. After the court approved the infant compromise order, Arye Weiner executed a settlement agreement and general release on January 19, 2006, purportedly releasing the defendants from further liability. On or about January 23, 2006, Progressive, as subrogee of Arye Weiner, commenced the instant action against the defendants to recover the APIP benefits it had paid, claiming lack of notice and an improper waiver. The defendants moved to dismiss the complaint pursuant to CPLR 3211(a)(1), (3), and (7), primarily on the ground that the general release executed by Arye Weiner barred the action. Progressive, in response, asserted that the general release was not a bar to its cause of action because, at the time the general release was executed, the defendants knew of its subrogation rights with respect to the APIP payments. The Supreme Court agreed, and denied the defendants' motion to dismiss the complaint. We reverse.

When an insured executes a general release in favor of a tortfeasor without reserving the rights of his or her insurer, the insured impairs the insurer's right of subrogation (see Weinberg v Transamerica Ins. Co., 62 NY2d 379, 381-382; State Farm Mut. Auto. Ins. Co. v Hertz Corp., 28 AD3d 643, 644; Ziegler v Raskin, 100 AD2d 814; Aetna Cas. & Sur. Co. v Schulman, 70 AD2d 792, 793). Arye Weiner, upon his execution of the unrestricted settlement agreement and release, released forever the defendants from any past and future liability to him arising from the underlying accident. Since Progressive, as Arye Weiner's subrogee, stands in the shoes of Arye Weiner, Progressive has no greater rights than he does (see Allstate Ins. Co. v Stein, 1 NY3d 416, 423). Hence, that release shields the defendants from any liability to Progressive as subrogee of Arye Wiener.

Progressive's plight here appears to have resulted from its own failure to participate in, or object to, the duly-noticed infant compromise hearing and to "insist on the resolution of its subrogation claim against the tortfeasor for APIP payments as part of a global settlement of the personal injury claims" (Walker v Stein, 305 AD2d 972, 975, affd sub nom. Allstate Ins. Co. v Stein, 1 NY3d 416, 423). Insofar as the defendants are concerned, Arye Weiner fatally impaired Progressive's right of subrogation against them (see Federal Ins. Co. v Arthur Andersen & Co., 75 NY2d 366, 372; State Farm Mut. Auto. Ins. Co. v Hertz Corp., 28 AD3d at 644). In such a case, Progressive's remedy is against its subrogor for any conduct which may have prejudiced its subrogation rights (see Allstate Ins. Co. v Stein, 1 NY3d at 423; State Farm Mut. Auto. Ins. Co. v Hertz Corp., 28 AD3d at 644). Accordingly, the defendants' motion to dismiss the complaint should have been granted.

Preferred Mut. Ins. Co. v. Pine


Robert P. Augello, Middletown, N.Y., for appellant-respondent.
Methfessel & Werbel, P.C., New York, N.Y. (Fredric Paul
Gallin of counsel), for respondent-
appellant.
DECISION & ORDER

In an action to recover damages for injury to property, the defendant Ruth Pine appeals from a judgment of the Supreme Court, Orange County (Horowitz, J.), dated June 27, 2006, which, upon a jury verdict on the issue of liability, upon stipulation of the parties as to the amount of damages, and upon an order of the same court dated March 28, 2006, denying that branch of her motion which was, in effect, pursuant to CPLR 4404(a) to set aside the verdict and for judgment as a matter of law, is in favor of the plaintiff and against her awarding damages, and the plaintiff cross-appeals from the same judgment.

ORDERED that the cross appeal by the plaintiff is dismissed; and it is further,

ORDERED that the judgment is reversed, on the law, the order dated March 28, 2006, is vacated, that branch of the motion of the defendant Ruth Pine which was, in effect, pursuant to CPLR 4404(a) to set aside the verdict and for judgment as a matter of law is granted, and the complaint is dismissed insofar as asserted against the defendant Ruth Pine; and it is further,

ORDERED that the appellant-respondent is awarded one bill of costs.

The plaintiff's cross appeal from the judgment must be dismissed on the ground that it is not aggrieved by the judgment (see CPLR 5511). The issues raised on the cross appeal have been considered in support of its contention that the judgment appealed from should be affirmed (see Parochial Bus Sys. v Board of Educ. of City of N.Y., 60 NY2d 539).

At issue here is whether the defendant Ruth Pine is liable for the acts of her boyfriend, co-tenant Kenneth Barrish, pursuant to the terms of a one-year form lease originally entered into in 2001. The lease was renewed for a second year in 2002, pursuant to the same terms, and was signed by both Pine and Barrish as co-tenants.

During the term of the second lease, Pine vacated the premises. About one month later, on December 26, 2002, Barrish started a fire which caused significant damage to the premises, resulting in its demolition. As a result of the fire, Barrish pleaded guilty to arson in the fourth degree, a class E felony (see Penal Law § 150.05[1]).

The instant action was brought by the plaintiff insurance carrier, as subrogee of the owners of the property, to recover the amount paid on the owners' insurance claim against it. In its complaint against both Pine and Barrish, the plaintiff asserted three causes of action. The plaintiff's first cause of action alleged that the fire was the result of Pine's and/or Barrish's negligence. The second cause of action alleged that Pine was vicariously liable for Barrish's negligence pursuant to the terms of the lease, which provided, in pertinent part:

"Tenant must pay for damages suffered and money spent by Landlord relating to any claims arising from any act or neglect of Tenant. Tenant is responsible for all acts of Tenant's family, employees, guests and invitees."


The third cause of action against Pine asserted that Pine was negligent for failing to warn the owners of Barrish's alleged propensity to set fires.

Barrish defaulted in appearing in the action. Pine answered and moved for summary judgment dismissing the complaint insofar as asserted against her, asserting that the fire was not the result of her negligence and she had no duty to warn the owners of Barrish's allegedly unstable mental condition. The Supreme Court granted that branch of her motion for summary judgment which was to dismiss the third cause of action insofar as asserted against her, which sounded in breach of a duty to advise the owners of Barrish's mental condition. The court held that Pine was not qualified to evaluate Barrish's mental condition. There is no basis in this record to disturb that determination (see Gill v New York City Hous. Auth., 130 AD2d 256; see also Diakakis v Bedrick, 236 AD2d 274).

At trial, the court found that the plaintiff's claim against Pine sounded in breach of contract and not negligence. At the charge conference, Pine argued that pursuant to the lease, Barrish was her co-tenant and not her family, guest, or invitee. The plaintiff's position was that Pine and Barrish were co-tenants and constituted a nontraditional family.

The trial court instructed the jury that the lease provided that Pine could be held liable as a tenant "for all acts of tenant's family, employees, guests and invitees." Without objection, the trial court charged that Barrish was Pine's co-tenant. Over Pine's objection, the trial court instructed the jury that "[u]nder a lease, non-traditional relationships can be considered as a family" and submitted the question of whether Pine and Barrish were a family to the jury as a question of fact.

On the verdict sheet, the jury was asked a single question: "Is the defendant Ruth Pine liable for the damages caused to the property?" The jury answered "Yes" to this question and judgment was entered against Pine in the principal sum of $100,000 pursuant to a stipulation between the parties to limit damages to $100,000. This appeal and cross appeal ensued.

In New York, the general rule is that an insurance carrier in a subrogation action may recover damages in tort for the tortious conduct of the lessee (see Phoenix Ins. Co. v Stamell, 21 AD3d 118, 125; Galante v Hathaway Bakeries, 6 AD2d 142; see also Federal Ins. Co. v Arthur Andersen & Co., 75 NY2d 366; cf. New York Bd. of Fire Underwriters v Trans Urban Constr. Co., 60 NY2d 912, 915; USAA Cas. Ins. Co. v Brown, 206 AD2d 470). However, as noted by the plaintiff on this appeal, in the instant case the plaintiff's claim against Pine is "on a contract track" based upon the lease and not upon a tort theory of liability.

In the absence of fault or a specific contract provision to the contrary, neither the landlord nor the tenant is obligated to perform repairs after a fire (see Real Property Law § 227; Smith v Kerr, 108 NY 31; Kinkaide v Liebowitz, 20 AD2d 812). The instant lease provided that in the event of a fire, the landlord had the option of repairing the premises or canceling the lease. The lease did not impose an obligation to repair the premises upon a tenant (see Siebel v McGrady, 170 AD2d 906). Further, Pine was not at fault in starting the fire and therefore could not be held liable under the "Repairs, alterations" provision which required the tenant to return the premises in good order and repair (see Kinkaide v Liebowitz, 20 AD2d 812; Ducker v Del Genovese, 93 App Div 575), nor could Pine be held liable for negligence or "waste" as argued by the plaintiff.

The plaintiff's position at the trial was that Pine was obligated to indemnify the landlord for Barrish's tortious conduct pursuant to the indemnification provision of the lease which stated that "Tenant is responsible for all acts of Tenant's family, employees, guests and invitees" (see Bender v Niebel, 11 Misc 3d 136 [A]). The "provisions included in a lease that create or enhance a tenant's liability are subject to the normal rules of contract law" (Rausch v Allstate Ins. Co., 388 Md 690, 715, 882 A2d 801, 815). To the extent that such provisions may be ambiguous, they are to be construed against the party who prepared it, in this case the landlords who purchased the form lease and provided it to the tenants (see Rausch v Allstate Ins. Co., 388 Md 690, 882 AD2d 801; Mazzola v County of Suffolk, 143 AD2d 734). A contract imposing a duty to indemnify must be strictly construed to avoid reading into it a duty which the parties did not intend to be assumed (see Great N. Ins. Co. v Interior Constr. Corp., 7 NY3d 412, 417; Hooper Assoc. v AGS Computers, 74 NY2d 487, 491).

Pursuant to the indemnification provision in the lease, a tenant could be held liable for his or her own negligence or wrongdoing (see Granger Univ. Ave Corp. v First State Ins. Co., 99 AD2d 1022; Galante v Hathaway Bakeries, 6 AD2d 142), or the negligence or wrongdoing of the tenant's family, employees, guests, or invitees (see Sonny Boy Realty Inc. v City of New York, 4 NY3d 858). No provision was made in the lease for vicarious liability for the negligence or wrongdoing of a co-tenant or "occupant" (see Churchill Forge v Brown, 61 SW3d 368 [Tex]; Granger Univ. Ave Corp.v First State Ins. Co., 99 AD2d 1022).

As a co-tenant, Barrish had the legal right to be present on the premises without Pine's consent and was not her guest or invitee (see Rosenthal v Mahler, 141 AD2d 625). Under the general verdict reached by the jury, the jury could have concluded that Pine was liable pursuant to theories not properly in the case, such as findings that Barrish was her guest or invitee.

The plaintiff's claim that Pine was liable for Barrish's conduct was founded on its contention that Barrish was part of Pine's family, pursuant to the concept of nontraditional family set forth in Braschi v Stahl Assoc., Co. (74 NY2d 201), and its progeny, characterized by people living together and holding themselves out as family. Braschi interpreted a regulation prohibiting a landlord of a rent-controlled building from evicting a "member of the deceased tenant's family" to include relationships which are not by blood or marriage. At the time the case was decided, there were no regulations defining family pursuant to the rent-control regulations. Since family was not defined, the court sought to arrive at a definition that satisfied the ultimate purpose of rent control law in stabilizing living arrangements (see Raum v Restaurant Assoc., 252 AD2d 369, 371).

The expansive definition of family set forth in Braschi was thereafter applied to the rent stabilized tenants since the purpose of the Rent Stabilization Law was substantially the same as rent control laws (see East 10th St. Assoc. v Estate of Goldstein, 154 AD2d 142, 145). It has no bearing on interpreting different statutes with different statutory purposes (see Raum v Restaurant Assoc., 252 AD2d at 371). In this case, which does not involve the interpretation of a statute at all, but rather a contractual provision, there is no basis for applying the expansive definition of family set forth in Braschi.

In any event, the evidence adduced at the trial did not satisfy the definition of a nontraditional family set forth in Braschi and its progeny, i.e., individuals involved in a long-term relationship characterized by both emotional and financial commitment and interdependence (see RHM Estates v Hampshire, 18 AD3d 326; Matter of Watson v Perine, 288 AD2d 7; GLS Enters. v Lopez, 239 AD2d 122; Seminole Realty Co. v Greenbaum, 209 AD2d 345). Accordingly, the judgment appealed from must be reversed, that branch of Pine's motion which was, in effect, pursuant to CPLR 4404(a) to set aside the verdict and for judgment as a matter of law must be granted, and the complaint must be dismissed insofar as asserted against Pine.

In view of the foregoing, Pine's remaining contentions regarding her summary judgment motion have been rendered academic.

Czach v. O'Neill

Soffey & Soffey, LLC, Garden City, N.Y. (Michael J. Lynch of
counsel), for appellant.
McCabe, Collins, McGeough & Fowler, LLP, Carle Place, N.Y.
(Patrick M. Murphy of counsel), for
respondents.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Doyle, J.), dated August 29, 2006, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

The defendants failed to establish their prima facie entitlement to summary judgment 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, 350-351; Gaddy v Eyler, 79 NY2d 955, 956-957). Upon his examination, which took place more than one year and two months after the subject accident, the defendants' examining orthopedist found significant limitations in range of motion in the plaintiff's lumbar spine (see Jenkins v Miled Hacking Corp., 43 AD3d 393; Bentivegna v Stein, 42 AD3d 555; Zamaniyan v Vrabeck, 41 AD3d 472; see also Brown v Motor Veh. Acc. Indem. Corp., 33 AD3d 832).

Since the defendants failed to satisfy their prima facie burden, it is unnecessary to consider whether the plaintiff's papers in opposition were sufficient to raise a triable issue of fact (see Jenkins v Miled Hacking Corp., 43 AD3d 393; Coscia v 938 Trading Corp., 283 AD2d 538).

Govori v. Agate Corp.


Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Stacy R. Seldin of counsel), for appellants.
Steven Smith, Brooklyn, N.Y. (Louis A. Badolato of counsel),
for respondent.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the defendants Agate Corp. and Carboni Benjamin appeal, as limited by their brief, from so much an order of the Supreme Court, Kings County (Saitta, J.), dated February 8, 2007, as denied their motion for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, the motion of the defendants Agate Corp. and Carboni Benjamin for summary judgment dismissing the complaint insofar as asserted against them is granted.

The defendants Agate Corp. and Carboni Benjamin established their prima facie entitlement to judgment as a matter of law by demonstrating, through the affirmations of their medical experts and the deposition testimony of the plaintiff, 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; see also Meyers v Bobower Yeshiva Bnei Zion, 20 AD3d 456).

In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff's hospital records and magnetic resonance imaging reports were without probative value since they were neither affirmed nor certified (see Rodriguez v Cesar, 40 AD3d 731, 732-732; Mejia v De Rose, 35 AD3d 407, 408), the affirmation of the plaintiff's treating physician was without probative value since the conclusions were reached in reliance upon the unsworn reports of others (see Furrs v Griffith, 43 AD3d 389, 390; Phillips v Zilinsky, 39 AD3d 728, 729; Porto v Blum, 39 AD3d 614, 615), and the plaintiff's affidavit was insufficient to overcome these deficiencies (see Garcia v Solbes, 41 AD3d 426, 427; Fisher v Williams, 289 AD2d 288, 289).

Tarhan  v. Kabashi


Akin & Smith, LLC, New York, N.Y. (Zafer A. Akin of counsel),
for appellants.
Longo & D'Apice, Brooklyn, N.Y. (Deborah Ann Kramer of
counsel), for respondent Krist Kabashi.
James P. Nunemaker, Jr., & Associates, Jericho, N.Y. (Gene W.
Wiggins of counsel), for respondent
Raif Yigit.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiffs appeal (1), as limited by their brief, from so much of an order of the Supreme Court, Kings County (Jacobson, J.), dated June 15, 2006, as granted those branches of the motion of the defendant Krist Kabashi which were for summary judgment dismissing the first, second, and third causes of action insofar as asserted against him by the plaintiff Nurcin Tarhan on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d) and granted those branches of the separate motion of the defendant Raif Yigit which were for summary judgment dismissing the first, second, and third causes of action insofar as asserted against him on the ground that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d), and (2) from so much of a judgment of the same court, entered August 1, 2006, as, upon the order, is in favor of the defendants and against them dismissing the first, second, and third causes of action. The notice of appeal from the order is deemed also to be a notice of appeal from the judgment (see CPLR 5501[c]).

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

ORDERED that the judgment is affirmed insofar as appealed from; and it is further, [*2]

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

The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from the order are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501[a][1]).

In support of their motions for summary judgment, the defendants established prima facie their entitlement to judgment as a matter of law. The defendants demonstrated that the plaintiffs' injuries were not serious through the submission of the plaintiffs' deposition testimony and the affirmed reports of the orthopedist, neurologist, and radiologist who examined them and determined that there was no evidence of any injury sustained in the accident (see Toure v Avis Rent A Car Sup., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In opposition to the motions, the plaintiffs failed to raise a triable issue of fact as to whether either of them sustained a serious injury within the meaning of Insurance Law § 5102(d). The plaintiffs' medical expert improperly relied upon unsworn magnetic resonance imaging reports by another physician in arriving at his diagnosis and conclusions (see Puerto v Omholt, 17 AD3d 650, 651).

 

Newsletter Sign-up

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