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07/07/03
BRONXVILLE PROPERTIES, INC. v FRIEDLANDER GROUP,
INC.
New York State Supreme Court, Appellate Division, Second
Department
Owner of Property Not Named as
Insured in Policy Lacks Standing to Seek Damages Based on Inadequacy of Proceeds
Consistent with their business practices, and not because
of any legitimate mutual mistake, Dweck and Sladkus were named as the insured
persons in a policy issued by Transtate Insurance Company, even though one of
the properties covered under the policy was owned by Bronxville Properties, Inc.
Transtate issued checks payable jointly to Dweck and Sladkus, in connection with
a fire loss at that property. Bronxville then commenced this action seeking to
recover damages against Friedlander Group, Inc., the broker that procured the
policy with Transtate, and against Prism General Services, the adjuster that
evaluated the fire loss, alleging that Friedlander failed to adequately
investigate the financial condition of Transtate, an insurer that later went
into liquidation, and that Prism improperly evaluated the loss. The court
dismissed the claim, holding that Bronxville had no standing to bring this
action. It was the two persons named as insureds in the policy who, under the
circumstances of this case, had standing to seek to recover damages based on any
supposed inadequacy of the available insurance proceeds. This applies whether
the recovery is sought from the insurer itself, from the Superintendent of
Insurance as representative of the insurer in liquidation, from the broker that
procured the policy, or from the adjuster which acted as the insurer’s agent.
Plaintiff did not seek to reform the contract based on mutual mistake or
fraudulently-induced unilateral mistake, and its status as the owner of the
property where the loss occurred, and its consequential insurable interest in
that property, did not in and of itself confer standing.
07/03/03
NEW YORK CENTRAL MUT. FIRE INS. CO. v NATIONWIDE MUT. INS. CO.
New York State Supreme Court, Appellate Division, Third Department
Evidence Rebuts Presumption of Permissive Use; Criminal Acts Exclusion Enforced
Delvecchios commenced a wrongful death action following the
death of their son, who died as a result of a car accident after leaving an
underage drinking party at the home of the Gooleys. New York Central insured
Gooley’s parents under a homeowner’s policy. The car in which Delvecchios’ son
was a passenger was owned by Piche, and was operated by Gooley. New York Central
commenced this declaratory judgment action seeking a declaration that
Nationwide, the insurer under homeowner’s and auto insurance policies issued to
Piche, had a duty to defend and indemnify the Piches. The Delvecchios
cross-claimed, seeking declarations that New York Central and Nationwide must
defend and indemnify various parties. The court affirmed the lowers court’s
holding that New York Central was required to defend and indemnify the Gooleys
against the Delvecchios’ Dram Shop Act claim but no other causes of action, and
that Nationwide was not required to defend or indemnify the Piches Sr. under
either the homeowner’s or automobile insurance policies. The court held that
Nationwide did not owe Piche a duty to defend or
indemnify under the auto policy, as Gooley was not a permissive user.
Nationwide rebutted the presumption of permissive use through sworn police
statements from most of the party’s attendees that Gooley asked Piche for his
car keys as Piche was too intoxicated to drive; Piche’s keys were hidden from
him; Gooley had never been permitted to drive Piche’s car prior to this
accident; the car was locked; Piche neither told nor implied that Gooley could
drive the car; and the next morning Piche was unaware that his car was gone.
Nationwide was not obligated to defend and indemnify
the Gooleys under their homeowner’s policy as the criminal acts and motor
vehicle exclusions applied.
07/03/03
CURANOVIC v NEW YORK CENTRAL
MUT. INS. CO.
New York State Supreme Court,
Appellate Division, Third Department
Summary Judgment Denied where
Issues of Fact Remain about Materiality of Insured’s Misrepresentations; Agents
not Liable to Insured Absent Showing of Special Duty
Plaintiff’s uninsured
home sustained fire damage. After repairs were made to make the home habitable,
plaintiff went to Partners Insurance Agency to obtain homeowner’s insurance.
Plaintiff, who could not read or write English, answered Partners’ insurance
application questions, then allegedly read and signed the application.
Thereafter, an insurance binder was issued with New York Central. Shortly after
plaintiff left Partners’ office, his son told him he gave inaccurate answers to
the application questions. Specifically, plaintiff negatively replied to the
question, “[A]ny losses, whether or not paid by insurance, during the last 3
years, at this or any other location?” Plaintiff’s home and its contents were
totally destroyed by fire. New York Central denied plaintiff’s claim on the
grounds that it was caused by arson and that plaintiff’s policy application
contained material misrepresentations. This declaratory judgment action
ensued. The court held that, while a misrepresentation had been made in the
application, an issue of fact existed whether the misrepresentation was
material. An insurer can demonstrate a material misrepresentation, as a matter
of law, by presenting documentation regarding underwriting practices, such as
underwriting manuals or bulletins, which establish that the insurer would not
have issued the policy if the correct information were disclosed in the
application. Conclusory statements from the insurer’s employees regarding such
practices, without documentary evidence, are insufficient to establish a
material misrepresentation. The court also held that dismissal of the complaint
against Partners for negligent misrepresentation was proper, as Curanovic failed
to show that there was a special relationship between himself and Partners which
would have created liability. Insurance agents generally are not liable for
anything more than obtaining the requested coverage, unless there is a special
relationship with the insurance customer justifying reliance on the agent's
speech. New York courts disfavor finding such a relationship, but can recognize
an additional duty in exceptional situations, for example where the agent
receives compensation for consultation beyond the premium payments, the insured
relies on expertise of the agent regarding a raised question of coverage, or
there is an extended course of dealing sufficient to put objectively reasonable
agents on notice that their advice was being specially relied upon. In this
case, the insured’s only encounter with the agent was the single appointment to
obtain the policy; he made no payments beyond the premium and he never informed
her that he could not read English even when she asked him to read over the
application, so this was akin to a normal insurance agent/customer relationship.
07/01/03
BELT PAINTING v TIG INSURANCE COMPANY
New York Court of Appeals
Total Pollution Exclusion Deemed
Inapplicable to Inhalation of Indoor Paint Fumes
Plaintiff, a painting
subcontractor, was sued in an underlying action alleging injury caused by the
inhalation of paint or solvent fumes in an office building where the insured was
performing stripping and painting work. Plaintiff sought defense and
indemnification from its CGL carrier, who disclaimed coverage based on the
policy’s “total pollution exclusion endorsement”. Plaintiff then commenced this
action seeking a declaratory judgment that its insurer was obligated to defend
and indemnify it in the underlying action. New York’s highest court held the
total pollution exclusion was ambiguous as applied to the facts of this case.
First, because the exclusion used terms such as “discharge, dispersal, seepage,
migration, release or escape,” terms of art in environmental law used to
reference damage or injury caused by disposal or containment of hazardous waste,
the language did not clearly and unequivocally exclude claims arising from
indoor exposures. The Court also concluded that the word “fumes” could not be
isolated from its context in the endorsement. Even if the paint or solvent fumes
were within the definition of “pollutant,” the exclusion applies only if the
injury is caused by “discharge, dispersal, seepage, migration, release or
escape” of the fumes. It could not be said that this language unambiguously
applied to ordinary paint or solvent fumes that drifted a short distance from
the area of the insured’s intended use and allegedly caused inhalation injuries
to a bystander.
06/30/03
EMPIRE INS. CO. v SCHLIESSMAN
Auto Policy Did Not Cover Claim
for Fall from Truck Where Vehicle was Merely Incidental to Accident
Plaintiffs in an
underlying personal injury action leased an apartment at premises owned by the
defendant Schliessman, who was the principal of the defendant H & S Landscaping,
Inc. H & S’s office was located on adjacent premises, which Schliessman owned.
The two parcels shared a common yard and driveway on which H & S’s truck was
parked. Plaintiff heard his four-year-old son crying and observed him on top of
a truck asking for help. Plaintiff was injured when he fell off the truck while
trying to assist his son. Empire insured Schliessman and H & S, and commenced
this action seeking a declaration that Utica Mutual was obligated to defend and
indemnify Schliessman and H & S in the underlying action in accordance with a
GGL policy it had issued. Court held that Utica Mutual was obligated to defend
and indemnify Schliessman and H & S in the underlying action. Empire’s policy
covered accidents resulting in bodily injury or property damage caused by an
occurrence arising out of the “ownership, maintenance or use” of a covered auto.
The determination of whether an accident has resulted from the use or operation
of a covered vehicle turns on whether the accident arose out of the inherent
nature of the vehicle and whether the vehicle itself produced the injury.
“Negligence in the use of the vehicle must be shown, and that negligence must be
a cause of the injury.” In this case, there were no allegations that the truck
itself was used negligently, or that its condition in any way contributed to the
accident. Rather, it was merely the location of, and incidental to, the
accident.
Visit the
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07/16/03
FOLKMAN v SOCIETY INS.
Wisconsin Supreme Court
Ambiguities in Insurance
Policies should be Evaluated in the Context of the Whole Policy
The Supreme Court of
Wisconsin used this case as an opportunity to clarify its definition of
contextual ambiguity within the insurance coverage context. According to the
court, in order to prevent contextual ambiguity, a policy does not have to be
perfectly drafted, however, it must “avoid inconsistent provisions, provisions
that build up false expectations, and provisions that produce reasonable
alternative meanings.” In the present case, applying the definition, the court
held that the policy provision limiting liability to $50,000 for bodily injury
was not ambiguous.
07/16/03
PENN TRAFFIC CO. v AIU INS. CO.
Ohio Supreme Court
An Employer's Intentional Tort
Does Not Negate an Express Policy Exclusion for Bodily Injury to an Employee
Arising Out of and in the Course of Employment
An employer’s intentional
tort does not negate an express policy exclusion for bodily injury to an
employee “arising out of and in the course of employment by the insured.” The
plaintiff in the underlying case was injured when she fell off a loading dock
while working for Penn Traffic Co. Penn’s insurer’s declined to indemnify its
insured. This court was asked to determine whether a CGL policy with a provision
excluding “bodily injury to an employee” occurring in the course of employment
is required to cover the employer’s liability for substantially certain
intentional torts. The court defined substantially certain intentional torts as
occurring when an employer “acts with the belief that injury is substantially
certain to occur.” The court concluded that under such circumstances the “bodily
injury to an employee” exclusion still applies, thus there is no CGL policy
coverage.
07/15/03
DODSON v J.C. PENNEY CO., INC.,
Eighth Circuit (applying
Arkansas law)
Oral Cancellation of Life Policy
Doesn't Absolve Carrier of Following Statutory Requirements
Under Arkansas law, oral
cancellation of an insurance policy did not relieve insurer of statutory duty to
provide a 31-day grace period once the policy lapsed; insured’s policy was a
group life policy covered by Ark. Code Ann. section 23-83-110.
07/15/03
WESTFIELD INS. CO. v TECH DRY, INC
Sixth Circuit (applying
Kentucky law)
Murder Leads to Coverage --
Negligent Hiring and Retention of Employee Constitutes Occurrence
Court holds that Kentucky
courts would likely find that negligent hiring and retention of an employee
constitutes an “occurrence” under the terms of an employer’s insurance liability
contract, thus an insurer was obligated to defend the employer in a negligence
action arising from a murder committed by an employee.
07/14/03
LOGUIDICE v METROPOLITAN LIFE INS. CO.
First Circuit (Massachusetts)
Failure to Read Policy Puts
Plaintiff on Inquiry Notice Barring Application of Discovery Rule Which Operates
to Toll Statute of Limitations
MetLife sold to plaintiff
a whole life insurance policy under the guise of it being in insured retirement
plan. Without having read the policy, for two and one-half years, plaintiff made
her monthly premiums believing she was contributing to a “retirement plan” with
a life insurance policy until she became aware of a class-action settlement
involving MetLife and nurses who had purchased whole life policies after being
led to believe that they were investing in retirement or savings plans.
Plaintiff brought claims against MetLife for fraud and deceit, breach of
fiduciary duty, and violation of a consumer protection statute four and one-half
years after the policy was delivered to plaintiff. The district court judgment
held that the two-year limitations period under Massachusetts law applied to all
claims mirroring the cause of action set forth in the statute, even if those
claims are brought under common law or the consumer protection statute.
Plaintiff appealed and sought application of Massachusetts’ discovery rule which
applies to tort actions and the consumer protection statute, and operated to
toll a limitations period until a prospective plaintiff learns or should have
learned that he has been injured. While condemning MetLife’s sales tactics as
shameful, the appellate court refused to apply the discovery rule to plaintiff’s
claims because she failed to read through the materials that MetLife provided to
her, but which, had she done so, would have revealed to a reasonable fact finder
that nothing in the folder could have constituted part of the retirement plan
she thought she had purchased other than the life insurance policy, which was
distinctively so labeled.
Bruce Celebrezze and Teresa
Hu, Celebrezze & Wesley, San Francisco, CA
07/11/03
HOME INS. CO. OF ILLINOIS v OM GROUP, INC.
Ohio First District Court of
Appeals
Failure of Insured’s Product is
Not Covered by Policy Definition of “Property Damage” and Loss of Use is Not
Covered under Commercial General Liability Insurance
The insured manufactured
a product known as M-Gard, a wood preservative that was applied to utility poles
to retard decay, which was purchased by companies that applied the product to
utility poles. The utility poles, in turn, were bought by many utility companies
throughout the country. Some of the utility companies discovered that the poles
treated with M-Gard had prematurely decayed, which led to numerous lawsuits
against the insured by the utilities and by the companies that had used M-Gard
to treat the poles. The insurer filed a complaint for declaratory judgment,
seeking a declaration of its rights and duties with respect to the lawsuits
under an insurance policy purchased by the insured and naming other insurance
companies that had contracted with the insured for liability coverage as
defendants. The insured filed counterclaims seeking a declaration that the
policies covered the claims. Each of the parties filed a motion for summary
judgment, and the trial court granted the motions in favor of the insurance
companies and denied the insured’s motion for summary judgment. The court of
appeals affirmed the trial court’s decision and held that under the policies’
definition of “property damage,” there was no coverage under the definition's
first prong because there was no “physical injury to or destruction of tangible
property”; rather, M-Gard simply failed as a preservative to protect the utility
poles from decay caused by exposure to natural elements. The appellate court
also held that, for the same reason, there was no coverage under the second
prong of the definition of “property damage,” defined as “loss of use of
tangible property which has not been physically injured or destroyed provided
such loss of use is caused by an occurrence during the policy period.” The court
stated that the poles’ gradual disintegration as a result of exposure to the
elements was not an “occurrence” within the meaning of the policies’ language,
nor did the deterioration of the poles and the product itself present a “harmful
condition” under the policies’ definition of occurrence. Finally, the court held
that, under commercial general liability insurance, which covers tort liability
for physical damages to others and not for contractual liability of the insured
for economic loss, the policies did not cover liability for the loss of use of
the utility poles due to the alleged failure of M- Gard to preserve the poles as
the insured had warranted.
Bruce Celebrezze and Teresa
Hu, Celebrezze & Wesley, San Francisco, CA
07/11/03
JOHNSON CONTROLS, INC. v EMPLOYERS INS. OF WAUSAU
Wisconsin Supreme Court
PRP Letter is Suit; Remedial
Costs are Covered by CGL Policy
Ending years of internal
acrimony and confusion in the Wisconsin courts with respect to the availability
of CGL coverage for environmental clean up claims, the Wisconsin Supreme Court
has now formally disavowed its 1995 pro-insurer analysis in City of Edgerton and
has ruled that a PRP letter will be treated as a “suit” for coverage purposes
and that an insured’s costs of restoring and remediating damaged property,
whether the costs are based on remediation efforts by a third party (including
the government) or are incurred directly by the insured, are covered damages
under applicable CGL policies, provided that other policy exclusions do not
apply. Several dissenting justices decried the majority’s decision to abandon
established Wisconsin precedent in violation of basic principles of stare
decisis.
Michael F. Aylward,
Morrison, Mahoney &
Miller, LLP, Boston, MA
07/09/03
WELLS DAIRY, INC. v TRAVELERS INDEMNITY CO. OF
ILLINOIS
United States District Court
for the Northern District of Iowa, Western Division
Breach of Duty to Defend Results
In Loss of Right to Control Defense of Action and Entitles Insured to Recover
Reasonable Attorney’s Fees, Reasonableness to be Determined by Trier of Fact
The court concluded that
when an insurer has a duty to defend, but refuses to defend a suit against its
insured, the insurer loses the right to control the defense of the action. In
this case, the insurer refused to defend the insured under a reservation of
rights, and thus, lost its right to control the insured’s defense of the
underlying action. Further, the court held that under Iowa law, an insured is
entitled to recover reasonable attorney’s fees for an insurer’s breach of its
duty to defend its insured, and the question of what amount constitutes a
reasonable attorney’s fee is an issue of fact to be determined by a jury.
Bruce Celebrezze and Teresa
Hu, Celebrezze & Wesley, San Francisco, CA
07/10/03
SECURITY INS. CO. OF HARTFORD v LUMBERMENS MUT.
CAS. CO.
Connecticut Supreme Court
Insured Must Pay Pro-Rata Share
of Cost of Defending Long Tail Cases Where Insured Has No Established Coverage
The Connecticut Supreme
Court has ruled that an insured must pay a pro rata share of the cost of
defending long-tail cases reflecting periods of time for which the insured
failed to purchase insurance or cannot now locate missing policies. The court
rejected the insured’s arguments for joint and several liability and refused to
find that pro rata allocation conflicting with general rules concerning the duty
to defend.
Michael F. Aylward,
Morrison, Mahoney &
Miller, LLP, Boston, MA
07/10/03
GILMER v STATE FARM
California Court of Appeal
Permissive User of Non-Owned
Vehicle Need Not Be Insured Under California Law
Neither policy language
nor mandates of California law provide coverage, under personal auto policy, for
permissive user of non-owned car.
07/10/03
B.M.B. v STATE FARM FIRE AND CAS. CO.
United States District Court,
District of Minnesota
Question of Fact as to Whether
Non-Consensual Touching by Insured with Mental Illness is Within Coverage or Not
Where insurance coverage
is being or has been sought for personal injury or bodily harm resulting from an
insured’s nonconsensual sexual contact with another, and where there is a
genuine issue of material fact as to whether the insured’s acts were
“unintentional” because of mental illness, as set forth in the holding of
State Farm Fire & Casualty Co. v Wicka, 474 NW2d 324 (Minn. 1991), and
therefore outside the scope of an insurance policy’s intentional act exclusion,
the trial court should submit the issue to the jury and is not, as a matter of
law, to infer the insured’s intent to cause injury.
07/08/03
PAULSON v ALLSTATE INSURANCE
Wisconsin Supreme Court
Plaintiff, Whose Carrier Settles
Subro Claim for 70%, Cannot Sue for Remainder
The court was asked to
decide whether Paulson may recover the amount of money representing the
difference between the amount Paulson’s insurer paid and what her insurer
settled for in negotiations with the tortfeasor’s insurer upon its subrogation
claim. Because allowing the plaintiff to recover this sum would amount to double
recovery, court held that Paulson may not recover that difference as damages.
She has already collected the amount of property damages to which she is
entitled and was not entitled to any additional recompense.
07/07/03
SPORT SUPPLY GROUP, INC. v COLUMBIA CAS. CO.,
Fifth Circuit
No Duty to Defend Trademark
Infringement Case under “Advertising Injury” Policy
In an action alleging
that an insurer was required to reimburse plaintiff for part of the cost of
defending a counterclaim for trademark infringement, plaintiff was not entitled
to coverage under the insurance policy because infringement fell outside the
provisions of the policy relating to “advertising injury.”
07/03/03
WESTOIL TERMINALS CO. v INDUSTRIAL INDEM. CO.
California Court of Appeal
Continuous Trigger Theory Does
Not Apply under Limited Pollution Exclusion
In this action, Westoil
sought coverage from Industrial for $11 million in indemnity and defense costs
incurred in a lawsuit against it for environmental contamination of a facility
subsequently operated by the plaintiff. Industrial denied coverage based on a
limited pollution exclusion which excluded coverage for property damage arising
out of the discharge of pollutants except where the discharge is “sudden,
unexpected and unintended” and takes place during the policy period. The court
concluded that, under the plain language of the exclusion, the exclusion does
not apply only if a sudden discharge of contaminants takes place during the
policy period and causes damage during the policy period. The court accordingly
held there was no duty to defend, as there was no potential for coverage under
the terms of the policy where the complaint sought damages for alleged
negligence only during the time Westoil was operating the facility, 10 years
before Industrial’s policy first became effective. The court rejected Westoil’s
suggestion to apply the continuous trigger theory espoused under Montrose II.
Bruce D. Celebrezze and Joseph
Pelochino,
Celebrezze & Wesley, San
Francisco, CA
07/03/03
CREVELING v GEICO
Maryland Court of Appeals
Class Action Certification
Properly Denied in Action against No Fault Carrier
Where previous decisions
have already determined that carriers were improperly denying PIP benefits, it
would be improper to certify class to determine amount individual claimants
would recover. Issues of commonality do not predominate.
07/03/03
HAMEID v NAT'L FIRE INS. OF HARTFORD
California Supreme Court
Solicitation of Customers from a
Customer List Does Not Constitute Advertising and Does Not Give Rise to the
Insurer's Duty to Defend under Advertising Injury Provisions of Commercial
General Liability Insurance Policies
Plaintiff-insured opened
a beauty parlor and purchased from defendant commercial general liability
insurance, which included coverage for advertising injury. When two hairdressers
from a nearby competitor salon left to work for plaintiff, taking most of their
customers with them, the salon sued plaintiff for appropriating its customer
list and soliciting customers from it. The insurer refused to defend plaintiff
on the grounds that plaintiff's conduct was not advertising. Reversing the
appellate court's judgment that the insurer owed plaintiff a duty to defend, the
supreme court found that plaintiff's limited solicitation of customers through
phone calls and ValuPak mailers did not constitute advertising, and thus
plaintiff was not eligible for coverage under the policy's advertising injury
provisions. The court interpreted the term advertising as used in commercial
general liability policies to mean widespread promotional activities usually
directed to the public at large. One-on-one solicitation of a few customers does
not give rise to the insurer's duty to defend the underlying lawsuit.
Larry P. Schiffer and Michelle
Luburich,
LeBoeuf, Lamb, Greene &
MacRae, LLP, New York, NY
07/03/03
JOSLIN v MITCHELL
West Virginia Supreme Court of
Appeals
Plaintiffs Violated
Anti-Stacking Language in Insurance Policies When Allowed to Recover "Per
Accident" Limits Rather Than “Per person” Limits
Plaintiff’s son and
daughter-in-law were killed in an automobile accident. The decedents had five
different insurance policies covering five different vehicles. Plaintiff sought
to have the policies stacked, thus obtaining the coverage limits of all five.
Defendants argue that they offered a multi-vehicle discount to the plaintiffs,
which allowed them to contractually preclude policy stacking. The circuit court
held that decedents were not given the opportunity to bargain for the discount,
and thus the policies could be stacked. The supreme court of appeals held that
the phrase “bargained for discount” allowed an insurance company to unilaterally
give an insured a multi-car discount as consideration for the enforcement of
anti-stacking language in an automobile insurance policy. Therefore, the circuit
court erred in allowing plaintiffs to stack the insurance policies, and the
lower court decision was reversed.
Larry P. Schiffer and Andrew
Woodworth,
LeBoeuf, Lamb, Greene & MacRae, LLP, New York, NY
07/03/03
FOX v CATHOLIC KNIGHTS INS. SOCIETY
Wisconsin Supreme Court
Wisconsin Statute §631.11(3)
Does Not Apply to Conditions Precedent, Failure to Satisfy, Which May Be Used to
Justify Rescission of Insurance Contracts
Plaintiff brought suit
against Defendant insurance company, alleging breach of contract, after his
claim for benefits under his father’s life insurance policy was denied. The
insurance company defended on the ground that the policy listed certain
conditions, among which was a blood test, which had to be satisfied before
coverage would begin. Plaintiff's father died before completing the blood test.
The Supreme Court found that no effective insurance policy was in place at the
time of Plaintiff’s father’s death and as a result, summary judgment in favor of
the insurance company was appropriate.
Larry P. Schiffer and Karen M.
Soares, LeBoeuf,
Lamb, Greene & MacRae, LLP, New York, NY
07/02/03
TRINITY UNIVERSAL INS. CO. v KIRSLING
Idaho Supreme Court
Clauses of Insurance Policy
Providing Less Coverage than Required under State Law Unenforceable
Defendants, husband and
wife, purchased homeowners’ insurance from plaintiff-insurer. Each was insured
under the policy, which excluded coverage for intentional loss. After
defendants’ home burned down, the insurer paid out on the policy, but
subsequently sought to recover the funds after the husband was convicted of
arson and insurance fraud. Affirming a lower court’s order granting partial
summary judgment in favor of the wife, the court held that while the intentional
act and fraud exclusions in the insurer's policy unambiguously exclude coverage
for innocent co-insureds, the plain language of the policy provides less
coverage than is required by Idaho’s statutory standard fire policy. As the
clauses that prevent the wife’s recovery cause the policy to violate Idaho
insurance law, the clauses are unenforceable, and thus the wife may recover for
her loss as an innocent co-insured.
Larry P. Schiffer and Michelle
Luburich, LeBoeuf,
Lamb, Greene & MacRae, LLP, New York, NY
07/03/03
VENNEMANN v BADGER MUT. INS. CO.
Eighth Circuit
Sporadic Remodeling Projects and
Occasional Overnight Stays Not Sufficient to Overcome Vacancy Exclusion Clause
in Homeowner's Policy
Insured was denied
coverage under a homeowner’s policy on the basis of a vacancy exclusion clause
in the insurance policy. Plaintiff argued that the property was not vacant
because he had engaged in sporadic remodeling projects and occasional overnight
stays (on average, he stayed at the house two nights a week). The court, in
upholding the district court’s ruling of summary judgment in favor of the
Insurance Company, held that the house was vacant because it was not being used
for its intended purpose as a dwelling.
Larry P. Schiffer and Karen M.
Soares, LeBoeuf,
Lamb, Greene & MacRae, LLP, New York, NY
07/01/03
LIERBOE v STATE FARM MUT. AUTO. INS. CO.
Montana Supreme Court
Insured May Stack Medical
Payment Coverages Only When Accident is Covered by Multiple Policies
Plaintiff-insured
suffered physical injury as a result of an automobile collision. The vehicle she
was driving at the time was insured by defendant. Plaintiff had two additional
auto insurance policies issued by defendant that covered other vehicles
uninvolved in the accident. The court rejected plaintiff's argument that she
could stack the personal medical payment coverage of the vehicle she was driving
with the coverage of one of the other vehicles she was not, noting that the
second policy contained a "no coverage" provision, expressly excluding coverage
for injuries sustained while occupying owned vehicles covered by other policies.
While affirming previous case law that allows an insured to stack when two or
more medical payment coverages apply to a given accident, the court held that no
stacking issue exists unless there are multiple policies that actually cover the
accident in question. As plaintiff's accident in her vehicle was covered by only
a single policy, there was no second policy to stack.
Larry P. Schiffer and Michelle
Luburich, LeBoeuf,
Lamb, Greene & MacRae, LLP, New York, NY
07/01/03
JANSSEN v STATE FARM MUT. AUTO. INS. CO.
Wisconsin Court of Appeals
Anti-Stacking Provision, if
Ambiguously Worded, can not be Used to Prevent Recovery
Plaintiff was injured
when she was a passenger in a vehicle that was involved in an accident. Neither
driver was insured, but Plaintiff had uninsured motorist coverage under Insurer
and another company. Insurer argued that the antistacking provision in the
policy prevented recovery. Court held that the excess clause in Insurer's
uninsured motorists coverage is ambiguous and illusory and, consequently,
affirmed the lower court's order granting Plaintiff recovery.
Larry P. Schiffer and Karen M.
Soares, LeBoeuf,
Lamb, Greene & MacRae, LLP, New York, NY
07/01/03
IRELAND v WORCESTER INS. CO.
New Hampshire Supreme Court
Insured Must Prove Liability of
Uninsured Motorist to Recover Uninsured Motorist Benefits
The court reviewed and
upheld its previous decision in Matarese v. New Hampshire Municipal Association
Property-Liability Insurance Trust, Inc., 147 N.H. 396 (2002), that the phrase
"legally entitled to recover" unambiguously imposes a condition precedent on the
insured to prove the liability of an uninsured motorist before recovering
uninsured motorist benefits. The court further ruled that the Matarese ruling
must be applied retroactively to this case.
Larry P. Schiffer and Rajab
Abbassi, LeBoeuf,
Lamb, Greene & MacRae, LLP, New York, NY
07/01/03
PRINTIS v BANKERS LIFE INS. CO.
Georgia Supreme Court
Premium on Credit Life Insurance
Policy Purchased with Installment Loan can be Calculated Based on Total Payments
Due Through Life of Loan, Not Just on Amount Financed
Plaintiff purchased a
car, a service agreement, and optional credit life and disability insurance for
the 60-month term of her financing contract. Plaintiff financed $ 20,711.45 and
was informed that the finance charge resulting from her financing arrangement
would be $ 2117.95, making the total amount she would pay over the life of the
loan $ 22,829.40. The credit life insurance provided by defendant and for which
plaintiff was charged a premium was for $ 22,829.40. Plaintiff filed a complaint
in which she claimed the amount of life insurance for which she should have been
charged was the amount of her indebtedness ($ 20,711.50 plus any accrued
interest) rather than $ 22,829.40. The court construed O.C.G.A. § 33-31-4(a) to
signify that for this type of policy the amount of insurance equals the total
payments due through the life of the loan, i.e. $22, 829.40, not just the amount
financed.
Larry P. Schiffer and David
Garcia, LeBoeuf,
Lamb, Greene & MacRae, LLP, New York, NY
06/30/03
CAMIOLO v STATE FARM FIRE AND CAS. CO.
Third Circuit Court of Appeals
Release Signed by Plaintiff in
Settlement of Claim for Breach of Insurance Contract Barred All Possible Claims
against Defendant Insurer
After Plaintiff was
indicted for arson, he sued Defendant insurance company and others alleging
violations of his civil rights under 42 U.S.C. § 1983 and various state law
causes of action. Plaintiff was already indemnified by Defendant for the
underlying fire and he signed a release upon settling that claim. Plaintiff
further alleged Defendant insurance company violated RICO with its continued
dispute of coverage by “having [Plaintiff] indicted for insurance fraud in an
attempt to have the consideration paid for the release returned via a criminal
case.” The court ruled that, because of the breadth of its language, the release
signed by Plaintiff in the previous civil suit precluded all possible claims
against the insurance company, even those based on incidents that occurred after
the release was signed. Defendant’s motion to dismiss was granted.
Larry P. Schiffer and Rajab
Abbassi, LeBoeuf,
Lamb, Greene & MacRae, LLP, New York, NY
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Text of Reported Decisions
BRONXVILLE PROPERTIES,
INC. v FRIEDLANDER GROUP, INC.
In an action, inter alia,
to recover damages for breach of contract, the plaintiff appeals, as limited by
its brief, from so much of an order of the Supreme Court, Westchester County
(Rudolph, J.), entered July 16, 2001, as granted the amended motion of the
defendant Friedlander Group, Inc., and the separate motion of the defendant
Prism General Services, to dismiss the complaint.
ORDERED that the order is
affirmed insofar as appealed from, with one bill of costs.
The record establishes
that, "consistent with [their] business practices [and] not because of any
legitimate mutual mistake" (Pascal v Nova Cas.
Co., 226 AD2d 688, 690), Jack S. Dweck and Harvey Sladkus (doing business as
Omni Properties) were named as the insured persons in policy number
TPP-2318647-0 issued by Transtate Insurance Company (hereinafter Transtate) for
the period August 1, 1996, to August 1, 1997, even though one of the properties
covered under the policy, 107-09-111 Kensington Road, Bronxville, New York., was
owned by Bronxville Properties, Inc., the corporate plaintiff herein. As
described in Matter of Transtate Ins. Co. (297 AD2d 684), Transtate, or
the Superintendent of Insurance as successor to Transtate, issued checks
totaling $182,159.35, payable jointly to Dweck and Sladkus, in connection with a
fire loss at that property that occurred on May 14, 1997. Two checks (in the
sums of $40,000 and $102,159.35) were also payable jointly to the Dime Savings
Bank as mortgagee.
In this action, the
plaintiff seeks to recover damages against Friedlander Group, Inc. (hereinafter
Friedlander), the broker that procured the policy with Transtate, and against
Prism General Services (hereinafter Prism), the adjuster that evaluated the fire
loss of May 14, 1997. It alleges, among other things, that Friedlander failed to
adequately investigate the financial condition of Transtate, an insurer that
later went into liquidation, and that Prism improperly evaluated the loss.
We agree with the Supreme
Court that the corporate plaintiff has no standing to bring this action. As is
implicit in Matter of Transtate Ins. Co. (supra), it is the two
persons named as insureds in the relevant policy, Dweck and Sladkus, who, under
the circumstances of this case, have standing to seek to recover damages based
on any supposed inadequacy of the available Insurance proceeds in covering all
of the losses caused by the fire of May 14, 1997. This applies whether the
recovery is sought from the insurer itself, from the Superintendent of Insurance
as representative of the insurer in liquidation (see id.), from the
broker that procured the policy, or from the adjuster which acted as the
insurer's agent.
The plaintiff does not
explicitly seek to reform the contract based on mutual mistake or
fraudulently-induced unilateral mistake (cf. Judge v
Travelers Ins. Co., 262 AD2d 983; Matter of Galaxy Ins. Co., 257 AD2d
351; Pascal v Nova Ins. Co., supra). Rather, it argues that, in light of
its status as the owner of the property where the loss occurred, and its
consequential insurable interest in that property, it was an "intended
beneficiary" of the Insurance contract. We do not agree.
The fact that the
plaintiff owned the insured property does not in and of itself confer standing (see
Brownell v Board of Educ., 239 NY 369;
Etterle v Excelsior Ins. Co. of N.Y.,
74 AD2d 436, 440-441; Stainless, Inc. v Employers Fire Ins. Co., 69 AD2d
27, 31-33, affd 49 NY2d 924; see also
Pascal v Nova Ins. Co., supra). Further, it does not appear from the "four
corners of the policy" that Transtate "intended to insure the plaintiff's
interest," as opposed to that of Dweck and Sladkus (Orange
Handling v American Mfrs. Mut. Ins. Co.,
245 AD2d 768, 769; see also Stainless, Inc. v Employers Fire Ins. Co., supra).
The plaintiff itself emphasizes that the one single policy was written so as to
name Dweck and Sladkus as the only insured persons, even though the policy
provided coverage relative to "six (6) separate properties owned by [different]
entities." 20th Century Foods Pte.
v Home Ins. Co.(1989 WL
99773 [SDNY, Aug. 22, 1989]), relied on by the
plaintiff, is not to the contrary. In that case, the court cited specific
language from the policy under review in support of its conclusion that such
policy "expressly and clearly intended to benefit" a party not actually named as
an insured (20th Century Foods Pte. v Home Ins.
Co., supra at * 9). We see no similar evidence in this case, and note,
again, that the named insureds, Dweck and Sladkus, were the payees to whom the
checks representing the Insurance proceeds were issued, and were the individuals
who have pursued, or who are pursuing, a claim against the Superintendent of
Insurance in the liquidation proceedings (see Matter of Transtate Ins. Co.,
supra).
The plaintiff's remaining
contentions are without merit.
PRUDENTI,
P.J., FLORIO, SCHMIDT
and MASTRO,
JJ., concur.
In an action for a
judgment declaring, inter alia, that the defendant Utica Mutual Insurance
Company is obligated to defend and indemnify the defendants Henry J. Schliessman
and H & S Landscaping, Inc., in an action entitled
Pietraniello v Schliessman, pending in the Supreme Court,
Queens County, under Index No. 2934/98, the defendant Utica Mutual Insurance
Company appeals, as limited by its brief, from so much of an order and judgment
(one paper) of the Supreme Court, Queens County (LaTorella,
J.), dated May 15, 2002, as granted the motion of the plaintiff Empire Insurance
Company for summary judgment, and, in effect, declared that it is obligated to
defend and indemnify Henry J. Schliessman and H & S Landscaping, Inc., in the
underlying action.
ORDERED that the order and judgment is affirmed insofar as appealed from, with
one bill of costs to the respondents appearing separately and filing separate
briefs.
The plaintiffs in the
underlying personal injury action, Vincent Pietraniello
and Carol Ann Pietraniello, leased an apartment at
premises owned by the defendant Henry J. Schliessman. Schliessman is the
principal of the defendant H & S Landscaping, Inc. (hereinafter H & S). The H &
S office is located on the adjacent premises, which Schliessman owns. The two
parcels share a common yard and driveway on which H & S's truck was parked.
Vincent Pietraniello heard his four-year-old son
crying and observed him on top of a truck asking for help.
Pietraniello was injured when he fell off the truck while trying to
assist his son.
Pietraniello
and his wife brought a personal injury action against Schliessman and H & S. The
plaintiff Empire Insurance Company (hereinafter Empire) insured Schliessman and
H & S. Empire commenced this action seeking a declaration, inter alia, that the
defendant Utica Mutual Insurance Company (hereinafter Utica) was obligated to
defend and indemnify Schliessman and H & S in the underlying action in
accordance with a commercial general liability insurance policy it had issued.
The Supreme Court granted Empire's motion for summary judgment and, in effect,
declared that Utica was obligated to defend and indemnify Schliessman and H & S.
We affirm.
Empire's policy contains
a standard automobile liability provision which requires the insurer to defend
and indemnify its insureds for accidents resulting in bodily injury or property
damage caused by an occurrence arising out of the "ownership, maintenance or
use" of a covered auto (see e.g. Elite Ambulette
Corp. v All City Ins. Co., 293 AD2d 643; U.S. Oil Ref. & Mktg. Corp. v
Aetna Cas. & Sur. Co., 181 AD2d 768; United
Servs. Auto. Assn. v
Aetna
Cas. & Sur. Co.,
75 AD2d 1022).
"Generally, the determination of whether an accident has resulted from the use
or operation of a covered vehicle requires consideration of whether, inter alia,
the accident arose out of the inherent nature of the vehicle and whether the
vehicle itself produced the injury" (Eagle Ins. Co. v Butts, 269 AD2d
558, 558-559; U.S. Oil Ref. and Mktg. Corp. v Aetna Cas. &
Sur. Co., supra). "Negligence in the use of the
vehicle must be shown, and that negligence must be a cause of the injury" (Argentina
v Emery World Wide Delivery Corp.,
93 NY2d 554, 562).
However, "'[n]ot
every injury occurring in or near a motor vehicle is covered by the phrase 'use
or operation'. The accident must be connected with the use of an automobile
qua automobile'" (Olin v
Moore,
178 AD2d 517, 518; quoting United Servs. Auto.
Assn. v
Aetna Cas. &
Sur. Co., supra).
In this case, "[t]here
were no allegations that the truck itself was used negligently" (Progressive
Cas. Ins. Co. v Yodice,
276 AD2d 540, 542) or that its condition in any way contributed to the accident
(see Eagle Ins. Co. v Butts, supra). Rather, it was merely the location
of, and incidental to, the accident. Because the accident was not the result of
any act or omission related to the ownership, maintenance, or use of the truck,
the Supreme Court properly, in effect, declared that Utica was obligated to
defend and indemnify Schliessman and H & S in the underlying action (see
Elite Ambulette v All City Ins. Co., supra at
644).
ALTMAN, J.P.,
FLORIO, ADAMS and RIVERA,
JJ., concur.
CURANOVIC v NEW YORK CENTRAL MUT.
FIRE INS. CO.
Kane, J.
Appeal from an order of
the Supreme Court (Rumsey, J.), entered July 1, 2002
in Broome County, which granted defendants' motions for summary judgment
dismissing the complaint.
In November 1997,
plaintiff sustained a fire at his house, which had been uninsured for several
months. A code enforcement officer determined that certain structural and
electrical repairs needed to be completed and inspected before the house could
be occupied. Plaintiff completed the electrical repairs and, on December 17,
1997, an inspector authorized reoccupancy of the
premises. Prior to and after this fire, plaintiff had been staying with his sons
at a home deeded to plaintiff as custodian for his minor son. In December 1997,
plaintiff and one of his sons went to the offices of defendant Partners
Insurance Agency to obtain homeowner's insurance. Partners' insurance agent,
Mary Oliver, asked plaintiff questions and typed the answers on an application
for insurance with defendant New York Central Mutual Fire Insurance Company.
Plaintiff can neither read nor write English, but did not inform Oliver of this.
Oliver handed plaintiff the completed application, asked him to read and sign it
if no corrections were necessary, then plaintiff signed it. An insurance binder
was issued. Shortly after leaving the office, plaintiff's son told plaintiff
that there were some inaccurate answers on the application. One was the negative
answer to the question, "[A]ny
losses, whether or not paid by insurance, during the last 3 years, at this or
any other location?" Oliver later admitted that when she read this question, she
merely asked whether there were any losses in the prior three years. Many other
misstatements by plaintiff were also alleged. Plaintiff never spoke to Oliver
again and these misstatements were never corrected.
On January 18, 1998,
plaintiff's house and its contents were totally destroyed by a fire. New York
Central denied plaintiff's claim on the bases that it was arson and there were
material misrepresentations on plaintiff's policy application. Plaintiff
commenced this action against New York Central for breach of contract and
against Partners for negligent misrepresentation. Both defendants moved for
summary judgment dismissing the complaint. Plaintiff appeals from Supreme
Court's order granting both motions.
Plaintiff first argues
that New York Central was required to show that any misrepresentation was
intentional and material in order to void the policy. An insurer may avoid an
insurance contract if the insured made a false statement of fact as an
inducement to making the contract and the misrepresentation was material (see
Insurance Law § 3105 [a], [b]). "Rescission is available even if the material
misrepresentation was innocently or unintentionally made" (Nationwide
Mut. Fire Ins. Co. v Pascarella,
993 F Supp 134, 136 [1998] [citation omitted];
see
Holloway v Sacks & Sacks,
275 AD2d 625 [2000],
lv
denied 95 NY2d 770
[2000]; Meagher v Executive Life Ins. Co.
of N.Y., 200 AD2d
720, 720 [1994];
Tennenbaum v Insurance Corp. of
Ireland, 179 AD2d
589, 592 [1992]; see also
Mutual Benefit Life Ins. Co. v
JMR Elecs.,
848 F2d 30, 32 [1988]).
Despite plaintiff's
claims that the misrepresentations were innocent, he signed the application
indicating that all information was correct. The signer of a contract is
conclusively bound by it regardless of whether he or she actually read it (see
Maines
Paper & Food Serv. v Adel,
256 AD2d 760, 761 [1998]). The inability to understand the English language is
insufficient to avoid this general rule (see
id.
at 761). Here, although portions of the application were read to plaintiff by
Oliver, he made no effort to have someone else read or explain the entire
document to him. "An insured cannot remain silent while cognizant that his
insurance application contains misleading or incorrect information" (North
Atl. Life Ins. Co. of Am. v Katz,
163 AD2d 283, 284 [1990] [citations omitted]), but "ha[s] a duty to review the
entire application and to correct any incorrect or incomplete answers" (id.
at 285). Whether or not plaintiff intended to provide inaccurate statements or
misrepresentations at the time he filled out the application is irrelevant, as
he was bound by those answers and swore to their accuracy by signing the
application although he knew he could not read it, yet did not ask Oliver or his
son to read the completed application to him. Additionally, when he discovered
inaccuracies shortly after leaving Partners' office, he failed to comply with
his duty to correct that information (compare
Holloway v Sacks & Sacks,
supra
at 626).
While it is clear that
plaintiff's application contained misrepresentations, as found by Supreme Court,
those misrepresentations must be proven material before New York Central can
avoid payment under the contract. Materiality is generally a question of fact (see
Carpinone
v Mutual of Omaha Ins. Co.,
265 AD2d 752, 754 [1999]). To establish materiality of misrepresentations as a
matter of law, the insurer must present documentation concerning its
underwriting practices, such as underwriting manuals, bulletins or rules
pertaining to similar risks, to establish that it would not have issued the same
policy if the correct information had been disclosed in the application (see
id.
at 754; see also
Insurance Law § 3105 [c];
Iacovangelo
v Allstate Life Ins. Co. of N.Y.,
300 AD2d 1132, 1133 [2002]). Conclusory statements
by insurance company employees, unsupported by documentary evidence, are
insufficient to establish materiality as a matter of law (see
Carpinone
v Mutual of Omaha Ins. Co.,
supra
at 755; but cf.
North Atl.
Life Ins. Co. of Am. v Katz,
supra
at 285).
Here, New York Central
has no written underwriting policies on the topic of plaintiff's
misrepresentations and the conclusory affidavits by
its employees are insufficient. The affidavit of the independent insurance
broker is likewise deficient since it, like the affidavits of the employees and
the testimony of Oliver, neither identifies a written underwriting policy nor
does it identify any specific applicants with similar histories that were denied
coverage (see
Iacovangelo
v Allstate Life Ins. Co. of N.Y.,
supra
at 1133; Church of Transfiguration v New
Hampshire Ins. Co.,
207 AD2d 1039, 1039 [1994],
lv
denied 1994
WL 712777 [4th Dept. 1994];
Alaz
Sportswear v Public Serv. Mut.
Ins. Co., 195 AD2d 357,
358 [1993]).
Thus, there is a question of fact regarding the materiality of the
misrepresentations here which requires denial of the insurer's motion for
summary judgment.
Plaintiff further
contends that Partners is liable for negligent misrepresentation because a
special relationship existed. Insurance agents generally are not liable for
anything more than obtaining the requested coverage, unless there is a special
relationship with the insurance customer justifying reliance on the agent's
speech (see
Murphy v Kuhn,
90 NY2d 266, 270 [1997];
Catalanotto
v Commercial Mut. Ins. Co.,
285 AD2d 788, 790 [2001],
lv
denied 97 NY2d 604
[2001]). New York courts disfavor finding such a relationship, but can recognize
an additional duty in exceptional situations, for example where the agent
receives compensation for consultation beyond the premium payments, the insured
relies on expertise of the agent regarding a raised question of coverage, or
there is an extended course of dealing sufficient to put objectively reasonable
agents on notice that their advice was being specially relied upon (see
Murphy v Kuhn,
supra
at 272). Plaintiff's only encounter with Oliver was the single appointment to
obtain the subject policy; he made no payments beyond the premium and he never
informed her that he could not read English even when she asked him to read over
the application, so this was akin to a normal insurance agent/customer
relationship. Plaintiff is bound by the application after signing it and his
duty to correct inaccuracies once discovered applies to Partners as well as New
York Central.
Plaintiff also contends
that there are questions of fact regarding his attempts to notify Oliver of the
misstatements on his application and correct them. Plaintiff's deposition
testimony indicated that he believed he and his son called Partners several
times but Oliver was never available, that they left messages for Oliver and
told the receptionist there were mistakes on the application, and they informed
the receptionist of inaccuracies when plaintiff dropped off another document at
Partners' office. His son, however, testified at his deposition that he never
spoke to or called anyone at Partners after the application
appointment, and he was not present when plaintiff later went to
Partners' office. Additionally, Partners' records contain no mention of any
contact by or on behalf of plaintiff regarding any inaccuracies. Although
credibility questions are generally reserved for the jury, in certain
circumstances credibility may be properly determined as a matter of law (see
Bushman v Di
Carlo, 268 AD2d
920, 922 [2000], lv
denied 94 NY2d 764
[2000]; Home Mut.
Ins. Co. v Lapi,
192 AD2d 927, 929 [1993];
Rickert
v Travelers Ins. Co.,
159 AD2d 758, 759 [1990],
lv
denied 76 NY2d 701
[1990]). Supreme Court properly determined that plaintiff's statements were
self-serving and incredible on these points, permitting summary judgment in
favor of Partners.
Spain, J.P.,
Carpinello, Rose and Lahtinen,
JJ.,
concur.
ORDERED that the order is modified, on the law, without costs, by reversing so
much thereof as granted defendant New York Central Mutual Fire Insurance
Company's motion for summary judgment; said motion denied; and, as so modified,
affirmed.
NEW YORK CENTRAL MUT.
FIRE INS. CO. v NATIONWIDE MUT. INS. CO.
Kane, J.
Appeal from that part of
an order of the Supreme Court (Canfield, J.), entered April 29, 2002 in
Rensselaer County, which granted a cross motion by defendant Nationwide Mutual
Insurance Company and declared that said defendant is not obligated to defend or
indemnify defendants Robert Piche Sr., Nicholas Piche and Robert Piche Jr. in an
underlying action.
An action was commenced
by defendants Mark Delvecchio and Janice
Delvecchio to recover for pain, suffering and the
wrongful death of their son, who died as a result of a car accident. Aaron
Gooley was the driver of a car owned by defendant Robert Piche Sr., in which the
Delvecchios' son was a passenger. Plaintiff was the insurer under a homeowner's
policy issued to John Gooley and Bonnie Gooley, Aaron Gooley's parents and
owners of the home where an underage drinking party occurred shortly before the
accident. Plaintiff commenced this declaratory judgment action seeking a
declaration that defendant Nationwide Mutual Insurance Company, the insurer
under homeowner's and automobile insurance policies issued to Robert Piche Sr.,
had a duty to defend and indemnify the Piches. The
Delvecchios cross-claimed, seeking declarations that plaintiff and Nationwide
must defend and indemnify various parties. Following motions for summary
judgment, Supreme Court determined that plaintiff must defend and indemnify the
Gooleys against the Delvecchios' Dram Shop Act cause of action but no other
causes of action, and Nationwide was not required to defend or indemnify Robert
Piche Sr. and defendants Nicholas Piche and Robert Piche Jr. under either the
homeowner's or automobile insurance policies. The Delvecchios appeal.
The Delvecchios contend
that Nationwide should be required to defend and indemnify the Piches under its
automobile insurance policy. A vehicle owner is vicariously liable for the
negligence of anyone operating his or her vehicle with express or implied
permission (see
Vehicle and Traffic Law § 388 [1]). The statute creates a
rebuttable presumption that an operator of a motor vehicle is driving
with the owner's consent (see
Bost
v Thomas, 275 AD2d
513, 514 [2000]; Ames v Cross,
177 AD2d 771, 772 [1991]). Although the question of permission is generally one
for the jury, the presumption may be rebutted as a matter of law upon an
uncontroverted factual showing (see
Leonard v Karlewicz,
215 AD2d 973, 974-975 [1995]; Ames v
Cross,
supra
at 772).
Sworn police statements
from most of the attendees of the party, including Aaron Gooley, and Nicholas
Piche's statement to an insurance investigator indicate that Aaron Gooley asked
Nicholas Piche for his car keys to prevent him from driving after having
consumed alcohol, the keys were put away so Nicholas Piche would not find them,
Aaron Gooley had never been permitted to drive the Piche vehicle before, the
vehicle was locked, Nicholas Piche did not then nor ever tell nor imply to Aaron
Gooley that he could drive the vehicle, and the next morning Nicholas Piche was
not aware that his car was gone, was not sure who had taken it, and was upset
that someone had taken it. Nicholas Piche's statement was consistent with the
other statements except he did not remember giving his keys to Aaron Gooley.
This information rebuts the presumption and establishes a lack of permission for
Aaron Gooley to operate the Piche vehicle (compare
Leonard v Karlewicz,
supra;
Polsinelli
v Town of Rotterdam,
167 AD2d 579 [1990]). As Nationwide's automobile
policy only insured permissive users, Supreme Court properly determined that
Nationwide was not required to defend or indemnify the Piches under that policy.
The Delvecchios also
contend that Nationwide should be required to defend and indemnify the Piches
under its homeowner's policy. That policy contained an exclusion, relied upon in
Nationwide's disclaimer letter, excluding coverage
for bodily injury "caused by or resulting from an act or omission which is
criminal in nature and committed by an insured * * * regardless of whether the
insured is actually charged with, or convicted of a crime." Contrary to the
Delvecchios' arguments, such an exclusion is not
contrary to public policy, as the Legislature has expressed a preference to
facilitate rather than hinder insurers' efforts to remove coverage for persons
who perform criminal acts (see
Slayko
v Security Mut. Ins. Co.,
98 NY2d 289, 295-296 [2002], citing Insurance Law § 3425 [c]
[2] [B]).
Under the homeowner's policy, the Delvecchios believe coverage should extend
under their negligence and Dram Shop Act claims (General Obligations Law §
11-101) based on allegations that Nicholas Piche, then 17 years old, purchased
alcohol for the party using identification belonging to and provided to him by
his 22-year-old brother, Robert Piche Jr. These actions by the Piche brothers
violated criminal statutes (see
Penal Law § 190.25 [1] [criminal impersonation in the second degree];[1]
§ 260.20 [2] [unlawfully dealing with a child in the first degree];
see also
Alcoholic Beverage Control Law §§ 65, 65-b, 65-c [1] [all offenses, not
crimes]). The Delvecchios even noted in their complaint that the cause of action
against the Piche brothers was based on their "illegal providing of alcoholic
beverages." Additionally, injury arising out of the use of a motor vehicle was
an exclusion under the policy, which was raised in
the disclaimer letter. As the motor vehicle and the criminal acts exclusions
apply, Nationwide has no obligation to defend or indemnify the Piches.
We have examined the
Delvecchios' remaining arguments and find them to be without merit.
Crew III, J.P.,
Carpinello and Lahtinen,
JJ.,
concur.
ORDERED that the order is affirmed, with one bill of costs.
[1] Although an
affirmative defense to this crime now exists (Penal Law § 190.84), it was not in
effect at the relevant time.
