Coverage Pointers - Volume V, No. 11

Failure to Send Disclaimer Notice to Injured Person Does Not Invalidate Disclaimer to Insured Who Received Notice

In June 1999, Santorelli served a notice of claim upon the City. Approximately five months later, in November 1999, the City sent a copy of this notice to Investors. This was the first notice that Investors received regarding the Santorelli claim. Two weeks after receipt of the notice of claim from the City, Investors sent a letter to the City, with a copy to Pile, in which it disclaimed coverage based upon late notice. Investors did not send a notice of disclaimer to Santorelli. Pile subsequently commenced the instant action seeking a judgment declaring that Investors was obligated to defend and indemnify the City in the personal injury action, which Santorelli had commenced against the City. The court held that, contrary to Pile’s contention, it could not rely upon Investors’ failure to send its notice of disclaimer to Santorelli as a basis for invalidating the disclaimer, which Investors timely sent to the City.

 

12/04/03          TRENTINI v METROPOLITAN PROP. & CAS. INS. CO.

New York State Supreme Court, Appellate Division, Third Department

Can a Locked, Unattended Vehicle Be "In Use"? Sure.

Campbell was driving a vehicle insured by defendant. After the vehicle stalled and Campbell could not restart it, he pushed the vehicle down a hill to a safer spot, pushed it to the shoulder of the road against a snow bank, turned on its hazard flashers, locked the doors and walked home. Approximately 15 minutes later, he returned in another vehicle and attempted to jump start the disabled vehicle. These attempts were fruitless. Campbell then locked the vehicle again and went to a friend’s home in order to get someone to tow the disabled vehicle. About 20 to 25 minutes later, as he was heading back to the vehicle, he was informed that two snowmobiles had collided with the disabled car. Plaintiff, who was operating one of those snowmobiles, was injured. After defendant denied plaintiff’s request for no-fault benefits, plaintiff commenced this action. The sole issue was whether the disabled vehicle was in “use or operation” at the time of the accident, thus permitting plaintiff to recover no- fault benefits pursuant to Insurance Law §5103(a)(1). After a bench trial, Supreme Court found that the vehicle was in use and granted judgment to plaintiff. Appellate Division affirms. Campbell did not voluntary place his vehicle near his residence intending that to be his permanent parking place for the night. He experienced an unplanned stop due to the temporary disability of his car in a place where a vehicle would not normally be parked. Campbell activated the hazard lights to warn other drivers, and his sole purpose in leaving the vehicle was to gain assistance to return and retrieve it as soon as possible. These circumstances constituted an "on-going activity relating to the vehicle" which would necessitate a conclusion that the vehicle was in use. Because the vehicle he struck was in "use or operation" at the time of the accident, plaintiff is entitled to no- fault benefits.

 

12/11/03          Opinion of Office of General Counsel, Superintendent of Insurance,                               

Rental Car Company May Not Hold Driver Liable for Mechanical Damage Unrelated to Accident, Normal Wear and Tear or Loss of Use

Not every expense incurred by a car rental company may be recovered against an authorized driver, according to the NYS Insurance Department. A renter shall not be liable for mechanical damage unrelated to an accident, nor for any normal wear and tear or other mechanical damage that could reasonably be expected from normal use of the vehicle, except in instances where abuse or neglect by the driver is shown.

 

And in Defense

 

12/23/03          BLAKE v NEIGHBORHOOD HOUSING SERVICES

New York Court of Appeals

Not Every Fall from a Ladder at a Construction Site Gives Rise to Labor Law §240 Liability

When a construction worker fell from a well-constructed and placed ladder, owner and general contractor held NOT liable under Section 240 of the New York State Labor Law. Courts have long held that “this statute is one for the protection of [workers] from injury and undoubtedly is to be construed as liberally as may be for the accomplishment of the purpose for which it was thus framed.” But to impose liability for a ladder injury even though all the proper safety precautions were met would not further the Legislature’s purpose. It would, instead, be a sweeping and dramatic turnabout that the statute neither permits nor contemplates. Labor Law §240(1) “must not be strained” to accomplish what the Legislature did not intend. If liability were to attach even though the proper safety devices were entirely sound and in place, the Legislature would have simply said so or made owners and contractors into insurers. Instead, the Legislature has enacted no-fault workers’ compensation to address workplace injuries where, as here, the worker is entirely at fault and there has been no Labor Law violation shown.

 

Across Borders

 

Visit the HOT CASES section of the Federation of Defense and Corporate Counsel website for cases covering a broad range of legal issues from other jurisdictions.

 

12/18/03          LABRADOR v LIBERTY MUTUAL GROUP

Hawai’i Supreme Court

Policyholder May Not Recover Attorney’s Fees and Costs Where Coverage is Determined in Arbitration

Labrador, a thirteen-year-old girl, suffered severe facial scarring as a result of an auto accident. She was insured under her parents’ personal automobile insurance issued by Liberty Mutual. That policy provided a total of $140,000 in UM coverage. The policy provided that the parties would submit to binding arbitration if either Liberty Mutual or the insured disagreed about (1) whether the insured was legally entitled to recover damages; or (2) the amount of damages. Liberty filed a complaint for declaratory judgment and other relief, and the parties went to arbitration to dispute Labrador’s UM benefits claim. Labrador was awarded damages of $250,000. Labrador filed a motion to confirm the arbitration award and for attorneys’ fees and costs under HRS § 431:10-242, which provides that “[w]here an insurer has contested its liability under a policy and is ordered by the courts to pay benefits under the policy, … the beneficiary under a policy … shall be awarded reasonable attorney’s fees and costs of suit ….” The court found that Labrador was not entitled to fees and costs because the motion for confirmation was not a proceeding in which the insurer contested liability, and furthermore, because the statute uses the phrase “costs of suit,” the statute does not apply to an underlying arbitration proceeding because an arbitration proceeding is not a “suit.”

Bruce D. Celebrezze and Joseph Pelochino, Sedgwick, Detert, Moran & Arnold LLP

 

12/18/03          UMLAND v NATIONAL CAS. CO.

Montana Supreme Court

Individual can only be “Resident of Household” of One Household for Purposes of UIM Coverage

A fifteen-year-old boy was killed in an auto accident, and the boy’s father, who was divorced from the mother, sought uninsured motorist coverage on behalf of the son under the business auto policy issued to the father’s logging operation. The policy provided UIM coverage for relatives who are “residents” of the named insured’s household. The court found that the son was not a resident of the father’s household where the mother was awarded physical custody of the son to the motion, the father did not fulfill all of his child support obligations, the son lived with the father for seven months before returning to live with the mother, the mother financially supported the son before his death, and the majority, if not all, of the son’s contact, time spent in school, and athletic involvement occurred with the financial and emotional support of the mother. The court also relied on the fact that Montana does not allow dual residency, and thus the son could not be a resident of both households.

Bruce D. Celebrezze and Joseph Pelochino, Sedgwick, Detert, Moran & Arnold LLP

 

12/18/03          NATIONWIDE MUT. INS. CO. v RILEY

Third Circuit

Household Exclusion Clause Applied to UIM Benefits Claim

Summary judgment was properly entered for plaintiff, who had no obligation to pay underinsured motorist benefits to defendant under her father's insurance policy. Because her father did not pay to insure her vehicle under the underinsured motorist policy, she was validly denied coverage per the "household exclusion clause."

Lori Iwan, Iwan Cray

 

12/18/03          HAROLD IVES TRUCKING CO. v MIKE PICKENS, INS. COMM’R FOR THE STATE OF ARK.

Arkansas Supreme Court

Insured was Deemed Affiliate of Corporation with Net Worth Over $50,000,000, Such That Insured’s Claims Did Not Fall within Arkansas Property & Casualty Insurance Guaranty Act

Insured, an Arkansas based corporation, sold 100% of its stock to Covenant Transport, Inc., a Nevada corporation. Subsequently the insured’s carrier was declared insolvent and the Guaranty Fund retained counsel to provide a defense in 10 lawsuits pending against the insured. However, the insurance commission later filed a motion to deny claim, alleging that the insured had a net worth of over $50,000,000.00, which caused the Guaranty Fund to no longer be responsible for its claims, as those were not “covered claims” within the meaning of the Guaranty Act. The commissioner’s argument was based on the fact that Covenant was an “affiliate” for purposes of the Act, and the Guaranty Fund would not cover claims of an insured whose net worth exceeds $50,000,000.00. Net worth included the aggregate net worth of the insured and all of its affiliates. The trial court granted the commissioner’s motion for summary judgment and the insured appealed. The court affirmed the trial court’s ruling noting that the definition of affiliate included “a corporation that is related to another corporation by shareholdings or other means of control.” Because Covenant owned 100% of the shares of the insured, the insured was a wholly-owned subsidiary of Covenant. Thus, the insured’s claims were not covered under the Guaranty Act, which included the net worth exclusion on the basis that an insured with that much net worth out to buy insurance intelligently enough so that it would not be insured by an unsound insurer.

Bruce D. Celebrezze and Vanessa O'Brien, Sedgwick, Detert, Moran & Arnold LLP

 

12/17/03          ASHE v ENTERPRISE RENT-A-CAR

Maine Supreme Judicial Court

Rental Car Passengers Cannot Recover against Owner or Owner’s Insurer

Plaintiff, a passenger in a rental car, was injured when the car was involved in a single car accident. He brought suit against the driver, who stipulated to liability. The driver’s insurer paid the passenger for damage up to the policy limits, and the plaintiff passenger agreed not to seek recover from the driver’s personal assets in exchange for an assignment of rights against the rental car company and its insurer. Plaintiff contended that, because Maine law mandates that rental car companies carry insurance, he can recover from the rental company’s insurer. However, Maine law also provides that passengers in a rental vehicle have no right of action against the vehicle owner. Since the plaintiff passenger had no cause of action against the owner, he could not recover for the insurer, even though Maine law requires rental car owners to be insured.

Bruce D. Celebrezze and Erin Adrian, Sedgwick, Detert, Moran & Arnold LLP

 

12/17/03          WESTFIELD INS. CO. v GALATIS

Ohio Supreme Court

Employer's Commercial Automobile Liability Policy Only Covers Loss Sustained by Employee if Loss Occurs Within the Course and Scope of Employment

Passenger was killed in a car accident; his estate settled its claim against the driver and released him from liability. The estate also settled an underinsured motorist claim against the driver’s parents’ insurer. The estate then presented claims under the business auto policies of the driver’s parents’ employers. A prior Ohio decision had ruled that ambiguity in the term “you” in a corporate auto policy should be construed to favor coverage for an employee outside the scope of his employment and the employee’s family members. The court overruled this decision, noting that whether someone is insured under an insurance policy should not be interpreted in favor of one who was not a party to the contract. As a result, an employee acting outside the scope of his or her employment, and that employee’s family members, were not covered by the corporate auto policy.

Bruce D. Celebrezze and Erin Adrian, Sedgwick, Detert, Moran & Arnold LLP

 

12/17/03          EMPLOYERS MUT. CAS. CO. v WENDLAND & UTZ

Eighth Circuit (applying Minnesota law)

Business Owners Policy Does Not Cover Vehicular Accidents

Insurer sought a declaratory judgment that no coverage exists under law firm business owners policy for vehicular accident by lawyer picking up witness. In response, law firm sought to reform the insurance policy, or in the alternative, show that EMC negligently or intentionally misrepresented the terms of the policy to the agent and thus should be estopped from refusing to honor the terms as represented. The district court found that no genuine issues of fact exist on law firm's claim because the law firm never contacted insurer about providing coverage for employee-owned vehicles.

Lori Iwan, Iwan Cray

 

12/16/03          ADZICK v UNUM LIFE INS. CO.

Eighth Circuit (applying Minnesota law)

Disability Insurance Terms "Regularly Use" and "Currently Use" Were Not Ambiguous

Unum disability policy and application were not ambiguous as to terms "regularly use" and "currently use", and questions of fact regarding fraud in the application for disability insurance warranted new trial on Unum's motion.

Lori Iwan, Iwan Cray

 

12/12/03          KIMBROUGH v UNIVERSITY OF KANSAS MED. CTR. & KEMPER INS. CO. ET AL.

Kansas Supreme Court

For Purposes of Workers’ Compensation Claims, Date of Injury is Last Day Worked. When Claimant Continues to Work in Same Position that Caused Injury, Date of Injury is Last Date Claimant Worked Prior to Hearing

Insured and insurer filed a petition for review of the Court of Appeals decision establishing that the workers’ compensation date of injury for a carpal tunnel claim is the last date the claimant worked prior to the hearing. The insured asserted that the date of injury should be the date when the claimant informed the treating physician of her injuries. The Supreme Court of Kansas rejected this contention, noting the bright line rule that the date of injury in a repetitive, micro-trauma situation like carpal tunnel is the last day worked. Even if the claimants do not terminate their employment but accepted accommodated positions that were significantly different than those that caused the micro-trauma, the last day worked is the claimant’s last day on the job that caused the injuries. This rule was intended to allow the latest possible date for the claim and does not penalize the claimant for continuing to work in spite of the pain or difficulty caused by the injuries. The Court found “no merit” to the insurer’s argument that using the last day worked before the hearing could prejudice the carrier if the carrier did not insure the employer when the claimant first made the claim. According to the court, only the employer was entitled notice and receipt of a written claim, not the insurance carrier. “[T]he insurance carrier has no separate right of procedural due process flowing from provisions of the Workers Compensation Act.”

Bruce D. Celebrezze & Vanessa O'Brien, Sedgwick, Detert, Moran & Arnold LLP

 

12/10/03          LIBERTY MUT. FIRE INS. CO. v STATEWIDE INS. CO.

Seventh Circuit

Insurer Not Obligated To Defend/Indemnify Based on Additional Insured Limitations in Policy

Liberty Mutual Fire Insurance Company (“Liberty”) filed an action seeking a declaratory judgment that Statewide Insurance Company (“Statewide”) had a duty to defend and indemnify two companies Liberty defended in a personal injury lawsuit. Liberty’s insured entered into a contract with a subcontractor, in which the subcontractor was required to name the insured as an additional insured under its CGL policy. The subcontractor then entered into a sub-subcontract with Bond Enterprises, and Bond was required to name both Liberty’s insured and the subcontractor as additional insureds under its CGL policy. Bond paid a $35 additional premium for the additional coverage from its insurer, Statewide. Bond’s employee was injured and filed suit against the contractor and subcontractor. Liberty defended the suit, but Statewide refused to defend, relying on two limitations to the coverage provided in its policy: (1) that the coverage was limited to liability resulting from the conduct of the named insured which could be imputed to any additional insured by virtue of the conduct of the named insured; (2) no coverage is provided to an additional insured for liability arising out of the claimed negligence of the additional insured, other than that imputed to the additional insured by virtue of the conduct of the named insured. The district court granted summary judgment in favor of Statewide and Liberty appealed, contending that the limitations were so broad that the additional-insured endorsement furnished no coverage that could ever apply, and therefore, the coverage was illusory and against public policy in Illinois. The court disagreed, finding that there was strong public policy favoring freedom of contract. The court noted that the contracting parties were companies, and not hapless individuals. Further, the contracts gave the parties notice and the right to review the insurance policy. Finally, the court noted that the small premium paid for the coverage indicated that the coverage would be very limited. Thus, the court affirmed the district court’s judgment.

 

12/09/03          COMMONWEALTH INS. v STONE CONTAINER CORP

Seventh Circuit

Where Exclusion for Listed Types of Explosions Didn’t List Type that Occurred, But another Exclusion Excluded Coverage for Rupture and Resulting Damages, Explosion as a Result of Rupture was Excluded

Insurance policy that did not explicitly exclude coverage for explosions of pressure vessels, but did exclude coverage for ruptures and resulting damage excluded damage caused by explosion of pressure vessel caused by a rupture. Additionally, the court held that a publication produced by the insured that stated that “major hazard” with digesters is “explosion from vessel failure,” did not make any representations about coverage, nor did it intend that the defendant rely on it to determine the scope of coverage.

Bruce D. Celebrezze & Hank Brier, Sedgwick Detert Moran & Arnold LLP

 

12/09/03          MALLAR v PENN-AMERICAN INS. CO.

Maine Supreme Judicial Court

Coverage Excluded for Emotional Distress Caused by Witnessing Murder

After witnessing the murder of a bartender, plaintiff obtained a judgment against the bar for negligent infliction of emotional distress. Plaintiff brought a declaratory judgment action against the pub’s liability insurer seeking a determination that the pub’s general liability policy provided coverage for his damage award. The court determined that the insurance policy’s assault and battery exclusion relieved the insurer of any duty to indemnify. The court reasoned that, although the plaintiff argued that the bartender’s taunting of the patron who later killed him was the cause of his emotional distress, witnessing the murder was unquestionably the cause-in-fact of his distress. Damages resulting from the murder fell squarely within the assault and battery exclusion and were not covered.

Bruce D. Celebrezze and Erin Adrian, Sedgwick, Detert, Moran & Arnold LLP

 

12/09/03          STATELINE STEEL ERECTORS, INC. v SHIELDS

Supreme Court of New Hampshire

Assignment of Negligence Claims against Insurance Provider is Valid When Coupled with Covenant not to Sue

Stateline provided steel erection services to subcontractors, and was routinely required to indemnify the subcontractors for claims arising out of its work. Stateline sought insurance coverage from defendant, who obtained insurance for Stateline from Liberty Mutual. However, unbeknownst to Stateline, the policy excluded coverage for claims arising out of Stateline’s contracts and provided only $100,000 of coverage. When one of Stateline’s employees was injured on the job and sued the project’s general contractor, the contractor sought indemnification from Stateline. Stateline and Liberty Mutual entered into a settlement with the contractor and its insurers in which the contractor agreed not to sue Stateline for the remainder of the judgment in excess of its insurance coverage in exchange for an assignment of any claims for liability relating to the accident, including claims regarding the provision of insurance to Stateline. The contractor sued defendant for negligence and breach of contract in Stateline’s name. Defendant argued that, because of the settlement, Stateline suffered no damages from the negligent provision of insurance and thus the assignment was invalid. The court held that, because Stateline had a claim against the defendant when it entered the settlement agreement, the assignment was valid.

Bruce D. Celebrezze and Erin Adrian, Sedgwick, Detert, Moran & Arnold LLP

 

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GREATER NEW YORK MUT. INS. CO. v MUTUAL MARINE OFFICE, INC.

 

At issue is an insurance coverage dispute between plaintiff Greater New York Mutual Insurance Company (GNY) and defendant Mutual Marine Office, Inc. (MMO) arising out of the January 15, 1999 collapse of the roof of a building housing a commercial parking garage located in the premises at 241 East Broadway, as a result of which a number of cars parked at the garage were destroyed or damaged. Numerous claims were thereafter filed against the owner of the [*2]building, Seward Park Housing Corp. (Seward) and its lessee, Ulltra East Parking Corp. (Ulltra), the operator of the parking garage, for the recovery of the value of the cars destroyed or the cost of repair of those damaged in the collapse.

 

On or about August 21, 1990, Seward, a real estate cooperative apartment corporation, and Ulltra entered into a 10-year lease of the "entire garage building, including roof, as presently constructed," which was to be used "solely and exclusively as a 24 hour garage for the storage of motor vehicles." Ulltra, at its own cost and expense, was to "keep the demised premises clean and well lit, fix broken windows and keep all doors and gates (including overhead doors) . . . operating and in good repair, paint and restripe the demised premises when necessary, keep the surfaces of walls, floors and ceiling in good repair and free of leaks . . . and make all other necessary repairs to the demised premises, including all repairs required to safely and legally operate the Garage and repairs to mechanical systems, except that the Tenant shall not make any structural repairs not expressly referred to herein." Thus, Seward was solely responsible for repairs to the structure of the parking garage.

 

The lease also required Ulltra to provide liability insurance coverage for itself and Seward with respect to Ulltra's leasing of the parking garage. The insurance procurement clause states:

 

Insurance. (a) Tenant at its own cost and expense, shall procure and at all times maintain general liability insurance with companies satisfactory to Landlord, insuring Landlord and Tenant against damages from bodily injury, including death, and for injury to property to any and all persons, incurred either in the interior of the demised premises, or any part thereof, or upon and in or about adjacent to the exterior of the said premises[.]

 

In compliance with this requirement, Ulltra procured a Comprehensive General Liability policy with a Garage Keepers Liability endorsement (#3) from MMO for bodily injury and property damage with an additional insured endorsement for the period January 31, 1998 to January 31, 1999 that included coverage for damage to cars "in connection with the insured's [Ulltra's] 'garage operations.'" Endorsement #3 defined "Garage Operations" as "the ownership, maintenance or use of locations for the purpose of a business of selling, servicing, repairing or parking 'automobiles' and that portion of the roads or other accesses that adjoin these locations."As regards the MMO policy's additional insured provision, endorsement #11 specifically provides, "It is agreed that this Policy shall include as additional insureds any person or organization to whom [Ulltra] has agreed by written contract to provide coverage, but only with respect to operations performed by or on behalf of [Ulltra]."

 

Shortly after the January 15, 1999 collapse of the parking garage roof, claims were asserted, as noted, by the owners of vehicles as well as by the vehicle owners' subrogated insurers against Seward and Ulltra, seeking to recover for the damages to the vehicles parked in the garage at the time of the collapse. At the time, Seward was the named insured under a General Liability policy issued by GNY for the period of July 31, 1998 to July 31, 1999 providing commercial property, commercial general liability and commercial automobile coverage for [*3]Seward's properties, including 241 East Broadway. The coverage provided by the GNY policy issued to Seward is distinct from the MMO policy and not overlapping, and it covered claims arising out of the ownership of the building. As noted, the MMO policy, on the other hand, provided additional insured coverage for Seward only for claims arising out of Ulltra's parking garage operations.

 

After reaching agreement with MMO to fund jointly the settlement of claims by the owners of cars uninsured for damage or loss due to the roof collapse, subject to resolution of ultimate liability after the disposition of all similar claims, GNY, in March 2000, requested coverage from MMO on behalf of Seward as an additional insured for those claims asserted by subrogated insurers whose insureds' cars had been damaged or destroyed in the collapse. MMO disclaimed coverage on the ground that Seward was not an additional insured under the terms of endorsement #11 since the claims did not arise out of the "operations performed by or on behalf of [Ulltra]," the named insured. In response, GNY commenced this action seeking a declaration that Seward is entitled to additional insured coverage under the MMO policy. GNY moved for summary judgment for a declaration that MMO was obligated to defend and indemnify Seward with respect to the subrogated claims. MMO cross-moved for summary judgment dismissing the complaint. Supreme Court granted GNY's motion, holding, "Since the automobiles in question were damaged while parked in the garage maintained by Ulltra
. . . , the claims against Seward which were filed by the automobile owners and their insurers clearly arose from Ulltra's . . . operations." Thus, the court held, the MMO policy's additional insured endorsement was triggered, obligating MMO to defend and indemnify Seward against the claims arising out of the roof collapse. As is plainly evident, the collapse of the roof had nothing to do with Ulltra's garage operations. Thus, the additional insured endorsement was never triggered and a reversal is in order.

 

To determine whether Seward is an additional insured under MMO's policy for claims arising out of the collapse of the parking garage roof, it is necessary to look to the policy itself and the underlying lease between Ulltra and Seward (General Acc. Fire & Assurance Corp. v Travelers Ins. Co., 162 AD2d 130). In that case, a lessee of a marine terminal procured a general liability policy naming the lessor as an additional insured under an endorsement that limited additional insured coverage to liability arising out of the lessee's ownership, maintenance or use of the leased terminal. The court looked to the obligations undertaken by the tenant in the underlying lease agreement to determine whether the claim asserted implicated those obligations so as to trigger the additional insured endorsement.

 

The lease agreement between Seward and Ulltra specifically limits the permitted use of the demised premises "solely and exclusively as a 24 hour garage for the storage of motor vehicles." Moreover, the lease limited Ulltra's duty to repair to cleaning and surface maintenance and keeping the premises in good repair. The lease reserved the obligation of making structural repairs to Seward. In accordance with the policy's terms, endorsement #11 qualifies an entity as an additional insured if Ulltra "has agreed by written contract to provide coverage, but only with respect to the operations performed by or on behalf" of Ulltra. MMO's policy defines "garage operations" as the "ownership, maintenance or use of locations for the purpose of selling, [*4]servicing, repairing or parking 'automobiles' and that portion of the roads or other accesses that adjoin these locations."

 

Thus, in accordance with the lease terms and policy provisions, Seward would qualify as an additional insured under MMO's policy only as to claims arising out of the "operations performed by or on behalf of" Ulltra, that is, parking garage operations. Any claim of liability on Seward's part arising out of an incident relating to the operation of the parking garage, such as parking or servicing cars or involving non-structural repair or maintenance of the premises, would necessarily arise out of the operations "performed by or on behalf of Ulltra," thereby triggering the additional insured clause. The collapse of the parking garage roof clearly did not arise out of Ulltra's parking garage operations but, rather, absent a showing otherwise, which GNY has not made, out of a structural defect in the building housing the parking garage, as to which, under the lease, Seward had the duty of repair. As noted, Ulltra's maintenance obligations under the lease were limited to cleaning and surface repair. In considering the provisions of the MMO policy and the terms of the lease, it is clear that the additional insured endorsement was never intended to extend to Seward's liability arising out of a roof defect in a building it owns and which, under its lease with Ulltra, it is obligated to maintain.

 

In holding that Seward is an additional insured under the MMO policy, Supreme Court relied upon Tishman Constr. Corp. v CNA Ins. Co. (236 AD2d 211) and Structure Tone, Inc. v Component Assembly Sys. (275 AD2d 603), which are distinguishable. Both Tishman and Structure Tone deal with the interpretation of an additional insured provision in a policy of liability insurance for a subcontractor in the construction field, and not a liability policy for a garage operator. In those cases, the additional insured clause of the subcontractor's policy limited such coverage to "liability arising out of your [the subcontractor's] work" (Structure Tone) and "liability . . . for 'your work'" (Tishman) for the putative additional insured.

 

Tishman, which Structure Tone followed, adopted the language of Consolidated Edison Co. v Hartford Ins. Co. (203 AD2d 83) that the additional insured language at issue "focuses not upon the precise cause of the accident . . . but upon the general nature of the operation in the course of which the injury was sustained" (id. at 83). In the construction field context, the general contractor is held to be an additional insured under the subcontractor's policy where, typically, the injury occurs to an employee of the subcontractor (see e.g. Tishman, supra; Consolidated Edison Co., supra) or of an entity with which the subcontractor has subcontracted (see e.g. Structure Tone, supra). Under such circumstances, the employee is injured in furtherance of the work to be performed under the contract and the injury, arguably, arises out of the subcontractor's operations at the work site.

 

This distinction is exemplified by Consolidated Edison Co., where the subcontractor's policy contained an additional insured endorsement, which stated: "The 'Persons Insured' provision is amended to include as an insured [Con Edison] but only with respect to liability arising out of operations performed for such insured by or on behalf of the named insured [the contractor]." The subcontractor's employee was injured while removing debris and other material accumulated from insulation work required under the contractor's contract with Con Edison. Thus, the injury arose out of the operations performed by or on behalf of the insured, the [*5]contractor, in furtherance of the work to be performed under the contract.

 

Given the significantly different relationship between owner/general contractor and lessor/lessee garage keeper, the rationale for extending additional insured coverage to an owner does not apply to the additional insured endorsement in a Comprehensive General Liability policy with a Garage Keepers Liability endorsement. A construction contractor, working in furtherance of its contract with the owner, is in the best position to avoid or reduce the risk of injury, especially to its own employees and those of its subcontractor. In fact, often, as in Consolidated Edison (supra), the contractor is required to procure liability insurance coverage to protect the owner against liability for work being performed at the construction site by it or in its behalf. In such circumstances, as the courts recognize (see Kinney v Lisk Co., 76 NY2d 215; Mathew v Crow Constr. Co., 220 AD2d 490), it is appropriate, as a matter of risk allocation, to shift the risk of liability, as the case may be, to the contractor or subcontractor performing the work giving rise to the liability.

 

Such considerations do not apply to the relationship of a lessee garage keeper to the lessor, especially in light of the lease allocation of responsibility for the repair and maintenance of the demised premises. Here, the lease specifically reserves to Seward the sole responsibility for structural repairs. Unlike the contractor or subcontractor, which has the opportunity to control or minimize the risk of injury to its employees and those acting in its behalf at a construction site, Ulltra was in no position to avoid the risk of the structural collapse of the roof of a garage it leased, an event completely beyond its control.

 

In determining the scope of contractual obligations, the reasonable expectation of the parties is a factor to be considered. Indeed, "[a]ny interpretation of an insurance contract implicates as a standard 'the reasonable expectation and purpose of the ordinary businessman when making an ordinary business contract'" (Matter of Liquidation of Midland Ins. Co., 269 AD2d 50, 59, quoting Atlantic Cement Co. v Fidelity & Cas. Co., 91 AD2d 412, 418, affd 63 NY2d 798). Thus, courts must interpret a contract so as to give meaning to all its terms. "The reason is clear. Since a contract is a voluntary undertaking, it should be interpreted to give effect to the parties' reasonable expectations" (Mionis v Bank Julius Baer & Co., Ltd., 301 AD2d 104, 109). In that regard, it cannot be seriously argued that in negotiating the lease, Seward and Ulltra, and by extension, MMO, Ulltra's insurance carrier, contemplated that Ulltra would bear the responsibility for damages arising out of the collapse of Seward's garage roof.

 

Consistent with that apportionment of responsibility, MMO's endorsement #11 limited the scope of additional insured coverage to liability arising out of Ulltra's garage operations, which are defined in endorsement #3. While it might reasonably be anticipated that an insurer would expect its policy to provide additional insured coverage to a general contractor or owner for injuries sustained by the named insured's employee in a construction site accident, the same cannot be said with respect to a building owner under a Comprehensive General Liability policy endorsed to provide Garage Keepers Liability coverage for a structural collapse. Since the liability for the damage to the parked cars, at the nub of this coverage issue, arose out of the structural maintenance of the demised premises, the responsibility for which, under the lease, was reserved to Seward, rather than out of Ulltra's "garage operations," the additional insured [*6]endorsement was never triggered.

 

We have considered the other issues raised and find that they are without merit.

 

Accordingly, the order of the Supreme Court, New York County (Marylin Diamond, J.), entered April 12, 2002, which, in this declaratory judgment action, upon the parties' respective motions for summary judgment, granted plaintiff's motion and declared in its favor, and denied defendant's cross motion, should be reversed, on the law, with costs and disbursements, plaintiff's motion denied, defendant's cross motion granted and a declaration made that defendant has no obligation to defend or indemnify Seward in connection with the underlying claims.

 

All concur.

 

HERNANDEZ v AMERICAN TRANSIT INS. CO.

 

In an action pursuant to Insurance Law § 3420(a)(2) to recover on two unsatisfied judgments entered against the defendant's insureds, the plaintiffs appeal from so much of an order of the Supreme Court, Queens County (Hart, J.), dated June 10, 2003, as denied their motion for summary judgment on the issue of liability.

 

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

The plaintiffs commenced this action pursuant to Insurance Law § 3420(a)(2) to recover on two unsatisfied judgments they obtained against the defendant's insureds on default. In its answer, the defendant asserted that the judgments in the underlying action were void and unenforceable.

 

A valid and enforceable judgment is a condition precedent to maintaining an action pursuant to Insurance Law § 3420(a)(2) (see Braddy v Allcity Ins. Co., 282 AD2d 637). A judgment entered through fraud, misrepresentation, or other misconduct practiced on the court is a nullity and is subject to collateral attack (see Sirota v Kloogman, 140 AD2d 426; Shaw v Shaw, 97 AD2d 403). The evidence presented by the defendant in opposition to the plaintiffs' motion for summary judgment was sufficient to raise a triable issue of fact as to whether the plaintiffs had a basis upon which to enter the judgments. Accordingly, the plaintiffs' motion for summary judgment was properly denied.

 

PILE FOUNDATION CONSTRUCTION CO., INC. v INVESTORS INS. CO. OF AMERICA

 

In an action, inter alia, for a judgment declaring that the defendant is obligated to defend and indemnify the City of New York in an underlying action entitled Santorelli v City of New York, pending in the Supreme Court, Kings County, under Index No. 31007/99, the plaintiff appeals from an order of the Supreme Court, Nassau County (Franco, J.), entered August 22, 2002, which denied its motion for summary judgment and granted the defendant's cross motion for summary judgment declaring, inter alia, that the defendant is not obligated to defend and indemnify the City of New York in the underlying personal injury action.

 

ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Nassau County, for the entry of an appropriate judgment declaring that the defendant is not obligated to defend and indemnify the City of New York in the underlying personal injury action.

 

In March 1999 Alfredo Santorelli, an employee of the plaintiff, Pile Foundation Construction Company, Inc. (hereinafter Pile), was injured while working on a construction project undertaken by Pile for the New York City Department of Environmental Protection. In conjunction with this project, Pile obtained a commercial general liability insurance policy from the defendant, Investors Insurance Company of America (hereinafter Investors). It is undisputed that this policy named the City of New York as an additional insured. [*2]

 

In June 1999 Santorelli served a notice of claim upon the City. Approximately five months later, in November 1999, the City sent a copy of this notice of claim to Investors. This was the first notice which Investors received regarding the Santorelli claim. Two weeks after receipt of the notice of claim from the City, Investors sent a letter to the City, with a copy to Pile, in which it disclaimed coverage based upon late notice. Investors did not send a notice of disclaimer to Santorelli. Pile subsequently commenced the instant action seeking, inter alia, a judgment declaring that Investors was obligated to defend and indemnify the City in the personal injury action which Santorelli had commenced against the City. The plaintiff moved for summary judgment, and Investors cross-moved for the same relief. In the order appealed from, the Supreme Court denied the motion and granted the cross motion. We affirm.

 

Contrary to Pile's contention, it cannot rely upon Investors' failure to send its notice of disclaimer to Santorelli as a basis for invalidating the disclaimer which Investors timely sent to the City (see Agway Ins. v Alvarez, 258 AD2d 487; Khan v Convention Overlook, 253 AD2d 737; Batchie v Travelers Ins. Co., 130 AD2d 536; cf. Markevics v Liberty Mut. Ins. Co., 97 NY2d 646).

 

Furthermore, it is well settled that where an insurance policy, such as the one involved in this case, requires an insured to provide "notice of the claim or 'suit' as soon as practicable," such notice must be provided within a reasonable time in view of all of the facts and circumstances (see Merchants Mut. Ins. Co. v Hoffman, 56 NY2d 799; 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" (Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons, 31 NY2d 436, 440).

 

Investors established, prima facie, its entitlement to judgment as a matter of law by demonstrating that the City failed to provide Investors with notice of Santorelli's notice of claim until five months after Santorelli served his notice upon the City. Moreover, neither Pile nor the City offered any excuse to justify the delay in notifying Investors about Santorelli's personal injury claim. Under such circumstances, the delay in notifying Investors about the underlying tort claim was unreasonable as a matter of law (see 1700 Associates v Public Service Mutual Ins. Co., 256 AD2d 456; Can-Am Roofing v American States Ins. Co., 229 AD2d 973). Accordingly, Investors properly disclaimed coverage for the Santorelli lawsuit, and the Supreme Court correctly granted summary judgment to Investors.

 

TRENTINI v METROPOLITAN PROPERTY AND CAS. INS. CO.

 

Appeal from an order and judgment of the Supreme Court (Nolan Jr., J.), entered November 8, 2002 in Saratoga County, upon a decision of the court in favor of plaintiff.

 

Bruce Campbell Jr. was driving a vehicle insured by defendant. After the vehicle stalled and Campbell could not restart it, he pushed the vehicle down a hill to a safer spot, pushed it to the shoulder of the road against a snowbank, turned on its hazard flashers, locked the doors and walked home. Approximately 15 minutes later, he returned in another vehicle and attempted to jump start the disabled vehicle. These attempts were fruitless. Campbell then locked the vehicle again and went [*2]to a friend's home in order to get someone to tow the disabled vehicle. About 20 to 25 minutes later, as he was heading back to the vehicle, he was informed that two snowmobiles had collided with the disabled car. Plaintiff, who was operating one of those snowmobiles, was injured. After defendant denied plaintiff's request for no-fault benefits, plaintiff commenced this action. The sole issue was whether the disabled vehicle was in "use or operation" at the time of the accident, thus permitting plaintiff to recover no-fault benefits pursuant to Insurance Law § 5103 (a) (1). After a bench trial, Supreme Court found that the vehicle was in use and granted judgment to plaintiff. We agree.

 

In McConnell v Fireman's Fund Am. Ins. Co. (49 AD2d 676 [1975]), the plaintiff, while operating a snowmobile, struck a locked, unoccupied automobile parked on the street. The Fourth Department held that the automobile was not in "use" within the meaning of the Insurance Law (id. at 677). Unlike the vehicle owner in McConnell, Campbell did not voluntary place his vehicle near his residence intending that to be his permanent parking place for the night (cf. Wooster v Soriano, 167 AD2d 233 [1990]). He experienced an unplanned stop due to the temporary disability of his car in a place where a vehicle would not normally be parked. Campbell activated the hazard lights to warn other drivers, and his sole purpose in leaving the vehicle was to gain assistance to return and retrieve it as soon as possible. These circumstances constituted an "on-going activity relating to the vehicle" which would necessitate a conclusion that the vehicle was in use (compare Matter of Celona v Royal Globe Ins. Co., 85 AD2d 635 [1981]; Gering v Merchants Mut. Ins. Co., 75 AD2d 321, 323 [1980]). Because the vehicle he struck was in "use or operation" at the time of the accident, plaintiff is entitled to no-fault benefits.