FDCC LITIGATION MANAGEMENT COLLEGE
We are pleased to advise you of two superb educational programs available for claims professionals: The 10th Annual FDCC Litigation Management College and the Graduate Program of the FDCC Litigation Management College, and urge you to consider attendance. You can find additional information and brochures for these two programs, as well as online registration, at the FDCC website: www.thefederation.org.
The 10th Annual FDCC Litigation Management
College is being held at the J. L. Kellogg
Graduate School of Management, Northwestern University in Evanston, Illinois,
May 24 - 28, 2004. It is a program designed exclusively for the Claim
Professional to enhance litigation management and negotiation skills. The
Litigation Management College is sponsored by the Federation of Defense &
Corporate Counsel as a service to claim professionals from the insurance
industry and self-insureds organizations. The target group for the College is
claim professionals with three to twelve years claims and/or litigation
management experience. The college consists of an intensive five-day series of
workshops and participatory, interactive educational experiences. It provides a
unique opportunity for claim professionals to meet, study, and discuss issues of
common interest with the focus on the increasingly important area of litigation
management. The curriculum is designed to provide a practical approach to
litigation management. Everyone who attends should leave with new and enhanced
skills to improve the work of litigation management.
The Graduate Program of the FDCC Litigation
Management College
is being held at the J. L. Kellogg Graduate School of
Management, Northwestern University in Evanston, Illinois, May 24 - 26, 2004.
In response to the demand in the insurance industry for advanced skills
training in litigation management, nine years ago the Federation of Defense &
Corporate Counsel began an annual five-day intensive course devoted to the
advanced study of litigation management. In response to the overwhelming success
of the Litigation Management College and also requests from Alumni, the FDCC is
pleased to offer its Graduate Program to the Alumni of the Litigation Management
College, as well as to any students certified by their employers to have company
experience equivalent to the rigors of the College to satisfy the admission
prerequisite. The purpose of the Graduate Program is to build on the solid
foundation provided by the Litigation Management College to refine the student’s
understanding of advanced coverage issues, strategic litigation tactics, and
alternatives for resolution of disputes on favorable terms, while gaining
further understanding of the process to allow application of these skills to any
litigation challenge that may arise on the job in a cost-effective.
Dan Kohane has served on the faculty of the Litigation Management College for the past five years, and is now involved in the planning of the Graduate Program. If you have any questions about either of these programs, please call him at 716-849-8942.
01/26/04 CENATUS v ROSEN
New York State Supreme Court, Appellate Division, Second Department
Evidence of Loss of Range of Motion Raised Issue of Fact Whether Plaintiff Sustained Significant Limitation of Use of Body Function or System under “Serious Injury” Threshold
Plaintiff claimed he sustained a significant limitation of his cervical and lumbosacral spine as the result of an accident. Defendants moved for summary judgment on the ground that the plaintiff’s injuries did not satisfy the “serious injury” threshold under Insurance Law § 5102(d). Defendants’ experts noted that a MRI of plaintiff’s back revealed a herniated disc in the lumbosacral spine and two herniated discs in the cervical spine. After examining the plaintiff, one of the defendants’ examining physicians concluded that the plaintiff demonstrated a “full range of motion … throughout the spinal column” and diagnosed his injury as cervical and lumbar sprains which had resolved. This evidence established defendants’ prima facie case for summary judgment. In opposition, plaintiff submitted an affirmation from a physician who performed a recent examination of the plaintiff, and quantified the results with percentages of the loss of range of motion of the cervical and lumbosacral spine, which the court concluded was sufficient to establish an issue of fact whether he sustained a significant limitation of use of a body function or system within the meaning of Insurance Law § 5102(d).
01/26/04 MANN v GULF INS. CO.
New York State Supreme Court, Appellate Division, Second Department
Insurer’s Four-Month delay in
Disclaiming Coverage Based on Late Notice Deemed Unreasonable
In October 1997, plaintiffs were injured
when a truck owned by All Waste Systems struck their cherry picker, which was
parked along the side of a road while they were working. Plaintiffs brought
actions to recover damages for their injuries, and, in September 2000, settled
the two personal injury actions for a total of $4,500,000, with All Waste
contributing $250,000, its primary insurer contributing $1,000,000, and its
excess insurer contributing $3,250,000. The settlement was made without
prejudice to the excess insurer’s disclaimer of coverage issued on the ground
that notification to it was untimely. The primary insurer was notified of the
accident soon after it occurred; however, the excess insurer did not receive its
first notice of the accident until November 1999. On November 29, 1999, the
excess insurer wrote the primary carrier, stating that it was investigating the
claim but that the late notification to it had deprived it of its rights under
the policy, and stated it was investigating whether or not there was
notification to insurance brokers who were its agents under the terms of the
policy. By January 10, 2000, the excess insurer’s coverage counsel opined that
there were grounds to disclaim based upon late notice. Thereafter, by letter
dated January 18, 2000, All Waste’s personal counsel requested that the excess
insurer examine certain items before determining whether or not to disclaim
coverage. The excess insurer finally issued a formal notice of disclaimer on
March 21, 2000. Court held that the excess insurer’s delay in formally
disclaiming was unreasonable as a matter of law. Insurance Law §3420(d) requires
that written notice of a disclaimer be given “as soon as is reasonably possible”
after the insurer learns of the grounds for disclaimer of liability. The basis
for the disclaimer was apparent from the notices and information the excess
insurer received by November 30, 1999. By that date, the excess insurer’s
vice-president and claims manager had investigated and ascertained that the
brokers to whom notice was allegedly sent were not its agents. Thus, the excess
insurer had sufficient facts to allow its claims manager to conclude, at the
latest by the beginning of December 1999, that All Waste had breached the notice
provisions of the policy. The four-month delay in disclaiming was deemed
unreasonable as a matter of law.
01/26/04 MATTER OF UTICA MUT. INS. CO. v LECONTE
New York State Supreme Court, Appellate Division, Second Department
Issue of Fact Concerning Physical Contact with “Hit-and-Run” Vehicle Warrants Hearing
In a proceeding pursuant to CPLR Article 75 to stay arbitration of an uninsured motorist claim, court held that a hearing on the issue of whether there was physical contact between the respondent's vehicle and an alleged “hit-and run” vehicle was required. In support of its petition, petitioner submitted a police accident report wherein respondent told the reporting officer that an unknown vehicle “cut him off.” In opposition to the petition, the respondent offered his affidavit wherein he stated that his car was “suddenly struck on the driver’s side” by an unidentified car which left the scene. Court held that physical contact is a prerequisite to the applicability of the uninsured motorist endorsement in the insured’s policy. When there is a triable issue of fact with respect to whether a claimant’s vehicle had physical contact with an alleged “hit-and-run” vehicle, the appropriate procedure is to stay the arbitration pending a determination of that issue.
01/20/04 ZURICH AMERICAN INS. CO. v LUIS BASTOS CONSTRUCTION
New York State Supreme Court, Appellate Division, Second Department
Employers’ Liability Policy Did Not Afford Coverage for Work Performed Out of Covered Territory
Plaintiff issued a workers’
compensation/employers’ liability policy to defendant/insured. While the policy
was in effect, one of the insured's employees was seriously injured while
working on a job in New York that had nothing to do with any work being
performed in New Jersey. The employee commenced an action to recover damages for
his personal injuries. Defendants in that action impleaded the insured as a
third-party defendant, and plaintiff commenced this action seeking a judgment
declaring it was not obligated to defend or indemnify its insured in the
underlying action. Court held that the policy provided, in clear and unambiguous
terms, that the insured had employers’ liability coverage only for claims
arising out of accidents occurring during work performed in New Jersey, or for
claims arising out of accidents occurring during work performed in another state
that was necessary or incidental to work being performed in New Jersey. As such,
the insurer was entitled to summary judgment declaring it had no obligation to
defend or indemnify its insured in the underlying action.
Across Borders
Visit the HOT CASES section of the Federation of Defense and Corporate Counsel website, recently ranked among the top five legal research websites in an article published in the January 2004 issue of Litigation News, a publication of the Litigation Section of the American Bar Association. Dan Kohane serves as the FDCC’s Website Editor.
01/28/04 PICARD v THOMAS
Massachusetts Appeals Court
Specific Permission from Owner to Use Auto is not the same as Grant of “Unfettered” Access for Purposes of Permissive User Auto Coverage
This case arises out of an automobile accident that occurred when two cars full of teenage friends were traveling together to a common destination. The defendant Thomas drove the lead automobile with Samantha Pearlman (Samantha) as his passenger. This car, a Toyota Avalon, was leased by David Pearlman, Samantha’s father, for Samantha’s use and was insured by Commerce Insurance Company (Commerce). Two of the passengers in the other vehicle were killed in the accident. Following the accident, negligence actions were brought against Thomas and both Samantha and David Pearlman. Commerce filed a declaratory judgment action seeking a ruling that it had no duty to defend or indemnify Thomas in the litigation based on the accident. The cases were consolidated, and the motion judge allowed summary judgment for Commerce in its declaratory judgment action. The Appeals Court affirmed that Commerce had no duty to defend or indemnify Thomas for any damages recovered against him in these actions because there was no evidence that Thomas operated the vehicle with the express or implied consent of David Pearlman. The person named as the policyholder was David Pearlman and, while Samantha Pearlman was listed as an operator of the vehicle, she did not have David Pearlman's permission to allow Thomas to operate the vehicle or permission to allow anyone else to operate the vehicle except in an emergency. The court distinguished those cases in which the insurer has been held liable to defend and indemnify a third party because the child who gave permission to the third party had unfettered permission to operate the car.
Bruce D. Celebrezze and Joseph Pelochino, Sedgwick, Detert, Moran & Arnold LLP
01/27/04 GALGANO v METROPOLITAN PROPERTY AND CAS. INS. CO.
Supreme Court of Connecticut
No Recovery for Uninsured Motorist Benefit for Bystander Emotional Distress where “Each Person” Coverage Limit Exhausted
The court determined that, under the underinsured motorist provision of the plaintiff’s insurance policy, the plaintiff was not entitled to compensation, for bystander emotional distress arising from his having witnessed bodily injury to his son, where to the extent of the “each person” bodily injury coverage limit applicable to the plaintiff, when the defendant already had paid to the plaintiff’s son the full amount of the “each person” bodily injury limit available to the son and the policy provided that the maximum amount that the defendant was required to pay “for all claims by all persons for damages for bodily injury to any one person is the ‘each person’ Uninsured Motorist Coverage limit.” The court reasoned that although any damages that flowed to the plaintiff from his son’s bodily injury may be covered under the policy, in theory, those damages fall under the limit applicable to the plaintiff’s son, the person who had sustained the bodily injury.
Bruce D. Celebrezze & Teresa Hu, Sedgwick, Detert, Moran & Arnold LLP
01/23/04 PROGRESSIVE PALOVERDE INS. CO. v HARTFORD FIRE INS. CO.
Fourth Circuit
Insurance Follows the Car
Consistent with West Virginia’s bright line rule that “insurance follows the automobile rather than the driver,” defendant’s policy provided primary coverage for injuries sustained by a motorist while occupying a tow truck insured by defendant; plaintiff’s policy provides only excess coverage.
01/22/04 JOHNSON v AM. FAMILY MUT. INS. CO.
Iowa Supreme Court
Carrier Permitted to Call Expert Witnesses to Demonstrate Lack of Bad Faith in Refusing to Offer Policy Limits
An automobile accident occurred between plaintiff, Johnson, and Eric Jennings. American Family Mutual provided Jennings with $100,000 of liability insurance coverage and retained counsel on his behalf. It was apparent from the outset that Jennings had no basis for disputing liability, but medical experts differed as to whether plaintiff developed fibromyalgia from the accident. Plaintiff obtained an expert economic witness who would testify he had sustained damages in excess of $600,000. Plaintiff offered to settle for the policy limits but rejected American Family’s $75,000 offer and, after trial, obtained a $597,014 verdict. Plaintiff, as Jennings’ assignee, then brought a bad-faith action against American Family for refusing to settle for its policy limit. On appeal, the court held: I. The district court properly instructed the jury that plaintiff had to show there was no reasonable basis for American Family’s rejection of the demand for its policy limits. II. The district court did not abuse its discretion in allowing the testimony of three personal-injury attorneys who testified as expert witnesses and supported the decisions of American Family and its attorneys. This was relevant evidence in aid of American Family’s defense of the bad-faith claim. III. In defending itself against plaintiff’s claims that a verdict of that size should reasonably have been anticipated, American Family was entitled to produce evidence that militated against a recovery of that magnitude.
01/21/04 GRANGE INS. ASSOCIATION v EVANS
Court of Appeals of Washington
Exclusionary Clause Precludes Proximate Cause Analysis of Whether Negligence Facilitated Accident
The Court of Appeals affirmed the trial court’s grant of summary judgment finding that plaintiff Grange Insurance Association had no duty to defend or indemnify for injuries sustained in an all-terrain vehicle accident on defendant’s property. The insurance policy excluded coverage for injuries arising out of motor vehicle accidents. The court found that the exclusionary language “arising out of” use of a motor vehicle was unambiguous, and that the injuries arose directly out of riding on the all-terrain vehicle, which flipped over on top of one of the passengers. The court further found that the exclusionary clause precludes a proximate cause analysis of whether negligence facilitated the all-terrain vehicle accident.
Bruce D. Celebrezze & Teresa Hu, Sedgwick, Detert, Moran & Arnold LLP
01/21/04 PINTO v NEW JERSEY MANUFACTURERS INS. COMPANY
New Jersey Appellate Division
Step-Down Clause Limits UIM Coverage
The issue on appeal was whether the underinsured motorists (UIM) benefits claim of an employee, injured while operating a motor vehicle owned and insured by his employer, was effectively reduced by the “step-down” coverage clause contained in the UIM endorsement of the employer’s business auto policy to the limit of UIM coverage contained in the employee’s personal auto policy when that employee is listed as an individual “named insured” in his personal auto policy but is not listed as an individual named insured under the employer’s business auto policy. Here, plaintiff was injured in an auto accident while operating a vehicle owned by his employer that was insured by defendant New Jersey Manufacturers Insurance Company (NJM) under a business auto policy. The NJM policy contained a $1 million UM/UIM coverage limit, and a step-down clause in its UM/UIM endorsement that limited UM/UIM claims to the UM/UIM coverage limit contained in any other policy having similar coverage that listed the claimant as an individual named insured when that claimant was not an individual named insured under the NJM policy. The tortfeasor’s auto policy had $300,000 in auto liability coverage. Plaintiff had a personal auto policy naming him as a named insured with $100,000 in UIM coverage. Because plaintiff was a “named insured” under his personal auto policy and was not a named insured under his employer’s business auto policy issued by NJM, his claim for UIM coverage under the business auto policy was limited by the step-down clause contained in that policy’s UM/UIM endorsement to the amount of UIM coverage he elected in his personal auto policy. The language of the step-down, coverage limitation clause to be clear, unambiguous and uncontroverted by any other provisions contained in the business auto policy issued by NJM. Furthermore, because the limit of liability coverage contained in the tortfeasor’s policy exceeded the limit of UIM coverage contained in plaintiff's personal auto policy, plaintiff was not an “underinsured motorist” as defined in the NJM policy.
01/21/04 ARCHER DANIELS MIDLAND CO. v AON RISK SERVS., INC. OF MINNESOTA,
Eighth Circuit (applying Minnesota law)
Broker Liable for Failing to Secure Contingent Business Interruption Insurance
Defendant, an insurance broker, failed to obtain contingent business interruption and extra expense insurance coverage as requested by plaintiff; damages award for plaintiff, plus prejudgment interest, was affirmed.
01/21/04 ALLSTATE INS. CO. v LANE
Illinois Appeals Court
Homeowner’s Carrier Has No Obligation to Defend Claim Arising Out of Negligent Representation of Property Being Sold
Defendants appealed from a summary judgment in favor of plaintiff Allstate Insurance Company. The trial court concluded that Allstate had no obligation to defend or indemnify the Lanes in a lawsuit seeking rescission of a real estate contract and damages because the home they purchased from defendants had been damaged by extensive water infiltration before the closing. Court founds no obligation to defend.
01/20/04 MINNESOTA PROPERTY INS. v SLATER
Minnesota Court of Appeals
Vehicle Undergoing Maintenance is not in Dead Storage and may Satisfy Homeowners Insurance Exclusion for Injury Arising out Of Use of Motor Vehicle
An operable vehicle undergoing maintenance and repair to meet the Minnesota Department of Transportation registration requirements for commercial hauling is not in dead storage and may satisfy the homeowners’ insurance policy exclusion of covering bodily injury arising out of maintenance or use of a motor vehicle. Vehicle repair and maintenance work that is necessary to facilitate the commencement of a business’s primary activity satisfies the business- pursuits exclusion to the homeowners’ insurance policy.
Bruce D. Celebrezze and Hank Brier, Sedgwick, Detert, Moran & Arnold LLP
01/15/04 SAFECO INS. CO. v WOODLEY
Washington Supreme Court
Insurer Must Pay Insured's Legal Expenses before Being Entitled to Offset
A no-fault motorist was injured in a car accident with an underinsured motorist (tortfeasor). She received both personal injury protection (PIP) benefits and underinsured motorist (UIM) benefits from the same insurance carrier, as well as a recovery from the tortfeasor. After arbitration of the UIM claim was complete, the insurance carrier took an offset, in an amount equal to the PIP benefits it previously paid, against the amount it owed in its capacity as UIM carrier. The Court held that in order to take the offset, the insurance carrier must pay a pro rata share of the legal expenses incurred by the insured to recover from the tortfeasor and to arbitrate the UIM claim.
Robert Cooper and Charlie Shah, Christian & Small
Hurwitz
& Fine, P.C. is a full-service law firm
providing legal services throughout the State of New York.
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In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Barasch, J.), dated December 5, 2002, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is
reversed, on the law, with costs, the motion is denied, and the complaint is
reinstated.
The plaintiff claims that he sustained, inter alia, a significant limitation of
his cervical and lumbosacral spine as the result of an accident which occurred
on August 26, 1998, when he was 18 years old. The defendants moved for summary
judgment on the ground that the plaintiff's injuries "do not satisfy the
threshold requirement of a serious injury" under any definition set forth in
Insurance Law § 5102(d).
In support of their motion, the defendants' experts noted that a magnetic
resonance imaging of the plaintiff's back revealed a herniated disc in the
lumbosacral spine and two herniated discs in the cervical spine. After examining
the plaintiff, one of the defendants' examining physicians concluded that the
plaintiff demonstrated a "full range of motion * * * throughout the spinal
column" and diagnosed his injury as cervical and lumbar sprains which had
resolved. Accordingly, the defendants established a prima facie case for summary
judgment in their favor.
In opposition, the plaintiff submitted an affirmation from a physician who
performed a recent examination of the plaintiff. The physician quantified the
results with percentages of the loss of range of motion of the cervical and
lumbosacral spine.
In view of the foregoing, the plaintiff established that there is an issue of
fact as to whether he sustained a significant limitation of use of a body
function or system within the meaning of Insurance Law § 5102(d) (see
Toure v Avis Rent A Car Sys., 98 NY2d 345, 353).
In related actions, inter alia,
for a judgment declaring, among other things, that the defendant Gulf Insurance
Company is obligated to defend and indemnify the plaintiff All Waste Systems,
Inc., in two underlying actions which were pending in the Supreme Court, Orange
County, one entitled Mann v All Waste Sys., under Index No. 7848/97, and
the other entitled Hernandez v All Waste Sys., under Index No. 2751/98,
the defendant in Action No. 2, Gulf Insurance Company, appeals from (1) an order
of the Supreme Court, Orange County (Peter C. Patsalos,
J.), dated December 10, 2002, which denied its motion for summary judgment
dismissing the complaint insofar as asserted against it and granted the
plaintiff's motion for summary judgment, and (2) a judgment of the same court
entered January 15, 2003, which, upon the order, inter alia, declared that the
defendant Gulf Insurance Company is obligated to indemnify the plaintiff All
Waste Systems, Inc., and that its disclaimer was untimely.
ORDERED that the appeal from the order is dismissed; and it is further,
ORDERED that the judgment is affirmed; and it is further,
ORDERED that one bill of costs is awarded to the respondent.
The appeal from the intermediate order must be dismissed because the right of
direct appeal therefrom terminated with the entry of
judgment in the action (see Matter of Aho, 39
NY2d 241, 248). The issues raised on the appeal from the intermediate order are
brought up for review and have been considered on the appeal from the judgment (see
CPLR 5501[a][1]).
On October 22, 1997, Timothy Mann, Sr., and Nathan Hernandez were injured when a
truck owned by All Waste Systems, Inc. (hereinafter All Waste), struck their
cherry picker truck which was parked along the side of a road while Mann and
Hernandez were working. Mann and Hernandez brought separate actions to recover
damages for their personal injuries. Mann suffered severe brain injuries.
In September 2000 the parties settled the two personal injury actions for a
total of $4,500,000, with All Waste contributing $250,000, Empire Fire and
Marine Insurance Company (hereinafter Empire), All Waste's primary insurer,
contributing $1,000,000, and Gulf Insurance Company (hereinafter Gulf), All
Waste's excess insurer, contributing $3,250,000. The settlement was made without
prejudice to Gulf's disclaimer of its obligation to provide excess insurance
coverage on the ground that the notification to it was untimely, in violation of
All Waste's obligations under its insurance policy.
Empire was notified of the accident soon after it occurred. However, Gulf did
not receive its first notice of the accident until November 1999 more than two
years after the accident. At that time, Empire notified Gulf that it had
received a settlement demand of $17,500,000 in the Mann personal injury action.
By letter dated November 19, 1999, All Waste's litigation counsel, retained by
Empire, notified Gulf that Empire was tendering its policy limits to counsel for
Mann and Hernandez. On November 29, 1999, Gulf wrote Empire, stating that it was
investigating the claim but that the late notification to Gulf had deprived it
of its rights under the policy. Gulf also stated that it was investigating
whether or not there was notification to insurance brokers who were its agents
under the terms of the policy. By January 10, 2000, Gulf's coverage counsel
opined that there were grounds to disclaim based upon late notice. Thereafter,
by letter dated January 18, 2000, which followed up on his telephone call of
January 10, 2000, to Gulf, and before Gulf's issuance of a formal disclaimer
letter, All Waste's "personal counsel" requested that Gulf examine certain items
before determining whether or not to disclaim coverage. Gulf finally issued a
formal notice of disclaimer on March 21, 2000.
Gulf's delay in formally disclaiming was unreasonable as a matter of law.
Insurance Law § 3420(d) requires that written notice of a disclaimer be given
"as soon as is reasonably possible" after the insurer learns of the grounds for
disclaimer of liability (see Hartford Ins. Co. v
County of Nassau,
46 NY2d 1028, 1029-1030; Uptown Whole Foods v
Liberty Mut.
Fire Ins. Co., 302 AD2d
592, 593; McGinnis v Mandracchia,
291 AD2d 484, 485).
The basis for the disclaimer was apparent from the notices and information Gulf
received by November 30, 1999. By that date, Gulf's vice-president and claims
manager had investigated and ascertained that the brokers to whom notice was
allegedly sent were not agents of Gulf. Thus, Gulf had sufficient facts to allow
its claims manager to conclude, at the latest by the beginning of December 1999,
that All Waste had breached the notice provisions of the policy. Therefore,
Gulf's nearly four-month delay in disclaiming was unreasonable as a matter of
law (see Uptown Whole Foods v
Liberty Mut. Fire Ins. Co.,
supra at 593; McGinnis v
Mandracchia, supra
at 485; Matter of Interboro
Mut.
Indem.
Ins. Co. v Rivas, 205 AD2d
536, 537; Mount Vernon Fire Ins. Co. v Gatesington
Equities, 204 AD2d 419, 420-421; Matter
of Nationwide Mut. Ins. Co. v Steiner,
199 AD2d 507, 508; see also First Fin. Ins.
Co. v Jetco Contr. Corp., 1 NY3d 64).
MATTER OF UTICA MUT. INS. CO. v LECONTE
In a proceeding pursuant to CPLR
article 75, inter alia, to stay arbitration of an uninsured motorist claim, the
petitioner appeals from an order of the Supreme Court, Queens County (Thomas,
J.), entered November 25, 2002, which denied the petition.
ORDERED that the order is reversed, on the law, with costs, and the matter is
remitted to the Supreme Court, Queens County, for a hearing on the issue of
whether there was physical contact between the respondent's vehicle and the
alleged "hit-and run" vehicle.
Physical contact is a prerequisite to the applicability of the uninsured
motorist endorsement in the insured's policy (see Insurance Law § 5217;
Matter of Great N. Ins. Co. v Ballinger, 303 AD2d 503, 504; Matter of
New York Cent.
Mut. Fire Ins. Co.
v Paredes, 289
AD2d 495, 496; Matter of Maryland
Cas.
Co. v Piasecki, 235
AD2d 423, 424; Matter of Atlantic Mut.
Ins. Co. v Shaw, 222 AD2d
581). When there is a
triable issue of fact with respect to whether a claimant's vehicle had physical
contact with an alleged "hit-and-run" vehicle, the appropriate procedure is to
stay the arbitration pending a determination on that issue (see Matter of
New York Cent.
Mut.
Fire Ins. Co. v Paredes, supra).
In support of its petition to stay arbitration, the petitioner submitted a
police accident report wherein the respondent told the reporting officer that an
unknown vehicle "cut him off." In opposition to the petition, the respondent
offered his affidavit wherein he stated that his car was "suddenly struck on the
driver's side" by an unidentified car which left the scene. Under these
circumstances, there is an issue of fact with respect to physical contact, and
the matter must be remitted to the Supreme Court, Queens County, for a hearing
on that issue (see Matter of New
York Cent. Mut.
Fire Ins. Co. v Paredes, supra; Matter of Maryland
Cas. Co. v
Piasecki, supra).
ZURICH AMERICAN INS. CO. v LUIS BASTOS CONSTRUCTION
In an action for a judgment
declaring that the plaintiff is not obligated to defend or indemnify the
defendant Luis Bastos Construction, in an underlying
action entitled Cruz v A.P. Roofing & Siding Corp., pending in the
Supreme Court, Westchester County, under Index No. 00-16320, the defendant A.P.
Roofing & Siding Corp. appeals from an order and judgment (one paper) of the
Supreme Court, Westchester County (LaCava, J.),
entered November 13, 2002, which granted the plaintiff's motion for summary
judgment, declared, in effect, that the plaintiff is not obligated to defend or
indemnify Luis Bastos Construction, Inc., in the
underlying action, and denied its cross motion for summary judgment declaring
that the plaintiff was obligated to defend and indemnify Luis
Bastos Construction, Inc., in the underlying action.
ORDERED that the order and judgment is affirmed, with costs.
The plaintiff Zurich American Insurance Co. (hereinafter Zurich) issued a
workers' compensation/employers' liability insurance policy to the defendant
Luis Bastos Construction, Inc. (hereinafter
Bastos), a New Jersey Corporation. While the policy
was in effect, the defendant Hermilo Cruz, one of
Bastos's employees, was seriously injured while
working on a job in New York that had nothing to do with any work being
performed in New Jersey.
Cruz commenced an action to recover damages for his personal injuries. The
defendants in that action impleaded Bastos as a
third-party defendant. Zurich subsequently commenced the instant action, seeking
a judgment declaring that it was not obligated to defend or indemnify
Bastos in the underlying action.
The subject policy effectively provides, in clear and unambiguous terms, that
Bastos had employers' liability coverage only for
claims arising out of accidents occurring during work performed in New Jersey,
or for claims arising out of accidents occurring during work performed in
another state that was necessary or incidental to work being performed in New
Jersey (see Chase Manhattan Bank v Travelers Group, 269 AD2d 107, 108).
Accordingly, the Supreme Court properly granted Zurich's motion for summary
judgment declaring that it is not obligated to defend or indemnify
Bastos in the underlying action.
The appellant's remaining contentions are without merit.
