Coverage Pointers - Volume V, No. 22

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Hurwitz & Fine, P.C. is pleased to announce that...

 

Dan D. Kohane, a senior trial attorney with Hurwitz & Fine, P.C., was elected Secretary-Treasurer of the Federation of Defense & Corporate Counsel at its annual meeting in Chesapeake, Maryland, last week. 

 

Dan will become President-Elect in July of 2005 and will lead the organization as its President commencing in July, 2006.  A member of the organization since 1989, Mr. Kohane previously chaired the FDCC’s Insurance Coverage section and  served as Vice Chair of its Technology & E-Commerce section. He was General Convention Chair for the Winter Meeting of 2002, and was a Program Chair in the Winter Meeting of 1999. He is also founder and webmaster of the nationally recognized FDCC website, www.thefederation.org

 

Founded in 1936, the FDCC is an invitation-only international organization whose more than 1,300 members include attorneys who specialize in the defense of civil litigation, general counsel, risk managers and insurance claims executives. The guiding principles of the Federation of Defense & Corporate Counsel are summarized in the three words underlying its logo: “Knowledge,” “Justice,” and “Fellowship”. Its objectives and purposes are “to assist in establishing standards for providing competent, efficient and economical legal services; to encourage and provide for continuing legal education of the members and to use the knowledge and experience of its membership for the promotion of public good.”

 

Insurance coverage, civil trial litigation, and technology are the focus of his professional activities. He heads the Insurance Coverage, Technology Law and ADR practice groups at Hurwitz & Fine, P.C.  He is also a member of the Association of Defense Trial Attorneys and the Defense Research Institute, where he served as chair of its Technology Committee.

 

 

8/12/04            Mildred Cruz v. Ruby M. Castanos

Appellate Division, First Department

Despite Twenty Month Gap In Treatment Non-Treating Physician Affirmation Raised Issue Of Fact As To Serious Injury

Physician’s affirmation contained sufficient objective medical evidence to raise a triable issue as to whether Planitiff sustained a serious injury, inasmuch as he conducted range-of-motion tests and determined that there were quantifiable limitations on her range of motion.  Although the doctor was not Plaintiff’s treating physician and his examination followed an almost 20-month "gap in treatment," his previous findings as to Plaintiff’s condition were "totally comparable" with the findings made and expressed in numeric percentages by another physician connected with his practice in March 2000, five days after the accident, and again in June 2000. The Court found this constituted evidence that the Plaintiff’s impairments endured at least from March 2000 through January 2002.  The so-called "treatment gap" in Plaintiff’s medical history went to the weight to be given the medical opinion and so was a question for the jury  and did not resolve or eliminate the disputed factual issue as to whether plaintiff did or did not sustain a serious injury within the meaning of the No-Fault Law.

 

8/09/04            Karol Prus v. Glencott Realty Corp

Appellate Division, Second Department

Denial Of Coverage Is Strictly Limited To The Grounds Stated In The Notice Of Disclaimer

Insurer contended that it timely disclaimed coverage of the accident based upon the insured's failure to immediately send it a copy of the summons and complaint in the action. However, the insurer received notice that the action was pending by letter dated April 17, 2000.  On June 19, 2000, the appellant disclaimed coverage solely based upon the insured's failure to promptly notify it of the action.  Since the insurer knew at the time of its disclaimer that it had not received a copy of the summons and complaint, and based its disclaimer upon the insured's failure to promptly notify it of the action and not on this alternate ground, it could not later rely upon this alternate ground to disclaim coverage.

 


8/9/04  CRITCHLOW V. FIRST UNUM LIFE INSURANCE COMPANY OF AMERICA

To Determine Whether a Death Was Within the Meaning of an ERISA-Regulated Insurance Policy, Either Accidental or the Result of an Intentionally Self-Inflicted Injury, Courts Should Use a Subjective/Objective Analysis
United States Court of Appeals for the Second Circuit

Courts should use the subjective/objective analysis in ERISA cases to determine whether a death, including a death during the practice of autoerotic asphyxiation, was, within the meaning of an ERISA-regulated insurance policy, either accidental or the result of an intentionally self-inflicted injury. Thus, the court must ask, first, whether the decedent subjectively lacked an expectation of death or injury, and second, if so, whether the suppositions that underlay that expectation were reasonable from the decedent's perspective, taking into account, inter alia, his own personal characteristics and experiences. Applying this analysis to the instant case, the Second Circuit concluded that the decedent's death from autoerotic asphyxiation was unexpected and unintended as evidenced by the escape measures constructed by the decedent prior to engaging in autoerotic asphyxiation and the fact that just hours before, he had shopped at a grocery store and left items on the kitchen counter indicating that he was planning supper. Moving to the second part of the analysis, there was no evidence in the record from which a rational factfinder could find that the decedent's subjective intent to survive was objectively unreasonable where the decedent had set up escape mechanisms and where he had engaged in autoerotic asphyxiation in the past without suffering injury.

Submitted by: Kimberly Baker and Megan Pedersen [Williams, Kastner & Gibbs]


8/5/04              Commercial Union Ins. Co. v. Lines

Second Circuit Remands Arbitration Award for Consideration of Judicial Policy Violation
United States Court of Appeals for the Second Circuit

In a case that the court described as one "clearly without governing precedent," the Second Circuit Court of Appeals has vacated an arbitration award and has remanded the matter to the district court to reconsider whether the award violates the judicial policy of refusing to lend the court's power to assist or protect a fraud. In vacating the award and remanding for further consideration, the Second Circuit framed the issue as pitting pubic policy favoring arbitration against the judicial policy of refusing to lend the court's power to assist or protect a fraud. The court was concerned that if it confirmed the award, it would violate this fundamental judicial principle. The court held that it might be improper for it to affirm the award if, in fact, the reinsurer was prejudiced by the cedent's deceitful redomestication from Massachusetts to Bermuda (which the arbitration panel found). Because the district court did not consider this judicial policy and the affect of whether liquidation in Bermuda could affect the results of the arbitration, a remand was necessary. The Second Circuit noted that the district court may adopt or modify the now-vacated order, but the district court must address whether the liquidation in Bermuda, which flowed from the deceitful redomestication, could affect the results of the arbitration, and whether confirming the awards would violate the court's equitable principles.

Submitted by: Larry P. Schiffer, LeBoeuf, Lamb, Greene & MacRae, L.L.P.

 

 

7/30/04            Emma Moore v Allen Ewing(Action No. 1); Rosemary Briggs Moore v.New York Casualty Insurance Company(Action No. 2)

Appellate Division, Second Department

Mother’s Claim for Loss of Services Does Not Exist Independently but is Derivative of Daughter’s Claim and so Must Be Denied as Daughter Was an Insured Under Policy

            Emma's mother, Fisher, commenced a personal injury action on behalf of Emma and individual against Emma’s grandmother,Moore, as well as the neighbors who own the dog that bit Emma. The grandmother’s carrier, NY Casualty, sent a notice of disclaimer approximately 45 days after it had information about the claim. The evidence in the record indicated that NY Casualty had all the information regarding Emma's residence needed to determine her status as an "insured" under the policy soon after the incident.  Accordingly, NY Casualty's unexplained delay in disclaiming coverage was unreasonable as a matter of law. However, nothing in the record indicated that the notice of disclaimer of coverage was untimely with regard to providing a defense and indemnification with respect to Fisher's derivative claims.

Therefore, it was necessary for the court to determine whether the policy exclusions upon which NY Casualty based its disclaimer of coverage applied to Fisher's claims.  Under New York law,  under the policy's definition of "bodily injury," there must first be a covered bodily injury to an injured person before there is coverage for a resulting loss of services claim.

Under New York law, the exclusion for bodily injury to Emma, an insured, which would be applicable in this instance but for the late notice of disclaimer, bars Fisher's derivative claim for loss of services. Similarly, the only medical expenses incurred by Fisher were for Emma's injuries. Accordingly, the exclusion for medical expenses for bodily injury to residents of Moore's household applies to Fisher's derivative claim for medical expenses.

 

 

7/27/04            SCOTT WEILL v.LIBERTY LINES TRANSIT, INC.

Appellate Division, First Department

Documentation submitted to defendant concerning the accident was, in the aggregate, a valid, timely notice of claim.

The record discloses that the driver of the bus involved in the incident submitted a written report concerning the incident; that plaintiff sent a letter to defendant's claims administrator, at defendant's request, reporting the time, place and manner of the incident and the items of damage then known; and that plaintiff's counsel wrote to defendant "in regard to injuries" sustained by plaintiff and advising of "further action."

 

7/21/04            S & M SUPPLY v. DOLLAR RENT A CAR SYSTEMS

Appellate Division, Second Department

Affidavit Of Billing Manager Insufficient To Prove Sum Certain Under CPLR 3215(f)

This was an action to recover first party no-fault benefits furnished to an assignor.  The submission to the court of proofs of claim coupled with the affidavit of plaintiff's billing manager did not constitute sufficient proof of the "facts constituting the claim, the default and the amount due" pursuant to CPLR 3215 [f] since the averment of plaintiff's billing manager is to the effect that billing (for medical equipment) was set according to the Workers' Compensation Law Fee Schedules.  The statement was meaningless, and its inclusion in the affidavit raised an issue as to plaintiff's entitlement to the particular amount allegedly due. Thus the damages sought could no longer be deemed to be for a "sum certain or for a sum which can by computation be made certain" under CPLR 3215 [a].

 



 

Across Borders

 

Visit the Hot Cases section of the Federation of Defense & Corporate Counsel website, www.thefederation.org 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.


8/12/04            JUSTOFIN V. METROPOLITAN LIFE INSURANCE CO.

Question of Fact Whether Plaintiff in Bad Faith Failed to Disclose Medical Treatment Precluded Summary Judgment for Defendant
United States Court of Appeals for the Third Circuit

Met Life voided the decedent's policy amendment, claiming that she failed to disclose that her son (a doctor) had treated her and prescribed her medication. The appellate court overturned the district court's grant of summary judgment. It found that although the decedent's representations were false, there was not incontrovertible evidence that she made them in bad faith. But it did not agree with plaintiffs that defendant waived its right to contest the amended policy's validity by failing to investigate decedent's allegedly ambiguous claim. It also determined that on remand the trial court must consider the bad faith claim (against defendant) separately from the contract claims.

Submitted by: Kimberly Baker and Michelle Garzon [Williams, Kastner & Gibbs PLLC]


8/06/04            BUCZEK V. CONTINENTAL CASUALTY INSURANCE

Property Loss to Owners of Condominium Caused by Rotten Pilings Not Covered under All-Risk Insurance Policy Where Pilings Are Excluded from Policy Coverage and Where Collapse of Condominium is Not "Imminent."
United States Court of Appeals for the Third Circuit

In 1986, plaintiffs purchased a three-story, two-unit condominium known as Meadows Condominium located in Wildwood, New Jersey. At the time of their purchase, the Owners obtained from Transportation Insurance Company, an Illinois corporation, an all-risk policy of insurance to cover the Condominium Association. Built on filled marshland, the condominium is located on an inlet and was supported by wooden pilings. In 1998, the Owners paid approximately $103,634.00 to replace rotted pilings with concrete beams, after observing that the building was swaying in high winds. The Owners submitted a Notice of Loss to Transportation, which denied the claim because the rotten pilings, which were not covered property under the policy, were the cause of the loss. In the Owners' action for breach of contract and breach of the duty of good faith dealing, the district court concluded that the Owners were entitled to coverage under the Policy. The Third Circuit reversed the district court where the pilings served as the foundation for the building and the language of the Policy clearly excluded both foundations and "pilings" as "Covered Property" and where the policy covered "property loss caused by collapse of a building" and the condominium in issue did not face an "imminent collapse" as a result of the rotten pilings.

Submitted by: Kimberly Baker and Megan Pedersen [Williams, Kastner & Gibbs]


8/5/04              CASSIM V. ALLSTATE INS. CO.
California Supreme Court Refines Brandt And Holds That Insured May Recover Attorneys Fees For Any Amount Of The Fees Attributable To The Attorney’s Efforts To Obtain The Rejected Payment Due On The Insurance Contract And That Amount Could Conceivably Exceed The Amount Of The Contract Damages

California Supreme Court

In Cassim v. Allstate Ins. Co., 2004 WL 1687866 (2004), the California Supreme Court reiterated and supplemented its Brandt decision regarding the circumstances in which an insured is entitled to recover attorneys’ fees in a lawsuit against its insurer. The court observed that California adheres to the American Rule “which provides that each party to a lawsuit must ordinarily pay his own attorneys’ fees.” In Brandt, the court made an exception to this rule, holding that, if an insurer fails to act fairly and in good faith when discharging its responsibilities concerning an insurance contract, that breach may result in tort liability for any damages proximately caused by the breach. Those damages can include the fees and costs to hire an attorney to obtain the policy benefits. In Brandt, the court stated that, because entitlement to attorneys’ fees as compensatory damages is premised on an insured’s need to hire an attorney to vindicate his or her contractual rights under the insurance policy, the fees recoverable may not exceed the amount attributable to the attorney’s efforts to obtain the rejected payment due on the insurance contract. Fees attributable to obtaining any portion of the insured’s award which exceeds the amount due under the policy are not recoverable. In Cassim, the policyholders were represented by an attorney on a contingent fee basis. The amount of contract benefits recovered was $40,856.40. The insurer argued that the Brandt fees should be limited to 40% of that amount. The policyholders argued that the Brandt fees should be awarded on the entire amount of the judgment, including the bad faith and punitive awards. The court rejected both proffered methods of calculation. The court indicated that, if the policyholders can prove that some portion of the fee was for legal work solely or partially attributable to the withheld contract benefits, the failure to reimburse the plaintiffs for that out-of-pocket expense would necessarily result in a diminution of their policy benefits. Nothing in Brandt limits the amount of fees awarded as damages to a percentage of the contract benefits. Rather, the amount of the fees attributable to the attorney’s efforts to obtain the rejected payment due on the insurance contract is what is recoverable. This amount could conceivably exceed the amount of the contract damages. To the extent that some portion of the attorney’s legal fee represented legal work that was related to both the tort and the contract recoveries, it would be at least partially attributable to the attorney’s efforts to obtain the rejected payment due on the insurance contract. Failure to reimburse the policyholders for that portion of that shared amount would necessarily diminish their contract recovery and violate Brandt’s premise that plaintiffs should recover, as tort damages, the legal fees incurred to recover their policy benefits. The court further held that permitting plaintiffs in a mixed contract/tort case to recover the majority of their attorneys’ fees attributable to the entire compensatory award would be inconsistent with the premise of Brandt. Brandt is only a limited exception to the American Rule that the parties are expected to pay their own legal fees. To the extent that there is overlap between the legal work in prosecuting the contract and tort claims, the trial court should exercise its discretion to apportion the fees. The trier of fact must determine the percentage of the legal fees paid to the attorney that reflects the work attributable to obtaining the contract recovery. Finally, the court set some parameters as to how that determination would be made. The policyholders bear the burden of demonstrating how the fees for legal work attributable to both the contract and the tort recoveries should be apportioned. The trial courts retain discretion to disregard fee agreements that appear designed to manipulate the calculation of Brandt fees for the policyholder’s benefit.

Submitted by: Daina Kojelis (Zurich North America)

 

7/29/04            MERCER V. PROGRESSIVE GULF INSURANCE COMPANY
Mississippi Supreme Court

Summary Judgment Was Appropriate As The Question Of Residence Of An Individual Under An Insurance Policy Did Not Create A Genuine Issue Of Material Fact
An individual was involved in a car accident and brought a claim under her father’s insurance policy. Mercer claimed that she could recover under the policy because she was a resident of her father’s home and was therefore covered under the terms of his policy. She in fact lived in a separate home owned by her father that had separate utilities and all of the necessities of a home. Mercer’s argument failed and the Mississippi Supreme Court held that Mercer did not intend to live with her father, the key in determining whether parties created and maintained a household, and all of the facts, which are not in dispute, demonstrate that Mercer maintained a separate household.

Submitted by: Mark Gesk (Wayman, Irvin & McAuley, LLC)


7/29/04            MARLIN FINANCIAL & LEASING VS. NATIONWIDE MUTUAL INS.

Insurer Estopped from Asserting Lawsuit Requirement in Policy.
Tennessee Court of Appeals

This is a declaratory judgment action filed by Marlin Financial & Leasing Corporation ("Marlin") against its insurer, Nationwide Mutual Insurance Company ("Nationwide"), seeking a determination as to coverage under Marlin's insurance policy with Nationwide. Specifically, the suit seeks to obligate Nationwide to pay $8,333.33, the amount of Marlin's settlement of a claim asserted by AmSouth Bank ("AmSouth" or "the Bank"), and associated attorney's fees and expenses of $52,654.05. The trial court granted summary judgment to Marlin, finding that AmSouth's claim against Marlin for "loss of use" of certain property was covered under the business liability feature of the policy and that Marlin was entitled to reimbursement for the amount of its settlement of AmSouth's claim and Marlin's related litigation expenses. The trial court ultimately awarded Marlin prejudgment interest, but it refused to assess a bad faith penalty against Nationwide. The court of appeal affirmed, holding that Nationwide waived the lawsuit requirement in Marlin’s insurance policy and is estopped from asserting the suit requirement and Nationwide is liable to Marlin for its settlement costs.

Submitted by: Bruce D. Celebrezze & Vanessa L. O'Brien (Sedgwick, Detert, Moran & Arnold LLP)



 

 

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

 

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[email protected]

 

Insurance Coverage Team

Dan D. Kohane, Team Leader

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Michael F. Perley

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No-Fault/SUM Arbitration Team

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Appellate Team

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[*1]Emma Moore, etc., et al., plaintiffs,

v

Allen Ewing, et al., defendants. (Action No. 1) (Index No. 3863/00)



Rosemary Briggs Moore, respondent-appellant,

v

New York Casualty Insurance Company, appellant-respondent. (Action No. 2) (Index No. 3209/01)






Cook, Tucker, Netter & Cloonan, P.C., Kingston, N.Y. (Eric M.
Kurtz of counsel), for appellant-respondent.
Walsh, Wicks & Salisbury, Red Hook, N.Y. (Douglas F.
Wicks of counsel), for respondent-
appellant.

In an action to recover damages for personal injuries (Action No. 1) and a related action (Action No. 2) for a judgment declaring that New York Casualty Insurance Company is obligated to defend and indemnify Rosemary Briggs Moore in Action No. 1, which actions were joined for trial, New York Casualty Insurance Company, the defendant in Action No. 2, appeals (1) from an order of the Supreme Court, Dutchess County (Dillon, J.), dated August 28, 2002, which denied its motion for summary judgment and granted the motion of Rosemary Briggs Moore for summary judgment in Action No. 2, and (2), by permission, from so much of an amended order of the same court dated June 11, 2003, as, in effect, upon reargument, denied that branch of its motion which was for summary judgment on the issue of whether it is obligated to [*2]defend and indemnify Rosemary Briggs Moore on the claims brought against her by the plaintiff Sara Fisher in Action No. 1, and granted that branch of the motion of Rosemary Briggs Moore which was for summary judgment on that issue, and Rosemary Briggs Moore (1) cross-appeals, as limited by her brief, from stated portions of the order dated August 28, 2002, and (2) appeals, as limited by her brief, from stated portions of an order of the same court dated October 23, 2002.

ORDERED that the appeal by New York Casualty Insurance Company and the cross appeal by Rosemary Briggs Moore from the order dated August 28, 2002, are dismissed, without costs or disbursements, as that order was superseded by the amended order dated June 11, 2003, made, in effect, upon reargument; and it is further,

ORDERED that on the court's own motion, the notice of appeal by Rosemary Briggs Moore from the order dated October 23, 2002, is deemed a premature application for leave to cross-appeal from so much of the amended order dated June 11, 2003, as, in effect, upon reargument, denied that branch of her motion which was for summary judgment declaring that New York Casualty Insurance Company is obligated to defend and indemnify her for the claims asserted against her on behalf of the plaintiff Emma Moore in Action No. 1, and granted that branch of New York Casualty Insurance Company's motion which was for summary judgment on that issue, and the application is granted (see CPLR 5520[c], 5701[c]); and it is further,

ORDERED that the amended order is reversed insofar as appealed and cross-appealed from, on the law, without costs or disbursements, that branch of New York Casualty Insurance Company's motion which was for summary judgment declaring that it is not obligated to defend and indemnify Rosemary Briggs Moore for the claims asserted against her in Action No. 1 by the plaintiff Sara Fisher individually is granted and that branch of Rosemary Briggs Moore's motion which was for a declaration of coverage for those claims is denied, and that branch of Rosemary Briggs Moore's motion which was for summary judgment declaring that New York Casualty Insurance Company is obligated to defend and indemnify her for the claims asserted against her in Action No. 1 on behalf of the plaintiff Emma Moore is granted and that branch of New York Casualty Insurance Company's motion which was for a declaration that it is not obligated to defend and indemnify Rosemary Briggs Moore for such claims is denied, and the matter is remitted to the Supreme Court, Dutchess County, for the entry of a judgment declaring that New York Casualty Insurance Company is obligated to defend and indemnify Rosemary Briggs Moore in Action No. 1 for the claims asserted against her on behalf of the plaintiff Emma Moore, and that New York Casualty Insurance Company is not obligated to defend and indemnify Rosemary Briggs Moore for the claims asserted against her in Action No. 1 by Sara Fisher, individually.

On May 7, 2000, 10-year-old Emma Moore (hereinafter Emma) allegedly was bitten by a dog while on the property of her grandmother, Rosemary Briggs Moore (hereinafter Moore). Moore was insured under a homeowners policy (hereinafter the policy) issued by New York Casualty Insurance Company (hereinafter NY Casualty). On or about May 12, 2000, Moore notified NY Casualty about the incident. A claims representative of NY Casualty interviewed Moore by telephone on or about May 18, 2000. NY Casualty received a letter dated May 11, 2000, and stamped "received" on May 22, 2000, from attorneys representing Emma notifying it of the dog attack on Moore's premises and the claim alleging negligent supervision. By letter dated June 27, 2000, Emma's counsel sent to NY Casualty the police investigation report and copies of medical bills. By letter dated July 7, 2000, NY Casualty disclaimed [*3]coverage on the basis that Emma was a resident of Moore's home, which would classify her as an insured under the policy and subject her to coverage exclusions for (1) personal liability for bodily injury to an insured, and (2) medical payments for bodily injury to an insured.

Shortly thereafter, on August 29, 2000, Emma's mother, Sara Fisher (hereinafter Fisher), commenced the underlying personal injury action (hereinafter Action No. 1) on behalf of Emma and individually against Moore and the neighbors who own the dog that bit Emma. NY Casualty first received notice of Fisher's individual claims, which were for loss of services and medical expenses, upon receipt of the summons and complaint. By letter dated September 27, 2000, NY Casualty acknowledged receipt of the summons and complaint and referred Moore to the exclusions regarding bodily injury to an insured and for "medical payments to others."

Moore commenced the declaratory judgment action (hereinafter Action No. 2) against NY Casualty seeking a declaration that NY Casualty is obligated to defend and indemnify her in Action No. 1, and NY Casualty counterclaimed for a judgment declaring that Moore is not covered under the policy for the plaintiffs' claims in Action No. 1. Moore moved for summary judgment, asserting, inter alia, that NY Casualty's notice of disclaimer was untimely. In opposition, NY Casualty's attorney stated that after the telephone interview with Moore on May 18, 2000, NY Casualty continued to receive information about the underlying incident from Emma's counsel. By amended order dated June 11, 2003, the Supreme Court, inter alia, determined that NY Casualty is not obligated to defend and indemnify Moore for claims asserted on behalf of Emma, but is obligated to defend and indemnify Moore for claims asserted on behalf of Sara Fisher. We disagree.

Pursuant to Insurance Law § 3420(d), an insurance carrier is required to provide the insured with timely notice of its disclaimer or denial of coverage on the basis of a policy exclusion (see Markevics v Liberty Mut. Ins. Co., 97 NY2d 646, 648-649; Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 188-189; Campos v Sarro, 309 AD2d 888) and will be estopped from disclaiming liability or denying coverage if it fails to do so (see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 68-69; Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1029; Mount Vernon Fire Ins. Co. v Gatesington Equities, 204 AD2d 419, 420; Allstate Ins. Co. v Centennial Ins. Co., 187 AD2d 690, 691). "[T]imeliness of an insurer's disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage" (First Fin. Ins. Co. v Jetco Contr. Corp., supra at 68-69). The determination of whether a notice of disclaimer is untimely often is a question of fact dependent on all the circumstances of the case (see First Fin. Ins. Co.v Jetco Contr. Corp., supra at 70; Hartford Ins. Co. v County of Nassau, supra at 1030; Murphy v Hanover Ins. Co., 239 AD2d 323, 324). It is the responsibility of the insurer to explain its delay, and an unsatisfactory explanation will render the delay unreasonable as a matter of law (see First Fin. Ins. Co.v Jetco Contr. Corp., supra at 70).

Here, NY Casualty interviewed Moore about the occurrence on May 18, 2000, and received a letter regarding the claim from Emma's attorneys by May 22, 2000. NY Casualty did not send its notice of disclaimer until July 7, 2000, which is approximately 45 days after it had information about the claim. The evidence in the record indicates that NY Casualty had all the information regarding Emma's residence needed to determine her status as an "insured" under the policy by May 22, 2000; additional information provided after that date did not pertain to Emma's residency. Accordingly, NY Casualty's unexplained delay in disclaiming coverage was [*4]unreasonable as a matter of law (see First Fin. Ins. Co. v Jetco Contr. Corp., supra at 70) and its disclaimer was untimely as a matter of law. Therefore, NY Casualty is required to defend and indemnify Moore with respect to the claims asserted on behalf of Emma.

There is no evidence in the record, however, that the notice of disclaimer of coverage was untimely with regard to providing a defense and indemnification with respect to Fisher's derivative claims. Accordingly, it is necessary to determine whether the policy exclusions upon which NY Casualty based its disclaimer of coverage apply to Fisher's claims. The Supreme Court determined, as asserted by Moore, that the exclusions for injury to an insured and for medical expenses to a resident are inapplicable to Fisher's claims, presumably because Fisher was not an insured or a resident of Moore's household. We disagree.

Emma, who was a resident of Moore's household when the injury occurred, is an "insured" as defined in the policy. Although Emma allegedly sustained a "bodily injury" as a result of the dog attack, exclusions for bodily injury to an insured and for medical expenses for bodily injury to regular residents of the household would have precluded coverage for Emma's claims but for the late notice of disclaimer. The issue, therefore, is whether the same exclusions apply to Fisher's derivative claims even though she was not an insured or a resident of the Moore household.

The policy defines "[b]odily injury" as "bodily harm, sickness or disease, including required care, loss of services and death that results." The "Liability Coverages" section of the policy includes "Coverage E-Personal Liability," under which NY Casualty will provide a defense and indemnification if "a claim is made or a suit is brought against an 'insured' for damages because of 'bodily injury' . . . caused by an 'occurrence' to which this coverage applies." Pursuant to exclusion 2.f., the personal liability coverage does not apply to "'[b]odily injury' to you or an 'insured ' . . . as defined."

The Liability Coverages section of the policy also includes Coverage F, Medical Payments to Others, which states, in relevant part:

"We will pay the necessary medical expenses that are incurred or medically ascertained within three years from the date of an accident causing 'bodily injury.' * * * This coverage does not apply to you or regular residents of your household except 'resident employees.'"


Exclusion 3.d. states that Coverage F does not apply to "bodily injury" to "any person, other than a 'residence employee' of an 'insured,' regularly residing on any part of the 'insured location.'"

Moore asserts that these exclusions do not apply to Fisher's claims. To accept this argument, this court is required to conclude that Fisher's claim for loss of services exists independently of Emma's right to recover for her bodily injuries pursuant to the insurance policy. New York courts, however, consider a parent's claim for loss of services and medical expenses associated with a child's injury to be derivative of the child's claim (see Maidman v Stagg, 82 AD2d 299, 301, 303; see also Buckley v National Frgt., Inc., 220 AD2d 155, 157-158, affd 90 NY2d 210). In the context of insurance policy interpretation, New York courts have held that because derivative claims do not constitute an independent bodily injury, a person asserting a [*5]derivative claim is not entitled to a separate per person limitation of liability; rather, the derivative claims are included in the per person limitation of liability applicable to the injured individual (see Champagne v State Farm Mut. Auto. Ins. Co., 185 AD2d 835; Redcross v Aetna Cas. and Sur. Co., 146 AD2d 125, 126-127).

Here, a consistent result under New York law requires that under the policy's definition of "bodily injury," there must first be a covered bodily injury to an injured person before there is coverage for a resulting loss of services claim. This is the conclusion reached by other jurisdictions that have interpreted the same or similar provision that, like New York, consider a parent's claims to be derivative of the child's claims (see e.g. American Motorists Ins. Co. v Moore, 970 SW2d 876, 878-879 [Mo]; Vierkant v AMCO Ins. Co., 543 NW2d 117 [Minn]). In contrast, courts in other jurisdictions that consider a parent or spouse's claims to be independent injuries, not derivative, do not require coverage for the physically injured party to find coverage for the parent or spouse's claims (see e.g. Worcester Ins. Co. v Fells Acres Day Sch., 408 Mass 393, 413-414, 558 NE2d 958, 971-972). Thus, under New York law, the exclusion for bodily injury to Emma, an insured, which would be applicable in this instance but for the late notice of disclaimer, bars Fisher's derivative claim for loss of services. Similarly, the only medical expenses incurred by Fisher were for Emma's injuries. Accordingly, the exclusion for medical expenses for bodily injury to residents of Moore's household applies to Fisher's derivative claim for medical expenses.

The parties' contentions concerning coverage for the Holts's cross claim are improperly raised for the first time on appeal.

Since this is a declaratory judgment action, we remit the matter to the Supreme Court, Dutchess County, for entry of a judgment declaring that NY Casualty is obligated to defend and indemnify Moore in Action No. 1 for the claims asserted on behalf of Emma, and that NY Casualty
is not obligated to defend and indemnify Moore in Action No. 1 for Fisher's derivative claims (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
PRUDENTI, P.J., KRAUSMAN, TOWNES and SPOLZINO, JJ., concur.

SCOTT WEILL, Plaintiff-Respondent,

against

LIBERTY LINES TRANSIT, INC., Defendant-Appellant.

 

Defendant appeals from an order of the Civil Court, Bronx County, dated February 21, 2003 (Arthur F. Engoron, J.) which denied its motion for summary judgment dismissing the complaint.

 

PER CURIAM:

Order entered February 21, 2003 (Arthur F. Engoron, J.) affirmed, with $10 costs.

We agree that the documentation submitted to defendant concerning the vehicular accident in which plaintiff was allegedly injured constituted, in the aggregate, a valid, timely notice of claim. The record discloses that the driver of the bus involved in the incident submitted a written report concerning the incident; that plaintiff sent a letter to defendant's claims administrator, at defendant's request, reporting the time, place and manner of the incident and the items of damage then known; and that plaintiff's counsel wrote to defendant "in regard to injuries" sustained by plaintiff and advising of "further action." Considered together, these timely submissions were adequate to constitute a valid notice of claim pursuant to General Municipal Law § 50-e (see Santiago v Liberty Lines Tr., 259 AD2d 362 [1st Dept 1999]; Gallagher v Liberty Lines Tr., 211 AD2d 440 [1st Dept 1995]; Miller v Liberty Lines Tr., 208 [*2]AD2d 454 [1st Dept 1994]; Losada v Liberty Lines Tr., 155 AD2d 337 [1st Dept 1989]; cf. Delisca v Liberty Lines Tr., 272 AD2d 291 [2d Dept 2000]; Zydyk v New York City Tr. Auth., 151 AD2d 745 [2d Dept 1989]).

This constitutes the decision and order of the court.

 

S & M SUPPLY INC., a/a/o Umar Credle, Appellant,

against

DOLLAR RENT A CAR SYSTEMS INC., Respondent.

 

Appeal by plaintiff from an order of the Civil Court, Kings County (J. Battaglia, J.), entered June 6, 2003, which denied with leave to renew, its motion for an order directing the clerk to enter a default judgment against defendant.

 

Order unanimously affirmed without costs.

Plaintiff commenced the instant action to recover the sum of $2,176.29 in first-party no-fault benefits for medical supplies furnished to its assignor. Upon defendant's failure to appear or answer, plaintiff moved for an order directing the clerk to enter a default judgment against defendant for the principal sum of $2,176.29, plus preset statutory attorney's fees of 20% and statutory interest of 2% per month, which motion was unopposed. The motion was denied with leave to renew, the court finding that plaintiff failed to establish prima facie that defendant was liable to plaintiff's assignor for first-party no-fault benefits.

CPLR 3215 (f) provides that upon an application for a default judgment, the applicant must file proof of service of the summons and the complaint, and "proof by affidavit made by the party of the facts constituting the claim, the default and the amount due."

Generally, a plaintiff establishes a prima facie case of entitlement to no-fault benefits on a [*2]motion for summary judgment by proof of submission of a proper proof of claim (see Amaze Med. Supply Inc. v Eagle Ins. Co., NYLJ, Dec. 29, 2003 [App Term, 2d & 11th Jud Dists]). Proper proof of claim consists of either the completed statutory forms (11 NYCRR 65.15 [c] [3]) or their functional equivalent (11 NYCRR 65.15 [d] [5] ["insurer must accept proof of claim submitted on a form other than a prescribed form if it contains substantially the same information as the prescribed form"]) which must establish "proof of the fact and amount of the loss sustained" (Insurance Law § 5106 [a]).

Plaintiff contends that its submission of the statutory forms established "proof of the fact and the amount of the loss sustained" and that the affidavit of its medical billing officer established a proper billing. Moreover, inasmuch as the damages sought were statutorily fixed, they were for a "sum certain or for a sum which can by computation be made certain" (CPLR 3215 [a]), and the court below therefore erred in denying its motion.

In our opinion, the submission to the court of the instant proofs of claim coupled with the affidavit of plaintiff's billing manager did not constitute sufficient proof of the "facts constituting the claim, the default and the amount due" (CPLR 3215 [f]), inasmuch as plaintiff's billing manager averred in the affidavit that the billing for the medical equipment had been set according to the Workers' Compensation Law Fee Schedules. While fees for physicians' services are governed by such schedules, fees for medical equipment and supplies are set by insurance regulation, specifically 11 NYCRR App. 17-C, Part E (b) (1), which states that "for medical equipment and supplies . . . provided by a physician or medical supplier, the maximum permissible charge is 150 percent of the documented cost of the equipment to the provider." Since the averment of plaintiff's billing manager is to the effect that billing (for the medical equipment) was set according to the Workers' Compensation Law Fee Schedules, this statement was meaningless, and its inclusion in the affidavit raised an issue as to plaintiff's entitlement to the particular amount allegedly due. Thus the damages sought could no longer be deemed to be for a "sum certain or for a sum which can by computation be made certain" (CPLR 3215 [a]). Accordingly, upon the instant motion papers, the court's denial of plaintiff's motion was proper. Plaintiff may renew its motion for a default judgment upon a showing of compliance with CPLR 3215.

To the extent that at oral argument defense counsel submitted a portion of the transcript of the examination under oath of plaintiff's assignor, which indicated the possibility of a fraudulent claim by plaintiff, such evidence is dehors the record and, accordingly, we do not reach that issue (see Chimarios v Duhl, 152 AD2d 508 [1989]). We note, however, that defendant may, in an appropriate manner, raise the matter in the court below.
Decision Date: July 21, 2004

[*1]Karol Prus, plaintiff,

v

Glencott Realty Corp., defendant third-party plaintiff-respondent; Asbestway Abatement Corp., third-party defendant, Insurance Corporation of New York, third-party defendant-appellant. (Index Nos. 4244/00 and 75805/00)






White, Quinlan & Staley, Garden City, N.Y. (Regis E. Staley, Jr.,
and Smith Mazure Director Wilkins Young & Yagerman, LLP [Joel
M. Simon] of counsel), for third-party defendant-appellant.
Lester Schwab Katz & Dwyer, LLP, New York, N.Y. (Eric A.
Portuguese and Eric B. Stern of
counsel), for defendant third-party plaintiff-
respondent.

In an action, inter alia, to recover damages for personal injuries, the third-party defendant Insurance Corporation of New York appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (D. Schmidt, J.), dated February 4, 2003, as denied that branch of its cross motion which was for summary judgment dismissing the third-party complaint insofar as asserted against it.

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

The plaintiff commenced this action, inter alia, to recover damages for personal injuries allegedly sustained on November 11, 1999, at the workplace of the defendant third-party plaintiff, while the plaintiff was employed by the third-party defendant Asbestway Abatement Corp. (hereinafter AAC). At the time of the accident, AAC was covered under a general liability insurance policy issued by the appellant. The defendant commenced a third-party action against AAC and the appellant. [*2]

On the cross motion for summary judgment, the appellant contended that it timely disclaimed coverage of the accident based upon the insured's failure to immediately send it a copy of the summons and complaint in the action. However, by letter dated April 17, 2000, the appellant received notice that the action was pending. On June 19, 2000, the appellant disclaimed coverage solely based upon the insured's failure to promptly notify it of the action. This disclaimer was untimely as a matter of law (see Pennsylvania Millers Mut. Ins. Co. v Sorrentino, 238 AD2d 491; Matter of Allstate Ins. Co. v Souffrant, 221 AD2d 434; Matter of Aetna Cas. & Sur. Co. v Rosen, 205 AD2d 684; Matter of Nationwide Mut. Ins. Co. v Steiner, 199 AD2d 507). An insurer's justification for denying coverage is strictly limited to the grounds stated in the notice of disclaimer (see General Acc. Ins. Group v Cirucci, 46 NY2d 862). Accordingly, an insurer, which denied coverage on a specific ground, may not later deny coverage on another ground known to it at the time of its disclaimer (see Sisco v Nations Tit. Ins. of N.Y., 278 AD2d 479; Hubbell v Trans World Life Ins. Co. of N.Y., 54 AD2d 94). Since the appellant knew at the time of its disclaimer that it had not received a copy of the summons and complaint, and based its disclaimer upon the insured's failure to promptly notify it of the action and not on this alternate ground, the appellant could not later rely upon this alternate ground to disclaim coverage.
SMITH, J.P., KRAUSMAN, ADAMS and SKELOS, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Mildred Cruz, et al., Plaintiffs-Appellants,

v

Ruby M.
Castanos, Defendant-Respondent.






Levine & Gilbert, New York (Richard A. Gilbert of counsel),
for appellants.
James P. Nunemaker, Jr. & Associates, Uniondale (Linda
Meisler of counsel), for respondent.

Order, Supreme Court, Bronx County (Howard R. Silver, J.), entered on or about March 11, 2003, which, to the extent appealable, denied plaintiffs' motion for leave to renew an order (same court and Justice) entered on or about September 3, 2002, granting defendant's motion for summary judgment and dismissing the complaint, reversed, on the law and in the exercise of discretion, without costs, plaintiffs' motion to renew granted and, upon renewal, defendant's motion for summary judgment denied and the complaint reinstated. Appeal from the prior order unanimously dismissed, without costs, as superseded by the appeal from the order denying renewal.

The record reflects that several exhibits referenced in the affidavit opposing defendant's motion for summary judgment on the issue of "serious injury" (Insurance Law § 5102[d]) were omitted from the submission. Given plaintiffs' reasonable excuse of law office failure for this inadvertent omission and the absence of a showing of prejudice to defendant, plaintiffs' motion to renew based on submission of these exhibits should have been granted (Telep v Republic El. Corp., 267 AD2d 57, 58).

In her affidavit in opposition to the motion for summary judgment, plaintiff Cruz stated that on March 3, 2000, when her police patrol car was hit by a car driven by defendant, she lost consciousness after striking her head on the bar of the door. After regaining consciousness, she experienced severe dizziness and pains in her back, neck and legs, and vomiting. Thereafter, she consulted a neurologist for dizziness, severe headaches and continual nausea and vomiting. She wore a neck brace for more than two months and subsequently received physical therapy for several months for her neck and legs.

At her deposition taken on June 13, 2001, 15 months after the accident, Cruz testified that since the accident she could no longer exercise to the extent that she once did, and that she experienced frequent dizzy spells, lightheadedness, blurred vision, sometimes for as long as 30 minutes to an hour, and frequent headaches. She also stated that she missed substantial time at work and that her physical and emotional relationship with her husband had been compromised as a result of her injuries.

Dr. Landis Barnes, an osteopath, affirmed that Cruz was seen at his office on March 8, [*2]2000, complaining of severe head pain, inability to move or flex her neck, blurred vision and thoracic pain, and mild nausea. On orthopedic evaluation, "it was found that range of motion of the neck revealed severe restriction in flexion 30 degrees; extension 40 degrees; right rotation 20 degrees, left rotation 25 degrees, lateral flexion was 40 degrees right and 45 degrees left." A compression test was positive for pain, there was weakness in the patient's right grip, and Soto-Hall was positive for pain in the cervical spine.

Dr. Barnes stated that Cruz received physical therapy three times a week "with little improvement." When she was evaluated again on June 7, 2000, the findings included "marked restriction of the range of motion in her neck, i.e., flexion 30 degrees; extension 35 degrees; right rotation 30 degrees; left rotation 30 degrees with pain; right lateral flexion 45 [degrees] with mild pain; and left lateral flexion 40 degrees." She had a positive right arm drop test and Apley's scratch test; there was weakness of the right grip; and Jackson's compression elicited pain. According to Dr. Barnes, "All of the above findings were abnormal," and Cruz was diagnosed with cephalgia, cervical sprain/strain - flexion/extension injury, status post-concussion syndrome with cervical muscle spasm. Dr. Barnes stated that over the three-month period, the patient showed "little improvement."

Dr. Barnes examined Cruz on January 28, 2002, again finding "marked restriction in flexion, right and left rotation, and right and left lateral flexion, totally comparable with the earlier findings." He stated that she "is still totally symptomatic," and "still complains of lightheadedness, dizziness and mild nausea." Based on the length of time as well as the marked restriction of movement early on and as of January 28, 2002, Dr. Barnes opined that these injuries were permanent in nature and directly related to the March 6, 2000 accident.

Dr. Barnes's affirmation contains sufficient objective medical evidence to raise a triable issue as to whether Cruz sustained a serious injury, inasmuch as he conducted range-of-motion tests and determined that there were quantifiable limitations on her range of motion (see Ramos v Dekhtyar, 301 AD2d 428, 429, citing Toure v Avis Rent a Car Sys., 98 NY2d 345, 350). The motion court held that since Dr. Barnes was not Cruz's treating physician and his examination followed an almost 20-month "gap in treatment," his affirmation was "insufficient proof of the duration of the alleged impairments claimed by the plaintiff." To the contrary, Dr. Barnes affirmed that the findings he made in January 2002 were "totally comparable" with the findings made and expressed in numeric percentages by another physician connected with his practice in March 2000, five days after the accident, and again in June 2000. This constitutes evidence that the patient's impairments endured at least from March 2000 through January 2002. In any event, any so-called "treatment gap" in Cruz's medical history goes to the weight to be given a medical opinion and is thus a question for the jury (id.). It does not resolve or eliminate the disputed factual issue as to whether plaintiff did or did not sustain a serious injury within the meaning of the No-Fault Law (see Martin v Schwartz, 308 AD2d 318, 320).

All concur except Buckley, P.J. and Marlow, J. who dissent in part in a memorandum by Buckley, P.J. as follows:


BUCKLEY, P.J. (dissenting in part)

I would find that the grant of summary judgment dismissing the complaint was proper and should therefore be affirmed.

The affirmation of Dr. Barnes was insufficient to create a triable issue of fact on the issue of serious injury. The affirmation does not indicate that any objective tests were performed, or that he relied on anything other than plaintiff Cruz's subjective complaints, in reaching the vague [*3]conclusion that she had restricted range of motion in her neck "totally comparable" to findings made by other doctors 20 months earlier (see Franchini v Palmieri, 1 NY3d 536). The inadequacy of the affirmation is all the more notable in that MRIs, CTs and x-rays were all normal, and defendant cited the affirmation's shortcomings in her reply papers, yet plaintiffs failed to submit a clarifying affirmation on renewal. Even if plaintiffs should have been granted renewal based on their inadvertent omission of certain exhibits in opposing summary judgment, those exhibits were insufficient to raise a question of fact.

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

ENTERED: AUGUST 12, 2004

CLERK

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