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Coverage Pointers - Volume VI, No. 12

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2/1/05              NYSBA Committee on Professional Ethics Opinion 785
New York State Bar Association Committee on Professional Ethics
An Attorney Representing a Plaintiff in a Personal Injury Action May Engage in Settlement Discussions with a Non-lawyer Insurance Company Claims Adjuster Over Objection of Defense Counsel Under Certain Circumstances

In an interesting decision from the New York State Bar Association Committee on Professional Ethics over the objection of the attorney assigned by the insurance company to represent the defendant-policyholder with respect to the claim, provided that (i) the insurer is not represented by separate counsel with respect to the matter; and (ii) the plaintiff’s attorney does not deliberately elicit information protected from disclosure.

 

2/10/05            The City of New York v. Lloyd's of London

Appellate Division, First Department

Injury Arising Out of 9/11 Cleanup Covered Under City of New York Marine Policies

In the aftermath of the 2001 terrorist attack on the World Trade Center, the City of New York hired contractors to clean up the site. These contractors used tug boats and barges, many of which were owned and operated by the City through its Department of Sanitation, to transport the debris to a landfill in Staten Island.  The City obtained various marine insurance policies underwritten by Lloyd’s to cover these operations.  Green, an employee of one of the contractors was allegedly injured by exposure to various toxic substances present in the clean-up debris while working as a crew member on a tugboat that was towing City bargesThe City requested that defendants defend, but they disclaimed coverage on the ground that the City did not own the tugboat.  The Supreme Court denied the City's dispositive motion and instead granted defendants' cross-motion to dismiss the complaint, finding no basis for coverage because Green did not allege, in the underlying personal injury action, that the City vessel had injured him. In addition, "within the four corners of the complaint," the motion court found no basis for coverage.  The First Department reverses (also granting the unopposed fee application of the City) and finds Lloyd’s did not met their heavy burden of “demonstrating that the allegations of the complaint cast the pleadings wholly within that exclusion, that the exclusion is subject to no other reasonable interpretation, and that there is no possible factual or legal basis upon which the insurer may eventually be held obligated to indemnify the insured under any policy provision.”   The Court found that the record was clear that the City's liability would arise from Green's contact with City-owned barges which were covered under defendants' insurance policies and which explicitly cover the risk at issue. To judicially declare defendants' duty to defend extinguished under these circumstances would lead to an unjust result, "exalting form over substance and denying an insured party the benefit of the 'litigation insurance' for which it has paid."

 

 

2/8/05              McGinley v. Odyssey Re

Appellate Division, First Department
Yes, It IS Possible to Disclaim Properly in an Assault Case and Properly Documented Investigation Can Excuse a Delay in Denying in a More Timely Manner
We know you have read decision after decision where appellate courts have found a way to punish, penalize and prevent insurers from denying claims based on coverage defenses.  Well, here’s a winner. The underlying claim arose by reason of the assault and battery committed against the plaintiff on him on the premises of defendants' insured. The policy contained an exclusion for assault and/or battery claims and the court found it clear that plaintiff's claims do not fall within the coverage. An argument was made that the policy's liquor liability endorsement did not mention the assault and battery exclusion.  The Court found that the endorsement does not purport to contradict or alter the exclusion's terms. The argument that the carrier had waived its right to deny coverage based on the exclusion because of the passage of 39 days was rejected where the delay, which was occasioned by their documented efforts to obtain the information and independent legal advice necessary to determine whether a disclaimer predicated upon the assault and battery exclusion would be proper.

 

2/7/05              In the Matter of Eveready Insurance Company v. Mack

Appellate Division, Second Department

Improper Disclaimer By Tortfeasor’s Carrier Results In Stay of UM Arbitration

Mack was involved in an automobile accident with a vehicle owned by Nunez.  At the time of the accident, Mack's vehicle was insured by Eveready.  The Nunez vehicle was insured by General Assurance.  General Assurance disclaimed coverage on the basis that Nunez "failed to report this loss and cooperate in the investigation, settlement or defense of this claim."  Mack filed a demand for arbitration with Eveready and the petition to permanently stay the arbitration was denied.  This court reverses, finding General Assurance failed to demonstrate that it met the requirements to disclaim coverage on the ground of lack of cooperation.  An insurance carrier that seeks to disclaim coverage on the ground of lack of cooperation "must demonstrate that it acted diligently in seeking to bring about the insured's co-operation . . . that the efforts employed by the insurer were reasonably calculated to obtain the insure[d]'s co-operation . . . and that the attitude of the insured, after his co-operation was sought, was one of 'willful and avowed obstruction’”. 


2/7/05              In the Matter of Eagle Insurance Company v. Rodriguez

Appellate Division, Second Department

Police Accident Report with Insurance Code of Tortfeasor Is Proof of Insurance

Rodriguez was involved in an automobile accident while operating a vehicle insured by Eagle Insurance. Eagle commenced a proceeding to permanently stay arbitration on the ground that the offending vehicle was insured.  The Supreme Court found the offending vehicle was insured but nonetheless, denied the petition.  The Second Department reverses and grants the stay finding that Eagle established a prima facie case as to the existence of insurance coverage by producing the police accident report containing the vehicle's insurance code.  Since Rodriguez did not rebut the petitioner's prima facie case, the Supreme Court properly concluded that the offending vehicle was insured but erred in denying the petition.

 

2/7/05              Tchjevskaia v. Chase

Appellate Division, Second Department

Defendants Papers in Support of Threshold Motion Insufficient To Require Opposition

The defendants failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).  The affirmation of the defendants' examining orthopedist disclosed that the orthopedist actually recorded limitations in the plaintiff's ranges of motion despite his ultimate conclusion that the plaintiff did not sustain a serious injury. Under the circumstances, the Court found it unnecessary to consider the sufficiency of the plaintiff's opposition papers.

 

2/7/05              Grigoli v. Passantino

Appellate Division, Second Department

Two Injuries, One Dismissed on Serious Injury, One Remanded On Inadequate Award

Based on the decision in this case, it can be implied that the jury was asked to make a separate determination of serious injury and damage awards for two claimed injuries (cervical fracture and disc herniation) on the verdict sheet.  The Court finds the alleged disc herniation didn’t meet the threshold and reversed the trial courts grant of plaintiff’s motion to set aside the verdict.  But, as to the cervical fracture, the court finds that the damages award was inadequate and upholds the trial court’s setting aside as to that injury.  This is a peculiar decision.  Why the jury was even considering the serious injury question, when there was a cervical fracture, is beyond our understanding.

 

2/7/05              Christensen v. Weeks
Appellate Division, Second Department

Improper (as Prejudicial) to Allow Third Party Action for Declaratory Judgment Relief, Even in Subrogation Case
It is improper to allow third party action to proceed against liability carrier to overturn coverage decision.  Having the insurance company before the same jury as the underlying jury considering the damage case would be prejudicial to the insurance company’s chance of success.  This is the case even if one of the plaintiffs is bringing a subrogation case in the name of the insurer.

 

 

2/4/05              Cosser v. One Beacon Insurance Group

Appellate Division, Fourth Department

Allegations of Trademark Infringement Are Covered as an Advertising Injury

A former Stickley employee who had access to an exclusive Stickley formula for furniture polish went into business for themselves and manufactured and marketed the formula.  The complaint’s allegations of misuse or infringement of trademarks fell within the coverage of the defendant’s policy that insured as to advertising injuries.  The Court also concludes that One Beacon has a duty to defend plaintiffs in the underlying federal action because there is "a 'reasonable possibility that the insured[s] may be held liable for some act or omission covered by the policy'" despite the allegations of intentional conduct by the insured as liability may attach to the insured without a showing of intentional or knowing conduct.

 

2/4/05              Town of Newfane v. General Star National Ins. Co.
Appellate Division, Fourth Department
For Insurance Purposes, Malicious Prosecution Claim Accrues on Date of Arrest, Not on Date of Termination
Further Appeal Pending --
In our issue of 12/03/04, we reported on this decision and it is reported in full there.  The Fourth Department has granted leave to appeal to the Court of Appeals so this case of first impression will be reviewed
An element of a malicious prosecution claim is that it terminates favorably for the plaintiff.  However, the Court held that the claim accrues upon the arrest so that the carrier on the risk at that time, rather than at the time the underlying criminal claim is dismissed, is responsible for defense and indemnity.  Case of first impression in New York.

 

2/4/05              Collins v. Blunt

Appellate Division, Fourth Department

Occupants of Apartment Struck By Debris After Car Struck Window Are Covered Persons

Plaintiffs sought damages for injuries they sustained when a vehicle owned by defendant struck the window of the room in which they were seated. Plaintiffs sustained injuries when the window shattered, causing glass, bricks and other debris to be strewn about the room.  The Court holds that plaintiffs were injured as a result of the use and operation of a motor vehicle entitling them to first party benefits pursuant to Insurance Law § 5102 (j) as covered persons pursuant to Insurance Law § 5104 (a).  The Court also concluded that defendants established as a matter of law that one of the plaintiffs did not sustain a serious injury. Plaintiff Collins asserted in her bill of particulars that she sustained a serious injury within the meaning of the 90/180 category of serious injury but testified that she has a "dent" in her cheek that has improved over the years, that she experienced pain in her neck that did not require treatment, and that she had glass in one of her eyes and in her hair following the accident.  This was insufficient to meet the serious injury threshold.

 

2/4/05              Callea v. Hartford Insurance Company

Appellate Division, Fourth Department

Mistake as To Policy Effective Date Does Not Bind Carrier in Absence of Agency

Plaintiff purchased a homeowner's insurance policy through her insurance agent, Boyle, when Boyle was an insurance agent for Nationwide.  Boyle became affiliated with an independent agent with binding authority on behalf of Hartford.  When the insured Nationwide policy expired October 10, 1999, plaintiff agreed to replace it with a Hartford policy, but an employee of Boyle mistakenly wrote an effective date of the Hartford policy of October 19, 1999. On October 15, 1999, an accident occurred on plaintiff's property and Hartford disclaimed coverage on the ground that its policy with plaintiff was not in force on the date of the loss.  Hartford established that it provided coverage as of the date requested by Boyle, and plaintiff failed to establish her right to reformation of the insurance policy by "clear, positive and convincing evidence" of a mutual mistake.  Nor was there any proof of an express or implied agency agreement between Boyle and Hartford such that the mistake admitted by Boyle's employee could be attributed to Hartford.

 

 

2/4/05              Walker v. LaJara

Appellate Division, First Department

Plaintiff’s Physician Affirmation Sufficient to Raise Question of Fact on Serious Injury

Questions of fact existed as to whether the defendant used reasonable care in entering the intersection and kept a proper lookout in this two car mva.  Also, the affirmation of plaintiff's treating physician that indicated specific range of motion restrictions upon tests conducted on plaintiff’s neck and back within three weeks of the accident and concluded plaintiff sustained permanent injuries as a result of the accident was sufficient to raise question of fact as to whether plaintiff sustained a serious injury under Insurance Law § 5102.

 

2/3/05              Allstate Insurance Company v. Reilly
Appellate Division, First Department
When Application is Made to Stay Uninsured Motorist Case on Grounds that Vehicle was Insured, Claimant Needs to Arrange His or Her Ducks in a Row
Some time after Court determined that Uninsured Motorists case be permanently stayed because the offending vehicle was, in fact, insured, claimant tried to reopen proceeding.  Carrier that apparently was insurer of offending car was not a party to the UM stay application and now took the position that its policy was not in force.  Since it wasn’t bound by first proceeding, it was not precluded from taking adverse coverage position.  Court found that claimant was too late in making the argument that offending vehicle was uninsured.  That argument must be made at the time the UM stay application is made or the argument is lost forever.  So, in this case, injured party gets no coverage from either carrier.

 

2/3/05              Clements v. Lasher
Appellate Division, Third Department
Spasms Do Not Equate to a “Significant Limitation” or “90-Day Disability” Under No Fault

To establish either permanent consequential limitation or a significant limitation, the medical evidence must provide either a quantitative or qualitative assessment to differentiate serious injuries from mild or moderate  The chiropractor observed muscle spasms in Clements' neck, shoulder and back the areas claimed to be injured in the accident which the chiropractor claims were confirmed by electromyography testing. This evidence of spasm is an objective medical finding. Absent, however, is any comparison with normal function or proof that there is a meaningful impairment.  As she continued to work as a teacher right after the accident, using pain medication, it cannot be said that she was unable to perform her customary daily activities for not less than 90 days during the 180 days immediately following the accident.


2/5/05              In Re Worldcom, Inc Securities Litigation
Southern District of New York

WorldCom Director Entitled To Defense Costs Under Excess D&O Policy Until Rescission Of Policy Is Adjudicated
 
One of WorldCom’s former directors was named as a defendant in the consolidated WorldCom securities class action. Continental Casualty Company provided WorldCom and its officers and directors with one of seven layers of excess D&O coverage. Continental rescinded the policy and declared it void ab initio based on material misrepresentations in WorldCom’s financial statements, and refused to provide the director with a defense. The director filed a declaratory judgment action contenting that he was entitled to defense costs until it is adjudicated that Continental effectively rescinded the policy. Because the rescission of the excess policy had not been adjudicated, the court ordered that Continental was required to pay the director’s defense costs as they were incurred pursuant to the excess policy.

Submitted by: Bruce D. Celebrezze and Erin Adrian (Sedgwick, Detert, Moran & Arnold LLP)

 

2/1/05              A & S Medical P.C., Assignee, et al v. Allstate Insurance Company

Appellate Division, First Department

No Fault Carrier Cannot Rely on Denial to Insured When Assignee Seeks to Recover Expenses as Well
If you’ve said it once, you’ll have to say it again.  No Fault carrier had denied further medical benefits to insured.  Later, assignee files claim to recover other benefits and carrier remained silent, relying on previous denial to insured.  Appellate Court finds that carrier’s failure to respond in a timely manner to assignee’s claim is fatal and that carrier lost its right to deny claim.  It must deny claim separately to assignee and cannot rely on previous denial to insured.

 

1/31/05            Jordan Construction Products Corporation v, Travelers Indemnity Company of America
Appellate Division, Second Department
Nineteen (19) Month Late Notice to Liability Carrier can be Excused
Insured did not give notice of accident to its liability carrier for 19 months.  Court finds that while notice was presumptively late, insured raised a triable issue of fact as to whether its delay in giving notice of the occurrence to Travelers was reasonably founded upon a good faith belief in its non-liability and upon the injured party's purported representation that he did not intend to sue Jordan.  Oh sure!  [Editor’s note:  why do courts rarely believe the insurer’s excuses and usually believe the insured!]

1/31/05            Marquez v. Oballe
Appellate Division, Second Department
If Defendant’s Motion Raises Question of Fact About Serious Injury, Plaintiff Need Submit Nothing in Response
Here, defendant’s examining physician’s affidavit suggested limitations which may give rise to a Serious Injury under the No Fault law.  Since it did, there was no reason the plaintiff had to submit anything in opposition to the motion and question of fact will be left to the jury.        

 

1/31/05            Matter of New York Central Mutual Fire Insurance Company v. Dukes
Appellate Division, Second Department
Not Every Vehicle Used Without Permission is Stolen, for Purposes of Uninsured Motorist Coverage
In application to stay UM arbitration, carrier successfully established that car was not being used with express permission of insured.  However, appellate court upheld finding that insurer did not establish that car was stolen.  A car can be used with “implied permission” and that is sufficient to hold owner of car (and its insurer) responsible for injuries or damage caused by driver’s negligence.  Here, uninsured motorists coverage will not come into play because liability carrier did not meet its burden of proving that car was stolen.

1/31/05            Matter of Allstate Insurance Company v. Calderon
Appellate Division, Second Department
If We’ve Told You Once, We’ve Told You 100 Times: A Carrier That Wants to Challenge the Right to Pursue a Claim for Uninsured Motorist Benefits Must Make Application to the Court Within 20 Days of Claim File
Court rejects Uninsured Motorist carrier’s claims that it was not required to commence a proceeding to stay arbitration of the appellant's uninsured motorist claim within the 20-day limitation period.  The issue of whether or not the injuries occurred as the result of an intentional act relates to whether certain conditions of coverage have been satisfied and not whether the parties have agreed to arbitrate.  Allstate's failure to seek a stay within 20 days of service of the demand for arbitration also precluded it from asserting in court that the uninsured motorist claim is barred by the statute of limitations.

 

1/31/05            Edwards v. United States Liability Insurance Company

Appellate Division, Second Department
No Rescission of Liability Policy Permitted Without Proof of Material Misrepresentation

The insurer failed to establish that the policyholder made any misrepresentations to the insurer or to the successor defendant, or that the defendant relied thereupon in renewing the subject policy. Moreover, the plaintiff demonstrated as a matter of law that no misrepresentation was made to induce the defendant to issue or renew the subject policy.  Whether there were material misrepresentations about the presence or absence of smoke detectors, remains to be seen.

 

1/31/05            Levenherz v.  Povinelli

Appellate Division, Second Department

Plaintiff Stated a Cause of Action to Rescind Annuity Contract

In an action to rescind an annuity contract and for fraud, Levenhertz alleged Keyport failed to "maintain and enforce a reasonably adequate system of internal supervision and control over" Povinelli and that Povinelli made fraudulent misrepresentations to induce the plaintiff to purchase the annuity contract from Keyport.  Plaintiff presented sufficient evidence to resist Keyport’s motion to dismiss as plaintiff submitted an affidavit that stated she was led to believe that Povinelli was acting as an agent for Keyport by its brochure that stated that "we form enlightened partnerships with our distributors, affiliates and suppliers" and that she was not provided with a copy of the contract until a year after execution.

 

1/31/05            Meely v. 4 G's Truck Renting Co., Inc

Appellate Division, Second Department

Affirmed Reports Carry the Day over Unaffirmed Reports as to Serious Injury

Evidence submitted by the respondents was sufficient to establish that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d). Plaintiffs' unaffirmed reports of the MRIs which indicated that they each had bulging and herniated discs, could not alone raise a question of fact as to whether either plaintiff sustained a serious injury in the absence of objective evidence of the extent of alleged physical limitations resulting from the disc injury.  The respondents' radiologist concluded in his affirmed reports that, contrary to the findings stated in the plaintiffs' unaffirmed reports, there was no evidence that either plaintiff suffered from disc bulges or herniations as a result of the accident. The affirmed reports of the respondents' examining neurologist found that the plaintiffs suffered no limitations in their ranges of motion and suffered no neurological abnormalities or sequelae as a result of the motor vehicle accident. Taken together these affirmed reports established the absence of objective evidence of the extent of physical limitations resulting from the alleged disc injuries.

 

1/31/05            Willis v New York City Transit Authority

Appellate Division, Second Department

Defendant’s IME and Related Tests Sufficient to Dismiss on Serious Injury Grounds

The defendants' examining physician examined plaintiff approximately 1 1/2 years after the accident and reported with respect to the various ranges of motion in plaintiff’s cervical and lumbar spine and shoulder area, and found no tenderness or muscle spasm. Additionally, the neurological examination was normal, and other tests performed showed no abnormalities. The examining physician opined that Singleton had no disability.  This was sufficient to find the plaintiff had not sustained a serious injury.

 

 

 

 

 

 

 

Across Borders

 

Visit the Hot Cases section of the Federation of Defense & Corporate Counsel website, www.thefederation.org  ranked among the top five legal research websites in an article published in Litigation News, a publication of the Litigation Section of the American Bar Association. Dan Kohane serves as the FDCC’s Website Editor Emeritus.

 


2/2/05              Graphic Arts Mutual Insurance Co. v. Time Travel Int’l Inc.

Court of Appeals for the State of California

California Permits Workers' Compensation Insurer to Pursue Reimbursement From an Illegally Uninsured Employer in a Court of Law and Not the Workers' Compensation Appeal Board
 In case of first impression in California, the California Court of Appeals held that an insurance carrier that is held liable for workers' compensation benefits under California Labor Code section 5500.5 can pursue an action in civil court seeking reimbursement from an unlawfully uninsured employer instead of seeking redress from the Workers' Compensation Appeals Board. In this case, Plaintiff briefly provided workers' compensation insurance to defendant. However, the defendant was "illegally uninsured." Meanwhile, the Workers' Compensation Board ordered Plaintiff to pay workers' compensation benefits to a former employee of defendant. Because the defendant was "illegally uninsured," the arbitrator's opinion from the Workers' Compensation Board stated that the plaintiff had the right to reimbursement under section 5500.5 of the California Labor Code. Plaintiff argued that they could seek reimbursement through the courts, while defendant argued that the plaintiff could only seek reimbursement through the Workers' Compensation Board. In ruling that the insurer could pursue reimbursement through the courts, the Court of Appeals reasoned that the insurer was an employer under the definition of the statute and that the insurer's rights are subrogated to the rights granted to the employee. Therefore, where an employer is subrogated to the rights granted to an employee against an unlawfully uninsured employer, and the employee has a right to sue the unlawfully uninsured employer in a court of law for damages, the employer should have the same right.

Submitted by: Mark J. Gesk and Kevin M. Eddy (Wayman, Irvin & McAuley, LLC)



 

 

 


1/31/05            Carolina Casualty Insurance v. E.C. Trucking

Court of Appeals for the Seventh Circuit

MCS-90 Endorsement on a Policy Required Insurer to Provide Coverage to its Insured in a Wrongful Death Action
 Plaintiff insurer sought a declaratory judgment that it did not owe coverage to its insured who allegedly caused the death of an individual in a motor vehicle accident. The court of appeals affirmed the district court's decision finding that the general provisions of the policy did not afford coverage, however the federally mandated endorsement of MCS-90 required the insurer to cover its insured. The court reasoned that the purpose of the MCS-90 endorsement is to assure that injured members of the public are able to obtain judgments from negligent actions of authorized interstate carriers.

Submitted by: Mark J. Gesk and Kevin M. Eddy (Wayman, Irvin & McAuley, LLC)

 


1/31/05            Friedland v. The Travelers Indemnity Company.

Colorado Supreme Court

Presumption of Prejudice Exists Where Insured Gives Insurer Notice of Claim and Suit After Settlement of Suit
In this insurance case arising out of environmental contamination by the Summitville mining operation in the San Luis Valley, the Colorado Supreme Court applied to liability policies the notice-prejudice rule enunciated in Clementi v. Nationwide Mutual Fire Ins. Co., 16 P.3d 223 (Colo. 2001), for uninsured motorists policies. Implementation of the notice-prejudice rule ordinarily requires of trial courts a two-step approach under which an insurance company bears the burden of showing that (1) the insured’s late notice to it of claim and suit was unreasonable, and (2) the late notice prejudiced the insurer. The Court added a third step for cases, like this one, where the insured’s delayed notice to the insurer of claim and suit occurred after the insured settled the liability lawsuit. Notice of claim and suit by the insured to the insurer after settlement of the liability lawsuit is unreasonable as a matter of law and the late notice is presumed to have prejudiced the insurer. The insured must go forward with evidence rebutting the presumption of prejudice in order to place back on the insurer the responsibility of proving prejudice.

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

 


1/28/05            Lee Builders, Inc. v. Farm Bureau Mutual Insurance Co.

Kansas Court of Appeals

Court Construes Policy Terms broadly to find that Policy Provided Coverage for a Portion of General Contractor’s Claims
Builders was the general contractor in building a custom home for a doctor and was insured under a CGL policy issued by defendants. Five years after the home was completed, the doctor discovered water leaks and resulting damage. The doctor made a claim against Builders who timely notified defendants, but defendants denied coverage. Builders sued defendants to recover the amount paid to settle the doctor’s claim. Following a grant of judgment on the merits in favor of Builders, defendants appealed. The Kansas Court of Appeals found as follows: (1) The term “accident” shall be interpreted in its usual, ordinary and popular sense but will be construed liberally because it is ambiguous; (2) Property damage to the structural components caused by water leakage from faulty work is an “occurrence”; (3) The “real property” exception to the “your product” exclusion in a CGL policy will be broadly construed , especially where the insured is a contractor whose broad form CGL coverage was apparently intended to be expanded by the exception.

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

 

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A & S Medical P.C., Assignee of Reyna Martinez v. Allstate Insurance Company


            Order of the Appellate Term of the State of New York, First Department, entered on or about June 18, 2003, which, in an action by a health provider against a no-fault insurer to recover on an assigned no-fault claim, reversed an order, Civil Court, Bronx County (Wilma Guzman, J.), entered October 24, 2001, denying plaintiff's motion for summary judgment, and, inter alia, granted the motion, unanimously affirmed, without costs.

Plaintiff submitted a claim to defendant for orthopedic services it provided to its assignor from November 4, 1998 to February 8, 1999. More than 30 days later, and after plaintiff had commenced the instant action alleging that defendant had neither paid nor denied the claim within 30 days as required by Insurance Law § 5106(a) and 11 NYCRR 65.15(g)(3), defendant rejected a portion of the claim, explaining that it had previously denied all further orthopedic benefits effective January 26, 1999, and that it was accordingly denying the claim insofar as it sought benefits for services provided after that date. It appears that on January 19, 1999, defendant had sent plaintiff's assignor a Denial of Claim Form advising that all further orthopedic benefits would be denied effective January 26, 1999, based on an independent medical examination showing no further need for treatment. Appellate Term rejected defendant's argument that the January 19, 1999 Denial of Claim Form it had sent to plaintiff's assignor is imputable to plaintiff (citing Atlantis Med. v Liberty Mut. Ins. Co., 2002 NY Slip Op 40043U, 2002 NY Misc LEXIS 202, 2002 WL 523102 [Dist Ct Nassau County, 2002], and held that defendant's failure to respond to plaintiff's claim within the statutory 30-day time limit precluded defendant from defending against the claim on the ground that any treatment after January 26, 1999 was unnecessary (citing Presbyterian Hosp. v Maryland Cas. Co., 90 NY2d 274 [1997]; Central Gen. Hosp. v Chubb Group of Ins Cos., 90 NY2d 195 [1997]; Country-Wide Ins. Co. v Zablozki, 257 AD2d 506 [1999], lv denied 93 NY2d 809 [1999]).

We hold that the no-fault law itself (Insurance Law art 51), and the regulations promulgated thereunder for settlement of claims (11 NYCRR 65.15), require that "When a provider of medical services [first] submits a claim as assignee of an insured, neither the statute nor the regulations contemplate the insurer simply sitting mute and failing to act upon the claim, silently and secretly relying upon an earlier [blanket] denial issued directly to the insured" (Atlantis Med., 2002 NY Misc LEXIS at *8-9; see also Aurora Chiropractic v Farm & Cas. Ins. [*2]Co., __ Misc 3d __ [2004], 2004 NY Misc LEXIS 1584, *5-7, 2004 WL 2167818, *3; compare Hospital for Joint Diseases v Allstate Ins. Co., 5 AD3d 441 [2d Dept 2004]).

Clements v. Lasher


Mugglin, J.

Appeal from an order of the Supreme Court (Nolan Jr., J.), entered March 30, 2004 in Saratoga County, which granted defendants' motion for summary judgment dismissing the complaint.

In July 2002, plaintiffs commenced this action for personal injuries allegedly sustained by plaintiff Kathleen Clements on September 1, 1999 when her vehicle was struck from behind by one owned by defendant Tracy Lasher and operated by defendant John Pailley. Neither vehicle was damaged by the impact and, as no one was apparently injured, Clements and Pailley exchanged insurance information and left the scene. Upon completion of discovery, Supreme Court granted defendants' motion for summary judgment dismissing the complaint, finding that plaintiffs had failed to demonstrate a triable issue of fact as to whether Clements sustained a serious injury within the meaning of Insurance Law § 5102 (d). Plaintiffs appeal and we affirm.

As plaintiffs do not challenge the sufficiency of defendants' medical evidence as meeting the threshold burden (see Marks v Brown, 3 AD3d 648, 648-649 [2004]; Seymour v Roe, 301 AD2d 991, 991-992 [2003]), the issue becomes whether plaintiffs' evidence met the shifted burden of raising a triable issue of fact that Clements suffered a compensable serious injury (see Insurance Law § 5102 [d]; Marks v Brown, supra; Mrozinski v St. John, 304 AD2d 950, 951 [2003]). Plaintiffs claim that their evidence raises triable issues of fact as to whether Clements sustained a permanent consequential limitation of use of a body organ or member, a [*2]significant limitation of use of a body function or system, and an injury which is covered by the 90/180-day category. Plaintiffs maintain that Clements' affidavit, her attorney's affidavit and the affidavit of her treating chiropractor, to which is attached certain records of treatment, establish her impairment by objective medical findings and diagnostic tests in each of the three categories specified (see Buster v Parker, 1 AD3d 659, 660 [2003]; Drexler v Melanson, 301 AD2d 916, 917 [2003]).

To establish either permanent consequential limitation or a significant limitation, the medical evidence must provide either a quantitative or qualitative assessment to differentiate serious injuries from mild or moderate ones (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350 [2002]). Here, as Clements' treating chiropractor made no quantitative assessment, we review the qualitative assessment to determine if the chiropractor's evaluation of Clements has "an objective basis" and if a comparison of her limitations to the normal function has been made (id. at 350-351). The record reveals that the chiropractor, upon palpation, observed muscle spasms in Clements' neck, shoulder and back the areas claimed to be injured in the accident which the chiropractor claims were confirmed by electromyography testing. This evidence of spasm is an objective medical finding (see Santos v Marcellino, 297 AD2d 440, 441-442 [2002]). Absent, however, is any comparison with normal function. Broadly claiming that the injuries limit Clements' "ability to use the affected muscles in the course of her usual and customary daily activities which would involve use of these muscles in lifting, pushing or pulling" makes no meaningful comparison so that mild or moderate injuries can be distinguished from serious injuries. This record does not establish that the soft tissue injury sustained by Clements resulted in a meaningful impairment or limitation (see Rath v Shafer, 267 AD2d 565, 566 [1999]).

To successfully create a triable issue of fact with respect to the 90/180-day category, plaintiffs' evidence must establish the existence of a nonpermanent medically determined injury or impairment that prevents Clements from performing substantially all of her usual and customary daily activities for not less than 90 days during the 180 days immediately following the injury (see Insurance Law § 5102 [d]; Toure v Avis Rent A Car Sys., supra at 357; Marks v Brown, supra). Although Clements testified at her pretrial deposition that, since the accident, her ability to engage in her customary usual daily activities has been curtailed as a result of pain, she did not miss any days from her employment as a teacher during the six months immediately following the accident and she continued to perform her usual and customary activities, albeit with pain ameliorated with daily medication. This, coupled with the fact that her treating chiropractor never imposed any restrictions on her activities, persuades us that no genuine triable issue of fact exists with respect to a curtailment, to a great extent, of Clements' usual and customary daily activities.

Allstate Insurance Company v. Reilly



            Order, Supreme Court, New York County (Kibbie F. Payne, J.), entered December 3, 2003, which denied respondent insured's motion to vacate a default judgment in favor of petitioner insurer (Allstate) permanently staying an uninsured motorist arbitration, unanimously affirmed, without costs.

The insured asserts that he defaulted on Allstate's July 1995 application to stay the arbitration because he was then unable to counter Allstate's claim, based on a police accident report, that the offending vehicle was insured by Aetna. The insured's instant motion to vacate that default, made in August 2003, is based on newly discovered evidence (CPLR 5015[a][2]) of the offending vehicle's uninsured status, to wit, a June 2003 Suffolk County judgment dismissing a direct action that the insured commenced against Aetna (Insurance Law § 3420[a][2]) to enforce a default judgment that he obtained against the driver and owner of the offending vehicle in a federal court personal injury action that he commenced in January 1997. It further appears that Aetna was named as a "proposed" co-respondent on Allstate's application to stay arbitration but never joined therein, and that the Suffolk County judgment was based on a finding, made after a framed issue hearing, that Aetna did not insure the offending vehicle on the date of the accident.

The insured's motion to vacate his default was properly denied for failure to show that evidence sufficient to raise an issue of fact as to the offending vehicle's uninsured status was not available, or could not have been discovered, at the time of the insurer's application to stay arbitration (CPLR 5015[a][2]). While the insured states that he lacked information to counter the police accident report on which Allstate relied in resisting his demand for arbitration, he fails to [*2]explain why the "registration expansion search" on which he relied in demanding arbitration was insufficient to rebut the police accident report
(cf. Matter of New York Cent. Mut. Fire Ins. Co. [Rozenberg], 281 AD2d 330 [2001]; Matter of Empire Mut. Ins. Co. [Greaney], 156 AD2d 154 [1989]). Indeed, evidence that a simple inquiry of Aetna elicited a denial of coverage would have been enough to rebut the police accident report and force a framed-issue hearing, wherein Allstate, bearing the burden of proof, would have been constrained to join Aetna as a necessary party and prove that it insured the offending vehicle on the date of the accident (see Rozenberg, id. at 331; Greaney, id. at155).

An attorney representing a plaintiff in a personal injury action may engage in settlement discussions with a non-lawyer insurance company claims adjuster over the objection of the attorney assigned by the insurance company to represent the defendant-policyholder with respect to the claim, provided that (i) the insurer is not represented by separate counsel with respect to the matter; and (ii) the plaintiff’s attorney does not deliberately elicit information protected from disclosure.

 

NYSBA Committee on Professional Ethics Opinion 785

 

FACTS

 

An individual injured in an automobile accident (the “Plaintiff”) filed a personal injury action against the driver of the vehicle alleged to be at fault (the “Defendant”).  In response, the Defendant’s insurer assigned counsel to defend against the action.  Before the suit was commenced, the Plaintiff’s attorney engaged in unsuccessful settlement negotiations with the insurance company’s non-lawyer claims adjuster.  Subsequent to his assignment, the Defendant’s attorney learned that Plaintiff’s attorney was persisting in communicating with the adjuster in further settlement attempts.  Defendant’s attorney thereupon instructed the Plaintiff’s attorney to cease all such communications.

 

QUESTION

 

May the Plaintiff’s attorney engage in direct settlement negotiations with the adjuster over the objection of the attorney assigned by the insurance company to represent the Defendant?

 

OPINION

 

DR 7-104(A)(1) of the Code of Professional Responsibility (the “Code”), commonly referred to as the “no contact” rule, provides that, in the course of a representation, a lawyer shall not “[c]ommunicate or cause another to communicate on the subject of the representation with a party the lawyer knows to be represented by a lawyer in that matter unless the lawyer has the prior consent of the lawyer representing such other party or is authorized by law to do so.”[1][1] 

 

Is the adjuster a represented party for purposes of the “no contact” rule?   Or to restate the question, is the adjuster represented by the same counsel assigned to represent the Defendant?   We believe not.  40 years ago in N.Y. State 4 (1964), we stated that:  “[W]e see nothing improper in an attorney for a claimant entering into negotiations with the adjuster, even where the negotiations include discussion of the legal aspects of liability.”  We adhere to this conclusion, which is consistent with our many subsequent opinions on the ethically complex tripartite relationship that exists among an insurance company, assigned counsel and a policyholder[2][2], in holding that contact with the adjuster is not contact with the policyholder.

 

However, the “no contact” rule will bar unconsented communication with the adjuster if the insurance company is known to be separately represented by counsel with respect to the matter.[3][3]   In addition, an attorney may not deliberately elicit information that is protected by attorney-client privilege or as attorney work product from an unrepresented  person, such as the insurance company (for whom the adjuster is an agent).[4][4]   Here, a sizeable portion of the insurance company’s file is likely to be protected as work product.[5][5]   Therefore, in discussing settlement with the insurance adjuster, the Plaintiff’s attorney must not deliberately elicit such protected information.

 

CONCLUSION

 

An attorney representing a plaintiff injured in an automobile accident may engage in direct settlement discussions with a non-lawyer insurance company claims adjuster over the objection of the attorney assigned by the insurance company to represent the defendant-policyholder with respect to the claim, provided that:  (i) the insurer is not represented by separate counsel with respect to the matter, and (ii) the plaintiff’s attorney does not deliberately elicit information protected from disclosure in the action.

[1]Emphasis added.
[2]For example, we have stated, “Despite the fact that an insurance company has retained the lawyer pursuant to its contractual duty to defend the policyholder, the client is the policyholder, not the insurance company.”   N.Y. State 721 (1999) (citing N.Y. State 716 [1999]); see also ABA Inf. Op. 1476 (1981) (“When a liability insurer retains a lawyer to defend an insured, the insured is the lawyer’s client”); American Employers Ins. Co. v. Goble Aircraft Specialties, Inc., 205 Misc. 1066, 1075, 131 N.Y.S.2d 393, 401 (Sup. Ct. 1954) (“When counsel, although paid by the casualty company, undertakes to represent the policyholder and files his notice of appearance, he owes to his client, the assured, an undeviating and single allegiance”). We also reject the notion that the policyholder and the insurance company can be co-clients of the policyholder’s assigned counsel.   See  N.Y. State 721 (“Some U.S. jurisdictions have held that an insurance carrier and an insured are ‘co-clients’ who have joint rights in the information concerning the representation.  New York is not one of them.”) (citation omitted); N.Y. State 716 (1999), n. 2 (“[A]t least in New York, the policyholder’s agreement to be represented by a lawyer who is compensated by the insurer does not itself make ‘co-clients’ of the policyholder and the insurer for purposes of the Code of Professional Responsibility.  Rather, . . . the policyholder alone is the client”).
[3] Under certain circumstances, claimant’s attorney may have a duty to inquire before concluding that the insurance company is not so represented.   See N.Y. State 728 (2000).
[4]See N.Y. State 735 (2001) (independent accountant); N.Y. State 700 (1997) (former employee).  
[5]See Mc Kinney’s Cons Laws of N.Y.,   CPLR 3101(d)(2) (2005) (discussing protections for materials prepared in anticipation of litigation); Kandell v. Tocher,  22 A.D.2d 513, 256 N.Y.S.2d 898 (1st Dept. 1965) (applying CPLR 3101(d) to accident report information policyholder gave to his insurance carrier); Finegold v. Lewis, 22 A.D.2d 447, 256 N.Y.S.2d 358 (2d Dept. 1965) (same); see generally Connors, Practice Commentaries C3101:31 and C3101:32, McKinney’s Cons. Laws of NY,  CPLR 3101 (2004).

 

Edwards v. United States Liability Insurance Company


            In an action, inter alia, to recover damages for breach of an insurance policy in which the defendant counterclaimed to rescind the policy, the defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Jonas, J.), dated May 20, 2003, as denied its cross motion for summary judgment on its counterclaims, and granted that branch of the plaintiff's motion which was for summary judgment dismissing its first counterclaim for rescission based upon misrepresentation, and the plaintiff cross-appeals from so much of the same order as denied those branches of his motion which were for summary judgment on the issue of liability and for summary judgment dismissing the defendant's second counterclaim for rescission based upon noncompliance with the terms of a protective safeguards endorsement.

ORDERED that the order is affirmed insofar as appealed and cross-appealed from, without costs or disbursements.

The plaintiff's decedent, Jgwo Edwards, purchased a policy of liability insurance from the defendant for a mixed-use building in Hempstead, consisting of a store and two apartments. The building was damaged in a fire, following which the plaintiff's decedent submitted a claim to the defendant. The defendant rejected the claim. The plaintiff's decedent then commenced this [*2]action. The defendant counterclaimed for a judgment declaring its right to rescind the policy, contending, inter alia, that the plaintiff's decedent had made material misrepresentations when he obtained the policy from the defendant's predecessor-in-interest, Calvert Insurance Company (hereinafter Calvert), and because he failed to comply with the terms of a protective safeguards endorsement in the pertinent renewal, pursuant to which he was obligated to maintain functional smoke detectors.

The Supreme Court correctly determined that the defendant was not entitled to a declaration that it had the right to rescind the policy due to the alleged material misrepresentation by the plaintiff's decedent that the building contained two residential apartments rather than multiple single-room occupancies. The defendant failed to prove, as a matter of law, that the plaintiff's decedent made any misrepresentations to Calvert or to the defendant, or that the defendant relied thereupon in renewing the subject policy (see Zilkha v Mutual Life Ins. Co. of N.Y., 287 AD2d 713; Penn Mut. Life Ins. Co. v Remling, 268 AD2d 572; cf. McLaughlin v Nationwide Mut. Fire Ins. Co., 8 AD3d 739). Moreover, the plaintiff demonstrated as a matter of law that no misrepresentation was made to induce the defendant to issue or renew the subject policy. The Supreme Court thus correctly denied that branch of the defendant's cross motion which was for summary judgment declaring that it was entitled to rescind the policy due to an alleged misrepresentation, and correctly granted the branch of the plaintiff's motion which was for summary judgment dismissing the defendant's first counterclaim.

Furthermore, in light of the numerous issues of fact concerning the presence or absence of smoke detectors in the subject premises, the Supreme Court correctly denied both parties' respective summary judgment motions with regard to the defendant's second counterclaim, which sought to rescind the policy based upon the absence of such smoke detectors.

Matter of New York Central Mutual Fire Insurance Company v. Dukes


            In a proceeding pursuant to CPLR article 75 to stay arbitration of an uninsured motorist claim, the petitioner appeals from so much of an order of the Supreme Court, Kings County (Silverman, J.H.O.), dated May 8, 2003, as, after a hearing, determined that the vehicle owned by its insured was not stolen or being operated without permission at the time of the subject accident, and that it was obligated to defend and indemnify its insured in connection therewith.

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

Contrary to the petitioner's contention, the determination of the Judicial Hearing Officer (hereinafter the J.H.O.) that it failed to prove the vehicle owned by its insured was stolen or being used without permission at the time of the accident, and thus was obligated to defend and indemnify its insured was within the scope of the order of reference which authorized the J.H.O. to hear and determine the issue of "insurance coverage" (see Steele v Rose, 309 AD2d 1242; Marshall v Pappas, 143 AD2d 979). The petitioner charted its own procedural course, as parties are free to do, as long as it does not conflict with public policy (see J & A Vending v J.A.M. Vending, 303 AD2d 370; Braithwaite v Braithwaite, 299 AD2d 383) by affirmatively alleging in its petition that the [*2]vehicle owned by its insured was stolen at the time of the accident, and by submitting an affidavit from its insured as proof of this claim. Moreover, the petitioner raised no objection to the admission of evidence at the hearing on the issue of permissive use.

Vehicle and Traffic Law § 388(1) provides that the owner of a motor vehicle shall be liable for the negligence of one who operates the vehicle with the owner's express or implied consent (see Sargeant v Village Bindery, 296 AD2d 395; Matter of Allstate Indem. Co. v Nelson, 285 AD2d 545; Headley v Tessler, 267 AD2d 428). This statute creates a presumption that the driver was using the vehicle with the owner's express or implied permission (see Murdza v Zimmerman, 99 NY2d 375; Forte v New York City Tr. Auth., 2 AD3d 489), which only may be rebutted by substantial evidence sufficient to show that the vehicle was not operated with the owner's consent (see Murzda v Zimmerman, supra; Sargeant v Village Bindery, supra; Matter of Allstate Indem. Co. v Nelson, supra; Headley v Tessler, supra). Although evidence that a vehicle was stolen at the time of the accident will rebut the presumption of permissive use (see Adamson v Evans, 283 AD2d 527), the affidavit of the petitioner's insured was insufficient to establish that the vehicle was stolen (see Minaya v Horner, 279 AD2d 333). Moreover, although the affidavit indicated that the petitioner's insured did not give anyone permission to operate his vehicle at the time of the accident, it failed to address whether any person had implied consent to do so. Thus, the J.H.O. correctly determined that the vehicle was not stolen or being used without permission at the time of the accident.

Matter of Allstate Insurance Company v. Calderon

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, the appeal is from an order of the Supreme Court, Suffolk County (Jones, J.), dated June 23, 2003, which granted the petition.

ORDERED that the order is reversed, on the law, with costs, the petition is denied, and the proceeding is dismissed.

We reject the petitioner's contention that it was not required to commence this proceeding to stay arbitration of the appellant's uninsured motorist claim within the 20-day limitation period set forth in CPLR 7503(c). "[T]he issue of whether or not the [appellant's] injuries occurred as the result of an intentional act relates to whether certain conditions of coverage have been satisfied and not whether the parties have agreed to arbitrate" (Matter of Allstate Ins. Co. v Rosado, 271 AD2d 527, 528). To the extent that Matter of United Community Ins. Co. v Gabriel (229 AD2d 444), holds otherwise, it should not be followed.

Allstate's failure to seek a stay within 20 days of service of the demand for arbitration also precluded it from asserting in court that the uninsured motorist claim is barred by the statute of limitations (see CPLR 7503[c]). Accordingly, the petition for a stay of arbitration should have been denied as time-barred and the proceeding should have been dismissed. [*2]

 

Jordan Construction Products Corporation v, Travelers Indemnity Company of America

In an action, inter alia, for a judgment declaring that the defendant Travelers Indemnity Company of America is obligated to defend and indemnify the plaintiff in an underlying action entitled Walls v Turner Construction Company, pending in the Supreme Court, New York County, under Index No. 103185/01, the defendant Travelers Indemnity Company of America appeals from so much of an order and judgment (one paper) of the Supreme Court, Suffolk County (Costello, J.), entered December 22, 2003, as, upon a decision of the same court dated August 12, 2003, denied that branch of its cross motion which was for summary judgment declaring that it is not obligated to defend or indemnify the plaintiff in the underlying action.

ORDERED that on the court's own motion, the notice of appeal from the decision is deemed a premature notice of appeal from the order and judgment (see CPLR 5520[c]); and it is further,

ORDERED that the order and judgment is affirmed insofar as appealed from, with one bill of costs to the respondent.

On August 21, 1999, Timothy Walls, an employee of Diamond Storefronts, Inc. (hereinafter Diamond), was injured when he fell from a second-story ledge while erecting a scaffold during a school renovation project. Turner Construction Company (hereinafter Turner) was the construction manager on the project. The plaintiff, Jordan Construction Products Corporation (hereinafter Jordan), was performing window replacement work at the school pursuant to a prime [*2]contract with the Massapequa Union Free School District, and Diamond was hired by Jordan as a subcontractor to install curtain walls. Although Jordan was immediately aware of the accident, it did not notify the defendant Travelers Indemnity Company of America (hereinafter Travelers), its liability insurer, until March 21, 2001, following its receipt of notice that Walls and his wife commenced an action in the Supreme Court, New York County, against it and Turner to recover damages, inter alia, for personal injuries, alleging common-law negligence and Labor Law causes of action.

Jordan commenced this action seeking, inter alia, a judgment declaring that Travelers is obligated to defend and indemnify it. The Supreme Court denied Jordan's motion for summary judgment and Travelers' cross-motion for summary judgment on the issue of whether Travelers properly disclaimed coverage, finding questions of fact as to the reasonableness of Jordan's delay in giving Travelers notice of the occurrence. Travelers appealed and Jordan cross-appealed. This court granted Jordan's application to withdraw its cross appeal. We affirm insofar as appealed from.

Travelers established its prima facie entitlement to judgment as a matter of law by demonstrating that Jordan failed to provide it with notice of the occurrence until 19 months after the accident (see White v City of New York, 81 NY2d 955, 957; Unigard Sec. Ins. Co. v North Riv. Ins. Co., 79 NY2d 576, 581). After construing all reasonable inferences in favor of the insured plaintiff (see Genova v Regal Mar. Indus., 309 AD2d 733, 734), we find that Jordan raised a triable issue of fact as to whether its delay in giving notice of the occurrence to Travelers was reasonably founded upon a good faith belief in its non-liability and upon the injured party's purported representation that he did not intend to sue Jordan (see Argentina v Otsega Mut. Fire Ins. Co., 86 NY2d 748, 750; D'Aloia v Travelers Ins. Co., 85 NY2d 825, 826; Merchants Mut. Ins. Co. v Hoffman, 56 NY2d 799, 801; Kaliandasani v Otsego Mut. Fire Ins. Co., 256 AD2d 310, 311; Sphere Drake Ins. Co. v Aspen Tree Specialists, 234 AD2d 358).

Marquez v. Oballe


            In an action to recover damages for personal injuries, etc., the plaintiffs appeal from an order of the Supreme Court, Queens County (Price, J.), dated January 30, 2004, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff Rosa Marquez 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.

Contrary to the determination of the Supreme Court, the defendant failed to make a prima facie showing that the plaintiff Rosa Marquez (hereinafter the plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). A close comparison of the affirmations of the defendant's examining physicians reveal that the defendant's orthopedist found restrictions in the plaintiff's cervical and lumbar ranges of motion. Accordingly, the Supreme Court erred in granting the defendant's motion for summary judgment. [*2]

Under these circumstances, where the defendant failed to meet his initial burden of establishing a prima facie case, it is unnecessary "to consider whether the plaintiffs' papers in opposition to the defendants' motion were sufficient to raise a triable issue of fact" (Coscia v 938 Trading Corp., 283 AD2d 538; see Chaplin v Taylor, 273 AD2d 188; Mariaca-Olmos v Mizrhy, 226 AD2d 437).
KRAUSMAN, J.P., LUCIANO, MASTRO and LIFSON, JJ., concur.

ENTER:

 

 

Levenherz v.  Povinelli



Chorpenning, Good, Carlet & Garrison, New York, N.Y.
(Michael J. Zaretsky of counsel; Robert S. Getman on the brief), for
appellant.
Montalbano, Condon & Frank, P.C., New City, N.Y. (Richard
H. Sarajian and Michael J. Weiner
of counsel), for respondents.

In an action, inter alia, to rescind an annuity contract and to recover damages for fraud, the defendant Keyport Benefit Life Insurance Company appeals from an order of the Supreme Court, Westchester County (Barone, J.), dated October 31, 2003, which denied its motion pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint insofar as asserted against it.

ORDERED that the order is affirmed, with costs.

The plaintiffs' causes of action against the defendant Keyport Benefit Life Insurance Company (hereinafter Keyport) allege that Keyport failed to "maintain and enforce a reasonably adequate system of internal supervision and control over" the codefendant Povinelli and that fraudulent misrepresentations were made by Povinelli to induce the plaintiff Miriam Levenherz to purchase the annuity contract from Keyport. Keyport moved to dismiss those causes of action pursuant to CPLR 3211(a)(1) based upon "documentary evidence" consisting of the annuity contract, and CPLR 3211(a)(7) based upon the plaintiffs' failure to state a cause of action against it.

The plaintiff Miriam Levenherz submitted an affidavit in opposition claiming that she was led to believe that the codefendant Povinelli was acting as an agent for Keyport by its brochure which she annexed as an exhibit. The brochure from Keyport stated that "we form [*2]enlightened partnerships with our distributors, affiliates and suppliers." She further alleged that Povinelli made misrepresentations to induce her to enter into the annuity contract and she was not provided with a copy of the contract until over a year after it was executed.

The plaintiffs stated causes of action against Keyport for which relief may be granted (see CPC Intl. v McKesson Corp., 70 NY2d 268; Brenkus v Metropolitan Life Ins. Co., 309 AD2d 1260). Accordingly, Keyport's motion to dismiss was properly denied.
GOLDSTEIN, J.P., LUCIANO, RIVERA and FISHER, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Meely v. 4 G's Truck Renting Co., Inc

 

APPEAL by the plaintiffs, in an action to recover damages for personal injuries, as limited by their brief, from so much of an order of the Supreme Court (Leon Ruchelsman, J.), dated February 25, 2003, and entered in Kings County, as granted the motion of the defendants 4 G's Truck Renting Co., Inc., and Samuel Clarke for summary judgment dismissing the complaint insofar as asserted against them on the ground that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d).


Weiss & Rosenbloom, P.C., New York, N.Y. (Barry D. Weiss of
counsel), for appellants.
Morris, Duffy, Alonso & Faley, LLP, New York, N.Y. (Anna
J. Ervolina and Andrea M. Alonso of
counsel), for respondents.

CRANE, J.The defendants 4 G's Truck Renting Co., Inc., and Samuel Clarke (hereinafter the respondents) moved for summary judgment dismissing the complaint insofar as asserted against them on the ground that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d). The issue presented is whether the respondents satisfied their prima facie burden on the motion. The respondents submitted the plaintiffs' unaffirmed magnetic resonance imaging (hereinafter MRI) reports which stated that the plaintiffs had bulging or herniated discs. They added the affirmed reports from their own medical experts which expressed disagreement with the plaintiffs' MRI reports and set forth the opinion that the plaintiffs had no limitations in their ranges of motion nor suffered from any other disabilities. We hold that this evidence was sufficient to establish the respondents' prima facie entitlement to judgment as a matter [*2]of law, and to the extent that DeVeglio v Oliveri (277 AD2d 345) may be read to the contrary, it should no longer be followed.

This is an action to recover damages for personal injuries arising out of a multiple- vehicle accident occurring on December 16, 1999. The plaintiff Melvin Frasier was a passenger in a vehicle operated by the plaintiff Mark Meely. While stopped in traffic, their vehicle was struck in the rear by a vehicle owned and operated by the defendant Jin Yu Hua, which, in turn, had been struck in the rear by a vehicle owned and operated by the defendant Michael Benimowitz. The Benimowitz vehicle had been struck in the rear by a vehicle owned by the respondent 4 G's Truck Renting Co., Inc., and operated by the respondent Samuel Clarke.

Meely and Frasier commenced this action on April 19, 2000. Meely alleged in his bill of particulars, inter alia, that as a result of the accident he sustained herniated discs at L4-5 and L5-S1, which indented the thecal sac, and bulging discs at L2-3 and L3-4. Frasier alleged in his bill of particulars, inter alia, that he sustained a herniated disc at C3-4, which indented the thecal sac, a bulging disc at C4-5, and herniated discs at C5-6 and C6-7.

The respondents moved for summary judgment dismissing the complaint insofar as asserted against them on the ground that neither Meely nor Frasier sustained a serious injury within the meaning of Insurance Law § 5102(d).

In support of their motion with respect to the plaintiff Mark Meely, the respondents submitted, inter alia, an affirmed report from neurologist Dr. Paul Slotwiner, the unaffirmed report of an MRI of Meely's lumbar spine, and an affirmed report of radiologist Dr. Arthur Fruauff whom the defendants hired to review the MRI of Meely's lumbar spine.

Dr. Slotwiner examined Meely on behalf of the respondents on March 21, 2002. He reported that he reviewed, among other things, the unaffirmed report of the MRI of Meely's lumbar spine which revealed the herniated and bulging discs. Dr. Slotwiner found that Meely suffered no limitation in his range of motion and no neurologic abnormalities or sequelae as a result of the accident of December 16, 1999.

The unaffirmed report of the MRI of Meely's lumbar spine dated April 4, 2000, stated that Meely had bulging discs at L2-3 and L3-4, a herniated disc at L4-5 indenting the thecal sac, and a central herniated disc at L5-S1 indenting the thecal sac.

Dr. Fruauff reviewed the MRI of Meely's lumbar spine. In his affirmed report dated April 17, 2002, Dr. Fruauff stated that he found no evidence of disc herniation and he concluded that Meely suffered from degenerative disc disease. He also opined that Meely suffered from diffusely bulging discs which were secondary to the degenerative disc disease. Dr. Fruauff stated that there were no findings on the MRI which were causally related to the motor vehicle accident.

In support of their motion with respect to the plaintiff Melvin Frasier, the respondents submitted, inter alia, an affirmed report from Dr. Slotwiner, the unaffirmed report of the MRI of Frasier's cervical spine, and an affirmed report of Dr. Fruauff whom the respondents hired to review the MRI of Frasier's cervical spine.

Dr. Slotwiner examined Frasier on behalf of the respondents on March 21, 2002. He reported that he reviewed, among other things, the unaffirmed report of the MRI of Frasier's cervical spine which diagnosed the herniated and bulging discs. Dr. Slotwiner found no limitation in Frasier's range of motion. He concluded that there were no objective abnormalities on neurologic examination, and no objective findings indicating any neurologic sequelae of the motor vehicle accident.

The unaffirmed report of the MRI of Frasier's cervical spine dated April 4, 2000 stated that Frasier had a herniated disc at C3-4, indenting the thecal sac, a bulging disc at C4-5, and herniated discs at C5-6 and C6-7. [*3]

Dr. Fruauff reviewed the MRI of Frasier's cervical spine. In his affirmed report dated April 17, 2002, Dr. Fruauff stated that he found no evidence of disc herniation, and he concluded that Frasier suffered from degenerative disc disease of the cervical spine. Dr. Fruauff opined that there were no findings on the MRI which were causally related to the motor vehicle accident of December 16, 1999.

In opposition to the motion, the plaintiffs argued that the MRI reports submitted by the respondents which reported that they each suffered from herniated or bulging discs were sufficient to deprive the respondents of summary judgment because those reports established that each plaintiff sustained a serious injury. Relying on this court's holding in DeVeglio v Oliveri (277 AD2d 345), the plaintiffs further argued that the contradictory evidence offered by the respondents, consisting of Dr. Fruauff's interpretations of the MRIs which disagreed with the interpretations of the MRIs set forth in the unaffirmed reports of the plaintiffs' radiologist, raised an issue of fact requiring denial of the motion. The plaintiffs submitted no medical evidence in opposition to the motion.

The Supreme Court granted the motion for summary judgment dismissing the complaint insofar as asserted against the respondents. We affirm.

A defendant may submit unsworn medical reports and records of an injured plaintiff's physicians in support of a motion for summary judgment (see Mantila v Luca, 298 AD2d 505; Itkin v Devlin, 286 AD2d 477; Pagano v Kingsbury, 182 AD2d 268, 271). Furthermore, a defendant who submits admissible proof that a plaintiff has a full range of motion and that he or she suffers from no disabilities has established a prima facie case that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), despite the existence of an MRI report which shows herniated or bulging discs (see e.g. Kearse v New York City Tr. Auth., AD3d [decided herewith]; Diaz v Turner, 306 AD2d 241, 242; Figueroa v Westbury Trans, 304 AD2d 614; Fauk v Jenkins, 301 AD2d 564, 565; Bernabel v Perullo, 300 AD2d 330, 331; Malpica v Lavergne, 294 AD2d 340; Espinal v Galicia, 290 AD2d 528; Duldulao v City of New York, 284 AD2d 296, 297; see also Brown v Achy, 9 AD3d 30, 31). This holding naturally follows from the rule that the mere existence of a bulging or herniated disc is not evidence of a serious injury in the absence of objective evidence of the extent of the alleged physical limitations resulting from the disc injury and its duration (see e.g. Kearse v New York City Tr. Auth., supra; Diaz v Turner, supra; Monette v Keller, 281 AD2d 523; Pierre v Nanton, 279 AD2d 621; Guzman v Michael Mgt., 266 AD2d 508, 509).

In the case at bar, the evidence submitted by the respondents was sufficient to establish that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d). The plaintiffs' unaffirmed reports of the MRIs which indicated that they each had bulging and herniated discs, could not alone raise a question of fact as to whether either plaintiff sustained a serious injury in the absence of objective evidence of the extent of alleged physical limitations resulting from the disc injury (see Kearse v New York City Tr. Auth., supra; Bernabel v Perullo, supra). The respondents' radiologist concluded in his affirmed reports that, contrary to the findings stated in the plaintiffs' unaffirmed reports, there was no evidence that either plaintiff suffered from disc bulges or herniations as a result of the accident. The affirmed reports of the respondents' examining neurologist found that the plaintiffs suffered no limitations in their ranges of motion and suffered no neurologic abnormalities or sequelae as a result of the motor vehicle accident. Taken together these affirmed reports established the absence of objective evidence of the extent of physical limitations resulting from the alleged disc injuries.

Thus, rather than constituting conflicting evidence, the respondents' evidence in fact was sufficient to satisfy their burden of demonstrating their prima facie entitlement to judgment as a matter of law. This evidence proved, prima facie, that neither plaintiff sustained a serious injury [*4]within the meaning of Insurance Law § 5102(d), despite the existence of MRIs which show herniated or bulging discs (see Kearse v New York City Tr. Auth., supra; Diaz v Turner, supra; Figueroa v Westbury Trans, supra; Fauk v Jenkins, supra; Bernabel v Perullo, supra; Malpica v Lavergne, supra; Espinal v Galicia, supra; Duldulao v City of New York, supra; see also Brown v Achy, supra).

In DeVeglio v Oliveri (277 AD2d 345), evidence was submitted that was substantially similar to what was submitted in the case at bar. The contrary result reached in DeVeglio does not comport with the case law of this court. The DeVeglio decision implies that the mere existence of a herniated disc is sufficient to establish that the injured plaintiff may have sustained a serious injury (cf. Kearse v New York City Tr. Auth., supra; Guzman v Michael Mgt., supra). In the absence of objective corroboration that the herniation resulted in physical limitations, the mere existence of a herniated disc is insufficient to establish, prima facie, a serious physical injury (see Diaz v Turner, supra; Monette v Keller, supra; Pierre v Nanton, supra; Guzman v Michael Mgt., supra). Therefore, to the extent that DeVeglio v Oliveri (supra) may be read to the contrary, it should no longer be followed (cf. Coscia v 938 Trading Corp., 283 AD2d 538).
In the case at bar, the plaintiffs did not submit any medical evidence in opposition to the motion and, therefore, they failed to raise a triable issue of fact.

Accordingly, the Supreme Court properly granted the motion for summary judgment dismissing the complaint insofar as asserted against the respondents, and the order is affirmed insofar as appealed from, with costs.
S. MILLER, J.P., RITTER, and RIVERA, JJ., concur.

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

ENTER:

James Edward Pelzer

Clerk of the Court

Willis v New York City Transit Authority






Wallace D. Gossett (Steve S. Efron, New York, N.Y., of counsel),
for appellants.

In an action to recover damages for personal injuries, etc., the defendants appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Jacobson, J.), dated April 9, 2003, as denied that branch of their motion which was, in effect, for summary judgment dismissing the complaint on the ground that none of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is modified, on the law, by deleting the provision thereof denying that branch of the motion which was, in effect, for summary judgment dismissing the complaint insofar as asserted by the plaintiff Edward Singleton and substituting therefor a provision granting that branch of the motion; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements, and the complaint is dismissed insofar as asserted by that plaintiff.

The defendants relied upon the medical records of the plaintiffs Sakina Willis and Emma Washington and medical reports of their physicians in support of those branches of their motion which were, in effect, for summary judgment dismissing the complaint insofar as asserted by those plaintiffs. Those records failed to establish, as a matter of law, that neither Willis nor Washington sustained a serious injury within the meaning of Insurance Law § 5102(d). Accordingly, we need not consider the sufficiency of the plaintiffs' opposition to those branches of the motion (see Mangum v Trabulsi, 294 AD2d 472, 473). Thus, the Supreme Court properly denied those branches of the defendants' motion (see Taccetta v Scotto, 287 AD2d 707, 709).

The affirmed medical report submitted by the defendants in support of that branch [*2]of their motion which was, in effect, for summary judgment dismissing the complaint insofar as asserted by the plaintiff Edward Singleton established the defendants' prima facie entitlement to summary judgment on that branch of their motion (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955; Grant v Heli Trucker, 294 AD2d 538, 539). The defendants' examining physician examined Singleton approximately 1 1/2 years after the accident. He reported his findings with respect to the various ranges of motion of Singleton's cervical and lumbar spines and shoulders, and found no tenderness or muscle spasm. Additionally, the neurological examination was normal, and other tests performed showed no abnormalities. The examining physician opined that Singleton had no disability. In opposition, the medical evidence submitted by the plaintiffs failed to raise a triable issue of fact (see Carroll v Jennings, 264 AD2d 494, 495; Kauderer v Penta, 261 AD2d 365, 366).
H. MILLER, J.P., SCHMIDT, RITTER, CRANE and SKELOS, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Walker v. LaJara

 

 

Defendant Vinnette A. Powell appeals from an order of the Civil Court of the City of New York, Bronx County, entered February 26, 2003 (Arthur F. Engoron, J.) which denied her motion for summary judgment dismissing the complaint.

 

PER CURIAM:

Order entered February 26, 2003 (Arthur F. Engoron, J.) affirmed, with $10 costs.

The drastic remedy of summary judgment is unwarranted in this negligence action arising out of a two- car intersection collision. The record so far developed raises issues of fact [*2]concerning the events surrounding the accident, including whether defendant Powell used reasonable care in entering the intersection and kept a proper lookout (see Hernandez v Bestway Beer & Soda Distrib., 301 AD2d 381 [2003]; cf. Jenkins v Alexander, 9 AD3d 286 [2004]), particularly considering the presence of a construction "barricade" that partially blocked her view of the roadway.

The affirmation of plaintiff's treating doctor, which set forth specific range of motion findings with respect to plaintiff's back and neck based on tests conducted within three weeks of the automobile accident and opined that plaintiff sustained permanent injuries as a result of the accident, was sufficient to raise a factual issue as to whether she sustained a serious injury as defined in Insurance Law § 5102(d) (see Toure v Avis Rent A Car Systems, 98 NY2d 345 [2002]; Woods v Tomayo, 5 AD3d 309 [2004]; Benson v Lighting Gas Co., 305 AD2d 234 [2003]).

This constitutes the decision and order of the court.
Decision Date: February 03, 2005

Cosser v. One Beacon Insurance Group

Appeal from a judgment (denominated order and judgment) of the Supreme Court, Onondaga County (Charles T. Major, J.), entered May 7, 2004 in a declaratory judgment action. The judgment denied plaintiffs' motion for summary judgment and granted defendant's cross motion for summary judgment.


SUGARMAN LAW FIRM, LLP, SYRACUSE (TIMOTHY J. PERRY OF COUNSEL), FOR PLAINTIFFS-APPELLANTS.
SMITH, SOVIK, KENDRICK & SUGNET, P.C., SYRACUSE (KAREN M. RICHARDS OF COUNSEL), FOR DEFENDANT-RESPONDENT. It is hereby ORDERED that the judgment so appealed from be and the same hereby is unanimously reversed on the law without costs, the motion is granted, judgment is granted in favor of plaintiffs as follows: It is ADJUDGED AND DECLARED that defendant has a duty to defend plaintiffs in the federal action, L. & J.G. Stickley, Inc. v Ronald C. Cosser, doing business as The Craftsman, and Melissa Cosser, and contribute to defense costs incurred to date in that action


and the cross motion is denied.

Memorandum: Plaintiffs commenced this action seeking judgment declaring that, pursuant to the terms of two commercial general liability insurance policies issued by defendant to plaintiffs, defendant has a duty to defend and indemnify them in an action commenced against them in federal court by L. & J.G. Stickley, Inc. (Stickley). In the federal action, Stickley alleged causes of action for false advertising and false designation of origin under the Lanham Act (15 USC § 1125 [a]), false advertising under General Business Law § 350, deceptive acts and practices under General Business Law § 349, unfair competition, and misappropriation of trade secrets. According to the complaint in the federal action, the plaintiffs herein formed a partnership with a former Stickley employee who had access to an exclusive Stickley formula for furniture polish, and plaintiffs thereafter manufactured and marketed the formula themselves. In its answer herein, defendant asserted a counterclaim seeking judgment declaring that there is no [*2]coverage under the policies at issue and that defendant therefore has no duty to defend plaintiffs in the federal action, and defendant in addition sought costs and attorney's fees incurred in defending this action. Plaintiffs thereafter moved for partial summary judgment seeking a declaration that defendant has a duty to defend them in the federal action and must contribute to their defense costs incurred to date, and defendant cross-moved for summary judgment on its counterclaim seeking a declaration that no coverage exists under the policies at issue. Supreme Court granted defendant's cross motion, declaring that there is no coverage under the policies at issue. We reverse.

In granting defendant's cross motion, the court agreed with defendant that the causes of action in the federal complaint did not trigger possible coverage for advertising injury. That was error. We note at the outset that the court erred in agreeing with defendant that the complaint in the federal action fails to allege an advertising injury covered by the terms of the policies at issue. The complaint therein alleges the misuse or infringement of Stickley's trademark (see Allou Health & Beauty Care v Aetna Cas. & Sur. Co., 269 AD2d 478, 479-480) or "trade dress" within the terms of the policies at issue (see American Mfrs. Mut. Ins. Co. v Quality King Distribs., 287 AD2d 527, 529; see also Maritime Fish Prods. v World-Wide Fish Prods., 100 AD2d 81, 86-87, appeal dismissed 63 NY2d 675).

Defendant's further contention that the claims in the underlying action are excluded from coverage because plaintiffs' alleged wrongful conduct was knowing and intentional also is without merit (see PG Ins. Co. of N.Y. v S.A. Day Mfg. Co., 251 AD2d 1065). As in this case, PG Ins. Co. involved causes of action in a federal complaint for false advertising and deceptive business practices in violation of the Lanham Act and General Business Law §§ 349 and 350, as well as the identical liability form at issue in this case. Here, as in PG Ins. Co.,we conclude that defendant has a duty to defend plaintiffs in the underlying federal action because there is "a 'reasonable possibility that the insured[s] may be held liable for some act or omission covered by the policy'" (Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 70). Plaintiffs "may be liable to [Stickley] pursuant to the Lanham Act and the General Business Law in the underlying action without a showing of intentional or knowing conduct on [their] part. Whether [plaintiffs] engaged in intentional or knowing conduct is relevant on the issue of damages only and not liability" (PG Ins. Co. of N.Y., 251 AD2d at 1066; see Massachusetts Bay Ins. Co. v Penny Preville, Inc., 1996 WL 389266, *10-11 [SD NY, July 10, 1996]; see also Simply Lite Food Corp. v Aetna Cas. & Sur. Co. of Am., 245 AD2d 500; cf. Atlantic Mut. Ins. Co. v Terk Tech. Corp., 309 AD2d 22, 32). Further, it is well established that an insurer must provide a defense where, as here, "it has actual knowledge of facts establishing a reasonable possibility of coverage" (Fitzpatrick, 78 NY2d at 67). Thus, because at least some of the causes of action in the complaint in the federal action "arguably arise from covered events, [defendant] is required to defend the entire action" (Frontier Insulation Contrs. v Merchants Mut. Ins. Co.,91 NY2d 169, 175; see Town of Massena v Healthcare Underwriters Mut. Ins. Co., 98 NY2d 435, 443-444).

Defendant has also failed to establish as a matter of law that the events giving rise to the complaint in the federal action were outside of the policy periods or that "the allegations of the complaint cast the pleading[] wholly within [the] exclusion" for an advertising injury where the first publication of the advertisement occurred before the commencement of the policy period (Frontier Insulation Contrs.,91 NY2d at 175). Finally, the court properly rejected defendant's contention that plaintiffs' failure to notify defendant of a patent infringement suit not covered by the policies at issue was a condition precedent to defendant's obligation to provide a defense for plaintiffs in the federal action (see generally Darby & Darby v VSI Intl., 95 NY2d 308, 312-314; A. Meyers & Sons Corp. v Zurich Am. Ins. Group, 74 NY2d 298, 303). We therefore reverse the judgment, grant the motion, grant judgment declaring that defendant has a duty to defend plaintiffs in the federal action and contribute to defense costs incurred to date in that action and [*3]deny the cross motion.
Entered: February 4, 2005
JoAnn M. Wahl
Clerk of the Court

Collins v. Blunt




Appeal from an order of the Supreme Court, Erie County (Nelson H. Cosgrove, J.), entered March 1, 2004. The order granted plaintiffs' motion for partial summary judgment determining that plaintiffs are not "covered persons" within the meaning of Insurance Law § 5102 (j) and denied in part defendants' cross motion for summary judgment.


LAW OFFICES OF MARY A. BJORK, BUFFALO (JOSEPH G. GOERGEN OF COUNSEL), FOR DEFENDANTS-APPELLANTS.
JOHN FEROLETO-ATTORNEYS AT LAW, BUFFALO (DAVID W. POLAK OF COUNSEL), FOR PLAINTIFFS-RESPONDENTS.


It is hereby ORDERED that the order so appealed from be and the same hereby is unanimously modified on the law by denying the motion, granting the cross motion in its entirety and dismissing the complaint of plaintiff Linda Collins and as modified the order is affirmed without costs.

Memorandum: Plaintiffs each commenced an action seeking damages for injuries they sustained when a vehicle owned by defendant Brenda J. Blunt and driven by defendant Cardinale D. Green struck the window of the room in which they were seated. Plaintiff Mark Loatman was visiting the apartment of plaintiff Linda Collins at the time of the collision, and both plaintiffs sustained injuries when the window shattered, causing glass, bricks and other debris to be strewn about the room. After consolidation of the two actions, plaintiffs moved for partial summary judgment seeking a determination that they are not "covered persons" within the meaning of Insurance Law § 5102 (j) and therefore are not required to meet the serious injury threshold. Defendants cross-moved for summary judgment seeking a determination that plaintiffs are "covered persons" within the meaning of that section and seeking summary judgment dismissing the complaint of Collins on the ground that she did not sustain a serious injury. Defendants further sought to compel Loatman to produce various records and authorizations. Supreme Court granted plaintiffs' motion and denied defendants' cross motion except to the extent that it sought discovery. We modify the order by denying plaintiffs' motion and by granting defendants' cross motion in its entirety and dismissing the complaint of Collins.

Pursuant to Insurance Law § 5104 (a), "in any action by or on behalf of a covered person against another covered person for personal injuries arising out of negligence in the use or operation of a motor vehicle in this state, there shall be no right of recovery for non-economic [*2]loss, except in the case of a serious injury ...." Insurance Law § 5102 (j) defines a covered person in relevant part as a pedestrian injured by a motor vehicle, or "any other person entitled to first party benefits." Pursuant to Insurance Law § 5103 (a) (1), those persons entitled to first party benefits include "[p]ersons, other than occupants of another motor vehicle ..., for loss arising out of the use or operation in this state of such motor vehicle."

Here, plaintiffs were injured as a result of the use and operation of a motor vehicle (see generally McConnell v Fireman's Fund Am. Ins. Co., 49 AD2d 676, 677), thus entitling them to first party benefits pursuant to Insurance Law § 5102 (j). We therefore conclude that plaintiffs are covered persons and pursuant to Insurance Law § 5104 (a) may recover only if they establish that they sustained a serious injury.

We further conclude that defendants established as a matter of law that Collins did not sustain a serious injury. Collins asserted in her bill of particulars that she sustained a serious injury within the meaning of the 90/180 category of serious injury. In support of that part of their cross motion seeking summary judgment dismissing the complaint of Collins, defendants submitted the deposition testimony of Collins in which she testified that she has a "dent" in her cheek that has improved over the years, that she experienced pain in her neck that did not require treatment, and that she had glass in one of her eyes and in her hair following the accident. Collins could not recall how the pain limited her ability to move her neck. We conclude that defendants thereby met their initial burden, and Collins offered no objective evidence in opposition to raise an issue of fact whether she sustained "a medically determined injury or impairment of a non-permanent nature" that prevented her from performing substantially all of the material acts that constitute her usual and customary daily activities for not less than 90 days during the 180 days immediately following the accident (Insurance Law § 5102 [d]; see generally Nitti v Clerrico,98 NY2d 345, 357-358).
Entered: February 4, 2005
JoAnn M. Wahl
Clerk of the

Callea v. Hartford Insurance Company



Appeal and cross appeal from a judgment (denominated order) of the Supreme Court, Erie County (Donna M. Siwek, J.), entered February 5, 2004. The judgment denied plaintiff's motion for summary judgment, denied the cross motion of defendant Michael Boyle, doing business as Michael Boyle Insurance Agency, for summary judgment, granted the cross motion of defendants Hartford Insurance Company of Connecticut and Twin City Fire Insurance Company for summary judgment and declared that there was no insurance policy in effect between plaintiff and defendant Twin City Fire Insurance Company at the time of the accident on October 15, 1999.


LUSTIG & BROWN, LLP, BUFFALO (JOHN R. CONDREN OF COUNSEL), FOR DEFENDANT-APPELLANT-RESPONDENT.
LIPSITZ, GREEN, FAHRINGER, ROLL, SALISBURY & CAMBRIA LLP, BUFFALO (JOHN A. COLLINS OF COUNSEL), FOR PLAINTIFF-RESPONDENT-APPELLANT.
SMITH, MURPHY & SCHOEPPERLE, LLP, BUFFALO (FRANK G. GODSON OF COUNSEL), FOR DEFENDANTS-RESPONDENTS.


It is hereby ORDERED that the judgment so appealed from be and the same hereby is unanimously modified on the law by granting that part of the motion seeking summary judgment on negligence against defendant Michael Boyle, doing business as Michael Boyle Insurance Agency, and as modified the judgment is affirmed without costs.

Memorandum: Plaintiff commenced this action seeking, inter alia, a judgment declaring that she is entitled to defense and indemnification from defendants under her policy of homeowner's insurance. It is not disputed that plaintiff purchased a homeowner's insurance policy through her insurance agent, defendant Michael Boyle, doing business as Michael Boyle Insurance Agency (Boyle), when Boyle was an insurance agent for Nationwide Mutual Insurance Company (Nationwide). In 1999, Boyle became affiliated with Consolidated Insurance Agency (Consolidated), an independent insurance agent with binding authority on behalf of defendants [*2]Hartford Insurance Company of Connecticut and Twin City Fire Insurance Company (Hartford). Upon Boyle's affiliation with Consolidated, Hartford agreed to roll over any of Boyle's existing Nationwide policies to Hartford policies. Plaintiff's Nationwide policy expired October 10, 1999, and plaintiff agreed to replace it with a Hartford policy, which was to be effective October 10, 1999. Anne Boyle, an employee of Boyle, however, mistakenly wrote that the effective date of the Hartford policy was to be October 19, 1999 when the requisite information was sent to Hartford for a replacement policy. On October 15, 1999, an accident occurred on plaintiff's property. Hartford disclaimed coverage on the ground that its policy with plaintiff was not in force on the date of the loss.

Supreme Court properly granted the cross motion of Hartford for summary judgment declaring that there was no policy in effect between plaintiff and Hartford. Hartford established that it provided coverage as of the date requested by Boyle, and plaintiff failed to establish her right to reformation of the insurance policy by "clear, positive and convincing evidence" of a mutual mistake (Gaylords Natl. Corp. v Arlen Realty & Dev. Corp., 112 AD2d 93, 96 [emphasis deleted]). Nor is there any proof of an express or implied agency agreement between Boyle and Hartford such that the mistake admitted by Boyle's employee could be attributed to Hartford.

The court erred, however, in failing to grant plaintiff's motion to the extent that plaintiff sought summary judgment on the issue of negligence against Boyle. In her affidavit, Anne Boyle admitted that a mistake was made in transcribing the effective date of the policy, leaving plaintiff without insurance coverage at the time of the accident. That admission establishes negligence on the part of Boyle, entitling plaintiff to summary judgment on that issue. We therefore modify the judgment by granting that part of plaintiff's motion seeking summary judgment on the issue of negligence against Boyle.

 

McGinley v. Odyssey Re (London), formerly known as Sphere Drake Insurance Company 



Longo & D'Apice, Esqs., Brooklyn (Mark A. Longo of counsel),
for appellant.
Landman Corsi Ballaine & Ford P.C., New York (Louis G.
Corsi of counsel), for respondents.

Orders, Supreme Court, New York County (Rosalyn Richter, J.), entered February 25, 2004 and March 4, 2004, respectively, which, inter alia, collectively granted the motion of defendants-respondents for summary judgment declaring that defendant insurer Odyssey Re is not obligated to provide coverage or payment for the judgment entered in the underlying personal injury action, unanimously affirmed, without costs.

Inasmuch as plaintiff's claims in the underlying personal injury action all arose by reason of the assault and battery committed against him on the premises of defendants' insured (see Mount Vernon Fire Ins. Co. v Creative Hous. Ltd., 88 NY2d 347, 352 [1996]), and the policy issued by defendants to that insured contained an exclusion for assault and/or battery claims, it is clear that plaintiff's claims do not fall within the subject insured's coverage. Contrary to plaintiff's contention, the policy's liquor liability endorsement, which does not mention the assault and battery exclusion, does not purport to contradict or alter the exclusion's terms (see County of Columbia v Cont. Ins. Co., 83 NY2d 618, 628 [1994]). Nor is there merit to plaintiff's contention that defendants' disclaimer based upon the assault and battery exclusion, issued some 39 days subsequent to the insured's notice of claim, was untimely. Defendants have adequately explained the delay, which was occasioned by their diligent efforts to obtain the information and independent legal advice necessary to determine whether a disclaimer predicated upon the assault and battery exclusion would be proper (see Structure Tone, Inc. v Burgess Steel Prods. Corp., [*2]249 AD2d 144, 145 [1998]; DeSantis Brothers v Allstate Ins. Co., 244 AD2d 183, 184 [1997], lv denied 91 NY2d 808 [1998]).

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

ENTERED: FEBRUARY 8, 2005

Christensen v. Weeks


 

Motion by the third-party defendant-appellant, New York Mutual Underwriters, for leave to reargue an appeal from an order of the Supreme Court, Westchester County, entered December 10, 2002, which was determined by decision and order of this court dated March 15, 2004.

Upon papers filed in support of the motion and the papers filed in opposition thereto, it is

ORDERED that the motion is granted; and it is further,

ORDERED that, upon reargument, the decision and order of this court dated March 15, 2004, in the above-entitled actions, is recalled and vacated, and the following decision and order is substituted therefor: [*2]

In an action to recover for damages for trespass and property damage and a third-party action for a judgment declaring that the third-party defendant, New York Mutual Underwriters, is obligated to defend and indemnify the third-party plaintiff as a defendant in the main action (Action No. 1), and a subrogation action and a third-party action for a judgment declaring that the third-party defendant, New York Mutual Underwriters, is obligated to defend and indemnify the third-party plaintiff as a defendant in the subrogation action (Action No. 2), New York Mutual Underwriters appeals from an order of the Supreme Court, Westchester County (Lefkowitz, J.), entered December 10, 2002, which denied its motions, pursuant to CPLR 603, to sever the third-party actions against it. Justice Santucci has been substituted for former Justice Townes (see 22 NYCRR 670.1[c]).

ORDERED that the order is reversed, on the law, with costs, the motions are granted, and the third-party actions are severed.

This appeal stems from two related actions. In Action No. 1, the plaintiffs sought, inter alia, to recover damages for trespass and property damage from, among others, the defendant Rita Weeks. After Weeks' insurance carrier, New York Mutual Underwriters (hereinafter NY Mutual), disclaimed coverage, Weeks commenced a third-party action seeking a judgment declaring that NY Mutual was obligated to defend and indemnify her in the main action.

In Action No. 2, State Farm & Casualty Company (hereinafter State Farm), as subrogee of the plaintiffs in the main action in Action No. 1, sought to recoup from, among others, Weeks, the money it paid on its insureds' claim, pursuant to their insurance policy with State Farm. After NY Mutual disclaimed coverage of this claim as well, Weeks commenced another third-party action against it, seeking a judgment declaring that NY Mutual was obligated to defend and indemnify her in the main action in Action No. 2. A joint trial was ordered.

At issue on this appeal is the Supreme Court's denial of the motions of NY Mutual to sever the third-party actions against it from the property damage action in Action No. 1 and from the subrogation action in Action No. 2. While recognizing the general rule favoring severance of a third-party action against an insurer for a judgment declaring an obligation to defend and indemnify, from the underlying action in which the defendant claims entitlement to coverage from the third-party defendant insurer (see Kelly v Yannotti, 4 NY2d 603), the Supreme Court found it inapplicable here. The Supreme Court reasoned that since the plaintiff in Action No. 2 is an insurance company suing as its insureds' subrogee, "the fact of insurance is already in the case."

Since we disagree with the Supreme Court's conclusion that the general rule does not apply here, we reverse the order appealed from. "It is generally recognized that, even where common facts exist, it is prejudicial to insurers 'to have the issue of insurance coverage tried before the jury that considers the underlying liability claims' (Schorr Bros. Dev. Corp. v Continental Ins. Co., 174 AD2d 722)" (Medick v Millers Livestock Mkt., 248 AD2d 864, 865; see also Schwartz v [*3]Woodner and Co., 40 AD2d 1027). The fact that State Farm is the plaintiff in Action No. 2, as subrogee of its insureds, does not take this case outside of the general rule. As subrogee, State Farm steps into the shoes of its insureds, such that the jury hearing the case will have to determine Weeks' liability for the underlying claim that State Farm covered on its insureds' behalf. Therefore, NY Mutual will be subjected to some prejudice if the main actions and the third-party declaratory judgment actions are tried before the same jury (see Kelly v Yannotti, supra). As such, denial of the motions to sever the third-party actions was an improvident exercise of the Supreme Court's discretion.
S. MILLER, J.P., RITTER, SANTUCCI and LUCIANO, JJ., concur.

 

Grigoli v. Passantino





Rivkin Radler, LLP, Uniondale, N.Y. (Evan H. Krinick, Cheryl
F. Korman, Harris J. Zakarin, and Melissa Murphy of counsel),
for appellant.
Dominick W. Lavelle, Mineola, N.Y. (Susan R. Nudelman
and Jared Selvin of counsel), for
respondent.

In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Kings County (Jackson, J.), dated June 17, 2003, which granted the plaintiff's motion to set aside so much of a jury verdict as awarded the plaintiff damages in the sum of $15,000 for past pain and suffering and the sum of $0 for future pain and suffering for a cervical fracture and as found that the plaintiff did not sustain a significant limitation of the use of a body function or system or a permanent limitation of use of a body organ or member with respect to a disc herniation as a result of an automobile accident, and granted a new trial unless the defendant stipulated to increase the award for past pain and suffering for the cervical fracture from the sum of $15,000 to the sum of $50,000, increase the award for future pain and suffering for the cervical fracture from the sum of $0 to the sum of $30,000, increase the award for past pain and suffering for the disc herniation from the sum of $0 to the sum of $60,000, and increase the award for future pain and suffering for the disc herniation from the sum of $0 to the sum of $90,000.

ORDERED that the order is modified, on the facts and as a matter of discretion, by deleting the provision thereof granting that branch of the plaintiff's motion which was to set aside that portion of the verdict which found that he did not sustain a significant limitation of the use of a body function or system or a permanent limitation of use of a body organ or member with respect [*2]to a disc herniation as a result of the automobile accident and ordering a new trial on the issue of damages unless the defendant stipulated to increase the awards for past and future pain and suffering for the disc herniation, and substituting therefor a provision denying that branch of the motion; as so modified, the order is affirmed, without costs or disbursements.

The Supreme Court properly set aside the damages verdict insofar as the jury awarded the plaintiff the sum of only $15,000 for past pain and suffering and $0 for future pain and suffering for a cervical fracture. The damages were inadequate to the extent indicated, in that they deviated materially from what would be reasonable compensation (see CPLR 5501[c]; Ramos v Ramos, 234 AD2d 439, 440; Chase v City of New York, 233 AD2d 474).

However, we agree with the defendant that a fair interpretation of the evidence supports the verdict that the plaintiff did not sustain a herniated disc. Thus, the Supreme Court erred in setting aside, as against the weight of the evidence, that portion of the damages verdict which found that the plaintiff did not sustain a significant limitation of the use of a body function or system or a permanent limitation of use of a body organ or member as a result of the automobile accident (see Cohen v Hallmark Cards, 45 NY2d 493, 499; Nicastro v Park, 113 AD2d 129).
SCHMIDT, J.P., ADAMS, SANTUCCI and LUCIANO, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Tchjevskaia v. Chase






Rivkin Radler, LLP, Uniondale, N.Y. (Evan H. Krinick, Cheryl
F. Korman, Harris J. Zakarin, and Melissa M. Murphy of
counsel), for appellants.
Olga Sorkin, P.C., New York, N.Y., for respondent.

In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (F. Rivera, J.), dated October 30, 2003, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendants failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Meiheng Qu v Doshna, 12 AD3d 578; Rodriguez & J & K Taxi, 12 AD3d 434). The affirmation of the defendants' examining orthopedist discloses that the orthopedist actually recorded limitations in the plaintiff's ranges of motion despite his ultimate conclusion that the plaintiff did not sustain a serious injury. Under these circumstances, it is unnecessary to consider the sufficiency of the plaintiff's opposition papers (see Coscia v 938 Trading Corp., 283 AD2d 538; Chaplin v Taylor, 273 AD2d 188; Mariaca-Olmos v Mizrhy, 226 AD2d 437).

Accordingly, the Supreme Court properly denied the defendants' motion for summary judgment.
COZIER, J.P., S. MILLER, SANTUCCI and FISHER, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

 

In the Matter of Eveready Insurance Company v. Mack

 



Wollerstein & Futoran, Lake Success, N.Y. (Sweetbaum &
Sweetbaum [Marshall D. Sweetbaum] of counsel), for appellant.
Bruce A. Lawrence, Brooklyn, N.Y. (Christine L. Fontaine
and R. Alexander Hulien of
counsel), for proposed additional
respondent.

In a proceeding pursuant to CPLR article 75 to stay arbitration of an uninsured motorist claim, the petitioner appeals from an order of the Supreme Court, Kings County (Lodato, J.H.O.), dated May 6, 2004, which, after a hearing, denied the petition.

ORDERED that the order is reversed, on the law, with costs, the petition is granted, and the arbitration is stayed.

On March 28, 2002, the respondent, Greta Mack, was involved in an automobile accident with a vehicle owned by Diogenes Nunez and operated by Israel Serrano (hereinafter the Nunez vehicle). At the time of the accident, Mack's vehicle was insured by the petitioner Eveready Insurance Company (hereinafter Eveready). The Nunez vehicle was insured by the proposed additional respondent General Assurance Company (hereinafter General Assurance).

On July 9, 2002, General Assurance disclaimed coverage on the basis that Nunez "failed to report this loss and cooperate with us in the investigation, settlement or defense of this claim." On September 10, 2003, Mack filed a demand for arbitration against Eveready. Thereafter, Eveready commenced the instant proceeding to stay the arbitration. Following a hearing on the issue [*2]of General Assurance's disclaimer based on lack of cooperation, the Supreme Court denied the petition. Specifically, the Supreme Court found that General Assurance met its burden of proving Nunez' lack of cooperation. We reverse.

An insurance carrier that seeks to disclaim coverage on the ground of lack of cooperation "must demonstrate that it acted diligently in seeking to bring about the insured's co-operation . . . that the efforts employed by the insurer were reasonably calculated to obtain the insure[d]'s co-operation . . . and that the attitude of the insured, after his co-operation was sought, was one of 'willful and avowed obstruction'" (Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168-169, quoting Coleman v New Amsterdam Cas. Co., 247 NY 271, 276; see also New York State Ins. Fund v Merchants Ins. Co. of N.H., 5 AD3d 449, 450; Matter of Metlife Auto & Home v Burgos, 4 AD3d 477).

Here, General Assurance failed to demonstrate that it met the requirements set forth in Thrasher to disclaim coverage on the ground of lack of cooperation (see Matter of New York Cent. Mut. Fire Ins. Co. v Bresil, 7 AD3d 716). Thus, the Supreme Court erred in denying the petition.
FLORIO, J.P., ADAMS, S. MILLER and GOLDSTEIN, JJ., concur.

ENTER:

James Edward Pelzer

In the Matter of Eagle Insurance Company v. Rodriguez


Samuel K. Rubin, Bethpage, N.Y. (Lawrence R. Miles of
counsel), for appellant.
Mallow, Konstam & Hager, P.C., New York, N.Y. (David M.
Mallow of counsel), for respondent-
respondent.

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, the petitioner appeals from so much of an order of the Supreme Court, Kings County (Lodato, J.H.O.), entered February 4, 2004, as, after a hearing, denied the petition.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs payable by the respondent-respondent Daniel Rodriguez, the petition is granted, and the arbitration is permanently stayed.

The respondent Daniel Rodriguez was involved in an automobile accident while operating a vehicle insured by the petitioner. He subsequently sought arbitration of a claim for uninsured motorist benefits. The petitioner commenced this proceeding to permanently stay arbitration on the ground that the offending vehicle was insured. After a hearing, at which the proposed additional respondent Legion Insurance Company failed to appear, the Supreme Court concluded that the offending vehicle was insured, but nevertheless denied the petition. The petitioner appeals. Rodriguez contends that the petitioner did not establish that the offending vehicle was insured and, therefore, the petition was properly denied. Contrary to the petitioner's contention, Rodriguez may raise that issue as an alternative ground for affirmance (see Parochial Bus Sys. v Board of Educ. of City of N.Y., 60 NY2d 539, 545-546; Rice v Board of Educ. of City of N.Y., 302 [*2]AD2d 578, 579; Lauer v Great S. Bay Seafood Co., 299 AD2d 325, 327).

The petitioner established a prima facie case as to the existence of insurance coverage for the offending vehicle by producing the police accident report containing the vehicle's insurance code (see Matter of Liberty Mut. Ins. Co. v McDonald, 6 AD3d 614, 615; Matter of Eagle Ins. Co. v Beauvil, 297 AD2d 736, 737; Lopez v Ford Motor Credit Co., 238 AD2d 211; Matter of Eagle Ins. Co. v Olephant, 81 AD2d 886). The burden then shifted to Rodriguez to establish a lack of coverage. Since Rodriguez did not rebut the petitioner's prima facie case, the Supreme Court properly concluded that the offending vehicle was insured. Consequently, the Supreme Court should have granted the petition (see Matter of Lumbermens Mut. Cas. Co. v Quintero, 305 AD2d 684, 685; Matter of CGU Ins. Co. v Greatheart, 301 AD2d 649).
H. MILLER, J.P., GOLDSTEIN, CRANE and SKELOS, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

The City of New York v. Certain Underwriters at Lloyd's of London, England






Michael A. Cardozo, Corporation Counsel, New York (Dona B.
Morris of counsel), for appellant.
Thacher Proffitt & Wood LLP, New York (Jonathan D. Forstot
of counsel), for respondents.

Judgment, Supreme Court, New York County (Faviola A. Soto, J.), entered March 2, 2004, which denied plaintiff's motion for summary judgment declaring that defendants are obligated to defend plaintiff and dismissed the complaint, unanimously reversed, on the law, without costs, and plaintiff's motion and fee application in the amount of $84,206.43, without interest, granted. The Clerk is directed to enter judgment accordingly. Appeal from order, same court and Justice, entered January 23, 2004, unanimously dismissed, without costs, as subsumed within the appeal from the judgment.

In the aftermath of the 2001 terrorist attack on the World Trade Center, plaintiff City of New York, through its Department of Design and Construction, hired contractors and subcontractors to clean up the site. These contractors and subcontractors used tug boats and barges, many of which were owned and operated by the City through its Department of Sanitation, to transport the debris to a landfill in Staten Island.

In connection with these clean-up efforts, the City obtained six categories of marine insurance in three insurance policies underwritten by defendants, providing, inter alia, coverage for protection and indemnity. The City, its Department of Design and Construction and Department of Sanitation, and several of its contractors and subcontractors, including McAllister Brothers Towing, are named insureds under the policies.

On or about April 1, 2002, Thomas Green, an employee of McAllister Brothers Towing, was allegedly injured by exposure to various toxic substances present in the clean-up debris while working as a crew member on the tugboat, Joan McAllister. Green commenced an action to recover damages for personal injury in federal court against McAllister Brothers, Inc., the owner of the Joan McAllister. McAllister Brothers, in turn, filed a notice of claim against the City stating that Green worked on the Joan McAllister towing and shifting barges which were owned, loaded, operated and controlled by the City, and alleging that the barges contained debris contaminated with toxic and potentially dangerous substances. McAllister Brothers also maintained that if Green was injured, that injury was caused by the City's negligence. [*2]

McAllister Brothers thereafter commenced a third-party action against the City, specifically seeking to hold the City liable for any injuries sustained by Green while working on the Joan McAllister, based on the operation of the City's insured barges. The City requested that defendants defend it in the third-party action, but they disclaimed coverage on the ground that the City did not own the tugboat. Consequently, the City commenced the instant action for a declaration that defendants had a duty to defend and indemnify it and for recovery of costs in defending the third-party action.

After joinder of issue, the City moved for summary judgment on the ground that, as a matter of law, defendants were obligated to defend and indemnify. In addition, the City sought reimbursement for legal costs incurred to date in the amount of $84,206.43. Defendants opposed the motion, claiming that the City was not implicated in Green's complaint against McAllister Brothers and that the third-party complaint did not allege that a particular vessel owned by the City and covered under defendants' policies had caused Green any injury. In addition, without benefit of a cross motion, defendants requested that judgment be entered in their favor. Defendants did not object to the City's fee application.

The court denied the City's motion and instead granted defendants' request to dismiss the complaint, finding no basis for coverage because Green did not allege, in the underlying personal injury action, that the City vessel had injured him. In addition, "within the four corners of the [third-party] complaint," the motion court found no basis for coverage as McAllister Brothers had not alleged that a particular vessel owned by the City and covered under defendants' policies caused Green's injury.

We reverse. An insurer's duty to defend is exceedingly broad (see Colon v Aetna Life & Casualty Insurance Co., 66 NY2d 6 [1985]). The duty to defend arises "whenever the allegations of the complaint, for which the insured may stand liable, fall within the risk covered by the policy" (id. at 8), or, in other words, where there is a "reasonable possibility of recovery under the policy" (Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 65 [1991]). The courts have rejected the mechanical application of the "four corners of the complaint" rule in this context (see Fitzpatrick, 78 NY2d at 67). Thus, "[i]f the complaint contains any facts or allegations which bring the claim even potentially within the protection purchased," a duty to defend exists
(Technicon v Elecs. Corp. v American Home Assur. Co., 74 NY2d 66, 73 [1989]).

An insurer may be relieved of its duty to defend only if it "bears the heavy burden of demonstrating that the allegations of the complaint cast the pleadings wholly within that exclusion, that the exclusion is subject to no other reasonable interpretation, and that there is no possible factual or legal basis upon which the insurer may eventually be held obligated to indemnify the insured under any policy provision (Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169, 175 [1997]). Defendants have not met this heavy burden. Here, the record is clear that the City's liability, if any, arises from Green's contact with City-owned barges which are covered under defendants' insurance policies and which explicitly cover the risk at issue. To judicially declare defendants' duty to defend extinguished under these circumstances would lead to an unjust result, "exalt[ing] form over substance and den[ying] an insured party the benefit of the 'litigation insurance' for which it has paid" (Fitzpatrick, 78 NY2d at 70).

Since defendants did not establish, as a matter of law, that there is no possible factual or [*3]legal basis upon which they eventually would be obligated to indemnify the City, the City's motion for summary judgment should have been granted. The fee application is granted without opposition.

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

ENTERED: FEBRUARY 10, 2005

CLERK

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