5/19/04 Wilson v. Quaranta
Appellate Division, First Department
Don’t Need a Letter Threatening Suit Before
Obligation to Give Notice of Potential Claim to E&O Carrier – Coverage Lost
Insured attorney failed to give malpractice carrier notice of
plaintiff's potential malpractice claim against him as soon as practicable, as
the policy required. For at least 8½ months before he gave notice of
plaintiff's malpractice claim, there could not have had a reasonable belief
that plaintiff would not or could not assert a malpractice claim against him
based on his untimely filing of a notice of plaintiff's personal injury claim
against the City that inaccurately set forth the place of injury. Notice of
the potential malpractice claim should have been given no later than the time
he learned of the court's denial of his application to amend and deem timely
plaintiff's notice of claim against the City, which the City had rejected as
untimely.
5/17/05
Serio v. National Union Company of Pittsburgh
Appellate Division, First Department
Insurance Executive Self-Dealing Falls Within
Dishonest Exclusion of D&O Policy
The jury concluded the president had diverted Nassau's premiums to
his other entities "as part of an integrated transaction designed to benefit
[his] entities." That finding in this regard and its decision that the
president should pay the Nassau estate millions of dollars demonstrated a
determination that his actions had been intentional. It was a final
adjudication established that the insureds had purposely and intentionally
committed active and deliberate dishonesty, and thus placed the matter
squarely within the liability exclusion of the D&O policy.
5/16/05
In the Matter of American Express Property Casualty Co. v.
Vinci
Appellate Division, First Department
Carrier Must Disclaim as Soon as Reasonably Possible
After it Has Knowledge Giving it Reason to Disclaim or Knows that it Will
Reasonableness of the delay is measured from the time when the insurer
"has sufficient knowledge of facts entitling it to disclaim, or knows that it
will disclaim coverage" with the insurer bearing the burden of justifying any
delay. Here, the insurer acquired "sufficient knowledge of facts
entitling it to disclaim" coverage at the examination under oath of its
insured on February 21, 2003. The time to disclaim cannot be delayed
indefinitely until all issues of fact regarding the insurer's coverage
obligations have been resolved." The petitioner's failure to disclaim coverage
until April 10, 2003, was unreasonable as a matter of law.
5/16/05 Utica First Insurance Company v. Arken, Inc.
Appellate Division, Second Department
Non-Cooperation Under Liability Policy Established
In a rare determination of non-cooperation by an insured, the court
restated the long established standards for a carrier’s proof in establishing
a breach of the condition of cooperation, known as the “Thrasher” test: An
insurer who seeks to disclaim coverage on the ground of noncooperation is
required to demonstrate that (1) it acted diligently in seeking to bring about
the insured's cooperation, (2) its efforts were reasonably calculated to
obtain the insured's cooperation, and (3) the attitude of the insured, after
its cooperation was sought, was one of willful and avowed obstruction. In this
instance, the plaintiff and the law firm it retained to represent the
defendant Arken, Inc. made diligent efforts, by means of correspondence and
numerous telephone calls, which were reasonably calculated to bring about
Arken's cooperation. Furthermore, the evidence supports the conclusion that
the insured willfully obstructed the plaintiff's defense of the underlying
litigation. By verbal instruction and written correspondence, the insured was
made fully aware of its contractual obligation to cooperate in defending the
litigation.
5/16/05
474431 Associates v. AXA Global Risks U.S. Insurance Company
Appellate Division, Second Department
Failure to Disclaim Timely, Based on Exclusion, Leads
to Waiver of Coverage Defense
If we’ve told you once, we’ve told you 100 times, when a policy
exclusion or condition is involved, and there is a claim for bodily injury or
wrongful death, a carrier that fails to disclaim promptly runs the risk of
losing coverage defenses. That’s what happened here. AXA's decision to
disclaim coverage was based on a policy exclusion and not the absence of
coverage inclusion, AXA was required to give timely notice of the disclaimer
under Insurance Law § 3420(d). Allcity satisfied its prima facie burden of
demonstrating its entitlement to judgment as a matter of law with respect to
the untimeliness of AXA's disclaimer. In opposition, AXA failed to raise a
triable issue of fact so AXA ends up as a co-insurer.
5/16/05
Binyan Shel Chessed, Inc. v. Goldberger Insurance Brokerage,
Inc.
Appellate Division, Second Department
Insurance Broker May be Liable for Fraud to Purported
Additional Insured
Interesting case surrounding the duty of an insurance broker to a
party who received a certificate of insurance issued by an insurance broker
advising it that a policy had been issued with a specific policy number.
Carrier established that it never issued such a policy and thus insurer walked
away from coverage. Court held that insurance broker may indeed have
duty to party relying on certificate of insurance it issued – in this case
proposed additional insured -- and if the insurance broker committed fraud,
liability may attach.
5/16/05
Ashkenazi v. Hertz Rent A Car
Appellate Division, Second Department
Vehicle & Traffic Law Section 388 Does Not Apply In
Mexico
Section 388 imposes derivative liability on the owner of a car for
negligence in a permissive user’s operation of that vehicle. In this
case, accident occurred in Mexico with insured driving a rental car which was
never registered, licensed or insured or used in New York. Court holds
that Section 388 is not applicable here. Husband and wife who were
plaintiff and driver offered no real proof that vehicle was ever destined for
New York.
5/16/05
In the Matter of AIU Insurance Company v. Orellana
Appellate Division, Second Department
New York’s Shortest Statute of Limitations Strikes
Again – Moving to Stay Uninsured Motorist Arbitration
Claimant filed demand for uninsured motorist arbitration claiming that
he was a victim of a hit-and-run accident. Under Insurance Law
3420(f)(1), UM benefits are available for hit-and-run accidents if there is
physical contact between the vehicles. Here, the UM carrier sought a
determination that there was no contact, which would have entitled it to
receive a permanent stay of the arbitration. However, under Article 75
of the CPLR, the UM carrier needed to make the application to stay
arbitration, to court, within 20 days of the arbitration filing.
It failed to make the application timely and thus was forever barred from
raising the issue.
5/12/05 Munoz v. Hollingsworth
Appellate Division, First Department
“Tailored” Physician’s Affidavit Insufficient to Defeat Threshold Motion
Plaintiff alleges injuries to her neck, lower back and left shoulder and that these injuries constituted a "permanent consequential limitation" and a "significant limitation" of her cervical and lumbosacral spine under Insurance Law § 5102[d]. Defendant’s expert examined plaintiff and concluded that plaintiff had "completely recovered”. In opposition, plaintiff’s own affidavit related subjective complaints and plaintiff’s physician found limitations but, as the court points out that the plaintiff’s physician referred to no specific objective medical testing and was “completely silent with respect to any description of the nature of those tests….. In the absence of such evidence, plaintiff's medical affidavit can only be deemed conclusory and apparently tailored to meet the statutory requirements.” Complaint dismissed.
5/10/05 Pires v. Ortiz
Appellate Division, First Department
Willful Inaction by Insured Keeps Default Judgment in Place
This was a motion to vacate a default judgment. The defendants' claimed that they believed that that the action was being defended by their insurance carrier. It appears that several weeks after defendants mailed the summons and complaint to the carrier as instructed by their insurance broker, the documents were returned to them in the same envelope in which they were sent, albeit stamped "Received." Thereafter, defendants were served with a motion for a default judgment. Thereafter, they received a letter from their carrier advising them of their default and disclaiming coverage for failure to promptly provide the carrier with a copy of the summons and complaint and then subsequently they were served with the order granting a default judgment. By this time, any belief that the carrier was defending the action was no longer tenable and thus no reasonable excuse for delay in serving a responsive pleading was provided. Given this persistent and willful inaction, defendants' default should not be vacated even if they have a meritorious defense.
5/9/05
Gallante Properties, Inc. v. State National Insurance
Company
Appellate Division, Second Department
Question of Fact Exists on Whether Insured Has Excuse
for Late Notice of Lawsuit
Carrier denied notice on late notice of occurrence. The insured
claimed that it did not know of the accident until later because it did not
know of the accident and gave notice “as soon as practicable.” The question of
whether the plaintiff's alleged lack of notice was attributable to its own
negligence is an issue of fact and a hearing should be held to determine.
5/9/05 Jefferson v. Village of Ossining
Appellate Division, Second Department
Attorney Affirmation Alone Insufficient to Oppose Threshold Motion
In this serious injury threshold motion pursuant to Insurance Law § 5102(d), defendants' submitted the § 50-h hearing and deposition testimony, medical records, and the affirmed report of defendants’ examining physician. The plaintiff’s opposition consisted solely of an affirmation of the plaintiff's attorney and that was found insufficient to raise a triable issue of fact.
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.
5/11/05
Unterlack v. Westport Insurance Company
Florida Court of Appeal
Insured Is Entitled To
Attorneys Fees Under Florida Statute Section 627.428 Where Declaratory Action
Filed Against It By Insurer Is Dismissed Voluntarily Without Regard To The
Timing Of The Insurer’s Settlement Of The Underlying Lawsuit Against The
Insured.
Unterlack was an insurance agent and broker in the business of
selling various insurance products through his insurance agency. Unterlack had
a professional liability policy issued by Westport. Unterlack sold insurance
policies that were issued by the Vanguard Asset Group, which was not a
licensed insurer in Florida and which failed to pay claims of policyholders.
Two such policyholders sued Unterlack for breach of duty in obtaining the
policies. Unterlack tendered the claims to Westport and demanded it defend and
indemnify him. Westport agreed to defend, but reserved its right to deny
coverage. Westport then filed a declaratory judgment action against Unterlack
to determine coverage, which it later voluntarily withdrew. Westport then
settled the underlying lawsuits against Unterlack. Unterlack sought to recover
his attorney’s fees in defending the declaratory action under Section 627.428,
Florida Statutes. The Court of Appeal found that Unterlack was entitled to his
attorney’s fees under 627.428(1) because Westport’s dismissal of the
declaratory action against Unterlack was the functional equivalent of a
verdict in favor of the insured Unterlack in the declaratory action,
regardless of the fact that Westport settled the underlying lawsuits after the
voluntary dismissal and not before, as was the case in O’Malley v. Nationwide
Mutual Fire Insurance Co.
Submitted by: Bruce D. Celebrezze & Serena C. Hunn (Sedgwick, Detert, Moran & Arnold LLP)
5/11/05
Highwood Properties, Inc. v. Executive Risk Indemnity Inc.
Eighth Circuit Court of Appeals
Two Separate Claims Grounded
in Actions Taken By Shareholders in Relation to Corporate Mergare Considered
"Related Claims" So As To Preclude Coverage Under Insurance Policy Even Though
Claims Did Not Arise Out of Identical Facts
Highwoods first purchased a claims-made policy in 1996 to insure its directors
and officers in the event that claims were filed against them. The policy did
not include coverage for the company as an entity, covering only claims made
against individuals in covered positions within the company during the policy
period from June 30, 1996, to June 30, 1998. Highwoods arranged a merger with
J.C. Nichols Company, a Missouri real estate company, that was to occur July
13, 1998. In January 1998, Dennis Wright, a J.C. Nichols shareholder, filed a
lawsuit on behalf of himself and a potential class of shareholders (never
certified) against J.C. Nichols, J.C. Nichols’s officers, and Highwoods,
claiming breach of fiduciary duty and seeking to enjoin the merger. Highwoods
filed a motion to dismiss, contending that it did not at that time have a
fiduciary obligation to J.C. Nichols shareholders. The state court granted the
motion and dismissed Wright’s claims against Highwoods. Soon after Wright
filed filed his action, Highwoods notified Executive Risk that a claim had
been filed against it and sought coverage. Executive Risk denied coverage on
the ground that there was no coverage for the corporate entity other than for
its obligation to indemnify insured persons, and that no proceeding had been
commenced against an insured person. Highwoods negotiated a new insurance
policy in 1998 having a policy period from June 30, 1998 to June 30, 2001.
Although it was also a claims-made policy, it included entity coverage for
company securities claims in addition to coverage for Highwoods directors and
officers. John Flake moved to be substituted for Wright in the original
lawsuit, but then voluntarily dismissed the claims without prejudice in state
court. Flake instead filed a lawsuit in federal district court on October 2,
1998, claiming that J.C. Nichols and Highwoods violated federal securities
laws based on misrepresentations in the prospectus and registration statement
that were disseminated in connection with the merger. Highwoods eventually
settled the class action for $5.7 million, after spending $4.8 million
defending the lawsuit. Highwoods notified Executive Risk when the Flake action
was filed in federal court and sought coverage under the 1998 policy.
Executive Risk again rejected coverage, on the grounds that the Flake action
was considered to be “a Claim made within the policy period of the 1996
Policy.” Because the 1996 policy did not provide entity coverage, Executive
Risk would not provide coverage for the Flake action. The district court
granted summary judgment for Executive Risk, finding that the Wright action
was a prior claim that barred coverage for the Flake action under the 1998
policy’s “related claims” provision. After reviewing the pertinent language of
the 1998 policy, the Court of Appeals concluded that the Wright action was
within the policy's definition of "claim" as it was a company securities
claim. The Court further concluded that the Wright action and the Flake action
were related claims, falling within the natural scope of the related claims
provision. The two cases did not arise out of identical facts, but were
grounded in actions taken by the defendants in relation to the acquisition of
J.C. Nichols by Highwoods. Therefore, by operation of the policy, the claims
constituted a single claim that was made outside the policy period of the 1998
policy. Because entity coverage was not included in the 1996 policy, and
because a logical and reasonable application of the 1998 policy language
operates to preclude coverage for the Flake action, summary judgment was
appropriate for Executive Risk.
Submitted by: Steve Farrar and Rebecca Zabel (Leatherwood
Walker Todd & Mann, P.C.)
5/11/05
Resource Bankshares Corp. v. St. Paul Mercury Ins. Co.
Fourth Circuit Court of Appeals
Neither Property Damage Nor
Advertising Liability Coverage Provisions Include Intentional Violation of
Telephone Conusmer Protection Act
Cohen & Malad, LLP, an Indiana limited partnership, sued Resource
Bankshares Corporation and Resource Bank in Indiana state court on behalf of a
class of recipients of Resource’s faxes. The lawsuit was based on the private
right of action provided by the Telephone Consumer Protection Act. During the
times relevant to the lawsuit, Resource had a series of materially identical
one-year general commercial liability insurance policies with St. Paul Mercury
Insurance Company. Resource sought a declaration in the United States District
Court for the Eastern District of Virginia that the class-action suit
triggered coverage under two separate provisions of the policies. On
cross-motions for summary judgment, the district court found that one of the
two provisions mandated a duty to defend. The Court of Appeals held that
neither policy compelled St. Paul to defend Resource, and thus affirmed in
part and reversed in part. The two provisions at issue described coverage for
"property damage," as well as for damages resulting from an "advertising
injury offense." The property damage provision covered loss caused by an
"event," which the policy defined as an "accident." Because Resource's faxes
were intentionally, rather than accidentally, sent as solicitations,
Resource's liability was not the result of an accident. Therefore, there was
no coverage under the property damage provision. The Court further found that
coverage did not exist under the advertising liability provision as the
contested portion of that provision covered only damage resulting from an
invasion of privacy. The Court held that sending unsolicited faxes was not a
violation of privacy, and thus did not fall within the advertising liability
coverage provision.
Submitted by: Steve Farrar and Rebecca Zabel (Leatherwood Walker Todd & Mann, P.C.)
5/10/05
Travelers Indemnity Co. v. Nobel Insurance Co.
Fifth Circuit Court of Appeals
Excess Carrier Cannot Assert
Claim Against Primary Carrier Under Theory That Primary Carrier Breached Duty
to Insured
As a result of an irregular MCS-90 endorsement to an excess
insurance policy which expressly granted a judgment creditor the right to seek
direct payment from the insurer, an excess insurance company was held to be
required to pay the balance of a tort judgment after the primary insurance
company paid out its limits. After discovering that the primary insurer
refused the insured's offer to settle within the policy's limits, the excess
insurer brought suit against the primary insurer. The district court ruled
that the excess carrier had no claim against the primary carrier for the
primary carrier's alleged negligence in failing to settle, and the excess
carrier appealed, relying on a further irregular provision in the MCS-90
endorsement which gave the insurer the right to recover money paid to a
judgment creditor from the insured. The Court of Appeals noted that the
prevailing law is that the MCS-90 endorsement imposed a suretyship obligation
on the excess carrier to the judgement creditor, and thus the excess carrier
became subrogated to the rights of the plaintiff as a judgment creditor of the
insured party, with a right to reimbursement from the insured. The endorsement
does not extinguish the debt of the insured; it transfers the right to receive
the insured’s debt obligation from the judgment creditor to the insurer.
Because the excess carrier became subrogated to the rights of the plaintiff as
a creditor and not to the rights of the debtor insured under the primary and
excess policies, the Court held that the excess carrier could not pursue a
claim against the primary carrier under a theory that the primary carrier
breached a duty to the insured.
Submitted by: Steve Farrar and Rebecca Zabel (Leatherwood Walker Todd & Mann, P.C.
5/6/05
American Family Mutual Insurance v. Corrigan
Iowa Supreme Court
Insured Must Satisfy the Sole Proximate Cause Requirement For Coverage Under A Homeowner’s Policy
The Iowa Supreme Court found that when two independent acts of negligence are alleged . . . coverage will be provided for both acts under a homeowners policy unless it is established that one negligent act is the sole proximate cause of the injury (i.e. the negligent acts must be independent of each other for coverage to apply to both separately.) In this case, Mark operated child care services out of his father, Harold’s home. American Family Mutual Insurance Company insured the home, when Mark was accused of injuring a child in his care. In a criminal action, Mark plead guilty to child endangerment. The child’s parents subsequently filed a civil suit against Mark and Harold. The trial court found that the allegations against Mark were excluded from coverage under the policy’s Violation of Law exclusion, which was not disputed on appeal. The allegations against Harold consisted of negligent supervision of Mark. The trial court held that coverage applied, but the Supreme Court reversed holding that because proof of the acts of negligence alleged against Harold were dependent upon proof of the excluded acts of Mark, they did not satisfy the sole proximate cause requirement and were not covered under the policy.
Submitted by: Bruce D. Celebrezze & Michelle Y. McIsaac (Sedgwick, Detert, Moran & Arnold LLP)
5/6/05
Otterberg v. Farm Bureau Mutual Insurance Company
Iowa Supreme Court
No Double Recovery Under
Worker’s Compensation and Uninsured Motorist Provision
This was a case of first impression for the Iowa Supreme Court to
determine whether an insured is “legally entitled to recover” within the
meaning of the Uninsured Motorist (“UM”) provision of an insurance policy or
Iowa’s UM insurance statute when the injuries are covered under the workers’
compensation system. Otterberg was injured in a car accident as a passenger
while he was working as a paramedic on an ambulance. Otterberg received
worker’s compensation benefits. Otterberg also owned an automobile insurance
policy with Farm Bureau Mutual Insurance Company, which included UM coverage.
Otterberg claimed the ambulance was an uninsured vehicle under his Farm Bureau
policy because the ambulance’s policy did not extend coverage to him due to
the applicability of the workers’ compensation laws. Farm Bureau denied
Otterberg’s claim, asserting that the UM provision did not provide coverage
because Otterberg was not “legally entitled to recover” from the employer or
the co-employee who was operating the ambulance. In holding that Otterberg was
not entitled to UM coverage, the Iowa Supreme Court stated that “the purpose
of the uninsured motorist statute is to protect insureds from financially
irresponsible motorists. That purpose is fulfilled by placing the insured in
the same position as if the uninsured motorist had been insured, not a better
position.” Moreover, the Court held that the exclusivity provision of the
workers’ compensation statute provides a substantive bar to any legal claim
against his employer and co-employee for injuries covered by workers’
compensation.
Submitted by: Bruce D. Celebrezze & Michelle Y. McIsaac (Sedgwick, Detert, Moran & Arnold LLP)
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Order, Supreme Court, Bronx County (Bertram Katz, J.), entered March 30, 2004, which denied defendants' motion to vacate a default judgment, unanimously affirmed, without costs.
The motion court properly rejected defendants' claim that they reasonably believed that at all relevant times the action, commenced in June 2000, was being defended by their insurance carrier. It appears that several weeks after defendants mailed the summons and complaint to the carrier as instructed by their insurance broker, the documents were returned to them in the same envelope in which they were sent, albeit stamped "Received." Thereafter, in October 2000, defendants were served with a motion for a default judgment; in January 2001, they received a letter from their carrier advising them of their default and disclaiming coverage for failure to promptly provide the carrier with a copy of the summons and complaint; and in March 2001, they were served with notice of entry of an order granting a default judgment and directing an inquest. By this time, any belief that the carrier was defending the action was no longer tenable. Thereafter, defendants received notice that the carrier was in liquidation, notice of an inquest to be held in February 2002, and notice of entry of judgment in September 2002, but they did not make their motion to vacate the default until November 2003. Given this persistent and willful inaction, defendants' default should not be vacated even if they have a meritorious defense (see Kent v Fearless Realty, 177 AD2d 499 [1991]; Time Warner City Cable v Tri State Auto, 5 AD3d 153 [2004], appeal dismissed 3 NY3d 656 [2004]). We also reject defendants' argument that the inquest was invalid since it was conducted while the liquidation stay against their carrier was in effect. The stay against all proceedings involving defendants' carrier took effect in May 2001, after the carrier had disclaimed coverage in this action in January 2001. Thus, at the time of the inquest, the stay was inapplicable to this action.
THIS CONSTITUTES THE DECISION
AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: MAY 10, 2005
CLERK
Gallante Properties, Inc. v. State National Insurance
Company
In an action for a judgment declaring that the defendant, State National Insurance Company, must defend and if necessary indemnify the plaintiff with respect to an underlying action to recover damages for personal injuries entitled Sattaur v Gallante Properties, Inc., pending in the Supreme Court, Queens County, under Index No. 7845/99, State National Insurance Company appeals from an order of the Supreme Court, Queens County (Rosengarten, J.), dated September 30, 2004, which denied its motion for summary judgment.
ORDERED that the order is affirmed, with costs.
The appellant disclaimed coverage and therefore any duty to defend and if necessary indemnify the plaintiff in the underlying action to recover damages for personal injuries on the ground that the plaintiff did not comply with the policy provision that it notify the appellant of the occurrence as soon as practicable. The plaintiff contends that it notified the appellant of the occurrence as soon as it received notice itself of the occurrence. Lack of notice that an accident occurred constitutes a legitimate excuse for failing to notify the carrier (see Centrone v State Farm Fire & Cas., 275 AD2d 728; Government Empl. Ins. Co. v Fasciano, 212 AD2d 579).
The plaintiff's default in the underlying action was vacated on the ground that it never received notice of the lawsuit and had a meritorious defense (see Sattaur v Gallante Prop., 304 AD2d 548; CPLR 317). The question of whether the plaintiff's alleged lack of notice was attributable to its own negligence is an issue of fact (see Fenske v State Farm Mut. Auto. Ins. Co., [*2]8 AD2d 1005). Accordingly, the appellant's motion for summary judgment was property denied.
Jefferson v. Village of Ossining
In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Westchester County (Barone, J.), entered October 19, 2004, which denied their motion for summary judgment dismissing the complaint on the grounds of qualified immunity for authorized emergency vehicles under Vehicle and Traffic Law § 1104 and that the plaintiff 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 granted, and the complaint is dismissed.
The defendants' evidence, which consisted of the plaintiff's General Municipal Law § 50-h hearing and deposition testimony, medical records, and the affirmed report of their own examining physician, was sufficient to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The plaintiff's opposition, which consisted solely of an affirmation of the plaintiff's attorney, was clearly insufficient to raise a triable issue of fact (see Carpluk v Friedman, 269 AD2d 349, 350; Sloan v Schoen, 251 AD2d 319). Accordingly, the defendants' motion for summary judgment dismissing the complaint should have been granted. [*2]
In light of our determination,
we need not reach the parties' remaining contentions.
H. MILLER, J.P., S. MILLER, GOLDSTEIN, MASTRO and LIFSON, JJ., concur.
ENTER:
James Edward Pelzer
Clerk of the Court
Order, Supreme Court, New York County (Robert D. Lippmann, J.), entered November 5, 2003, which, to the extent appealed from as limited by the briefs, denied defendants' motion for summary judgment seeking dismissal of the complaint on the ground that plaintiff failed to meet the serious injury threshold of Insurance Law § 5102(d), unanimously reversed, on the law, without costs, and the motion granted. The Clerk is directed to enter judgment in favor of defendants dismissing the complaint.
Plaintiff was injured in January 2001 when the car she was driving was struck by a bus owned by defendant Transit Authority and operated by defendant Hollingsworth. She alleges injuries to her neck, lower back and left shoulder as a result of the accident, and that these injuries constitute a "permanent consequential limitation" and a "significant limitation" of her cervical and lumbosacral spine (Insurance Law § 5102[d]).
On the instant motion for summary judgment, defendants met their initial burden of making a prima facie showing that plaintiff's claimed injuries were not serious, as defined in the Insurance Law (Brown v Achy, 9 AD3d 30, 31 [2004]). Upon a physical examination of plaintiff and a review of her post-accident medical reports, including MRIs of the cervical and lumbar spine, defendants' expert orthopedist concluded plaintiff had "completely recovered" from any soft tissue injuries that may have occurred as a result of the accident, and no objective findings substantiated plaintiff's current subjective complaints of pain and limitations.
In response to defendants' prima facie showing, plaintiff's submissions failed to raise a triable issue of fact on the issue of serious injury (Shaw v Looking Glass Assoc., LP, 8 AD3d 100, 102-103 [2004]). Plaintiff's own affidavit relates only subjective complaints of pain and limitations and, as such, is insufficient to raise a triable issue of fact (id. at 103). More significantly, the affirmation of plaintiff's medical expert was totally bereft of any objective medical evidence to correlate the MRI findings to plaintiff's claimed limitations (see Oribamie v Santiago, 12 AD3d 250 [2004]; cf. Newcomb v Leslie, 300 AD2d 92 [2002]). Although the affidavit asserts that the expert's findings "are confirmed by objective medical testing and physical examination," it is completely silent with respect to any description of the nature of those tests (Oribamie v Santiago, 12 AD3d 250, supra). In the absence of such evidence, plaintiff's medical affidavit can only be deemed conclusory and apparently tailored to meet the [*2]statutory requirements (see Simms v APA Truck Leasing Corp., 14 AD3d 322 [2005]; Hernandez v Lopez, 9 AD3d 300 [2004]).
THIS CONSTITUTES THE DECISION
AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: MAY 12, 2005
Serio v. National Union Fire Insurance Company of
Pittsburgh, PA.
Judgment, Supreme Court, New York County (Helen E. Freedman, J.), entered February 24, 2004, which granted defendant's motion to dismiss the complaint, and order, same court and Justice, entered October 20, 2004, which, to the extent appealable, denied plaintiff's motion to renew, unanimously affirmed, without costs.
The liquidator of the now defunct Nassau Insurance Company seeks, under Insurance Law § 3420(a)(2), to recover on the judgment awarded against Richard DiLoreto, Nassau's former president, in Serio v Ardra Ins. Co. (304 AD2d 362 [2003], appeal dismissed 100 NY2d 576 [2003], lv denied 100 NY2d 516 [2003]). The basis of the recovery is a Directors and Officers Liability and Corporation Reimbursement insurance policy (the D&O policy) issued by defendant. Defendant was entitled to rely on the "personal profit or advantage exclusion" and "dishonesty exclusion" in refusing to pay for the judgment. Plaintiff maintains his claim against the president in the underlying action was based on Insurance Law § 1505(a), which simply prohibits a person in control of an insurance company from involving it in transactions with a related party that are not "fair and equitable" to the insurer. In convincing the jury in the underlying action of a violation of § 1505(a), plaintiff had argued that the president made personal use of Nassau's funds rather than retaining them for appropriate purposes. Thus, plaintiff himself has previously taken the position that the president used Nassau for "personal profit or advantage," an event which the D&O policy excluded from liability coverage.
Plaintiff now emphasizes that there is no indication the jury ever specifically found the president had used the Nassau funds for his personal needs. But the record indicates that both the jury and this Court found Ardra Insurance Company, which the president controlled (his wife Jeanne was Ardra's controlling shareholder), gained a certain advantage by receiving Nassau funds for which he did not account (see Jarvis Christian Coll. v National Union Fire Ins. Co. of Pittsburgh, Pa., 197 F3d 742, 747 [5th Cir 1999]). The "personal profit or advantage" the president received was more than just a mere "derivative benefit" (cf. In re Donald Sheldon & Co., 186 BR 364, 369 [SD NY 1995]). [*2]
Federal Ins. Co. v Kozlowski (2005 NY App Div LEXIS 3029, 2005 WL 646497), on which plaintiff relies, does not warrant a different conclusion. There, unlike the present case, the allegations against the director in the underlying actions did not solely and entirely fall within the personal profit exclusion (id. at *17-18).
In any event, the record reflects, at the very least, that coverage is barred pursuant to the D&O policy's "dishonesty exclusion." In the underlying action, we observed that the jury concluded the president had diverted Nassau's premiums to his other entities "as part of an integrated transaction designed to benefit [his] entities" (304 AD2d at 363). Surely, the jury's finding in this regard and its decision that the president should pay the Nassau estate millions of dollars demonstrated a determination that his actions had been intentional. Our final adjudication established that the insureds had purposely and intentionally committed active and deliberate dishonesty, and thus placed the matter squarely within the liability exclusion of the D&O policy.
Plaintiff's reliance on In re Donald Sheldon (186 BR 364, supra) is misplaced. That case involved a general verdict that the defendants violated the business judgment rule, engaging in either self-dealing, fraud or bad faith. The court held that a finding of dishonesty was not necessary to the judgment (id. at 370). Here, by contrast, both the jury (in its special verdict) and this Court found the DiLoretos had intentionally diverted assets to their own entities, which by definition constituted acts of dishonesty. Moreover, the record indicates that the "loss" in this case is uninsurable under New York law (see Reliance Group Holdings v National Union Fire Ins. Co. of Pittsburgh, Pa., 188 AD2d 47, 54-55 [1993], lv dismissed in part, denied in part 82 NY2d 704 [1993]; see also Vigilant Ins. Co. v Credit Suisse First Boston Corp., 10 AD3d 528 [2004]).
Nor is defendant obligated to reimburse plaintiff for his costs in defending Nassau's treasurer in the third-party action brought by Nassau's president. As plaintiff has readily acknowledged, he was not obligated to advance defense costs for the treasurer, who at the time of the third-party action was an officer in plaintiff's Liquidation Bureau. Thus, there is no indication that the treasurer was "entitled to indemnification by [Nassau]" under the D&O policy. That it may be good public policy or business sense for the State Insurance Department to defend its employees who are former directors of insurance companies does not translate into a requirement that an insurer of a D&O policy must reimburse the Department in that instance, notwithstanding a provision in the policy that the insurer must provide coverage if the director is entitled to it. Plaintiff's reliance on Mid-City Shopping Ctr. v Consolidated Mut. Ins. Co. (35 AD2d 1053 [1970]) is unavailing. The plaintiff seeking reimbursement in that case was the insured's alternate insurer, whereas here it cannot be said that either Nassau or plaintiff was, by any definition, an insurer of the treasurer.
In an action to recover damages for personal injuries, the plaintiff appeals from a judgment of the Supreme Court, Kings County (Ruchelsman, J.), entered August 16, 2004, which, upon an order of the same court dated July 23, 2004, granting that branch of the defendant's motion which was for summary judgment dismissing the complaint, dismissed the complaint.
ORDERED that the judgment is affirmed, with costs.
The plaintiff, a New York resident, allegedly was injured in Mexico while traveling as a passenger in a vehicle driven by her husband and rented in Acapulco, Mexico, from Alquiladora de Vehiculos Automotores, S.A. de C.V. (hereinafter Alquiladora), a Mexican entity. Alquiladora, which was the registered owner of the vehicle, was a licensee of Hertz International Corporation, a wholly-owned subsidiary of the defendant.
The plaintiff did not allege any negligence on the part of Alquiladora, Hertz International Corporation or the defendant. Rather, her complaint alleged that the accident was caused by her husband's negligence in operating the vehicle. The plaintiff nevertheless sought recovery against the defendant on the theory that the owner of the vehicle is vicariously liable for the driver's negligence under Vehicle and Traffic Law § 388, and that the defendant, in turn, is vicariously liable, under a theory of apparent agency, for the owner's vicarious liability. The defendant moved, inter alia, for summary judgment dismissing the complaint.
At the outset, the Supreme Court correctly determined that Vehicle and Traffic Law § 388 is inapplicable in this case, since it is undisputed that the subject vehicle was never registered, [*2]used, or operated in New York (see Fried v Seippel, 80 NY2d 32, 40; see also Klippel v U-Haul Co., 759 F2d 1176, 1181-1183). The plaintiff's conclusory assertion that she and her husband at some point formed the intent to drive the rental vehicle from Mexico back to their home in New York was insufficient, in and of itself, to raise a triable issue of fact as to the extraterritorial effect of Vehicle and Traffic Law § 388. The plaintiff failed to tender any evidence to establish, among other things, that she or her husband communicated to Alquiladora or to anyone else their alleged intent to drive the vehicle to New York. The defendant, in contrast, submitted an affidavit from Alquiladora's general manager stating that the plaintiff's husband never requested Alquiladora's permission to drive the vehicle outside of Mexico. Moreover, the husband testified at his deposition that he purchased round-trip plane tickets to Mexico for himself and for the plaintiff.
In any event, even assuming that Alquiladora, as the registered owner of the vehicle, could have been held vicariously liable for the driver's negligence under Vehicle and Traffic Law § 388, the plaintiff cannot, under a theory of apparent agency, seek to hold Alquiladora's licensor - let alone the parent company of that licensor - vicariously liable for Alquiladora's liability as owner under Vehicle and Traffic Law § 388. The vicarious liability imposed on the owner of a vehicle is a creature of statute. The definition of "owner," as used in Vehicle and Traffic Law § 388(3), is strictly limited, in relevant part, to a person having a property interest in "or title to a vehicle" (Vehicle and Traffic Law § 128). Such definition cannot be judicially expanded, through the doctrine of apparent agency, to include persons, such as the defendant, having no property interest in or title to the subject vehicle.
Generally, in order to succeed against a principal on a claim of apparent agency, the plaintiff must establish, inter alia, the apparent agent's negligence (see Bank v Rebold, 69 AD2d 481, 493-494; Hamilton v Hertz Corp., 130 Misc 2d 1034, 1036-1037; Restatement [Second] on Agency § 267). Here, the plaintiff does not contend that Alquiladora was negligent in causing the accident; to the contrary, she claims that the accident was caused solely by the negligence of her husband. Therefore, the plaintiff's reliance on the doctrine of apparent agency to hold the defendant liable in this case is misplaced, and the Supreme Court properly granted the defendant's motion for summary judgment dismissing the complaint.
The parties' remaining contentions either are academic in light of our determination, or without merit.
Binyan Shel Chessed, Inc. v. Goldberger Insurance Brokerage, Inc.
In an action, inter alia, to recover damages for negligence and for a judgment declaring that the defendant Colonial Cooperative Insurance Co. is obligated to defend and indemnify the plaintiff with respect to an occurrence in July 1999 involving Abraham Katz, the defendants Goldberger Insurance Brokerage, Inc., and Colonial Cooperative Insurance Co. separately appeal from an order of the Supreme Court, Kings County (M. Garson, J.), dated March 31, 2004, which denied, as premature, their separate motions for summary judgment dismissing the complaint insofar as asserted against them, with leave to renew after the completion of depositions.
ORDERED that the order is modified, on the law, by deleting the provision thereof denying the defendant Colonial Cooperative Insurance Co.'s motion for summary judgment and substituting therefor a provision granting that motion; as so modified, the order is affirmed, without costs or disbursements, the complaint is dismissed insofar as asserted against the defendant Colonial Cooperative Insurance Co., the action against the remaining defendants is severed, and the matter is remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that the defendant Colonial Cooperative Insurance Co. is not obligated to defend and indemnify the plaintiff [*2]with respect to an occurrence in July 1999 involving Abraham Katz.
The plaintiff contracted with the defendant American Building Corporation (hereinafter American) to perform renovation work on its premises. Goldberger Insurance Brokerage, Inc. (hereinafter Goldberger), which is American's insurance broker, delivered a "certificate of liability insurance" to the plaintiff stating that American had liability insurance with Colonial Cooperative Insurance Co. (hereinafter Colonial) and that the plaintiff was an additional named insured. The certificate was dated July 15, 1999, and stated that the policy number was ACC5449828 with a policy term running from December 1, 1998, until December 1, 1999. The certificate further stated that it was "issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend or alter the coverage afforded by the policies below."
On or about July 20, 1999, a worker for one of American's subcontractors was injured on the plaintiff's premises. In this action against, among others, Colonial, Goldberger, and American, the plaintiff seeks damages and a judgment declaring that Colonial is obligated to defend and indemnify it for the accident.
Colonial moved for summary judgment, stating that a search of its records revealed no policy insuring either American or the plaintiff, and that it never issued a policy which began with the letters "ACC."
Goldberger separately moved for summary judgment on the grounds, inter alia, that there was no privity of contract between it and the plaintiff, and the certificate of insurance contained a disclaimer that it conferred no rights on the certificate holder. Goldberger's president, Chaim Goldberger, submitted an affirmation which stated that American was one of Goldbergers's customers but Goldberger never received payment from American for the subject Colonial policy, and accordingly, "the policy was never procured."
In opposition, the plaintiff's president claimed that Chaim Goldberger "specifically represented" that he procured the insurance "on behalf of American for the benefit of" the plaintiff and that both Goldberger and American represented that "payment had been made for the policy."
The Supreme Court denied both motions as premature, with leave to renew after the completion of depositions.
Further discovery would yield no basis to impose liability upon Colonial, which did not issue an insurance policy (see Spatola v Gelco Corp., 5 AD3d 469). Therefore, Colonial's motion for summary judgment should have been granted, and we remit the matter to the Supreme Court, Kings County, for the entry of a judgment declaring that Colonial is not obligated to defend and indemnify the plaintiff with respect to an occurrence in July 1999 involving Abraham Katz.
Since there was no privity of
contract between Goldberger and the plaintiff, the plaintiff cannot recover
from Goldberger for its pecuniary loss "absent evidence of fraud, collusion,
or other special circumstances" (Calamari v Grace, 98 AD2d 74, 83;
see Good Old Days Tavern v Zwirn, 259 AD2d 300; Metral v Horn, 213
AD2d 524, 526). However, "a cause of action sounding in fraud does not require
the existence of a relationship of privity or something close to privity
between the parties" (Metral v Horn, supra at 526). Under the
particular facts of this case, summary [*3]judgment
to Goldberger at this juncture would be premature. The certificate was issued
over six months after the policy purportedly went into effect. Therefore, a
question arises as to why Goldberger was not aware that the policy had not
been paid for at the time the certificate was issued. Further, a question
arises as to how Goldberger came to use a policy number with a prefix which
was never a policy prefix in existence for this carrier. Depositions should
therefore be held.
ADAMS, J.P., GOLDSTEIN and LIFSON, JJ., concur.
SANTUCCI, J., concurs in part and dissents in part and votes to reverse the
order, and grant both motions for summary judgment dismissing the complaint
insofar as asserted against the appellants, with the following memorandum:
I agree that the insurer, Colonial Cooperative Insurance Co., was entitled to summary judgment dismissing the complaint insofar as asserted against it. However, the insurance agent, Goldberger Insurance Brokerage (hereinafter Goldberger), also was entitled to summary judgment dismissing the complaint insofar as asserted against it.
It is well settled that the duty of an insurance broker runs to its customer and not to any additional insureds since there is no privity of contract for the imposition of liability (see St. George v Barney Corp., 270 AD2d 171, 172; see also Halali v Vista Envts., 245 AD2d 422). The majority opinion acknowledges that there was no privity of contract between Goldberger and the plaintiff, and thus the plaintiff cannot recover from Goldberger unless there is evidence of "fraud, collusion or other special circumstances." However, the majority concludes that the circumstances of the case, including the fact that the certificate of insurance was issued six months after the insurance policy allegedly went into effect, raises issues of fact concerning the "possibility of fraud and collusion between Goldberger and American," the contractor for whom Goldberger was to obtain the subject insurance. I disagree.
The certificate of insurance clearly stated that it "confers no rights upon the certificate holder." Thus, it was unreasonable for the plaintiff to rely on the certificate as evidence that an insurance policy existed which protected its interests. Indeed, this court has consistently held that such a certificate is insufficient to establish an issue of fact as to the existence of the alleged insurance coverage (see Halmar Builders v Team Star Contractors, Inc., 13 AD3d 581; American Ref-Fuel Co. of Hempstead v Resource Recycling, 248 AD2d 420; Trapani v 10 Arial Way Assoc., 301 AD2d 644). In addition, the issuance of the certificate cannot serve as a basis for a cause of action alleging either fraud or negligent misrepresentation (see Greater N.Y. Mut. Ins. Co. v White Knight Restoration, 7 AD3d 292; Benjamin Shapiro Realty Co. v Kemper Natl. Ins. Cos., 303 AD2d 245). Moreover, contrary to the majority's conclusion, the mere fact that the certificate at issue bears a date which is more than six months after the insurance policy allegedly became effective does not sufficiently raise the specter of fraud or collusion, there being no evidence in the record as to when the certificate was requested.
With respect to the allegation that Chaim Goldberger told the plaintiff's principal that he had obtained the insurance, this statement, without more, did not demonstrate evidence of fraud. In this regard, it is noted that the complaint does not plead a cause of action in fraud or even state facts which would support such a claim (see CPLR 3016[b]; Pitcherello v Moray Homes, 150 AD2d [*4]860). Moreover, the alleged misrepresentation relates solely to Goldberger's breach of agreement to obtain the subject insurance. There was no showing of any misrepresentation collateral to the breach. Under such circumstances, it cannot be concluded that there was adequate evidence of fraud so as to overcome the lack of privity between the plaintiff and Goldberger, and thus to potentially render Goldberger liable to the plaintiff (see generally Glanzer v Keilin & Bloom, 281 AD2d 371; Fort Ann Cent. School Dist. v Hogan, 206 AD2d 723; see also Briand Parenteau Assocs. v HMC Assocs., 225 AD2d 874; Metropolitan. Transp. Auth. v Triumph Adv. Prods., 116 AD2d 526).
Finally, the mere possibility of a factual issue is insufficient to defeat entitlement to summary judgment, and further discovery should not be permitted when it is merely a "fishing expedition" (Amsterdam Sav. Bank v Terra Domus Corp., 97 AD2d 41, 45; see CPLR 3212[f]). Indeed, "[t]he mere hope that evidence sufficient to defeat [a motion for summary judgment] may be uncovered during the discovery process is insufficient" (Spatola v Gelco Corp., 5 AD3d 469, 470; see Frouws v Campbell Foundry Co., 275 AD2d 761; Mazzaferro v Barterama Corp., 218 AD2d 643).
Accordingly, since Goldberger cannot be liable to the plaintiff as matter of law, it was entitled to summary judgment dismissing the complaint insofar as asserted against it.
474431 Associates v. AXA Global Risks U.S. Insurance Company
In a consolidated action, inter alia, for a judgment declaring that the defendant AXA Global Risks U.S. Insurance Company, is a co-insurer with the defendant Allcity Insurance Company with respect to the causes of action brought by the plaintiffs, Allcity Insurance Company appeals from an order of the Supreme Court, Kings County (M. Garson, J.), dated December 3, 2004, which denied its cross motion for summary judgment declaring that AXA is a co-insurer and granted the motion of AXA Global Risks U.S. Insurance Company for summary judgment declaring that it is not a co-insurer.
ORDERED that the order is reversed, on the law, with costs, the motion is denied, the cross motion is granted, and the matter is remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that the defendant AXA Global Risks U.S. Insurance Company is a co-insurer with the defendant Allcity Insurance Company in connection with the causes of action brought by the plaintiffs, and the action against the remaining defendants is severed.
In an underlying action entitled Rios v 474431 Associates, commenced in the Supreme Court, Kings County, under Index No. 39469/94, Ruperto Rios obtained a judgment against 474431 Associates, a plaintiff in the instant action, the owner of the premises where Rios was injured [*2](hereinafter the owner). This judgment was satisfied by the owner's insurance carrier, the plaintiff National Union Fire Insurance Company of Pittsburgh Pennsylvania (hereinafter AIG). The owner commenced a third-party action against Rios's employer, A.S.L. Associates (hereinafter ASL), and obtained a judgment for common-law indemnification against ASL.
Thereafter, the plaintiffs commenced an action, inter alia, for a judgment declaring that ASL's Worker's Compensation carrier, the defendant Allcity Insurance Company (hereinafter Allcity), and its general liability carrier, the defendant AXA Global Risks U.S. Insurance Company (hereinafter AXA), were required to reimburse AIG for the judgment amount it paid to Rios. AXA commenced a separate action seeking, inter alia, a declaration that Allcity was the responsible carrier. Following consolidation of these two actions and after mediation, the parties entered into a settlement, with AIG accepting $130,000 in full satisfaction of its claims.
The settlement further permitted AXA and Allcity to make motions for summary judgment aimed at establishing their respective responsibility for the payment to AIG. In its motion, AXA argued that the policy it issued to ASL did not cover the risk. In its cross motion for summary judgment, Allcity argued that AXA was a co-insurer of the risk.
Contrary to the Supreme Court, we hold that, as AXA's decision to disclaim coverage was based on a policy exclusion and not the absence of coverage inclusion, AXA was required to give timely notice of the disclaimer under Insurance Law § 3420(d) (see Interested Underwriters at Lloyds v Midge Rest. Corp., 283 AD2d 459, 460; Sphere Drake Ins. Co. v Block 7206 Corp., 265 AD2d 78, 82; cf. Matter of Continental Casualty Co. v Luhrs, 299 AD2d 357, 358).
Allcity satisfied its prima facie burden of demonstrating its entitlement to judgment as a matter of law (see Alvarez v Prospect Hosp., 68 NY2d 320, 324) with respect to the untimeliness of AXA's disclaimer (see General Acc. Ins. Co. v Villani, 200 AD2d 711). In opposition, AXA failed to raise a triable issue of fact (see id.). Accordingly, the Supreme Court erred in granting the motion and denying the cross motion.
In the Matter of American Express Property Casualty Co. v. Vinci
In a proceeding pursuant to CPLR article 75 to stay arbitration of an uninsured motorist claim, the petitioner appeals, as limited by its brief, from so much of an order of the Supreme Court, Westchester County (Bellantoni, J.), entered November 26, 2003, as denied that branch of its petition which was for a permanent stay of arbitration on the ground that its insured breached the insurance policy by making material misrepresentations to it, or in the alternative, for a temporary stay of arbitration and a framed issue hearing to determine whether its insured breached the insurance policy by making material misrepresentations to it.
ORDERED that the order is affirmed insofar as appealed from, without costs or disbursements.
Insurance Law § 3420(d) requires an insurer to provide a written disclaimer "as soon as is reasonably possible." Reasonableness of the delay is measured from the time when the insurer "has sufficient knowledge of facts entitling it to disclaim, or knows that it will disclaim coverage" (First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 66). The insurer bears the burden of justifying any delay (id. at 69). [*2]
The petitioner acquired "sufficient knowledge of facts entitling it to disclaim" coverage at the examination under oath of its insured on February 21, 2003. Contrary to the petitioner's contention, "the obligation to provide prompt notice under Insurance Law § 3420(d) is triggered when the insurer has a reasonable basis upon which to disclaim coverage, and cannot be delayed indefinitely until all issues of fact regarding the insurer's coverage obligations have been resolved" (Republic Franklin Ins. Co. v Pistilli, 16 AD3d 477). Thus, under the circumstances of this case, the petitioner's failure to disclaim coverage until April 10, 2003, was unreasonable as a matter of law (see Moore v Ewing, 9 AD3d 484; Colonial Penn Ins. Co. v Pevzner, 266 AD2d 391).
Utica First Insurance Company v. Arken, Inc.
In an action
for a judgment declaring that the plaintiff is not obligated to defend or
indemnify the defendant Arken, Inc., in an underlying action entitled
Furtado v C&M Holding Corp., pending in the Supreme Court, Kings County,
under Index No. 49192/99, the defendants C&M Holding Corporation and Town
Sports International, Inc., appeal from an order of the Supreme Court, Kings
County (Douglass, J.), dated January 22, 2004, which granted the plaintiff's
motion for summary judgment and denied their cross motion for summary
judgment.
ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that the plaintiff is not obligated to defend and indemnify the defendant Arken, Inc., in the underlying action entitled Furtado v C&M Holding Corp., pending in the Supreme Court, Kings County, under Index No. 49192/99.
An insurer who seeks to disclaim coverage on the ground of noncooperation is required to demonstrate that (1) it acted diligently in seeking to bring about the insured's cooperation, (2) its efforts were reasonably calculated to obtain the insured's cooperation, and (3) the attitude of the insured, after its cooperation was sought, was one of willful and avowed [*2]obstruction (see Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168-169; Matter of New York Cent. Mut. Fire Ins. Co. v Bresil, 7 AD3d 716).
In this instance, the plaintiff and the law firm it retained to represent the defendant Arken, Inc. (hereinafter Arken), made diligent efforts, by means of correspondence and numerous telephone calls, which were reasonably calculated to bring about Arken's cooperation. Furthermore, the evidence supports the conclusion that the insured willfully obstructed the plaintiff's defense of the underlying litigation. By verbal instruction and written correspondence, the insured was made fully aware of its contractual obligation to cooperate in defending the litigation (see State Farm and Cas. Co. v Imeri, 182 AD2d 683).
The appellants' remaining contentions are without merit.
In the Matter of AIU Insurance Company v. Orellana
In a proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of a claim for uninsured motorist benefits, the appeal is from so much of an order of the Supreme Court, Suffolk County (Molia, J.), dated July 6, 2004, as, in effect, granted that branch of the petition which was for a temporary stay of arbitration pending a hearing to determine whether there was physical contact between the appellants' vehicle and the alleged hit-and-run vehicle.
ORDERED that the order is reversed insofar as appealed from, on the law, with costs, the petition is denied, and the proceeding is dismissed.
Contrary to the petitioner's
contention and the determination of the Supreme Court, the petitioner's claim
that arbitration should be stayed on the ground that there was no physical
contact between the appellants' vehicle and the hit-and-run vehicle does not
relate to whether the parties had an agreement to arbitrate (see generally
Matter of Matarasso, 56 NY2d 264). Rather, the issue of physical contact
relates to whether certain conditions of the insurance contract were complied
with, and therefore had to be asserted within the 20-day time limit set forth
in CPLR 7503(c) (see Matter of Steck, 89 NY2d 1082; Matter of
Merchants Mut. Ins. Co. v Anemone, 271 AD2d 690; Matter of Allstate
Ins. Co. v Taylor, 271 AD2d 443; Matter of DelGaudio v Aetna
Ins. Co., 262 AD2d 641; Matter of Nationwide Ins. Co. v McDonnell,
248 AD2d 476; Matter of CNA Ins. Co. v Carsley, 243 AD2d 474).
Accordingly, the petition to stay arbitration, which was served well beyond
the 20-day statutory period, was untimely and should have been dismissed.
COZIER, J.P., KRAUSMAN, MASTRO and FISHER, JJ., concur.
Judgment,
Supreme Court, New York County (Rosalyn Richter, J.), entered June 30, 2004,
dismissing the third-party complaint, and bringing up for review an order
which, in an action for legal malpractice, granted the motion of third-party
defendant legal malpractice insurer (CIC) for summary judgment declaring that
it is not required to defend or indemnify defendant and third-party plaintiff
attorney (Quaranta) in the main action, and also granted the motion of
third-party defendant successor attorney (Finkelstein) for summary judgment
dismissing Quaranta's claims for contribution and indemnity, unanimously
modified, on the law, to vacate the dismissal of the action as against CIC and
to substitute therefor a declaration that CIC is not obligated to defend or
indemnify Quaranta in the main action, and otherwise affirmed, without costs.
The motion court correctly held that CIC has no obligation to defend or indemnify Quaranta in the main action on the ground that Quaranta failed to give CIC notice of plaintiff's potential malpractice claim against him as soon as practicable, as the policy required. Uncontroverted evidence establishes that, for at least 8½ months before he gave CIC notice of plaintiff's malpractice claim, Quaranta could not have had a reasonable belief that plaintiff would not or could not assert a malpractice claim against him (see Security Mut. Ins. Co. v Acker-Fitzsimons Corp., 31 NY2d 436, 441 [1972]; SSBSS Realty Corp. v Public Serv. Mut. Ins. Co., 253 AD2d 583, 584-585 [1998]) based on his untimely filing of a notice of plaintiff's personal injury claim against the City that inaccurately set forth the place of injury. Quaranta should have given CIC notice of the potential malpractice claim no later than the time he learned of the court's denial of his application to amend and deem timely plaintiff's notice of claim against the City, which the City had rejected as untimely. At that point, Quaranta, who had been discharged by plaintiff even before he made such application, could no longer reasonably believe that a malpractice claim would not be asserted against him, and his subsequent 8½-month delay in notifying CIC of the potential claim was unreasonable as a matter of law. We reject Quaranta's argument that, until he was advised of plaintiff's intent to sue him for malpractice, it was reasonable for him to delay giving CIC notice of the potential malpractice claim while plaintiff could still take an appeal from the adverse order concerning her notice of claim against the City (see Bellefonte Ins. Co. v Albert, 99 AD2d 947, 948-949 [1984]).
Contrary to Quaranta's further argument, his untimely notice of the malpractice claim negates coverage whether or not the delay caused CIC any prejudice, as the Court of Appeals recently reiterated (Argo Corp. v Greater New York Mut. Ins. Co., __ NY3d __, 2005 NY LEXIS 770 [April 5, 2005]). Nor is there any merit to Quaranta's argument that the notice of the malpractice claim subsequently given to CIC by plaintiff's malpractice attorney was timely under Insurance Law § 3420 (see Ringel v Blue Ridge Ins. Co., 293 AD2d 460 [2002]).
The motion court also correctly granted the cross motion by Finkelstein, the firm that succeeded Quaranta as plaintiff's attorney, for summary judgment dismissing the third-party complaint as against it. Since plaintiff did not retain Finkelstein until after the statute of limitations had already expired on her personal injury claim against the City, Finkelstein's conduct did not contribute to the loss of that claim, and there is no basis for requiring Finkelstein to absorb any liability that may ultimately be imposed on Quaranta for such loss (see Lifshitz v Brady, 298 AD2d 437 [2002]). In any event, the record establishes that Finkelstein did not commit any malpractice.
