Coverage Pointers - Volume VI, No. 2

9/23/04           Maroney v. New York Central Mutual
Appellate Division, Third Department
Court Considers Disclaimer Based on Business Pursuits Exclusion Which Mentions Only One of Two Businesses.  Also, What IS an Insured Location
Disclaimer letter mentioned one of two of insured’s businesses when the letter cited the “business pursuits exclusion” under a homeowner’s policy.  Eventually, it was OTHER business that became in important in coverage dispute.  Appellate Division held that reference to the business pursuits exclusion was broad enough to encompass to put insured of notice of reason for denial of coverage, even though second business wasn’t specifically mentioned.  Moreover, since accident occurred across the road from the insured premises, in a barn (coincidentally insured under another carrier’s policy) accident did not occur on insured premises so that exclusion barred coverage as well.

 

9/21/04           In re United Services Automobile Association v. Bertan

Appellate Division, First Department

Insurer Cannot Be Compelled To Arbitrate In Venue That Contravenes Policy Language

The policy in question provided that arbitration of uninsured motorist claims would take place in the county in which the covered person lived at the time of the accident, and appellant insured did not, at the time of the accident, live in New York County.  Court held that the insurer could not be compelled to arbitrate the subject claims in New York County. Although respondent insurer was precluded, pursuant to CPLR 7503(c) and a prior court order, from objecting to arbitration on the ground that a valid agreement to arbitrate had not been made or complied with, the insurer could still object to proceeding in a venue other than one to which it may be deemed to have agreed under the governing policy.

 

9/20/04           KING'S MEDICAL SUPPLY v. HEREFORD INSURANCE

Appellate Division, Second Department

Triable Issue of Fact as to Timeliness of Denial

In an action to recover first party no-fault benefits, plaintiff established its prima facie entitlement to summary judgment by showing that it submitted a properly completed claim form to defendant.  The plaintiff's billing manager asserted that the defendant's denial was untimely and he submitted a photocopy of a postmarked envelope that allegedly contained the denial form.  However, defendant submitted the affidavit of its claims adjuster who attested to the routine procedure and practice of her office, in
the regular course of its business and indication that the denial had been duly addressed and mailed to plaintiff previously.  The court found the lower court properly found a triable issue of fact existed as to timeliness of the denial.

 

9/20/04           State Farm Mutual v. Eastman
Appellate Division, Second Department
Failure to Move to Stay Uninsured Motorist Arbitration is Not Fatal to Carrier if Policy Never Existed
Generally, if an auto carrier believe a uninsured motorist claim should not go forward because of untimeliness, because there was no “physical contact,” because the offending car is not “uninsured,” etc, it MUST make an application to permanently stay arbitration with 20 days of service of the arbitration demand (or be forever barred from raising those issues of “arbitrability”).  However, here, the Court held that the missing the 20 day time period was not fatal where there was, in fact, no policy issued to the insured on the day of the accident.

 

9/17/04           A.B. MEDICAL SERVICES v. STATE FARM

Appellate Division, Second Department

Question as to Timely Claim Forms as Fraudulent Scheme Lurks in Background

In another action to recover no-fault benefits, plaintiffs' affidavit in support of their motion for summary judgment was insufficient when it set forth only that the affiant is a practice and billing manager and an officer of plaintiff because there were three named plaintiffs each asserting independent standing as an insured's assignee. The court could not assume that the affiant acted on behalf of one particular plaintiff or on behalf of all of the plaintiffs and so the affidavit was insufficient to establish that plaintiffs provided defendant with properly completed claim forms.  In addition, defendant failed to establish its entitlement to dismissal based on failure to cooperate with its requests for examinations under oath because when plaintiffs filed their claims, there was no provision in the insurance regulations for such a procedure and the mandatory no-fault endorsement cannot be qualified by conditions of the liability portions of the policy.  Note:  for reasons set forth in the related case of  Ocean Diagnostic Imaging P.C. v State Farm Mut. Auto. Ins. Co.( involving the same assignors and the same traffic incident) the court found defendant's claim that the underlying traffic incident was staged pursuant to a scheme to defraud was supported by sufficient factual allegations in admissible form to require a trial.

 

9/16/04           Gousgoulas v. Melendez
Appellate Division, Second Department
”Tailored” Doctor’s Affidavit Insufficient to Defeat Serious Injury Summary Judgment Motion
Defendant’s examining physician’s affidavit established, prima facie, the lack of a “serious injury” on the part of the plaintiff. Plaintiff’s submitted an orthopedist’s affirmation which the court found was “designed merely to tailor the plaintiff’s claim to meet statutory requirements” and found it was “notable for its complete lack of any verified objective medical findings”.  In addition, there was no competent medical evidence supporting her “90 day disability” claim..  Case dismissed.

 

9/16/04           Vigilant Insurance Company v. Credit Suisse First Boston Corporation

Appellate Division, First Department

No Liability Coverage for Recovery of Ill-Gotten Gains

The court properly held that the defendant could not recover through its insurers the amount of the settlement with the SEC and NASDR which represented the disgorgement of funds improperly acquired. The risk of being directed to return improperly acquired funds is not insurable. Restitution of ill-gotten funds does not constitute "damages" or a "loss" as those terms are used in insurance policies.  Similarly, there was no recovery of defense costs since the loss was not a covered loss.

 

9/16/04           The Gap, Inc. v. Fireman’s Fund Insurance Company
Appellate Division, First Department

Additional Insured Under Liability Policy Cannot Squeeze Out Proceeds for Property Damage to Its Own Property
Insurance coverage for damage to property owned by the insured, or "first-party coverage," pays the insured the proceeds when the damage occurs; it protect a different interest than a liability policy. Liability insurance covers one's liability to others for bodily injury or property damage, while property insurance covers damage to one's own property".  The Gap contends that since it is not named as an additional insured under the portion of the policy that provides the named insured coverage for property damage, it may reasonably be covered for property damage under the liability portion of the policy. However, it would be anomalous for a named insured to receive first-party coverage under the property portion of an insurance policy while an additional insured received first-party coverage under the general liability portion of the policy, and such an anomaly cannot be assumed to be the intent of the parties to the insurance contract. That it was not the intent of the named insured and The Gap in the instant case is manifest in the construction agreement between them, which expressly obligated The Gap to maintain its own property insurance.

 

 

9/13/04           Kay Bee Builders v. Merchant's Mutual Insurance Company

Appellate Division, Second Department

No Coverage Where Policy Excludes Damages Caused By Plaintiff and Exempts the Specific Work

Exclusions in the commercial general liability policy issued by defendant Blue Ridge Insurance Company to the plaintiff applied to damage caused by the plaintiff or one of its subcontractors to the plaintiff's work product, and therefore excluded the plaintiff's claim from coverage.  In addition, a separate exclusion modified the policy to exempt "roofing" from the designated work that was covered.  The court reminds that "policy exclusions are to be read seriatim and, if any one exclusion applies, there is no coverage since no one exclusion can be regarded as inconsistent with another".

 

9/13/04           Hospital for Joint Diseases v. Countrywide Insurance Company

Appellate Division, Second Department

Evidence That Claims For No-Fault Were Previously Billed and Denied Sufficient To Raise Triable Issue of Fact

Plaintiffs submitted evidentiary proof that the defendant insurance company had not responded to their February 19, 2003, and January 15, 2003, claims for no-fault medical benefits within 30 days as required by Insurance Law § 5106(a) and 11 NYCRR 65.15(g)(3). In opposition, defendant submitted documentary evidence and an affidavit of an employee asserting that the same claims had originally been billed over one year earlier and that timely denial of claim forms had been mailed to the plaintiffs at that time.  Defendant’s opposition papers constituted sufficient admissible evidence to raise triable issues of fact as to the dates plaintiffs mailed the no-fault claims to the defendant and whether defendant properly denied those claims.

 

8/30/04           Opinion 778 : Conflicts of Interest Representing Multiple Defendants
New York State Bar Association Committee on Professional Ethics

May a lawyer engaged by an insurance carrier represent two co-defendants who are named insureds when the amount of the plaintiff’s claims exceeds the policy limits and one co-defendant has indemnification claim against the other?

Often, insurance carriers, in an attempt to present a unified defense among co-insureds and to try to provide an effective, honorable yet more economical defense, assign one defense counsel to represent more than one insured under a policy.  For example, a law firm may be retained to represent the owner and driver of a motor vehicle, or the named and additional insureds under a CGL policy covering a construction site accident.  What happens when the amount sought in the complaint is in excess over the policy limits and one of the two clients might potentially have a claim against the other if there is an “excess verdict”?  Does that preclude one law firm from representing both?

 

The Ethics Committee of the New York State Bar Association considered that question in an Ethics opinion arising out of a local construction accident.  The ethics opinion concluded that:

 

·        Defense counsel assigned to represent more than one defendant must make an independent professional judgment if he or she believes that one client would be adversely affected by representing another;

·        Defense counsel must provide full disclosure of the implications of joint representation, advising all clients of the advantages and risks of joint representation;

·        The disclosure should explain the potential advantage to both clients of presenting a unified defense and the consequential disadvantage to one because of an inability to assert cross claims against the other;

·        If consent is obtained, joint representation is permissible but if there be subsequent litigation by one defendant against the other, the defense firm representing both in the lawsuit cannot represent either in the subsequent proceeding.

 

 

Across Borders

 

Visit the Hot Cases section of the Federation of Defense & Corporate Counsel website, www.thefederation.org recently ranked among the top five legal research websites in an article published in the January 2004 issue of Litigation News, a publication of the Litigation Section of the American Bar Association. Dan Kohane serves as the FDCC’s Website Editor.

9/17/04           FARMERS ALLIANCE MUTUAL V. DAMIAN GARCIA & EAGLE INS. Kansas Court of Appeals

Under Kansas Law, An Insurer Is Subject To Interest Penalties And Attorney Fees If Unable To Provide Proof That It Is Not Responsible For Personal Injury Protection Benefits
The trial court, although finding that the insurer was responsible for personal injury protection (“PIP”) benefits, did not assess attorney fees or interest penalties as requested. Under Kansas law, when an insurer refuses to pay PIP benefits, the insurer must provide reasonable proof to establish that it is not responsible for the PIP benefits, or a good faith belief that a controversy existed concerning the right to the payment. In the event an insurer fails to provide requisite proof, attorney fees and interest penalties are recoverable against the insurer. An award of attorney fees and interest are a matter of judicial discretion subject to being overruled only when there is an abuse of discretion. On appeal of the trial court’s denial of fees and penalties, the Kansas Supreme Court did not find an abuse of discretion, and affirmed the judgment.

Submitted by: Bruce D. Celebrezze & Michelle McIsaac (Sedgwick, Detert, Moran & Arnold LLP)

9/16/04           FARMLAND MUTUAL INS. CO. SCRUGGS
Mississippi Supreme Court

No Duty to Defend Farmer Who Stole Patented Genetically Modified Seeds
This action arose out of a complaint that Scruggs, a farmer, illegally obtained “Monsanto seeds”, (i.e. genetically modified seeds that are resistant to the herbicide.) Monsanto seeds are patented, and are licensed to seed companies, who in turn issue licenses to individual customers. The license only allows planting of seeds during that one season. No seeds can be saved for another season. Monsanto discovered that Scruggs had planted Monsanto seeds without a license, and brought suit for various intentional torts including, patent infringement and conversion. When Scruggs notified its insurer, Farmers Insurance of the pending suit, Farmland denied coverage on the basis that the acts were intentional, and therefore excluded under the policy. Scruggs filed suit against Farmland. The trial court granted partial summary judgment in favor of Scruggs, finding that the policy covered Scruggs and ordered Farmland to defend the suit. However, the Mississippi Supreme Court reversed, holding that the policy was clear and unambiguous that intentional torts were excluded from coverage. Further, Scruggs had not disputed the allegation that the use of the Monsanto seeds without a license was intentional, only that the effects were unintended. Therefore, the court found Farmland was not required to provide coverage for Scrugg’s intentional acts.

Submitted by: Bruce D. Celebrezze & Michelle McIsaac (Sedgwick, Detert, Moran & Arnold LLP

9/13/04           REPUBLIC INS. CO. V. PAICO RECEIVABLE LLC
Fifth Circuit Court of Appeals

Substantially Invoking The Judicial Process Waives A Party’s Right to Arbitrate Regardless Of A “No Waiver” Clause
The Fifth Circuit affirmed that Republic waived its right to arbitrate under a settlement agreement by invoking the judicial process. Prior to requesting arbitration days before trial, Republic undertook full-fledged discovery, amended its complaint, filed numerous discovery and pretrial motions, and answered PAICO’s counterclaims. Because of Republic’s extensive litigation activities, PAICO would be prejudiced if arbitration was compelled at this point. Further, the “no waiver” provision in the settlement agreement does not remove the district court’s inherent power to control its docket considering Republic’s broad invocation of the judicial process.

Submitted by: Gene M. Williams and Beth M. Bassani [Shook, Hardy & Bacon, LLP]

9/10/04           TERRA INDUSTRIES, INC. v. NATIONAL UNION FIRE INSURANCE Eighth Circuit Court of Appeals

Primary Liability Policy Limits Do Not Need to be Exhausted Before Excess Coverage Under Sunrise Endorsement Becomes Available

Terra Industries, a manufacturer and distributor of an agricultural pesticide, maintained primary liability insurance policies with CIGNA for claims stemming from use of the pesticide. After an excess claims-made policy through Lexington Insurance Co. expired, Terra purchased a replacement excess occurrence policy with National Union. Terra and National Union agreed to a sunrise endorsement to the excess policy to address the gap in excess coverage created by the change from a claims-made excess policy to an occurrence policy. National Union refused to pay any litigation costs for defending and settling several pesticide suits where the claims were made after the Lexington policy expired but were based on pre-expiration occurrences, arguing that Terra should have to exhaust all of its CIGNA coverage before National Union’s excess coverage would become available. The District Court ruled that under the sunrise endorsement, Terra was not required to exhaust its CIGNA policies and the excess coverage would become available once Terra’s liability exceeded its deductible with CIGNA. Based on the language of the endorsement, the Court of Appeals found that the limits listed in the endorsement were applicable to the pesticide suits, that they equaled the deductibles on the CIGNA policies, and that since the CIGNA policies were not mentioned in the endorsement they were not included in the monetary limits that must have been exhausted before coverage under the endorsement became available. Therefore, the Court held that the endorsement fully replaced the main policy’s retained limit calculations, and National Union’s obligation under the endorsement arose when Terra’s total liability on the lawsuits exceeded the deductibles on the CIGNA policies.

Submitted by: Steve Farrar and Rebecca Zabel [Leatherwood Walker Todd & Mann, P.C.]

9/10/04           HORNBUCKLE V. STATE FARM LLOYDS, ET AL.
Fifth Circuit Court of Appeals

Award of Attorneys' Fees Against Insurer Reversed Where Reasonable Grounds Existed To Support Its Belief That Removal Was Proper Because The Insured Could Not Produce Sufficient Evidence To Sustain A Finding Of Actionable Wrongdoing By Insurer’s Employee Under Texas Law.
 

Hornbuckle sued her insurer, State Farm Lloyds, and its employee, Claims Specialist Kirkpatrict, in Texas state court. Hornbuckle alleged that the defendants breached the insurance contract, violated the duty of good faith and fair dealing, violated the Texas Insurance Code (“TIC”) and violated the Texas Deceptive Trade Practices Act (“DTPA”). State Farm and Kirkpatrict removed the case to federal court, contending that Hornbuckle fraudulently joined Kirkpatrict to destroy diversity. The district court remanded the case to state court and awarded attorneys’ fees. The Fifth Circuit Court of Appeals reversed the award of attorneys’ fees and held that for removal purposes, a local defendant is deemed fraudulently joined not only when there is no arguable reasonable basis for predicting that the local law would recognize the cause of action pled against that defendant, but also when, as shown by piercing the pleadings in a summary judgment type procedure, there is no arguably sufficient evidence to sustain a finding necessary to recover against that defendant. In this case, the court concluded that there is no reasonable possibility that Texas would allow recovery under the TIC or the DTPA against an insurance company employee who in the course of his employment engages in the business of insurance, in the absence of evidence sufficient to sustain a finding that the employee himself committed a violation of the TIC or the DPTA and that such violation was a cause of damage or legally recognized harm to the plaintiff.

Submitted by: Bruce D. Celebrezze & Serena C. Hunn (Sedgwick, Detert, Moran & Arnold LLP)

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

 

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Vigilant Insurance Company, Plaintiff-Counterclaim Defendant- Respondent,

v

Credit Suisse First Boston Corporation, Defendant-Counterclaim Plaintiff- Appellant-Respondent.



Credit Suisse First Boston Corporation, Plaintiff-Appellant-Respondent,

v

Various Underwriters at Lloyds of London and Certain London Companies, et al., Additional Counterclaim Defendants- Respondents-Appellants, Continental Casualty Company, et al., Additional Counterclaim Defendants- Respondents.

Order, Supreme Court, New York County (Karla Moskowitz, J.), entered July 17, 2003, which granted plaintiff-counterclaim defendant's and additional counterclaim defendants' [*2](collectively insurers) motions for summary judgment, declaring that defendant Credit Suisse First Boston Corporation (CSFB) is not entitled to coverage for that portion of its settlement with the SEC and NASDR which required disgorgement of certain funds allegedly improperly obtained through violations of various securities regulations; and which granted so much of the cross motion of CSFB as sought coverage for the costs of defending the securities investigation which led to the settlement, and referred the matter to a Special Referee to hear and report with recommendations on the proper amount of such defense costs, unanimously modified, on the law, to the extent of denying that portion of CSFB's cross motion that sought coverage for the costs of defending the securities investigation, and otherwise affirmed, with separate bills of costs in favor of plaintiff-counterclaim defendant and each additional counterclaim defendant payable by defendant Credit Suisse First Boston Corporation.

The court properly held that CSFB could not recover through its insurers the amount of the settlement with the SEC and NASDR which represented the disgorgement of funds improperly acquired. The risk of being directed to return improperly acquired funds is not insurable. Restitution of ill-gotten funds does not constitute "damages" or a "loss" as those terms are used in insurance policies (see Reliance Group Holdings, Inc. v Natl. Union Fire Ins. Co. of Pittsburgh, Pa., 188 AD2d 47, 55, lv dismissed in part and denied in part 82 NY2d 704; Level 3 Communications, Inc. v Fed. Ins. Co., 272 F3d 908, 911). Although the final judgment directing the disgorgement here at issue was based on a settlement and not on an adjudication after trial that CSFB wrongfully obtained the funds, the final judgment expressly states that the money ordered disgorged was "obtained improperly by CSFB as a result of the conduct alleged in the Complaint," and CSFB executed a "Consent and Undertaking of CSFB to final judgment of Permanent Injunctive and Other Relief" with the SEC, and a Letter of "Acceptance, Waiver and Consent" with the NASDR, in which it agreed not to contest the allegations of the complaint.

The court improperly granted CSFB's cross motion for summary judgment on the issue of its entitlement to defense costs incurred by reason of the regulatory investigation. The policy defines defense costs as a component of "Loss," which "shall not include matters which are uninsurable under the law pursuant to which this coverage section of this policy shall be construed . . ." As indicated, restitution of ill-gotten funds is not insurable under the law. Moreover, this is a no-duty-to-defend policy. While, under certain circumstances, the insurers must advance defense costs incurred by the insured in connection with a claim, the insured is obligated to repay such advance payments upon a finding that it is not entitled "to payment of [*3]such Loss." Thus, defense costs are only recoverable for covered claims (see e.g. Stonewall Ins. Co. v Asbestos Claims Mgt. Corp., 73 F3d 1178, 1219; In re Kenai Corp., 136 BR 59, 64 [SD NY 1992]).

The Gap, Inc., Plaintiff-Respondent,

v

Fireman's Fund Insurance Company, Defendant-Appellant.

 

Defendant appeals from an order, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered July 19, 2002, which denied its motion for summary judgment dismissing the complaint and declaring that it has no duty under the policy of insurance to indemnify plaintiff for its loss, granted plaintiff's cross motion for partial summary judgment on the issue of liability, and declared that plaintiff is entitled to recover for its property damage under the insurance policy.


ELLERIN, J.

Plaintiff The Gap was named as an additional insured on the standard commercial general liability portion of a portfolio insurance policy issued by defendant Fireman's Fund Insurance Company to nonparty Fisher Development, Inc. (FDI), a general construction contractor engaged [*2]to perform construction and improvement work at several of The Gap's sites. During the policy period, The Gap sustained damage to its premises at 45 West 18th Street when a heat pipe cap installed by one of FDI's subcontractors cracked and ruptured. The question before us is whether The Gap is entitled under the policy to coverage for the damage to its property.

The construction agreement between The Gap and FDI provided that each would maintain certain policies of insurance:

17. Insurance.

A. FDI's Obligations. FDI shall maintain the following insurance with a company or companies reasonably satisfactory to The Gap:

(i) Commercial general liability insurance with a combined single limit of at least Ten Million Dollars ($10,000,000) . . . ; and

(ii) statutory worker's compensation and employer's liability insurance . . . ; and

(iii) automobile liability insurance . . . ; and

(iv) such other insurance as may be required by The Gap, any landlord or any Addendum to this Agreement.

FDI shall furnish to The Gap certificates of such policies evidencing that:

(i) The Gap, its subsidiary corporations and affiliated companies, and their respective employees, and such other entity or entities as The Gap may direct, are named as additional insureds for any loss arising out of or in any way connected with the Work; . . .

B. The Gap's Obligations. The Gap shall maintain property insurance, or otherwise bear the risk of loss or damage to the Work, including materials and equipment, (but not including tools belonging to FDI or their subcontractors) intended for installation and any other loss customarily covered by so-called "builder's risk" insurance. This obligation of The Gap shall extend to FDI and its subcontractors and suppliers to the extent of their interest in the Work.

FDI was the named insured on a portfolio insurance policy issued by Fireman's Fund. The Gap was added as an additional insured on the commercial general liability (CGL) portion of the policy in an endorsement that provided:

Who is an insured (Section II) is amended to include as an insured the person or organization shown in the Schedule, but only with respect to liability arising out of your work for that insured by or for you.

The insuring agreement for the CGL coverage provided:

Coverage A. Bodily Injury and Property Damage Liability

1. Insuring Agreement

[*3]

We will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies.

The policy also contained an "owned property" exclusion, which provided:

This insurance does not apply to:

j. Property damage to:

(1) Property you own, rent or occupy; . . .

(5) That particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the property damage arises out of those operations; or

(6) That particular part of any property that must be restored, repaired or replaced because your work was incorrectly performed on it.

The words, "you" and "insured," were defined as follows:

Throughout this policy, the words you and your refer to the Named Insured shown in the Declarations. The words we, us and our refer to the company providing the insurance.

The word insured means any person or organization qualifying as such under SECTION II WHO IS AN INSURED.

The Gap contends that the owned property exclusion, which refers to property "you own, rent or occupy," applies only to the named insured and not to an additional insured such as itself. Fireman's Fund argues that, as an additional insured only under the general liability portion and not under the property portion of the policy, The Gap is not entitled to coverage for property damage.

"The meaning of a writing may be distorted where undue force is given to single words or phrases" (Empire Properties Corp. v Manufacturers Trust Co., 288 NY 242, 248). Examining the policy as an integrated whole to determine its purpose and effect and the apparent intent of the parties (see Murray Oil Products v Royal Exchange Assurance Co., 21 NY2d 440, 445), we find that the policy does not cover The Gap for damage to its own property.

The policy under which The Gap is named as an additional insured is a standard commercial general liability insurance policy, written on a standard Insurance Service Office (ISO) form. Since the purpose of general liability insurance is to provide coverage for liability to third parties (see Holmes' Appleman on Insurance 2d § 129.1[B], at 4), the standard CGL policy does not cover damage to property owned by the insured (id. at 166, Commercial General Liability Coverage Form, Exclusion j). A CGL policy pays a third-party claimant according to a judgment or settlement against the insured (see Great N. Ins. Co. v Mount Vernon Fire Ins. Co., 92 NY2d 682, 688, citing Holmes, supra, § 3.2).

In contrast, insurance coverage for damage to property owned by the insured, or "first-party coverage," pays the insured the proceeds when the damage occurs (Great N. Ins., supra at 687); it protects an interest "wholly different" from that protected by third-party coverage (id. at [*4]688). "The principal distinction between liability and property insurance is that liability insurance covers one's liability to others for bodily injury or property damage, while property insurance covers damage to one's own property" (Postner & Rubin, New York Construction Law Manual, § 10.06, Coverage, at 380 [emphasis in original]).

First-party coverage may be provided in a separate and distinct property insurance policy or, as in the instant case, in a separate portion of a portfolio policy. The Gap contends that since it is not named as an additional insured under the portion of the policy that provides FDI coverage for property damage, it may reasonably be covered for property damage under the liability portion of the policy. However, it would be anomalous for a named insured to receive first-party coverage under the property portion of an insurance policy while an additional insured received first-party coverage under the general liability portion of the policy, and such an anomaly cannot be assumed to be the intent of the parties to the insurance contract. That it was not the intent of FDI and The Gap in the instant case is manifest in the construction agreement between them, which expressly obligated The Gap to maintain its own property insurance.

In view of our decision, we do not reach The Gap's remaining contentions.

Accordingly, the order of the Supreme Court, New York County (Shirley Werner Kornreich, J.), entered July 19, 2002, which denied defendant's motion for summary judgment dismissing the complaint and declaring that it has no duty under the policy of insurance to indemnify plaintiff for its loss, granted plaintiff's cross motion for partial summary judgment on the issue of liability, and declared that plaintiff is entitled to recover for its property damage under the insurance policy, should be reversed, on the law, without costs, defendant's motion for summary judgment declaring that no coverage exists in favor of plaintiff under the policy granted, the complaint otherwise dismissed and plaintiff's cross motion for partial summary judgment denied. The Clerk is directed to enter judgment accordingly.

 

In re United Services Automobile Association, Petitioner-Respondent,

v

Gilbert Bertan, et al., Respondents-Appellants, American Arbitration Association, Proposed Additional Respondent.

Lambos & Junge, New York (Steven L. Barkan of counsel), for
appellants.
Paul F. McAloon, New York, for respondent.

Order, Supreme Court, New York County (Nicholas Figueroa, J.), entered September 10, 2003, which, to the extent appealed from as limited by the brief, implicitly denied respondents-appellants' motion seeking to compel petitioner insurer to arbitrate the subject uninsured motorist claim in New York County, unanimously affirmed, with costs.

Inasmuch as the policy in question provided that arbitration of uninsured motorist claims would take place in the county in which the covered person lived at the time of the accident, and appellant insureds did not, at the time of the accident, live in New York County, respondent insurer may not be compelled to arbitrate the subject claims in New York County. Although respondent insurer is precluded, pursuant to CPLR 7503(c) and a prior court order, from objecting to arbitration on the ground that a valid agreement to arbitrate had not been made or complied with, the insurer is not currently making such objection; it is merely objecting to proceeding in a venue other than one to which it may be deemed to have agreed under the governing policy.

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

ENTERED: SEPTEMBER 21, 2004

CLERK

Kay Bee Builders, Inc., plaintiff-respondent,

v

Merchant's Mutual Insurance Company, et al., defendants-respondents, Blue Ridge Insurance Company, appellant. (Index No. 28622/02)

Shayne, Dachs, Stanisci, Corker & Sauer, Mineola, N.Y. (Norman
H. Dachs of counsel), for appellant.
David K. Lieb, P.C., Center Moriches, N.Y., for plaintiff-
respondent.

In an action, inter alia, to recover damages for breach of contract, the defendant Blue Ridge Insurance Company appeals from an order of the Supreme Court, Suffolk County (Baisley, J.), dated October 16, 2003, which denied its motion for summary judgment dismissing the complaint and all cross claims insofar as asserted against it.

ORDERED that the order is reversed, on the law, with costs, the motion is granted, the complaint and all cross claims are dismissed insofar as asserted against the appellant, and the action against the remaining defendants is severed.

Contrary to the conclusion of the Supreme Court, exclusions "j5" and "j6" of the commercial general liability policy issued by the defendant Blue Ridge Insurance Company (hereinafter Blue Ridge) to the plaintiff, which apply to damage caused by the plaintiff or one of its subcontractors to the plaintiff's work product, exclude the plaintiff's claim from coverage. Moreover, a separate exclusion modified the policy to exempt "roofing" from the designated work that was covered (see Adler & Nelson Co. v Insurance Co. of North Amer., 56 NY2d 540, 542; Pavarini Const. Co. v Continental Ins. Co., 304 AD2d 501; George A. Fuller Co. v United States Fidelity & Guaranty Co., 200 AD2d 255). [*2]

The purported ambiguity created by exclusion "l" does not preclude an award of summary judgment to Blue Ridge. "[P]olicy exclusions are to be read seriatim and, if any one exclusion applies, there is no coverage since no one exclusion can be regarded as inconsistent with another" (Sampson v Johnston, 272 AD2d 956; Hartford Acc. & Indem. Co. v Reale & Sons, 228 AD2d 935, 936; Garson Mgt. Co. v Travelers Indem. Co. of Ill., 300 AD2d 538, 539).

The respondents' remaining contentions are without merit.
SMITH, J.P., KRAUSMAN, ADAMS and SKELOS, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Hospital for Joint Diseases, etc., et al., appellants,

v

Countrywide Insurance Company, respondent. (Index No. 6434/03)

Joseph Henig, P.C., Bellmore, N.Y., for appellants.

In an action to recover no-fault medical payments, the plaintiffs appeal from an order of the Supreme Court, Nassau County (Cozzens, J.), dated October 1, 2003, which denied their motion for summary judgment.

ORDERED that the order is affirmed, without costs or disbursements.

In support of their motion for summary judgment, the plaintiffs submitted evidentiary proof that the defendant insurance company had not responded to their February 19, 2003, and January 15, 2003, claims for no-fault medical benefits within 30 days as required by Insurance Law § 5106(a) and 11 NYCRR 65.15(g)(3). In opposition to the motion, the defendant submitted documentary evidence and an affidavit of an employee asserting that the same claims had originally been billed over one year earlier and that timely denial of claim forms had been mailed to the plaintiffs at that time.

The evidence submitted by the plaintiffs satisfied their burden of establishing a prima facie entitlement to judgment as a matter of law (see Winegard v New York Univ. Med. Ctr., 64 NY2d 851, 853). However, the defendant submitted admissible evidence in opposition to the motion, which raised triable issues of fact as to the dates on which the plaintiffs mailed the no-fault claims to the defendant (see New York Hosp. Med. Ctr. of Queens v Country-Wide Ins. Co., 295 AD2d 583, 585) and whether the defendant properly denied those claims (see Hospital for Joint Diseases v Nationwide Mut. Ins. Co., 284 AD2d 374, 375). Accordingly, the Supreme Court correctly denied the motion for summary judgment.
FLORIO, J.P., S. MILLER, RIVERA and LIFSON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

In the Matter of State Farm Mutual Automobile Insurance Company, appellant,

v

Humella Eastman, respondent. (Index No. 16702/02)

Martin, Fallon & Mullé, Huntington, N.Y. (Richard C. Mullé of
counsel), for appellant.

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, the petitioner appeals from an order of the Supreme Court, Queens County (Thomas, J.), dated September 25, 2003, which denied the petition and dismissed the proceeding.

ORDERED that the order is reversed, on the law, with costs, the petition is granted, and arbitration of the uninsured motorist claim is permanently stayed.

The automobile liability policy issued by the petitioner State Farm Mutual Automobile Insurance Company (hereinafter State Farm) did not exist on the date of the accident in which the respondent Humella Eastman claims to have been injured. It was not until 21 days after the accident that Eastman first obtained uninsured motorist coverage from State Farm. Under these circumstances, it is clear that the parties never agreed to arbitrate any claim arising out of the accident. The Supreme Court, therefore, should have granted State Farm's petition to permanently stay arbitration of the uninsured motorist claim, even though the proceeding was commenced beyond the 20-day deadline set forth in CPLR 7503(c)(see Matter of Matarasso v Continental Cas. Co., 56 NY2d 264, 267; see also Matter of Liberty Mut. Ins. Co. v Panetta, 187 AD2d 719, 720; Nassau Ins. Co. v Manzione, 112 AD2d 408, 409-410). [*2]

Patricia Gousgoulas, appellant,

v

Antonio Melendez, respondent. (Index No. 24701/00)

Litman & Litman, P.C., New York, N.Y. (Jeffrey E. Litman of
counsel), for appellant.
Abrams, Gorelick, Friedman & Jacobson, P.C., New York, N.Y.
(Siobhan M. Forde of counsel), for
respondent.

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Kitzes, J.), dated September 23, 2003, which granted the defendant's 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 defendant made a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) through the affirmations of an orthopedist and a neurologist who examined the plaintiff and determined that there was no disability, restriction, or limitation 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 affirmation of the plaintiff's orthopedist submitted in opposition to the defendant's motion was insufficient to raise a triable issue of fact. It is readily apparent that the affirmation was designed merely to tailor the plaintiff's claim to meet statutory requirements (see Powell v Hurdle, 214 AD2d 720; Giannakis v Paschilidou, 212 AD2d 502, 503), and is notable for its complete lack of any verified objective medical findings (see Carroll v Jennings, 264 AD2d 494, 495; Kauderer v Penta, 261 AD2d 365, 366). [*2]

Moreover, the plaintiff's claim that she was unable to return to work for a year and a half following the accident was not supported by any competent medical evidence that she was unable to perform substantially all of her daily activities for not less than 90 of the first 180 days as a result of the subject accident (see Sainte-Aime v Ho, 274 AD2d 569, 570; Jackson v New York City Tr. Auth., 273 AD2d 200, 201; Greene v Miranda, 272 AD2d 441, 442; Arshad v Gomer, 268 AD2d 450; Bennett v Reed, 263 AD2d 800, 801; DiNunzio v County of Suffolk, 256 AD2d 498, 499). Indeed, the plaintiff failed to submit any evidence concerning her medical condition following the accident.

Accordingly, the Supreme Court properly granted the defendant's motion for summary judgment dismissing the complaint.

MARSHA MARONEY, Individually and as Parent and Guardian of MARK MARONEY, an Infant, Respondent,

v

NEW YORK CENTRAL MUTUAL FIRE INSURANCE COMPANY, Appellant. (And a Third-Party Action.)

 

MEMORANDUM AND ORDER

Calendar Date: May 27, 2004
Before: Cardona, P.J., Crew III, Peters, Mugglin and Rose, JJ.


Flink Smith & Associates L.L.C., Latham (Edward B.
Flink of counsel), for appellant.
Powers & Santola L.L.P., Albany (Michael J. Hutter Jr.
of counsel), for respondent.


Mugglin, J.

Appeal from an order of the Supreme Court (Monserrate, J.), entered August 25, 2003 in Otsego County, which, inter alia, denied defendant's cross motion for summary judgment.

In June 1997, plaintiff made arrangements for her then-six-year-old son, Mark, to be cared for during the day at the home of third-party defendants John J. Morris and Deborah A. Morris (hereinafter collectively referred to as the Morrises), by Deborah Morris's then-14-year-old daughter, Ashley. On the morning of June 19, 1997, plaintiff dropped off Mark for what was scheduled to be the first day that Ashley watched him. After plaintiff left, Deborah Morris indicated that she had to go across the road to the barn, which contained their horses, as well as other horses boarded for a fee, to do some chores before she left for work. Since Ashley was still dressing, Deborah Morris asked Mark if he would like to go with her. The child agreed and accompanied Deborah Morris while she, among other things, fed the horses. Unfortunately, as she was leading one of the boarded horses out of the barn to the pasture, Mark got behind the horse and was kicked in the forehead, suffering a fractured skull with lasting physical and mental effects. [*2]

Initially, the Morrises' entire property was insured under a homeowner's policy issued by defendant. When the Morrises built the barn on the east side of the highway (their house was located on the west side), defendant's policy was amended to cover farming operations east of the highway. However, once John Morris and his cousin, third-party defendant Thomas C. Morris, started a horse boarding business ^[FN1] at the barn, the policy was amended on May 28, 1997, deleting coverage for all property east of the highway as defendant will not insure a horse boarding business. As a result, John Morris and Thomas Morris obtained a separate policy issued by the Broome County Cooperative Fire Insurance Company for the east side of the highway.

The Morrises provided notice of the accident to both insurance companies and defendant sent a disclaimer letter which begins with a verbatim restatement of a coverage exclusion excluding liability coverage for injuries "arising out of business pursuits of an insured." The letter next lists the exclusion for injuries "arising out of a premises . . . owned by an insured . . . that is not an insured location." Then, the letter "additionally" refers to endorsement H0-322, which describes circumstances under which home day care services could constitute a business which would likewise not receive liability coverage. The letter next restates a portion of the endorsement and notes again that the policy "does not provide Section II [l]iability [c]overages because a business of an insured is excluded," and concludes by summarizing the denial of the request for coverage by restating: (1) "The accident occurred as a result of business pursuits," (2) "The accident occurred on premises you own which is not an insured location" and (3) "[H]ome day care services are considered to be a business, which is excluded as outlined above."

In February 2000, plaintiff, individually and on behalf of Mark, commenced a personal injury action against the Morrises and Thomas Morris, alleging negligent supervision by Deborah Morris. The Morrises sent a copy of the complaint to defendant, which sent a second disclaimer letter restating its reasons and elaborating that the accident "occurred at your business property while you were undertaking your duties there." In September 2001, plaintiff commenced this action against defendant seeking a declaration that defendant is obligated to defend and indemnify the Morrises from any claims arising out of Mark's injury. Defendant's answer contained a counterclaim naming the Morrises as defendants in order to bind them to any judgment. Plaintiff moved for summary judgment seeking a declaration that defendant was obligated to defend and indemnify the Morrises, and defendant cross-moved requesting a declaration that it had no such obligation. Supreme Court determined that none of the disclaimers applied and declared that, under the terms of the policy that defendant issued to the Morrises, defendant was required to defend and indemnify them. Defendant appeals.

We begin our analysis, as did Supreme Court, by observing some well-settled rules which apply to insurance coverage disputes. "The duty of an insurer to defend its insured arises whenever the allegations within the four corners of the underlying complaint potentially give rise to a covered claim, or where the insurer 'has actual knowledge of facts establishing a reasonable possibility of coverage'" (Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169, 175 [1997], quoting Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 67 [1991]). In order "[t]o be relieved of its duty to defend on the basis of a policy exclusion, the insurer bears the [*3]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., supra at 175). Further, an insurer's disclaimer "is strictly limited to those grounds stated in the notice of disclaimer" (2540 Assoc. v Assicurazioni Generali, 271 AD2d 282, 284 [2000]), which disclaimer must clearly apprise the insured of the grounds on which the disclaimer is based (see Westview Assoc. v Guaranty Natl. Ins. Co., 95 NY2d 334, 340 [2000]; General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864 [1979]).

We reverse because we are of the view that defendant has met its burden with respect to two of the exclusions. First, given the specificity of the disclaimer letter, viewed in light of the factual background involving the amendments to defendant's policy, we disagree with Supreme Court's conclusion that the disclaimer letter denying coverage on the basis that "the accident occurred as a result of business pursuits" was referring only to the day care services exclusion and not the horse boarding business. In Supreme Court's opinion, because the horse boarding business was not specifically referenced, the first and third exclusions must be read together as referring only to home day care services. We disagree. When the letter is read in its entirety, it is clear that the insurance company is referring to separate provisions of the policy. Both the body of the letter and the summary contain the same format: (1) there is a business exclusion, (2) there is a location exclusion, and (3) day care falls within the business exclusion also. Any other reading makes (1) and (3) redundant. Given the very recent amendment to defendant's policy excluding from coverage the premises on which the horse boarding business was being conducted, there can be no doubt that the insureds knew that defendant was disclaiming on the basis of three exclusions in the policy. Moreover, we reject plaintiff's argument that, while concededly the Morrises were operating a horse boarding business, the "activities which are usual to nonbusiness pursuits" exception found in the policy under the business pursuits exclusion applies because Deborah Morris's alleged negligent supervision of the child was not incident to her business pursuit of boarding horses. We are of the view that plaintiff's reliance on Lamb v Security Mut. Ins. Co. (278 AD2d 855 [2000]) and Gallo v Grosvenor (175 AD2d 454 [1991]) is misplaced. In Lamb, the insured plaintiff's 21-year- old daughter was babysitting a two-year-old in the insured plaintiff's premises. The child was bitten by the insured's dog and the Fourth Department held that allegations of strict liability for the dog's action and negligent supervision of the dog were not incident to the daughter's babysitting business (Lamb v Security Mut. Ins. Co., supra at 855-856). In Gallo, a babysitter's son sexually abused a child she was caring for in her home. We held that a cause of action against the babysitter for the negligent supervision of her own child was not incident to her business pursuit (Gallo v Grosvenor, supra at 485-486). Here, in stark contrast, it was precisely because Deborah Morris was engaged in her business pursuit leading a boarded animal from the barn that she was allegedly inattentive to the child and the child was injured. Hence, the exclusion, and not the exception to the exclusion, is applicable.

With respect to the second basis for excluding coverage, there is no factual dispute that the barn is owned by the Morrises and that it is a location not insured by defendant. Supreme Court concluded, however, that since the child was initially left at the house, insured by defendant, before being taken across the road, the accident arose out of an insured location. New York case law interpreting the phrase "arising out of a premises" as used in a homeowner's policy is not definitive. In other jurisdictions, there are conflicting views as to whether the phrase excludes coverage for injuries causally connected to some dangerous condition of the uninsured [*4]premises as opposed to injuries arising primarily from the insured's personal tortious conduct (see e.g. Sea Ins. Co. v Westchester Fire Ins. Co., 849 F Supp 221, 224 [1994], affd on other grounds 51 F3d 22 [1995]). This debate is not applicable here since there is simply no view of the facts, nor is one alleged, that the insured premises were in any way defective or that personal tortious conduct of an insured occurred on the insured premises. The sole allegation is that Deborah Morris negligently supervised the child while in the uninsured barn. There exists no causal connection between the injury and the insured premises (see e.g. Bianco v Travelers Ins. Co., 99 AD2d 629, 629-630 [1984]).

Lastly, although rendered academic by this decision, we agree that the home day care services exclusion does not apply. Assuming arguendo that Ashley was engaged in a business pursuit, she is not a party in any of the lawsuits and, significantly, she was not supervising Mark at the time of the accident. There is no real dispute here that Deborah Morris was watching Mark for a short time that morning to be "nice" to a little boy she liked, as well as to give Ashley a chance to "get dressed," and did not involve a "profit motive" (Allstate Ins. Co. v Noorhassan, 158 AD2d 638, 640 [1990]). Insurance policies are to be viewed as separate contracts where there are multiple insureds (see Fulmont Mut. Ins. Co. v New York Cent. Mut. Fire Ins. Co., 4 AD3d 724, 725-726 [2004]; Fadden v Cambridge Mut. Fire Ins. Co., 27 AD2d 487, 488 [1967]), and Deborah Morris was not engaged in the provision of babysitting services as a business pursuit.

Crew III, Peters and Rose, JJ., concur. Cardona, P.J. (concurring in part and dissenting in part).

While I agree with the majority's conclusion that defendant did not establish a basis for the "[h]ome day care services" exclusion, I do not agree that the remaining two exclusions bar coverage under the particular circumstances herein and, accordingly, respectfully dissent from that part of the decision.

With respect to the "uninsured premises" exclusion, it should be noted that plaintiff's homeowner's policy clearly contemplated coverage for negligent acts by its insureds occurring off the insured premises. Under the "Liability Coverages" section of the policy, Coverage E concerns personal liability for bodily injury caused by an "occurrence"^[FN1] and Coverage F provides coverage for medical payments to "a person off the insured location, if the bodily injury . . . is caused by the activities of an insured" (emphasis added). Thus, it appears clear that, for example, had third-party defendant Deborah A. Morris taken plaintiff's son to a neighbor's barn and the accident occurred in a similar way, defendant's homeowner's policy would certainly have provided coverage for the injuries. Here, however, the accident occurred at the barn of Deborah Morris and third-party defendant John J. Morris, which was not covered by defendant's policy, and, therefore, defendant maintains that coverage does not exist based upon the policy exclusion providing that coverage does not apply to bodily injury "arising out of a premises . . . owned by an insured . . . that is not an insured location."

In my view, defendant's position does not withstand close scrutiny. In construing that exclusion, this Court is clearly bound by its precise language. Accordingly, the majority's reliance on the case of Bianco v Travelers Ins. Co. (99 AD2d 629 [1984]) to apply the exclusion is not persuasive, since, as noted in the case of Sea Ins. Co. v Westchester Fire Ins. Co. (849 F Supp 221, 224 [1994], affd 51 F3d 22 [1995]), the exclusion in Bianco contains different and much broader language than that employed in cases such as the one before us. Specifically, in Bianco, the insurance policy clearly excluded coverage for injuries arising from the insured's own acts or omissions in connection with the uninsured premises (Bianco v Travelers Ins. Co., supra at 629). In contrast, the "arising out of" exclusion in this case does not reference the insured's conduct, nor does it, as it so easily could have, exclude injuries arising "on" uninsured premises or in connection with the "use" of said premises. The precise language before us appears to more logically exclude from coverage only those injuries causally connected to some dangerous condition of the uninsured premises (which its insured owns and has control over) as opposed to injuries arising primarily from the insured's negligent acts or omissions (see Sea Ins. Co. v Westchester Fire Ins. Co., supra; see also Callahan v Quincy Mut. Fire Ins. Co., 50 Mass App Ct 260, 264 n 5, 736 NE2d 857, 860 n 5 [2000]). Given the absence of proof of a dangerous condition on the property herein and the assertion that the injuries occurred because of the actions of the insured in negligently supervising the child,^[FN2] I must conclude that the proof herein does not indicate that the injuries herein arose out of a condition on the insured premises as opposed to negligent conduct of the insured.

Turning to the purported "business pursuits" exclusion pertaining to the horse boarding business, I agree with Supreme Court that the disclaimer failed to sufficiently identify that policy exclusion and, therefore, it can properly be considered waived (see Kokonis v Hanover Ins. Co., 279 AD2d 868, 869-870 [2001]; Cain v Allstate Ins. Co., 234 AD2d 775, 776 [1996]). Significantly, "an insurer seeking to exclude coverage 'must do so "in clear and unmistakable" language' and any exclusions are given a strict and narrow interpretation" (Bragin v Allstate Ins. Co., 238 AD2d 773, 774 [1997], quoting Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311 [1984], quoting Kratzenstein v Western Assur. Co. of City of Toronto, 116 NY 54, 59 [1889]). Thus, a disclaimer in a personal injury action is held to a high degree of specificity (see General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864 [1979]). It is the insurer's burden to establish the applicability of the claimed exclusion, and any ambiguity perceived in its language "must be strictly construed against the insurer" (Allstate Ins. Co. v Noorhassan, 158 AD2d 638, 639 [1990] [emphasis added]).

Here, a review of defendant's disclaimer demonstrates the absence of the required specificity. It cannot be denied that the disclaimer only specifically referenced the day care [*6]business and made no mention of the horse boarding business in any respect. While the majority makes a plausible argument in favor of the insurer's position, it is my opinion that the language in the disclaimer creates an ambiguity which should be construed against defendant, not the insured. Furthermore, I believe that speculation as to what the insurer may have intended and what the insureds may have assumed was meant by the language is inappropriate. Accordingly, I would affirm the finding of waiver.

In any event, regardless of the waiver issue, on the merits, it is my opinion that the business pursuits exclusion does not apply. Although that provision does exclude liability and coverage for bodily injury "arising out of business pursuits of an insured," it nevertheless contains an exception providing that the "exclusion does not apply to: . . . activities which are usual to non-business pursuits." In determining the applicability of that exception to the facts of this case, I find the reasoning in the case of Gallo v Grosvenor (175 AD2d 454, 456 [1991]) to be compelling. Gallo involved a person who was engaged in the business pursuit of babysitting who was also undertaking the nonbusiness pursuit of supervising her own child. In that case, the plaintiffs did not allege that the insured was negligent in her business pursuit but, instead, they argued that she was negligent in her nonbusiness activity, i.e., the supervision of her own child (id.).

The parallel to the subject case is apparent. Here, plaintiff is not alleging that Deborah Morris was negligent in her business activity of handling the boarded horse. Instead, they argue that, while she was engaged in the business pursuit of caring for a boarded horse, she was negligent in the supervision of the child; childcare being an activity that was clearly "incident to a nonbusiness pursuit" (id. at 456). Since the care and supervision of the child was clearly not incident to Deborah Morris's business pursuit of boarding horses (see id.),^[FN3] I must conclude that, regardless of the waiver issue, the circumstances herein come within the exception to the business pursuits exclusion.

Inasmuch as it is my view that none of the exclusions advanced by defendant has been established, I would affirm Supreme Court's ruling that defendant was obligated to defend and indemnify plaintiff pursuant to the homeowner's policy issued by defendant.

ORDERED that the order is reversed, on the law, with costs, plaintiff's motion denied, defendant's cross motion granted and it is declared that defendant has no insurance coverage obligations in connection with plaintiff's underlying action.

Footnotes

Footnote 1:1 We note that this business was operated under the name of "Soft Meadow Stables." The Morrises listed this operation as a business in their tax returns, kept a separate checking account and required others who boarded horses with them to sign contracts.

Footnote 1:1 An "occurrence" is defined in the policy as "as accident . . . which results, during the policy period, in: a. bodily injury; or b. property damage."

Footnote 2:2 The proof does not indicate a claim of negligence arising from the horse that kicked the child. The propensity of horses to kick when startled from behind is well known and there are no allegations herein that the horse was vicious (see e.g. Loder v State of New York, 200 AD2d 925, 927 [1994]; Doyle v Monroe County Deputy Sheriff's Assn., 195 Misc 2d 358, 361-362 [2003]).

Footnote 3:3 Notably, since it is clear that the child was not in the barn as a customer of the horse boarding business, this raises another issue as to exclusion's inapplicability (see generally 16 Am Jur Proof of Facts 3d 355 § 29).

KING'S MEDICAL SUPPLY, INC. a/a/o AZNIZ KEGEYAN, Appellant,

against

HEREFORD INSURANCE COMPANY, Respondent.

 

Appeal by plaintiff from an order of the District Court, Nassau County (H. Miller, J.), entered September 10, 2003, denying its motion for summary judgment.

 

Order unanimously affirmed without costs.

Plaintiff commenced this action to recover first-party no-fault benefits for medical supplies provided to its assignor. Thereafter, plaintiff moved for summary judgment in the amount of $980, which motion was denied by order entered September 10, 2003.

Contrary to the determination of the court below, plaintiff's billing manager did not have to allege in his supporting affidavit that he had personal knowledge that the equipment was furnished to plaintiff's assignor. Said affidavit set forth the billing manager's duties so as to support the conclusion that the attached exhibits were sufficiently accurate and trustworthy to merit their admission into evidence pursuant to the business record exception to the hearsay rule (see CPLR 4518 [a]; People v Kennedy, 68 NY2d 569 [1986]), and said exhibits established that the supplies were furnished to the assignor.

A review of the record indicates that plaintiff established its prima facie entitlement to summary judgment by showing that it submitted a properly completed claim form to defendant for $980 (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Damadian MRI in Elmhurst v Liberty Mut. Ins. Co., 2 Misc 3d 128 [A], [*2]2003 NY Slip Op 51700 [U] [App Term, 9th & 10th Jud Dists]). It is uncontroverted that defendant had until July 17, 2003 to pay or deny plaintiff's claim. The plaintiff's billing manager asserted that the defendant's denial was untimely and he submitted a photocopy of an envelope, postmarked August 29, 2003, which allegedly contained the denial form. Defendant, however, submitted the affidavit of its claims adjuster who attested to the routine procedure and practice of her office, in

the regular course of its business, which indicates that the denial had been duly addressed and mailed to plaintiff on July 17, 2003. In view of the foregoing, we find that the court below properly determined that a triable issue of fact existed (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). Accordingly, plaintiff's motion for summary judgment was properly denied.
Decision Date: September 20, 2004

A.B. MEDICAL SERVICES PLLC DANIEL KIM'S ACUPUNCTURE P.C. D.A.V. CHIROPRACTIC P.C. a/a/o JEAN BAPTISTE TURENNE and JOHNSON TURENNE, Respondents,

against

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant.

 

Appeal by defendant from an order of the District Court, Nassau County (A. Cooper, Sr., J.), dated March 5, 2003, denying its cross motion for summary judgment and granting plaintiff's motion for summary judgment.

 

Order unanimously modified by providing that plaintiffs' motion for summary judgment is denied; as so modified, affirmed without costs.

In this action to recover assigned first-party no-fault benefits, plaintiffs' affidavit in support of their motion for summary judgment set forth only that the affiant is a "practice and billing manager" and an "officer" of "plaintiff" notwithstanding that there are three named plaintiffs each asserting independent standing as an insured's assignee. As we cannot assume that the affiant acted on behalf of one particular plaintiff or on behalf of all of the plaintiffs (A.B. Med. Servs. v Allstate Ins. Co., NYLJ, Mar. 18, 2004 [App Term, 9th & 10th Jud Dists]), such an affidavit is "insufficient to establish that plaintiffs provided defendant with properly completed claim forms" (id.). We further note that as to D.A.V. Chiropractic P.C., the record before us contains no assignment of benefits form on plaintiff's behalf, an additional reason for the motion's denial as to this plaintiff. Accordingly, plaintiff's motion for summary judgment [*2]should have been denied upon plaintiffs' failure to make out a prima facie case.

With respect to defendant's cross motion for summary judgment, upon the papers presented, defendant failed to establish its entitlement to judgment dismissing the action as a matter of law. Defendant's claim that the assignors failed to cooperate with its requests to examine them under oath is without merit because when plaintiffs filed their claims, there was no provision in the insurance regulations for such a procedure (compare 11 NYCRR 65.15 [d] [3]; 65.2 [a], with 11 NYCRR 65-1.1 [d]; 65-3.5 [e], eff. April 5, 2002; e.g. King's Med. Supply Inc v Progressive Ins., 3 Misc 3d 126 [A], 2004 NY Slip Op 501312 [U] [App Term, 2d & 11th Jud Dists]). Defendant's argument that its policy provisions require an insured's cooperation with an examination under oath is likewise misplaced in that the mandatory no-fault endorsement "cannot be qualified by . . . conditions . . . of the liability portions of the policy" (Utica Mut. Ins. Co. v Timms, 293 AD2d 669, 670 [2002]).

However, for the reasons set forth in Ocean Diagnostic Imaging P.C. v State Farm Mut. Auto. Ins. Co. (No. 2003-1289 N C decided herewith), involving the same assignors and the same traffic incident, we find defendant's claim, that the underlying traffic incident was staged pursuant to a scheme to defraud, to be supported by sufficient factual allegations in admissible form to require a trial thereon, albeit insufficiently established to warrant accelerated judgment in defendant's favor.
Decision Date: September 17, 2004

OCEAN DIAGNOSTIC IMAGING P.C., a/a/o JEAN BAPTISTE TURENNE, JOHNSON TURENNE, Appellant,

against

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Respondent.

 

Appeal by plaintiff from so much of an order of the District Court, Nassau County (R. Marber, J.), entered on July 16, 2003, as denied its motion for summary judgment.

 

Order insofar as appealed from unanimously affirmed with $10 costs.

Plaintiff, a health care provider, seeking to recover assigned first-party no-fault benefits, established a prima facie entitlement to summary judgment by the submission of a complete proof of claim and the amount of the loss (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply Inc. v Eagle Ins. Co., 2 Misc 3d 128 [A], 2003 NY Slip Op 51701 [U] [App Term, 2d & 11th Jud Dists]). Defendant failed to deny the claim within the statutory 30-day claim
determination period (11 NYCRR 65.15 [g] [3]). Defendant's requests for examinations under oath did not toll the 30-day period, inasmuch as the insurance regulation in effect at the time plaintiff submitted its claim did not contain a provision requiring a claimant to appear for an examination under oath (see A. B. Med. Servs. PLLC v Lumbermens Mut. Cas. Co., 2003 NY Slip Op 51392 [U] [App Term, 2d & 11th Jud Dists]). Accordingly, defendant is precluded from raising most defenses (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]).

However, an untimely denial does not preclude a defendant from asserting the defense [*2]that the collision was a staged event in furtherance of an insurance fraud scheme (see Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2002]). The investigator's affidavit set forth sufficient facts to demonstrate that defendant possessed a "founded belief that the alleged injur[ies] do[] not arise out of an insured incident" (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]).
As a result, because defendant demonstrated the existence of a triable issue of fact as to whether there was a lack of coverage (see id.), plaintiff's motion for summary judgment was properly denied.
Decision Date: September 17, 2004