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Coverage Pointers - Volume VI, No. 5

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11/4/04            Burack v. Tower Insurance Company of New York
Appellate Division, First Department
I Feel the Earth – Move -- Under My Feet.  So?
Allegation was that building collapsed because of excavation.  Insurer denied claim based on “Earth Movement.”  Court was unsure whether exclusion would apply to collapse caused by ground surface disturbed by contractor or was, in fact, designed to apply only to natural Earth movement.

 

 

11/4/04            MYP Food Corp v. Tower Insurance Company

Appellate Division, First Department

Question of Fact Exists As To Whether Carrier May Rely On Insured’s Purported Agent For Service Of Demand For Proof Of Loss

Insured alleged wrongful refusal to pay a claim on the basis that the insured never received the letter demanding a sworn proof of loss. The court found questions of fact including whether insurer made reasonable efforts to serve the insured with a demand for proof of loss and if it properly relied on insured’s public adjuster to do so.  To rely on a public adjuster as insured’s agent for service of the demand for proof of loss, insurer was required to have a good faith reason to believe the agent would advise his principal of the demand letter and factual issues remain as to both the substance and admissibility of the public adjuster's purported acknowledgment that plaintiff had received defendant's proof-of-loss demand.

 

11/4/04            AMCC Corp v. Illinois National Insurance Co.
Appellate Division, First Department

Coverage “Emanating” From Construction Site Does Not Cover Accident With Lease En Route to Construction Site
The language of the policy issued by defendant Illinois National, which provided liability coverage for activities "emanating" from the construction site, did not encompass an accident while the leased crane was en route to the construction site.  The specific language of the “Project Endorsement" and the "Named Insured Endorsement" collectively and specifically limits coverage to occurrences at or on the project site itself or occurrences "emanating from" the project site, i.e., beginning at or on the project site but ending up outside its boundaries.

11/4/04            Bonded Concrete, Inc. v. Transcontinental Ins. Co.
Appellate Division, Third Department
Defective Concrete Claim Not Covered Under “Damage to Your Product” Exclusion
Plaintiff was sued by the general contractor on a school renovation project for allegedly supplying defective concrete for use in sidewalks. Shortly thereafter, plaintiff forwarded the pleadings to defendant with a demand that it provide plaintiff with a defense and indemnification.  There is no coverage for the claim under the policy because the delivery of defective concrete did not constitute a covered "occurrence." Defendant also relied upon a number of exclusions in the policy in denying plaintiff's demand. Among the exclusions was one for property damage to "your product." There is also no coverage under the “personal or advertising injury” portion of the policy for a deceptive business practices claim (General Business Law § 349).  A CGL insurer is not a surety for a construction contractor's defective work product. The damages sought were the costs of correcting the defect, not damage to property other than the completed work itself.

 

11/1/04            In the Matter of Liberty Mutual Insurance Company v. Rapisarda
Appellate Division, Second Department
If UM Carrier Believes that UM Claimant Not Eligible as Insured Under the Policy, It Needs to Raise That Issue in Motion to Stay Arbitration, or Lose Right to Argue Later
Uninsured motorist carrier raised issue of timeliness of notice of UM claim by seeking permanent stay of arbitration.  That was the right procedural application.  On its own, the motion court raised the issue of whether or not the UM claimant was eligible for coverage under the policy because of his residence.  Appellate Division held that the insurer cannot avoid coverage on residency because it never raised that issue in the application to stay arbitration.  Raise it or lose it.

 

11/1/04            In the Matter of American Home Assurance Company v. Manzo
Appellate Division, Second Department
What’s Good for the Previous Goose, is Good for the Gander
Here, it wasn’t he UM carrier that failed to raise an issue for consideration, but, instead, the other driver’s carrier.  Again, it was an uninsured motorist application.  This time, the carrier for the other driver – joined in the application to stay -- denied coverage, claiming that the policy was void because it was procured by fraud.  The Court held that an auto policy providing mandatory coverage cannot be rescinded retroactively (a good point to remember, well established under NY cases).  When the defendant’s carrier realized it was going to lose that issue, it argued that, in addition, it’s insured “failed to cooperate” and thus breached the policy.  The Appellate Division refused to allow that issue to be considered since it was never raised in any disclaimer letter sent out by that carrier.  Accordingly, the other car’s policy was in effect and the UM application was stayed.

 

11/1/04            Provenzano v. Ioffe
Appellate Division, Second Department
Application for UM Benefits Does Not Stay Lawsuit Against Supposedly Uninsured Driver
Defendant’s carrier took the position that livery exclusion in its policy led to there being no coverage for accident in which plaintiff was injured.  Plaintiff filed Uninsured Motorist claim and UM carrier moved for stay alleging that defendant’s driver’s disclaimer was invalid.  Eventually, Appellate Division agreed with UM carrier and declared that defendant was insured and plaintiff was not injured by uninsured motorists.  Plaintiff then sues defendant but three year statute of limitations had expired.  Plaintiff argued that stay of UM arbitration should toll statute of limitations.  Second Department disagrees and finds lawsuit against the “insured” motorist time barred

 

11/1/04            Loadholt v. New York City Transit Authority

Appellate Division, Second Department
When Making “Threshold Motion,” Be Certain That Defense Examiner’s Report be “Sworn” or “Affirmed”
Submission by defendants of defense doctor’s reports, without those reports being “sworn to” or “affirmed” renders them of no value and will not support a “serious injury” motion.  Accordingly, plaintiff’s counsel will not be obligated to respond to motion since “prima facie” case not established justifying a defense judgment.
See also:           McPhaul-Morgan v. E. L. Corp. (decided same day for same proposition)



 

10/28/04          Creech v. Rowlett
Appellate Division, Third Department
Without Objective Evidence of a 90/180 Day Disability, Case Dismissed on Serious Injury Threshold Motion
There must be objective medical evidence to support a claim of “serious injury” based on a “90 day” disability.  Here, the defendant submitted proof showing entitlement to summary judgment shifting to her the burden of producing competent proof to defeat the motion. In opposition, she submitted her own affidavit and certain post accident medical records. While an orthopedist that plaintiff visited on April 26, 2000 noted a lumbosacral strain secondary to the motor vehicle accident, subsequent reports in May 2000 from that doctor and her primary care physician indicated improvement in her condition. The medical proof submitted, consisting only of selected medical records, failed to sufficiently set forth objective evidence linking the alleged curtailment of activities following the accident to an injury or exacerbation of a preexisting condition sustained in the accident

10/28/04          Mack v. Goodrich
Appellate Division, Third Department

… And In Case You Didn’t Read the Case Above, the Court Says it Again (and the Same Goes for “Consequential Limitation)
Although the plaintiff’s doctor opined that plaintiff suffers from causally related thoracic outlet syndrome and probable fibromyalgia, his reports do not contain objective, quantitative evidence to substantiate that diagnosis and appear to rely heavily upon plaintiff's subjective complaints of pain and numbness. There was no opinion that the limitations experienced by plaintiff are indeed permanent. As to the 90/180 claim, plaintiff failed to demonstrate that her "normal activities were substantially curtailed for the requisite period of time.

10/26/04          Wallingford v. Perez
Appellate Division, First Department
Plaintiff’s Doctor’s Failure to Explain Difference in MRI Taken Shortly After Accident Leads To Dismissal Based on Lack of Causally Related Serious Injury
Plaintiff's physician performed surgery on her knee some 10 months after the accident.  He found tear which he said were accident related. However he did not explain why an MRI taken a month after the accident showed no tears, or why plaintiff did not complain to him or anyone else about the knee until some four months after the accident, which was a few days after she was knocked down in an unrelated incident. His report did not address defendants' experts' opinions, based on that MRI and X-rays taken three years before the accident, that there were no post-traumatic changes to the knee after the accident and that the claimed injury was degenerative in origin. Such failure to address crucial facts relevant to causation warrants a finding of no causation

 

10/25/04          Bombard v. Amica Mutual Insurance Company
Appellate Division, Second Department
In Declaratory Judgment Action, Claim File May be Discoverable
Discovery request in declaratory judgment action sought the claims file.  Insurer’s counsel failed to specifically articulate reasons it was resisting disclosure of claims file and it was its burden to do so. Here, the record demonstrated that contrary to the insurer’s argument, the decision to deny coverage was not made by December 31, 2002, the date of the reservation of rights letter. The language of that letter, as well as the subsequent disclaimer letter, clearly established that the defendant's investigation of the incident and the facts related to the plaintiff's notice of the incident was ongoing and that it was not until the disclaimer letter, dated February 4, 2003, that there was a firm decision to reject the plaintiff's claim. Since it was only at that time that the files became privileged, the Supreme Court properly directed the defendant to comply with the plaintiff's request for the production of the material previously prepared.

 

 

10/25/04          Nyack Hospital v. State Farm Mutual Automobile Insurance Company
Appellate Division, Second Department
Incomplete No Fault Denial Form, Even if Timely Sent, is Virtually Worthless
No-Fault carrier sent out timely denial of claim form – within 30 days of claim being made -- but left several items blank on the form, including the name of the health services provider, the date and amount of the claims being denied, and the date it received those claims.  Subsequently, but after the 30 days had expired, insurer “filled in the blanks” in the form by a letter. Court held that denial was ineffective because the insurer failed to deny coverage with a “high degree of specificity.” Court held that “statutory goal of ensuring the prompt payment or denial of claims would be materially frustrated if insurers were permitted to file timely but factually defective denial of claim forms, to be supplemented only after the expiration of the 30-day period prescribed by 11 NYCRR 65-3.8.”

 

10/25/04          Russell v, New York Central Mutual Fire Insurance Company
Appellate Division, Second Department
SUM (Underinsured) Carrier Gets Own Day “In Court” -- It Need Not Intervene in Underlying Personal Injury Action to Contest Right to Deny SUM Benefits or Contest the Amount
Contrary to plaintiff’s contention, underinsured carrier is not required to intervene in underlying personal injury action in order to contest its insured’s right to claim SUM benefits (or contest the amount of those benefits).  Similarly, it is not bound by the decision in the personal injury lawsuit since it is not a party in that lawsuit.

 

10/25/04          H.L. & F.H. Realty Corp v Gulf Insurance Company

Appellate Division, Second Department

Failure To Invoke Hold Harmless Provision or Include Policy In Record Fatal To Motion

The lease between the owner of a gasoline station (H.L.& F.H. Realty Corp) and its tenant Panco Equipment Corp. (Panco) required Panco to procure an insurance policy protecting HL&FH from liability for environmental damage. When an underground spillage of petroleum was discovered, HL&FH commenced and action against the insurer and the brokers through which Panco obtained pollution insurance, seeking indemnification for the cleanup costs HL&FH had incurred. HL&FH subsequently added a cause of action against Panco and its two officers alleging that the Panco parties failed to have HL&FH included in the pollution policy as an additional insured.

The Court affirmed dismissal of all Panco’s affirmative defenses.  Specifically, those affirmative defenses alleging that HL&FH failed to comply with certain obligations and conditions of the pollution insurance policy and that certain exclusions set forth in the policy were applicable. The Court held that even if the insurer considered HL&FH a named insured but had independent reasons for denying coverage to HL&FH, the Panco parties could not escape liability, due to the "hold harmless" provision of the lease. HL&FH, however, did not assert an indemnity cause of action against the Panco parties, and thus did not invoke the "hold harmless" provision of the lease. The sole cause of action against the Panco parties’ alleged breach of contract was based on the entirely different theory that they violated the insurance procurement provision of the lease. 

Note: The insurance policy was not included in the papers submitted by the Panco parties in opposition to the motion and so was not contained in the record on appeal. Accordingly, the Panco parties failed to establish the terms of the policy.

 

10/25/04          FARZANA AHMED v. MOHAMMED A. KHAN

Appellate Division, Second Department

Gap In Treatment Of More Than Two Years Not Sufficient In Itself For Dismissal

Plaintiff successfully opposed the motion under Insurance Law § 5102 (d) through an affirmation from her treating physician who presented a qualitative assessment of plaintiff's condition which had an objective basis and compared the plaintiff's limitations of motion of her cervical spine to normal function.  The Court noted that the gap in treatment of more than two years did not require the granting of defendant's motion for summary judgment. There was evidence regarding the nature of Plaintiff’s treatment for more than six months after the accident and plaintiff explained that she had to stop treatment at that point because her no-fault insurance ran out and she could not afford to pay for it herself.

 

 

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.

 



10/25/04          SOUTHERN GUAR. INS. CO. V. DOWSE

Georgia Supreme Court

Insurer Refusing To Defend Or Indemnify Not Estopped From Arguing That Claims Brought Against Insured Are Not Covered Under Policy’s Terms
The Dowses sued Cutter, Inc., for defective construction and installation of exterior insulation and finishing on their home, alleging negligence, breach of warranty and bad faith. Cutter, Inc. was insured under a general commercial liability policy issued by Southern Guaranty Insurance Co. (“SGIC”), which informed Cutter, Inc., that the claim brought against it by the Dowses was not covered by the policy and that SGIC would not defend or indemnify Cutter, Inc. The Court of Appeals ruled that an insurer that refused to defend or indemnify its insured was estopped from subsequently arguing that a settlement agreement entered into by the insured and a third party relieved the insurer from its obligations under the policy. In affirming the Court of Appeals, the Supreme Court ruled that the insurer is not estopped from arguing that the claims brought against its insured are not covered under the policy’s terms, and remanded this matter for a determination of whether the policy provides coverage for the underlying claims.

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


10/22/04          NORFOLK v. LORE MAHONEY

Massachusetts Supreme Court

Insolvency of Adverse Driver’s Insurer Trigger’s Uninsured Motorist Coverage
Two vehicles rear-ended plaintiff’s vehicle and plaintiff received injuries. Plaintiff settled with one tortfeasor’s insurer for the full policy limits of $50,000. However, the second tortfeasor’s insurer became insolvent and did not contribute to any settlement. Plaintiff then made a claim on his own uninsured motorist policy which had policy limits of $20,000. Plaintiff’s insurer refused payment on grounds plaintiff’s recovery of $50,000 from one of the third party’s insurance companies precluded any payment of uninsured motorist benefits. The court disagreed and held uninsured motorist benefits were payable to plaintiff. Once a responsible party’s insurance company becomes insolvent that driver is considered an uninsured motorist. Submitted by: Peter S. Doody (Higgs, Fletcher and Mack)


10/22/04          Old American County Mut. Fire Ins. Co. v. Sanchez

TEXAS SUPREME COURT

Named Insured's Spouse Can Reject UM And PIP Coverages
The issue was whether the named insured’s spouse could reject Uninsured and Personal Injury Protection coverages under an automobile liability policy. The court held that the named insured’s spouse had statutory authority to do so under Articles 5.06-1(1) and 5.06-3(a) of the Texas Insurance Code. Specifically, because under that statute, the phrase, "insured named in the policy” (meaning the named insured’s spouse), is synonymous with the “named insured,” that spouse can reject UM and PIP coverages under an automobile liability policy.

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

 

 

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Wallingford v. Perez

Order, Supreme Court, Bronx County (Stanley Green, J.), entered April 28, 2003, which granted defendants' motion for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury as required by Insurance Law § 5102(d), unanimously affirmed, without costs.

Although plaintiff's physician performed surgery on her knee some 10 months after the accident which revealed tears that he opines were caused by the accident, his reports do not explain why an MRI taken a month after the accident showed no tears, or why plaintiff did not complain to him or anyone else about the knee until some four months after the accident, which was a few days after she was knocked down in an unrelated incident. His report does say that the MRI revealed spurring and mucoid degeneration, but does not address defendants' experts' opinions, based on that MRI and X-rays taken three years before the accident, that there were no post-traumatic changes to the knee after the accident and that the claimed injury was degenerative in origin. Such failure to address crucial facts relevant to causation warrants a finding of no causation (cf. Braham v U-Haul Co., 195 AD2d 277 [1993]; Eisen v Walter & Samuels, 215 AD2d 149 [1995]). Nor does plaintiff adduce evidence sufficient to raise an issue of fact as to whether the claimed injuries to her neck and back resulted in any significant or permanent limitations (see Godden v Carmen, 169 AD2d 812 [1991]). We have considered and rejected plaintiff's other arguments.

Bombard v. Amica Mutual Insurance Company

In an action, inter alia, for a judgment declaring that the defendant is obligated to defend and indemnify the plaintiff in a personal injury action pending in the Supreme Court, Nassau County, under Index No. 17777/02, the defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (McCarty, J.), dated April 19, 2004, as granted that Branch of the Plaintiff's Motion which was to compel the defendant to respond to the plaintiff's Notice for Discovery and Inspection insofar as it sought disclosure of documents prepared between December 31, 2002, and February 4, 2003.

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

The party asserting the privilege provided by CPLR 3101(d) bears the burden of demonstrating that the material it seeks to withhold is immune from discovery (see Koump v Smith, 25 NY2d 287, 294) by identifying the particular material with respect to which the privilege is asserted and establishing with specificity that the material was prepared exclusively in anticipation of litigation (see Chakmakjian v NYRAC, Inc., 154 AD2d 644, 645; Crazytown Furniture v Brooklyn Union Gas Co., 145 AD2d 402). The Supreme Court correctly held that the defendant's conclusory assertions failed to satisfy this burden. In fact, on the limited record that was before the Supreme Court, it was apparent that the asserted privilege is inapplicable. [*2]

"[T]he payment or rejection of claims is a part of the regular business of an insurance company. Consequently, reports which aid it in the process of deciding which of the two indicated actions to pursue are made in the regular course of its business" (Landmark Ins. Co. v Beau Rivage Rest., 121 AD2d 98, 101). Reports prepared by insurance investigators, adjusters, or attorneys before the decision is made to pay or reject a claim are thus not privileged and are discoverable (see Landmark Ins. Co. v Beau Rivage Rest., supra at 101; see also Bertalo's Rest. v Exchange Ins. Co., 240 AD2d 452, 454; Roman Catholic Church of Good Shepherd v Tempco Sys., 202 AD2d 257, 258; Paramount Ins. Co. v Eli Constr. Gen. Contr., 159 AD2d 447), even when those reports are "mixed/multi-purpose" reports, motivated in part by the potential for litigation with the insured (see Landmark Ins. Co. v Beau Rivage Rest., supra at 102; see also McKie v Taylor, 146 AD2d 921).

Here, the record belies the defendant's contention that the decision to deny coverage had been made by December 31, 2002, the date of the reservation of rights letter. The language of that letter, as well as the subsequent disclaimer letter, clearly established that the defendant's investigation of the incident and the facts related to the plaintiff's notice of the incident was ongoing and that it was not until the disclaimer letter, dated February 4, 2003, that there was a firm decision to reject the plaintiff's claim. Since it was only at that time that the files became privileged, the Supreme Court properly directed the defendant to comply with the plaintiff's request for the production of the material previously prepared.

Nyack Hospital v. State Farm Mutual Automobile Insurance Company

In an action pursuant to Insurance Law § 5106, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Jonas, J.), dated December 15, 2003, as denied its motion for summary judgment on the complaint.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and the motion is granted.

On March 11, 2003, and March 18, 2003, respectively, the plaintiff submitted two claims to the defendant to recover no-fault medical payments. On or about April 14, 2003, the defendant responded with a standard denial of claim which failed, inter alia, to supply the information listed in items 23 through 30 of the prescribed form, including the name of the health services provider, the date and amount of the claims being denied, and the date it received those claims. Subsequent correspondence dated June 13, 2003, from the defendant's claim representative to the plaintiff supplied most of the previously-omitted information. The plaintiff then commenced this action against the defendant seeking payment of both claims, and moved for summary judgment on the ground that the April 14, 2003, denial of claim was fatally defective. The Supreme Court denied the motion and the plaintiff appeals.

Pursuant to 11 NYCRR 65-3.8(c), the defendant was required either to pay or deny [*2]the plaintiff's claims "[w]ithin 30 calendar days after proof of claim [was] received." A proper denial of claim must include the information called for in the prescribed denial of claim form (see 11 NYCRR 65-3.4[c] [11]) and must "promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated" (General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864; accord Halali v Evanston Ins. Co., 8 AD3d 431; Hereford Ins. Co. v Mohammod, 7 AD3d 490). "An insurer which fails to properly deny a claim within 30 days as required by these statutory provisions may be precluded from interposing a defense to the plaintiff's lawsuit" (Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 16; see e.g. Presbyterian Hosp. in City of NY v Maryland Cas. Co., 90 NY2d 274, 283 [hereinafter Presbyterian I]; New York Hosp. Med. Ctr. of Queens v Country-Wide Ins. Co., 295 AD2d 583, 584; New York and Presbyt. Hosp. v Empire Ins. Co., 286 AD2d 322; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 226 AD2d 613 [hereinafter Presbyterian II]). Moreover, "[a] timely denial alone does not avoid preclusion where said denial is factually insufficient, conclusory, vague or otherwise involves a defense which has no merit as a matter of law" (Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 44).

Applying these principles, we find that the defendant's April 14, 2003, denial of claim, while timely, was nonetheless fatally defective in that it failed to include a number of basic items called for in the prescribed form (see 11 NYCRR 65-3.4[c][11]; Presbyterian II, supra; Amaze Med. Supply v Allstate Ins. Co., supra). The defendant's contention that it supplied the missing information on June 13, 2003, is without merit, as the defective claim form could not be corrected, nunc pro tunc, through information supplied after the regulatory 30-day period expired. Indeed, the statutory goal of ensuring the prompt payment or denial of claims would be materially frustrated if insurers were permitted to file timely but factually defective denial of claim forms, to be supplemented only after the expiration of the 30-day period prescribed by 11 NYCRR 65-3.8. Under these circumstances, the remedy of preclusion was appropriate, and the plaintiff's motion should have been granted (cf. Presbyterian I, supra at 283-284

Russell v, New York Central Mutual Fire Insurance Company

 

In an action, inter alia, to recover damages for breach of contract, the plaintiff appeals from so much of an order of the Supreme Court, Queens County (Dye, J.), dated October 31, 2003, as denied his motion for summary judgment on the first cause of action.

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

Contrary to the plaintiff's contention, the Supreme Court correctly concluded that the defendant, the plaintiff's supplementary uninsured motorist (hereinafter SUM) insurer, is not collaterally estopped from contesting his right to recover SUM benefits because it failed to intervene in the underlying personal injury action.

An insurer's duty to pay SUM benefits does not arise until the insured demonstrates that the limits of his or her bodily injury coverage exceeds the same coverage in the tortfeasor's policy and the limits of all available bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements (see Insurance Law § 3420[f][2]; Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d 487, 493; Rodriguez v Metropolitan Prop.& Cas. Ins. Co., 7 AD3d 775). Moreover, the doctrine of collateral estoppel applies only to those who, unlike the defendant, were either a party, or in privity with a party, to the original action or proceeding (see Buechel v Bain, 97 NY2d 295, 303, cert denied 535 US 1096; D'Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659, 664; Ryan v New York Tel. Co., 62 NY2d 494, 500).

In this case, the plaintiff's endorsement provided for more than the minimum amount of uninsured motorist coverage mandated by Insurance Law § 3420(f)(1), and the plaintiff did not exercise his option to arbitrate the dispute (see 11 NYCRR 60-2.3[f]). Therefore, it may be resolved through an action at law instead of arbitration (see Cacciatore v New York Cent. Mut. Fire Ins. Co., 301 AD2d 253; cf. Mahmood v Fidelity & Guar. Ins. Co., 303 AD2d 385). However, the amount of SUM benefits to which the plaintiff is entitled, if any, remains to be determined (see Insurance Law § 3420[f][1]; Matter of Gravenese v Allstate Ins. Co., 245 AD2d 507).

ROWLETT v. WALKER

 


Lahtinen, J.

Appeal from an order of the Supreme Court (McNamara, J.), entered August 11, 2003 in Albany County, which, inter alia, partially granted defendant's motion for summary judgment dismissing the complaint.

This action was commenced by the driver, plaintiff Dolores Creech, and the front-seat passenger, plaintiff Earline Rowlett, of a vehicle that was rear-ended by defendant's car on April 17, 2000 in the City of Albany. Defendant moved for summary judgment dismissing the complaint on the ground that neither plaintiff suffered a "serious injury" (see Insurance Law § 5102 [d]). Supreme Court partially dismissed Creech's claim, limiting the categories of serious injury she could pursue, and dismissed Rowlett's action in its entirety. Rowlett appeals.

Rowlett argues that she submitted ample evidence to raise a factual issue regarding the 90/180-day category of serious injury. To establish the 90/180-day category, the proof must include objective evidence of a medically determined injury flowing from the accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 357 [2002]; Blanchard v Wilcox, 283 AD2d 821, 822 [2001]) and that, during the relevant time following the accident, the injury caused a curtailment of customary activities "to a great extent" (Licari v Elliott, 57 NY2d 230, 236 [1982]; see Badger v Schinnerer, 301 AD2d 853, 854 [2003]). In her bill of particulars, Rowlett asserted that she suffered, among other things, low back pain and hip pain causing her to be totally incapacitated for five days and that, upon returning to work, she was moved from her position as a home health aid to that of a receptionist because of her injuries.

In support of his motion, defendant submitted Rowlett's medical records and the affirmed medical report of Cyril Shea, the doctor who performed an independent medical examination of Rowlett. X-ray reports from over a year before the accident indicated degenerative conditions in Rowlett's hips and spine. She also sustained injuries to her groin and right leg shortly before the accident. Shea's detailed report concluded that, while Rowlett had medical problems caused by her degenerative conditions, the only injury related to the accident was a lumbosacral sprain, which he characterized as minor and having some transient and self-limited aggravation of the low back.

Rowlett does not contest that the proof submitted by defendant satisfied his threshold showing of entitlement to summary judgment shifting to her the burden of producing competent proof to defeat the motion. In opposition, she submitted her own affidavit and certain postaccident medical records. While an orthopedist that Rowlett visited on April 26, 2000 noted a lumbosacral strain secondary to the motor vehicle accident, subsequent reports in May 2000 from that doctor and Rowlett's primary care physician indicated improvement in her condition. The medical proof submitted, consisting only of selected medical records, failed to sufficiently set forth objective evidence linking the alleged curtailment of Rowlett's activities following the accident to an injury or exacerbation of a preexisting condition sustained in the accident (see Blanchard v Wilcox, supra at 824; Evans v Beebe, 267 AD2d 828, 829 [1999], lv denied 94 NY2d 762 [2000]).

Mack v. Goodrich

 

MEMORANDUM AND ORDER


Calendar Date: September 10, 2004
Before: Mercure, J.P., Crew III, Peters, Spain and Carpinello, JJ.


Crew III, J.

Appeal from an order of the Supreme Court (Rumsey, J.), entered April 1, 2003 in Cortland County, which granted defendant's motion for summary judgment dismissing the complaint.

In November 1997, plaintiff was a passenger in an automobile that was rear-ended by a vehicle operated by defendant. Although no damage to either vehicle was reported, plaintiff complained of neck and shoulder pain at the scene and was evaluated and released from a local hospital. Plaintiff thereafter commenced this action in November 2000 alleging that she sustained a serious injury within the meaning of Insurance Law § 5102 (d). Specifically, plaintiff contends that she sustained a permanent consequential limitation of use of both arms due to "thoracic outlet syndrome" and of her neck and back due to, inter alia, fibromyalgia, in addition to suffering a medically determined nonpermanent injury that prevented her from performing substantially all of her customary daily activities for 90 of the first 180 days following the accident.

Following joinder of issue and discovery, defendant moved for summary judgment dismissing the complaint and plaintiff opposed the motion. Supreme Court granted defendant's motion finding, inter alia, that plaintiff failed to tender sufficient admissible proof to raise a question of fact as to the issue of permanency. Supreme Court also dismissed plaintiff's 90/180-day claim, finding no evidence to substantiate plaintiff's professed inability to cook, clean or [*2]perform household activities following the underlying accident. This appeal by plaintiff ensued.

We affirm. In support of his motion for summary judgment, defendant tendered portions of plaintiff's medical records and the affidavit and report of Daniel Elstein, the orthopedic surgeon who evaluated plaintiff in May 2002. In this regard, the reports of MRI studies conducted in February 1998, March 1999 and September 2000 revealed no evidence of disc herniation, nerve root encroachment or spinal stenosis and, as such, were characterized by Elstein as "basically negative." Although such studies disclosed some evidence of disc bulging and Elstein's examination of plaintiff revealed a limitation in the lateral bending of plaintiff's lumbar spine, Elstein ultimately opined that the underlying automobile accident produced no significant injury to plaintiff's neck or low back. Specifically Elstein, who described all of plaintiff's symptoms, many of which pre-dated the November 1997 accident, as hysterical in nature, was of the view that the 1997 accident "produced nothing more than a mild strain of [plaintiff's] cervical spine."

The foregoing proof, in our view, was sufficient to discharge defendant's initial burden on the motion for summary judgment, thereby obligating plaintiff to tender sufficient admissible proof to raise a question of fact as to whether she sustained a serious injury. This she failed to do. In opposition to defendant's motion, plaintiff primarily relied upon the affidavit and medical reports prepared by Kenneth Yonemura, an assistant professor of neurological surgery and orthopedics, who evaluated plaintiff in late 1999. Although Yonemura opined that plaintiff suffers from thoracic outlet syndrome and probable fibromyalgia, which, in turn, he believes to be directly related to the 1997 accident, his reports do not contain objective, quantitative evidence to substantiate that diagnosis and appear to rely heavily upon plaintiff's subjective complaints of pain and numbness. Moreover, even if such deficiencies were not fatal to Yonemura's reports, as Supreme Court aptly observed, Yonemura failed to opine that the limitations experienced by plaintiff are indeed permanent. Accordingly, Supreme Court properly granted defendant's motion for summary judgment as to this aspect of plaintiff's serious injury claim.

We reach a similar conclusion with regard to plaintiff's 90/180-day claim, as plaintiff failed to demonstrate that her "normal activities were substantially curtailed for the requisite period of time" (Marks v Brown, 3 AD3d 648, 651 [2004]). At best, plaintiff's proof established that she was unable to work only the last 74 of the 180 days immediately following her accident.  Inasmuch as plaintiff worked the first 106 days following her accident, and given the absence of any testimony to substantiate her professed inability to cook and clean following the accident, plaintiff plainly did not meet her burden of proof in this regard. Accordingly, Supreme Court's order granting defendant's motion for summary judgment dismissing the complaint is affirmed.

H.L. & F.H. Realty Corp. v. Gulf Insurance Company
 

In an action, inter alia, for indemnification (Action No. 1), and a related action to recover damages for breach of contract (Action No. 2), Panco Equipment Corp., a defendant in Action No. 1 and the plaintiff in Action No. 2, and John A. Panebianco and Nicholas Panebianco, defendants in Action No. 1, appeal from an order of the Supreme Court, Orange County (Slobod, J.), dated July 21, 2003, which granted the motion of H.L. & F.H. Realty Corp., the plaintiff in Action No. 1 and the defendant in Action No. 2, to dismiss all of their affirmative defenses in Action No. 1 and for summary judgment dismissing the complaint in Action No. 2.

ORDERED that the appeal by John A. Panebianco and Nicholas Panebianco from so much of the order as granted that branch of the motion which was for summary judgment dismissing the complaint in Action No. 2 is dismissed, as those appellants are not aggrieved by that [*2]portion of the order (see CPLR 5511); and it is further,

ORDERED that the order is affirmed; and it is further,

ORDERED that H.L. & F.H. Realty Corp. is awarded one bill of costs.

The lease between the owner of a gasoline station, H.L.&F.H. Realty Corp. (hereinafter HL&FH) and its tenant, Panco Equipment Corp. (hereinafter Panco), required Panco to procure an insurance policy protecting HL&FH from liability for environmental damage. When an underground spillage of petroleum was discovered, HL&FH contracted with an environmental engineer, whose company excavated a large quantity of contaminated soil from the site and removed all underground storage tanks, gas pumps, and other fixtures from the premises. HL&FH commenced Action No. 1 against the insurer and the brokers through which Panco obtained pollution insurance, seeking indemnification for the cleanup costs HL&FH had incurred. HL&FH subsequently added a cause of action against Panco and its two officers (hereinafter collectively the Panco parties), alleging that the Panco parties failed to have HL&FH included in the pollution policy as an additional insured.

The Supreme Court properly granted that branch of the motion of HL&FH which was to dismiss all 13 of the affirmative defenses asserted in the Panco parties' answer. In their fifth and twelfth affirmative defenses, the Panco parties alleged that HL&FH failed to comply with certain obligations and conditions of the pollution insurance policy and that certain exclusions set forth in the policy were applicable. The Supreme Court reasoned that even if the insurer considered HL&FH a named insured but had independent reasons for denying coverage to HL&FH, the Panco parties could not escape liability, due to the "hold harmless" provision of the lease. HL&FH, however, did not assert an indemnity cause of action against the Panco parties, and thus did not invoke the "hold harmless" provision of the lease. The sole cause of action against the Panco parties alleged breach of contract, based on the entirely different theory that they violated the insurance procurement provision of the lease (see Kinney v Lisk Co., 76 NY2d 215, 218; McGill v Polytechnic Univ., 235 AD2d 400). Nevertheless, we affirm the dismissal of the fifth and twelfth affirmative defenses. The insurance policy was not included in the papers submitted by the Panco parties in opposition to the motion and, as such, is not contained in the record on appeal. Accordingly, the Panco parties failed to establish the terms of the policy and that they apply to support the fifth and twelfth affirmative defenses.

In its separate action against HL&FH (Action No. 2), Panco alleged that HL&FH breached the lease by removing the service station's infrastructure and all underground tanks without proper notice to it. Panco relied on a clause of the lease which provided that "[t]he Landlord [HL&FH] has the right to demolish or rebuild the Demised Premises if there is substantial damage by fire or other casualty. The Landlord may cancel this Lease within thirty (30) days after the substantial fire or casualty by giving the Tenant [Panco] notice of the Landlord's intention to demolish or rebuild. This Lease will end thirty (30) days after the Landlord's cancellation notice to the Tenant."

In support of its motion for summary judgment, HL&FH submitted the affidavit of its environmental engineer, which established that 2,376 tons of soil, including soil underneath the underground tanks, had been contaminated by petroleum and had to be removed from the leased premises. HL&FH thereby made a prima facie showing that the underground petroleum leak had [*3]caused "substantial damage," which could not be remedied without removing all of the underground tanks (cf. Mawardi v Purple Potato, 187 AD2d 569). Panco submitted no evidence contradicting the engineer's assertions or raising a triable issue of fact regarding"substantial damage."

The cancellation notice referred to in the lease is a prerequisite to the termination of the lease, not the demolition or remedial action itself. As long as substantial damage occurred, the lease affords landlord HL&FH the "right to demolish or rebuild the Demised Premises," regardless of whether it provided the tenant Panco with a notice of cancellation.

Thus, the Supreme Court properly granted that branch of HL&FH's motion which was for summary judgment dismissing the complaint in Action No. 2.



Ahmed v. Khan

 

Appeal by defendant from an order of the Civil Court, Queens County (V. Brathwaite, J.), entered October 2, 2003, which denied his motion for summary judgment.

 

Order unanimously affirmed without costs.

The medical evidence submitted by defendant in support of his motion for summary judgment made out a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d). One of defendant's medical experts stated that plaintiff had a resolved cervical and lumbar strain/sprain. The defendant's other medical expert stated that plaintiff had full range of motion of her cervical spine. The burden, therefore, shifted to the plaintiff to raise a triable issue of fact that she sustained a serious injury (see Gaddy v Eyler, 79 NY2d 955 [1992]).

The plaintiff successfully opposed the motion by presenting evidence that she suffered a serious injury. She submitted an affirmation from her treating physician who presented a qualitative assessment of plaintiff's condition which had an objective basis and compared the plaintiff's limitations of motion of her cervical spine to normal function (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350 [2002]). We note that the gap in treatment of a little more than two years does not require the granting of defendant's motion for summary judgment. There was evidence regarding the nature of her treatment for more than six months after the accident and plaintiff explained that she had to stop treatment at that point because her no-fault insurance ran out and she could not afford to pay for it herself (see Black v Robinson, 305 AD2d 438 [2003]).
Decision Date: October 25, 2004

Loadholt v. New York City Transit Authority



            In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Durante, J.), dated October 27, 2003, which granted the defendants' 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 reversed, on the law, with costs, the motion is denied, and the complaint is reinstated.

It is well established that when a defendant relies on the findings of defense experts, those findings must be in admissible form, i.e., affidavits or affirmations, not unsworn reports, in order to make a prima facie showing of entitlement to summary judgment (see Pagano v Kingsbury, 182 AD2d 268, 270; Gleason v Huber, 188 AD2d 581). In this case, the defendants submitted the reports of two experts, Dr. Stanley Ross and Dr. Monette G. Basson. The report of Dr. Ross was unaffirmed, and therefore should not have been considered on the motion for summary judgment. Dr. Basson's report was properly affirmed, however, Dr. Basson's neurological examination did not address the plaintiff's major claim of a serious injury to her right ankle and foot, and did not indicate that the doctor had even examined that area of her body.

Since the defendants failed to meet their initial burden of establishing a prima facie [*2]case that the plaintiff did not sustained a serious injury, "we need not consider whether the plaintiff's papers in opposition to the defendants' motion were sufficient to raise a triable issue of fact" (Mariaca-Olmos v Mizrhy, 226 AD2d 437, 438; see Coscia v 938 Trading Corp., 283 AD2d 538; Chaplin v Taylor, 273 AD2d 188).

McPhaul-Morgan v. E. L. Corp.

In an action to recover damages for personal injuries, etc., the plaintiffs appeal from an order of the Supreme Court, Suffolk County (Doyle, J.), dated October 14, 2003, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff Janice McPhaul-Morgan did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is reversed, on the law, with costs, the motion is denied, and the complaint is reinstated.

In support of their motion for summary judgment, the defendants failed to make a prima facie showing that the plaintiff Janice McPhaul-Morgan did not sustain a serious injury within the meaning of Insurance Law § 5102[d](see Zavala v DeSantis, 1 AD3d 354; Black v Robinson, 305 AD2d 438, 439; Junco v Ranzi, 288 AD2d 440). Thus, the motion should have been denied regardless of the sufficiency of the plaintiffs' opposing papers (see Coscia v 938 Trading Corp., 283 AD2d 538).

 

Provenzano v. Ioffe


            In an action to recover damages for personal injuries, the plaintiff appeals (1) from an order of the Supreme Court, Kings County (Dabiri, J.), dated August 11, 2003, which granted the motion of the defendants Svetlana Ginzberg and Yefim Latsberg for summary judgment dismissing the complaint insofar as asserted against them on the ground that the action was time-barred, and (2), as limited by his brief, from so much of an order of the same court, dated December 22, 2003, as, upon reargument, adhered to its original determination.

ORDERED that the appeal from the order dated August 11, 2003, is dismissed, as that order was superseded by the order dated December 22, 2003, made upon reargument; and it is further,

ORDERED that the order dated December 22, 2003, is affirmed insofar as appealed from; and it is further,

ORDERED that one bill of costs is awarded to the respondents.

On August 18, 1999, the plaintiff allegedly sustained personal injuries when the motor vehicle he was driving was struck by another motor vehicle operated by the defendant Yefim [*2]D. Latsberg, and registered to the defendant Svetlana Ginzberg. The plaintiff attempted to pursue a claim with the respondents' insurance carrier, New York Central Mutual (hereinafter NYCM), but NYCM disclaimed coverage based upon the livery vehicle exclusion contained in the applicable policy. On November 8, 2000, the plaintiff served a demand for arbitration of an uninsured motorist claim upon his own insurer, Federal Insurance Company (hereinafter Federal). Federal commenced a proceeding to permanently stay the arbitration on the ground that Ginzberg's vehicle was, in fact, insured by NYCM. After a hearing, by order dated November 1, 2001, the Supreme Court determined, inter alia, that NYCM's disclaimer was valid, and directed the plaintiff and Federal to proceed to arbitration. Federal moved for reargument, and its motion was denied.

Federal took an appeal to this court. In a decision and order dated December 16, 2002, this court reversed the order dated November 1, 2001, granted Federal's petition, and permanently stayed the arbitration (see Matter of Federal Ins. Co. v Provenzano, 300 AD2d 485). The plaintiff then commenced this action on April 3, 2003. The respondents moved for summary judgment dismissing the complaint insofar as asserted against them, on the ground that the action was time-barred. The plaintiff opposed the motion, contending that he was entitled to the arbitration toll contained in CPLR 204(b), and that his action was timely. The Supreme Court granted the respondents' motion, and subsequently adhered to its original determination upon granting the plaintiff's motion for leave to reargue.

On reargument, the Supreme Court correctly adhered to its original determination granting the respondents' motion for summary judgment dismissing the complaint on the ground that the action was time-barred. The respondents made a prima facie showing of entitlement to judgment as a matter of law by demonstrating that the accident occurred on August 18, 1999, and that this action was not commenced until well after the running of the applicable statute of limitations on August 18, 2002 (see CPLR 214[5]; Alvarez v Prospect Hosp., 68 NY2d 320). In opposition, the plaintiff failed to raise a triable issue of fact.

The plaintiff contends that under CPLR 204(b), the statute of limitations was tolled from November 8, 2000 (the date he served his demand for arbitration of his claim for uninsured motorist benefits against his insurer, Federal) until to December 16, 2002 (the date this court determined that Federal's petition to permanently stay arbitration should have been granted). However, the same contention advanced by the plaintiff in this case was rejected on similar facts in this court's decision in Bright v Pagan (236 AD2d 350). There, we noted that the purpose of CPLR 204(b) is to preserve a remedy to a litigant who has mistaken his forum. We further held that the function of CPLR 204(b) is similar to that of CPLR 205. The two provisions serve to extend the time for "commencing a second action after a timely action has been terminated in a manner other than by voluntary discontinuance, a dismissal for neglect to prosecute, or a final judgment on the merits" (Bright v Pagan, supra at 351 [emphasis in original]). Here, as in Bright, there was no second action "because the demand to arbitrate did not concern the claim asserted in the common-law negligence action. The demand to arbitrate concerned the plaintiff's contractual rights to uninsured motorist benefits" under his policy with Federal (id.). Thus, the common-law negligence cause of action was not "an action upon such claim" as was arbitrated, within the meaning of CPLR 204(b), and the plaintiff was not entitled to the statutory toll under the circumstances of this case (id.).

In the Matter of Liberty Mutual Insurance Company v. Rapisarda
.

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an underinsured motorist claim, the appeal is from an order of the Supreme Court, Queens County (Hart, J.), dated November 3, 2003, which granted the petition and permanently stayed arbitration.

ORDERED that the order is reversed, on the law, without costs or disbursements, and the matter is remitted to the Supreme Court, Queens County, for a hearing in accordance herewith, and for a new determination of the petition thereafter.

In December 2000 the appellant, Giovanni P. Rapisarda, allegedly was injured while driving a vehicle owned by his wife Lucia Reina, when it was struck by another motor vehicle. After settling his claim against the driver of the offending vehicle, the appellant demanded arbitration of his claim for underinsured motorist benefits under the automobile insurance policy issued by the petitioner, Liberty Mutual Insurance Company (hereinafter Liberty Mutual), to his father-in-law, Giuseppe Reina, with whom he resided. In June 2002 Liberty Mutual brought this proceeding to permanently stay the arbitration, arguing that it did not receive timely notice of the underinsured motorist claim as required by the terms of the policy. The Supreme Court directed that a hearing be held on the issue of notice. However, the hearing court did not reach the notice issue raised by the petitioner; rather, it granted the petition on the ground that the appellant had no standing to demand arbitration under his father-in-law's policy. We reverse. [*2]
The issue of the appellant's standing to seek arbitration under the subject policy, raised sua sponte by the hearing court, was waived by the petitioner's failure to raise this issue in its petition or amended petition (see Matter of State Farm Mut. Ins. Co. v Genao, 175 AD2d 164). Contrary to the petitioner's contention, it failed to submit any evidence sufficient to raise a triable issue with respect to the appellant's residence, and the hearing court erred in permanently staying the arbitration on that basis (see Matter of Prudential Prop. & Cas. Ins. Co., 266 AD2d 926; National Grange Mut. Ins. Co. v Diaz, 111 AD2d 700).

Accordingly, we remit the matter to the Supreme Court, Queens County, for an evidentiary hearing on the issue of notice and for a new determination of the petition thereafter.
 

In the Matter of American Home Assurance Company v. Manzo

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, the petitioner appeals from an order and judgment (one paper) of the Supreme Court, Queens County (Thomas, J.), entered December 22, 2003, which, after a hearing, denied the petition and, in effect, dismissed the proceeding.

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

At the time of the accident, the vehicle which collided with the vehicle owned and operated by the respondent Joyce Manzo was insured by the proposed additional respondent Nationwide Mutual Insurance Company (hereinafter Nationwide). Nationwide claimed that the policy was procured by fraud and canceled it after the accident. The effect of such a cancellation was prospective only (see Matter of Insurance Co. of N. Am. v Kaplun, 274 AD2d 293, 297-298; Matter of Liberty Mut. Ins. Co. v McClellan, 127 AD2d 767, 769). Nationwide's claim on appeal that noncooperation on the part of the proposed additional respondent Niram Service negated any coverage was not cited in its disclaimer as a ground for disclaiming coverage. Further, Nationwide's [*2]disclaimer was untimely as a matter of law (see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64; Moore v Ewing, 9 AD3d 484).

Bonded Concrete, Inc. v. Transcontinental Ins. Co.



Appeal from an order of the Supreme Court (Benza, J.), entered February 19, 2004 in Albany County, which, inter alia, granted defendant's cross motion for summary judgment dismissing the complaint.

This declaratory judgment action between plaintiff, an insured under a commercial general liability insurance policy, and defendant, its insurer, arises out of a dispute which itself was the subject of a recent appeal to this Court (see U.W. Marx v Bonded Concrete, 7 AD3d 856 [2004]). In that prior action, filed in mid-November 1999, plaintiff was sued by the general contractor on a school renovation project for allegedly supplying defective concrete for use in sidewalks. Shortly thereafter, plaintiff forwarded the pleadings to defendant with a demand that it provide plaintiff with a defense and indemnification.

After investigating the claim, defendant advised plaintiff, by letter dated February 7, 2000, that there was no coverage for the claim under the policy because the delivery of defective concrete did not constitute a covered "occurrence." Defendant also relied upon a number of exclusions in the policy in denying plaintiff's demand. Among the exclusions was one for property damage to "your product." Shortly before trial in the underlying action, the general [*2]contractor was permitted to amend its complaint to assert an additional claim that plaintiff violated General Business Law § 349 (deceptive business practices). The amended pleadings were not immediately provided to defendant. After defendant failed to pay the judgment rendered against plaintiff in the underlying action, plaintiff commenced the instant suit. Plaintiff now appeals from an order of Supreme Court granting defendant summary judgment dismissing the complaint.

We begin with the well-settled rule that the issuer of a commercial general liability insurance policy is not a surety for a construction contractor's defective work product (see George A. Fuller Co. v United States Fid. & Guar. Co., 200 AD2d 255 [1994], lv denied 84 NY2d 806 [1994]). In Fuller, policy provisions identical to those in the case at bar were construed to negate insurance coverage to a contractor which had been sued for faulty workmanship in a construction project. Thus, precedent dictates that policies like defendant's were never intended to provide indemnification to contractors from claims that their work product was defective (see id. at 259). Rather, the "purpose of a commercial general liability policy . . . is to provide coverage for tort liability for physical damage to others and not for contractual liability of the insured for economic loss because the product . . . is not what the damaged [party] bargained for" (Hartford Acc. & Indem. Co. v Reale & Sons, 228 AD2d 935, 936 [1996]).

Plaintiff cannot escape the effect of this rule. The gist of the claims in the underlying action is that plaintiff provided an allegedly defective product, namely, concrete. The damages sought were the costs of correcting the defect, not damage to property other than the completed work itself (see Zandri Constr. Co. v Firemen's Ins. Co. of Newark, 81 AD2d 106, 109 [1981], affd sub nom. Zandri Constr. Co. v Stanley H. Calkins, Inc., 54 NY2d 999 [1981]).

We are unpersuaded by plaintiff's reliance on a number of cases which stand for the proposition that a commercial general liability policy provides coverage for damages when an insured's defective product is a mere component of another product or structure (see e.g. Apache Foam Prods. Div. of Millmaster Onyx Group of Kewanee Indus. v Continental Ins. Co., 139 AD2d 933 [1988]; Penn Aluminum v Aetna Cas. & Sur. Co., 61 AD2d 1119 [1978]; Marine Midland Servs. Corp. v Kosoff & Sons, 60 AD2d 767 [1977]). Here, the subject concrete was not a component of any other larger structure. Rather, the concrete itself was the product, namely, the sidewalk. Thus, this line of cases does not assist plaintiff in its quest for a defense and indemnification.

Next, we need not devote extensive discussion to plaintiff's alternate argument that defendant's notice of disclaimer was untimely. This assertion is rendered academic by our conclusion that there is no coverage for the claims in the underlying action. Indeed, "requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed" (Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 188 [2000]).

Finally, while we agree with plaintiff that our prior decision striking the General Business Law § 349 claim from the underlying action does not necessarily render moot its argument that it would have been entitled to reimbursement for defense costs incurred in defending that claim had coverage existed, we nonetheless find no coverage for this claim under the "advertising injury" portion of defendant's policy. That provision clearly contemplates "publication" of material that libels or slanders another or violates a person's right to privacy, torts not even alleged in the stricken cause of action. Accordingly, we affirm Supreme Court's order in its entirety.

AMCC Corp v. Illinois National Insurance Co.


            Order, Supreme Court, New York County (Edward H. Lehner, J.), entered January 28, 2004, which, upon reargument, adhered to an earlier determination of the same court and Justice, entered on or about April 29, 2003, granting summary judgment to defendants and declaring neither defendant obligated for defense costs incurred by plaintiffs in an underlying negligence action, unanimously affirmed, without costs. Appeal from the aforesaid order entered on or about April 29, 2003, unanimously dismissed, without costs, as superseded by the appeal from the order entered January 28, 2004.

The language of the policy issued by defendant Illinois National, which provided liability coverage for activities "emanating" from the construction site, did not encompass an accident while the leased crane was en route to the construction site. De Forte v Allstate Ins. Co. (81 AD2d 465 [1981], appeal dismissed 54 NY2d 1027 [1981]), upon which plaintiffs rely, is inapposite since there the specific language of the policy allowed for coverage of off-premises occurrences; whereas here, the differing language in the "Project Endorsement" and the "Named Insured Endorsement" collectively and specifically limits coverage to occurrences at or on the project site itself or occurrences "emanating from" the project site, i.e., beginning at or on the project site but ending up outside its boundaries.

Burack v. Tower Insurance Company of New York



            Order, Supreme Court, New York County (Diane A. Lebedeff, J.), entered February 18, 2004, which denied defendant's motion for summary judgment dismissing the complaint, unanimously affirmed, without costs.

This action for declaratory judgment resulted from defendant's declination of coverage after the collapse of an apartment building. For three weeks before the collapse, excavation had been ongoing in an adjacent lot. Plaintiff claims the collapse resulted from the construction equipment coming into contact with his building. Defendant claims this loss is not covered because the policy excludes coverage for losses due to "earth movement," a phrase whose meaning is an issue in this appeal.

Assuming, for the sake of argument, that the displacement of earth occasioned the collapse, it is premature to conclude that the contract exclusion applies as a matter of law. Traditionally, that exclusion has covered instances of earth movement from natural phenomena, such as catastrophic land shifts or erosion (see e.g. Holy Angels Academy v Hartford Ins. Group, 127 Misc 2d 1024 [1995]; Barash v Insurance Co. of N. Am., 114 Misc 2d 325, 330 [1982]; Peters Twp. School Dist. v Hartford Acc. & Indem. Co., 833 F2d 32, 36 [3d Cir 1987]). Defendant claims that language in the policy excluding loss "regardless of any other cause or event that contributes concurrently or in any sequence to the loss" precludes coverage from an intervening human cause where the primary cause (a shifting of the earth) is specifically excluded.

There are, however, questions as to whether the shifting of the earth due to the actions of third parties on the adjoining property's construction site fall within the exclusion. The policy does not unequivocally exclude losses of the type at issue here. Furthermore, we are not persuaded that the loss here resulted from activity similar to "mine subsidence," which is excluded under the policy, and which occurs over a much longer period of time, without any active intervening agent such as ongoing construction.

 

MYP Food Corp. v. Tower Insurance Company of New York


            Order, Supreme Court, New York County (Karen S. Smith, J.), entered April 9, 2004, denying defendant's motion for summary judgment and granting plaintiff's cross motion to the extent of dismissing the first affirmative defense, unanimously modified, on the law, plaintiff's cross motion denied, the first affirmative defense reinstated, and otherwise affirmed, without costs.

Plaintiff alleges wrongful refusal to pay an insurance claim, asserting it never received the letter demanding a sworn proof of loss. Questions of fact preclude the award of summary judgment to either party (Travis v Allstate Ins. Co., 280 AD2d 394 [2001]), including whether defendant made reasonable efforts to serve plaintiff with its demand for proof of loss, or properly relied on plaintiff's public adjuster to do so. In order to rely on a public adjuster as plaintiff's agent for service of the demand for proof of loss, defendant was required to have a good faith reason to believe the agent would advise his principal of the demand letter (Rosalie Estates v Colonia Ins. Co., 227 AD2d 335 [1996]). Moreover, factual issues remain as to both the substance and admissibility of the public adjuster's purported acknowledgment that plaintiff had received defendant's proof-of-loss demand.

 

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