Coverage Pointers - Volume VI, No. 6

 

Editors Note:  Yesterday’s decision from the Court of Appeals in Lang is surely a “must read” decision; it is the most significant high court decision on liability coverage in several months:

 

11/18/04          Lang  v. Hanover Insurance Company
New York Court of Appeals
Injured Party Cannot Seek Declaratory Judgment Against Liability Carrier Until After Judgment Obtained Against Insured BUT High Court Issues Warning ….

There has, for several years, been a debate between the Appellate Departments on this very simple question: can a plaintiff (an injured person) commence a declaratory judgment action to test or challenge a liability insurer’s disclaimer before that plaintiff has a judgment against the defendant/tortfeasor/insured?  Three Departments had answered that question in the negative, one in the affirmative.  The Court of Appeals has now resolved that issue in this case.  The high court has held that an injured party cannot commence a declaratory judgment action against a liability carrier without having taken judgment against the insured first.  Once the plaintiff has taken judgment, he or she can then commence a “direct action” against the carrier in accordance with the statutory “direct action” provisions found in Section 3420 of the Insurance Law.  The plaintiff (now a judgment creditor) must present the judgment to the insurer and the insured and ask for payment.  Once 30 days go by and payment is not made, a direct action can be commenced against the liability insurer to seek a determination of responsibility under the policy.  The Court of Appeals, however, issued a warning to carriers (without citation to any authority for its dicta:

Finally, we note that an insurance company that disclaims in a situation where coverage may be arguable is well advised to seek a declaratory judgment concerning the duty to defend or indemnify the purported insured. If it disclaims and declines to defend in the underlying lawsuit without doing so, it takes the risk that the injured party will obtain a judgment against the purported insured and then seek payment pursuant to Insurance Law § 3420. Under those circumstances, having chosen not to participate in the underlying lawsuit, the insurance carrier may litigate only the validity of its disclaimer and cannot challenge the liability or damages determination underlying the judgment.

There is no precedent cited for the proposition suggesting that a carrier may not challenge the “liability” or “damage determination.”  However, it should give an insurer some additional pause before denying coverage and allowing, for example, a default to be entered against an insured.  

11/18/04          Little Princess Express Cab Corp. v. American Transit Insurance Company
Appellate Division, First Department
Bad Faith Claim Fails Where Insured Fails to Prove Opportunity to Settle Was Lost
Plaintiff insured failed to make any showing that a demand for settlement was made, and that the insured lost an actual opportunity to settle the claim at a time when all serious doubts about its liability were removed. Failure to keep insured advised of status of negotiations, alone, insufficient to establish bad faith.

 

11/18/04          Oribamie v. Santiago

Appellate Division, First Department

Conclusory Affirmation by Plantiff’s Doctor, Without More, Insufficient to Defeat Motion for Summary Judgment on Serious Injury
The affirmation, which states that the damage to plaintiff's shoulder resulted in "a marked decrease in range of motion, flexibility, rotation and maneuverability," that plaintiff's "everyday activities have been severely limited," and that plaintiff "has been rendered permanently disabled," does not specify the degree of plaintiff's limitation or restriction, identify the diagnostic tests the physician conducted to reach these conclusions, or describe the "everyday activities" in which plaintiff has been limited.  Accordingly, where defendant has sufficiently established a basis for a motion dismissing case for lack of serious injury, motion must be granted in this situation.




 

11/16/04          Badio v. Liberty Mutual Fire Insurance Company
Appellate Division, First Department
Proof of Compliance With Sound Mailing Practices Enough to Establish Proper Cancellation of Policy
Insurer convinced jury that it “follow[ed] reasonable procedures in mailing out the notice of fire insurance policy cancellation to plaintiff . . . on January 12, 1999, which were reasonably calculated to ensure plaintiff . . . received such notice.”  Insured’s claim that it never received cancellation notice was unimportant.  Proof that sound procedures were followed was sufficient to establish valid cancellation of policy.

 

11/15/04          In the Matter of Continental Insurance Company v. Marshall
Appellate Division, Second Department
Underinsurance (SUM) Arbitration Successfully Stayed on Late Notice Grounds
Insured is required to provide notice of an underinsurance claim "[a]s soon as practicable" and the triggering event is when the insured "knew or should reasonably have known" that the motorist involved in the accident was underinsured. Notice must be given thereafter within "a reasonable time under all the circumstances".  The insured, the appellant, failed to ascertain the insurance status of the alleged tortfeasor and to notify her carrier, the respondent, of her underinsurance claim until approximately 22 months after the accident, and more than one year after first being diagnosed with, inter alia, multiple disc herniations and a pinched nerve. Under these circumstances, the timeliness of her underinsurance claim notice was "unreasonable as a matter of law.”

 

11/15/04          Bardakas v. Winstral
Appellate Division, Second Department
As Defendant Didn’t Offer Sufficient Proof of a Lack of Serious Injury in Motion for Summary Judgment, Plaintiff has No Burden
Defendants failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as the defendants' neurologist found limitations in the plaintiff's lumbar range of motion, an audible cracking sound upon movement of the shoulder and a limitation of cervical range of motion was limited to 25 degrees on extension. Since defendant didn’t meet his burden on the motion for summary judgment, plaintiff’s response is of no consequence.  NB, the court decided three other cases on the same issue the same way the same day: Basmajian v. Wang, Grant v. Parsons Coach, Ltd., and Holtz v. Y. Derek Taxi

 

11/9/04            Radiology Resource Network, P.C. v. Fireman's Fund Insurance Company

Appellate Division, First Department
Assigned No-Fault Claims Must Be Separately Sued
The court properly exercised its discretion granting insurer’s motion to split plaintiff's 68 assigned claims for no-fault insurance benefits into separate actions. The claims arise from 68 different accidents, and have been assigned to plaintiff, a vendor of medical services, by 68 different assignors. Each claim will raise unique legal and factual issues and at issue are the validity of the assignments, the necessity and reasonableness of plaintiff's services in light of each assignor's medical condition, defendant's receipt of bills from plaintiff, and the sufficiency of the no-fault forms that have been submitted. The viability of these defenses will depend, in the case of each assignor's claim, on the particular facts relating to that claim.

 

11/9/04            Akamnonu v. Rodriguez
Appellate Division, First Department
Gap in Treatment Does Not Necessarily Mean Lack of Serious Injury
Plaintiff offered two reports from his chiropractor which laid out the degree to which plaintiff's cervical and thoraco-lumbar ranges of motion were limited, and in which the chiropractor opined that plaintiff had suffered a "permanent impairment" which "preclud[ed] the possibility of complete restoration.” These reports were supported by the results of an MRI. Plaintiff's submissions constituted objective evidence that he had sustained serious injury within the meaning of Insurance Law § 5102(d), sufficient to raise a factual issue warranting denial of defendant's motion for summary judgment.  The carrier argues that there was an inexplicable gap of 2½ years between his initial visits to a chiropractor and his follow-up visit on January 8, 2003 which the chiropractor did not explain. This was a 3-2 decision of the Appellate Division which gives the insurer the right to seek review by the state’s highest court, the Court of Appeals, once the decision is considered final.  However, since the matter is not yet fully resolved, it is unlikely that immediate review can be sought.  Editors Note:  See Next Decision

 

11/8/04            Mooney v. Edwards
Appellate Division, Second Department
Gap in Treatment Suggests Lack of Serious Injury
For another opinion on the same subject, the Second Department suggests that the lack of continuing treatment might indicate that a Serious Injury is less certain.  Here, defendant submitted proof that the plaintiff had not met the statutory threshold. . But the, the Court noted, the plaintiff’s physician failed to offer any explanation for the two-year gap in time between the conclusion of the plaintiff's medical treatments and the date of his examination. The plaintiff was involved in two subsequent accidents in which he injured his neck and back, and it was it was clear that the plaintiff's examining physician was completely unaware of them. Under these circumstances, it would have been purely speculative to conclude that the subject accident was the sole cause of the plaintiff's current injuries. Moreover, the plaintiff's only current complaint was that he had difficulty in participating in recreational basketball and table tennis.

 

11/8/04            United Parcel Service, Inc. v. American Motorists Insurance Company
Appellate Division, Second Department
Other Insurance: “No Liability” or “Escape Clause” Found Applicable and Trumps “Excess Clause”
At the time of the accident, AMI insured AAA under a business automobile liability policy which included a provision that the insurance provided under the policy was excess over any other collectible insurance. The Liberty policy insuring the UPS vehicle included a "no liability" clause, which provided that the insurance policy did not apply to any losses for which there was any "other valid and collectible insurance whether on a primary, excess, or contingent basis." AMI did not dispute that its policy covered Estrella, at least in part, for Cruz's damages resulting from the accident. Since there was other valid insurance covering the loss, the "no liability" clause of the UPS policy precluded coverage here.

 

 

11/8/04            Rodriguez v. J & K Taxi, Inc.
Appellate Division, Second Department
Inadequate Independent Medical Exam and Report Precludes Defendant from Securing Summary Judgment on Serious Injury
Despite plaintiff’s claim of shoulder injury in Bill of Particulars, examining doctor failed to mention exam or results or disability related to it.   In addition, examining doctor failed to set forth objective finding regarding disability.  Accordingly, since defense didn’t satisfy its minimum burden of going forward with an adequate motion for summary judgment, plaintiff need not respond to motion.

 

11/8/04            New York Hospital Medical Center of Queens v Motor Vehicle Accident Indemnification Corporation

Appellate Division, Second Department
Thirty Days to Deny No Fault Benefits Means 30 Days
Insurer failed to deny No Fault benefits within 30 days, claiming it had to “qualify” claimant.  Court refuses to allow carrier to escape time constraints of regulation by giving insurer more time.  To permit the defendant to obviate the 30-day time requirement would frustrate the purpose and objective of the No-Fault law "to assure claimants of expeditious compensation for their injuries through prompt payment of first-party benefits without regard to fault and without expense to them"

 

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.

11/18/04          GILCHRIST v. STATE FARM MUTUAL AUTOMOBILE INSURANCE
Eleventh Circuit Court of Appeals

Insurers' Conduct in Limiting Coverage for Certain External Auto Body Repairs is Excluded From Federal Antitrust Jurisdiction by the McCarran-Ferguson Act
Linda Gilchrist, Joanne Zipperer and Jackie Valentine filed this action seeking to represent a group of individual policy holders who purchased automobile insurance from various insurance companies, including State Farm, Allstate, Nationwide, and GEICO. Gilchrist alleges that defendants conspired in violation of federal antitrust laws to limit insurance coverage for certain external auto body repairs to the cost of less expensive parts not made by an original equipment manufacturer. Insurers moved to dismiss the complaint on the basis that the McCarran-Ferguson Act, 15 U.S.C. § 1012 (1999), bars plaintiffs’ claim because it concerns the “business of insurance,” which, under the Act, is not subject to the federal antitrust laws. The district court denied the motion, holding that the Act does not bar Gilchrist’s claim because her claim merely challenges the way in which the Insurers perform their policies, which is not the “business of insurance.” The district court then certified the class, and the Insurers appealed. The Court of Appeals determined that the Act did exclude the claims from federal antitrust jurisdiction and that therefore it was without subject matter jurisdiction.

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

11/18/04          ROYAL INSURANCE CO. OF AMERICA v. HARTFORD UNDERWRITERS INSURANCE CO.
Fifth Circuit Court of Appeals

Conflicting Provisions in Separate Insurance Policies Must Be Ignored So That Both Policies Provide Primary Coverage, Which Must Be Prorated
Two insurance companies dispute whether their coverage of claims against a nursing home is primary, excess or pro rata. One policy was a CGL policy, while the other was a professional liability policy. The district court held that one insurance company’s coverage was primary and the other insurance company’s coverage was excess. The Fifth Circuit reversed, holding that both policies offer primary coverage, which must be prorated. This decision was based on Texas law whereby if two policies are conflicting in their coverage or exclusions, courts will ignore the conflicting provisions, and instead apportion liability pro rata and require both insurers to defend.

Submitted by: Steve Farrar and Rebecca Zabel (Leatherwood Walker Todd & Mann, P.C.) -

11/10/04          UNITED NATIONAL INS. CO. V. FRONTIER INS. CO.
Nevada Supreme Court

“Property Damage” and “Occurrence” in CGL Policy Are Not Ambiguous Terms
There was no coverage, duty to indemnify or duty to defend under a CGL policy when a sign allegedly negligently erected by insured, fell after CGL policy had expired. The trial court’s finding that the CGL policy’s terms “property damage” and “occurrence” were ambiguous, was overturned. The Nevada Supreme Court held that when read together there was no ambiguity that the “occurrence” and the “property damage” must both be during the policy period for coverage to apply. There was no coverage because the sign fell, resulting in property damage, after the policy period. Accordingly, there can be no duty to indemnify unless the resulting damage actually occurs within the policy’s coverage period. Further, there is no duty to defend where there is no potential for coverage. The only damage alleged in the complaint was the falling of the sign, months after the expiration of the policy. As such, the court held that there was no potential for coverage, and thus no duty to defend.

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

 

11/05/04          DIXON v. LIFE INSURANCE CO. OF NORTH AMERICA
Eleventh Circuit Court of Appeals

Eleventh Circuit Adopts "Substantially Contributing" Test to Determine to What Extent an ERISA Policy May Preclude Recovery for Accidental Injury Where Some Pre-Existing Condition was a Contributing Factor
 LINA issued a group policy providing accidental death benefits to Dixon's husband, and Dixon was named as the beneficiary. The policy excluded loss resulting from sickness, disease or bodily infirmity. Dixon filed a claim for benefits under the policy after her husband died in a single car accident near his home, and LINA denied her claim, contending that her husband's death ws not caused by an accident but resulted from other causes. The cause of his death was heart failure. When LINA denied the benefits, Dixon brought an action in state court seeking to recover the benefits as well as a bad faith penalty and attorneys' fees. LINA removed this case on the ground that the benefits were governed by ERISA. The district court granted LINA's motion for summary judgment on the ground that the death was not accidental and thus the policy language precluded recovery. The Court of Appeals affirmed the district court's ruling on the basis that Dixon's husband's pre-existing heart condition "substantially contributed" to his death, regardless of whether the accident was the immediate cause in that it triggered his heart attack.

Submitted by: Steve Farrar and Rebecca Zabel (Leatherwood Walker Todd & Mann, P.C.) –

 

11/5/04            RUSSELL V. HERITAGE MUTUAL INSURANCE COMPANY
Ohio Court of Appeal

R.C. 3937.18 Requires An Insurer To Offer UM/UIM Coverage Only If Its Policy Is An Automobile Or Motor Vehicle Liability Policy.
 Russell had filed suit against Heritage and Joseph B. Jones because of an auto accident. While driving his personal pickup truck, Russell was hit by an auto driven by Jones. In his complaint, Russell claims negligence by Jones for failure to, among other things, maintain control of his auto. Because Russell’s damage exceeded Jones’ liability insurance coverage, Russell also filed a declaratory judgment claim against Heritage, asserting that he was entitled to underinsured-motorist coverage under a Heritage commercial auto policy. The trial court concluded that the Heritage policy was not an automobile or motor vehicle liability policy of insurance within the meaning of R.C. 3937.18, and that UM/UIM coverage did not arise by operation of law. The Appellate court agreed, holding that pursuant to R.C. 3937.18, Heritage was required to offer UM/UIM coverage only if the policy in question was an automobile or motor vehicle liability policy, a term defined in R.C. 3937.18 to mean a policy that serves as proof of financial responsibility for owners or operators of the motor vehicles specifically identified in the policy. The Heritage policy was not such a policy.

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

 

11/5/04            TACO BELL CORP. V. CONTINENTAL CASUALTY CO., ET AL.
Seventh Circuit Court of Appeals

Prior Publication Exclusion Precludes Coverage For Wrongful Behavior That Begins Before The Policy Incepts.
Taco Bell sued two insurance companies, Zurich and Continental, each of which had issued it a liability insurance policy. The suit sought a declaration that the insurance companies had a duty to pay for Taco Bell’s defense against a lawsuit that had been brought against it by a design agency named Wrench. Zurich argued that its policy’s “prior publication” exclusion precluded coverage. The court disagreed, holding that the prior publication exclusion precludes coverage for wrongful behavior that begins before the policy incepts. The court, looking only to the allegations in the complaint and not what was actually proven, found that the wrongful act alleged by the claimant only happened after Zurich’s policy incepted.

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

11/4/04            KELLY v. HAMILTON
Indiana Court of Appeals

Passengers’ Tort Judgment Against Insured Driver Did Not Collaterally Estop Auto Liability Insurer From Claiming That The Rental Car Leased To A Passenger Was Not An Insured Auto And That The Policy Provided No Coverage.
 Insured driver’s judgment creditors filed a verified motion for proceedings supplemental naming automobile liability insurer as a garnishee responsible for creditors’ injuries as passengers in car rented to one passenger. The Court of Appeal held that (1) the tort judgment did not collaterally estop the insurer from claiming that the rental car was not an insured auto and that the policy provided no coverage and (2) the driver did not have owner’s permission to drive due to age restriction in lease, and, thus, the car was not an insured auto.

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

 

 

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Radiology Resource Network, P.C. v. Fireman's Fund Insurance Company

Order, Supreme Court, Bronx County (Janice L. Bowman, J.), entered September 18, 2003, which, in an action to recover on 68 claims for no-fault insurance benefits assigned to plaintiff by 68 different assignors, granted defendant's motion to sever the claim of each assignor into a separate action, unanimously affirmed, without costs.

The IAS court properly exercised its discretion under CPLR 603 in granting defendant's motion to sever plaintiff's 68 assigned claims for no-fault insurance benefits into separate actions. It is undisputed that the claims arise from 68 different accidents, and have been assigned to plaintiff, a vendor of medical services, by 68 different assignors. Even if it is assumed that the insurance policies of the 68 assignors are identical in all relevant respects — a matter addressed neither in the complaint nor in plaintiff's papers opposing the motion — each claim will raise unique legal and factual issues. In this regard, we note that defendant's answer places at issue, inter alia, the validity of the assignments, the necessity and reasonableness of plaintiff's services in light of each assignor's medical condition, defendant's receipt of bills from plaintiff, and the sufficiency of the no-fault forms that have been submitted. The viability of these defenses will depend, in the case of each assignor's claim, on the particular facts relating to that claim. At the same time, the claims are likely to raise few, if any, common issues of law or fact, even if the assignors' insurance policies are identical. That all of the claims are for services provided by the same vendor, and are being asserted against the same insurance company, does not change the fact that individual issues are likely to predominate in the resolution of each claim.

Under the circumstances, to try all 68 claims together would be unwieldy and would create a substantial risk of confusing the trier of fact. Accordingly, the interests of convenience and avoidance of prejudice are best served by severing the claims
(see Mount Sinai Hosp. v Motor Veh. Acc. Indem. Corp., 291 AD2d 536 [2002]; Bender v Underwood, 93 AD2d 747, 748 [1983]; Reid v Haher, 88 AD2d 873, 873-874 [1982]; Schneph v New York Times Co., 21 AD2d 599, 600-601 [1964]).

We note that our decision is consistent with a recent federal decision in a remarkably similar case (Boston Post Road Med. Imaging v Allstate Ins. Co., 2004 WL 1586429 [US Dist [*2]Ct, SD NY, July 15, 2004]). The plaintiff in Boston Post Road was a medical services provider that sued the same insurance company on no-fault claims arising from 59 different accidents, which had been assigned to the plaintiff by 59 different patients. In granting the insurance company's motion to sever the claims, the Boston Post Road court stated, among other things, that the claims "arise out of distinct automobile accidents which led to different injuries to different individuals who underwent distinct medical services, payment for which was denied for varying reasons" (id. at *1). The court further noted that "[e]ven if the assignors' insurance contracts are identical, the legal and factual issues involved in these claims are not," since the defendant's "answer pleaded different defenses that will apply to some claims and not to others," meaning that "different provisions of the policies will be relevant to different claims" (id. at *2). These observations are equally applicable here.

Plaintiff's reliance on the Second Department's decision in Hempstead Gen. Hosp. v Liberty Mut. Ins. Co. (134 AD2d 569 [1987]) is unavailing. While Hempstead held that, under the particular circumstances of that case, Supreme Court had acted within its discretion in denying a motion to sever 29 assigned claims, the decision does not stand for the proposition that the granting of such a severance motion — in a case involving more than twice as many assigned claims — is an abuse of judicial discretion warranting reversal on appeal. In any event, Hempstead must be read in light of the Second Department's much more recent decision in Mount Sinai Hosp. v Motor Veh. Acc. Indem. Corp. (supra). Mount Sinai held that Supreme Court "providently exercised its discretion" in granting a motion to sever five assigned no-fault claims that, inter alia, arose from "accidents on five different dates" and had "no relation or similarity to each other, other than the fact that the no-fault benefits were not paid" (291 AD2d at 536).

Akamnonu v. Rodriguez
 

Order, Supreme Court, Bronx County (Janice L. Bowman, J.), entered May 6, 2003, which denied defendant's motion for summary judgment dismissing the complaint, affirmed, without costs.

Defendant waived any objection to the evidence plaintiff submitted in opposition to its motion for summary judgment, including the "affirmation" of plaintiff's chiropractor, by failing to contest its admissibility (see Sam v Town of Rotterdam, 248 AD2d 850, 851-852 [1998], lv denied 92 NY2d 804 [1998]). Therefore, we consider plaintiff's opposition on the merits (see Shinn v Catanzaro, 1 AD3d 195, 198 [2003]). Plaintiff offered two reports from his chiropractor which laid out the degree to which plaintiff's cervical and thoraco-lumbar ranges of motion were limited, and in which the chiropractor opined that plaintiff had suffered a "permanent impairment" which "preclud[ed] the possibility of complete restoration." These reports were supported by the results of an MRI. Plaintiff's submissions constituted objective evidence that he had sustained serious injury within the meaning of Insurance Law § 5102(d), sufficient to raise a factual issue warranting denial of defendant's motion for summary judgment.

The dissent would make it plaintiff's burden to explain the gap of 2½ years between his initial visits to a chiropractor and his follow-up visit on January 8, 2003. While a medical expert in Manzano v O'Neil, one of the cases decided with Toure v Avis Rent a Car System (98 NY2d 345, 355 [2002]), explained the reason for discontinuation of treatment, the failure to do so does not dictate summary resolution of the serious injury issue. A plaintiff is not required to explain why his treatment was not continuous, and lack of continuity does not determine as a matter of law whether he or she has suffered a "serious injury." Because a course of treatment is fact specific and is commensurate with the nature of the alleged injuries and the customary standard of care, the issue of a treatment gap bears only upon the weight to be accorded the medical opinion, a matter  which is clearly within the province of a jury (see e.g. Rosario v Universal Truck & Trailer Srvc., 7 AD3d 306 [2004]; Williams v Parke, 1 AD3d 240 [2003]; Ramos v Dekhtyar, 301 AD2d 428 [2003]; Manrique v Warshaw Woolen Assocs., 297 AD2d 519, 520-21 [2002]; Bitici v New York City Tr. Auth., 245 AD2d 157 [1997]; Cassagnol v Williamsburg Plaza Taxi, 234 AD2d 208[1996]).

United Parcel Service, Inc. v. American Motorists Insurance Company

In an action, inter alia, for a judgment declaring that the defendants American Motorists Insurance Company and Kemper Insurance Company are obligated to defend and indemnify the plaintiff Liberty Mutual Fire Insurance Company in a personal injury action entitled Cruz v United Parcel Service, Inc., pending in the Supreme Court, Bronx County, under Index No. 15301/95, the defendants American Motorists Insurance Company and Kemper Insurance Company appeal from an order and judgment (one paper) of the Supreme Court, Westchester County (DiBlasi, J.), entered May 1, 2003, which, among other things, granted the plaintiffs' motion for summary judgment and declared that the defendants American Motorists Insurance Company and Kemper Insurance Company are obligated to defend and indemnify the plaintiff Liberty Mutual Fire Insurance Company.

ORDERED that the order and judgment is affirmed, with costs.

In April 1995 Gonzalo A. Cruz commenced a personal injury action against, among others, United Parcel Service, Inc. (hereinafter UPS), AAA Truck Body Builders, Inc. (hereinafter AAA), and Modesto V. Estrella. In that action (hereinafter the Cruz action), Cruz sought damages for injuries he sustained in a car accident on the Brooklyn Queens Expressway on April 23, 1992.  The Cruz vehicle was struck by a vehicle owned by UPS and operated by Estrella, then an employee of AAA, while Estrella was transporting the UPS vehicle to an AAA body shop for repairs. The Cruz action was subsequently settled, and the plaintiff Liberty Mutual Fire Insurance Company (hereinafter Liberty), UPS's insurer, and the defendants American Motorists Insurance Company and Kemper Insurance Company (hereinafter collectively AMI), AAA's insurer, paid the costs thereof.

At the time of the accident, AMI insured AAA under a business automobile liability policy which included a provision that the insurance provided under the policy was excess over any other collectible insurance. The Liberty policy insuring the UPS vehicle included a "no liability" clause, which provided that the insurance policy did not apply to any losses for which there was any "other valid and collectible insurance whether on a primary, excess, or contingent basis" (see Progressive Northeastern Ins. Co. v Motors Ins. Co., 288 AD2d 363, 364). This action was commenced in May 2001 by UPS and Liberty (hereinafter collectively the plaintiffs) against AMI, AAA, Estrella, and Cruz, inter alia, for a judgment declaring that AMI is obligated to defend and indemnify Liberty in a personal injury action entitled Cruz v United Parcel Service, Inc., pending in the Supreme Court, Bronx County, under Index No. 15301/95.

AMI did not dispute that its policy covered Estrella, at least in part, for Cruz's damages resulting from the accident. Since there was other valid insurance covering the loss, the "no liability" clause of the UPS policy precluded coverage here (see Progressive Northeastern Ins. Co. v. Motors Ins. Co., supra). Accordingly, the Supreme Court correctly, inter alia, granted the plaintiffs' motion for summary judgment (see generally Alvarez v Prospect Hosp., 68 NY2d 320, 324-325) and declared that AMI was obligated to defend and indemnify Liberty.

Rodriguez v. J & K Taxi, Inc.

 

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Kitzes, J.), dated October 24, 2003, which granted the motion of the defendants J & K Taxi, Inc., and Harcharan S. Bedi, and the separate motion of the defendant Ramon A. Gonzalez, for summary judgment dismissing the complaint insofar as asserted against them 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 one bill of costs payable by the respondents appearing separately and filing separate briefs, the motions are denied, and the complaint is reinstated.

Contrary to the Supreme Court's determination, the defendants failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident. The defendants' examining physician failed to set forth the objective test or tests performed supporting her conclusion that there was no limitation of range of motion (see Black v Robinson, 305 AD2d 438, 439; Gamberg v Romeo, 289 AD2d 525, 525-526; see also Zavala v DeSantis, 1 AD3d 354; Gamberg v Romeo, supra; Junco v Ranzi, 288 AD2d 440). Moreover, the defendants' physician did not indicate that she examined the plaintiff's left shoulder despite the fact that the plaintiff alleged in her bill of particulars that a tendon in her left shoulder was torn in the accident.

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

Accordingly, the Supreme Court erred in granting the defendants' respective motions for summary judgment.

New York Hospital Medical Center of Queens v Motor Vehicle Accident Indemnification Corporation

In an action to recover no-fault medical payments, the defendant appeals from a judgment of the Supreme Court, Nassau County (Jonas, J.), entered July 26, 2004, which, upon a decision of the same court dated February 10, 2004, is in favor of the plaintiff and against it.

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

ORDERED that the judgment is affirmed, with costs.

Contrary to the defendant's contention, the plaintiff made a prima facie showing of entitlement to judgment as a matter of law by submitting evidentiary proof that the prescribed statutory billing forms had been mailed and received and that payment of no-fault benefits was overdue (see Insurance Law § 5106[a]; 11 NYCRR 65.15[g][3]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742, 742-743; St. Luke's Roosevelt Hosp. v American Tr. Ins. Co., 1 AD3d 498). In opposition, the defendant failed to raise a triable issue of fact (see Zuckerman v City of New York, 49 NY2d 557, 562).

The defendant neither denied the claim within 30 days after receiving it nor sought to extend that time by requesting verification (see 11 NYCRR 65.15[g][3]; [d][1]; [e]). We reject the defendant's contention that the 30-day time requirement contained in 11 NYCRR 6.15(g)(3) does not apply to it until after it has "qualified" an injured party. The defendant "shall have only those rights and obligations which are applicable to an insurer subject to article [51 of the Insurance Law]" (Insurance Law § 5221[B][3]). Moreover, the subject regulation expressly applies to the defendant (see 11 NYCRR 65.15). To permit the defendant to obviate the 30-day time requirement would frustrate the purpose and objective of the No-Fault law "to assure claimants of expeditious compensation for their injuries through prompt payment of first-party benefits without regard to fault and without expense to them" (Dermatossian v New York City Tr. Auth., 67 NY2d 219, 225). It would also frustrate the purpose and objective of 11 NYCRR 65.15(g)(3), "to provide a tightly timed process of claim, disputation and payment" (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 281).

Moreover, the defendant's failure to object to the adequacy of the plaintiff's claim form within 10 days of receipt constituted a waiver of any defenses based thereon (see 11 NYCRR 65.15[d]; New York Hosp. Med. Ctr. of Queens v AIU Ins. Co., 8 AD3d 456; New York & Presbyt. Hosp. v American Tr. Ins. Co., 287 AD2d 699, 701; Mount Sinai v Triboro Coach, 263 AD2d 11, 17).

 

Mooney v. Edwards

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Dollard, J.), dated May 6, 2004, which granted the motion of the defendants National Equipment Rental Co., d/b/a National Cranes and United Rentals of North America, for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendants National Equipment Rental Co., d/b/a National Cranes and United Rentals of North America, made a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The affidavit of the plaintiff's physician submitted in opposition to the defendants' motion was insufficient to raise a triable issue of fact. The physician failed to offer any explanation for the two-year gap in time between the conclusion of the plaintiff's medical treatments and the date of his examination (see Jimenez v Kambli, 272 AD2d 581; Smith v Askew, 264 AD2d 834). In addition, despite the clear evidence that the plaintiff was involved in two subsequent accidents in which he injured his neck and back, it was equally clear that the plaintiff's examining physician was completely unaware of them. Under these circumstances, it would have been purely speculative to [*2]conclude that the subject accident was the sole cause of the plaintiff's current injuries (see e.g. Dimenshteyn v Caruso, 262 AD2d 348). Moreover, the plaintiff's only current complaint was that he had difficulty in participating in recreational basketball and table tennis.

Finally, the plaintiff did not submit any competent medical evidence indicating that his injuries prevented him from performing substantially all of the material acts which constituted his usual and customary activities for not less than 90 days during the 180 days immediately following the accident (see Sainte-Aime v Ho, 274 AD2d 569; Arshad v Gomer, 268 AD2d 450; DiNunzio v County of Suffolk, 256 AD2d 498, 499).

Accordingly, the Supreme Court properly granted the motion for summary judgment.

Badio v. Liberty Mutual Fire Insurance Company

Order, Supreme Court, New York County (Norman Ryp, J.), entered February 27, 2003, which denied defendant Liberty Mutual's motion for a directed verdict dismissing the complaint and so much of plaintiff's motion for a directed verdict dismissing Liberty Mutual's fourth affirmative defense, but granted plaintiff's motion to the extent of vacating the jury verdict in Liberty Mutual's favor and remanding for a new trial, unanimously modified, on the law, Liberty Mutual's motion for a directed verdict dismissing the complaint granted, plaintiff's motion to the extent of vacating the jury verdict in Liberty Mutual's favor denied, and otherwise affirmed, without costs. The Clerk is directed to enter judgment accordingly.

The insurer has the burden of proving the validity of its timely cancellation of an insurance policy (see Lehrer McGovern Bovis v Public Service Mut. Ins. Co., 268 AD2d 388 [2000], lv dismissed 94 NY2d 944 [2000]). An insurer is entitled to a presumption that a cancellation notice was received when "the proof exhibits an office practice and procedure followed by the insurers in the regular course of their business, which shows that the notices of cancellation have been duly addressed and mailed" (Nassau Ins. Co. v Murray, 46 NY2d 828, 829 [1978]). In order for the presumption of receipt to arise "office practice must be geared so as to ensure the likelihood that a notice of cancellation is always properly addressed and mailed" (id. at 830).

The trial court improperly ruled that Liberty Mutual did not present evidence of its office mailing practice sufficient to establish that the notice of cancellation had been mailed and presumably received. Indeed, Liberty Mutual did present the testimony of an employee who possessed personal knowledge of the office mailing practice, including how the mail was picked up and counted, and how the names and addresses on each item were confirmed. Such proof of regular office practice and procedure obviated the necessity of producing a witness with personal knowledge of the actual mailing of plaintiff's notice of cancellation (see Bossuk v Steinberg, 58 [*2]NY2d 916 [1983]). The court also improperly precluded the signed and stamped certificate of mailing as direct proof of actual mailing
(see Abuhamra v New York Mut. Underwriters, 170 AD2d 1003 [1991];
see also Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001] and Pardo v Central Coop. Ins. Co., 223 AD2d 832 [1996]), questioning even its admissibility as proof of office practice.

By establishing its routine and reasonable office practice, defendant met its burden of proof that notice was mailed to plaintiff and presumed received. The burden then shifted to plaintiff to rebut the presumption of receipt (see Abuhamra, supra). An insured's denial of receipt, standing alone, is insufficient to rebut the presumption. Indeed, "[i]n addition to a claim of no receipt, there must be a showing that routine office practice was not followed or was so careless that it would be unreasonable to assume that the notice was mailed" (Nassau Ins., 46 NY2d at 830).

The main issue at trial was whether defendant Liberty Mutual's notice of cancellation of plaintiff's homeowner's insurance was effective. To that end, the trial court asked the jury the following questions:

1. Did the defendant . . . follow reasonable procedures in mailing out the notice of fire insurance policy cancellation to plaintiff . . . on January 12, 1999, which were reasonably calculated to ensure plaintiff . . . received such notice.

2. Did plaintiff . . . before the September 15, 1999 fire:

a) know of the notice of cancellation? . . . b) receive the notice of cancellation?

Defendant maintains that if the jury answered yes to question number 1, which it did, then it established that it had complied with notice requirements and proved its timely cancellation of plaintiff's insurance policy as a matter of law regardless of whether plaintiff actually received notice. The jury found that plaintiff knew of the cancellation, but did not receive notice of the cancellation.

The mere fact that plaintiff claimed she did not receive the notice is not legally sufficient to rebut the presumption of receipt and negate the effectiveness of cancellation. Indeed, an insurer may effectively cancel its policy by mailing a notice of cancellation to the address shown on the policy, even if notice is not actually received by the insured (see Matter of Skoczlois v Vinocour, 221 NY 276 [1917]; Wolarsky v New York Life Ins. Co., 120 AD 99 [1907]; see also Brelsford v USAA, 289 AD2d 847 [2001] and Makawi v Commercial Union Ins., 244 AD2d 533 [1997]). Moreover, it is not necessarily inconsistent that defendant had a reasonable mailing procedure as the jury found and that plaintiff did not receive the notice of cancellation, as the jury also found. The reasons for non-receipt may well have been outside defendant's control.

By granting the motion to set aside the verdict and ordering a new trial, the trial court second-guessed the jury. While questions of fact cannot be resolved summarily and therefore entitle the party raising them to a trial, unresolved questions of fact after a trial do not inure to the benefit of the party who bears the burden of proof. In addition, although the trial court ostensibly couched its decision in terms of affording defendant the opportunity to fill in the gaps, it was plaintiff's burden to rebut the presumption of receipt. The jury found that defendant had proven reasonable mailing procedures. Plaintiff's mere denial was insufficient to rebut the presumption of receipt.

Bardakas v. Winstral

In an action to recover damages for personal injuries, etc., the plaintiffs appeal from an order of the Supreme Court, Queens County (Satterfield, J.), dated December 15, 2003, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff Anastasia Bardakas did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

Contrary to the determination of the Supreme Court, the defendants failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The defendants' neurologist found limitations in the plaintiff's lumbar range of motion. In addition, although he reported that the plaintiff had a full range of motion in her right shoulder, he also reported finding an audible cracking sound upon movement of the shoulder. Finally, the defendants' orthopedist reported that the plaintiff's cervical range of motion was limited to 25 degrees on extension.

Since the defendants failed to meet their initial burden of establishing a prima facie case, "it is not necessary to consider whether the plaintiffs' papers in opposition to the defendants' motion were sufficient to raise a triable issue of fact" (Coscia v 938 Trading Corp., 283 AD2d 538; see Chaplin v Taylor, 273 AD2d 188; Mariaca-Olmos v Mizrhy, 226 AD2d 437).

Accordingly, the Supreme Court erred in granting the defendants' motion for summary judgment.

In the Matter of Continental Insurance Company v. Marshall
 

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an underinsured motorist claim, Genevieve Marshall appeals from a judgment of the Supreme Court, Suffolk County (Henry, J.), entered September 26, 2003, which granted the petition.

ORDERED that the judgment is affirmed, with costs.

Where, as here, the insured is required to provide notice of an underinsurance claim "[a]s soon as practicable" (11 NYCRR 60-2.3[f], condition 2), the triggering event is when the insured "knew or should reasonably have known" that the motorist involved in the accident was underinsured (Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d 487, 495; see Matter of Nationwide Mut. Ins. Co. v DiGregorio, 294 AD2d 579, 580; Schlesinger v Nationwide Mut. Ins. Co., 294 AD2d 421, 422; Matter of Continental Ins. Co. v Boyar, 284 AD2d 332), and notice must be given thereafter within "a reasonable time under all the circumstances" (Matter of Interboro Mut. Indem. Ins. Co. v Brown, 300 AD2d 660; see Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, supra at 494).

The insured, the appellant, failed to ascertain the insurance status of the alleged tortfeasor and to notify her carrier, the respondent, of her underinsurance claim until approximately 22 months after the accident, and more than one year after first being diagnosed with, inter alia, multiple disc herniations and a pinched nerve. Under these circumstances, the timeliness of her [*2]underinsurance claim notice was "unreasonable as a matter of law" (Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, supra at 497; see also Matter of Nationwide Mut. Ins. Co. v DiGregorio, supra), and her failure to give timely notice vitiated coverage and warranted a permanent stay of arbitration (see e.g. Matter of State Farm Mut. Auto. Ins. Co. v Mears, 7 AD3d 533; Matter of State Farm Mut. Auto. Ins. Co. v Bombace, 5 AD3d 782; Matter of Eagle Ins. Co. v Garcia, 280 AD2d 476, 477; Matter of Nationwide Ins. Co. v Bietsch, 224 AD2d 623, 623-624).

Lang  v. Hanover Insurance Company

GRAFFEO, J.:

Insurance Law § 3420 grants an injured plaintiff the right to sue a tortfeasor's insurance company to satisfy a judgment obtained against the tortfeasor. The issue presented in this appeal is whether the injured party may bring a declaratory judgment action against the insurance company before securing a judgment against the tortfeasor. We hold that a judgment is a statutory condition precedent to a direct suit against the tortfeasor's insurer.

Plaintiff David Lang was injured when he was struck in the eye while playing "paintball" at the home of John and Elizabeth Durbin. The paintball shot that hit plaintiff was fired by Richard Bachman, a houseguest of the Durbins. When notified of the incident, defendant Hanover Insurance Company, the Durbins' homeowners' liability insurance carrier, promptly disclaimed coverage for Bachman's acts on the ground that Bachman was not an insured party under the terms of the policy.

A year after the incident, plaintiff commenced a personal injury action against Bachman seeking damages for his alleged negligent conduct. After serving the complaint, plaintiff learned that Bachman had filed a Chapter 7 bankruptcy petition. A bankruptcy discharge was issued in April 2002.

While the personal injury case was pending, plaintiff also initiated this declaratory judgment action against Hanover challenging the disclaimer of coverage. Plaintiff sought a declaration that Bachman was an insured under the Durbin policy and that Hanover was therefore obligated to compensate Lang for the injuries Bachman negligently caused. Hanover answered and moved to dismiss the complaint. Among other arguments, Hanover asserted that plaintiff lacked standing to sue Hanover directly because plaintiff had not yet obtained a judgment against Bachman, Hanover's purported insured.

Supreme Court denied the motion to dismiss. On appeal, the Appellate Division reversed and dismissed the declaratory judgment action on the ground that Insurance Law § 3420 precludes a direct action by an injured party against a tortfeasor's insurance company until a judgment has been secured against the tortfeasor and that judgment has been served on the insurance company but has remained unpaid for 30 days. We affirm.

There is no dispute that parties to an insurance contract — the issuer, a named insured or a person claiming to be an insured under the policy — may bring a declaratory judgment action against each other when an actual controversy develops concerning the extent of coverage, the duty to defend, or other issues arising from the insurance contract. The question presented in this case is whether, and under what circumstances, a stranger to the policy — an injured party who has sued a tortfeasor — can bring a direct action against the tortfeasor's insurance company for a determination of coverage issues.

Under the common law, "an injured person possessed no cause of action against the insurer of the tort-feasor" (Jackson v Citizens Cas. Co., 277 NY 385, 389 [1938]). When a plaintiff acquired a judgment against the insured and the insured failed to satisfy the judgment due to insolvency, the plaintiff could not sue the insurance company directly because there was [*3]no privity of contract between plaintiff and the insurance carrier (Burke v London Guar. and Acc. Co., 47 Misc 171 [Kings Co 1905], affd 126 AD 933 [2d Dept 1908], affd 199 NY 557 [1910]). A direct suit by an injured party against the tortfeasor's insurer was thus unknown to the common law (Thrasher v U.S. Liab. Ins. Co., 19 NY2d 159, 166 [1967]).

As a result, even when a tortfeasor had coverage under an existing insurance policy, the common-law rule created a hardship for an injured party who lacked the means to sue the insolvent tortfeasor's insurance company directly and was therefore unable to gain access to available insurance proceeds. "[I]f the insured was insolvent, so that the person injured or the estate of one killed was unable to satisfy the judgment against him, the insurer in effect would be released. The policy being one of indemnity against loss suffered by the principal, it followed that the insured having suffered no damage, there was no loss for the insurer to indemnify" (Jackson v Citizens Cas. Co., 277 NY at 389). Insurance companies thus were able to avoid paying judgments for losses that would have been covered under policies issued to their insureds.

In 1917, the Legislature remedied this inequity by creating a limited statutory cause of action on behalf of injured parties directly against insurers (Coleman v New Amsterdam Cas. Co., 247 NY 271, 275 [1928]). That statutory right, presently codified at Insurance Law § 3420, requires that every insurance policy issued in New York contain a provision "that the insolvency or bankruptcy of the person insured, or the insolvency of his estate, shall not release the insurer from the payment of damages for injury sustained or loss occasioned during the life of and within the coverage of such policy of contract" (Insurance Law § 3420[a][1]).

Section 3420(b)(1) authorizes "any person who . . . has obtained a judgment against the insured . . . for damages for injury sustained or loss or damage occasioned during the life of the policy or contract" to maintain an action against the insurer "[s]ubject to the limitations and conditions of paragraph two of subsection (a) hereof." Subparagraph (a)(2) states: "in case judgment against the insured . . . shall remain unsatisfied at the expiration of thirty days from the serving of notice of entry of judgment upon the attorney for the insured, or upon the insured, and upon the insurer, then an action may . . . be maintained against the insurer."

Insurance Law § 3420 therefore grants an injured party a right to sue the tortfeasor's insurer, but only under limited circumstances — the injured party must first obtain a judgment against the tortfeasor, serve the insurance company with a copy of the judgment and await payment for 30 days. Compliance with these requirements is a condition precedent to a direct action against the insurance company (see Thrasher v U.S. Liab. Ins. Co., 19 NY2d at 166). As Chief Judge Cardozo described it, "[t]he effect of the statute is to give to the injured claimant a cause of action against an insurer for the same relief that would be due to a solvent principal seeking indemnity and reimbursement after the judgment had been satisfied. The cause of action is no less but also it is no greater" (see Coleman v New Amsterdam Cas. Co., 247 NY at 275). Once the statutory prerequisites are met, the injured party steps into the shoes of the tortfeasor and can assert any right of the tortfeasor-insured against the insurance company.

Here, it is undisputed that plaintiff did not obtain a judgment against Bachman, the alleged tortfeasor. Having failed to fulfill the condition precedent to suit, plaintiff could not pursue a direct action against Hanover and the Appellate Division properly granted Hanover's motion to dismiss the complaint.

Plaintiff's reliance on CPLR 3001, the statute that governs declaratory judgment actions, is misplaced. CPLR 3001 authorizes a court to declare "the rights and other legal relations of the parties to a justiciable controversy," providing a procedure for parties to resolve disputes over existing rights and obligations. What distinguishes declaratory judgment actions from other types of actions or proceedings is the nature of the primary relief sought — a judicial declaration rather than money damages or other coercive relief (Solnick v Whalen, 49 NY2d 224, 229 [1980]). But nothing in the language of CPLR 3001 alters the precedent regarding an injured party's standing to sue a tortfeasor's insurer. Plaintiff has no common-law right to seek relief directly from a tortfeasor's insurer, and the statutory right created in Insurance Law § 3420 arises only after plaintiff has obtained a judgment in the underlying personal injury action. That Bachman has obtained a bankruptcy discharge does not change our analysis. Far from supplying a reason for disregarding the statutory requirements, the bankruptcy or insolvency of an insured is precisely the situation Insurance Law § 3420 was intended to address. The statute makes clear that bankruptcy does not relieve the insurance company of its obligation to pay damages for injuries or losses covered under an existing policy (Insurance Law § 3420[a][1]). Where there has been a discharge in bankruptcy, federal courts have held that the permanent injunction that follows does not bar a plaintiff in a personal injury action from obtaining a judgment against the bankrupt defendant for the limited purpose of pursuing payment from defendant's insurance carrier (see e.g. Green v Welsh, 956 F2d 30 [2d Cir 1992]). Even if we were to assume that the potential personal liability judgment was listed in Bachman's bankruptcy petition, the discharge would not prevent plaintiff from obtaining a judgment against Bachman, thereby satisfying the section 3420 condition precedent to suit against Hanover.

Finally, we note that an insurance company that disclaims in a situation where coverage may be arguable is well advised to seek a declaratory judgment concerning the duty to defend or indemnify the purported insured. If it disclaims and declines to defend in the underlying lawsuit without doing so, it takes the risk that the injured party will obtain a judgment against the purported insured and then seek payment pursuant to Insurance Law § 3420. Under those circumstances, having chosen not to participate in the underlying lawsuit, the insurance carrier may litigate only the validity of its disclaimer and cannot challenge the liability or damages determination underlying the judgment.

Accordingly, the order of the Appellate Division should be affirmed, with costs.

Oribamie v. Santiago

Order, Supreme Court, Bronx County (Kenneth L. Thompson, J.), entered October 14, 2003, which denied defendants' motion for summary judgment dismissing the complaint on the ground that plaintiff failed to meet the serious injury threshold of Insurance Law § 5102(d), unanimously reversed, on the law, without costs, the motion granted and the complaint dismissed. The Clerk is directed to enter judgment in favor of defendants-appellants dismissing the complaint.

Plaintiff's submissions in response to defendants' motion for summary judgment are insufficient to raise a triable issue of fact as to whether he suffered permanent loss of use or permanent consequential limitation of use of a body organ, member or function, or impairment in his daily activities for 90 days in the 180-day period following the accident (Insurance Law
§ 5102[d]). Both the report and the affirmation of the examining physician fail to present objective medical evidence to support the physician's conclusions (see Toure v Avis Rent a Car Sys., 98 NY2d 345, 353 [2002]). The report stating that plaintiff has decreased range of motion in his right shoulder and arm sets forth no basis for these findings other than plaintiff's subjective complaints of pain. The affirmation, which states that the damage to plaintiff's shoulder resulted in "a marked decrease in range of motion, flexibility, rotation and maneuverability," that plaintiff's "everyday activities have been severely limited," and that plaintiff "has been rendered permanently disabled," does not specify the degree of plaintiff's limitation or restriction, identify the diagnostic tests the physician conducted to reach these conclusions, or describe the "everyday activities" in which plaintiff has been limited (see id.).

Little Princess Express Cab Corp. v. American Transit Insurance Company
 

Order, Supreme Court, New York County (Walter B. Tolub, J.), entered November 13, 2003, which granted defendant's motion for summary judgment dismissing the complaint, and order, same court and Justice, entered November 28, 2003, which denied plaintiff's motion for summary judgment, unanimously affirmed, with costs.

Plaintiff insured failed to make any showing that a demand for settlement was made, and that the insured lost an actual opportunity to settle the claim at a time when all serious doubts about its liability were removed, each of which are requirements for a bad-faith action for failure to settle (Pavia v State Farm Mut. Auto. Ins. Co., 82 NY2d 445, 454 [1993]). On the contrary, defendant-insurer produced competent proof that it had offered to pay the full policy limits prior to trial, but that the plaintiff in the underlying personal injury action refused to settle. Defendant's failure, if any, to keep plaintiff apprised of the developments in the case against it is insufficient in itself to constitute bad faith (Smith v General Acc. Ins. Co., 91 NY2d 648, 655 [1998]).